UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
Commission file number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
(Address of principal executive offices) | (Zip Code) |
( |
(Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol |
| Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ |
| ☒ | |
Non-accelerated filer | ☐ | Smaller reporting company | ||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
As of July 23, 2021,
TABLE OF CONTENTS
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
ServiceSource International, Inc.
Consolidated Balance Sheets
(in thousands, except per share and par value amounts)
(unaudited)
| June 30, 2021 |
| December 31, 2020 | |||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | | $ | | ||
Accounts receivable, net | | | ||||
Prepaid expenses and other | | | ||||
Total current assets | | | ||||
Property and equipment, net | | | ||||
ROU assets | | | ||||
Contract acquisition costs | | | ||||
Goodwill | | | ||||
Other assets | | | ||||
Total assets | $ | | $ | | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | | $ | | ||
Accrued expenses | | | ||||
Accrued compensation and benefits | | | ||||
Revolver | | | ||||
Operating lease liabilities | | | ||||
Other current liabilities | | | ||||
Total current liabilities | | | ||||
Operating lease liabilities, net of current portion | | | ||||
Other long-term liabilities | | | ||||
Total liabilities | | | ||||
Commitments and contingencies (Note 9) | ||||||
Stockholders' equity: | ||||||
Preferred stock, $ | ||||||
Common stock, $ | | | ||||
Treasury stock | ( | ( | ||||
Additional paid-in capital | | | ||||
Accumulated deficit | ( | ( | ||||
Accumulated other comprehensive income | | | ||||
Total stockholders' equity | | | ||||
Total liabilities and stockholders' equity | $ | | $ | |
The accompanying notes are an integral part of these Consolidated Financial Statements
3
ServiceSource International, Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
| 2021 |
| 2020 |
| 2021 |
| 2020 | |||||
Net revenue | $ | | $ | | $ | | $ | | ||||
Cost of revenue | | | | | ||||||||
Gross profit | | | | | ||||||||
Operating expenses: | ||||||||||||
Sales and marketing | | | | | ||||||||
Research and development | | | | | ||||||||
General and administrative | | | | | ||||||||
Restructuring and other related costs | | | | | ||||||||
Total operating expenses | | | | | ||||||||
Loss from operations | ( | ( | ( | ( | ||||||||
Interest and other (expense) income, net | ( | | ( | ( | ||||||||
Loss before provision for income taxes | ( | ( | ( | ( | ||||||||
Provision for income tax benefit (expense) | | ( | ( | ( | ||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Net loss per common share: | ||||||||||||
Basic and diluted | ( | ( | ( | ( | ||||||||
Weighted-average common shares outstanding: | ||||||||||||
Basic and diluted | | | | |
The accompanying notes are an integral part of these Consolidated Financial Statements.
4
ServiceSource International, Inc.
Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
| 2021 |
| 2020 |
| 2021 |
| 2020 | |||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Other comprehensive income (loss): | ||||||||||||
Foreign currency translation adjustments | | ( | | ( | ||||||||
Other comprehensive income (loss): | | ( | | ( | ||||||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
The accompanying notes are an integral part of these Consolidated Financial Statements.
5
ServiceSource International, Inc.
Consolidated Statements of Stockholders’ Equity
(in thousands)
(unaudited)
Accumulated | ||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||
Common Stock | Treasury Shares/Stock | Paid-in | Accumulated- | Comprehensive | ||||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Income |
| Total | |||||||
Balance at January 1, 2021 | | $ | | ( | $ | ( | $ | | $ | ( | $ | | $ | | ||||||||
Net loss | — | — | — | — | — | ( | — | ( | ||||||||||||||
Other comprehensive income | — | — | — | — | — | — | | | ||||||||||||||
Stock-based compensation | — | — | — | — | | — | — | | ||||||||||||||
Issuance of common stock, RSUs | | — | — | — | — | — | — | — | ||||||||||||||
Proceeds from the exercise of stock options and ESPP | | — | — | — | | — | — | | ||||||||||||||
Balance at March 31, 2021 | | | ( | ( | | ( | | | ||||||||||||||
Net loss | — | — | — | — | — | ( | — | ( | ||||||||||||||
Other comprehensive income | — | — | — | — | — | — | | | ||||||||||||||
Stock-based compensation | — | — | — | — | | — | — | | ||||||||||||||
Issuance of common stock, RSUs | | — | — | — | — | — | — | — | ||||||||||||||
Proceeds from the exercise of stock options | | — | — | — | | — | — | | ||||||||||||||
Balance at June 30, 2021 | | $ | | ( | $ | ( | $ | | $ | ( | $ | | $ | |
Accumulated | ||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||
Common Stock | Treasury Shares/Stock | Paid-in | Accumulated- | Comprehensive | ||||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Income |
| Total | |||||||
Balance at January 1, 2020 | | $ | | ( | $ | ( | $ | | $ | ( | $ | | $ | | ||||||||
Net loss | — | — | — | — | — | ( | — | ( | ||||||||||||||
Other comprehensive income | — | — | — | — | — | — | | | ||||||||||||||
Stock-based compensation | — | — | — | — | | — | — | | ||||||||||||||
Issuance of common stock, RSUs | | | — | — | ( | — | — | — | ||||||||||||||
Proceeds from the exercise of stock options and ESPP | | — | — | — | | — | — | | ||||||||||||||
Balance at March 31, 2020 | | | ( | ( | | ( | | | ||||||||||||||
Net loss | — | — | — | — | — | ( | — | ( | ||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | ( | ( | ||||||||||||||
Stock-based compensation | — | — | — | — | | — | — | | ||||||||||||||
Issuance of common stock, RSUs | | — | — | — | — | — | — | — | ||||||||||||||
Balance at June 30, 2020 | | $ | | ( | $ | ( | $ | | $ | ( | $ | | $ | |
The accompanying notes are an integral part of these Consolidated Financial Statements.
6
ServiceSource International, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
For the Six Months Ended June 30, | ||||||
| 2021 |
| 2020 | |||
Cash flows from operating activities: | ||||||
Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||
Depreciation and amortization | | | ||||
Amortization of contract acquisition costs | | | ||||
Amortization of ROU assets | | | ||||
Stock-based compensation | | | ||||
Restructuring and other related costs | | | ||||
Other | | | ||||
Net changes in operating assets and liabilities: | ||||||
Accounts receivable, net | | | ||||
Prepaid expenses and other assets | | | ||||
Contract acquisition costs | ( | ( | ||||
Accounts payable | | ( | ||||
Accrued compensation and benefits | ( | ( | ||||
Operating lease liabilities | ( | ( | ||||
Accrued expenses | ( | ( | ||||
Other liabilities | | ( | ||||
Net cash provided by (used in) operating activities | | ( | ||||
Cash flows from investing activities: | ||||||
Purchases of property and equipment | ( | ( | ||||
Net cash used in investing activities | ( | ( | ||||
Cash flows from financing activities: | ||||||
Repayment on finance lease obligations | ( | ( | ||||
Proceeds from Revolver | — | | ||||
Repayment of Revolver | — | ( | ||||
Proceeds from issuance of common stock | | | ||||
Net cash (used in) provided by financing activities | ( | | ||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash | | ( | ||||
Net change in cash and cash equivalents and restricted cash | ( | | ||||
Cash and cash equivalents and restricted cash, beginning of period | | | ||||
Cash and cash equivalents and restricted cash, end of period | $ | | $ | | ||
Supplemental disclosures of cash flow information: | ||||||
Cash paid for interest | $ | | $ | | ||
Supplemental disclosures of non-cash activities: | ||||||
Purchases of property and equipment accrued in accounts payable and accrued expenses | $ | | $ | | ||
ROU assets obtained in exchange for new lease liabilities | $ | | $ | |
The accompanying notes are an integral part of these Consolidated Financial Statements.
7
ServiceSource International, Inc.
Notes to Consolidated Financial Statements
(unaudited)
Note 1 — The Company
ServiceSource is a leading provider of BPaaS solutions that enable the transformation of go-to-market organizations and functions for global technology clients. We design, deploy, and operate a suite of innovative solutions and complex processes that support and augment our clients’ B2B customer acquisition, engagement, expansion, and retention activities. Our clients - ranging from Fortune 500 technology titans to high-growth disruptors and innovators - rely on our holistic customer engagement methodology and process excellence, global scale and delivery footprint, and data analytics and business insights to deliver trusted business outcomes that have a meaningful and material positive impact to their long-term revenue and profitability objectives. Through our unique integration of people, process, and technology - leveraged against our more than
“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.
For a summary of commonly used industry terms and abbreviations used in this quarterly report on Form 10-Q, see the Glossary of Terms.
Note 2 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim Consolidated Financial Statements include the accounts of ServiceSource International, Inc. and its wholly owned subsidiaries and have been prepared in accordance with GAAP and with the instructions to Form 10-Q and Article 8 of Regulation S-X for interim financial information. All intercompany balances and transactions have been eliminated in consolidation. These financial statements do not include all the information required by GAAP for annual financial statements. The unaudited Consolidated Balance Sheet as of December 31, 2020 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, 2020 filed with the SEC on February 24, 2021. In the opinion of management, these 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 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, 2020, included in our annual report on Form 10-K. Interim results are not necessarily indicative of results for the entire year.
Use of Estimates
The preparation of the Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amount of net revenue and expenses during the reporting period.
The Company bases its estimates and judgments on historical experience and on various assumptions that it believes are reasonable under the circumstances. The Company has considered the effects of the COVID-19 pandemic in determining its estimates. However, future events are difficult to predict and subject to change, especially with the risks and uncertainties related to the impact of the COVID-19 pandemic, which could cause estimates and judgments to require adjustment. Actual results and outcomes may differ from our estimates.
8
Cash Equivalents and Restricted Cash
The Company follows a three-tier fair value hierarchy, which is described in detail in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
Cash equivalents consist of highly liquid investments with original maturities of three months or less at the time of purchase and are classified as a Level 1 investment.
