Delaware | 81-0578975 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
717 17th Street, 5th Floor Denver, Colorado | 80202 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ¨ | Accelerated filer | x |
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Emerging growth company | ¨ |
Page No. | |
March 31, 2018 | December 31, 2017 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 51,750 | $ | 51,389 | |||
Short-term investments | 133,465 | 137,181 | |||||
Accounts receivable, net | 49,776 | 56,516 | |||||
Prepaid expenses and other | 7,561 | 6,112 | |||||
Total current assets | 242,552 | 251,198 | |||||
Property and equipment, net | 33,975 | 34,119 | |||||
Contract acquisition costs | 3,350 | — | |||||
Deferred income taxes, net of current portion | 73 | 70 | |||||
Goodwill and intangible assets, net | 6,334 | 6,419 | |||||
Other assets | 3,983 | 3,566 | |||||
Total assets | $ | 290,267 | $ | 295,372 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,767 | $ | 4,574 | |||
Accrued taxes | 337 | 651 | |||||
Accrued compensation and benefits | 16,807 | 19,257 | |||||
Convertible notes, net | 146,589 | 144,167 | |||||
Deferred revenue | — | 1,282 | |||||
Accrued expenses | 7,650 | 6,625 | |||||
Other current liabilities | 2,886 | 2,104 | |||||
Total current liabilities | 176,036 | 178,660 | |||||
Other long-term liabilities | 5,015 | 4,603 | |||||
Total liabilities | 181,051 | 183,263 | |||||
Commitments and contingencies (Note 5) | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.001 par value; 20,000 shares authorized and none issued and outstanding | — | — | |||||
Common stock; $0.0001 par value; 1,000,000 shares authorized; 90,583 shares issued and 90,462 shares outstanding as of March 31, 2018; 90,380 shares issued and 90,259 shares outstanding as of December 31, 2017 | 8 | 8 | |||||
Treasury stock | (441 | ) | (441 | ) | |||
Additional paid-in capital | 362,870 | 359,347 | |||||
Accumulated deficit | (254,150 | ) | (246,207 | ) | |||
Accumulated other comprehensive income (loss) | 929 | (598 | ) | ||||
Total stockholders’ equity | 109,216 | 112,109 | |||||
Total liabilities and stockholders’ equity | $ | 290,267 | $ | 295,372 |
For the Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Net revenue | $ | 58,585 | $ | 56,708 | |||
Cost of revenue | 41,724 | 41,409 | |||||
Gross profit | 16,861 | 15,299 | |||||
Operating expenses: | |||||||
Sales and marketing | 9,238 | 8,340 | |||||
Research and development | 1,516 | 2,243 | |||||
General and administrative | 12,889 | 13,980 | |||||
Restructuring and other | 53 | — | |||||
Total operating expenses | 23,696 | 24,563 | |||||
Loss from operations | (6,835 | ) | (9,264 | ) | |||
Interest expense and other, net | (2,846 | ) | (2,070 | ) | |||
Impairment loss on investment securities | (1,958 | ) | — | ||||
Loss before income taxes | (11,639 | ) | (11,334 | ) | |||
Provision for income tax expense | (13 | ) | (290 | ) | |||
Net loss | $ | (11,652 | ) | $ | (11,624 | ) | |
Net loss per common share: | |||||||
Basic and diluted | $ | (0.13 | ) | $ | (0.13 | ) | |
Weighted-average common shares outstanding: | |||||||
Basic and diluted | 90,358 | 88,385 |
For the Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Net loss | $ | (11,652 | ) | $ | (11,624 | ) | |
Other comprehensive loss, net of tax: | |||||||
Available for sale securities: | |||||||
Unrealized loss on short-term investments | 1,253 | 73 | |||||
Reclassification adjustment for impairment loss included in net loss | (1,958 | ) | — | ||||
Net decrease from available for sale securities | (705 | ) | 73 | ||||
Foreign currency translation adjustments | 273 | (130 | ) | ||||
Other comprehensive loss, net of tax | (432 | ) | (57 | ) | |||
Comprehensive loss, net of tax | $ | (12,084 | ) | $ | (11,681 | ) |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities | |||||||
Net loss | $ | (11,652 | ) | $ | (11,624 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization | 4,803 | 4,731 | |||||
Amortization of debt discount and issuance costs | 2,421 | 2,241 | |||||
Amortization of contract acquisition costs - ASC 606 initial adoption | 426 | — | |||||
Amortization of premium on short-term investments | 115 | (94 | ) | ||||
Deferred income taxes | — | 95 | |||||
Stock-based compensation | 3,111 | 3,218 | |||||
Restructuring and other | 196 | — | |||||
Impairment loss on investment securities | 1,958 | — | |||||
Other | 80 | — | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | 6,923 | 10,470 | |||||
Deferred revenue | 176 | 1,134 | |||||
Prepaid expenses and other | (1,523 | ) | 1,888 | ||||
Contract acquisition costs | (430 | ) | — | ||||
Accounts payable | (2,809 | ) | (104 | ) | |||
Accrued taxes | (319 | ) | (337 | ) | |||
Accrued compensation and benefits | (2,654 | ) | (4,176 | ) | |||
Accrued expenses | (48 | ) | 1,021 | ||||
Other liabilities | (175 | ) | (1,095 | ) | |||
Net cash provided by operating activities | 599 | 7,368 | |||||
Cash flows from investing activities: | |||||||
Acquisition of property and equipment | (3,469 | ) | (4,432 | ) | |||
Purchases of short-term investments | 7 | (18,059 | ) | ||||
Sales of short-term investments | 2,064 | 16,513 | |||||
Maturities of short-term investments | 825 | 925 | |||||
Net cash used in investing activities | (573 | ) | (5,053 | ) | |||
Cash flows from financing activities | |||||||
Repayment on capital lease obligations | (43 | ) | (16 | ) | |||
Proceeds from issuance of common stock | 353 | 616 | |||||
Payments related to minimum tax withholding on restricted stock unit releases | (53 | ) | (131 | ) | |||
Net cash provided by financing activities | 257 | 469 | |||||
Net increase in cash, cash equivalents and restricted cash | 283 | 2,784 | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 78 | (131 | ) | ||||
Cash, cash equivalents and restricted cash, beginning of period | 52,633 | 48,936 | |||||
Cash, cash equivalents and restricted cash, end of period | $ | 52,994 | $ | 51,589 | |||
Supplemental disclosure of non-cash activities: | |||||||
Acquisition of property and equipment accrued in accounts payable and accrued expenses | $ | 196 | $ | 287 | |||
Increase in contract acquisition costs and benefit to accumulated deficit related to adoption of ASC 606 | $ | 3,346 | $ | — | |||
Increase in prepaid expenses and other and other liabilities and benefit to accumulated deficit related to adoption of ASC 606 | $ | 363 | $ | — |
As reported | ASC 606 adjustments | Balances without adoption of ASC 606 | |||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 51,750 | $ | — | $ | 51,750 | |||||
Short-term investments | 133,465 | — | 133,465 | ||||||||
Accounts receivable, net | 49,776 | 80 | 49,856 | ||||||||
Prepaid expenses and other | 7,561 | (154 | ) | 7,407 | |||||||
Total current assets | 242,552 | (74 | ) | 242,478 | |||||||
Property and equipment, net | 33,975 | — | 33,975 | ||||||||
Contract acquisition costs | 3,350 | (3,350 | ) | — | |||||||
Deferred income taxes, net of current portion | 73 | — | 73 | ||||||||
Goodwill and intangible assets, net | 6,334 | — | 6,334 | ||||||||
Other assets | 3,983 | (118 | ) | 3,865 | |||||||
Total assets | $ | 290,267 | $ | (3,542 | ) | $ | 286,725 | ||||
Liabilities and Stockholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 1,767 | $ | — | $ | 1,767 | |||||
Accrued taxes | 337 | — | 337 | ||||||||
Accrued compensation and benefits | 16,807 | — | 16,807 | ||||||||
Convertible notes, net | 146,589 | — | 146,589 | ||||||||
Deferred revenue | — | 1,782 | 1,782 | ||||||||
Accrued expenses | 7,650 | — | 7,650 | ||||||||
Other current liabilities | 2,886 | (1,450 | ) | 1,436 | |||||||
Total current liabilities | 176,036 | 332 | 176,368 | ||||||||
Other long-term liabilities | 5,015 | — | 5,015 | ||||||||
Total liabilities | 181,051 | 332 | 181,383 | ||||||||
Commitments and contingencies (Note 5) | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $0.001 par value; 20,000 shares authorized and none issued and outstanding | — | — | — | ||||||||
Common stock; $0.0001 par value; 1,000,000 shares authorized; 90,583 shares issued and 90,462 shares outstanding as of March 31, 2018 | 8 | — | 8 | ||||||||
Treasury stock | (441 | ) | — | (441 | ) | ||||||
Additional paid-in capital | 362,870 | — | 362,870 | ||||||||
Accumulated deficit | (254,150 | ) | (3,874 | ) | (258,024 | ) | |||||
Accumulated other comprehensive income (loss) | 929 | — | 929 | ||||||||
Total stockholders’ equity | 109,216 | (3,874 | ) | 105,342 | |||||||
Total liabilities and stockholders’ equity | $ | 290,267 | $ | (3,542 | ) | $ | 286,725 |
As Reported | ASC 606 adjustments | Balances without adoption of ASC 606 | |||||||||
Net revenue | $ | 58,585 | $ | (161 | ) | $ | 58,424 | ||||
Cost of revenue | 41,724 | — | 41,724 | ||||||||
Gross profit | 16,861 | (161 | ) | 16,700 | |||||||
Operating expenses: | |||||||||||
Sales and marketing | 9,238 | 4 | 9,242 | ||||||||
Research and development | 1,516 | — | 1,516 | ||||||||
General and administrative | 12,889 | — | 12,889 | ||||||||
Restructuring and other | 53 | — | 53 | ||||||||
Total operating expenses | 23,696 | 4 | 23,700 | ||||||||
Loss from operations | (6,835 | ) | (165 | ) | (7,000 | ) | |||||
Interest expense and other, net | (2,846 | ) | — | (2,846 | ) | ||||||
Impairment loss on investment securities | (1,958 | ) | — | (1,958 | ) | ||||||
Loss before income taxes | (11,639 | ) | (165 | ) | (11,804 | ) | |||||
Provision for income tax expense | (13 | ) | — | (13 | ) | ||||||
Net loss | $ | (11,652 | ) | $ | (165 | ) | $ | (11,817 | ) | ||
Net loss per common share: | |||||||||||
Basic and diluted | $ | (0.13 | ) | $ | — | $ | (0.13 | ) | |||
Weighted-average common shares outstanding: | |||||||||||
Basic and diluted | 90,358 | — | 90,358 |
As Reported | ASC 606 adjustments | Balances without adoption of ASC 606 | |||||||||
Cash flows from operating activities | |||||||||||
Net loss | $ | (11,652 | ) | $ | (165 | ) | $ | (11,817 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 4,803 | — | 4,803 | ||||||||
Amortization of debt discount and issuance costs | 2,421 | — | 2,421 | ||||||||
Amortization of contract acquisition cost - ASC 606 initial adoption | 426 | (426 | ) | — | |||||||
Amortization of premium on short-term investments | 115 | — | 115 | ||||||||
Stock-based compensation | 3,111 | — | 3,111 | ||||||||
Restructuring and other | 196 | — | 196 | ||||||||
Impairment loss on investment securities | 1,958 | — | 1,958 | ||||||||
Other | 80 | — | 80 | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable, net | 6,923 | (80 | ) | 6,843 | |||||||
Deferred revenue | 176 | 1,782 | 1,958 | ||||||||
Contract acquisition costs | (430 | ) | 430 | — | |||||||
Prepaid expenses and other | (1,523 | ) | (91 | ) | (1,614 | ) | |||||
Accounts payable | (2,809 | ) | — | (2,809 | ) | ||||||
Accrued taxes | (319 | ) | — | (319 | ) | ||||||
Accrued compensation and benefits | (2,654 | ) | — | (2,654 | ) | ||||||
Accrued expenses | (48 | ) | — | (48 | ) | ||||||
Other liabilities | (175 | ) | (1,450 | ) | (1,625 | ) | |||||
Net cash provided by operating activities | 599 | — | 599 | ||||||||
Cash flows from investing activities: | |||||||||||
Acquisition of property and equipment | (3,469 | ) | — | (3,469 | ) | ||||||
Purchases of short-term investments | 7 | — | 7 | ||||||||
Sales of short-term investments | 2,064 | — | 2,064 | ||||||||
Maturities of short-term investments | 825 | — | 825 | ||||||||
Net cash used in investing activities | (573 | ) | — | (573 | ) | ||||||
Cash flows from financing activities | |||||||||||
Repayment on capital lease obligations | (43 | ) | — | (43 | ) | ||||||
Proceeds from issuance of common stock | 353 | — | 353 | ||||||||
Repayment related to minimum tax withholding on restricted stock unit releases | (53 | ) | — | (53 | ) | ||||||
