Delaware | 47-0945740 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Large accelerated filer | x | Accelerated filer | o | ||
Non-accelerated filer | o | Smaller reporting company | o | ||
Emerging growth company | o |
PART I. FINANCIAL INFORMATION | Page | |
Item 1. | Financial Statements (unaudited) | |
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II. OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 6. | ||
September 30, 2018 | December 31, 2017 | ||||||
(in thousands, except share data) | |||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 639,254 | $ | 627,878 | |||
Short-term investments | 317,505 | 226,787 | |||||
Accounts receivable, net of allowance for doubtful accounts of $1,401 and $1,003 | 187,424 | 203,366 | |||||
Prepaid expenses and other current assets | 136,828 | 30,514 | |||||
Income taxes receivable | 1,363 | 673 | |||||
Total current assets | 1,282,374 | 1,089,218 | |||||
Long-term investments | 63,551 | 148,364 | |||||
Property and equipment, net | 91,265 | 106,753 | |||||
Goodwill | 42,530 | 35,083 | |||||
Deferred income taxes | 4,007 | 5,287 | |||||
Other long-term assets | 46,271 | 14,090 | |||||
Total assets | $ | 1,529,998 | $ | 1,398,795 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 3,817 | $ | 4,448 | |||
Accrued compensation and employee-related benefits | 96,091 | 96,390 | |||||
Other accrued liabilities | 66,313 | 37,722 | |||||
Income taxes payable | 7,547 | 4,743 | |||||
Deferred revenue | 328,187 | 419,426 | |||||
Total current liabilities | 501,955 | 562,729 | |||||
Deferred revenue | 15,851 | 28,058 | |||||
Other long-term liabilities | 52,447 | 54,385 | |||||
Total liabilities | 570,253 | 645,172 | |||||
Commitments and contingencies (Note 10) | |||||||
Stockholders' equity | |||||||
Preferred stock, $0.0001 par value, 10,000,000 shares authorized; none issued | — | — | |||||
Class B common stock, $0.0001 par value, 75,000,000 shares authorized; 12,016,296 and 14,492,846 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively | 1 | 1 | |||||
Class A common stock, $0.0001 par value, 750,000,000 shares authorized; 71,530,794 and 65,969,499 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively | 7 | 7 | |||||
Additional paid-in capital | 1,290,077 | 1,168,563 | |||||
Accumulated other comprehensive loss | (11,914 | ) | (11,991 | ) | |||
Accumulated deficit | (318,426 | ) | (402,957 | ) | |||
Total stockholders' equity | 959,745 | 753,623 | |||||
Total liabilities and stockholders' equity | $ | 1,529,998 | $ | 1,398,795 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Revenues | |||||||||||||||
License | $ | 138,127 | $ | 99,424 | $ | 384,768 | $ | 299,964 | |||||||
Maintenance and services | 152,453 | 115,493 | 434,308 | 327,739 | |||||||||||
Total revenues | 290,580 | 214,917 | 819,076 | 627,703 | |||||||||||
Cost of revenues | |||||||||||||||
License | 5,230 | 3,265 | 13,810 | 9,474 | |||||||||||
Maintenance and services | 29,549 | 26,664 | 88,619 | 73,775 | |||||||||||
Total cost of revenues (1) | 34,779 | 29,929 | 102,429 | 83,249 | |||||||||||
Gross profit | 255,801 | 184,988 | 716,647 | 544,454 | |||||||||||
Operating expenses | |||||||||||||||
Sales and marketing (1) | 142,129 | 123,842 | 424,685 | 366,020 | |||||||||||
Research and development (1) | 97,939 | 84,494 | 285,477 | 249,863 | |||||||||||
General and administrative (1) | 30,959 | 25,697 | 93,055 | 76,017 | |||||||||||
Total operating expenses | 271,027 | 234,033 | 803,217 | 691,900 | |||||||||||
Operating loss | (15,226 | ) | (49,045 | ) | (86,570 | ) | (147,446 | ) | |||||||
Other income, net | 4,381 | 3,677 | 12,709 | 8,931 | |||||||||||
Loss before income tax expense | (10,845 | ) | (45,368 | ) | (73,861 | ) | (138,515 | ) | |||||||
Income tax expense | 10,492 | 1,185 | 6,014 | 5,207 | |||||||||||
Net loss | $ | (21,337 | ) | $ | (46,553 | ) | $ | (79,875 | ) | $ | (143,722 | ) | |||
Net loss per share: | |||||||||||||||
Basic | $ | (0.26 | ) | $ | (0.59 | ) | $ | (0.97 | ) | $ | (1.83 | ) | |||
Diluted | $ | (0.26 | ) | $ | (0.59 | ) | $ | (0.97 | ) | $ | (1.83 | ) | |||
Weighted average shares used to compute net loss per share: | |||||||||||||||
Basic | 83,264 | 79,440 | 82,191 | 78,463 | |||||||||||
Diluted | 83,264 | 79,440 | 82,191 | 78,463 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Cost of revenues | $ | 3,488 | $ | 2,885 | $ | 9,774 | $ | 8,252 | |||||||
Sales and marketing | 22,357 | 18,603 | 64,522 | 55,221 | |||||||||||
Research and development | 29,926 | 27,337 | 81,920 | 76,500 | |||||||||||
General and administrative | 6,175 | 5,489 | 19,805 | 15,650 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Net loss | $ | (21,337 | ) | $ | (46,553 | ) | $ | (79,875 | ) | $ | (143,722 | ) | |||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Foreign currency translation | (282 | ) | (3,455 | ) | (1,010 | ) | (10,663 | ) | |||||||
Net unrealized gain (loss) on available-for-sale securities | 179 | (119 | ) | (596 | ) | (119 | ) | ||||||||
Comprehensive loss | $ | (21,440 | ) | $ | (50,127 | ) | $ | (81,481 | ) | $ | (154,504 | ) |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
(in thousands) | |||||||
Operating activities | |||||||
Net loss | $ | (79,875 | ) | $ | (143,722 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities | |||||||
Depreciation and amortization expense | 27,783 | 34,174 | |||||
Amortization (accretion) on investments, net | (32 | ) | 162 | ||||
Stock-based compensation expense | 176,021 | 155,623 | |||||
Deferred income taxes | (3,810 | ) | (226 | ) | |||
Changes in operating assets and liabilities | |||||||
Accounts receivable, net | 14,232 | 80,030 | |||||
Prepaid expenses and other assets | (71,671 | ) | (138 | ) | |||
Income taxes receivable | (728 | ) | (297 | ) | |||
Deferred revenue | 4,666 | 45,109 | |||||
Accounts payable and accrued liabilities | 38,477 | 9,452 | |||||
Income taxes payable | 2,866 | 26 | |||||
Net cash provided by operating activities | 107,929 | 180,193 | |||||
Investing activities | |||||||
Purchases of property and equipment | (13,983 | ) | (43,179 | ) | |||
Business combination, net of cash acquired | (10,947 | ) | (23,966 | ) | |||
Purchases of investments | (206,454 | ) | (198,144 | ) | |||
Maturities of investments | 199,885 | — | |||||
Sales of investments | 99 | — | |||||
Net cash used in investing activities | (31,400 | ) | (265,289 | ) | |||
Financing activities | |||||||
Proceeds from issuance of common stock | 26,864 | 24,305 | |||||
Repurchases of common stock | (90,019 | ) | (59,986 | ) | |||
Net cash used in financing activities | (63,155 | ) | (35,681 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (1,998 | ) | 3,005 | ||||
Net increase (decrease) in cash and cash equivalents | 11,376 | (117,772 | ) | ||||
Cash and cash equivalents | |||||||
Beginning of period | 627,878 | 908,717 | |||||
End of period | $ | 639,254 | $ | 790,945 | |||
Non-cash activities | |||||||
Accrued purchases of property and equipment | $ | 3,589 | $ | 14,375 | |||
Asset retirement obligations recognized, net | — | 983 |
• | the contract contains reasonable evidence of approval and of both parties' commitment to perform their respective obligations; |
• | the contract includes identifiable rights to goods and/or services to be transferred and payment terms related to the transfer of those goods and/or services; |
• | the contract has commercial substance; and |
• | collection of substantially all of the consideration we are entitled to under the contract is probable. |
September 30, 2018 | |||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||
(in thousands) | |||||||||||||||
Short-term investments | |||||||||||||||
Commercial paper | $ | 1,976 | $ | — | $ | — | $ | 1,976 | |||||||
U.S. treasury securities | 171,643 | — | (438 | ) | 171,205 | ||||||||||
U.S. agency securities | 24,976 | — | (109 | ) | 24,867 | ||||||||||
Corporate bonds | 119,684 | — | (227 | ) | 119,457 | ||||||||||
Total short-term investments | 318,279 | — | (774 | ) | 317,505 | ||||||||||
Long-term investments | |||||||||||||||
U.S. treasury securities | 44,585 | — | (376 | ) | 44,209 | ||||||||||
Corporate bonds | 19,452 | 3 | (113 | ) | 19,342 | ||||||||||
Total long-term investments | 64,037 | 3 | (489 | ) | 63,551 | ||||||||||
Total short-term and long-term investments | $ | 382,316 | $ | 3 | $ | (1,263 | ) | $ | 381,056 |
December 31, 2017 | |||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||
(in thousands) | |||||||||||||||
Short-term investments | |||||||||||||||
Commercial paper | $ | 9,970 | $ | — | $ | — | $ | 9,970 | |||||||
U.S. treasury securities | 160,206 | — | (121 | ) | 160,085 | ||||||||||
U.S. agency securities | 9,917 | — | (24 | ) | 9,893 | ||||||||||
Corporate bonds | 46,901 | 3 | (65 | ) | 46,839 | ||||||||||
Total short-term investments | 226,994 | 3 | (210 | ) | 226,787 | ||||||||||
Long-term investments | |||||||||||||||
U.S. treasury securities | 79,371 | — | (202 | ) | 79,169 | ||||||||||
U.S. agency securities | 18,570 | — | (102 | ) | 18,468 | ||||||||||
Corporate bonds | 50,880 | — | (153 | ) | 50,727 | ||||||||||
Total long-term investments | 148,821 | — | (457 | ) | 148,364 | ||||||||||
Total short-term and long-term investments | $ | 375,815 | $ | 3 | $ | (667 | ) | $ | 375,151 |
September 30, 2018 | |||||||||||||||||||||||
Less Than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Short-term investments | |||||||||||||||||||||||
U.S. treasury securities | $ | 161,300 | $ | (351 | ) | $ | 9,905 | $ | (87 | ) | $ | 171,205 | $ | (438 | ) | ||||||||
U.S. agency securities | 5,042 | (35 | ) | 19,825 | (74 | ) | 24,867 | (109 | ) | ||||||||||||||
Corporate bonds | 93,716 | (144 | ) | 15,470 | (83 | ) | 109,186 | (227 | ) | ||||||||||||||
Total short-term investments | 260,058 | (530 | ) | 45,200 | (244 | ) | 305,258 | (774 | ) | ||||||||||||||
Long-term investments | |||||||||||||||||||||||
U.S. treasury securities | 44,209 | (376 | ) | — | — | 44,209 | (376 | ) | |||||||||||||||
Corporate bonds | 15,345 | (113 | ) | — | — | 15,345 | (113 | ) | |||||||||||||||
Total long-term investments | 59,554 | (489 | ) | — | — | 59,554 | (489 | ) | |||||||||||||||
Total short-term and long-term investments | $ | 319,612 | $ | (1,019 | ) | $ | 45,200 | $ | (244 | ) | $ | 364,812 | $ | (1,263 | ) |
• | Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities. |
• | Level 2—Inputs are quoted prices for similar assets and liabilities in active markets or quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. |
• | Level 3—Inputs are unobservable inputs based on our own assumptions and valuation techniques used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation. |
September 30, 2018 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(in thousands) | ||||||||||||||||
Cash and cash equivalents | ||||||||||||||||
Money market funds | $ | 555,773 | $ | — | $ | — | $ | 555,773 | ||||||||
Short-term investments | ||||||||||||||||
Commercial paper | — | 1,976 | — | 1,976 | ||||||||||||
U.S. treasury securities | — | 171,205 | — | 171,205 | ||||||||||||
U.S. agency securities | — | 24,867 | — | 24,867 | ||||||||||||
Corporate bonds | — | 119,457 | — | 119,457 | ||||||||||||
Long-term investments | ||||||||||||||||
U.S. treasury securities | — | 44,209 | — | 44,209 | ||||||||||||
Corporate bonds | — | 19,342 | — | 19,342 | ||||||||||||
Total | $ | 555,773 | $ | 381,056 | $ | — | $ | 936,829 |
December 31, 2017 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(in thousands) | ||||||||||||||||
Cash and cash equivalents | ||||||||||||||||
Money market funds | $ | 582,835 | $ | — | $ | — | $ | 582,835 | ||||||||
Commercial paper | — | 8,984 | — | 8,984 | ||||||||||||
Short-term investments | ||||||||||||||||
Commercial paper | — | 9,970 | — | 9,970 | ||||||||||||
U.S. treasury securities | — | 160,085 | — | 160,085 | ||||||||||||
U.S. agency securities | — | 9,893 | — | 9,893 | ||||||||||||
Corporate bonds | — | 46,839 | — | 46,839 | ||||||||||||
Long-term investments | ||||||||||||||||
U.S. treasury securities | — | 79,169 | — | 79,169 | ||||||||||||
U.S. agency securities | — | 18,468 | — | 18,468 | ||||||||||||
Corporate bonds | — | 50,727 | — | 50,727 | ||||||||||||
Total | $ | 582,835 | $ | 384,135 | $ | — | $ | 966,970 |
June 7, 2018 | |||
(in thousands) | |||
Cash | $ | 53 | |
Technology asset | 3,500 | ||
Goodwill | 7,447 | ||
Net assets acquired | $ | 11,000 |
August 1, 2017 | |||
(in thousands) | |||
Cash | $ | 161 | |
Technology asset | 5,000 | ||
Goodwill | 19,552 | ||
Other liabilities, net | (586 | ) | |
Net assets acquired | $ | 24,127 |
September 30, 2018 | December 31, 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands) | |||||||||||||||
Assets | |||||||||||||||
Current assets | |||||||||||||||
Cash and cash equivalents | $ | 639,254 | $ | — | $ | 639,254 | $ | 627,878 | |||||||
Short-term investments | 317,505 | — | 317,505 | 226,787 | |||||||||||
Accounts receivable, net | 187,424 | — | 187,424 | 203,366 | |||||||||||
Prepaid expenses and other current assets | 136,828 | (103,176 | ) | 33,652 | 30,514 | ||||||||||
Income taxes receivable | 1,363 | — | 1,363 | 673 | |||||||||||
Total current assets | 1,282,374 | (103,176 | ) | 1,179,198 | 1,089,218 | ||||||||||
Long-term investments | 63,551 | — | 63,551 | 148,364 | |||||||||||
Property and equipment, net | 91,265 | — | 91,265 | 106,753 | |||||||||||
Goodwill | 42,530 | — | 42,530 | 35,083 | |||||||||||
Deferred income taxes | 4,007 | 1,485 | 5,492 | 5,287 | |||||||||||
Other long-term assets | 46,271 | (29,940 | ) | 16,331 | 14,090 | ||||||||||
Total assets | $ | 1,529,998 | $ | (131,631 | ) | $ | 1,398,367 | $ | 1,398,795 | ||||||
Liabilities and stockholders' equity | |||||||||||||||
Current liabilities | |||||||||||||||
Accounts payable | $ | 3,817 | $ | — | $ | 3,817 | $ | 4,448 | |||||||
Accrued compensation and employee-related benefits | 96,091 | — | 96,091 | 96,390 | |||||||||||
Other accrued liabilities | 66,313 | — | 66,313 | 37,722 | |||||||||||
Income taxes payable | 7,547 | (4,381 | ) | 3,166 | 4,743 | ||||||||||
Deferred revenue | 328,187 | 154,435 | 482,622 | 419,426 | |||||||||||
Total current liabilities | 501,955 | 150,054 | 652,009 | 562,729 | |||||||||||
Deferred revenue | 15,851 | 12,693 | 28,544 | 28,058 | |||||||||||
Other long-term liabilities | 52,447 | (833 | ) | 51,614 | 54,385 | ||||||||||
Total liabilities | 570,253 | 161,914 | 732,167 | 645,172 | |||||||||||
Stockholders' equity | |||||||||||||||
Common stock | 8 | — | 8 | 8 | |||||||||||
Additional paid-in capital | 1,290,077 | — | 1,290,077 | 1,168,563 | |||||||||||
Accumulated other comprehensive loss | (11,914 | ) | 876 | (11,038 | ) | (11,991 | ) | ||||||||
Accumulated deficit | (318,426 | ) | (294,421 | ) | (612,847 | ) | (402,957 | ) | |||||||
Total stockholders' equity | 959,745 | (293,545 | ) | 666,200 | 753,623 | ||||||||||
Total liabilities and stockholders' equity | $ | 1,529,998 | $ | (131,631 | ) | $ | 1,398,367 | $ | 1,398,795 |
Three Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands) | |||||||||||||||
Revenues | |||||||||||||||
License | $ | 138,127 | $ | (20,095 | ) | $ | 118,032 | $ | 99,424 | ||||||
Maintenance and services | 152,453 | (30,894 | ) | 121,559 | 115,493 | ||||||||||
Total revenues | 290,580 | (50,989 | ) | 239,591 | 214,917 | ||||||||||
Cost of revenues | |||||||||||||||
License | 5,230 | (121 | ) | 5,109 | 3,265 | ||||||||||
Maintenance and services | 29,549 | 148 | 29,697 | 26,664 | |||||||||||
Total cost of revenues | 34,779 | 27 | 34,806 | 29,929 | |||||||||||
Gross profit | 255,801 | (51,016 | ) | 204,785 | 184,988 | ||||||||||
Operating expenses | |||||||||||||||
Sales and marketing | 142,129 | 7,828 | 149,957 | 123,842 | |||||||||||
Research and development | 97,939 | — | 97,939 | 84,494 | |||||||||||
General and administrative | 30,959 | — | 30,959 | 25,697 | |||||||||||
Total operating expenses | 271,027 | 7,828 | 278,855 | 234,033 | |||||||||||
Operating loss | (15,226 | ) | (58,844 | ) | (74,070 | ) | (49,045 | ) | |||||||
Other income, net | 4,381 | 32 | 4,413 | 3,677 | |||||||||||
Loss before income tax expense | (10,845 | ) | (58,812 | ) | (69,657 | ) | (45,368 | ) | |||||||
Income tax expense | 10,492 | (8,852 | ) | 1,640 | 1,185 | ||||||||||
Net loss | $ | (21,337 | ) | $ | (49,960 | ) | $ | (71,297 | ) | $ | (46,553 | ) |
Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands) | |||||||||||||||
Revenues | |||||||||||||||
License | $ | 384,768 | $ | (38,489 | ) | $ | 346,279 | $ | 299,964 | ||||||
Maintenance and services | 434,308 | (73,386 | ) | 360,922 | 327,739 | ||||||||||
Total revenues | 819,076 | (111,875 | ) | 707,201 | 627,703 | ||||||||||
Cost of revenues | |||||||||||||||
License | 13,810 | (264 | ) | 13,546 | 9,474 | ||||||||||
Maintenance and services | 88,619 | 315 | 88,934 | 73,775 | |||||||||||
Total cost of revenues | 102,429 | 51 | 102,480 | 83,249 | |||||||||||
Gross profit | 716,647 | (111,926 | ) | 604,721 | 544,454 | ||||||||||
Operating expenses | |||||||||||||||
Sales and marketing | 424,685 | 18,787 | 443,472 | 366,020 | |||||||||||
Research and development | 285,477 | — | 285,477 | 249,863 | |||||||||||
General and administrative | 93,055 | — | 93,055 | 76,017 | |||||||||||
Total operating expenses | 803,217 | 18,787 | 822,004 | 691,900 | |||||||||||
Operating loss | (86,570 | ) | (130,713 | ) | (217,283 | ) | (147,446 | ) | |||||||
Other income, net | 12,709 | 112 | 12,821 | 8,931 | |||||||||||
Loss before income tax expense | (73,861 | ) | (130,601 | ) | (204,462 | ) | (138,515 | ) | |||||||
