x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 86-1106510 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
Title of each class | Name of each exchange on which registered | |
Common Stock, $0.001 par value per share | The NASDAQ Global Select Market |
Large accelerated filer | x | Accelerated filer |
Non-accelerated filer | (Do not check if a smaller reporting company) | Smaller reporting company |
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• | our future financial and operating results; including trends in and expectations regarding revenues, deferred revenue, billings, gross margins, operating income and the proportion of transactions that will be recognized ratably; |
• | market opportunity; |
• | expected benefits to customers and potential customers of our offerings, as well as our user-driven ecosystem; |
• | investment strategy, business strategy and growth strategy, including the use of acquisitions to expand our business; |
• | sales and marketing strategy, including our international sales strategy; |
• | management’s plans, beliefs and objectives for future operations; |
• | our ability to provide compelling and uninterrupted cloud services to our customers; |
• | expectations about competition; |
• | economic and industry trends or trend analysis; |
• | expectations about seasonality; |
• | revenue mix; |
• | use of non-GAAP financial measures; |
• | operating expenses, including changes in research and development, sales and marketing, and general and administrative expenses; |
• | sufficiency of cash to meet cash needs for at least the next 12 months; |
• | exposure to interest rate changes; |
• | inflation; |
• | anticipated income tax rates; and |
• | capital expenditures, cash flows and liquidity. |
• | Splunk Enterprise Security - Addresses emerging security threats and security information and event management (“SIEM”) use cases through monitoring, alerts and analytics. |
• | Splunk IT Service Intelligence - Monitors the health and key performance indicators of critical IT and business services. |
• | Splunk User Behavior Analytics - Detects cyber-attacks and insider threats using data science, machine learning and advanced correlation. |
• | Splunk Analytics for Hadoop (formerly known as HUNK) - Allows customers to rapidly explore, analyze and visualize existing data in Hadoop. Splunk Analytics for Hadoop natively supports Apache Hadoop, Amazon EMR, Cloudera CDH, Hortonworks Data Platform, IBM InfoSphere BigInsights, MapR M-series and Pivotal HD distributions. |
• | Splunk App for AWS - Used to analyze over 15 AWS services and deliver critical end-to-end visibility across the AWS environment – helping to enable customers to ensure security and compliance, manage IT operations and optimize AWS cost in real-time. |
• | Splunk Stream - Used to capture, analyze and correlate network wire data to monitor operations and end-to-end transactions without manual instrumentation. |
• | DB Connect - Enables customers to get business and enterprise context such as customer, product and HR data from traditional relational databases using real-time integration. |
• | Palo Alto Networks App for Splunk - Enables Splunk users to gain visibility to Palo Alto Networks firewalls in order to perform incident analysis on correlated application and user activities across all network and security infrastructures from a real-time and historical perspective. |
• | IT departments of potential customers which have undertaken custom software development efforts to analyze and manage their machine data; |
• | companies targeting the big data market by commercializing open source software, such as the various Hadoop distributions and NoSQL data stores, including Elastic; |
• | security, systems management and other IT vendors, including BMC Software, CA Technologies, Hewlett Packard Enterprise, IBM, Intel, Microsoft, Dell Software and VMware; |
• | business intelligence vendors, analytics and visualization vendors, including IBM and Oracle; and |
• | cloud service providers, as well as small, specialized vendors that provide complementary or competitive solutions in enterprise data analytics, log aggregation and management, data warehousing and big data technologies that may compete with our offerings. |
• | the timing of our sales during the quarter, particularly because a large portion of our sales occur toward the end of the quarter, or the loss or delay of a few large contracts; |
• | the mix of revenues attributable to larger transactions as opposed to smaller transactions and the impact that a change in mix may have on the overall average selling price of our offerings; |
• | the mix of revenues attributable to perpetual licenses and term licenses, subscriptions, enterprise adoption agreements, maintenance and professional services and training, which may impact our revenue, deferred revenue, billings, gross margins and operating income; |
• | the renewal and usage rates of our customers; |
• | changes in the competitive dynamics of our market; |
• | changes in customers’ budgets and in the timing of their purchasing decisions; |
• | customers delaying purchasing decisions in anticipation of new offerings or software enhancements by us or our competitors; |
• | customer acceptance of and willingness to pay for new versions of our offerings or new solutions for specific product and end markets; |