Net cash provided by financing activities | 257 | — | 257 | ||||||||
Net increase in cash, cash equivalents and restricted cash | 283 | — | 283 | ||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 78 | — | 78 | ||||||||
Cash, cash equivalents and restricted cash, beginning of period | 52,633 | — | 52,633 | ||||||||
Cash, cash equivalents and restricted cash, end of period | $ | 52,994 | $ | — | $ | 52,994 |
Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | ||||||||||||
Level 1(1): | |||||||||||||||
Cash | $ | 45,314 | $ | — | $ | — | $ | 45,314 | |||||||
Cash equivalents: | |||||||||||||||
Money market mutual funds | 43 | — | — | 43 | |||||||||||
Total cash and cash equivalents | 45,357 | — | — | 45,357 | |||||||||||
Level 2(2): | |||||||||||||||
Cash equivalents: | |||||||||||||||
U.S. Treasury securities | 5,395 | — | — | 5,395 | |||||||||||
Commercial Paper | 998 | — | — | 998 | |||||||||||
Total cash equivalents | 6,393 | — | — | 6,393 | |||||||||||
Short-term investments: | |||||||||||||||
Corporate bonds | 54,045 | — | — | 54,045 | |||||||||||
U.S. agency securities | 34,144 | — | — | 34,144 | |||||||||||
Asset-backed securities | 19,441 | — | — | 19,441 | |||||||||||
U.S. Treasury securities | 25,835 | — | — | 25,835 | |||||||||||
Total short-term investments | 133,465 | — | — | 133,465 | |||||||||||
Cash, cash equivalents and short-term investments | $ | 185,215 | $ | — | $ | — | $ | 185,215 |
Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | ||||||||||||
Level 1(1): | |||||||||||||||
Cash | $ | 48,712 | $ | — | $ | — | $ | 48,712 | |||||||
Cash equivalents: | |||||||||||||||
Money market mutual funds | 2,677 | — | — | 2,677 | |||||||||||
Total cash and cash equivalents | 51,389 | — | — | 51,389 | |||||||||||
Level 2(2): | |||||||||||||||
Short-term investments: | |||||||||||||||
Corporate bonds | 55,763 | 1 | (346 | ) | 55,418 | ||||||||||
U.S. agency securities | 34,640 | — | (410 | ) | 34,230 | ||||||||||
Asset-backed securities | 21,739 | — | (127 | ) | 21,612 | ||||||||||
U.S. Treasury securities | 26,292 | — | (371 | ) | 25,921 | ||||||||||
Total short-term investments | 138,434 | 1 | (1,254 | ) | 137,181 | ||||||||||
Cash, cash equivalents and short-term investments | $ | 189,823 | $ | 1 | $ | (1,254 | ) | $ | 188,570 |
Amortized Cost | Estimated Fair Value | ||||||
Less than 1 year | $ | 30,585 | $ | 30,585 | |||
Due in 1 to 3 years | 109,316 | 109,316 | |||||
Total | $ | 139,901 | $ | 139,901 |
March 31, 2018 | December 31, 2017 | ||||||
Principal amount | $ | 150,000 | $ | 150,000 | |||
Unamortized debt discount | (3,121 | ) | (5,336 | ) | |||
Unamortized debt issuance costs | (290 | ) | (497 | ) | |||
Net carrying amount | $ | 146,589 | $ | 144,167 |
For the Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Contractual interest expense at 1.5% per annum | $ | 563 | $ | 563 | |||
Amortization of debt issuance costs | 206 | 191 | |||||
Accretion of debt discount | 2,215 | 2,050 | |||||
Total | $ | 2,984 | $ | 2,804 |
Selling services | $ | 56,578 | |
Professional services | 2,007 | ||
Total revenue | $ | 58,585 |
APJ | $ | 7,594 | |
EMEA | 15,522 | ||
NALA | 35,469 | ||
Total revenue | $ | 58,585 |
Fixed consideration | $ | 17,742 | |
Variable consideration | 40,843 | ||
Total revenue | $ | 58,585 |
For the Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Cost of revenue | $ | 279 | $ | 291 | |||
Sales and marketing | 886 | 882 | |||||
Research and development | 64 | 99 | |||||
General and administrative | 1,882 | 1,946 | |||||
Total stock-based compensation | $ | 3,111 | $ | 3,218 |
Shares | Weighted-Average Option Price Per Share | Weighted-Average Fair Value of Options Granted During the Year | Weighted-Average Remaining Contractual Life (Years) | Intrinsic Value | ||||||||||||
Issued and outstanding as of December 31, 2017 | 6,511 | $ | 4.48 | $ | 7 | |||||||||||
Granted | 84 | $ | 3.70 | $ | 1.81 | |||||||||||
Options exercised | (3 | ) | $ | 2.90 | $ | 1 | ||||||||||
Expired and/or Forfeited | (495 | ) | $ | 4.93 | ||||||||||||
Issued and outstanding as of March 31, 2018 | 6,097 | $ | 4.43 | 6.81 | $ | 183 | ||||||||||
Options exercisable as of March 31, 2018 | 4,509 | $ | 4.54 | 6.57 | $ | 101 |
Shares | Weighted-Average Grant Date Fair Value | |||||
Unvested as of December 31, 2017 | 5,027 | $ | 3.98 | |||
Granted | 1,490 | $ | 3.85 | |||
Vested(1) | (96 | ) | $ | 4.29 | ||
Forfeited | (125 | ) | $ | 4.00 | ||
Unvested as of March 31, 2018 | 6,296 | $ | 3.94 |
Severance and Other Employee Costs | Lease and Other Contract Termination Costs | Total | |||||||||
Balance as of December 31, 2017 | $ | 71 | $ | 1,754 | $ | 1,825 | |||||
Restructuring and other charges | — | 53 | 53 | ||||||||
Cash paid | (68 | ) | (783 | ) | (851 | ) | |||||
Change in estimates and non-cash charges | (2 | ) | 145 | 143 | |||||||
Balance as of March 31, 2018 | $ | 1 | $ | 1,169 | $ | 1,170 |
For the Three Months Ended March 31, | |||||
2018 | 2017 | ||||
Net revenue | 100 | % | 100 | % | |
Cost of revenue | 71 | % | 73 | % | |
Gross profit | 29 | % | 27 | % | |
Operating expenses: | |||||
Sales and marketing | 16 | % | 15 | % | |
Research and development | 3 | % | 4 | % | |
General and administrative | 22 | % | 25 | % | |
Restructuring and other | — | % | — | % | |
Total operating expenses | 41 | % | 44 | % | |
Loss from operations | (12 | )% | (17 | )% |
For the Three Months Ended March 31, | ||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||
Amount | % of Net Revenue | Amount | % of Net Revenue | $ Change | % Change | |||||||||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||
Net revenue | $ | 58,585 | 100 | % | $ | 56,708 | 100 | % | $ | 1,877 | 3 | % | ||||||||
Cost of revenue | 41,724 | 71 | % | 41,409 | 73 | % | 315 | 1 | % | |||||||||||
Gross profit | $ | 16,861 | 29 | % | $ | 15,299 | 27 | % | $ | 1,562 | 10 | % |
• | $0.4 million increase in employee costs related to operational improvements in our business that resulted in an increase in headcount to lower cost locations; |
• | $0.3 million increase in depreciation and amortization expense; |
• | $0.2 million increase in travel costs; partially offset by |
• | $0.3 million decrease in temporary labor and consulting costs; and |
• | $0.3 million decrease in information technology costs. |
For the Three Months Ended March 31, | ||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||
Amount | % of Net Revenue | Amount | % of Net Revenue | $ Change | % Change | |||||||||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Sales and marketing | $ | 9,238 | 16 | % | $ | 8,340 | 15 | % | $ | 898 | 11 | % | ||||||||
Research and development | 1,516 | 3 | % | 2,243 | 4 | % | (727 | ) | (32 | )% | ||||||||||
General and administrative | 12,889 | 22 | % | 13,980 | 25 | % | (1,091 | ) | (8 | )% | ||||||||||
Restructuring and other | 53 | — | % | — | — | % | 53 | 100 | % | |||||||||||
Total operating expenses | $ | 23,696 | 41 | % | $ | 24,563 | 44 | % | $ | (867 | ) | (4 | )% | |||||||
Stock-based compensation included in operating expenses: | ||||||||||||||||||||
Amount | Amount | $ Change | ||||||||||||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||
Sales and marketing | $ | 886 | $ | 882 | $ | 4 | ||||||||||||||
Research and development | 64 | 99 | (35 | ) | ||||||||||||||||
General and administrative | 1,882 | 1,946 | (64 | ) | ||||||||||||||||
Total stock-based compensation | $ | 2,832 | $ | 2,927 | $ | (95 | ) |
• | $0.6 million increase in employee related costs due to higher commissions from increased performance, offset by lower headcount costs from our efforts to better align our cost structure; |
• | $0.4 million increase in contract acquisition costs due to the adoption of ASC 606, see Notes to the Condensed Consolidated Financial Statements “Note 2 - Summary of Significant Accounting Policies” for additional information; and |
• | $0.2 million increase in travel costs; partially offset by |
• | $0.2 million decrease in marketing costs. |
• | $0.5 million decrease in temporary labor and consulting costs; |
• | $0.2 million decrease in facilities costs; and |
• | $0.1 million decrease in employee related costs; partially offset by |
• | $0.2 million increase in information technology costs. |
• | $1.7 million decrease in employee compensation costs due to lower headcount resulting from our efforts to better align our cost structure; partially offset by |
• | $0.6 million increase in temporary labor and consulting costs. |
For the Three Months Ended March 31, | ||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||
Amount | % of Net Revenue | Amount | % of Net Revenue | $ Change | % Change | |||||||||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||
Interest expense | $ | (3,022 | ) | (5 | )% | $ | (2,817 | ) | (5 | )% | $ | (205 | ) | 7 | % | |||||
Other, net | $ | 176 | — | % | $ | 747 | 1 | % | $ | (571 | ) | (76 | )% | |||||||
Impairment loss on investment securities | $ | (1,958 | ) | (3 | )% | $ | — | — | % | $ | (1,958 | ) | 100 | % |
For the Three Months Ended March 31, | |||||||||||||||||||
2018 | 2017 | ||||||||||||||||||
Amount | % of Net Revenue | Amount | % of Net Revenue | $ Change | % Change | ||||||||||||||
(in thousands) | (in thousands) | (in thousands) | |||||||||||||||||
Provision for income tax expense | $ | (13 | ) | — | % | $ | (290 | ) | 1 | % | $ | 277 | * |
For the Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
(in thousands) | |||||||
Net cash provided by operating activities | $ | 599 | $ | 7,368 | |||
Net cash used in investing activities | $ | (573 | ) | $ | (5,053 | ) | |
Net cash provided by financing activities | $ | 257 | $ | 469 | |||
Net increase in cash, cash equivalents and restricted cash net of the effect of exchange rates on cash, cash equivalents and restricted cash | $ | 361 | $ | 2,653 |
For the Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
(in thousands) | |||||||
Purchased intangible asset amortization | $ | 85 | $ | 378 | |||
Internally developed software amortization | 2,832 | 2,795 | |||||
Property and equipment depreciation | 1,886 | 1,933 | |||||
Depreciation and amortization | 4,803 | 5,106 | |||||
Adjustments and other | — | (375 | ) | ||||
Total depreciation and amortization | $ | 4,803 | $ | 4,731 |
• | $18.1 million decrease in cash outflows related to the purchase of short-term investments during 2017; and |
• | $1.0 million decrease in cash outflows related to the acquisition of property and equipment, which includes $0.7 million of decreased internally developed software costs; partially offset by |
• | $14.5 million decrease in cash inflows from the sale and maturity of short-term investments. |
• | $0.3 million decrease in cash inflows due to proceeds of approximately $0.6 million from the exercise of stock options and the employee purchase plan during 2017 compared to proceeds of approximately $0.4 million from the exercise of stock options and the employee purchase plan during 2018; partially offset by |
• | $0.1 million decrease in cash outflow due to the minimum tax withholding requirement. |
Exhibit Number | Description of Document |
31.1* | |
31.2* | |
32.1* | |
32.2* | |
101 | Interactive data files (XBRL) pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017, (ii) the Condensed Consolidated Statement of Operations for the three months ended March 31, 2018 and 2017, (iii) the Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2018 and 2017, (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017 and (v) the Notes to Condensed Consolidated Financial Statements. |
SERVICESOURCE INTERNATIONAL, INC. (Registrant) | |||
Date: | May 3, 2018 | By: | /s/ ROBERT N. PINKERTON |
Robert N. Pinkerton Chief Financial Officer (Principal Financial and Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of ServiceSource International, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