Income tax expense | 6,014 | (586 | ) | 5,428 | 5,207 | ||||||||||
Net loss | $ | (79,875 | ) | $ | (130,015 | ) | $ | (209,890 | ) | $ | (143,722 | ) |
Three Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands) | |||||||||||||||
Net loss | $ | (21,337 | ) | $ | (49,960 | ) | $ | (71,297 | ) | $ | (46,553 | ) | |||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Foreign currency translation | (282 | ) | 465 | 183 | (3,455 | ) | |||||||||
Net unrealized gain (loss) on available-for-sale securities | 179 | — | 179 | (119 | ) | ||||||||||
Comprehensive loss | $ | (21,440 | ) | $ | (49,495 | ) | $ | (70,935 | ) | $ | (50,127 | ) |
Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands) | |||||||||||||||
Net loss | $ | (79,875 | ) | $ | (130,015 | ) | $ | (209,890 | ) | $ | (143,722 | ) | |||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Foreign currency translation | (1,010 | ) | 2,559 | 1,549 | (10,663 | ) | |||||||||
Net unrealized loss on available-for-sale securities | (596 | ) | — | (596 | ) | (119 | ) | ||||||||
Comprehensive loss | $ | (81,481 | ) | $ | (127,456 | ) | $ | (208,937 | ) | $ | (154,504 | ) |
Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands) | |||||||||||||||
Operating activities | |||||||||||||||
Net loss | $ | (79,875 | ) | $ | (130,015 | ) | $ | (209,890 | ) | $ | (143,722 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities | |||||||||||||||
Depreciation and amortization expense | 27,783 | — | 27,783 | 34,174 | |||||||||||
Amortization (accretion) on investments, net | (32 | ) | — | (32 | ) | 162 | |||||||||
Stock-based compensation expense | 176,021 | — | 176,021 | 155,623 | |||||||||||
Deferred income taxes | (3,810 | ) | 3,673 | (137 | ) | (226 | ) | ||||||||
Changes in operating assets and liabilities | |||||||||||||||
Accounts receivable, net | 14,232 | — | 14,232 | 80,030 | |||||||||||
Prepaid expenses and other assets | (71,671 | ) | 68,002 | (3,669 | ) | (138 | ) | ||||||||
Income taxes receivable | (728 | ) | — | (728 | ) | (297 | ) | ||||||||
Deferred revenue | 4,666 | 62,974 | 67,640 | 45,109 | |||||||||||
Accounts payable and accrued liabilities | 38,477 | — | 38,477 | 9,452 | |||||||||||
Income taxes payable | 2,866 | (4,381 | ) | (1,515 | ) | 26 | |||||||||
Net cash provided by operating activities | 107,929 | 253 | 108,182 | 180,193 | |||||||||||
Investing activities | |||||||||||||||
Purchases of property and equipment | (13,983 | ) | — | (13,983 | ) | (43,179 | ) | ||||||||
Business combination, net of cash acquired | (10,947 | ) | — | (10,947 | ) | (23,966 | ) | ||||||||
Purchases of investments | (206,454 | ) | — | (206,454 | ) | (198,144 | ) | ||||||||
Maturities of investments | 199,885 | — | 199,885 | — | |||||||||||
Sales of investments | 99 | — | 99 | — | |||||||||||
Net cash used in investing activities | (31,400 | ) | — | (31,400 | ) | (265,289 | ) | ||||||||
Financing activities | |||||||||||||||
Proceeds from issuance of common stock | 26,864 | — | 26,864 | 24,305 | |||||||||||
Repurchases of common stock | (90,019 | ) | — | (90,019 | ) | (59,986 | ) | ||||||||
Net cash used in financing activities | (63,155 | ) | — | (63,155 | ) | (35,681 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (1,998 | ) | (253 | ) | (2,251 | ) | 3,005 | ||||||||
Net increase (decrease) in cash and cash equivalents | 11,376 | — | 11,376 | (117,772 | ) | ||||||||||
Cash and cash equivalents | |||||||||||||||
Beginning of period | 627,878 | — | 627,878 | 908,717 | |||||||||||
End of period | $ | 639,254 | $ | — | $ | 639,254 | $ | 790,945 |
Contract Assets | |||
(in thousands) | |||
Balances at December 31, 2017 | $ | — | |
Adoption of ASC 606 | 40,854 | ||
Contract assets transferred to receivables | (23,244 | ) | |
Additions to contract assets | 72,233 | ||
Balances at September 30, 2018 | $ | 89,843 |
Deferred Revenue | |||
(in thousands) | |||
Balances at December 31, 2017 | $ | 447,484 | |
Adoption of ASC 606 | (105,933 | ) | |
Deferred revenue recognized | (286,580 | ) | |
Additional amounts deferred | 289,067 | ||
Balances at September 30, 2018 | $ | 344,038 |
Deferred Contract Costs | |||
(in thousands) | |||
Balances at December 31, 2017 | $ | — | |
Adoption of ASC 606 | 25,489 | ||
Additional contract costs deferred | 25,821 | ||
Amortization of deferred contract costs | (7,740 | ) | |
Balances at September 30, 2018 | $ | 43,570 |
Options Outstanding | |||||||||||||
Shares | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||
(in years) | (in thousands) | ||||||||||||
Balances at December 31, 2017 | 3,017,113 | $ | 10.13 | ||||||||||
Options exercised | (999,451 | ) | 9.45 | ||||||||||
Balances at September 30, 2018 | 2,017,662 | $ | 10.48 | 3.60 | $ | 204,318 | |||||||
Vested and expected to vest at September 30, 2018 | 2,017,662 | $ | 10.48 | 3.60 | $ | 204,318 | |||||||
Exercisable at September 30, 2018 | 1,980,162 | $ | 9.63 | 3.52 | $ | 202,185 |
Number of Shares Underlying Outstanding RSUs | Weighted Average Grant-Date Fair Value per RSU | ||||||
Non-Vested outstanding at December 31, 2017 | 7,178,015 | $ | 62.79 | ||||
RSUs granted | 3,909,099 | 89.22 | |||||
RSUs vested | (2,755,315 | ) | 67.20 | ||||
RSUs forfeited | (579,741 | ) | 67.27 | ||||
Non-Vested outstanding at September 30, 2018 | 7,752,058 | $ | 74.22 |
Shares Available for Grant | ||||||
2013 Plan | 2013 ESPP | |||||
Balances at December 31, 2017 | 7,207,291 | 3,666,392 | ||||
Authorized | 4,023,117 | 804,623 | ||||
Granted | (3,909,099 | ) | (291,447 | ) | ||
Forfeited | 579,741 | — | ||||
Balances at September 30, 2018 | 7,901,050 | 4,179,568 |
Period Ending | Operating Lease Commitments | Expected Sublease Receipts | Net | |||||||||
(in thousands) | ||||||||||||
Remainder of 2018 | $ | 11,796 | $ | (1,972 | ) | $ | 9,824 | |||||
2019 | 41,849 | (10,606 | ) | 31,243 | ||||||||
2020 | 43,051 | (7,113 | ) | 35,938 | ||||||||
2021 | 43,600 | (1,180 | ) | 42,420 | ||||||||
2022 | 42,987 | (597 | ) | 42,390 | ||||||||
Thereafter | 175,493 | (121 | ) | 175,372 | ||||||||
Total | $ | 358,776 | $ | (21,589 | ) | $ | 337,187 |
Payments Due by Period | |||||||||||||||||||||||||||
Total | Remainder of 2018 | 2019 | 2020 | 2021 | 2022 | Thereafter | |||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||
Contractual commitments | $ | 51,053 | $ | 10,543 | $ | 23,146 | $ | 10,092 | $ | 7,090 | $ | 168 | $ | 14 |
Three Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(dollars in thousands) | |||||||||||||||
United States and Canada | $ | 207,166 | $ | (37,614 | ) | $ | 169,552 | $ | 150,059 | ||||||
International | 83,414 | (13,375 | ) | 70,039 | 64,858 | ||||||||||
Total revenues | $ | 290,580 | $ | (50,989 | ) | $ | 239,591 | $ | 214,917 |
Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(dollars in thousands) | |||||||||||||||
United States and Canada | $ | 571,957 | $ | (78,728 | ) | $ | 493,229 | $ | 437,657 | ||||||
International | 247,119 | (33,147 | ) | 213,972 | 190,046 | ||||||||||
Total revenues | $ | 819,076 | $ | (111,875 | ) | $ | 707,201 | $ | 627,703 |
Three Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Net loss per share - basic and diluted | |||||||||||||||
Net loss | $ | (21,337 | ) | $ | (49,960 | ) | $ | (71,297 | ) | $ | (46,553 | ) | |||
Weighted average shares outstanding used to compute basic and diluted net loss per share | 83,264 | 83,264 | 79,440 | ||||||||||||
Net loss per share - basic and diluted | $ | (0.26 | ) | $ | (0.86 | ) | $ | (0.59 | ) |
Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Net loss per share - basic and diluted | |||||||||||||||
Net loss | $ | (79,875 | ) | $ | (130,015 | ) | $ | (209,890 | ) | $ | (143,722 | ) | |||
Weighted average shares outstanding used to compute basic and diluted net loss per share | 82,191 | 82,191 | 78,463 | ||||||||||||
Net loss per share - basic and diluted | $ | (0.97 | ) | $ | (2.55 | ) | $ | (1.83 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
(in thousands) | |||||||||||
Shares subject to outstanding common stock awards | 9,887 | 11,083 | 9,887 | 11,083 |
Three Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands) | |||||||||||||||
Condensed Consolidated Statements of Operations Data: | |||||||||||||||
Revenues | |||||||||||||||
License | $ | 138,127 | $ | (20,095 | ) | $ | 118,032 | $ | 99,424 | ||||||
Maintenance and services | 152,453 | (30,894 | ) | 121,559 | 115,493 | ||||||||||
Total revenues | 290,580 | (50,989 | ) | 239,591 | 214,917 | ||||||||||
Cost of revenues | |||||||||||||||
License | 5,230 | (121 | ) | 5,109 | 3,265 | ||||||||||
Maintenance and services | 29,549 | 148 | 29,697 | 26,664 | |||||||||||
Total cost of revenues (1) | 34,779 | 27 | 34,806 | 29,929 | |||||||||||
Gross profit | 255,801 | (51,016 | ) | 204,785 | 184,988 | ||||||||||
Operating expenses | |||||||||||||||
Sales and marketing (1) | 142,129 | 7,828 | 149,957 | 123,842 | |||||||||||
Research and development (1) | 97,939 | — | 97,939 | 84,494 | |||||||||||
General and administrative (1) | 30,959 | — | 30,959 | 25,697 | |||||||||||
Total operating expenses | 271,027 | 7,828 | 278,855 | 234,033 | |||||||||||
Operating loss | (15,226 | ) | (58,844 | ) | (74,070 | ) | (49,045 | ) | |||||||
Other income, net | 4,381 | 32 | 4,413 | 3,677 | |||||||||||
Loss before income tax expense | (10,845 | ) | (58,812 | ) | (69,657 | ) | (45,368 | ) | |||||||
Income tax expense | 10,492 | (8,852 | ) | 1,640 | 1,185 | ||||||||||
Net loss | $ | (21,337 | ) | $ | (49,960 | ) | $ | (71,297 | ) | $ | (46,553 | ) |
Three Months Ended September 30, | |||||||
2018 | 2017 | ||||||
(in thousands) | |||||||
Cost of revenues | $ | 3,488 | $ | 2,885 | |||
Sales and marketing | 22,357 | 18,603 | |||||
Research and development | 29,926 | 27,337 | |||||
General and administrative | 6,175 | 5,489 |
Three Months Ended September 30, | ||||||||
2018 | 2017 | |||||||
As Reported (ASC 606) | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||
(as a percentage of total revenues) | ||||||||
Condensed Consolidated Statements of Operations Data: | ||||||||
Revenues | ||||||||
License | 47.5 | % | 49.3 | % | 46.3 | % | ||
Maintenance and services | 52.5 | % | 50.7 | % | 53.7 | % | ||
Total revenues | 100.0 | % | 100.0 | % | 100.0 | % | ||
Cost of revenues | ||||||||
License | 1.8 | % | 2.1 | % | 1.5 | % | ||
Maintenance and services | 10.2 | % | 12.4 | % | 12.4 | % | ||
Total cost of revenues | 12.0 | % | 14.5 | % | 13.9 | % | ||
Gross profit | 88.0 | % | 85.5 | % | 86.1 | % | ||
Operating expenses | ||||||||
Sales and marketing | 48.9 | % | 62.6 | % | 57.6 | % | ||
Research and development | 33.7 | % | 40.9 | % | 39.3 | % | ||
General and administrative | 10.7 | % | 12.9 | % | 12.0 | % | ||
Total operating expenses | 93.3 | % | 116.4 | % | 108.9 | % | ||
Operating loss | (5.2 | )% | (30.9 | )% | (22.8 | )% | ||
Other income, net | 1.5 | % | 1.8 | % | 1.7 | % | ||
Loss before income tax expense | (3.7 | )% | (29.1 | )% | (21.1 | )% | ||
Income tax expense | 3.6 | % | 0.7 | % | 0.6 | % | ||
Net loss | (7.3 | )% | (29.8 | )% | (21.7 | )% |
Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands) | |||||||||||||||
Condensed Consolidated Statements of Operations Data: | |||||||||||||||
Revenues | |||||||||||||||
License | $ | 384,768 | $ | (38,489 | ) | $ | 346,279 | $ | 299,964 | ||||||
Maintenance and services | 434,308 | (73,386 | ) | 360,922 | 327,739 | ||||||||||
Total revenues | 819,076 | (111,875 | ) | 707,201 | 627,703 | ||||||||||
Cost of revenues | |||||||||||||||
License | 13,810 | (264 | ) | 13,546 | 9,474 | ||||||||||
Maintenance and services | 88,619 | 315 | 88,934 | 73,775 | |||||||||||
Total cost of revenues (1) | 102,429 | 51 | 102,480 | 83,249 | |||||||||||
Gross profit | 716,647 | (111,926 | ) | 604,721 | 544,454 | ||||||||||
Operating expenses | |||||||||||||||
Sales and marketing (1) | 424,685 | 18,787 | 443,472 | 366,020 | |||||||||||
Research and development (1) | 285,477 | — | 285,477 | 249,863 | |||||||||||
General and administrative (1) | 93,055 | — | 93,055 | 76,017 | |||||||||||
Total operating expenses | 803,217 | 18,787 | 822,004 | 691,900 | |||||||||||
Operating loss | (86,570 | ) | (130,713 | ) | (217,283 | ) | (147,446 | ) | |||||||
Other income, net | 12,709 | 112 | 12,821 | 8,931 | |||||||||||
Loss before income tax expense | (73,861 | ) | (130,601 | ) | (204,462 | ) | (138,515 | ) | |||||||
Income tax expense | 6,014 | (586 | ) | 5,428 | 5,207 | ||||||||||
Net loss | $ | (79,875 | ) | $ | (130,015 | ) | $ | (209,890 | ) | $ | (143,722 | ) |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
(in thousands) | |||||||
Cost of revenues | $ | 9,774 | $ | 8,252 | |||
Sales and marketing | 64,522 | 55,221 | |||||
Research and development | 81,920 | 76,500 | |||||
General and administrative | 19,805 | 15,650 |
Nine Months Ended September 30, | ||||||||
2018 | 2017 | |||||||
As Reported (ASC 606) | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||
(as a percentage of total revenues) | ||||||||
Condensed Consolidated Statements of Operations Data: | ||||||||
Revenues | ||||||||
License | 47.0 | % | 49.0 | % | 47.8 | % | ||
Maintenance and services | 53.0 | % | 51.0 | % | 52.2 | % | ||
Total revenues | 100.0 | % | 100.0 | % | 100.0 | % | ||
Cost of revenues | ||||||||
License | 1.7 | % | 1.9 | % | 1.5 | % | ||
Maintenance and services | 10.8 | % | 12.6 | % | 11.8 | % | ||
Total cost of revenues | 12.5 | % | 14.5 | % | 13.3 | % | ||
Gross profit | 87.5 | % | 85.5 | % | 86.7 | % | ||
Operating expenses | ||||||||
Sales and marketing | 51.8 | % | 62.7 | % | 58.3 | % | ||
Research and development | 34.9 | % | 40.4 | % | 39.8 | % | ||
General and administrative | 11.4 | % | 13.2 | % | 12.1 | % | ||
Total operating expenses | 98.1 | % | 116.2 | % | 110.2 | % | ||
Operating loss | (10.6 | )% | (30.7 | )% | (23.5 | )% | ||
Other income, net | 1.6 | % | 1.8 | % | 1.4 | % | ||
Loss before income tax expense | (9.0 | )% | (28.9 | )% | (22.1 | )% | ||
Income tax expense | 0.7 | % | 0.8 | % | 0.8 | % | ||
Net loss | (9.8 | )% | (29.7 | )% | (22.9 | )% |
Three Months Ended September 30, | |||||||||||||||||||||
2018 | 2017 | % Change | |||||||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | As Reported | Without Adoption | ||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
Revenues | |||||||||||||||||||||
License | $ | 138,127 | $ | (20,095 | ) | $ | 118,032 | $ | 99,424 | 38.9 | % | 18.7 | % | ||||||||
Maintenance and services | 152,453 | (30,894 | ) | 121,559 | 115,493 | 32.0 | % | 5.3 | % | ||||||||||||
Total revenues | $ | 290,580 | $ | (50,989 | ) | $ | 239,591 | $ | 214,917 | 35.2 | % | 11.5 | % |
Nine Months Ended September 30, | |||||||||||||||||||||
2018 | 2017 | % Change | |||||||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | As Reported | Without Adoption | ||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
Revenues | |||||||||||||||||||||
License | $ | 384,768 | $ | (38,489 | ) | $ | 346,279 | $ | 299,964 | 28.3 | % | 15.4 | % | ||||||||
Maintenance and services | 434,308 | (73,386 | ) | 360,922 | 327,739 | 32.5 | % | 10.1 | % | ||||||||||||
Total revenues | $ | 819,076 | $ | (111,875 | ) | $ | 707,201 | $ | 627,703 | 30.5 | % | 12.7 | % |
Three Months Ended September 30, | |||||||||||||||||||||
2018 | 2017 | % Change | |||||||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | As Reported | Without Adoption | ||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
Cost of revenues | |||||||||||||||||||||
License | $ | 5,230 | $ | (121 | ) | $ | 5,109 | $ | 3,265 | 60.2 | % | 56.5 | % | ||||||||
Maintenance and services | 29,549 | 148 | 29,697 | 26,664 | 10.8 | % | 11.4 | % | |||||||||||||
Total cost of revenues | $ | 34,779 | $ | 27 | $ | 34,806 | $ | 29,929 | 16.2 | % | 16.3 | % |
Three Months Ended September 30, | ||||||||
2018 | 2017 | |||||||
As Reported (ASC 606) | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||
Gross Margin | ||||||||
License | 96.2 | % | 95.7 | % | 96.7 | % | ||
Maintenance and services | 80.6 | % | 75.6 | % | 76.9 | % | ||
Total gross margin | 88.0 | % | 85.5 | % | 86.1 | % |
Nine Months Ended September 30, | |||||||||||||||||||||
2018 | 2017 | % Change | |||||||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | As Reported | Without Adoption | ||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
Cost of revenues | |||||||||||||||||||||
License | $ | 13,810 | $ | (264 | ) | $ | 13,546 | $ | 9,474 | 45.8 | % | 43.0 | % | ||||||||
Maintenance and services | 88,619 | 315 | 88,934 | 73,775 | 20.1 | % | 20.5 | % | |||||||||||||
Total cost of revenues | $ | 102,429 | $ | 51 | $ | 102,480 | $ | 83,249 | 23.0 | % | 23.1 | % |
Nine Months Ended September 30, | ||||||||
2018 | 2017 | |||||||
As Reported (ASC 606) | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||
Gross Margin | ||||||||
License | 96.4 | % | 96.1 | % | 96.8 | % | ||
Maintenance and services | 79.6 | % | 75.4 | % | 77.5 | % | ||
Total gross margin | 87.5 | % | 85.5 | % | 86.7 | % |
Three Months Ended September 30, | |||||||||||||||||||||
2018 | 2017 | % Change | |||||||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | As Reported | Without Adoption | ||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
Operating expenses | |||||||||||||||||||||
Sales and marketing | $ | 142,129 | $ | 7,828 | $ | 149,957 | $ | 123,842 | 14.8 | % | 21.1 | % | |||||||||
Research and development | 97,939 | — | 97,939 | 84,494 | 15.9 | % | 15.9 | % | |||||||||||||
General and administrative | 30,959 | — | 30,959 | 25,697 | 20.5 | % | 20.5 | % | |||||||||||||