Restricted cash consists of cash in money market accounts that are used to secure letters of credit in connection with
The Company did
Government Assistance
During 2020, ServiceSource received various grants from the Singapore government, including the Job Support Scheme, which assists enterprises in retaining their local employees during the COVID-19 pandemic. ServiceSource received and recognized income of $
New Accounting Standards Adopted
Income Taxes
In December 2019, the FASB issued an ASU that simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This ASU is effective for annual periods and interim periods for those annual periods beginning after December 15, 2020, with early adoption permitted. The Company adopted this standard effective January 1, 2021 and the effects of this standard were applied prospectively to eligible costs incurred on or after January 1, 2021. The adoption of this standard did not have a material impact on the Consolidated Financial Statements.
New Accounting Standards Issued but Not yet Adopted
Financial Instruments - Credit Losses
In June 2016, the FASB issued an ASU that amends the measurement of credit losses on financial instruments and requires measurement and recognition of expected versus incurred credit losses for financial assets held. This ASU is effective for annual periods and interim periods for those annual periods beginning after December 15, 2022, with early adoption permitted. This standard will apply to the Company’s accounts receivable and contract assets. Based on our current analysis, the Company does not expect the adoption to have a material impact on the Consolidated Financial Statements as credit losses from trade receivables have historically been insignificant. The Company will adopt this standard effective January 1, 2023.
9
Note 3 — Debt
Revolving Line of Credit
In July 2018, ServiceSource, together with its wholly owned subsidiary, ServiceSource Delaware, Inc., entered into the 2018 Credit Agreement, providing for a $
As of June 30, 2021, the Company had $
The obligations under the 2018 Credit Agreement were secured by substantially all the assets of ServiceSource and certain of its subsidiaries, including pledges of equity in certain of the Company’s subsidiaries. The 2018 Credit Agreement had financial covenants which the Company was in compliance with as of June 30, 2021 and December 31, 2020.
In July 2021, ServiceSource, together with its wholly owned subsidiary, ServiceSource Delaware, Inc., entered into the 2021 Credit Agreement, which provides for a $
During July 2021, the Company borrowed $
Interest Expense
Interest expense related to the amortization of debt issuance costs and interest expense associated with the Company’s debt obligation was $
Note 4 — Leases
The Company has operating leases for office space and finance leases for certain equipment under non-cancelable agreements with various expiration dates through May 2030. Certain office leases include the option to extend the term between
During 2021, the Company entered into a sublease agreement through the end of the original lease term with a third-party for two floors of its Manila office space and extended its lease for a portion of its Yokohama office space through May 2024.
10
Supplemental income statement information related to leases was as follows:
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
| 2021 |
| 2020 |
| 2021 |
| 2020 | |||||
(in thousands) | ||||||||||||
Operating lease cost | $ | | $ | | $ | | $ | | ||||
Finance lease cost: | ||||||||||||
Amortization of leased assets | | | | | ||||||||
Interest on lease liabilities | | | | | ||||||||
Total finance lease cost | | | | | ||||||||
Sublease income | ( | ( | ( | ( | ||||||||
Net lease cost | $ | | $ | | $ | | $ | |
Supplemental balance sheet information related to leases was as follows:
| June 30, 2021 |
| December 31, 2020 | |||
(in thousands) | ||||||
Operating leases: | ||||||
ROU assets | $ | | $ | | ||
Operating lease liabilities | $ | | $ | | ||
Operating lease liabilities, net of current portion | | | ||||
Total operating lease liabilities | $ | | $ | | ||
Finance leases: | ||||||
Property and equipment | $ | | $ | | ||
Accumulated depreciation | ( | ( | ||||
$ | | $ | | |||
$ | | $ | | |||
| | |||||
Total finance lease liabilities | $ | | $ | |
Lease term and discount rate information was as follows:
For the Six Months Ended June 30, | |||||||
| 2021 | 2020 | |||||
Weighted-average remaining lease term (in years): | |||||||
Operating lease | |||||||
Finance lease | |||||||
Weighted-average discount rate: | |||||||
Operating lease | | % | | % | |||
Finance lease | | % | | % |
11
Maturities of lease liabilities were as follows as of June 30, 2021:
| Operating Leases |
| Operating Sublease |
| Finance Leases |
| Total | |||||
(in thousands) | ||||||||||||
Remainder of 2021 | $ | | $ | ( | $ | | $ | | ||||
2022 | | ( | | | ||||||||
2023 | | ( | | | ||||||||
2024 | | | | | ||||||||
2025 | | | | | ||||||||
Thereafter | | | | | ||||||||
Total lease payments | | ( | | | ||||||||
Less: interest | ( | — | ( | ( | ||||||||
Total | $ | | $ | ( | $ | | $ | |
Note 5 — Revenue Recognition
The following tables present the disaggregation of revenue from contracts with our clients:
Revenue by Performance Obligation
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
| 2021 |
| 2020 |
| 2021 |
| 2020 | |||||
(in thousands) | ||||||||||||
Selling services | $ | | $ | | $ | | $ | | ||||
Professional services | | | | | ||||||||
Total revenue | $ | | $ | | $ | | $ | |
Revenue by Geography
Revenue for each geography generally reflects commissions earned from sales of service contracts managed from revenue delivery centers in that geography and subscription sales and professional services to deploy the Company’s solutions. Predominantly all the service contracts sold and managed by the revenue delivery centers relate to end customers located in the same geography. All NALA revenue represents revenue generated within the U.S.
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
| 2021 |
| 2020 |
| 2021 |
| 2020 | |||||
(in thousands) | ||||||||||||
NALA | $ | | $ | | $ | | $ | | ||||
EMEA | | | | | ||||||||
APJ | | | | | ||||||||
Total revenue | $ | | $ | | $ | | $ | |
Revenue by Contract Pricing
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
| 2021 |
| 2020 |
| 2021 |
| 2020 | |||||
(in thousands) | ||||||||||||
Variable consideration | $ | | $ | | $ | | $ | | ||||
Fixed consideration | | | | | ||||||||
Total revenue | $ | | $ | | $ | | $ | |
Contract Balances
As of June 30, 2021, contract assets and liabilities were $
12
Transaction Price Allocated to Remaining Performance Obligations
As of June 30, 2021, assuming none of the Company’s current contracts with fixed consideration are renewed, the Company estimates receiving approximately $
Contract Acquisition Costs
As of June 30, 2021 and December 31, 2020, capitalized contract acquisition costs were $
Impairment recognized on contract costs was insignificant for the three and six months ended June 30, 2021 and 2020.
Note 6 — Stock-Based Compensation
ESPP
The Company previously offered an ESPP until its expiration in February 2021.
2021 PSU Awards
During March 2021, the Company granted PSUs under the 2020 Plan to certain executives in which the number of shares ultimately received depends on the Company’s achievement of
Additionally, certain of the Company’s senior leaders elected to receive a portion of their annual cash corporate incentive plan in PSUs. The Company granted the PSUs under the 2020 Plan during March 2021. The number of shares ultimately received depends on the Company’s achievement of specified revenue, Adjusted EBITDA, and free cash flow performance goals for fiscal year 2021. The aggregate target number of shares subject to these awards is
13
Stock-Based Compensation Expense
The following table presents stock-based compensation expense as allocated within the Company’s Consolidated Statements of Operations:
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
| 2021 |
| 2020 |
| 2021 |
| 2020 | |||||
(in thousands) | ||||||||||||
Cost of revenue | $ | | $ | | $ | | $ | | ||||
Sales and marketing | | | | | ||||||||
Research and development | | | | | ||||||||
General and administrative | | | | | ||||||||
Total stock-based compensation | $ | | $ | | $ | | $ | |
The above table does not include capitalized stock-based compensation related to internal-use software that was insignificant for the three and six months ended June 30, 2021 and 2020.
Stock Awards
A summary of the Company’s stock option activity and related information was as follows:
Weighted- | ||||||||||||
Weighted- | Average | |||||||||||
Average | Remaining | |||||||||||
Exercise | Contractual | |||||||||||
| Shares |
| Price |
| Life (Years) |
| Intrinsic Value | |||||
(in thousands) | (in thousands) | |||||||||||
Outstanding as of December 31, 2020 | | $ | | $ | | |||||||
Exercised | ( | $ | | |||||||||
Expired and/or forfeited | ( | $ | | |||||||||
Outstanding as of June 30, 2021 | | $ | | $ | | |||||||
Exercisable as of June 30, 2021 | | $ | | $ | |
As of June 30, 2021, there was $
A summary of the Company’s RSU and PSU activity and related information was as follows:
Weighted- | ||||||
Average Grant | ||||||
| Units |
| Date Fair Value | |||
(in thousands) | ||||||
Non-vested as of December 31, 2020 | | $ | | |||
Granted | | $ | | |||
Vested | ( | $ | | |||
Forfeited | ( | $ | | |||
Non-vested as of June 30, 2021 | | $ | |
As of June 30, 2021, there was $
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 and unvested RSUs and PSUs. The Company excluded from diluted earnings per share the weighted-average common share equivalents related to
14
Note 7 — Restructuring and Other Related Costs
The Company has undergone restructuring efforts to better align its cost structure with its business and market conditions. These restructuring efforts include severance and other employee costs, lease and other contract termination costs and asset impairments. Severance and other employee costs include severance payments, related employee benefits, stock-based compensation related to the accelerated vesting of certain equity awards 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. Asset impairments include charges related to leasehold improvements and furniture in spaces vacated or no longer in use. The restructuring plans and future cash outlays are recorded in "Accrued expenses," "Accrued compensation," and "Other long-term liabilities" in the Consolidated Balance Sheet as of December 31, 2020. There are no future restructuring plans and future cash outlays as of June 30, 2021.