Date: | May 3, 2018 | By: | /s/ CHRISTOPHER M. CARRINGTON |
Name: Christopher M. Carrington | |||
Title: Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of ServiceSource International, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
Date: | May 3, 2018 | By: | /s/ ROBERT N. PINKERTON |
Name: Robert N. Pinkerton | |||
Title: Chief Financial Officer |
Date: | May 3, 2018 | By: | /s/ CHRISTOPHER M. CARRINGTON |
Name: Christopher M. Carrington | |||
Title: Chief Executive Officer |
Date: | May 3, 2018 | By: | /s/ ROBERT N. PINKERTON |
Name: Robert N. Pinkerton | |||
Title: Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 30, 2018 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | SREV | |
Entity Registrant Name | SERVICESOURCE INTERNATIONAL, INC. | |
Entity Central Index Key | 0001310114 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common stock, shares outstanding | 90,969,118 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 90,583,000 | 90,380,000 |
Common stock, shares outstanding (in shares) | 90,462,000 | 90,259,000 |
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Income Statement [Abstract] | ||
Net revenue | $ 58,585 | $ 56,708 |
Cost of revenue | 41,724 | 41,409 |
Gross profit | 16,861 | 15,299 |
Operating expenses: | ||
Sales and marketing | 9,238 | 8,340 |
Research and development | 1,516 | 2,243 |
General and administrative | 12,889 | 13,980 |
Restructuring and other | 53 | 0 |
Total operating expenses | 23,696 | 24,563 |
Loss from operations | (6,835) | (9,264) |
Interest expense and other, net | (2,846) | (2,070) |
Impairment loss on investment securities | (1,958) | 0 |
Loss before income taxes | (11,639) | (11,334) |
Provision for income tax expense | (13) | (290) |
Net loss | $ (11,652) | $ (11,624) |
Net loss per share, basic and diluted (in dollars per share) | $ (0.13) | $ (0.13) |
Weighted average common shares outstanding, basic and diluted (in shares) | 90,358 | 88,385 |
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (11,652) | $ (11,624) |
Other comprehensive loss, net of tax: | ||
Unrealized loss on short-term investments | 1,253 | 73 |
Reclassification adjustment for impairment loss included in net loss | (1,958) | 0 |
Net decrease from available for sale securities | (705) | 73 |
Foreign currency translation adjustments | 273 | (130) |
Other comprehensive loss, net of tax | (432) | (57) |
Comprehensive loss, net of tax | $ (12,084) | $ (11,681) |
The Company |
3 Months Ended |
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Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
The Company | The Company ServiceSource International, Inc. is a global leader in outsourced, performance-based customer success and revenue growth solutions. Through our people, processes and technology, we grow and retain revenue on behalf of our clients — some of the world’s leading business-to-business companies — in more than 45 languages. Our solutions help our clients strengthen their customer relationships, drive improved customer adoption, expansion and retention and minimize churn. Our technology platform and best-practice business processes combined with our highly-trained, client-focused revenue delivery professionals and data from nearly 20 years of operating experience enable us to provide our clients greater value for our customer success services than attained by our clients' in-house customer success teams. “ServiceSource,” “the Company,” “we,” “us,” or “our”, as used herein, refer to ServiceSource International, Inc. and its wholly-owned subsidiaries, unless the context indicates otherwise. The Company’s pay-for-performance model allows its clients to pay for the services through either flat-rate or variable commissions based on the revenue generated by the Company on their behalf. Fixed-fee arrangements are typically used in quick deployments to address discrete target areas of our clients’ needs. The Company also earns revenue through its professional services teams, who assist clients with data optimization. The Company’s corporate headquarters is located in Denver, Colorado. The Company has additional U.S. offices in California and Tennessee, and international offices in Bulgaria, Ireland, Japan, Malaysia, Philippines, Singapore and the United Kingdom. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Interim Financial Information The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all the information required by GAAP for annual financial statements. The unaudited Condensed Consolidated Balance Sheet as of December 31, 2017 has been derived from the Company’s audited annual Consolidated Financial Statements included in our annual report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission on March 2, 2018. In the opinion of management, these Condensed Consolidated Financial Statements reflect all adjustments, including normal recurring adjustments, management considers necessary for a fair presentation of the Company’s financial position, operating results, and cash flows for the interim periods presented. These Condensed Consolidated Financial Statements and accompanying notes should be read in conjunction with our audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2017, included in our annual report on Form 10-K. Interim results are not necessarily indicative of results for the entire year. Basis of Presentation and Principles of Consolidation The accompanying unaudited interim Condensed Consolidated Financial Statements include the accounts of ServiceSource International, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates Preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ materially from those estimates. New Accounting Standards Issued but not yet Adopted Leases In February 2016, the Financial Accounting Standard Board ("FASB") issued an Accounting Standard Update ("ASU") that modifies existing accounting standards for lease accounting. The new standard requires a lessee to record a lease asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. Leases in which the Company is the lessee will generally be accounted for as operating leases and we will record a lease asset and a lease liability. The guidance is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The standard requires a modified retrospective transition approach for all capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with an option to use certain transition relief. The Company expects to adopt this standard effective January 1, 2019, and is in the process of assessing the impact of this standard. Comprehensive Income In February 2018, the FASB issued an ASU that allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted. The guidance should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company is in the process of evaluating this guidance. New Accounting Standards Adopted Restricted Cash In November 2016, the FASB issued an ASU that requires companies to combine restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning and end of period total amounts on the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company adopted this standard effective January 1, 2018 and the effects of this standard were applied retrospectively to all prior periods presented within these Condensed Consolidated Financial Statements. As a result, we include restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning and end of period balances on our Condensed Consolidated Statements of Cash Flows. For the year ended December 31, 2017 and for the three months ended March 31, 2018 the effect of the change in accounting principle was the increase in cash, cash equivalents and restricted cash of $1.2 million, on our Condensed Consolidated Statements of Cash Flows. Revenue Recognition In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers" which amended the existing FASB Accounting Standards Codification Topic 605 (“ASC 605” or “legacy GAAP") and created Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606"). Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services and is recognized in amounts that reflect the consideration the entity expects to receive in exchange for those goods or services. ASC 606 also specifies the incremental costs of obtaining a contract with a customer and the costs of fulfilling a contract with a customer (if those costs are not within the scope of another Topic or Sub-Topic) should be deferred and recognized over the appropriate period of contract performance if they are expected to be recovered. In addition, ASC 606 requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The most significant impact to the Company's financial position and results of operations is the timing of expense recognition for certain sales commissions and to a lesser extent, the timing of revenue recognition for certain contracts that include certain performance-based fees. See Impact of Changes in Accounting Policies for additional information regarding the application of this new standard and its impact on our Condensed Consolidated Financial Statements. The Company adopted this standard effective January 1, 2018 utilizing the modified retrospective approach, or the cumulative catch-up transition method and applied ASC 606 to all contracts not completed as of January 1, 2018. The initial adoption impact to the Company’s financial position was not material. Under the transition guidance, the Company recorded a $3.3 million contract acquisition asset and corresponding offset to the opening accumulated deficit balance related to previously expensed sales commissions. The $3.3 million asset will be expensed over the next four years as follows: $1.5 million in 2018, $0.9 million in 2019, $0.6 million in 2020, and $0.3 million in 2021. Additionally, the Company recorded a $0.4 million net contract asset and corresponding offset to the opening accumulated deficit balance related to previously unrecognized revenue under legacy GAAP which would have been recognized in periods prior to 2018 under ASC 606. New Accounting Policies upon Adoption of ASC 606 Revenue Recognition The Company provides a comprehensive suite of selling and professional services to its clients. Selling services involves three categories of selling motions: recurring revenue management, customer success activities and inside sales efforts. Recurring revenue management includes hardware and software maintenance contract renewals, subscription renewals and extensions, asset and contract opportunity management, and sales enablement and quoting solutions. Customer success activities include onboarding, product adoption, health checks, account management and certain service support. Inside sales efforts include lead generation and conversion, cross-sell and upsell activities, technology refresh, warranty conversion, win-backs and recaptures, cloud migration, and client and asset management. Professional services involves providing data integration at scale with our systems and processes, combined with client data enhancement, enablement and optimization. The Company derives all of its revenue from contracts with clients. Revenue is measured based on the consideration specified in a contract. The Company’s contracts typically contain two distinct performance obligations that are sold on a variable and/or fixed consideration basis. These two distinct performance obligations are identified as selling services and professional services, the nature of which are described in the paragraph above. The typical length of a selling services contract is 2-3 years, while professional services performance obligations are generally fulfilled within 90 days. The Company generally invoices its clients for services on a monthly or quarterly basis