Total operating expenses | $ | 271,027 | $ | 7,828 | $ | 278,855 | $ | 234,033 | 15.8 | % | 19.2 | % |
Nine Months Ended September 30, | |||||||||||||||||||||
2018 | 2017 | % Change | |||||||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | As Reported | Without Adoption | ||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
Operating expenses | |||||||||||||||||||||
Sales and marketing | $ | 424,685 | $ | 18,787 | $ | 443,472 | $ | 366,020 | 16.0 | % | 21.2 | % | |||||||||
Research and development | 285,477 | — | 285,477 | 249,863 | 14.3 | % | 14.3 | % | |||||||||||||
General and administrative | 93,055 | — | 93,055 | 76,017 | 22.4 | % | 22.4 | % | |||||||||||||
Total operating expenses | $ | 803,217 | $ | 18,787 | $ | 822,004 | $ | 691,900 | 16.1 | % | 18.8 | % |
Three Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands) | |||||||||||||||
Other income, net | $ | 4,381 | $ | 32 | $ | 4,413 | $ | 3,677 |
Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands) | |||||||||||||||
Other income, net | $ | 12,709 | $ | 112 | $ | 12,821 | $ | 8,931 |
Three Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(dollars in thousands) | |||||||||||||||
Income tax expense | $ | 10,492 | $ | (8,852 | ) | $ | 1,640 | $ | 1,185 | ||||||
Effective tax rate | (96.7 | )% | (2.4 | )% | (2.6 | )% |
Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(dollars in thousands) | |||||||||||||||
Income tax expense | $ | 6,014 | $ | (586 | ) | $ | 5,428 | $ | 5,207 | ||||||
Effective tax rate | (8.1 | )% | (2.7 | )% | (3.8 | )% |
Three Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(dollars in thousands) | |||||||||||||||
Non-GAAP gross profit | $ | 259,805 | $ | (51,016 | ) | $ | 208,789 | $ | 188,137 | ||||||
Non-GAAP gross margin | 89.4 | % | 87.1 | % | 87.5 | % | |||||||||
Non-GAAP operating income (loss) | $ | 47,236 | $ | (58,844 | ) | $ | (11,608 | ) | $ | 5,533 | |||||
Non-GAAP operating margin | 16.3 | % | (4.8 | )% | 2.6 | % | |||||||||
Non-GAAP net income (loss) | $ | 41,293 | $ | (47,049 | ) | $ | (5,756 | ) | $ | 6,447 |
Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(dollars in thousands) | |||||||||||||||
Non-GAAP gross profit | $ | 727,690 | $ | (111,926 | ) | $ | 615,764 | $ | 553,160 | ||||||
Non-GAAP gross margin | 88.8 | % | 87.1 | % | 88.1 | % | |||||||||
Non-GAAP operating income (loss) | $ | 90,720 | $ | (130,713 | ) | $ | (39,993 | ) | $ | 8,631 | |||||
Non-GAAP operating margin | 11.1 | % | (5.7 | )% | 1.4 | % | |||||||||
Non-GAAP net income (loss) | $ | 82,743 | $ | (104,481 | ) | $ | (21,738 | ) | $ | 12,293 | |||||
Free cash flow (1) | $ | 93,946 | $ | 253 | $ | 94,199 | $ | 137,014 |
Three Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands) | |||||||||||||||
Gross profit | $ | 255,801 | $ | (51,016 | ) | $ | 204,785 | $ | 184,988 | ||||||
Excluding: Stock-based compensation expense attributable to cost of revenues | 3,488 | — | 3,488 | 2,885 | |||||||||||
Excluding: Amortization of acquired intangible assets | 516 | — | 516 | 264 | |||||||||||
Non-GAAP gross profit | $ | 259,805 | $ | (51,016 | ) | $ | 208,789 | $ | 188,137 |
Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands) | |||||||||||||||
Gross profit | $ | 716,647 | $ | (111,926 | ) | $ | 604,721 | $ | 544,454 | ||||||
Excluding: Stock-based compensation expense attributable to cost of revenues | 9,774 | — | 9,774 | 8,252 | |||||||||||
Excluding: Amortization of acquired intangible assets | 1,269 | — | 1,269 | 454 | |||||||||||
Non-GAAP gross profit | $ | 727,690 | $ | (111,926 | ) | $ | 615,764 | $ | 553,160 |
Three Months Ended September 30, | ||||||||
2018 | 2017 | |||||||
As Reported (ASC 606) | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||
Gross margin | 88.0 | % | 85.5 | % | 86.1 | % | ||
Excluding: Stock-based compensation expense attributable to cost of revenues | 1.2 | % | 1.5 | % | 1.3 | % | ||
Excluding: Amortization of acquired intangible assets | 0.2 | % | 0.2 | % | 0.1 | % | ||
Non-GAAP gross margin | 89.4 | % | 87.1 | % | 87.5 | % |
Nine Months Ended September 30, | ||||||||
2018 | 2017 | |||||||
As Reported (ASC 606) | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||
Gross margin | 87.5 | % | 85.5 | % | 86.7 | % | ||
Excluding: Stock-based compensation expense attributable to cost of revenues | 1.2 | % | 1.4 | % | 1.3 | % | ||
Excluding: Amortization of acquired intangible assets | 0.2 | % | 0.2 | % | 0.1 | % | ||
Non-GAAP gross margin | 88.8 | % | 87.1 | % | 88.1 | % |
Three Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands) | |||||||||||||||
Operating loss | $ | (15,226 | ) | $ | (58,844 | ) | $ | (74,070 | ) | $ | (49,045 | ) | |||
Excluding: Stock-based compensation expense | 61,946 | — | 61,946 | 54,314 | |||||||||||
Excluding: Amortization of acquired intangible assets | 516 | — | 516 | 264 | |||||||||||
Non-GAAP operating income (loss) | $ | 47,236 | $ | (58,844 | ) | $ | (11,608 | ) | $ | 5,533 |
Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands) | |||||||||||||||
Operating loss | $ | (86,570 | ) | $ | (130,713 | ) | $ | (217,283 | ) | $ | (147,446 | ) | |||
Excluding: Stock-based compensation expense | 176,021 | — | 176,021 | 155,623 | |||||||||||
Excluding: Amortization of acquired intangible assets | 1,269 | — | 1,269 | 454 | |||||||||||
Non-GAAP operating income (loss) | $ | 90,720 | $ | (130,713 | ) | $ | (39,993 | ) | $ | 8,631 |
Three Months Ended September 30, | ||||||||
2018 | 2017 | |||||||
As Reported (ASC 606) | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||
Operating margin | (5.2 | )% | (30.9 | )% | (22.8 | )% | ||
Excluding: Stock-based compensation expense | 21.3 | % | 25.9 | % | 25.3 | % | ||
Excluding: Amortization of acquired intangible assets | 0.2 | % | 0.2 | % | 0.1 | % | ||
Non-GAAP operating margin | 16.3 | % | (4.8 | )% | 2.6 | % |
Nine Months Ended September 30, | ||||||||
2018 | 2017 | |||||||
As Reported (ASC 606) | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||
Operating margin | (10.6 | )% | (30.7 | )% | (23.5 | )% | ||
Excluding: Stock-based compensation expense | 21.5 | % | 24.9 | % | 24.8 | % | ||
Excluding: Amortization of acquired intangible assets | 0.2 | % | 0.2 | % | 0.1 | % | ||
Non-GAAP operating margin | 11.1 | % | (5.7 | )% | 1.4 | % |
Three Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Net loss | $ | (21,337 | ) | $ | (49,960 | ) | $ | (71,297 | ) | $ | (46,553 | ) | |||
Excluding: Stock-based compensation expense | 61,946 | — | 61,946 | 54,314 | |||||||||||
Excluding: Amortization of acquired intangible assets | 516 | — | 516 | 264 | |||||||||||
Income tax adjustments | 168 | 2,911 | 3,079 | (1,578 | ) | ||||||||||
Non-GAAP net income (loss) | $ | 41,293 | $ | (47,049 | ) | $ | (5,756 | ) | $ | 6,447 | |||||
Weighted average shares used to compute non-GAAP basic net income (loss) per share | 83,264 | 83,264 | 79,440 | ||||||||||||
Effect of potentially dilutive shares: stock awards | 4,376 | — | 4,398 | ||||||||||||
Weighted average shares used to compute non-GAAP diluted net income (loss) per share | 87,640 | 83,264 | 83,838 | ||||||||||||
Non-GAAP net income (loss) per share: | |||||||||||||||
Basic | $ | 0.50 | $ | (0.07 | ) | $ | 0.08 | ||||||||
Diluted | $ | 0.47 | $ | (0.07 | ) | $ | 0.08 |
Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Net loss | $ | (79,875 | ) | $ | (130,015 | ) | $ | (209,890 | ) | $ | (143,722 | ) | |||
Excluding: Stock-based compensation expense | 176,021 | — | 176,021 | 155,623 | |||||||||||
Excluding: Amortization of acquired intangible assets | 1,269 | — | 1,269 | 454 | |||||||||||
Income tax adjustments | (14,672 | ) | 25,534 | 10,862 | (62 | ) | |||||||||
Non-GAAP net income (loss) | $ | 82,743 | $ | (104,481 | ) | $ | (21,738 | ) | $ | 12,293 | |||||
Weighted average shares used to compute non-GAAP basic net income (loss) per share | 82,191 | 82,191 | 78,463 | ||||||||||||
Effect of potentially dilutive shares: stock awards | 4,092 | — | 3,981 | ||||||||||||
Weighted average shares used to compute non-GAAP diluted net income (loss) per share | 86,283 | 82,191 | 82,444 | ||||||||||||
Non-GAAP net income (loss) per share: | |||||||||||||||
Basic | $ | 1.01 | $ | (0.26 | ) | $ | 0.16 | ||||||||
Diluted | $ | 0.96 | $ | (0.26 | ) | $ | 0.15 |
Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
As Reported (ASC 606) | Impacts from Adoption | Without Adoption (ASC 605) | As Reported (ASC 605) | ||||||||||||
(in thousands) | |||||||||||||||
Net cash provided by operating activities | $ | 107,929 | $ | 253 | $ | 108,182 | $ | 180,193 | |||||||
Less: Purchases of property and equipment | (13,983 | ) | — | (13,983 | ) | (43,179 | ) | ||||||||
Free cash flow | $ | 93,946 | $ | 253 | $ | 94,199 | $ | 137,014 | |||||||
Net cash used in investing activities | $ | (31,400 | ) | $ | — | $ | (31,400 | ) | $ | (265,289 | ) | ||||
Net cash used in financing activities | $ | (63,155 | ) | $ | — | $ | (63,155 | ) | $ | (35,681 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | $ | (1,998 | ) | $ | (253 | ) | $ | (2,251 | ) | $ | 3,005 |
September 30, 2018 | December 31, 2017 | ||||||
(in thousands) | |||||||
Cash and cash equivalents | $ | 639,254 | $ | 627,878 | |||
Short-term investments | 317,505 | 226,787 | |||||
Long-term investments | 63,551 | 148,364 |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
(in thousands) | |||||||
Net cash provided by operating activities | $ | 107,929 | $ | 180,193 | |||
Net cash used in investing activities | (31,400 | ) | (265,289 | ) | |||
Net cash used in financing activities | (63,155 | ) | (35,681 | ) | |||
Effect of exchange rate changes | (1,998 | ) | 3,005 | ||||
Net increase (decrease) in cash and cash equivalents | $ | 11,376 | $ | (117,772 | ) |
• | hire, integrate, train and retain skilled talent, including members of our direct sales force and software engineers; |
• | maintain and expand our business, including our operations and infrastructure to support our growth, both domestically and internationally; |
• | increase the number and value of enterprise sales transactions; |
• | manage the transition to a subscription-based business model successfully; |
• | compete with other companies, custom development efforts and open source initiatives that are currently in, or may in the future enter, the market for our software; |
• | maintain and improve the security of our technology and infrastructure; |
• | expand our customer base, both domestically and internationally; |
• | renew maintenance and subscription agreements with, and sell additional products to, existing customers; |
• | improve the performance and capabilities of our software; |
• | price and package our product and service offerings successfully; |
• | maintain high customer satisfaction and ensure quality and timely releases of our products and product enhancements; |
• | maintain, expand and support our indirect sales channels and strategic partner network; |
• | maintain the quality of our website infrastructure to minimize latency when downloading or utilizing our software; |
• | make our software available on public cloud service providers; |
• | increase market awareness of our products and enhance our brand; and |
• | maintain compliance with applicable governmental regulations and other legal obligations, including those related to intellectual property, data protection and privacy, security, international sales and taxation. |
• | our revenues and cash flows may fluctuate more than anticipated over the short-term as a result of this strategy; |
• | if new or current customers desire only perpetual licenses, our subscription sales may lag behind our expectations; |
• | the shift to a subscription strategy may raise concerns among our customer base, including concerns regarding changes to pricing over time and access to files once a subscription has expired; |
• | we may be unsuccessful in maintaining or implementing our target pricing or new pricing models, product adoption and projected renewal rates, or we may select a target price or new pricing model that is not optimal and could negatively affect our sales or earnings; |
• | our customers have and may continue to shift purchases to our lower priced subscription offerings, which could negatively affect our financial results; |
• | our shift to a subscription licensing model may result in confusion among new or existing customers (which can slow adoption rates), partners, resellers and investors; |
• | if our customers do not renew their subscriptions, our revenue may decline and our business may suffer; |
• | our relationships with existing partners that resell perpetual license products may be damaged; and |
• | we may incur sales compensation costs at a higher than forecasted rate if the pace of our subscription transition is faster than anticipated. |
• | effectively recruit, integrate, train and motivate a large number of new employees, including our direct sales force, while retaining existing employees, maintaining the beneficial aspects of our corporate culture and effectively executing our business plan; |
• | satisfy existing customers and attract new customers; |
• | successfully introduce new products and enhancements; |
• | continue to improve our operational, financial and management controls; |
• | protect and further develop our strategic assets, including our intellectual property rights; and |
• | make sound business decisions in light of the scrutiny associated with operating as a public company. |
• | large technology companies, including suppliers of traditional business intelligence and data preparation products, and/or cloud-based offerings that provide one or more capabilities that are competitive with our products, such as Amazon.com, Inc., Google Inc., IBM, Microsoft Corporation, Oracle Corporation, Salesforce and SAP SE; |
• | business analytics software companies, such as MicroStrategy, Qlik and TIBCO Spotfire (a subsidiary of TIBCO Software Inc.); and |
• | SaaS-based products or cloud-based analytics providers. |
• | the timing of satisfying revenue recognition criteria, particularly with regard to large enterprise license agreements and other sales transactions, and as a result of our adoption of the new revenue standard on January 1, 2018; |
• | the transition from perpetual license transactions to term and subscription license transactions, which have lower unit sales prices than comparable perpetual licenses; |
• | the expansion of our customer base; |
• | the renewal of maintenance and subscription agreements with, and sales of additional products to, existing customers; |
• | seasonal variations in our sales, which have generally historically been highest in the fourth quarter of a calendar year and lowest in the first quarter; |
• | the size, timing and terms of our perpetual license sales to both existing and new customers; |
• | changes in the mix of term and subscription license sales versus perpetual license sales; |
• | the mix of direct sales versus sales through our indirect sales channels; |
• | the introduction of products and product enhancements by existing competitors or new entrants into our market, and changes in pricing for products offered by us or our competitors; |
• | customers delaying purchasing decisions in anticipation of new products or product enhancements by us or our competitors or otherwise; |
• | changes in customers' budgets; |
• | customer acceptance of and willingness to pay for new versions of our products; |
• | seasonal variations related to sales and marketing and other activities, such as expenses related to our annual customer conferences; |
• | cyber-attacks or incidents; and |
• | general economic and political conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers operate. |
• | costs related to the hiring, training and maintenance of our direct sales force; |
• | the timing and growth of our business, in particular through our hiring of new employees and international expansion; |
• | our ability to control costs, including our operating expenses; |
• | the effect of changes in tax law, such as the effect of the Tax Cuts and Jobs Act that was enacted on December 22, 2017; and |
• | fluctuations in our effective tax rate. |
• | failure to predict market demand accurately in terms of software functionality and capability or to supply software that meets this demand in a timely fashion; |
• | inability to operate effectively with the technologies, systems or applications of our existing or potential customers; |
• | defects, errors or failures; |
• | negative publicity about their performance or effectiveness; |
• | delays in releasing our new software or enhancements to our existing software to the market; |
• | the introduction or anticipated introduction of competing products by our competitors; |
• | an ineffective sales force; |
• | poor business conditions for our end-customers, causing them to delay purchases; and |
• | the reluctance of customers to purchase software incorporating open source software. |
• | increased management, travel, infrastructure, legal compliance and regulation costs associated with having multiple international operations; |
• | management communication and integration problems resulting from geographic dispersion and language and cultural differences; |
• | sales and customer service challenges associated with operating in different countries; |
• | increased reliance on indirect sales channel partners outside the United States; |
• | longer payment cycles and difficulties in collecting accounts receivable or satisfying revenue recognition criteria, especially in emerging markets; |