During 2020, the Company announced a restructuring effort to align with its virtual-first operating model and reduce the operating cost structure resulting in a reduction of headcount and office lease costs. The Company recognized charges related to this restructuring effort of $
The following table presents a reconciliation of the beginning and ending fair value liability balance related to the 2020 restructuring effort:
Severance and Other | Lease Termination | ||||||||
| Employee Costs |
| Costs |
| Total | ||||
(in thousands) | |||||||||
Balance as of January 1, 2020 | $ | | $ | | $ | | |||
Restructuring and other related costs | | | | ||||||
Cash paid | ( | | ( | ||||||
Balance as of December 31, 2020 | | | | ||||||
Restructuring and other related costs | | | | ||||||
Cash paid | ( | ( | ( | ||||||
Balance as of June 30, 2021 | $ | | $ | | $ | |
Note 8 — 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. The "Provision for income tax expense" in the Consolidated Statements of Operations 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 the U.S., Ireland, and Singapore because those losses are offset by a full valuation allowance. The tax years 2012 through 2020 generally remain subject to examination by federal, state, and foreign tax authorities.
The gross amount of the Company’s unrecognized tax benefits was $
15
Note 9 — Commitments and Contingencies
Letters of Credit
In connection with
Non-cancelable Service Contract Commitments
Future minimum payments under non-cancelable service contract commitments were as follows:
| June 30, 2021 | ||
(in thousands) | |||
Remainder of 2021 | $ | | |
2022 | | ||
2023 | | ||
2024 | | ||
Thereafter | | ||
Total | $ | |
16
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following MD&A should be read in conjunction with our unaudited Consolidated Financial Statements and notes thereto which appear elsewhere in this quarterly report on Form 10-Q.
This report includes estimates, projections, statements relating to our business plans, objectives, and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward looking statements may appear throughout this report. These forward-looking statements are generally identified by the words “believe,” “project,” "target," "forecast," “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and variations of such words or similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, those identified elsewhere in this report, including the risks and uncertainties related to the impact and duration of the COVID-19 pandemic, as well as those discussed in the sections of our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 24, 2021 entitled “Forward Looking Statements” and “Risk Factors” and in our other filings with the SEC. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise, except as required by applicable law.
Overview
ServiceSource is a leading provider of BPaaS solutions that enable the transformation of go-to-market organizations and functions for global technology clients. We design, deploy, and operate a suite of innovative solutions and complex processes that support and augment our clients’ B2B customer acquisition, engagement, expansion, and retention activities. Our clients - ranging from Fortune 500 technology titans to high-growth disruptors and innovators - rely on our holistic customer engagement methodology and process excellence, global scale and delivery footprint, and data analytics and business insights to deliver trusted business outcomes that have a meaningful and material positive impact to their long-term revenue and profitability objectives. Through our unique integration of people, process, and technology - leveraged against our more than 20 years of experience and domain expertise in the cloud, software, hardware, medical device and diagnostic equipment, and industrial IoT sectors - we effect and transact billions of dollars of B2B commerce in more than 175 countries on our clients’ behalf annually.
“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.
For a summary of commonly used industry terms and abbreviations used in this Form 10-Q, see the Glossary of Terms.
Impact of the COVID-19 Pandemic
With the global outbreak of COVID-19 and the declaration of a pandemic by the World Health Organization on March 11, 2020, we created a dedicated crisis team to proactively implement our business continuity plans. By March 19, 2020, more than 95% of our employees had moved from an in-office to a work-from-home environment and as of April 1, 2020, we transitioned to a 100% virtual operating model. As a result of this successful work-from-home implementation, we have shifted to a virtual-first operating model whereby our employees will continue to primarily work from their home offices and our facilities will be used for collaboration, innovation, and connection. Additionally, this model includes virtual sourcing, hiring, and onboarding for new employees as well as a process for driving performance and culture in a virtual environment. As a result of the implementation of these business continuity measures, we have not experienced material disruptions in our operations.
We believe we have sufficient liquidity on hand to continue business operations even during periods of volatility such as those experienced since early 2020. As of June 30, 2021, we had total available liquidity of $42.1 million consisting of cash on hand and availability under our Revolver. See "Liquidity and Capital Resources" for additional information.
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There was no material adverse impact on the results of operations for the three and six months ended June 30, 2021 as a result of the COVID-19 pandemic. We expect to continue to invest capital to allow our employees to function in our virtual, work-from-home operating model. However, we are benefiting and will continue to benefit from decreases in certain costs related to our facilities and reduced travel and entertainment costs.
During 2020, ServiceSource received various grants from the Singapore government, including the Job Support Scheme, which assists enterprises in retaining their local employees during the COVID-19 pandemic. ServiceSource received $1.3 million related to these grants during the year ended December 31, 2020, $0.1 million during the three and six months ended June 30, 2021, and is expected to receive an additional $0.1 million through August 2021.
The situation surrounding COVID-19 remains fluid and the potential for a negative impact on our financial condition and results of operations increases the longer the virus impacts the economic activity in the U.S. and globally. See “Risk Factors” in Part I, Item 1A of our annual report on Form 10-K for the year ended December 31, 2020 for additional information.
Key Financial Results For the Three Months Ended June 30, 2021
● | GAAP revenue was $46.3 million compared with $47.6 million reported for the same period in 2020. |
● | GAAP net loss was $5.1 million or $0.05 per diluted share, compared with GAAP net loss of $5.4 million or $0.06 per diluted share reported for the same period in 2020. |
● | Adjusted EBITDA, a non-GAAP financial measure, was negative $0.2 million compared with negative $0.4 million reported for the same period in 2020. See “Non-GAAP Financial Measurements” below for a reconciliation of Adjusted EBITDA from net loss. |
● | Ended the quarter with $34.8 million of cash and cash equivalents and restricted cash and $15.0 million of borrowings under the Company’s $40.0 million Revolver. |
Results of Operations
For the Three Months Ended June 30, 2021 Compared to the Same Period Ended June 30, 2020
Net Revenue, Cost of Revenue and Gross Profit
Net revenue is primarily attributable to commissions we earn from the sale of renewals of maintenance, support and subscription agreements on behalf of our clients. We also generate revenues from selling professional services.
Cost of revenue includes employee compensation, technology costs, including those related to the delivery of our cloud-based technologies, and allocated overhead expenses which consist of depreciation, amortization of internally developed software, facility and technology costs.
For the Three Months Ended June 30, | ||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||
% of Net | % of Net | |||||||||||||||||||
| Amount |
| Revenue |
| Amount |
| Revenue |
| $ Change |
| % Change | |||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||
Net revenue | $ | 46,307 | 100 | % | $ | 47,638 | 100 | % | $ | (1,331) | (3) | % | ||||||||
Cost of revenue | 35,395 | 76 | % | 34,645 | 73 | % | 750 | 2 | % | |||||||||||
Gross profit | $ | 10,912 | 24 | % | $ | 12,993 | 27 | % | $ | (2,081) | (16) | % |
Net revenue decreased 1.3 million, or 3%, for the three months ended June 30, 2021 compared to the same period in 2020, primarily due to client churn and lower bookings.
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Cost of revenue increased $0.8 million, or 2%, for the three months ended June 30, 2021 compared to the same period in 2020, primarily due to the following:
● | $0.9 million increase in employee related costs primarily associated with higher commissions; |
● | $0.6 million increase in depreciation and amortization expense; and |
● | $0.1 million increase in information technology costs; partially offset by |
● | $1.0 million decrease in facility costs primarily related to transitioning to a virtual-first operating model and sublease income. |
Operating Expenses
For the Three Months Ended June 30, | ||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||
|
| % of Net |
| % of Net | ||||||||||||||||
| Amount |
| Revenue |
| Amount |
| Revenue |
| $ Change |
| % Change | |||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Sales and marketing | $ | 4,059 | 9 | % | $ | 6,142 | 13 | % | $ | (2,083) | (34) | % | ||||||||
Research and development | 1,181 | 3 | % | 1,516 | 3 | % | (335) | (22) | % | |||||||||||
General and administrative | 10,624 | 23 | % | 10,619 | 22 | % | 5 | — | % | |||||||||||
Restructuring and other related costs | 54 | — | % | 236 | — | % | (182) | (77) | % | |||||||||||
Total operating expenses | $ | 15,918 | 34 | % | $ | 18,513 | 39 | % | $ | (2,595) | (14) | % |
Sales and Marketing
Sales and marketing expenses primarily consist of employee compensation expense and sales commissions paid to our sales and marketing employees, amortization of contract acquisition costs, marketing programs and events, and allocated overhead expenses, which consist of depreciation, amortization of internally developed software, and facility and technology costs.
Sales and marketing expenses decreased $2.1 million, or 34%, for the three months ended June 30, 2021 compared to the same period in 2020, primarily due to a $1.4 million decrease in employee related costs associated with a reduction in headcount and lower bookings and a $0.7 million decrease in information technology and facility costs related to transitioning to a virtual-first operating model.
Research and Development
Research and development expenses primarily consist of employee compensation expense, third-party consultant costs and allocated overhead expenses, which consist of amortization of internally developed software, facility and technology costs.
Research and development expenses decreased $0.3 million, or 22%, for the three months ended June 30, 2021 compared to the same period in 2020, primarily due to $0.2 million decrease in information technology costs and a $0.2 million decrease in other professional fees, partially offset by a $0.1 million reduction in third-party capitalizable software development.
General and Administrative
General and administrative expenses primarily consist of employee compensation expense for our executive, finance, human resources, and legal functions and expenses for professional fees for accounting, tax and legal services, as well as allocated overhead expenses, which consist of depreciation, amortization of internally developed software, facility and technology costs.
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General and administrative expenses remained flat for the three months ended June 30, 2021 compared to the same period in 2020, primarily due to the following:
● | $0.8 million increase in information technology and facility costs; partially offset by |
● | $0.4 million decrease in depreciation and amortization expense; and |
● | $0.3 million decrease in employee related costs associated with a reduction in headcount. |
Restructuring and Other Related Costs
Restructuring and other related costs consist primarily of employees’ severance payments and related employee benefits, related legal fees and charges related to lease termination costs.