with 30-day payment terms. The Company recognizes revenue when it satisfies the performance obligations identified in the contract, which is achieved through the transfer of control over the services to the client. The Company accounts for individual services within a single contract separately only if they are considered distinct. A service is distinct if it is separately identifiable from other services in the contract and if a client can benefit from the service on its own or with other resources that are readily available to the client. The total contract consideration, or transaction price, is allocated between the separate services identified in the contract based on their stand-alone selling price ("SSP"). SSP is determined based on a cost plus margin analysis for selling services and a standard hourly rate card for professional services. For professional services that are contractually priced different from SSP, the Company estimates the SSP using a standard hourly rate card and allocates a portion of the total contract consideration to reflect professional services revenue at SSP. The Company’s performance obligations are satisfied over time and revenue is recognized based on monthly or quarterly time increments (output method) and the variable volume of closed bookings during the period at the contractual commission rates for selling services, or proportional performance during the period at the SSP for professional services. Because the client simultaneously receives and consumes the benefit of the Company’s selling and professional services as it is provided, the time increment output method faithfully depicts the measure of progress in transferring control of services to the client. While multiple selling motions in a contract are performed at various times and patterns throughout the month or quarter and the number of closed bookings vary in any given period, each time increment of a service activity is substantially the same and has the same pattern of transfer to the client, and therefore, represents a series of distinct performance obligations that form a single performance obligation. As a result, the Company allocates all variable consideration in a contract to the selling services performance obligation in accordance with the variable consideration allocation exception provisions in ASC 606 (less amounts for which it is probable a significant reversal of revenue will occur when the uncertainties related to the variability are resolved) and applies a single measure of progress to record revenue in the period based on when the output of the variable number of closed bookings occurs or when the variable performance metric is achieved. The Company also applies the optional disclosure exemptions related to variable consideration and the requirement to disclose the remaining transaction price allocated to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation. Contract Acquisition Costs To obtain contracts with clients, the Company pays its sales team certain commissions based in part on the estimated value of the contract. Because these sales commissions are incurred and paid solely upon contract execution and would not have otherwise been due or payable, they are considered incremental costs to acquire the contract; and if expected to be recoverable, are capitalized as contract acquisition costs in the period the contract is executed. Capitalized sales commissions are amortized to sales and marketing expense based on the pattern of transfer of goods or services to which the asset relates over the estimated contract term, generally 2-3 years for a new client or five years for long-standing client relationships. The contract acquisition costs asset is evaluated for recoverability and impairment each reporting period throughout the amortization period. The Company does not capitalize incremental acquisition costs for contracts if the amortization period of the asset would otherwise have been one year or less. Significant Estimates and Judgments Significant estimates and judgments for revenue recognition and contract acquisition cost capitalization include: identifying and determining distinct performances obligations in contracts with clients, determining the timing of the satisfaction of performance obligations, estimating the timing and amount of variable consideration in a contract and assessing whether it should be constrained in determining the total contract consideration, determining SSP for each performance obligations and the methodology to allocate the total contract consideration to the distinct performance obligations. Our revenue contracts often include promises to transfer services involving multiple selling motions to a client. Determining whether those services are considered distinct performance obligations and qualify as a series of distinct performance obligations that represent a single performance obligation requires significant judgment. Also, due to the continuous nature of providing services to our clients, judgment is required in determining when control of the services is passed to the client. A significant portion of our contracts are based on a pay-for-performance model that provides the Company with commissions and revenue based on a volume of closed bookings each time period and variable consideration if certain performance targets are achieved during a given period of time (such as exceeding quarterly closure rate thresholds or achieving absolute dollar volume sales targets). Significant judgment is required to determine if this type of variable consideration should be constrained, and to what extent, until the risk of a significant revenue reversal is not probable. We also enter into contracts with multiple performance obligations that incorporate fixed consideration, pay-for-performance commissions and variable bonus commissions. Judgment is required to estimate the amount of variable consideration to include when estimating the total contract consideration and how to allocate the consideration if one of the distinct performance obligations is not sold at SSP. Impact of Changes in Accounting Policies The Company adopted ASC 606 as of January 1, 2018 using the modified retrospective approach by recognizing the cumulative effect of initially applying ASC 606 as an adjustment to the opening accumulated deficit balance as of January 1, 2018. As a result, the comparative information throughout these financial statements has not been adjusted and continues to be reported under legacy GAAP as disclosed in our 2017 annual report on Form 10-K. As described above, the Company changed its accounting policy for revenue recognition and certain sales commissions. The qualitative impact of the changes is discussed below and the quantitative impact of ASC 606 adoption on the Company’s Condensed Consolidated Financial Statements for the three months ended March 31, 2018 is presented in the tables below. Selling Services The Company historically recognized all performance based fees in the period when the specific performance criteria was achieved; however, under ASC 606, in certain circumstances the Company estimates the variable fees for which it is probable that a significant reversal will not occur and recognizes these estimated variable fees over the estimated contract life. For certain contracts, this could result in the recognition of the performance-based fees sooner than under ASC 605. Professional Services Prior to the adoption of ASC 606, the Company recognized revenue from professional services at the best estimated selling price upon client acceptance at the end of the implementation or data integration event due to the short-term nature of the services, which was typically 90 days from the start of the services. Under ASC 606, the Company recognizes revenue at SSP over time as control of the service is transferred to the client, resulting in the recognition of professional services fees sooner than under ASC 605. Sales Commissions The Company previously recognized a portion of certain sales commissions as sales and marketing expense when it was earned by the employee upon obtaining and executing a contract. Under ASC 606, the Company capitalizes this portion of certain sales commissions as contract acquisition costs and amortizes the amount ratably over the contract term for new clients or the estimated life of the client for long-standing client relationships. As a result, sales and marketing expenses are recognized later and over a longer period of time than under ASC 605. The following tables summarize the impacts of adopting ASC 606 on the Company's Condensed Consolidated Financial Statements for the three months ended March 31, 2018:
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments Cash, Cash Equivalents and Short-Term Investments Cash equivalents consist of highly liquid fixed-income investments with original maturities of three months or less at the time of purchase. Short-term investments consist of readily marketable debt securities with a remaining maturity of more than three months from time of purchase. The Company classifies its cash equivalents and short-term investments as “available for sale,” as these investments are free of trading restrictions and are available for use in the Company's daily operations. These marketable securities are carried at fair value, with the unrealized gains and losses, net of tax, reported as accumulated other comprehensive loss and included as a separate component of stockholders’ equity. Gains and losses are recognized when realized. Gains and losses are determined using the specific identification method. The Company’s realized gains and losses for the three months ended March 31, 2017 were insignificant. There were no transfers between levels during the three months ended March 31, 2018 and 2017. The Company typically invests in highly-rated securities, and its investment policy generally limits the amount of credit exposure to any one issuer. The policy generally requires investments to be investment grade, with the primary objective of minimizing the potential risk of principal loss. Fair values were determined for each individual security in the investment portfolio. When evaluating an investment for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates and the Company’s intent to sell, or whether it is more-likely-than-not it will be required to sell the investment before recovery of the investment’s cost basis. The Company intends to sell our investment securities in 2018 and determined an other-than-temporary impairment occurred as of March 31, 2018. Consequently, a $2.0 million impairment loss was recorded in our Consolidated Statement of Operations as of March 31, 2018, which represents the difference between the investment securities' amortized cost basis and fair value. The following tables present the Company's cash, cash equivalents and short-term investments by significant investment category measured at fair value on a recurring basis (in thousands): For the Three Months Ended March 31, 2018:
For the Year Ended December 31, 2017:
(1) Level 1 valuations are based on quoted prices in active markets for identical assets or liabilities. (2) Level 2 valuations are based on inputs that are observable, either directly or indirectly, other than quoted prices included within Level 1. The following table summarizes the amortized cost and estimated fair value of money market mutual funds and short-term fixed income securities classified as short-term investments based on stated maturities as of March 31, 2018 (in thousands):