• | increased financial accounting and reporting burdens and complexities; |
• | general economic or political conditions in each country or region; |
• | economic uncertainty around the world and adverse effects arising from economic interdependencies across countries and regions; |
• | uncertainty around how the United Kingdom's vote to exit the European Union, commonly referred to as "Brexit," will impact the United Kingdom's access to the European Union Single Market, the related regulatory environment, the global economy and the resulting impact on our business; |
• | compliance with foreign laws and regulations and the risks and costs of non-compliance with such laws and regulations; |
• | compliance with laws and regulations for foreign operations, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on our ability to sell our software in certain foreign markets and the risks and costs of non-compliance; |
• | heightened risks of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of financial statements and irregularities in financial statements; |
• | fluctuations in currency exchange rates and related effects on our results of operations; |
• | difficulties in transferring or, if we determine to do so, repatriating funds from or converting currencies in certain countries; |
• | the need for localized software and licensing programs; |
• | reduced protection for intellectual property rights in certain countries and practical difficulties and costs of enforcing rights abroad; and |
• | compliance with the laws of numerous foreign taxing jurisdictions and overlapping of different tax regimes. |
• | the efficacy of our marketing efforts; |
• | our ability to continue to offer high-quality, innovative and error- and bug-free products; |
• | our ability to retain existing customers and obtain new customers; |
• | our ability to maintain high customer satisfaction; |
• | the quality and perceived value of our products; |
• | our ability to successfully differentiate our products from those of our competitors; |
• | actions of our competitors and other third parties; |
• | our ability to provide customer support and professional services; |
• | any misuse or perceived misuse of our products; |
• | positive or negative publicity; |
• | interruptions, delays or attacks on our website; and |
• | litigation- or regulatory-related developments. |
• | changes in fiscal or contracting policies; |
• | decreases in available government funding; |
• | changes in government programs or applicable requirements; |
• | the adoption of new laws or regulations or changes to existing laws or regulations; |
• | potential delays or changes in the government appropriations or other funding authorization processes; |
• | governments and governmental agencies requiring contractual terms that are unfavorable to us, such as most-favored-nation pricing provisions; and |
• | delays in the payment of our invoices by government payment offices. |
• | an acquisition may negatively affect our results of operations, financial condition or cash flows because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, including potential write- downs of deferred revenues, may expose us to claims and disputes by third parties, including intellectual property claims and disputes, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition; |
• | we may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, personnel or operations of any company that we acquire, particularly if key personnel of the acquired company decide not to work for us; |
• | an acquisition may disrupt our ongoing business, divert resources, increase our expenses and distract our management; |
• | an acquisition may result in a delay or reduction of customer purchases for both us and the company we acquired due to customer uncertainty about continuity and effectiveness of service from either company; |
• | we may encounter difficulties in, or may be unable to, successfully sell any acquired products; |
• | an acquisition may involve the entry into geographic or business markets in which we have little or no prior experience or where competitors have stronger market positions; |
• | challenges inherent in effectively managing an increased number of employees in diverse locations; |
• | the potential strain on our financial and managerial controls and reporting systems and procedures; |
• | potential known and unknown liabilities or deficiencies associated with an acquired company that were not identified in advance; |
• | our use of cash to pay for acquisitions would limit other potential uses for our cash and affect our liquidity; |
• | if we incur debt to fund such acquisitions, such debt may subject us to material restrictions on our ability to conduct our business as well as financial maintenance covenants; |
• | the risk of impairment charges related to potential write-downs of acquired assets or goodwill in future acquisitions; |
• | to the extent that we issue a significant amount of equity or convertible debt securities in connection with future acquisitions, existing stockholders may be diluted and earnings per share may decrease; and |
• | managing the varying intellectual property protection strategies and other activities of an acquired company. |
• | actual or anticipated fluctuations in our results of operations; |
• | the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; |
• | failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors on a quarterly basis; |
• | ratings changes by any securities analysts who follow our company; |
• | announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; |
• | changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; |
• | price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; |
• | changes in our board of directors or management; |
• | sales of large blocks of our common stock, including sales by our executive officers, directors and significant stockholders; |
• | lawsuits threatened or filed against us; |
• | short sales, hedging and other derivative transactions involving our capital stock; |
• | general economic conditions in the United States and abroad; |
• | cyber-attacks or incidents; and |
• | other events or factors, including those resulting from war, incidents of terrorism or responses to these events. |
• | establish a classified board of directors so that not all members of our board of directors are elected at one time; |
• | permit the board of directors to establish the number of directors and fill any vacancies and newly-created directorships; |
• | provide that directors may only be removed for cause; |
• | require super-majority voting to amend some provisions in our certificate of incorporation and bylaws; |
• | authorize the issuance of "blank check" preferred stock that our board of directors could use to implement a stockholder rights plan; |
• | eliminate the ability of our stockholders to call special meetings of stockholders; |
• | prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; |
• | provide that the board of directors is expressly authorized to make, alter or repeal our bylaws; and |
• | establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings. |
Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as part of Publicly Announced Program | Dollar Value of Shares that May Yet Be Purchased Under the Program (in thousands) | |||||||
January 1, 2018 - January 31, 2018 | — | $ | — | — | $ | 100,000 | ||||
February 1, 2018 - February 28, 2018 | 317,261 | $ | 81.97 | 317,261 | $ | 73,993 | ||||
March 1, 2018 - March 31, 2018 | 48,899 | $ | 81.82 | 48,899 | $ | 69,992 | ||||
April 1, 2018 - April 30, 2018 | — | $ | — | — | $ | 369,992 | ||||
May 1, 2018 - May 31, 2018 | 274,955 | $ | 95.48 | 274,955 | $ | 343,741 | ||||
June 1, 2018 - June 30, 2018 | 37,966 | $ | 98.90 | 37,966 | $ | 339,986 | ||||
July 1, 2018 - July 31, 2018 | — | $ | — | — | $ | 339,986 | ||||
August 1, 2018 - August 31, 2018 | 228,510 | $ | 104.73 | 228,510 | $ | 316,055 | ||||
September 1, 2018 - September 30, 2018 | 53,877 | $ | 112.75 | 53,877 | $ | 309,981 |
Exhibit Number | Description | |
3.1(1) | ||
3.2(2) | ||
31.1 | ||
31.2 | ||
32.1* | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Schema Linkbase Document | |
101.CAL | XBRL Taxonomy Definition Linkbase Document | |
101.DEF | XBRL Taxonomy Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Labels Linkbase Document | |
101.PRE | XBRL Taxonomy Presentation Linkbase Document |
TABLEAU SOFTWARE, INC. |
By: /s/ Damon Fletcher |
Damon Fletcher |
Chief Financial Officer (principal |
financial and accounting officer |
and duly authorized signatory) |
By: /s/ Adam Selipsky |
Adam Selipsky |
President and Chief Executive Officer |
(Principal Executive Officer) |
By: /s/ Damon Fletcher | |
Damon Fletcher | |
Chief Financial Officer | |
(Principal Financial and | |
Accounting Officer) |
1. | The Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, to which this Certification is attached as Exhibit 32.1 (the “Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: November 8, 2018 | ||
/s/ Adam Selipsky | /s/ Damon Fletcher | |
Adam Selipsky | Damon Fletcher | |
President and Chief Executive Officer | Chief Financial Officer | |
(Principal Executive Officer) | (Principal Financial and Accounting Officer) |
Document and Entity Information Statement - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Nov. 06, 2018 |
|
Document Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | TABLEAU SOFTWARE INC | |
Entity Central Index Key | 0001303652 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Class A common stock | ||
Document Information | ||
Entity Common Stock, Shares Outstanding | 71,551,528 | |
Class B common stock | ||
Document Information | ||
Entity Common Stock, Shares Outstanding | 12,016,296 |
Condensed Consolidated Balance Sheets Balance Sheet Parenthetical - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Allowance for doubtful accounts | $ 1,401 | $ 1,003 |
Preferred Stock, Par Value (in usd per share) | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Class B common stock | ||
Common Stock, Par Value (in usd per share) | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 75,000,000 | 75,000,000 |
Common Stock, Shares Issued | 12,016,296 | 14,492,846 |
Common Stock, Shares Outstanding | 12,016,296 | 14,492,846 |
Class A common stock | ||
Common Stock, Par Value (in usd per share) | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 750,000,000 | 750,000,000 |
Common Stock, Shares Issued | 71,530,794 | 65,969,499 |
Common Stock, Shares Outstanding | 71,530,794 | 65,969,499 |
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
||||
Revenues | |||||||
License | $ 138,127 | $ 99,424 | $ 384,768 | $ 299,964 | |||
Maintenance and services | 152,453 | 115,493 | 434,308 | 327,739 | |||
Total revenues | 290,580 | 214,917 | 819,076 | 627,703 | |||
Cost of revenues | |||||||
License | 5,230 | 3,265 | 13,810 | 9,474 | |||
Maintenance and services | 29,549 | 26,664 | 88,619 | 73,775 | |||
Total cost of revenues | [1] | 34,779 | 29,929 | 102,429 | 83,249 | ||
Gross profit | 255,801 | 184,988 | 716,647 | 544,454 | |||
Operating expenses | |||||||
Sales and marketing | [1] | 142,129 | 123,842 | 424,685 | 366,020 | ||
Research and development | [1] | 97,939 | 84,494 | 285,477 | 249,863 | ||
General and administrative | [1] | 30,959 | 25,697 | 93,055 | 76,017 | ||
Total operating expenses | 271,027 | 234,033 | 803,217 | 691,900 | |||
Operating loss | (15,226) | (49,045) | (86,570) | (147,446) | |||
Other income, net | 4,381 | 3,677 | 12,709 | 8,931 | |||
Loss before income tax expense | (10,845) | (45,368) | (73,861) | (138,515) | |||
Income tax expense | 10,492 | 1,185 | 6,014 | 5,207 | |||
Net loss | $ (21,337) | $ (46,553) | $ (79,875) | $ (143,722) | |||
Net loss per share: | |||||||
Basic | $ (0.26) | $ (0.59) | $ (0.97) | $ (1.83) | |||
Diluted | $ (0.26) | $ (0.59) | $ (0.97) | $ (1.83) | |||
Weighted average shares used to compute net loss per share: | |||||||
Basic | 83,264 | 79,440 | 82,191 | 78,463 | |||
Diluted | 83,264 | 79,440 | 82,191 | 78,463 | |||
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Condensed Consolidated Statements of Operations Parenthetical - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
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Cost of revenues | ||||
Stock-based Compensation Expense | $ 3,488 | $ 2,885 | $ 9,774 | $ 8,252 |
Sales and marketing | ||||
Stock-based Compensation Expense | 22,357 | 18,603 | 64,522 | 55,221 |
Research and development | ||||
Stock-based Compensation Expense | 29,926 | 27,337 | 81,920 | 76,500 |
General and administrative | ||||
Stock-based Compensation Expense | $ 6,175 | $ 5,489 | $ 19,805 | $ 15,650 |
Condensed Consolidated Statements of Comprehensive Loss Statement - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
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Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (21,337) | $ (46,553) | $ (79,875) | $ (143,722) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation | (282) | (3,455) | (1,010) | (10,663) |
Net unrealized gain (loss) on available-for-sale securities | 179 | (119) | (596) | (119) |
Comprehensive loss | $ (21,440) | $ (50,127) | $ (81,481) | $ (154,504) |
Description of Business |
9 Months Ended |
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Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business Tableau Software, Inc., a Delaware corporation, and its wholly-owned subsidiaries (the "Company," "we," "us" or "our") are headquartered in Seattle, Washington. Our software products put the power of data into the hands of everyday people, allowing a broad population of business users to engage with their data, ask questions, solve problems and create value. Based on innovative core technologies originally developed at Stanford University, our products dramatically reduce the complexity, inflexibility and expense associated with traditional business intelligence applications. We currently offer five key products: Tableau Desktop, a self-service, powerful analytics product for anyone with data; Tableau Server, a business intelligence platform for organizations; Tableau Online, a hosted software-as-a-service ("SaaS") version of Tableau Server; Tableau Prep, a data preparation product for combining, shaping and cleaning data; and Tableau Public, a free cloud-based platform for analyzing and sharing public data. |
Summary of Significant Accounting Policies |
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Sep. 30, 2018 | |||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial information has been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet data as of December 31, 2017 was derived from audited financial statements but does not include all disclosures required by GAAP. The condensed consolidated financial information should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 26, 2018. In the opinion of management, the accompanying unaudited condensed consolidated financial information includes all normal recurring adjustments necessary for a fair statement of the Company's financial position, results of operations, comprehensive loss and cash flows for the interim periods, but is not necessarily indicative of the results that may be expected for the year ending December 31, 2018. All intercompany accounts and transactions have been eliminated in consolidation. We adopted the new revenue recognition accounting standard, codified as Accounting Standards Codification (“ASC”) 606, effective January 1, 2018 on a modified retrospective basis (see Recently Adopted Accounting Pronouncements). Financial results for reporting periods during 2018 are presented in compliance with the new revenue recognition standard. Historical financial results for reporting periods prior to 2018 are presented in conformity with amounts previously disclosed under the prior revenue recognition standard, ASC 605. These financial statements include additional information regarding the impacts from the adoption of the new revenue recognition standard on our financial results for the three and nine months ended September 30, 2018. This includes the presentation of financial results during 2018 under ASC 605 for comparison to the prior year. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates include but are not limited to: the collectability of our receivables; the useful lives of our property and equipment and other lease-related assets, liabilities and costs; the benefit period for deferred commissions; the valuation of investments and the determination of other-than-temporary impairments; and the reported amounts of accrued liabilities. For revenue, we make estimates and assumptions related to the standalone selling prices of our products and services and the nature and timing of the delivery of performance obligations from our contracts with customers. We also use estimates in stock-based compensation, income taxes and business combinations. Actual results could differ from those estimates. Risks and Uncertainties Inherent in our business are various risks and uncertainties, including our limited history of operating our business at its current scale and development of advanced technologies in a rapidly changing industry. These risks include our ability to manage our growth, to attract new customers, to expand sales to existing customers and to attract, integrate and retain qualified personnel, as well as other risks and uncertainties. In the event that we do not successfully implement our business plan, certain assets may not be recoverable, certain liabilities may not be paid and investments in our capital stock may not be recoverable. Our success depends upon the acceptance of our technology, development of sales and distribution channels and our ability to generate significant revenues from the sale of our technology. Segments We follow the authoritative literature that establishes annual and interim reporting standards for an enterprise's operating segments and related disclosures about its products and services, geographic regions and major customers. We operate our business as one operating segment. Our chief operating decision makers are our Chief Executive Officer and Chief Financial Officer, who review financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance and allocating resources. Revenue Recognition - ASC 606 We generate revenues primarily in the form of software license fees and related maintenance and services fees. Software license revenues include fees from the sales of perpetual, term and subscription licenses. Maintenance and services revenues primarily consist of fees for maintenance services (including support and unspecified upgrades and enhancements if and when they are available), training and professional services. We recognize revenues related to contracts with customers that meet the following criteria:
We identify performance obligations in our contracts with customers, which may include software licenses and/or related maintenance and services. We determine the transaction price based on the amount we expect to be entitled to in exchange for transferring the promised goods or services to the customer. We allocate the transaction price in the contract to each distinct performance obligation in an amount that depicts the relative amount of consideration we expect to receive in exchange for satisfying each performance obligation. Revenue is recognized when performance obligations are satisfied. Our contract payment terms are typically net 30 days. We assess collectability based on a number of factors including collection history and creditworthiness of the customer, and we may mitigate exposures to credit risk by requiring payments in advance. If we determine that collectability related to a contract is not probable, we may not record revenue until collectability becomes probable at a later date. Our revenues are recorded based on the transaction price excluding amounts collected on behalf of third parties. For example, indirect taxes which we collect and remit to governmental authorities are excluded from our revenues. Nature of Products and Services Our on-premises software licenses are sold through both perpetual and term-based license agreements. These licensing arrangements provide customers with the same product functionality and differ mainly in the duration over which the customer benefits from the software. We deliver our software licenses electronically. Electronic delivery occurs when we provide the customer with access to the software and license key via a secure portal. Revenue from on-premises software licenses is generally recognized upfront at the point in time when the software is made available to the customer. Our contracts with customers for on-premises software licenses include maintenance services and may also include training and/or professional services. Maintenance services agreements consist of fees for providing software updates on an if and when available basis and for providing technical support for software products for a specified term. We believe that our software updates and technical support each have the same pattern of transfer to the customer and are substantially the same. Therefore, we consider these updates and technical support to be a single distinct performance obligation. Revenues allocated to maintenance services are recognized ratably as the maintenance services are provided. Revenues related to training services are billed on a fixed fee basis and are recognized as the services are delivered. Payments received in advance of services performed are deferred and recognized when the related services are performed. Revenues related to professional services are billed on a time and materials basis and are recognized as the services are performed. We also provide cloud-based subscriptions, which allow customers to access our software during a contractual period without taking possession of the software. We recognize revenue related to these cloud-based subscriptions ratably over the life of the subscription agreement beginning when the customer first has access to the software. Revenues from our cloud-based subscriptions are included in license revenues. Judgments and Estimates Our contracts with customers often include promises to transfer multiple products and services. Determining whether products and services are considered distinct performance obligations that should be accounted for separately from one another sometimes requires judgment. Judgment is also required to determine standalone selling prices (“SSP”) for each distinct performance obligation. We typically have more than one SSP for each of our products and services based on customer stratification, which is based on the size of the customer, their geographic region and market segment. We use other comparable software license sales to determine SSPs for perpetual software licenses. For our cloud-based subscriptions and for maintenance services, training and professional services, SSPs are generally observable using standalone sales and/or renewals. Our on-premises term-based software licenses generally do not have directly observable inputs for determining SSP. Therefore, we determine SSP using other observable inputs including customer-buying patterns, renewal rates, cumulative spend comparisons and other industry data. We evaluate contracts with customers that include options to purchase additional goods or services to determine whether the options give rise to a separate performance obligation that is material. If we determine the options give rise to a separate performance obligation that is material, the revenue allocated to such options is not recognized until the option is exercised or the option expires. Our revenue recognition accounting policy for ASC 605 is included in our Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the SEC on February 26, 2018. We applied the revenue recognition accounting policy for ASC 605 to our disclosures in Note 7, which include amounts presented for 2018. There were no changes to the ASC 605 policy during the nine months ended September 30, 2018. Assets Recognized from the Costs to Obtain a Contract with a Customer We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain costs related to our sales incentive programs meet the requirements to be capitalized and deferred. Assets recorded are included in other current assets and other long-term assets. We amortize these deferred costs proportionate with related revenues over the benefit period, currently estimated to be four years. We consider the benefit period to exceed the initial contract term for certain costs because of anticipated renewals and because our sales commission rates for renewal contracts are not commensurate with sales commissions for initial contracts. Concentrations of Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, investments and accounts receivable. Our investment portfolio consists of investment-grade securities diversified among security types, industries and issuers. Our cash and cash equivalents and investments are held and managed by recognized financial institutions that follow our investment policy. Our policy limits the amount of credit exposure to any one security issue or issuer. We extend credit to customers based upon an evaluation of the customer's financial condition. As of September 30, 2018 and December 31, 2017, no individual customer accounted for 10% or more of total accounts receivable. For the three and nine months ended 2018 and 2017, no individual customer represented 10% or more of our total revenues. Recently Adopted Accounting Pronouncements We adopted the new revenue recognition accounting standard, ASC 606, effective January 1, 2018. The new revenue recognition standard changed the way we recognize revenue, including the identification of contractual performance obligations and the allocation of transaction price, to depict the transfer of promised goods or services to customers at the amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. We adopted the new revenue recognition standard on a modified retrospective basis and applied the new revenue recognition standard only to contracts that were not completed contracts prior to January 1, 2018. Upon adoption, we recorded an adjustment of $146.8 million to our accumulated deficit. The adjustment was offset by a $105.9 million reduction to deferred revenue, which was primarily related to on-premises term licenses, and the addition of a $40.9 million contract asset. The new revenue recognition standard materially impacts the timing of revenue recognition related to our on-premises term license agreements. Prior to our adoption of the new revenue recognition standard, we historically recognized revenue related to on-premises term license agreements ratably over the term of the licensing agreement. Under the new revenue recognition standard, revenue allocable to the license portion of the arrangement is recognized upon delivery of the license. Maintenance revenues related to on-premises term license agreements continue to be recognized ratably over the term of the licensing agreement. Under the new revenue recognition standard, we allocate total transaction price to performance obligations based on estimated standalone selling prices, which impacts the timing of revenue recognition depending on when each performance obligation is recognized. These impacts to the timing of revenue recognition also affect our deferred revenue balances. The new revenue recognition standard requires the capitalization of certain incremental costs of obtaining a contract, which impacts the periods in which we record our sales commissions expense. Prior to our adoption of the new revenue recognition standard, we recognized sales commissions expense as incurred. Under the new revenue recognition standard, we are required to recognize these expenses over the period of benefit associated with these costs. This results in a deferral of sales commissions expense each period and subsequent amortization of those costs over the estimated benefit period. Upon adoption of the new revenue recognition standard, we reduced our accumulated deficit by $25.5 million and recognized an offsetting asset for deferred sales commissions related to contracts that were not completed contracts prior to January 1, 2018. For further discussion regarding the impacts of adopting the new revenue recognition standard, see Note 7. In October 2016, the FASB issued ASU 2016-16 related to the accounting for income tax effects on intra-entity asset transfers of assets other than inventory. The new guidance requires reporting entities to recognize tax expense from the sale of assets when the transfer occurs, even though the pre-tax effects of the transaction are eliminated in consolidation. We adopted the new standard in the first quarter of 2018 on a modified retrospective basis. The adoption resulted in the recognition of a U.S. deferred tax asset, which was fully offset by a corresponding increase to the valuation allowance on our U.S. federal and state deferred income tax assets, and therefore did not have a material impact on our consolidated financial statements. Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02 related to lease accounting. The new guidance will require lessees to recognize right-of-use assets and lease liabilities on the balance sheet for operating leases that do not meet the definition of a short-term lease. ASU 2016-02 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2018. We will adopt the new lease accounting standard using the modified retrospective transition method and apply a cumulative-effect balance sheet adjustment at the beginning of the first quarter of 2019. Under the new standard we anticipate that our current real estate leases will continue to be classified as operating leases and a significant amount of our currently outstanding operating lease commitments will be recorded to the balance sheet as right-of-use assets with corresponding lease liabilities. We expect the adoption of the new lease accounting standard to have a material impact on our balance sheet on the date of adoption. Our evaluation of the new standard will extend into future periods and we will update our disclosures as we progress towards the required adoption date. In June 2016, the FASB issued ASU 2016-13, related to credit losses. The new guidance replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. ASU 2016-13 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements. |
Short-Term and Long-Term Investments |
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Short-term and Long-term Investments | Short-Term and Long-Term Investments The following tables represent our short-term and long-term investments in available-for-sale securities as of September 30, 2018 and December 31, 2017, based on remaining contractual years to maturity:
The following table presents the fair values and the gross unrealized losses related to our investments in available-for-sale securities, summarized by the length of time that the investments have been in a continuous unrealized loss position:
The unrealized losses on investments as of September 30, 2018 were primarily caused by increases in interest rates. None of the unrealized losses represent other than temporary impairments based on our evaluation of available evidence as of September 30, 2018. As of December 31, 2017, there were no investments that had been in a continuous net loss position for 12 months or greater. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements We categorize assets and liabilities recorded at fair value based upon the level of judgment associated with inputs used to measure their fair value. The levels of the fair value hierarchy are as follows:
Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. We value our investments using quoted prices for identical instruments in active markets when available. If we are unable to obtain quoted prices for identical instruments in active markets, we value our investments using quoted market prices for comparable instruments. To date, all of our investments can be valued using one of these two methodologies. The following tables present the fair value of our financial assets using the fair value hierarchy as of September 30, 2018 and December 31, 2017:
We did not have any investments in prime money market funds as of September 30, 2018 or December 31, 2017. We had no financial assets or liabilities measured using Level 3 inputs as of September 30, 2018 or December 31, 2017. |
Stockholders' Equity |
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Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Common Stock Our certificate of incorporation, as amended and restated, authorizes us to issue 75,000,000 shares of Class B common stock at $0.0001 par value per share, and 750,000,000 shares of Class A common stock at $0.0001 par value per share. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each holder of Class B common stock is entitled to ten votes per share and each holder of Class A common stock is entitled to one vote per share. Shares of Class B common stock may be converted into Class A common stock at any time at the option of the stockholder and are automatically converted upon sale or transfer to Class A common stock, subject to certain limited exceptions. At its discretion, the board of directors may declare dividends on shares of common stock, subject to the rights of our preferred stockholders, if any. Upon liquidation or dissolution, holders of common stock will receive distributions only after preferred stock preferences have been satisfied. Preferred Stock Our certificate of incorporation, as amended and restated, authorizes us to issue 10,000,000 shares of preferred stock at $0.0001 par value per share. Our board of directors has the authority to provide for the issuance of all the shares in one or more series. At its discretion, our board of directors may designate the voting rights and preferences of the preferred stock. As of September 30, 2018 and December 31, 2017, no shares of preferred stock were outstanding. Stock Repurchase Program On November 1, 2016, we announced that our board of directors approved a stock repurchase program, under which we were authorized to repurchase up to $200 million of our outstanding Class A common stock. On April 26, 2018, our board of directors authorized us to repurchase up to an additional $300 million of our outstanding Class A common stock under our previously announced stock repurchase program. The repurchase program has no expiration date and may be modified, suspended or discontinued at any time. Repurchases under the program may be made from time to time on the open market at prevailing market prices, in privately negotiated transactions, in transactions structured through investment banking institutions or a combination of the foregoing, in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. During the nine months ended September 30, 2018, we repurchased 961,468 shares of our outstanding Class A common stock at an average price of $93.63 per share for $90.0 million. During the nine months ended September 30, 2017, we repurchased 979,577 shares of our outstanding Class A common stock at an average price of $61.24 per share for $60.0 million. All repurchases were made in open market transactions using cash on hand, and all of the shares repurchased were retired. As of September 30, 2018, we were authorized to repurchase a remaining $310.0 million of our Class A common stock under our repurchase program. |