• | our ability to successfully introduce and monetize new offerings and licensing and service models for our new offerings; |
• | our ability to control costs, including our operating expenses; |
• | the amount and timing of our stock-based compensation expenses; |
• | changes in accounting standards, particularly those related to revenue recognition; |
• | the timing of satisfying revenue recognition criteria; |
• | our ability to qualify and successfully compete for government contracts; |
• | the collectability of receivables from customers and resellers, which may be hindered or delayed; |
• | the removal of metered license enforcement via our software, which could lead to customers delaying renewal or purchasing decisions; and |
• | general economic and political conditions and uncertainty, both domestically and internationally, as well as economic and political conditions and uncertainty specifically affecting industries in which our customers participate. |
• | improve the performance and capabilities of our offerings and technology and architecture through research and development; |
• | continue to develop, enhance, expand adoption of and globally deliver our cloud services, including Splunk Cloud, and comply with applicable laws in each jurisdiction in which we offer such services; |
• | successfully develop, introduce and expand adoption of new offerings; |
• | acquire new customers and increase revenues from existing customers through increased or broader use of our offerings within their organizations; |
• | successfully expand our business domestically and internationally; |
• | maintain and expand our customer base and the ways in which our customers use our offerings; |
• | successfully compete with other companies, open source projects and custom development efforts that are currently in, or may in the future enter, the markets for our offerings; |
• | successfully provide our customers a compelling business case to purchase our offerings in a time frame that matches our and our customers’ sales and purchase cycles and at a compelling price point; |
• | generate leads and convert users of the trial versions of our offerings to paying customers; |
• | prevent users from circumventing the terms of their licenses and subscriptions; |
• | continue to invest in our platform to deliver additional enhancements and content for our offerings and to foster an ecosystem of developers and users to expand the use cases of our offerings; |
• | maintain and enhance our website and cloud services infrastructure to minimize interruptions when accessing our offerings; |
• | process, store and use our employees, customers’ and other third parties' data in compliance with applicable governmental regulations and other legal obligations related to data privacy, data protection, data transfer, data residency, encryption and security; |
• | hire, integrate and retain world-class professional and technical talent; and |
• | successfully integrate acquired businesses and technologies. |
• | improving our key business applications, processes and IT infrastructure to support our business needs; |
• | enhancing information and communication systems to ensure that our employees and offices around the world are well-coordinated and can effectively communicate with each other and our growing base of customers and channel partners; |
• | enhancing our internal controls to ensure timely and accurate reporting of all of our operations and financial results; and |
• | appropriately documenting our IT systems and our business processes. |
• | IT departments of potential customers which have undertaken custom software development efforts to analyze and manage their machine data; |
• | companies targeting the big data market by commercializing open source software, such as the various Hadoop distributions and NoSQL data stores, including Elastic; |
• | security, systems management and other IT vendors, including BMC Software, CA Technologies, Hewlett Packard Enterprise, IBM, Intel, Microsoft, Dell Software and VMware; |
• | business intelligence vendors, analytics and visualization vendors, including IBM and Oracle; and |
• | cloud service providers, as well as small, specialized vendors that provide complementary and competitive solutions in enterprise data analytics, log aggregation and management, data warehousing and big data technologies that may compete with our offerings. |
• | increased management, travel, infrastructure and legal compliance costs associated with having multiple international operations; |
• | reliance on channel partners; |
• | longer payment cycles and difficulties in collecting accounts receivable or satisfying revenue recognition criteria, especially in emerging markets; |
• | increased financial accounting and reporting burdens and complexities; |
• | general economic conditions in each country or region; |
• | economic and political uncertainty around the world, such as the recent U.S. presidential election and the United Kingdom’s referendum in June 2016 in which voters approved an exit from the European Union (“EU”), commonly referred to as “Brexit”; |
• | compliance with multiple and changing foreign laws and regulations, including those governing employment, tax, privacy and data protection, data transfer and the risks and costs of non-compliance with such laws and regulations; |