The Company had restricted cash of $1.2 million in "Other assets" in the Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017. The restricted cash is classified within Level 1. The convertible notes issued by the Company in August 2013 are included in the Condensed Consolidated Balance Sheets at their original issuance value, net of unamortized discount and issuance costs, and are not marked to market each period. The fair value of the convertible notes was approximately $145.9 million as of March 31, 2018 and December 31, 2017. The fair value of the convertible notes was determined using quoted market prices for similar securities and are considered Level 2 inputs due to limited trading activity. The Company did not have any other financial instruments or debt measured at fair value as of March 31, 2018 and December 31, 2017. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Senior Convertible Notes In August 2013, the Company issued senior convertible notes (the "Notes") in exchange for gross proceeds of $150.0 million. The Notes matures on August 1, 2018 and are recorded in current liabilities in "Convertible notes" in our Condensed Consolidated Balance Sheets. The Notes are governed by an indenture, dated August 13, 2013 (the "Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee. The Notes bear interest at a rate of 1.50% per year payable semi-annually in arrears on February 1 and August 1, beginning February 1, 2014. The Notes are convertible at an initial conversion rate of 61.6770 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $16.21 per share of common stock, subject to anti-dilution adjustments upon certain specified events as defined in the Indenture. Upon conversion, the Notes will be settled in cash, shares of the Company’s common stock, or any combination thereof, at the Company’s option. The Notes were not subject to repurchase as of March 31, 2018. However, holders of the Notes may convert their Notes at any time on or after February 1, 2018, until the close of business on the second scheduled trading day immediately preceding the maturity date, regardless of the foregoing circumstances. The net carrying amount of the liability component of the Notes consists of the following (in thousands):
The following table presents interest expense recognized related to the Notes (in thousands):
Letter of Credit On February 3, 2015, the Company issued a $1.2 million letter of credit in connection with a lease for a new San Francisco office facility. The letter of credit is secured by $1.2 million of cash in a money market account which is classified as restricted cash in "Other assets" in the Condensed Consolidated Balance Sheets. |
Commitments and Contingencies |
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Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases The Company leases its office space and certain equipment under non-cancelable operating lease agreements with various expiration dates through December 2022. Rent expense during the three months ended March 31, 2018 and 2017, was approximately $2.6 million and $2.8 million, respectively. The Company recognizes rent expense on a straight-line basis over the lease period and accrues for rent expense incurred but not paid. In January 2018, the Company entered into a sublease with a third-party for our San Francisco office space for the remaining term of the lease. The total minimum payments as of March 31, 2018 through November 30, 2022 under the original lease total approximately $8.9 million and sublease rental income totals approximately $8.9 million over the same period. In January 2018, the Company entered into a contract to finance a software license. As of March 31, 2018, the Company recorded a $1.2 million capital lease reflected in "Accrued expenses and Other long-term liabilities" in the Condensed Consolidated Balance Sheet. Future payments through December 31, 2020 total approximately $1.0 million. In April 2018, the Company entered into a non-cancelable operating lease agreement for approximately 7,215 rentable square feet in San Francisco. Future minimum lease payments through November 30, 2023 under the San Francisco non-cancelable operating lease total approximately $3.3 million as of March 31, 2018. There have been no other material changes in our contractual obligations and purchase commitments other than in the ordinary course of business since December 31, 2017. Litigation The Company is subject to various legal proceedings and claims arising in the ordinary course of our business, including the cases discussed below. Although the results of litigation and claims cannot be predicted with certainty, the Company is currently not aware of any litigation or threats of litigation in which the final outcome could have a material adverse effect on our business, operating results, financial position or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. The Company records a contingent liability when it is probable that a loss has been incurred and the amount is reasonably estimable in accordance with accounting for contingencies. As of March 31, 2018, the Company accrued a $1.5 million reserve relating to our potential liability for currently pending disputes, reflected in "Accrued expenses" in the Condensed Consolidated Balance Sheets. On August 23, 2016, the United States District Court for the Middle District of Tennessee granted conditional class certification in a lawsuit originally filed on September 21, 2015 by three former senior sales representatives. The lawsuit, Sarah Patton, et al v. ServiceSource Delaware, Inc., asserts a claim under the Fair Labor Standards Act alleging that certain sales account representatives and senior sales representatives in our Nashville location were not paid for all hours worked and were not properly paid for overtime hours worked. The complaint also asserts claims under Tennessee state law for breach of contract and unjust enrichment; however, the plaintiffs have not yet filed a motion to certify the state law breach of contract and unjust enrichment claims as a class action. The Company will continue to vigorously defend itself against these claims. |
Revenues, Contract Asset and Liability Balances and Contract Acquisition Costs |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues, Contract Asset and Liability Balances and Contract Acquisition Costs | Revenues, Contract Asset and Liability Balances and Contract Acquisition Costs The following tables present the disaggregation of revenue for the three months ended March 31, 2018 from contracts with our clients as follows (in thousands): Revenue by Performance Obligation
Revenue by Geography
Revenue by Contract Pricing
Contract Balances Once the Company obtains a client contract, the timing of satisfying performance obligations and the receipt of client consideration can be different and will give rise to contract assets and contract liabilities. Contract assets relate to the Company’s conditional rights to consideration for services provided but not yet billable at the reporting date. Accounts receivable balances reflected in the Condensed Consolidated Balance Sheet as of March 31, 2018 represent the Company’s unconditional rights to consideration for services provided. Contract asset amounts are transferred to accounts receivables when the rights become unconditional, typically in the same period control of services is transferred to the client and the amount is contractually billable. Contract liabilities primarily relate to the advance consideration received from clients for fixed consideration contracts where transfer of control of the services has not yet occurred. Contract liability balances generally convert to revenue upon either the satisfaction of professional services obligations or when services under fixed consideration contracts are transferred to the client, typically within six months of being recorded. The contract asset and liability balances as of March 31, 2018 totaled $0.3 million and $1.2 million, respectively, and are not considered material for further disclosure purposes. These contract balances are reflected in "Prepaid expenses and other", "Other current liabilities" and "Other assets" in the Condensed Consolidated Balance Sheet as of March 31, 2018. Transaction Price Allocated to Remaining Performance Obligations The Company applies the optional disclosure exemption related to variable consideration and the requirement to disclose the remaining transaction price allocated to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation. However, for contracts structured with fixed consideration, this optional disclosure is not available. The Company typically invoices selling services fixed consideration in monthly or quarterly installments over the contract term, which is typically 12 months or less. Contracts with fixed consideration are generally with long-standing client relationships and typically renew annually. Assuming none of the Company’s current contracts with fixed consideration are renewed, we estimate receiving approximately $32.3 million in future selling services fixed consideration as of March 31, 2018. Professional services revenues from fixed consideration are based on proportional performance which is typically concluded within 90 days of contract execution. The Company typically bills professional services upfront upon obtaining a client contract. As of March 31, 2018, we estimate $0.5 million in professional services fixed consideration revenue to be recognized by end of 2018. Contract Acquisition Costs Certain commissions paid to the Company's sales team upon obtaining a client contract are incremental and recoverable, and therefore, capitalized as contract acquisition costs. Under the transition guidance, the Company recorded a $3.3 million contract acquisition asset and corresponding offset to the opening accumulated deficit balance related to previously expensed sales commissions. The $3.3 million contract acquisition asset will be expensed over the next four years as follows: $1.5 million in 2018, $0.9 million in 2019, $0.6 million in 2020, and $0.3 million in 2021. The Company recorded $0.4 million of amortization for the three months ended March 31, 2018 related to amounts capitalized upon the adoption of ASC 606. During the three months ended March 31, 2018, the Company capitalized an additional $0.4 million of sales commissions as contract acquisition costs related to contracts obtained during the period. There were no impairment indicators or losses recorded during the period and the weighted average remaining amortization period related to these capitalized costs was 2.3 years. Contract acquisition costs amortization is included in "Sales and marketing" in the Condensed Consolidated Statements of Operations. Applying the practical expedient for amortization periods one year or less, the Company recognizes any incremental costs of obtaining contracts as expense when the cost is incurred. These costs are included in "Sales and marketing" in the Condensed Consolidated Statements of Operations. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation 2018 PSU Awards During March 2018, the Company granted performance-based restricted stock unit awards under the Company’s 2011 Equity Incentive Plan to certain key executives (the “2018 PSU Awards”). For each 2018 PSU Award, a number of restricted stock units became eligible to vest based on the levels of achievement of the performance-based conditions, and those restricted stock units that became eligible to vest will vest 50% on the first anniversary of the grant date and 50% on the second anniversary of the grant date, except as otherwise provided under certain termination and change-in-control provisions in each award agreement. The aggregate target number of restricted stock units subject to the 2018 PSU Awards was 1.0 million, with an aggregate grant date fair value of $3.9 million. The performance-based conditions are based upon the Company’s revenue and adjusted EBITDA performance in fiscal year 2018 against the target goals for such metrics under the Company’s 2018 corporate incentive plan (in each case, “Performance Achievement”), which will each be determined on the date the Company files its Annual Report on Form 10-K for fiscal year 2018. The target number of restricted stock units for each 2018 PSU Award will be divided equally between the two performance metrics. For each performance metric, the number of restricted stock units that become eligible to vest will be: (i) if the applicable Performance Achievement is less than 95.10% of the target revenue goal or less than 70.59% of the target EBITDA goal, no restricted stock units for such performance metric, (ii) if the applicable Performance Achievement is equal to 95.10% of the target revenue goal or 70.95% of the target EBITDA goal, 50% of the target number of restricted stock units for such performance metric, (iii) if the applicable Performance Achievement is equal to 100% of the target revenue and EBITDA goals, 100% of the target number of restricted stock units for such performance metric, or (iv) if the applicable Performance Achievement is at least 103.40% of the target revenue goal or 163.03% of the target EBITDA goal, 150% of the target number of restricted stock units for such performance metric. For each performance metric, if the applicable Performance Achievement falls between any of the thresholds (ii), (iii), and (iv) specified in the previous sentence, the number of restricted stock units that become eligible to vest for such performance metric will be determined via linear interpolation. Stock-Based Compensation Expense The following table presents stock-based compensation expense as allocated within the Company's Condensed Consolidated Statements of Operations (in thousands):
The above table does not include $0.1 million of capitalized stock-based compensation related to internal-use software for the three months ended March 31, 2018 and 2017. Stock Awards Issued to Employees The following table presents total options outstanding, granted, exercised, expired or forfeited, as well as total options exercisable (shares and aggregate intrinsic value in thousands):
The following table summarizes additional information concerning our vested restricted stock units and performance stock units (shares in thousands):
(1) 82 shares of common stock were issued for restricted stock units vested and the remaining 14 shares were withheld for taxes. Potential shares of common stock that are not included in the determination of diluted net loss per share because they are anti-dilutive for the periods presented consist of stock options, non-vested restricted stock and shares to be purchased under our Employee Stock Purchase Plan. The Company excluded from diluted earnings per share the weighted-average common share equivalents related to 6.8 million and 3.4 million shares for the three months ended March 31, 2018 and 2017, respectively, because their effect would have been anti-dilutive. |
Income Taxes |
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Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company is subject to taxation in the U.S. and various state and foreign jurisdictions. Earnings from non-U.S. activities are subject to local country income tax. The Company computes its quarterly income tax provision by using a forecasted annual effective tax rate and adjusts for any discrete items arising during the quarter. The primary difference between the effective tax rate and the federal statutory tax rate relates to the valuation allowances on the Company’s net operating losses and foreign tax rate differences. For the three months ended March 31, 2018, the Company recorded income tax expense less than $0.1 million. This amount primarily consists of income and withholding taxes for foreign and state jurisdictions where the Company has profitable operations, as well as valuation allowance adjustments for certain U.S. tax jurisdictions. No tax benefit was provided for losses incurred in U.S. and Singapore because those losses are offset by a full valuation allowance. The tax years 2010 through 2018 remain subject to examination by federal, state and foreign tax authorities. The gross amount of the Company’s unrecognized tax benefits was $0.9 million as of March 31, 2018 and December 31, 2017, none of which, if recognized, would affect the Company’s effective tax rate. FASB issued ASU 2018-05, Income Taxes (Topic 740): "Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118" to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. At March 31, 2018, the Company has not completed its accounting for all of the tax effects of the Act and has not made an adjustment to the provisional tax benefit recorded under SAB 118 at December 31, 2017. We have estimated our provision for income taxes in accordance with the Act and guidance available as of the date of this filing. Our estimated annual effective tax rate may be adjusted in subsequent interim periods, due to, among other things, additional analysis, changes in interpretations and assumptions we have made, and additional regulatory guidance that may be issued. |
Restructuring and Other |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Other | Restructuring and Other In early May 2017, the Company announced a restructuring effort to better align its cost structure with current business and market conditions, including a headcount reduction and the reduction of office space in four locations. The restructuring plan is accounted for in accordance with ASC 420, Exit or Disposal Cost Obligations. The Company recognized restructuring and other charges of $0.1 million for the three months ended March 31, 2018. Severance and other employee costs include severance payments, related employee benefits and employee-related legal fees. Lease and other contract termination costs include charges related to lease consolidation and abandonment of spaces no longer utilized and the cancellation of certain contracts with outside vendors. The Company expects to incur additional restructuring charges during the first half of 2018 related to the relocation and decommissioning of our San Francisco office space. Future cash outlays related to restructuring activities are expected to total approximately $1.2 million. These amounts are reported in "Accounts payable, Accrued compensation and benefits and Accrued expenses" in our Condensed Consolidated Balance Sheet as of March 31, 2018. Restructuring and other reserve activities are summarized as follows (in thousands):
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Subsequent Events |
3 Months Ended |
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Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events GAAP requires an entity to disclose events that occur after the balance sheet date but before financial statements are issued or are available to be issued (“subsequent events”) as well as the date through which an entity has evaluated subsequent events. There are two types of subsequent events. The first type consists of events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements (“recognized subsequent events”). The second type consists of events that provide evidence about conditions that did not exist at the date of the balance sheet but arose subsequent to that date (“nonrecognized subsequent events”). No significant recognized or nonrecognized subsequent events were noted other than those mentioned in “Note 5 - Commitments and Contingencies.” |
The Company (Policies) |
3 Months Ended |
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Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Interim Financial Information | Interim Financial Information The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all the information required by GAAP for annual financial statements. The unaudited Condensed Consolidated Balance Sheet as of December 31, 2017 has been derived from the Company’s audited annual Consolidated Financial Statements included in our annual report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission on March 2, 2018. In the opinion of management, these Condensed Consolidated Financial Statements reflect all adjustments, including normal recurring adjustments, management considers necessary for a fair presentation of the Company’s financial position, operating results, and cash flows for the interim periods presented. These Condensed Consolidated Financial Statements and accompanying notes should be read in conjunction with our audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2017, included in our annual report on Form 10-K. Interim results are not necessarily indicative of results for the entire year. |
Consolidation | Basis of Presentation and Principles of Consolidation The accompanying unaudited interim Condensed Consolidated Financial Statements include the accounts of ServiceSource International, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates Preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ materially from those estimates. |
Recent Accounting Pronouncements | New Accounting Standards Issued but not yet Adopted Leases In February 2016, the Financial Accounting Standard Board ("FASB") issued an Accounting Standard Update ("ASU") that modifies existing accounting standards for lease accounting. The new standard requires a lessee to record a lease asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. Leases in which the Company is the lessee will generally be accounted for as operating leases and we will record a lease asset and a lease liability. The guidance is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The standard requires a modified retrospective transition approach for all capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with an option to use certain transition relief. The Company expects to adopt this standard effective January 1, 2019, and is in the process of assessing the impact of this standard. Comprehensive Income In February 2018, the FASB issued an ASU that allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted. The guidance should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company is in the process of evaluating this guidance. New Accounting Standards Adopted Restricted Cash In November 2016, the FASB issued an ASU that requires companies to combine restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning and end of period total amounts on the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company adopted this standard effective January 1, 2018 and the effects of this standard were applied retrospectively to all prior periods presented within these Condensed Consolidated Financial Statements. As a result, we include restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning and end of period balances on our Condensed Consolidated Statements of Cash Flows. For the year ended December 31, 2017 and for the three months ended March 31, 2018 the effect of the change in accounting principle was the increase in cash, cash equivalents and restricted cash of $1.2 million, on our Condensed Consolidated Statements of Cash Flows. Revenue Recognition In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers" which amended the existing FASB Accounting Standards Codification Topic 605 (“ASC 605” or “legacy GAAP") and created Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606"). Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services and is recognized in amounts that reflect the consideration the entity expects to receive in exchange for those goods or services. ASC 606 also specifies the incremental costs of obtaining a contract with a customer and the costs of fulfilling a contract with a customer (if those costs are not within the scope of another Topic or Sub-Topic) should be deferred and recognized over the appropriate period of contract performance if they are expected to be recovered. In addition, ASC 606 requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The most significant impact to the Company's financial position and results of operations is the timing of expense recognition for certain sales commissions and to a lesser extent, the timing of revenue recognition for certain contracts that include certain performance-based fees. See Impact of Changes in Accounting Policies for additional information regarding the application of this new standard and its impact on our Condensed Consolidated Financial Statements. The Company adopted this standard effective January 1, 2018 utilizing the modified retrospective approach, or the cumulative catch-up transition method and applied ASC 606 to all contracts not completed as of January 1, 2018. The initial adoption impact to the Company’s financial position was not material. Under the transition guidance, the Company recorded a $3.3 million contract acquisition asset and corresponding offset to the opening accumulated deficit balance related to previously expensed sales commissions. The $3.3 million asset will be expensed over the next four years as follows: $1.5 million in 2018, $0.9 million in 2019, $0.6 million in 2020, and $0.3 million in 2021. Additionally, the Company recorded a $0.4 million net contract asset and corresponding offset to the opening accumulated deficit balance related to previously unrecognized revenue under legacy GAAP which would have been recognized in periods prior to 2018 under ASC 606. New Accounting Policies upon Adoption of ASC 606 Revenue Recognition The Company provides a comprehensive suite of selling and professional services to its clients. Selling services involves three categories of selling motions: recurring revenue management, customer success activities and inside sales efforts. Recurring revenue management includes hardware and software maintenance contract renewals, subscription renewals and extensions, asset and contract opportunity management, and sales enablement and quoting solutions. Customer success activities include onboarding, product adoption, health checks, account management and certain service support. Inside sales efforts include lead generation and conversion, cross-sell and upsell activities, technology refresh, warranty conversion, win-backs and recaptures, cloud migration, and client and asset management. Professional services involves providing data integration at scale with our systems and processes, combined with client data enhancement, enablement and optimization. The Company derives all of its revenue from contracts with clients. Revenue is measured based on the consideration specified in a contract. The Company’s contracts typically contain two distinct performance obligations that are sold on a variable and/or fixed consideration basis. These two distinct performance obligations are identified as selling services and professional services, the nature of which are described in the paragraph above. The typical length of a selling services contract is 2-3 years, while professional services performance obligations are generally fulfilled within 90 days. The Company generally invoices its clients for services on a monthly or quarterly basis with 30-day payment terms. The Company recognizes revenue when it satisfies the performance obligations identified in the contract, which is achieved through the transfer of control over the services to the client. The Company accounts for individual services within a single contract separately only if they are considered distinct. A service is distinct if it is separately identifiable from other services in the contract and if a client can benefit from the service on its own or with other resources that are readily available to the client. The total contract consideration, or transaction price, is allocated between the separate services identified in the contract based on their stand-alone selling price ("SSP"). SSP is determined based on a cost plus margin analysis for selling services and a standard hourly rate card for professional services. For professional services that are contractually priced different from SSP, the Company estimates the SSP using a standard hourly rate card and allocates a portion of the total contract consideration to reflect professional services revenue at SSP. The Company’s performance obligations are satisfied over time and revenue is recognized based on monthly or quarterly time increments (output method) and the variable volume of closed bookings during the period at the contractual commission rates for selling services, or proportional performance during the period at the SSP for professional services. Because the client simultaneously receives and consumes the benefit of the Company’s selling and professional services as it is provided, the time increment output method faithfully depicts the measure of progress in transferring control of services to the client. While multiple selling motions in a contract are performed at various times and patterns throughout the month or quarter and the number of closed bookings vary in any given period, each time increment of a service activity is substantially the same and has the same pattern of transfer to the client, and therefore, represents a series of distinct performance obligations that form a single performance obligation. As a result, the Company allocates all variable consideration in a contract to the selling services performance obligation in accordance with the variable consideration allocation exception provisions in ASC 606 (less amounts for which it is probable a significant reversal of revenue will occur when the uncertainties related to the variability are resolved) and applies a single measure of progress to record revenue in the period based on when the output of the variable number of closed bookings occurs or when the variable performance metric is achieved. The Company also applies the optional disclosure exemptions related to variable consideration and the requirement to disclose the remaining transaction price allocated to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation. Contract Acquisition Costs To obtain contracts with clients, the Company pays its sales team certain commissions based in part on the estimated value of the contract. Because these sales commissions are incurred and paid solely upon contract execution and would not have otherwise been due or payable, they are considered incremental costs to acquire the contract; and if expected to be recoverable, are capitalized as contract acquisition costs in the period the contract is executed. Capitalized sales commissions are amortized to sales and marketing expense based on the pattern of transfer of goods or services to which the asset relates over the estimated contract term, generally 2-3 years for a new client or five years for long-standing client relationships. The contract acquisition costs asset is evaluated for recoverability and impairment each reporting period throughout the amortization period. The Company does not capitalize incremental acquisition costs for contracts if the amortization period of the asset would otherwise have been one year or less. Significant Estimates and Judgments Significant estimates and judgments for revenue recognition and contract acquisition cost capitalization include: identifying and determining distinct performances obligations in contracts with clients, determining the timing of the satisfaction of performance obligations, estimating the timing and amount of variable consideration in a contract and assessing whether it should be constrained in determining the total contract consideration, determining SSP for each performance obligations and the methodology to allocate the total contract consideration to the distinct performance obligations. Our revenue contracts often include promises to transfer services involving multiple selling motions to a client. Determining whether those services are considered distinct performance obligations and qualify as a series of distinct performance obligations that represent a single performance obligation requires significant judgment. Also, due to the continuous nature of providing services to our clients, judgment is required in determining when control of the services is passed to the client. A significant portion of our contracts are based on a pay-for-performance model that provides the Company with commissions and revenue based on a volume of closed bookings each time period and variable consideration if certain performance targets are achieved during a given period of time (such as exceeding quarterly closure rate thresholds or achieving absolute dollar volume sales targets). Significant judgment is required to determine if this type of variable consideration should be constrained, and to what extent, until the risk of a significant revenue reversal is not probable. We also enter into contracts with multiple performance obligations that incorporate fixed consideration, pay-for-performance commissions and variable bonus commissions. Judgment is required to estimate the amount of variable consideration to include when estimating the total contract consideration and how to allocate the consideration if one of the distinct performance obligations is not sold at SSP. Impact of Changes in Accounting Policies The Company adopted ASC 606 as of January 1, 2018 using the modified retrospective approach by recognizing the cumulative effect of initially applying ASC 606 as an adjustment to the opening accumulated deficit balance as of January 1, 2018. As a result, the comparative information throughout these financial statements has not been adjusted and continues to be reported under legacy GAAP as disclosed in our 2017 annual report on Form 10-K. As described above, the Company changed its accounting policy for revenue recognition and certain sales commissions. The qualitative impact of the changes is discussed below and the quantitative impact of ASC 606 adoption on the Company’s Condensed Consolidated Financial Statements for the three months ended March 31, 2018 is presented in the tables below. Selling Services The Company historically recognized all performance based fees in the period when the specific performance criteria was achieved; however, under ASC 606, in certain circumstances the Company estimates the variable fees for which it is probable that a significant reversal will not occur and recognizes these estimated variable fees over the estimated contract life. For certain contracts, this could result in the recognition of the performance-based fees sooner than under ASC 605. Professional Services Prior to the adoption of ASC 606, the Company recognized revenue from professional services at the best estimated selling price upon client acceptance at the end of the implementation or data integration event due to the short-term nature of the services, which was typically 90 days from the start of the services. Under ASC 606, the Company recognizes revenue at SSP over time as control of the service is transferred to the client, resulting in the recognition of professional services fees sooner than under ASC 605. Sales Commissions The Company previously recognized a portion of certain sales commissions as sales and marketing expense when it was earned by the employee upon obtaining and executing a contract. Under ASC 606, the Company capitalizes this portion of certain sales commissions as contract acquisition costs and amortizes the amount ratably over the contract term for new clients or the estimated life of the client for long-standing client relationships. As a result, sales and marketing expenses are recognized later and over a longer period of time than under ASC 605. |