Restructuring and other related costs decreased $0.2 million, or 77% for the three months ended June 30, 2021 compared to the same period in 2020, due to timing of headcount reductions related to the 2019 and 2020 restructuring efforts resulting in a reduction of headcount and office lease costs compared to the three months ended June 30, 2020.
Interest and Other Expense, Net
Interest and other expense, net consists of interest expense associated with our Revolver, imputed interest from finance lease payments, interest income earned on our cash and cash equivalents, amortization of debt issuance costs and foreign exchange gains and losses.
For the Three Months Ended June 30, | ||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||
% of Net | % of Net | |||||||||||||||||||
| Amount |
| Revenue |
| Amount |
| Revenue |
| $ Change |
| % Change | |||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||
Interest expense | $ | (108) | — | % | $ | (235) | — | % | $ | 127 | (54) | % | ||||||||
Other (expense) income, net | $ | (256) | (1) | % | $ | 559 | 1 | % | $ | (815) | (146) | % |
Interest expense decreased $0.1 million, or 54%, for the three months ended June 30, 2021 compared to the same period in 2020, primarily due to the timing of borrowings on the Revolver.
Other expense, net increased $0.8 million, or 146%, for the three months ended June 30, 2021 compared to the same period in 2020, primarily due to foreign currency fluctuations.
Provision for Income Tax
For the Three Months Ended June 30, | ||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||
% of Net | % of Net | |||||||||||||||||||
| Amount |
| Revenue |
| Amount |
| Revenue |
| $ Change |
| % Change | |||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||
Provision for income tax benefit (expense) | $ | 279 | 0 | % | $ | (161) | — | % | $ | 440 | (273) | % |
Provision for income tax benefit (expense) changed $0.4 million for the three months ended June 30, 2021 compared to the same period in 2020 primarily resulting from a one year income tax holiday extension for the year ended December 31, 2020 subsequently approved during the three months ended June 30, 2021 that allowed the Company to reverse the income tax expense accrued for the year ended December 31, 2020.
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For the Six Months Ended June 30, 2021 Compared to the Same Period Ended June 30, 2020
Net Revenue, Cost of Revenue and Gross Profit
For the Six Months Ended June 30, | ||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||
|
| % of Net |
| % of Net | ||||||||||||||||
| Amount |
| Revenue |
| Amount |
| Revenue |
| $ Change |
| % Change | |||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||
Net revenue | $ | 91,330 | 100 | % | $ | 97,752 | 100 | % | $ | (6,422) | (7) | % | ||||||||
Cost of revenue | 69,462 | 76 | % | 70,205 | 72 | % | (743) | (1) | % | |||||||||||
Gross profit | $ | 21,868 | 24 | % | $ | 27,547 | 28 | % | $ | (5,679) | (21) | % |
Net revenue decreased $6.4 million, or 7%, for the six months ended June 30, 2021 compared to the same period in 2020, primarily due to client churn and lower bookings.
Cost of revenue decreased $0.7 million, or 1%, for the six months ended June 30, 2021 compared to the same period in 2020, primarily due to the following:
● | $1.8 million decrease in facility costs primarily related to transitioning to a virtual-first operating model and sublease income; and |
● | $0.3 million decrease in employee related costs associated with a reduction in headcount and lower travel and entertainment expenditures; partially offset by |
● | $1.2 million increase in depreciation and amortization expense. |
Operating Expenses
For the Six Months Ended June 30, | ||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||
% of Net | % of Net | |||||||||||||||||||
| Amount |
| Revenue |
| Amount |
| Revenue |
| $ Change |
| % Change | |||||||||
| (in thousands) |
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||||
Operating expenses: | ||||||||||||||||||||
Sales and marketing | $ | 8,089 | 9 | % | $ | 13,410 | 14 | % | $ | (5,321) | (40) | % | ||||||||
Research and development | 2,341 | 3 | % | 2,697 | 3 | % | (356) | (13) | % | |||||||||||
General and administrative | 22,814 | 25 | % | 21,307 | 22 | % | 1,507 | 7 | % | |||||||||||
Restructuring and other related costs | 974 | 1 | % | 703 | 1 | % | 271 | 39 | % | |||||||||||
Total operating expenses | $ | 34,218 | 37 | % | $ | 38,117 | 39 | % | $ | (3,899) | (10) | % |
Sales and Marketing
Sales and marketing expenses decreased $5.3 million, or 40%, for the six months ended June 30, 2021 compared to the same period in 2020, primarily due to a $3.7 million decrease in employee related costs associated with a reduction in headcount, lower bookings and lower travel and entertainment expenditures, a $1.5 million decrease in information technology and facility costs related to transitioning to a virtual-first operating model, and a $0.2 million decrease in marketing cost.
Research and Development
Research and development expenses decreased $0.4 million, or 13%, for the six months ended June 30, 2021 compared to the same period in 2020, primarily due to $0.4 million decrease in information technology costs and a $0.3 million decrease in professional fees, partially offset by a $0.4 million reduction in third-party capitalizable software development costs.
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General and Administrative
General and administrative expenses increased $1.5 million, or 7%, for the six months ended June 30, 2021 compared to the same period in 2020, primarily due to the following:
● | $1.9 million increase in information technology and facility costs; and |
● | $1.4 million increase in stock-based compensation costs; partially offset by |
● | $0.9 million decrease in employee related costs associated with a reduction in headcount; and |
● | $0.7 million decrease in depreciation and amortization expense. |
Restructuring and Other Related Costs
Restructuring and other related costs increased $0.3 million, or 39% for the six months ended June 30, 2021 compared to the same period in 2020, due to timing of headcount reductions related to the 2019 and 2020 restructuring efforts resulting in a reduction of headcount and office lease costs compared to the six months ended June 30, 2020.
Interest and Other Expense, Net
For the Six Months Ended June 30, | ||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||
% of Net | % of Net | |||||||||||||||||||
| Amount |
| Revenue |
| Amount |
| Revenue |
| $ Change |
| % Change | |||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||
Interest expense | $ | (266) | — | % | $ | (316) | — | % | $ | 50 | (16) | % | ||||||||
Other expense, net | $ | (1,258) | (1) | % | $ | (234) | — | % | $ | (1,024) | 438 | % |
Interest expense decreased $0.1 million, or 16%, for the six months ended June 30, 2021 compared to the same period in 2020, primarily due to the timing of borrowings on the Revolver.
Other expense, net increased $1.0 million, or 438%, for the six months ended June 30, 2021 compared to the same period in 2020, primarily due to foreign currency fluctuations.
Provision for Income Tax
For the Six Months Ended June 30, | ||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||
% of Net | % of Net | |||||||||||||||||||
| Amount |
| Revenue |
| Amount |
| Revenue |
| $ Change |
| % Change | |||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||
Provision for income tax expense | $ | (52) | (0) | % | $ | (179) | — | % | $ | 127 | (71) | % |
Provision for income tax expense for the six months ended June 30, 2021 resulted primarily from profitable jurisdictions where no valuation allowance has been provided. Provision for income tax expense decreased $0.1 million for the six months ended June 30, 2021 compared to the same period in 2020, due to a decrease in profitable operations in certain foreign jurisdictions.
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Liquidity and Capital Resources
Our primary operating cash requirements include the payment of compensation and related employee costs and costs for our facilities and information technology infrastructure. Historically, we have financed our operations from cash provided by our operating activities. We believe our existing cash and cash equivalents will be sufficient to meet our working capital and capital expenditure needs over the next twelve months.
We have considered the effects of the COVID-19 pandemic, including customer purchasing and renewal decisions, in our assessment of the sufficiency of our liquidity and capital resources. We will continue to monitor our financial position to the extent that pandemic-related challenges continue.
As of June 30, 2021, we had cash and cash equivalents of $32.5 million, which primarily consist of demand deposits and money market mutual funds. Included in cash and cash equivalents was $8.0 million held by our foreign subsidiaries used to satisfy their operating requirements. We consider the undistributed earnings of ServiceSource Europe Ltd. and ServiceSource International Singapore Pte. Ltd. permanently reinvested in foreign operations and have not provided for U.S. income taxes on such earnings. As of June 30, 2021, the Company had no unremitted earnings from our foreign subsidiaries.
In July 2018, ServiceSource, together with its wholly owned subsidiary, ServiceSource Delaware, Inc., entered into the 2018 Credit Agreement, providing for a $40.0 million revolving line of credit allowing each borrower to borrow against its domestic receivables as defined in the 2018 Credit Agreement. The Revolver in the 2018 Credit Agreement was scheduled to mature in July 2021 and was repaid in full in connection with the Company’s entry into the 2021 Credit Agreement. Under the 2018 Credit Agreement, the Revolver bore interest at a variable rate per annum based on the greater of the prime rate, the Federal Funds rate plus 0.50% or the one-month LIBOR rate plus 1.00%, plus, in each case, a margin of 1.00% for base rate borrowings or 2.00% for Eurodollar borrowings.
As of June 30, 2021, the Company had $15.0 million of borrowings under the Revolver through a one-month Eurodollar borrowing at an effective interest rate of 2.10% maturing July 2021. An additional $9.6 million was available for borrowing under the Revolver as of June 30, 2021. The Eurodollar borrowings may be extended upon maturity, converted into a base rate borrowing upon maturity or require an incremental payment if the borrowing base decreases below the current amount outstanding during the term of the Eurodollar borrowing.
The obligations under the 2018 Credit Agreement were secured by substantially all the assets of ServiceSource and certain of its subsidiaries, including pledges of equity in certain of ServiceSource’s subsidiaries. The 2018 Credit Agreement had financial covenants which the Company was in compliance with as of June 30, 2021 and December 31, 2020.