• | compliance with laws and regulations for foreign operations, including the United States Foreign Corrupt Practices Act, the United Kingdom Bribery Act, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on our ability to sell our offerings in certain foreign markets, and the risks and costs of non-compliance, including as a result of any changes in trade relations or restrictions; |
• | heightened risks of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of financial statements and irregularities in financial statements; |
• | fluctuations in currency exchange rates and the related effect on our financial results; |
• | difficulties in repatriating or transferring funds from or converting currencies in certain countries; |
• | the need for localized software and licensing programs; |
• | reduced protection for intellectual property rights in some countries and practical difficulties of enforcing intellectual property and contract rights abroad; and |
• | compliance with the laws of numerous foreign taxing jurisdictions and overlapping of different tax regimes. |
• | our failure to predict market demand accurately in terms of product functionality and to supply offerings that meet this demand in a timely fashion; |
• | defects, errors or failures; |
• | negative publicity about their performance or effectiveness; |
• | delays in releasing to the market our new offerings or enhancements to our existing offerings to the market; |
• | introduction or anticipated introduction of competing products by our competitors; |
• | poor business conditions for our end-customers, causing them to delay IT purchases; and |
• | reluctance of customers to purchase products incorporating open source software. |
• | changes in fiscal or contracting policies; |
• | decreases in available government funding; |
• | changes in government programs or applicable requirements; |
• | the adoption of new laws or regulations or changes to existing laws or regulations; |
• | potential delays or changes in the government appropriations or other funding authorization processes; and |
• | delays in the payment of our invoices by government payment offices. |
• | third-party developers may not continue developing or supporting the software apps that they share on Splunkbase; |
• | we cannot provide any assurance that these apps meet the same quality standards that we apply to our own development efforts, and, to the extent they contain bugs or defects, they may create disruptions in our customers’ use of our offerings or negatively affect our brand; |
• | we do not currently provide support for software apps developed by third-party software developers, and users may be left without support and potentially cease using our offerings if the third-party software developers do not provide support for these apps; |
• | these third-party software developers may not possess the appropriate intellectual property rights to develop and share their apps; and |
• | some of these developers may use the insight they gain using our offerings and from documentation publicly available on our website to develop competing products. |
• | an acquisition may negatively affect our financial results because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and disputes by third parties, including intellectual property claims and disputes, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition; |
• | potential goodwill impairment charges related to acquisitions; |
• | costs and potential difficulties associated with the requirement to test and assimilate the internal control processes of the acquired business; |
• | we may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, personnel or operations of any company that we acquire, particularly if key personnel of the acquired company decide not to work for us or if we are unable to retain key personnel; |
• | we may not realize the expected benefits of the acquisition; |
• | an acquisition may disrupt our ongoing business, divert resources, increase our expenses and distract our management; |
• | an acquisition may result in a delay or reduction of customer purchases for both us and the company acquired due to customer uncertainty about continuity and effectiveness of service from either company; |
• | the potential impact on relationships with existing customers, vendors and distributors as business partners as a result of acquiring another company or business that competes with or otherwise is incompatible with those existing relationships; |
• | the potential that our due diligence of the acquired company or business does not identify significant problems or liabilities; |
• | exposure to litigation or other claims in connection with, or inheritance of claims or litigation risk as a result of, an acquisition, including but not limited to claims from former employees, customers or other third parties; |
• | we may encounter difficulties in, or may be unable to, successfully sell any acquired products; |
• | an acquisition may involve the entry into geographic or business markets in which we have little or no prior experience or where competitors have stronger market positions; |
• | an acquisition may require us to comply with additional laws and regulations or result in liabilities resulting from the acquired company’s pre-acquisition failure to comply with applicable laws; |
• | our use of cash to pay for an acquisition would limit other potential uses for our cash; |