Cash, Cash Equivalents and Short-Term Investments | Cash, Cash Equivalents and Short-Term Investments Cash equivalents consist of highly liquid fixed-income investments with original maturities of three months or less at the time of purchase. Short-term investments consist of readily marketable debt securities with a remaining maturity of more than three months from time of purchase. The Company classifies its cash equivalents and short-term investments as “available for sale,” as these investments are free of trading restrictions and are available for use in the Company's daily operations. These marketable securities are carried at fair value, with the unrealized gains and losses, net of tax, reported as accumulated other comprehensive loss and included as a separate component of stockholders’ equity. Gains and losses are recognized when realized. Gains and losses are determined using the specific identification method. |
Litigation | Litigation The Company is subject to various legal proceedings and claims arising in the ordinary course of our business, including the cases discussed below. Although the results of litigation and claims cannot be predicted with certainty, the Company is currently not aware of any litigation or threats of litigation in which the final outcome could have a material adverse effect on our business, operating results, financial position or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. The Company records a contingent liability when it is probable that a loss has been incurred and the amount is reasonably estimable in accordance with accounting for contingencies. |
Income Taxes | The Company is subject to taxation in the U.S. and various state and foreign jurisdictions. Earnings from non-U.S. activities are subject to local country income tax. The Company computes its quarterly income tax provision by using a forecasted annual effective tax rate and adjusts for any discrete items arising during the quarter. The primary difference between the effective tax rate and the federal statutory tax rate relates to the valuation allowances on the Company’s net operating losses and foreign tax rate differences. For the three months ended March 31, 2018, the Company recorded income tax expense less than $0.1 million. This amount primarily consists of income and withholding taxes for foreign and state jurisdictions where the Company has profitable operations, as well as valuation allowance adjustments for certain U.S. tax jurisdictions. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Impacts of Adopting ASC 606 | The following tables summarize the impacts of adopting ASC 606 on the Company's Condensed Consolidated Financial Statements for the three months ended March 31, 2018:
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Fair Value of Financial Instruments (Tables) |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financial Instruments Measured at Fair Value | The following tables present the Company's cash, cash equivalents and short-term investments by significant investment category measured at fair value on a recurring basis (in thousands): For the Three Months Ended March 31, 2018:
For the Year Ended December 31, 2017:
(1) Level 1 valuations are based on quoted prices in active markets for identical assets or liabilities. (2) Level 2 valuations are based on inputs that are observable, either directly or indirectly, other than quoted prices included within Level 1. The following table summarizes the amortized cost and estimated fair value of money market mutual funds and short-term fixed income securities classified as short-term investments based on stated maturities as of March 31, 2018 (in thousands):
|
Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Carrying Amount of Liability Component | The net carrying amount of the liability component of the Notes consists of the following (in thousands):
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Schedule of Interest Expense on Notes Recognized | The following table presents interest expense recognized related to the Notes (in thousands):
|
Revenues, Contract Asset and Liability Balances and Contract Acquisition Costs (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue From Contracts with Clients | The following tables present the disaggregation of revenue for the three months ended March 31, 2018 from contracts with our clients as follows (in thousands): Revenue by Performance Obligation
Revenue by Geography
Revenue by Contract Pricing
|
Stock-Based Compensation (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock-Based Compensation Expense | The following table presents stock-based compensation expense as allocated within the Company's Condensed Consolidated Statements of Operations (in thousands):
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Summary of Option and Restricted Stock Activity | The following table presents total options outstanding, granted, exercised, expired or forfeited, as well as total options exercisable (shares and aggregate intrinsic value in thousands):
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Summary of Additional Information Concerning Vested RSUs and PSUs | The following table summarizes additional information concerning our vested restricted stock units and performance stock units (shares in thousands):
(1) 82 shares of common stock were issued for restricted stock units vested and the remaining 14 shares were withheld for taxes. |
Restructuring and Other (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring and Other Reserve Activities | Restructuring and other reserve activities are summarized as follows (in thousands):
|
The Company (Details) |
3 Months Ended |
---|---|
Mar. 31, 2018
language
| |
Accounting Policies [Abstract] | |
Number of languages (more than) | 45 |
Years of operating experience | 20 years |
Fair Value of Financial Instruments - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other-than-temporary impairment loss recorded in earnings | $ (2.0) | |
Significant Other Observable Inputs (Level 2) | Convertible Notes Payable | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of convertible notes | 145.9 | $ 145.9 |
Other Assets | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted cash | $ 1.2 | $ 1.2 |
Fair Value of Financial Instruments - Amortized Cost and Estimated Fair Value (Details) $ in Thousands |
Mar. 31, 2018
USD ($)
|
---|---|
Amortized Cost | |
Less than 1 year | $ 30,585 |
Due in 1 to 3 years | 109,316 |
Total | 139,901 |
Estimated Fair Value | |
Less than 1 year | 30,585 |
Due in 1 to 3 years | 109,316 |
Total | $ 139,901 |
Debt - Narrative (Details) $ / shares in Units, $ in Millions |
1 Months Ended | ||
---|---|---|---|
Aug. 31, 2013
USD ($)
$ / shares
|
Mar. 31, 2018 |
Feb. 03, 2015
USD ($)
|
|
Senior Convertible Notes | |||
Debt Instrument [Line Items] | |||
Proceeds from issuance of debt | $ 150.0 | ||
Interest rate | 1.50% | 1.50% | |
Conversion ratio | 0.061677 | ||
Conversion price (in dollars per share) | $ / shares | $ 16.21 | ||
Money market mutual funds | Letter of Credit | |||
Debt Instrument [Line Items] | |||
Collateral for letter of credit | $ 1.2 |
Debt - Net Carrying Amount of Liability Component (Details) - Senior Convertible Notes - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Liability Component | ||
Principal amount | $ 150,000 | $ 150,000 |
Unamortized debt discount | (3,121) | (5,336) |
Unamortized debt issuance costs | (290) | (497) |
Net carrying amount | $ 146,589 | $ 144,167 |
Debt - Interest Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Aug. 31, 2013 |
|
Interest Expense | |||
Total | $ 2,846 | $ 2,070 | |
Senior Convertible Notes | |||
Interest Expense | |||
Contractual interest expense at 1.5% per annum | 563 | 563 | |
Amortization of debt issuance costs | 206 | 191 | |
Accretion of debt discount | 2,215 | 2,050 | |
Total | $ 2,984 | $ 2,804 | |
Interest rate | 1.50% | 1.50% |
Commitments and Contingencies (Details) $ in Millions |
1 Months Ended | 3 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Aug. 23, 2016
plaintiff
|
Apr. 30, 2018
ft²
|
Mar. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Operating Leased Assets [Line Items] | ||||
Rent expense | $ 2.6 | $ 2.8 | ||
Loss contingency accrual | 1.5 | |||
Sarah Patton, et al v. ServiceSource Delaware, Inc | Pending Litigation | ||||
Operating Leased Assets [Line Items] | ||||
Number of plaintiffs | plaintiff | 3 | |||
San Fransisco Office Space | ||||
Operating Leased Assets [Line Items] | ||||
Operating lease, future minimum payments due | 3.3 | |||
Software License | ||||
Operating Leased Assets [Line Items] | ||||
Capital lease | 1.2 | |||
Capital lease, future minimum payments due | $ 1.0 | |||
Subsequent Event | San Fransisco Office Space | ||||
Operating Leased Assets [Line Items] | ||||
Rentable square feet | ft² | 7,215 |
Revenues, Contract Asset and Liability Balances and Contract Acquisition Costs - Disaggregation of Revenue (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Disaggregation of Revenue [Line Items] | |
Revenue | $ 58,585 |
Fixed consideration | |
Disaggregation of Revenue [Line Items] | |
Revenue | 17,742 |
Variable consideration | |
Disaggregation of Revenue [Line Items] | |
Revenue | 40,843 |
APJ | |
Disaggregation of Revenue [Line Items] | |
Revenue | 7,594 |
EMEA | |
Disaggregation of Revenue [Line Items] | |
Revenue | 15,522 |
NALA | |
Disaggregation of Revenue [Line Items] | |
Revenue | 35,469 |
Selling services | |
Disaggregation of Revenue [Line Items] | |
Revenue | 56,578 |
Professional services | |
Disaggregation of Revenue [Line Items] | |
Revenue | $ 2,007 |
Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation | $ 3,111 | $ 3,218 |
Cost of revenue | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation | 279 | 291 |
Sales and marketing | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation | 886 | 882 |
Research and development | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation | 64 | 99 |
General and administrative | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation | $ 1,882 | $ 1,946 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | |||
Provision for income tax expense | $ (13) | $ (290) | |
Unrecognized tax benefits | $ 900 | $ 900 |
Restructuring and Other - Narrative (Details) $ in Thousands |
1 Months Ended | 3 Months Ended | |
---|---|---|---|
May 31, 2017
location
|
Mar. 31, 2018
USD ($)
|
Mar. 31, 2017
USD ($)
|
|
Restructuring and Related Activities [Abstract] | |||
Number of locations where reduction of headcount and office spaces took place (location) | location | 4 | ||
Restructuring and other | $ 53 | $ 0 | |
Expected future cash outlays related to restructuring | $ 1,200 |
Restructuring and Other - Reserve Activities (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | $ 1,825 | |
Restructuring and other charges | 53 | $ 0 |
Cash paid | (851) | |
Change in estimates and non-cash charges | 143 | |
Ending Balance | 1,170 | |
Severance and Other Employee Costs | ||
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 71 | |
Restructuring and other charges | 0 | |
Cash paid | (68) | |
Change in estimates and non-cash charges | (2) | |
Ending Balance | 1 | |
Lease and Other Contract Termination Costs | ||
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 1,754 | |
Restructuring and other charges | 53 | |
Cash paid | (783) | |
Change in estimates and non-cash charges | 145 | |
Ending Balance | $ 1,169 |
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