In July 2021, ServiceSource, together with its wholly owned subsidiary, ServiceSource Delaware, Inc., entered into the 2021 Credit Agreement, which provides for a $35.0 million revolving line of credit allowing each borrower to borrow against its receivables as defined in the 2021 Credit Agreement. At the Company’s request and subject to customary conditions, the aggregate commitments under the 2021 Credit Agreement may be increased up to an additional $10.0 million, for a total maximum commitment amount of $45.0 million. The Revolver in the 2021 Credit Agreement matures in July 2024 and bears interest at a rate equal to BSBY plus 2.00% to 2.50% per annum or, at our election, an alternate base rate plus 1.00% to 1.50% per annum. The obligations under the 2021 Credit Agreement are secured by substantially all assets of ServiceSource and certain of its subsidiaries, including pledges of equity in certain of the Company’s subsidiaries.
During July 2021, the Company borrowed $3.5 million under the Revolver through a one-month BSBY borrowing at an effective interest rate of 2.32% maturing August 2021. Proceeds from the Revolver are used for working capital and general corporate purposes.
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Letters of Credit and Restricted Cash
In connection with two of our leased facilities, the Company is required to maintain two letters of credit totaling $2.3 million. The letters of credit are secured by $2.3 million of cash in money market accounts, which are classified as restricted cash in "Other assets" in the Consolidated Balance Sheets.
Cash Flows
The following table presents a summary of our cash flows:
For the Six Months Ended June 30, | ||||||
| 2021 |
| 2020 | |||
(in thousands) | ||||||
Net cash provided by (used in) operating activities | $ | 77 | $ | (3,070) | ||
Net cash used in investing activities | (2,092) | (2,596) | ||||
Net cash (used in) provided by financing activities | (179) | 19,595 | ||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash | 626 | (68) | ||||
Net change in cash and cash equivalents and restricted cash | $ | (1,568) | $ | 13,861 |
Depreciation and amortization expense were comprised of the following:
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
| 2021 |
| 2020 |
| 2021 |
| 2020 | |||||
(in thousands) | ||||||||||||
Internally developed software amortization | $ | 2,296 | $ | 1,849 | $ | 4,488 | $ | 3,614 | ||||
Property and equipment depreciation | 1,346 | 1,574 | 2,811 | 3,205 | ||||||||
Total depreciation and amortization | $ | 3,642 | $ | 3,423 | $ | 7,299 | $ | 6,819 |
Operating Activities
Net cash provided by operating activities increased $3.1 million for the six months ended June 30, 2021 compared to the six months ended June 30, 2020, primarily as a result of improved cash collections from our clients during the current period compared to the prior period.
Investing Activities
Net cash used in investing activities decreased $0.5 million for the six months ended June 30, 2021 compared to the six months ended June 30, 2020, due to decreased cash outflows from purchases of property and equipment during the six months ended June 30, 2021.
Financing Activities
Net cash provided by financing activities decreased $19.8 million for the six months ended June 30, 2021 compared to the six months ended June 30, 2020, primarily as a result of $20.0 million in net cash inflows from borrowings on the Revolver during the six months ended June 30, 2020.
Off-Balance Sheet Arrangements
As of June 30, 2021, we did not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. The Company’s significant accounting policies and estimates are described in "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates" in our Annual Report on Form 10-K for the year ended
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December 31, 2020. These policies were followed in preparing the Consolidated Financial Statements for the three and six months ended June 30, 2021 and are consistent with the year ended December 31, 2020.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see Note 2 - "Summary of Significant Accounting Policies" to the Consolidated Financial Statements.
Non-GAAP Financial Measurements
ServiceSource believes net income (loss), as defined by GAAP, is the most appropriate financial measure of our operating performance; however, ServiceSource considers Adjusted EBITDA to be useful supplemental, non-GAAP financial measure of our operating performance. We believe Adjusted EBITDA can assist investors in understanding and assessing our operating performance on a consistent basis, as it removes the impact of the Company’s capital structure and other non-cash or non-recurring items from operating results and provides an additional tool to compare ServiceSource’s financial results with other companies in the industry, many of which present similar non-GAAP financial measures.
EBITDA consists of net income (loss) plus provision for income tax expense (benefit), interest and other expense (income), net and depreciation and amortization. Adjusted EBITDA consists of EBITDA plus stock-based compensation, restructuring and other related costs, and amortization of contract acquisition costs related to the initial adoption of ASC 606.
This non-GAAP measure should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP.
The following table presents the reconciliation of "Net loss" to Adjusted EBITDA:
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||||
(in thousands) | |||||||||||||
Net loss | $ | (5,091) | $ | (5,357) | $ | (13,926) | $ | (11,299) | |||||
Provision for income tax (benefit) expense | (279) | 161 | 52 | 179 | |||||||||
Interest and other expense (income), net | 364 | (324) | 1,524 | 550 | |||||||||
Depreciation and amortization | 3,642 | 3,423 | 7,299 | 6,819 | |||||||||
EBITDA | (1,364) | (2,097) | (5,051) | (3,751) | |||||||||
Stock-based compensation | 1,074 | 1,275 | 3,549 | 2,320 | |||||||||
Restructuring and other related costs | 54 | 236 | 974 | 703 | |||||||||
Amortization of contract acquisition asset costs - ASC 606 initial adoption | 68 | 162 | 152 | 380 | |||||||||
Adjusted EBITDA | $ | (168) | $ | (424) | $ | (376) | $ | (348) |
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable to smaller reporting companies as defined by Item 10(f)(1) of Regulation S-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report.
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In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on management’s evaluation, our CEO and CFO concluded that our disclosure controls and procedures are designed to, and are effective to, provide at a reasonable assurance level, that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures.
Changes in Internal Control Over Financial Reporting
We continue to monitor the design and operating effectiveness of our internal controls for any effect resulting from the COVID-19 pandemic. There has not been any change in our internal control over financial reporting during the quarter covered by this report that materially affected or is reasonably likely to materially affect our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
For a summary of factors which could affect results and cause results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf, see “Risk Factors” in Part I, Item 1A of our annual report on Form 10-K for the year ended December 31, 2020. There have been no material changes to the risk factors as disclosed in our annual report on Form 10-K for the year ended December 31, 2020.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
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28
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SERVICESOURCE INTERNATIONAL, INC. | |||
(Registrant) | |||
Date: | July 28, 2021 | By: | /s/ CHAD W. LYNE |
Chad W. Lyne | |||
Chief Financial Officer | |||
(Principal Financial and Accounting Officer) |
29
CERTIFICATION PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Gary B. Moore, certify that:
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: | July 28, 2021 | By: | /s/ GARY B. MOORE |
| | | Name: Gary B. Moore |
| | | Title: Chief Executive Officer and Director |
| | | (Principal Executive Officer) |
CERTIFICATION PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Chad W. Lyne, certify that:
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: | July 28, 2021 | By: | /s/ CHAD W. LYNE |
| | | Name: Chad W. Lyne |
| | | Title: Chief Financial Officer |
| | | (Principal Financial and Accounting Officer) |
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Based on my knowledge, I, Gary B. Moore, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of ServiceSource International, Inc. on Form 10-Q for the quarter ended June 30, 2021, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of ServiceSource International, Inc.
Date: | July 28, 2021 | By: | /s/ GARY B. MOORE |
| | | Name: Gary B. Moore |
| | | Title: Chief Executive Officer and Director |
| | | (Principal Executive Officer) |
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Based on my knowledge, I, Chad W. Lyne, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of ServiceSource International, Inc. on Form 10-Q for the quarter ended June 30, 2021, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of ServiceSource International, Inc.