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Business Combinations | Business Combinations Empirical Systems, Inc. On June 7, 2018, we acquired all issued and outstanding stock of Empirical Systems, Inc., a privately-held Delaware corporation, for $11.0 million in cash. Empirical Systems, Inc. is a startup specializing in automated statistical analysis. As a result of this acquisition, we acquired all of the assets and assumed all of the liabilities of Empirical Systems, Inc., and we accounted for this transaction as a business combination. Pro forma results of operations for this acquisition have not been presented as the effects were not material to our financial results. The following table summarizes the purchase price allocation based on the estimated fair value of the net assets acquired:
The technology asset acquired in this business combination is being amortized on the straight-line method over a period of five years. Goodwill generated from this business combination is primarily attributable to expected synergies between the technology asset acquired and our key products. None of the goodwill recognized with this transaction is expected to be deductible for U.S. income tax purposes. Certain employees hired in conjunction with the acquisition of Empirical Systems, Inc. received restricted stock units ("RSUs") that are subject to service conditions as well as the completion of certain technology milestones. We account for these awards as a post-business combination expense. Additional information existing as of the acquisition date but unknown to us may become known at a later time, such as matters related to income taxes or other contingencies. In accordance with GAAP, if this occurs during the 12 month period subsequent to the acquisition date, we may update the amounts and allocations recorded as of the acquisition date, which are presented in the table above. Argo Technologies Corp. On August 1, 2017, we acquired all issued and outstanding stock of Argo Technologies Corp., a privately-held Delaware corporation doing business as ClearGraph ("ClearGraph"), for $24.1 million in cash. ClearGraph was a startup that enables smart data discovery and data analysis through natural language query technology. As a result of this acquisition, we acquired all of the assets and assumed all of the liabilities of ClearGraph, and we accounted for this transaction as a business combination. Pro forma results of operations for this acquisition were not presented as the effects were not material to our financial results. The following table summarizes the purchase price allocation based on the estimated fair value of the net assets acquired:
The technology asset acquired in this business combination is being amortized on the straight-line method over a period of five years. Goodwill generated from this business combination was primarily attributable to expected synergies between the technology asset acquired and our key products. None of the goodwill recognized with this transaction is expected to be deductible for U.S. income tax purposes. |
Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue We adopted the new revenue recognition accounting standard, ASC 606, effective January 1, 2018 on a modified retrospective basis and applied the new standard only to contracts that were not completed contracts prior to January 1, 2018. See Note 2 for a description of our ASC 606 revenue recognition accounting policy. Financial results for reporting periods during 2018 are presented in compliance with the new revenue recognition standard. Historical financial results for reporting periods prior to 2018 have not been retroactively restated and are presented in conformity with amounts previously disclosed under ASC 605. This note includes additional information regarding the impacts from the adoption of the new revenue recognition standard on our financial results for the three and nine months ended September 30, 2018. This includes the presentation of financial results during 2018 under ASC 605 for comparison to the prior year. Our revenue recognition accounting policy for ASC 605 is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the SEC on February 26, 2018. There were no changes to our ASC 605 policy during the nine months ended September 30, 2018. Condensed Consolidated Balance Sheets (Unaudited) - Reconciliation of the Impacts from the Adoption of the New Revenue Recognition Standard The following schedule summarizes the impacts from the adoption of the new revenue recognition standard on our condensed consolidated balance sheets as of September 30, 2018:
Condensed Consolidated Statements of Operations (Unaudited) - Reconciliation of the Impacts from the Adoption of the New Revenue Recognition Standard The following schedules summarize the impacts from the adoption of the new revenue recognition standard on our condensed consolidated statement of operations for the three and nine months ended September 30, 2018:
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - Reconciliation of the Impacts from the Adoption of the New Revenue Recognition Standard The following schedules summarize the impacts from the adoption of the new revenue recognition standard on our condensed consolidated statement of comprehensive loss for the three and nine months ended September 30, 2018:
Condensed Consolidated Statements of Cash Flows (Unaudited) - Reconciliation of the Impacts from the Adoption of the New Revenue Recognition Standard The following schedule summarizes the impacts from the adoption of the new revenue recognition standard on our condensed consolidated statement of cash flows for the nine months ended September 30, 2018:
Disclosures Related to our Contracts with Customers Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to our contracts with customers. We record assets for amounts related to performance obligations that are satisfied but not yet billed and/or collected. These assets are recorded as contract assets rather than receivables when receipt of the consideration is conditional on something other than the passage of time. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations. These liabilities are classified as current and non-current deferred revenue. Contract Assets and Contract Liabilities A summary of the activity impacting our contract assets during the nine months ended September 30, 2018 is presented below:
As of September 30, 2018, our contract assets are expected to be transferred to receivables within the next 12 months and therefore are included in other current assets. There were no impairments of contract assets during the nine months ended September 30, 2018. A summary of the activity impacting our deferred revenue balances during the nine months ended September 30, 2018 is presented below:
Assets Recognized from the Costs to Obtain our Contracts with Customers We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We amortize these deferred costs proportionate with related revenues over the benefit period, currently estimated to be four years. A summary of the activity impacting our deferred contract costs during the nine months ended September 30, 2018 is presented below:
As of September 30, 2018, $13.6 million of our deferred contract costs are expected to be amortized within the next 12 months and therefore are included in other current assets. The remaining amount of our deferred contract costs are included in other long-term assets. There were no impairments of assets related to deferred contract costs during the nine months ended September 30, 2018. There were no assets recognized related to the costs to fulfill contracts during the nine months ended September 30, 2018 as these costs were not material. Remaining Performance Obligations Our contracts with customers include amounts allocated to performance obligations that will be satisfied at a later date. These amounts include additional performance obligations that are not yet recorded in the consolidated balance sheets. As of September 30, 2018, amounts allocated to these additional contractual obligations are $191.9 million, of which we expect to recognize $153.6 million as revenue over the next 24 months with the remaining amount thereafter. |
Stock-Based Compensation |
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Stock-Based Compensation | Stock-Based Compensation Our 2004 Equity Incentive Plan (the "2004 Plan") authorized the granting of options to purchase shares of our Class B common stock, RSUs and other stock-based awards to our employees, consultants, officers and directors. Our 2013 Equity Incentive Plan, as amended, (the "2013 Plan" and, together with the 2004 Plan, the "Plans"), which is the successor to our 2004 Plan, authorizes the granting of options to purchase shares of our Class A common stock, RSUs and other stock-based awards to our employees, consultants, officers and directors. Options granted under the Plans may be incentive or nonstatutory stock options. Incentive stock options may only be granted to employees. The term of each option is stated in the award agreement but shall be no more than ten years from the date of grant. The board of directors determines the period over which options and RSUs become vested. Currently, the vesting period for our options and RSUs is typically four years. Our 2013 Employee Stock Purchase Plan ("2013 ESPP") allows eligible employees to purchase shares of our Class A common stock, at a discount, through payroll deductions of up to 15% of their eligible compensation, subject to plan limitations. The 2013 ESPP currently includes purchase periods approximately six months in duration starting on the first trading date on or after June 1st and December 1st of each year. Participants are able to purchase shares of our common stock at 85% of the lower of its fair market value on (i) the first day of the purchase period or on (ii) the purchase date, which is the last day of the purchase period. A summary of the option activity during the nine months ended September 30, 2018 follows:
The intrinsic value is the difference between the fair value of our Class A common stock as of September 30, 2018 and the exercise price of each of the respective stock options. A summary of the RSU activity, including RSU awards subject to technology milestones, during the nine months ended September 30, 2018 follows:
An RSU award entitles the holder to receive shares of our Class A common stock as the award vests, which is generally based on length of service. Our non-vested RSUs do not have nonforfeitable rights to dividends or dividend equivalents. Stock-based compensation expense is amortized using the straight-line method over the requisite service period. We account for forfeitures as they occur. For RSU awards subject to technology milestones, we recognize compensation cost over the estimated requisite service period if we believe it is probable that the associated technology milestone will be met. If our assessment of the probability of the technology milestone being met changes, we recognize the impact of the change in estimate in the period of the change. As of September 30, 2018, total unrecognized compensation expense related to stock options and non-vested RSUs was $525.4 million, which is expected to be recognized over a weighted average period of 2.9 years. The summary of shares available for issuance of equity-based awards (including stock options, RSUs and shares issuable under our 2013 ESPP) during the nine months ended September 30, 2018 follows:
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Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The income tax provision for interim periods is generally determined using an estimate of our annual effective tax rate, excluding jurisdictions for which no benefit can be recognized due to valuation allowance, and adjusted for discrete items, if any, in the relevant period. The impact of adjustments to our effective tax rate for discrete items and non-deductible expenses is greater in periods close to break-even. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment. Our effective tax rate is impacted by and differs from the federal statutory rate primarily due to the full valuation allowance on our U.S. federal and state deferred tax assets, the effect of income or losses incurred in foreign jurisdictions where the statutory tax rate differs from the federal statutory rate and non-deductible stock-based compensation. We recognized income tax expense of $10.5 million and $6.0 million under ASC 606 for the three and nine months ended September 30, 2018, respectively, compared to income tax expense of $1.2 million and $5.2 million for three and nine months ended September 30, 2017, respectively. Our effective tax rate was (96.7)% and (8.1)% for the three and nine months ended September 30, 2018, respectively, compared to (2.6)% and (3.8)% for the three and nine months ended September 30, 2017, respectively. The difference in the effective tax rates for the three month periods is primarily attributable to the cumulative adjustment recorded during the three months ended September 30, 2018 for the current estimated annual effective tax rate. The difference in the effective tax rates for the nine month periods is primarily attributable to additional income as a result of our adoption of ASC 606 partially offset by the recognition of excess tax benefits of stock-based compensation during the period. We recognized income tax expense of $1.6 million and $5.4 million under ASC 605 for the three and nine months ended September 30, 2018, respectively, compared to income tax expense of $1.2 million and $5.2 million for the three and nine months ended September 30, 2017, respectively. Our effective tax rate under ASC 605 was (2.4)% and (2.7)% for the three and nine months ended September 30, 2018, respectively, compared to (2.6)% and (3.8)% for the three and nine months ended September 30, 2017, respectively. The difference in the effective tax rates was primarily attributable to an increase in taxes in foreign jurisdictions, offset by an income tax benefit from the recognition of excess tax benefits of stock-based compensation during the three and nine months ended September 30, 2018. The difference in effective tax rates between ASC 606 and ASC 605 is primarily attributable to the differences in the amount of revenue recognized under ASC 606 compared to ASC 605. As a result of adopting ASC 606 in the first quarter of 2018, we recognized an immaterial amount of net deferred tax liabilities, which reduced our opening adjustment to stockholders' equity. During the first quarter of 2018, we also adopted ASU 2016-16 and recognized a U.S. deferred tax asset, which was fully offset by a corresponding increase to the valuation allowance on our U.S. federal and state deferred income tax assets. We periodically evaluate the realizability of our net deferred tax assets based on all available evidence, both positive and negative such as historic results, future reversals of existing deferred tax liabilities, projected future taxable income, as well as prudent and feasible tax-planning strategies. Generally, more weight is given to objectively verifiable evidence, such as the cumulative loss in recent years. As of September 30, 2018, we maintain a full valuation allowance on our U.S. federal and state deferred tax assets. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "Act") was signed with an effective date of January 1, 2018. The Act, which significantly revised U.S. tax law, included many important changes. On the same day, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to assist in addressing uncertainty in applying GAAP to the accounting and reporting of tax reform changes related to the Act. We considered these changes, including all available guidance, in determining our income tax provision for the period ending December 31, 2017. As of September 30, 2018, we have not yet completed our analysis of historical foreign earnings as well as potential correlative adjustments. As we complete the analysis, any subsequent adjustment to these amounts may be recorded to current income tax expense in that period. We expect to complete our analysis within the measurement period in accordance with SAB 118. No adjustments to the provisional amount have been made. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Operating Lease Commitments and Expected Sublease Receipts As of September 30, 2018, our principal obligations consisted of obligations outstanding under non-cancellable operating leases that expire at various dates through 2029. The following table represents our non-cancellable minimum lease payments, net of future expected sublease payments to be received under non-cancellable subleases, remaining as of September 30, 2018:
Contractual Commitments Our contractual commitments are associated with agreements that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions and the approximate timing of the transaction. Obligations under contracts that we can cancel without a significant penalty are not included. The following table represents our contractual commitments as of September 30, 2018:
Legal Proceedings We are subject to certain routine legal proceedings, as well as demands and claims that arise in the normal course of our business. We make a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. We are not aware of any pending legal proceedings that we believe, individually or in the aggregate, would be expected to have a material adverse effect on our business, operating results, or financial condition. We may, in the future, be party to litigation arising in the ordinary course of business, including claims that we allegedly infringe upon third party intellectual property rights. Such claims, even if not meritorious, could result in the expenditure of significant financial and management resources. |
Segments and Information about Revenues by Geographic Region |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments and Information about Revenues by Geographic Area | Segments and Information about Revenues by Geographic Area The following tables present our revenues by geographic region of end users who purchased products or services for the periods presented below:
For the three and nine months ended September 30, 2018 and 2017, no individual country other than the United States represented 10% or more of our total revenues. |
Net Loss Per Share |
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Net Loss Per Share | Net Loss Per Share The following tables present the computation of basic and diluted net loss per share for the three and nine months ended September 30, 2018 and 2017 and include additional information regarding the impacts from the adoption of the new revenue recognition standard for the three and nine months ended September 30, 2018:
The following shares were excluded from the computation of diluted net loss per share for the periods presented as their effect would have been antidilutive:
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial information has been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet data as of December 31, 2017 was derived from audited financial statements but does not include all disclosures required by GAAP. The condensed consolidated financial information should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 26, 2018. In the opinion of management, the accompanying unaudited condensed consolidated financial information includes all normal recurring adjustments necessary for a fair statement of the Company's financial position, results of operations, comprehensive loss and cash flows for the interim periods, but is not necessarily indicative of the results that may be expected for the year ending December 31, 2018. All intercompany accounts and transactions have been eliminated in consolidation. We adopted the new revenue recognition accounting standard, codified as Accounting Standards Codification (“ASC”) 606, effective January 1, 2018 on a modified retrospective basis (see Recently Adopted Accounting Pronouncements). Financial results for reporting periods during 2018 are presented in compliance with the new revenue recognition standard. Historical financial results for reporting periods prior to 2018 are presented in conformity with amounts previously disclosed under the prior revenue recognition standard, ASC 605. These financial statements include additional information regarding the impacts from the adoption of the new revenue recognition standard on our financial results for the three and nine months ended September 30, 2018. This includes the presentation of financial results during 2018 under ASC 605 for comparison to the prior year. |
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates include but are not limited to: the collectability of our receivables; the useful lives of our property and equipment and other lease-related assets, liabilities and costs; the benefit period for deferred commissions; the valuation of investments and the determination of other-than-temporary impairments; and the reported amounts of accrued liabilities. For revenue, we make estimates and assumptions related to the standalone selling prices of our products and services and the nature and timing of the delivery of performance obligations from our contracts with customers. We also use estimates in stock-based compensation, income taxes and business combinations. Actual results could differ from those estimates. |
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Risk And Uncertainties | Risks and Uncertainties Inherent in our business are various risks and uncertainties, including our limited history of operating our business at its current scale and development of advanced technologies in a rapidly changing industry. These risks include our ability to manage our growth, to attract new customers, to expand sales to existing customers and to attract, integrate and retain qualified personnel, as well as other risks and uncertainties. In the event that we do not successfully implement our business plan, certain assets may not be recoverable, certain liabilities may not be paid and investments in our capital stock may not be recoverable. Our success depends upon the acceptance of our technology, development of sales and distribution channels and our ability to generate significant revenues from the sale of our technology. |
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Segments | Segments We follow the authoritative literature that establishes annual and interim reporting standards for an enterprise's operating segments and related disclosures about its products and services, geographic regions and major customers. We operate our business as one operating segment. Our chief operating decision makers are our Chief Executive Officer and Chief Financial Officer, who review financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance and allocating resources. |
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Revenue Recognition | Revenue Recognition - ASC 606 We generate revenues primarily in the form of software license fees and related maintenance and services fees. Software license revenues include fees from the sales of perpetual, term and subscription licenses. Maintenance and services revenues primarily consist of fees for maintenance services (including support and unspecified upgrades and enhancements if and when they are available), training and professional services. We recognize revenues related to contracts with customers that meet the following criteria:
We identify performance obligations in our contracts with customers, which may include software licenses and/or related maintenance and services. We determine the transaction price based on the amount we expect to be entitled to in exchange for transferring the promised goods or services to the customer. We allocate the transaction price in the contract to each distinct performance obligation in an amount that depicts the relative amount of consideration we expect to receive in exchange for satisfying each performance obligation. Revenue is recognized when performance obligations are satisfied. Our contract payment terms are typically net 30 days. We assess collectability based on a number of factors including collection history and creditworthiness of the customer, and we may mitigate exposures to credit risk by requiring payments in advance. If we determine that collectability related to a contract is not probable, we may not record revenue until collectability becomes probable at a later date. Our revenues are recorded based on the transaction price excluding amounts collected on behalf of third parties. For example, indirect taxes which we collect and remit to governmental authorities are excluded from our revenues. Nature of Products and Services Our on-premises software licenses are sold through both perpetual and term-based license agreements. These licensing arrangements provide customers with the same product functionality and differ mainly in the duration over which the customer benefits from the software. We deliver our software licenses electronically. Electronic delivery occurs when we provide the customer with access to the software and license key via a secure portal. Revenue from on-premises software licenses is generally recognized upfront at the point in time when the software is made available to the customer. Our contracts with customers for on-premises software licenses include maintenance services and may also include training and/or professional services. Maintenance services agreements consist of fees for providing software updates on an if and when available basis and for providing technical support for software products for a specified term. We believe that our software updates and technical support each have the same pattern of transfer to the customer and are substantially the same. Therefore, we consider these updates and technical support to be a single distinct performance obligation. Revenues allocated to maintenance services are recognized ratably as the maintenance services are provided. Revenues related to training services are billed on a fixed fee basis and are recognized as the services are delivered. Payments received in advance of services performed are deferred and recognized when the related services are performed. Revenues related to professional services are billed on a time and materials basis and are recognized as the services are performed. We also provide cloud-based subscriptions, which allow customers to access our software during a contractual period without taking possession of the software. We recognize revenue related to these cloud-based subscriptions ratably over the life of the subscription agreement beginning when the customer first has access to the software. Revenues from our cloud-based subscriptions are included in license revenues. Judgments and Estimates Our contracts with customers often include promises to transfer multiple products and services. Determining whether products and services are considered distinct performance obligations that should be accounted for separately from one another sometimes requires judgment. Judgment is also required to determine standalone selling prices (“SSP”) for each distinct performance obligation. We typically have more than one SSP for each of our products and services based on customer stratification, which is based on the size of the customer, their geographic region and market segment. We use other comparable software license sales to determine SSPs for perpetual software licenses. For our cloud-based subscriptions and for maintenance services, training and professional services, SSPs are generally observable using standalone sales and/or renewals. Our on-premises term-based software licenses generally do not have directly observable inputs for determining SSP. Therefore, we determine SSP using other observable inputs including customer-buying patterns, renewal rates, cumulative spend comparisons and other industry data. We evaluate contracts with customers that include options to purchase additional goods or services to determine whether the options give rise to a separate performance obligation that is material. If we determine the options give rise to a separate performance obligation that is material, the revenue allocated to such options is not recognized until the option is exercised or the option expires. Our revenue recognition accounting policy for ASC 605 is included in our Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the SEC on February 26, 2018. We applied the revenue recognition accounting policy for ASC 605 to our disclosures in Note 7, which include amounts presented for 2018. There were no changes to the ASC 605 policy during the nine months ended September 30, 2018. |
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Deferred Commissions | Assets Recognized from the Costs to Obtain a Contract with a Customer We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain costs related to our sales incentive programs meet the requirements to be capitalized and deferred. Assets recorded are included in other current assets and other long-term assets. We amortize these deferred costs proportionate with related revenues over the benefit period, currently estimated to be four years. We consider the benefit period to exceed the initial contract term for certain costs because of anticipated renewals and because our sales commission rates for renewal contracts are not commensurate with sales commissions for initial contracts. |
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Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, investments and accounts receivable. Our investment portfolio consists of investment-grade securities diversified among security types, industries and issuers. Our cash and cash equivalents and investments are held and managed by recognized financial institutions that follow our investment policy. Our policy limits the amount of credit exposure to any one security issue or issuer. We extend credit to customers based upon an evaluation of the customer's financial condition. As of September 30, 2018 and December 31, 2017, no individual customer accounted for 10% or more of total accounts receivable. For the three and nine months ended 2018 and 2017, no individual customer represented 10% or more of our total revenues. |
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Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements We adopted the new revenue recognition accounting standard, ASC 606, effective January 1, 2018. The new revenue recognition standard changed the way we recognize revenue, including the identification of contractual performance obligations and the allocation of transaction price, to depict the transfer of promised goods or services to customers at the amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. We adopted the new revenue recognition standard on a modified retrospective basis and applied the new revenue recognition standard only to contracts that were not completed contracts prior to January 1, 2018. Upon adoption, we recorded an adjustment of $146.8 million to our accumulated deficit. The adjustment was offset by a $105.9 million reduction to deferred revenue, which was primarily related to on-premises term licenses, and the addition of a $40.9 million contract asset. The new revenue recognition standard materially impacts the timing of revenue recognition related to our on-premises term license agreements. Prior to our adoption of the new revenue recognition standard, we historically recognized revenue related to on-premises term license agreements ratably over the term of the licensing agreement. Under the new revenue recognition standard, revenue allocable to the license portion of the arrangement is recognized upon delivery of the license. Maintenance revenues related to on-premises term license agreements continue to be recognized ratably over the term of the licensing agreement. Under the new revenue recognition standard, we allocate total transaction price to performance obligations based on estimated standalone selling prices, which impacts the timing of revenue recognition depending on when each performance obligation is recognized. These impacts to the timing of revenue recognition also affect our deferred revenue balances. The new revenue recognition standard requires the capitalization of certain incremental costs of obtaining a contract, which impacts the periods in which we record our sales commissions expense. Prior to our adoption of the new revenue recognition standard, we recognized sales commissions expense as incurred. Under the new revenue recognition standard, we are required to recognize these expenses over the period of benefit associated with these costs. This results in a deferral of sales commissions expense each period and subsequent amortization of those costs over the estimated benefit period. Upon adoption of the new revenue recognition standard, we reduced our accumulated deficit by $25.5 million and recognized an offsetting asset for deferred sales commissions related to contracts that were not completed contracts prior to January 1, 2018. For further discussion regarding the impacts of adopting the new revenue recognition standard, see Note 7. In October 2016, the FASB issued ASU 2016-16 related to the accounting for income tax effects on intra-entity asset transfers of assets other than inventory. The new guidance requires reporting entities to recognize tax expense from the sale of assets when the transfer occurs, even though the pre-tax effects of the transaction are eliminated in consolidation. We adopted the new standard in the first quarter of 2018 on a modified retrospective basis. The adoption resulted in the recognition of a U.S. deferred tax asset, which was fully offset by a corresponding increase to the valuation allowance on our U.S. federal and state deferred income tax assets, and therefore did not have a material impact on our consolidated financial statements. Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02 related to lease accounting. The new guidance will require lessees to recognize right-of-use assets and lease liabilities on the balance sheet for operating leases that do not meet the definition of a short-term lease. ASU 2016-02 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2018. We will adopt the new lease accounting standard using the modified retrospective transition method and apply a cumulative-effect balance sheet adjustment at the beginning of the first quarter of 2019. Under the new standard we anticipate that our current real estate leases will continue to be classified as operating leases and a significant amount of our currently outstanding operating lease commitments will be recorded to the balance sheet as right-of-use assets with corresponding lease liabilities. We expect the adoption of the new lease accounting standard to have a material impact on our balance sheet on the date of adoption. Our evaluation of the new standard will extend into future periods and we will update our disclosures as we progress towards the required adoption date. In June 2016, the FASB issued ASU 2016-13, related to credit losses. The new guidance replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. ASU 2016-13 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements. |