Date: | July 28, 2021 | By: | /s/ CHAD W. LYNE |
| | | Name: Chad W. Lyne |
| | | Title: Chief Financial Officer |
| | | (Principal Financial and Accounting Officer) |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Consolidated Balance Sheets | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
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) | 97,959,000 | 97,248,000 |
Common stock, shares outstanding (in shares) | 97,838,000 | 97,127,000 |
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Consolidated Statements of Operations | ||||
Net revenue | $ 46,307 | $ 47,638 | $ 91,330 | $ 97,752 |
Cost of revenue | 35,395 | 34,645 | 69,462 | 70,205 |
Gross profit | 10,912 | 12,993 | 21,868 | 27,547 |
Operating expenses: | ||||
Sales and marketing | 4,059 | 6,142 | 8,089 | 13,410 |
Research and development | 1,181 | 1,516 | 2,341 | 2,697 |
General and administrative | 10,624 | 10,619 | 22,814 | 21,307 |
Restructuring and other related costs | 54 | 236 | 974 | 703 |
Total operating expenses | 15,918 | 18,513 | 34,218 | 38,117 |
Loss from operations | (5,006) | (5,520) | (12,350) | (10,570) |
Interest and other (expense) income, net | (364) | 324 | (1,524) | (550) |
Loss before provision for income taxes | (5,370) | (5,196) | (13,874) | (11,120) |
Provision for income tax benefit (expense) | 279 | (161) | (52) | (179) |
Net loss | $ (5,091) | $ (5,357) | $ (13,926) | $ (11,299) |
Net loss per common share: | ||||
Basic (in dollars per share) | $ (0.05) | $ (0.06) | $ (0.14) | $ (0.12) |
Diluted (in dollars per share) | $ (0.05) | $ (0.06) | $ (0.14) | $ (0.12) |
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 97,601 | 95,369 | 97,424 | 95,169 |
Diluted (in shares) | 97,601 | 95,369 | 97,424 | 95,169 |
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Consolidated Statements of Comprehensive Loss | ||||
Net loss | $ (5,091) | $ (5,357) | $ (13,926) | $ (11,299) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 31 | (547) | 356 | (49) |
Other comprehensive income (loss): | 31 | (547) | 356 | (49) |
Comprehensive loss | $ (5,060) | $ (5,904) | $ (13,570) | $ (11,348) |
The Company |
6 Months Ended |
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Jun. 30, 2021 | |
The Company | |
The Company | Note 1 — The Company ServiceSource is a leading provider of BPaaS solutions that enable the transformation of go-to-market organizations and functions for global technology clients. We design, deploy, and operate a suite of innovative solutions and complex processes that support and augment our clients’ B2B customer acquisition, engagement, expansion, and retention activities. Our clients - ranging from Fortune 500 technology titans to high-growth disruptors and innovators - rely on our holistic customer engagement methodology and process excellence, global scale and delivery footprint, and data analytics and business insights to deliver trusted business outcomes that have a meaningful and material positive impact to their long-term revenue and profitability objectives. Through our unique integration of people, process, and technology - leveraged against our more than 20 years of experience and domain expertise in the cloud, software, hardware, medical device and diagnostic equipment, and industrial IoT sectors - we effect and transact billions of dollars of B2B commerce in more than 175 countries on our clients’ behalf annually. “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. For a summary of commonly used industry terms and abbreviations used in this quarterly report on Form 10-Q, see the Glossary of Terms. |
Summary of Significant Accounting Policies |
6 Months Ended |
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Jun. 30, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2 — Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited interim Consolidated Financial Statements include the accounts of ServiceSource International, Inc. and its wholly owned subsidiaries and have been prepared in accordance with GAAP and with the instructions to Form 10-Q and Article 8 of Regulation S-X for interim financial information. All intercompany balances and transactions have been eliminated in consolidation. These financial statements do not include all the information required by GAAP for annual financial statements. The unaudited Consolidated Balance Sheet as of December 31, 2020 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, 2020 filed with the SEC on February 24, 2021. In the opinion of management, these 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 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, 2020, included in our annual report on Form 10-K. Interim results are not necessarily indicative of results for the entire year. Use of Estimates The preparation of the Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amount of net revenue and expenses during the reporting period. The Company bases its estimates and judgments on historical experience and on various assumptions that it believes are reasonable under the circumstances. The Company has considered the effects of the COVID-19 pandemic in determining its estimates. However, future events are difficult to predict and subject to change, especially with the risks and uncertainties related to the impact of the COVID-19 pandemic, which could cause estimates and judgments to require adjustment. Actual results and outcomes may differ from our estimates. Cash Equivalents and Restricted Cash The Company follows a three-tier fair value hierarchy, which is described in detail in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Cash equivalents consist of highly liquid investments with original maturities of three months or less at the time of purchase and are classified as a Level 1 investment. Restricted cash consists of cash in money market accounts that are used to secure letters of credit in connection with two of our leased facilities. Restricted cash is recorded within "Other assets" in the Consolidated Balance Sheets and is classified as a Level 1 investment. The Company had restricted cash of $2.3 million as of June 30, 2021 and December 31, 2020. The Company did not have any other financial instruments or debt measured at fair value as of June 30, 2021 and December 31, 2020. There were no transfers between levels during the six months ended June 30, 2021 and 2020. Government Assistance During 2020, ServiceSource received various grants from the Singapore government, including the Job Support Scheme, which assists enterprises in retaining their local employees during the COVID-19 pandemic. ServiceSource received and recognized income of $1.3 million related to these grants during the year ended December 31, 2020, $0.1 million during the three and six months ended June 30, 2021, and is expected to receive an additional $0.1 million through August 2021. There are no conditions to repay the grants. Government grants are recognized in the Company’s Consolidated Statements of Operations during the same period that the expenses related to the grant are incurred if there is reasonable assurance the grant will be received, and the Company has complied with the conditions attached to the grant. New Accounting Standards Adopted Income Taxes In December 2019, the FASB issued an ASU that simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This ASU is effective for annual periods and interim periods for those annual periods beginning after December 15, 2020, with early adoption permitted. The Company adopted this standard effective January 1, 2021 and the effects of this standard were applied prospectively to eligible costs incurred on or after January 1, 2021. The adoption of this standard did not have a material impact on the Consolidated Financial Statements. New Accounting Standards Issued but Not yet Adopted Financial Instruments - Credit Losses In June 2016, the FASB issued an ASU that amends the measurement of credit losses on financial instruments and requires measurement and recognition of expected versus incurred credit losses for financial assets held. This ASU is effective for annual periods and interim periods for those annual periods beginning after December 15, 2022, with early adoption permitted. This standard will apply to the Company’s accounts receivable and contract assets. Based on our current analysis, the Company does not expect the adoption to have a material impact on the Consolidated Financial Statements as credit losses from trade receivables have historically been insignificant. The Company will adopt this standard effective January 1, 2023. |
Debt |
6 Months Ended |
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Jun. 30, 2021 | |
Debt | |
Debt | Note 3 — Debt Revolving Line of Credit In July 2018, ServiceSource, together with its wholly owned subsidiary, ServiceSource Delaware, Inc., entered into the 2018 Credit Agreement, providing for a $40.0 million revolving line of credit allowing each borrower to borrow against its domestic receivables as defined in the 2018 Credit Agreement. The Revolver in the 2018 Credit Agreement was scheduled to mature in July 2021 and was repaid in full in connection with the Company’s entry into the 2021 Credit Agreement. The Revolver under the 2018 Credit Agreement bore interest at a variable rate per annum based on the greater of the prime rate, the Federal Funds rate plus 0.50% or the one-month LIBOR rate plus 1.00%, plus, in each case, a margin of 1.00% for base rate borrowings or 2.00% for Eurodollar borrowings. As of June 30, 2021, the Company had $15.0 million of borrowings under the Revolver through a one-month Eurodollar borrowing at an effective interest rate of 2.10% maturing July 2021. An additional $9.6 million was available for borrowing under the Revolver as of June 30, 2021. The Eurodollar borrowings may be extended upon maturity, converted into a base rate borrowing upon maturity or require an incremental payment if the borrowing base decreases below the current amount outstanding during the term of the Eurodollar borrowing. The obligations under the 2018 Credit Agreement were secured by substantially all the assets of ServiceSource and certain of its subsidiaries, including pledges of equity in certain of the Company’s subsidiaries. The 2018 Credit Agreement had financial covenants which the Company was in compliance with as of June 30, 2021 and December 31, 2020. In July 2021, ServiceSource, together with its wholly owned subsidiary, ServiceSource Delaware, Inc., entered into the 2021 Credit Agreement, which provides for a $35.0 million revolving line of credit allowing each borrower to borrow against its receivables as defined in the 2021 Credit Agreement. At the Company’s request and subject to customary conditions, the aggregate commitments under the 2021 Credit Agreement may be increased up to an additional $10.0 million, for a total maximum commitment amount of $45.0 million. The Revolver in the 2021 Credit Agreement matures in July 2024 and bears interest at a rate equal to BSBY plus 2.00% to 2.50% per annum or, at our election, an alternate base rate plus 1.00% to 1.50% per annum. The obligations under the 2021 Credit Agreement are secured by substantially all assets of ServiceSource and certain of its subsidiaries, including pledges of equity in certain of the Company’s subsidiaries. During July 2021, the Company borrowed $3.5 million under the Revolver through a one-month BSBY borrowing at an effective interest rate of 2.32% maturing August 2021. Proceeds from the Revolver are used for working capital and general corporate purposes. Interest Expense Interest expense related to the amortization of debt issuance costs and interest expense associated with the Company’s debt obligation was $0.1 million and $0.2 million for the three months ended June 30, 2021 and 2020, respectively, and $0.2 million and $0.3 million for the six months ended June 30, 2021 and 2020, respectively. |
Leases |
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Leases | Note 4 — Leases The Company has operating leases for office space and finance leases for certain equipment under non-cancelable agreements with various expiration dates through May 2030. Certain office leases include the option to extend the term between to seven years and certain office leases include the option to terminate the lease upon written notice within one year after lease commencement. Leases with an initial term of 12 months or less are not recorded on the balance sheet.During 2021, the Company entered into a sublease agreement through the end of the original lease term with a third-party for two floors of its Manila office space and extended its lease for a portion of its Yokohama office space through May 2024. Supplemental income statement information related to leases was as follows:
Supplemental balance sheet information related to leases was as follows:
Lease term and discount rate information was as follows:
Maturities of lease liabilities were as follows as of June 30, 2021:
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Revenue Recognition |
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Revenue Recognition | Note 5 — Revenue Recognition The following tables present the disaggregation of revenue from contracts with our clients: Revenue by Performance Obligation
Revenue by Geography Revenue for each geography generally reflects commissions earned from sales of service contracts managed from revenue delivery centers in that geography and subscription sales and professional services to deploy the Company’s solutions. Predominantly all the service contracts sold and managed by the revenue delivery centers relate to end customers located in the same geography. All NALA revenue represents revenue generated within the U.S.
Revenue by Contract Pricing
Contract Balances As of June 30, 2021, contract assets and liabilities were $0.0 million and $0.5 million, respectively. As of December 31, 2020, contract assets and liabilities were $0.5 million and $0.4 million, respectively. Transaction Price Allocated to Remaining Performance Obligations As of June 30, 2021, assuming none of the Company’s current contracts with fixed consideration are renewed, the Company estimates receiving approximately $32.9 million in future selling services fixed consideration and approximately $0.4 million in professional services fixed consideration. Contract Acquisition Costs As of June 30, 2021 and December 31, 2020, capitalized contract acquisition costs were $0.7 million and $0.9 million, respectively. The Company recorded amortization expense related to capitalized contract acquisition costs of $0.1 million and $0.2 million for the three months ended June 30, 2021 and 2020, respectively, and $0.3 million and $0.5 million for the six months ended June 30, 2021 and 2020, respectively. Impairment recognized on contract costs was insignificant for the three and six months ended June 30, 2021 and 2020. |
Stock-Based Compensation |
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Stock-Based Compensation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Note 6 — Stock-Based Compensation ESPP The Company previously offered an ESPP until its expiration in February 2021. 2021 PSU Awards During March 2021, the Company granted PSUs under the 2020 Plan to certain executives in which the number of shares ultimately received depends on the Company’s achievement of two performance goals for fiscal year 2021 and a rTSR modifier based on the Company’s rTSR for fiscal years 2021, 2022, and 2023 compared to a peer group. The aggregate target number of shares subject to these awards is 0.8 million. The awards were valued on the grant date using a Monte Carlo simulation for the rTSR modifier and using the Company’s closing stock price for the performance metrics for an aggregate grant date fair value of $1.2 million. The number of shares ultimately received related to these awards will range from 0% to 173% of the participant’s target award and will vest on the third anniversary of the grant date. The Company’s expense will be recognized over the service period and adjusted based on estimated achievement of the performance goals. Additionally, certain of the Company’s senior leaders elected to receive a portion of their annual cash corporate incentive plan in PSUs. The Company granted the PSUs under the 2020 Plan during March 2021. The number of shares ultimately received depends on the Company’s achievement of specified revenue, Adjusted EBITDA, and free cash flow performance goals for fiscal year 2021. The aggregate target number of shares subject to these awards is 0.4 million. The awards were valued using the Company’s closing stock price on the grant date and had an aggregate grant date fair value of $0.6 million. The number of shares ultimately received related to these awards ranges from 0% to 200% of the participant’s target award and will vest on the first anniversary of the grant date. The Company’s expense will be recognized over the service period and adjusted based on estimated achievement of the performance targets. Stock-Based Compensation Expense The following table presents stock-based compensation expense as allocated within the Company’s Consolidated Statements of Operations:
The above table does not include capitalized stock-based compensation related to internal-use software that was insignificant for the three and six months ended June 30, 2021 and 2020. Stock Awards A summary of the Company’s stock option activity and related information was as follows:
As of June 30, 2021, there was $0.1 million of unrecognized compensation expense related to previously granted stock options, which is expected to be recognized over a weighted-average period of 1.2 years. A summary of the Company’s RSU and PSU activity and related information was as follows:
As of June 30, 2021, there was $6.1 million of unrecognized compensation expense related to previously granted RSUs and PSUs, which is expected to be recognized over a weighted-average period of 1.7 years. 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 and unvested RSUs and PSUs. The Company excluded from diluted earnings per share the weighted-average common share equivalents related to 1.5 million and 5.2 million shares for the three months ended June 30, 2021 and 2020, respectively, and 1.4 million and 4.3 million shares for the six months ended June 30, 2021 and 2020, respectively, because their effect would have been anti-dilutive. |
Restructuring and Other Related Costs |
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Restructuring and Other Related Costs | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Other Related Costs | Note 7 — Restructuring and Other Related Costs The Company has undergone restructuring efforts to better align its cost structure with its business and market conditions. These restructuring efforts include severance and other employee costs, lease and other contract termination costs and asset impairments. Severance and other employee costs include severance payments, related employee benefits, stock-based compensation related to the accelerated vesting of certain equity awards 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. Asset impairments include charges related to leasehold improvements and furniture in spaces vacated or no longer in use. The restructuring plans and future cash outlays are recorded in "Accrued expenses," "Accrued compensation," and "Other long-term liabilities" in the Consolidated Balance Sheet as of December 31, 2020. There are no future restructuring plans and future cash outlays as of June 30, 2021. During 2020, the Company announced a restructuring effort to align with its virtual-first operating model and reduce the operating cost structure resulting in a reduction of headcount and office lease costs. The Company recognized charges related to this restructuring effort of $0.1 million and $1.0 million for the three and six months ended June 30, 2021, respectively. The Company does not expect to incur additional charges related to this restructuring effort as of June 30, 2021. The following table presents a reconciliation of the beginning and ending fair value liability balance related to the 2020 restructuring effort:
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Income Taxes |
6 Months Ended |
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Jun. 30, 2021 | |
Income Taxes | |
Income Taxes | Note 8 — 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. The "Provision for income tax expense" in the Consolidated Statements of Operations 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 the U.S., Ireland, and Singapore because those losses are offset by a full valuation allowance. The tax years 2012 through 2020 generally remain subject to examination by federal, state, and foreign tax authorities. The gross amount of the Company’s unrecognized tax benefits was $1.0 million as of June 30, 2021 and December 31, 2020, none of which, if recognized, would affect the Company’s effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the three and six months ended June 30, 2021 and 2020, interest and penalties recognized were insignificant. |
Commitments and Contingencies |
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Commitments and Contingencies | Note 9 — Commitments and Contingencies Letters of Credit In connection with two of our leased facilities, the Company is required to maintain two letters of credit totaling $2.3 million. The letters of credit are secured by $2.3 million of cash in money market accounts, which are classified as restricted cash in "Other assets" in the Consolidated Balance Sheets. Non-cancelable Service Contract Commitments Future minimum payments under non-cancelable service contract commitments were as follows:
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Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim Consolidated Financial Statements include the accounts of ServiceSource International, Inc. and its wholly owned subsidiaries and have been prepared in accordance with GAAP and with the instructions to Form 10-Q and Article 8 of Regulation S-X for interim financial information. All intercompany balances and transactions have been eliminated in consolidation. These financial statements do not include all the information required by GAAP for annual financial statements. The unaudited Consolidated Balance Sheet as of December 31, 2020 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, 2020 filed with the SEC on February 24, 2021. In the opinion of management, these 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 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, 2020, included in our annual report on Form 10-K. Interim results are not necessarily indicative of results for the entire year. |
Use of Estimates | Use of Estimates The preparation of the Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amount of net revenue and expenses during the reporting period. The Company bases its estimates and judgments on historical experience and on various assumptions that it believes are reasonable under the circumstances. The Company has considered the effects of the COVID-19 pandemic in determining its estimates. However, future events are difficult to predict and subject to change, especially with the risks and uncertainties related to the impact of the COVID-19 pandemic, which could cause estimates and judgments to require adjustment. Actual results and outcomes may differ from our estimates. |
Cash Equivalents and Restricted Cash | Cash Equivalents and Restricted Cash The Company follows a three-tier fair value hierarchy, which is described in detail in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Cash equivalents consist of highly liquid investments with original maturities of three months or less at the time of purchase and are classified as a Level 1 investment. Restricted cash consists of cash in money market accounts that are used to secure letters of credit in connection with two of our leased facilities. Restricted cash is recorded within "Other assets" in the Consolidated Balance Sheets and is classified as a Level 1 investment. The Company had restricted cash of $2.3 million as of June 30, 2021 and December 31, 2020. The Company did not have any other financial instruments or debt measured at fair value as of June 30, 2021 and December 31, 2020. There were no transfers between levels during the six months ended June 30, 2021 and 2020. |
Government Assistance | Government Assistance During 2020, ServiceSource received various grants from the Singapore government, including the Job Support Scheme, which assists enterprises in retaining their local employees during the COVID-19 pandemic. ServiceSource received and recognized income of $1.3 million related to these grants during the year ended December 31, 2020, $0.1 million during the three and six months ended June 30, 2021, and is expected to receive an additional $0.1 million through August 2021. There are no conditions to repay the grants. Government grants are recognized in the Company’s Consolidated Statements of Operations during the same period that the expenses related to the grant are incurred if there is reasonable assurance the grant will be received, and the Company has complied with the conditions attached to the grant. |
New Accounting Standards Adopted And New Accounting Standards Issued But Not Yet Adopted | New Accounting Standards Adopted Income Taxes In December 2019, the FASB issued an ASU that simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This ASU is effective for annual periods and interim periods for those annual periods beginning after December 15, 2020, with early adoption permitted. The Company adopted this standard effective January 1, 2021 and the effects of this standard were applied prospectively to eligible costs incurred on or after January 1, 2021. The adoption of this standard did not have a material impact on the Consolidated Financial Statements. New Accounting Standards Issued but Not yet Adopted Financial Instruments - Credit Losses In June 2016, the FASB issued an ASU that amends the measurement of credit losses on financial instruments and requires measurement and recognition of expected versus incurred credit losses for financial assets held. This ASU is effective for annual periods and interim periods for those annual periods beginning after December 15, 2022, with early adoption permitted. This standard will apply to the Company’s accounts receivable and contract assets. Based on our current analysis, the Company does not expect the adoption to have a material impact on the Consolidated Financial Statements as credit losses from trade receivables have historically been insignificant. The Company will adopt this standard effective January 1, 2023. |
Leases (Tables) |
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Leases | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Supplemental Income Statement Information and Other Information | Supplemental income statement information related to leases was as follows:
Lease term and discount rate information was as follows:
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Summary of Supplemental Balance Sheet Information | Supplemental balance sheet information related to leases was as follows:
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Summary of Maturities of Operating Lease Liabilities | Maturities of lease liabilities were as follows as of June 30, 2021:
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Operating Lease, Lease Income | Maturities of lease liabilities were as follows as of June 30, 2021:
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Summary of Maturities of Finance Lease Liabilities | Maturities of lease liabilities were as follows as of June 30, 2021:
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Revenue Recognition (Tables) |
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Revenue Recognition | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue from Contracts with Clients | The following tables present the disaggregation of revenue from contracts with our clients: Revenue by Performance Obligation
Revenue by Geography Revenue for each geography generally reflects commissions earned from sales of service contracts managed from revenue delivery centers in that geography and subscription sales and professional services to deploy the Company’s solutions. Predominantly all the service contracts sold and managed by the revenue delivery centers relate to end customers located in the same geography. All NALA revenue represents revenue generated within the U.S.