Short-Term and Long-Term Investments (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term and Long-term Investments | The following tables represent our short-term and long-term investments in available-for-sale securities as of September 30, 2018 and December 31, 2017, based on remaining contractual years to maturity:
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Investments, Continuous Unrealized Loss Position, Fair Value | The following table presents the fair values and the gross unrealized losses related to our investments in available-for-sale securities, summarized by the length of time that the investments have been in a continuous unrealized loss position:
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | The following tables present the fair value of our financial assets using the fair value hierarchy as of September 30, 2018 and December 31, 2017:
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Business Combination (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 |
Sep. 30, 2017 |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase Price Allocation | The following table summarizes the purchase price allocation based on the estimated fair value of the net assets acquired:
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The following table summarizes the purchase price allocation based on the estimated fair value of the net assets acquired:
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Revenue (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following schedule summarizes the impacts from the adoption of the new revenue recognition standard on our condensed consolidated balance sheets as of September 30, 2018:
Condensed Consolidated Statements of Operations (Unaudited) - Reconciliation of the Impacts from the Adoption of the New Revenue Recognition Standard The following schedules summarize the impacts from the adoption of the new revenue recognition standard on our condensed consolidated statement of operations for the three and nine months ended September 30, 2018:
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - Reconciliation of the Impacts from the Adoption of the New Revenue Recognition Standard The following schedules summarize the impacts from the adoption of the new revenue recognition standard on our condensed consolidated statement of comprehensive loss for the three and nine months ended September 30, 2018:
Condensed Consolidated Statements of Cash Flows (Unaudited) - Reconciliation of the Impacts from the Adoption of the New Revenue Recognition Standard The following schedule summarizes the impacts from the adoption of the new revenue recognition standard on our condensed consolidated statement of cash flows for the nine months ended September 30, 2018:
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Contract with Customer, Asset and Liability | A summary of the activity impacting our contract assets during the nine months ended September 30, 2018 is presented below:
As of September 30, 2018, our contract assets are expected to be transferred to receivables within the next 12 months and therefore are included in other current assets. There were no impairments of contract assets during the nine months ended September 30, 2018. A summary of the activity impacting our deferred revenue balances during the nine months ended September 30, 2018 is presented below:
Assets Recognized from the Costs to Obtain our Contracts with Customers We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We amortize these deferred costs proportionate with related revenues over the benefit period, currently estimated to be four years. A summary of the activity impacting our deferred contract costs during the nine months ended September 30, 2018 is presented below:
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Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Option Activity | A summary of the option activity during the nine months ended September 30, 2018 follows:
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Summary of RSU Activity | A summary of the RSU activity, including RSU awards subject to technology milestones, during the nine months ended September 30, 2018 follows:
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Summary of Shares Available for Grant | The summary of shares available for issuance of equity-based awards (including stock options, RSUs and shares issuable under our 2013 ESPP) during the nine months ended September 30, 2018 follows:
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Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Minimum Lease Payments for Operating Leases, Net of Expected Sublease Receipts | The following table represents our non-cancellable minimum lease payments, net of future expected sublease payments to be received under non-cancellable subleases, remaining as of September 30, 2018:
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Contractual Obligation, Fiscal Year Maturity Schedule | The following table represents our contractual commitments as of September 30, 2018:
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Segments and Information about Revenues by Geographic Region (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Revenue by Geographic Area | The following tables present our revenues by geographic region of end users who purchased products or services for the periods presented below:
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Net Income (Loss) Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Loss Per Share, Basic and Diluted | The following tables present the computation of basic and diluted net loss per share for the three and nine months ended September 30, 2018 and 2017 and include additional information regarding the impacts from the adoption of the new revenue recognition standard for the three and nine months ended September 30, 2018:
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Schedule of Antidilutive Securities Excluded from Computation of Net Loss Per Share | The following shares were excluded from the computation of diluted net loss per share for the periods presented as their effect would have been antidilutive:
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Description of Business Narrative (Details) |
Sep. 30, 2018
product
|
---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of key products | 5 |
Business Combination (Details) - USD ($) $ in Thousands |
Jun. 07, 2018 |
Aug. 01, 2017 |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Business Acquisition | ||||
Technology asset amortization period | 5 years | 5 years | ||
Goodwill | $ 42,530 | $ 35,083 | ||
Empirical Systems | ||||
Business Acquisition | ||||
Payments to Acquire Businesses, Gross | $ 11,000 | |||
Cash | 53 | |||
Technology asset | 3,500 | |||
Goodwill | 7,447 | |||
Net assets acquired | $ 11,000 | |||
ClearGraph | ||||
Business Acquisition | ||||
Payments to Acquire Businesses, Gross | $ 24,100 | |||
Cash | 161 | |||
Technology asset | 5,000 | |||
Goodwill | 19,552 | |||
Other liabilities, net | (586) | |||
Net assets acquired | $ 24,127 |
Revenue (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Revenue from Contract with Customer [Abstract] | |
Threshold for Asset Recognition From Costs of Obtaining a Contract | 1 year |
Amortization period, deferred commissions | 4 years |
Deferred Contract Costs, Current | $ 13.6 |
Revenue (Income Statement) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
||||
Revenue, Initial Application Period Cumulative Effect Transition | |||||||
License | $ 138,127 | $ 99,424 | $ 384,768 | $ 299,964 | |||
Maintenance and services | 152,453 | 115,493 | 434,308 | 327,739 | |||
Total revenues | 290,580 | 214,917 | 819,076 | 627,703 | |||
License | 5,230 | 3,265 | 13,810 | 9,474 | |||
Maintenance and services | 29,549 | 26,664 | 88,619 | 73,775 | |||
Total cost of revenues | [1] | 34,779 | 29,929 | 102,429 | 83,249 | ||
Gross profit | 255,801 | 184,988 | 716,647 | 544,454 | |||
Sales and marketing | [1] | 142,129 | 123,842 | 424,685 | 366,020 | ||
Research and development | [1] | 97,939 | 84,494 | 285,477 | 249,863 | ||
General and administrative | [1] | 30,959 | 25,697 | 93,055 | 76,017 | ||
Total operating expenses | 271,027 | 234,033 | 803,217 | 691,900 | |||
Operating loss | (15,226) | (49,045) | (86,570) | (147,446) | |||
Other income, net | 4,381 | 3,677 | 12,709 | 8,931 | |||
Loss before income tax expense | (10,845) | (45,368) | (73,861) | (138,515) | |||
Income tax expense | 10,492 | 1,185 | 6,014 | 5,207 | |||
Net loss | (21,337) | $ (46,553) | (79,875) | $ (143,722) | |||
Impacts from Adoption | Accounting Standards Update 2014-09 | |||||||
Revenue, Initial Application Period Cumulative Effect Transition | |||||||
License | (20,095) | (38,489) | |||||
Maintenance and services | (30,894) | (73,386) | |||||
Total revenues | (50,989) | (111,875) | |||||
License | (121) | (264) | |||||
Maintenance and services | 148 | 315 | |||||
Total cost of revenues | 27 | 51 | |||||
Gross profit | (51,016) | (111,926) | |||||
Sales and marketing | 7,828 | 18,787 | |||||
Research and development | 0 | 0 | |||||
General and administrative | 0 | 0 | |||||
Total operating expenses | 7,828 | 18,787 | |||||
Operating loss | (58,844) | (130,713) | |||||
Other income, net | 32 | 112 | |||||
Loss before income tax expense | (58,812) | (130,601) | |||||
Income tax expense | (8,852) | (586) | |||||
Net loss | (49,960) | (130,015) | |||||
Without Adoption (ASC 605) | |||||||
Revenue, Initial Application Period Cumulative Effect Transition | |||||||
License | 118,032 | 346,279 | |||||
Maintenance and services | 121,559 | 360,922 | |||||
Total revenues | 239,591 | 707,201 | |||||
License | 5,109 | 13,546 | |||||
Maintenance and services | 29,697 | 88,934 | |||||
Total cost of revenues | 34,806 | 102,480 | |||||
Gross profit | 204,785 | 604,721 | |||||
Sales and marketing | 149,957 | 443,472 | |||||
Research and development | 97,939 | 285,477 | |||||
General and administrative | 30,959 | 93,055 | |||||
Total operating expenses | 278,855 | 822,004 | |||||
Operating loss | (74,070) | (217,283) | |||||
Other income, net | 4,413 | 12,821 | |||||
Loss before income tax expense | (69,657) | (204,462) | |||||
Income tax expense | 1,640 | 5,428 | |||||
Net loss | $ (71,297) | $ (209,890) | |||||
|
Revenue (Contract Assets) (Details) - Contract Assets - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Jan. 01, 2018 |
|
Contract Asset Rollforward | ||
Balances at December 31, 2017 | $ 0 | |
Adoption of ASC 606 | $ 40,854 | |
Contract assets transferred to receivables | (23,244) | |
Additions to contract assets | 72,233 | |
Balances at September 30, 2018 | $ 89,843 |
Revenue (Deferred Revenue) (Details) - Deferred Revenue - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Jan. 01, 2018 |
|
Deferred Revenue Rollforward | ||
Balances at December 31, 2017 | $ 447,484 | |
Adoption of ASC 606 | $ (105,933) | |
Deferred revenue recognized | (286,580) | |
Additional amounts deferred | 289,067 | |
Balances at September 30, 2018 | $ 344,038 |
Revenue (Deferred Contract Costs) (Details) - Deferred Commissions - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
|
Deferred Contract Costs | |||
Capitalized Contract Cost, Net | $ 43,570 | $ 0 | |
Adoption of ASC 606 | $ 25,489 | ||
Additional contract costs deferred | 25,821 | ||
Amortization of deferred contract costs | $ (7,740) |
Revenue (Performance Obligations) (Details) $ in Millions |
Sep. 30, 2018
USD ($)
|
---|---|
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Revenue, Remaining Performance Obligation | $ 191.9 |
Recognized Over Next 24 Months | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Revenue, Remaining Performance Obligation | $ 153.6 |
Stock-Based Compensation (Details - Narrative) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Option expiration period (in years) | 10 years |
Vesting period (in years) | 4 years |
Share-based Compensation Arrangement by Share-based Payment Award | |
Unrecognized compensation expense | $ 525.4 |
Recognition period (in years) | 2 years 10 months 24 days |
2013 ESPP | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Maximum Payroll Deduction, Percent | 15.00% |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Purchase Period | 6 months |
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent | 85.00% |
Stock Based Compensation (Details - RSUs) - RSUs |
9 Months Ended |
---|---|
Sep. 30, 2018
$ / shares
shares
| |
Number of Shares Underlying Outstanding RSUs | |
RSU Shares Outstanding, Beginning of Period | shares | 7,178,015 |
RSUs granted, Shares | shares | 3,909,099 |
RSUs vested, Shares | shares | (2,755,315) |
RSUs forfeited, Shares | shares | (579,741) |
RSU Shares Outstanding, End of Period | shares | 7,752,058 |
Weighted Average Grant-Date Fair Value per RSU | |
Weighted Average Fair Value, Beginning of Period, USD per Share | $ / shares | $ 62.79 |
Weighted Average Fair Value, RSUs Granted, USD per Share | $ / shares | 89.22 |
Weighted Average Fair Value, RSUs Vested, USD per Share | $ / shares | 67.20 |
Weighted Average Fair Value, RSUs Forfeited, USD per Share | $ / shares | 67.27 |
Weighted Average Fair Value, End of Period, USD per Share | $ / shares | $ 74.22 |
Stock-Based Compensation (Details - Shares Available) |
9 Months Ended |
---|---|
Sep. 30, 2018
shares
| |
2013 Plan | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Awards, Outstanding [Roll Forward] | |
Equity Based Awards, Beginning of Period, Shares | 7,207,291 |
Authorized, Shares | 4,023,117 |
Granted, Shares | (3,909,099) |
Forfeited, Shares | 579,741 |
Equity Based Awards, End of Period, Shares | 7,901,050 |
2013 ESPP | Class A common stock | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Awards, Outstanding [Roll Forward] | |
Equity Based Awards, Beginning of Period, Shares | 3,666,392 |
Authorized, Shares | 804,623 |
Granted, Shares | (291,447) |
Forfeited, Shares | 0 |
Equity Based Awards, End of Period, Shares | 4,179,568 |
Income Taxes - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income Tax Expense | ||||
Effective tax rate | (96.70%) | (2.60%) | (8.10%) | (3.80%) |
Income tax expense | $ 10,492 | $ 1,185 | $ 6,014 | $ 5,207 |
Without Adoption (ASC 605) | ||||
Income Tax Expense | ||||
Effective tax rate | (2.40%) | (2.70%) | ||
Income tax expense | $ 1,640 | $ 5,428 |
Commitments and Contingencies (Details) $ in Thousands |
Sep. 30, 2018
USD ($)
|
---|---|
Operating Lease Commitments | |
Remainder of 2018 | $ 11,796 |
2019 | 41,849 |
2020 | 43,051 |
2021 | 43,600 |
2022 | 42,987 |
Thereafter | 175,493 |
Total | 358,776 |
Expected Sublease Receipts | |
Remainder of 2018 | (1,972) |
2019 | (10,606) |
2020 | (7,113) |
2021 | (1,180) |
2022 | (597) |
Thereafter | (121) |
Total | (21,589) |
Net | |
Net, Remainder of 2018 | 9,824 |
Net, 2019 | 31,243 |
Net, 2020 | 35,938 |
Net, 2021 | 42,420 |
Net, 2022 | 42,390 |
Net, Thereafter | 175,372 |
Net, Total | 337,187 |
Contractual commitments | |
Total | 51,053 |
Remainder of 2018 | 10,543 |
2019 | 23,146 |
2020 | 10,092 |
2021 | 7,090 |
2022 | 168 |
Thereafter | $ 14 |
Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Net loss per share - basic and diluted | ||||
Net loss | $ (21,337) | $ (46,553) | $ (79,875) | $ (143,722) |
Weighted average shares outstanding used to compute basic and diluted net loss per share | 83,264 | 79,440 | 82,191 | 78,463 |
Net loss per share - basic and diluted (in usd per share) | $ (0.26) | $ (0.59) | $ (0.97) | $ (1.83) |
Antidilutive shares excluded from computation of diluted net loss | 9,887 | 11,083 | 9,887 | 11,083 |
Without Adoption (ASC 605) | ||||
Net loss per share - basic and diluted | ||||
Net loss | $ (71,297) | $ (209,890) | ||
Weighted average shares outstanding used to compute basic and diluted net loss per share | 83,264 | 82,191 | ||
Net loss per share - basic and diluted (in usd per share) | $ (0.86) | $ (2.55) | ||
Accounting Standards Update 2014-09 | Impacts from Adoption | ||||
Net loss per share - basic and diluted | ||||
Net loss | $ (49,960) | $ (130,015) |
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