Revenue by Contract Pricing
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Stock-Based Compensation (Tables) |
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Stock-Based Compensation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock-Based Compensation Expense | The following table presents stock-based compensation expense as allocated within the Company’s Consolidated Statements of Operations:
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Summary of Option and Restricted Stock Activity | A summary of the Company’s stock option activity and related information was as follows:
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Summary of Additional Information Concerning Vested RSUs and PSUs | A summary of the Company’s RSU and PSU activity and related information was as follows:
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Restructuring and Other Related Costs (Tables) |
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Schedule of Restructuring and Other Reserve Activities | The following table presents a reconciliation of the beginning and ending fair value liability balance related to the 2020 restructuring effort:
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Commitments and Contingencies (Tables) |
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Future Minimum Payments Under Non-cancelable Service Contract Commitments | Future minimum payments under non-cancelable service contract commitments were as follows:
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The Company (Details) |
6 Months Ended |
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Jun. 30, 2021
country
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The Company | |
Years of operating experience | 20 years |
Number of countries in which company operates | 175 |
Summary of Significant Accounting Policies (Details) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | |
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Jun. 30, 2021
USD ($)
location
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Jun. 30, 2021
USD ($)
location
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Jun. 30, 2020
USD ($)
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Dec. 31, 2020
USD ($)
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New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Number of leased facilities | location | 2 | 2 | ||
Proceeds received from grant | $ 0.1 | $ 0.1 | $ 1.3 | |
Additional proceeds expected to be received from grant | 0.1 | 0.1 | ||
Financial instrument, fair value | 0.0 | 0.0 | 0.0 | |
Debt, fair value | 0.0 | 0.0 | 0.0 | |
Asset transfer, L1 to L2 | 0.0 | 0.0 | $ 0.0 | |
Asset transfer, L2 to L1 | 0.0 | 0.0 | 0.0 | |
Asset transfer, into L3 | 0.0 | 0.0 | ||
Asset transfer, out of L3 | 0.0 | 0.0 | ||
Liability transfer, L1 to L2 | 0.0 | 0.0 | 0.0 | |
Liability transfer, L2 to L1 | 0.0 | 0.0 | 0.0 | |
Liability transfer, into L3 | 0.0 | 0.0 | ||
Liability transfer, out of L3 | 0.0 | $ 0.0 | ||
Level 1 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Restricted cash | $ 2.3 | $ 2.3 | $ 2.3 |
Leases - Narrative (Details) |
6 Months Ended |
---|---|
Jun. 30, 2021 | |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Option to extend, term (in years) | 1 year |
Option to terminate, term (in years) | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Option to extend, term (in years) | 7 years |
Leases - Supplemental Income Statement Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Leases | ||||
Operating lease cost | $ 2,853 | $ 2,924 | $ 5,794 | $ 6,031 |
Finance lease cost: | ||||
Amortization of leased assets | 107 | 163 | 266 | 351 |
Interest on lease liabilities | 7 | 25 | 18 | 56 |
Total finance lease cost | 114 | 188 | 284 | 407 |
Sublease income | (1,287) | (895) | (2,385) | (1,787) |
Net lease cost | $ 1,680 | $ 2,217 | $ 3,693 | $ 4,651 |
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Operating leases: | ||
ROU assets | $ 25,290 | $ 29,798 |
Operating lease liabilities | 10,008 | 10,797 |
Operating lease liabilities, net of current portion | 21,408 | 25,975 |
Total operating lease liabilities | 31,416 | 36,772 |
Finance leases: | ||
Property and equipment | 2,870 | 2,880 |
Accumulated depreciation | (2,226) | (1,963) |
Property and equipment, net | 644 | 917 |
Other current liabilities | 356 | 608 |
Other long-term liabilities | 0 | 63 |
Total finance lease liabilities | $ 356 | $ 671 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Property and equipment, net | Property and equipment, net |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other current liabilities | Other current liabilities |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other long-term liabilities | Other long-term liabilities |
Leases - Lease Term and Discount Rate (Details) |
Jun. 30, 2021 |
Jun. 30, 2020 |
---|---|---|
Weighted-average remaining lease term (in years): | ||
Operating lease | 5 years 8 months 12 days | 5 years 9 months 18 days |
Finance lease | 6 months | 1 year 4 months 24 days |
Weighted-average discount rate: | ||
Operating lease | 6.20% | 6.40% |
Finance lease | 6.50% | 7.50% |
Leases - Maturity of Lease Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Operating Leases | ||
Remainder of 2021 | $ 6,291 | |
2022 | 9,412 | |
2023 | 4,447 | |
2024 | 3,042 | |
2025 | 2,991 | |
Thereafter | 11,344 | |
Total lease payments | 37,527 | |
Less: interest | (6,111) | |
Total | 31,416 | $ 36,772 |
Operating Sublease | ||
Remainder of 2021 | (2,460) | |
2022 | (2,538) | |
2023 | (623) | |
2024 | 0 | |
2025 | 0 | |
Thereafter | 0 | |
Total | (5,621) | |
Finance Leases | ||
Remainder of 2021 | 300 | |
2022 | 64 | |
2023 | 0 | |
2024 | 0 | |
2025 | 0 | |
Thereafter | 0 | |
Total lease payments | 364 | |
Less: interest | (8) | |
Total | 356 | $ 671 |
Total | ||
Remainder of 2021 | 4,131 | |
2022 | 6,938 | |
2023 | 3,824 | |
2024 | 3,042 | |
2025 | 2,991 | |
Thereafter | 11,344 | |
Total lease payments | 32,270 | |
Less: interest | (6,119) | |
Total | $ 26,151 |
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Disaggregation of Revenue [Line Items] | ||||
Net revenue | $ 46,307 | $ 47,638 | $ 91,330 | $ 97,752 |
Variable consideration | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 34,138 | 33,813 | 67,349 | 70,179 |
Fixed consideration | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 12,169 | 13,825 | 23,981 | 27,573 |
NALA | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 25,515 | 27,558 | 50,849 | 56,031 |
EMEA | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 13,318 | 12,846 | 26,087 | 26,853 |
APJ | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 7,474 | 7,234 | 14,394 | 14,868 |
Selling services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 45,609 | 46,545 | 89,937 | 95,718 |
Professional services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | $ 698 | $ 1,093 | $ 1,393 | $ 2,034 |
Revenue Recognition - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
Dec. 31, 2020 |
|
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Contract asset | $ 0.0 | $ 0.0 | $ 0.5 | ||
Contract liability | 0.5 | 0.5 | 0.4 | ||
Contract acquisition asset | 0.7 | 0.7 | $ 0.9 | ||
Amortization of contract acquisition costs | 0.1 | $ 0.2 | 0.3 | $ 0.5 | |
Selling services | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Remaining performance obligation | 32.9 | 32.9 | |||
Professional services | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Remaining performance obligation | $ 0.4 | $ 0.4 |
Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | $ 1,074 | $ 1,275 | $ 3,549 | $ 2,320 |
Cost of revenue. | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | 288 | 90 | 418 | 135 |
Sales and marketing | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | 168 | 444 | 359 | 821 |
Research and development | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | 17 | 1 | 32 | 19 |
General and administrative | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | $ 601 | $ 740 | $ 2,740 | $ 1,345 |
Stock-Based Compensation - Restricted Stock Unit Activity (Details) - RSUs and PSUs shares in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2021
$ / shares
shares
| |
Units | |
Non-vested, beginning balance (in shares) | shares | 7,015 |
Granted (in shares) | shares | 2,557 |
Vested (in shares) | shares | (611) |
Forfeited (in shares) | shares | (1,134) |
Unvested, ending balance (in shares) | shares | 7,827 |
Weighted-Average Grant Date Fair Value | |
Non-vested, weighted average grant date fair value, beginning balance (in dollars per share) | $ / shares | $ 1.55 |
Granted, weighted average grant date fair value (in dollars per share) | $ / shares | 1.53 |
Vested, weighted average grant date fair value (in dollars per share) | $ / shares | 2.47 |
Forfeited, weighted average grant date fair value (in dollars per share) | $ / shares | 1.63 |
Non-vested, weighted average grant date fair value, ending balance (in dollars per share) | $ / shares | $ 1.46 |
Restructuring and Other Related Costs - Narrative (Details) - Restructuring Effort 2020 - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended |
---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2021 |
Dec. 31, 2020 |
|
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 100 | $ 974 | $ 839 |
Other additional restructuring costs | $ 0 | $ 0 |
Restructuring and Other Related Costs - Restructuring and Other Reserve Activities (Details) - Restructuring Effort 2020 - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended |
---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2021 |
Dec. 31, 2020 |
|
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | $ 397 | $ 0 | |
Restructuring and other related costs | $ 100 | 974 | 839 |
Cash paid | (1,371) | (442) | |
Ending Balance | 0 | 0 | 397 |
Severance and Other Employee Costs | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 338 | 0 | |
Restructuring and other related costs | 897 | 780 | |
Cash paid | (1,235) | (442) | |
Ending Balance | 0 | 0 | 338 |
Lease Termination Costs | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 59 | 0 | |
Restructuring and other related costs | 77 | 59 | |
Cash paid | (136) | 0 | |
Ending Balance | $ 0 | $ 0 | $ 59 |
Income Taxes (Details) - USD ($) $ in Millions |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Income Taxes | ||
Unrecognized tax benefits | $ 1.0 | $ 1.0 |
Unrecognized tax benefits that would impact effective tax rate | $ 0.0 | $ 0.0 |
Commitments and Contingencies - Narrative (Details) $ in Millions |
Jun. 30, 2021
USD ($)
facility
item
|
---|---|
Other Commitments [Line Items] | |
Number of leased facilities | facility | 2 |
Number of letters of credit | item | 2 |
Money Market Mutual Funds | Letter of Credit | |
Other Commitments [Line Items] | |
Letters of credit | $ 2.3 |
Restricted cash | $ 2.3 |
Commitments and Contingencies - Future Minimum Payments (Details) $ in Thousands |
Jun. 30, 2021
USD ($)
|
---|---|
Non-cancelable Service Contract Commitments | |
Remainder of 2021 | $ 6,095 |
2022 | 10,266 |
2023 | 8,183 |
2024 | 828 |
Thereafter | 0 |
Total | $ 25,372 |
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