• | if we incur debt to fund such acquisition, such debt may subject us to material restrictions on our ability to conduct our business as well as financial maintenance covenants; and |
• | to the extent that we issue a significant amount of equity securities in connection with future acquisitions, existing stockholders may be diluted and earnings per share may decrease. |
• | actual or anticipated fluctuations in our financial results; |
• | the financial projections we provide to the public, any changes in these projections or our failure to meet or exceed these projections; |
• | failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; |
• | ratings changes by any securities analysts who follow our company; |
• | announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; |
• | changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; |
• | price and volume fluctuations in certain categories of companies or the overall stock market, including as a result of trends in the global economy; |
• | any major change in our board of directors or management; |
• | lawsuits threatened or filed against us; and |
• | other events or factors, including those resulting from war, incidents of terrorism or responses to these events. |
• | authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights and preferences determined by our board of directors; |
• | require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; |
• | specify that special meetings of our stockholders can be called only by our board of directors, the Chairman of our board of directors, or our Chief Executive Officer; |
• | establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; |
• | establish that our board of directors is divided into three classes, Class I, Class II and Class III, with each class serving three-year staggered terms; |
• | prohibit cumulative voting in the election of directors; |
• | provide that our directors may be removed only for cause; |
• | provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; and |
• | require the approval of our board of directors or the holders of a supermajority of our outstanding shares of capital stock to amend our bylaws and certain provisions of our certificate of incorporation. |
High | Low | |||||||
Year Ended January 31, 2016: | ||||||||
First Quarter | $ | 74.88 | $ | 51.41 | ||||
Second Quarter | $ | 76.85 | $ | 64.70 | ||||
Third Quarter | $ | 71.75 | $ | 51.71 | ||||
Fourth Quarter | $ | 66.90 | $ | 43.80 |
High | Low | |||||||
Year Ended January 31, 2017: | ||||||||
First Quarter | $ | 53.98 | $ | 29.85 | ||||
Second Quarter | $ | 62.63 | $ | 45.07 | ||||
Third Quarter | $ | 65.75 | $ | 54.45 | ||||
Fourth Quarter | $ | 62.90 | $ | 50.64 |
Company/Index | 4/19/12 | 1/31/13 | 1/31/14 | 1/31/15 | 1/31/16 | 1/31/17 | ||||||||||||
Splunk Inc. | $ | 100.00 | $ | 92.90 | $ | 217.11 | $ | 145.57 | $ | 130.47 | $ | 163.08 | ||||||
NASDAQ Composite | $ | 100.00 | $ | 104.47 | $ | 136.45 | $ | 154.12 | $ | 153.41 | $ | 186.69 | ||||||
NASDAQ Computer | $ | 100.00 | $ | 95.02 | $ | 121.69 | $ | 143.97 | $ | 150.45 | $ | 186.04 |
Fiscal Year Ended January 31, | |||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||
Consolidated Statement of Operations Data: | |||||||||||||||||||
Revenues | |||||||||||||||||||
License | $ | 546,925 | $ | 405,399 | $ | 283,191 | $ | 199,024 | $ | 135,922 | |||||||||
Maintenance and services | 403,030 | 263,036 | 167,684 | 103,599 | 63,022 | ||||||||||||||
Total revenues | 949,955 | 668,435 | 450,875 | 302,623 | 198,944 | ||||||||||||||
Cost of revenues (1) | |||||||||||||||||||
License | 11,965 | 9,080 | 1,859 | 330 | 727 | ||||||||||||||
Maintenance and services | 179,088 | 105,042 | 66,519 | 35,495 | 20,697 | ||||||||||||||
Total cost of revenues | 191,053 | 114,122 | 68,378 | 35,825 | 21,424 | ||||||||||||||
Gross profit | 758,902 | 554,313 | 382,497 | 266,798 | 177,520 | ||||||||||||||
Operating expenses (1) | |||||||||||||||||||
Research and development | 295,850 | 215,309 | 150,790 | 75,895 | 41,853 | ||||||||||||||
Sales and marketing | 653,524 | 505,348 | 344,471 | 215,335 | 125,098 | ||||||||||||||
General and administrative | 153,359 | 121,579 | 103,046 | 53,875 | 32,602 | ||||||||||||||
Total operating expenses | 1,102,733 | 842,236 | 598,307 | 345,105 | 199,553 | ||||||||||||||
Operating loss | (343,831 | ) | (287,923 | ) | (215,810 | ) | (78,307 | ) | (22,033 | ) | |||||||||
Interest and other income (expense), net | |||||||||||||||||||
Interest income (expense), net | (2,829 | ) | 1,798 | 754 | 225 | 152 | |||||||||||||
Other income (expense), net | (3,022 | ) | (519 | ) | 216 | (920 | ) | — | |||||||||||
Change in fair value of preferred stock warrants | — | — | — | — | (14,087 | ) | |||||||||||||
Total interest and other income (expense), net | (5,851 | ) | 1,279 | 970 | (695 | ) | (13,935 | ) | |||||||||||
Loss before income taxes | (349,682 | ) | (286,644 | ) | (214,840 | ) | (79,002 | ) | (35,968 | ) | |||||||||
Provision for income taxes (benefit) | 5,507 | (7,872 | ) | 2,276 | 6 | 713 | |||||||||||||
Net loss | $ | (355,189 | ) | $ | (278,772 | ) | $ | (217,116 | ) | $ | (79,008 | ) | $ | (36,681 | ) | ||||
Net loss per share: | |||||||||||||||||||
Basic and diluted | $ | (2.65 | ) | $ | (2.20 | ) | $ | (1.81 | ) | $ | (0.75 | ) | $ | (0.46 | ) | ||||
Weighted-average shares outstanding: | |||||||||||||||||||
Basic and diluted | 133,910 | 126,746 | 119,775 | 105,067 | 80,246 |
(1) | Amounts include stock-based compensation expense as follows: |
Fiscal Year Ended January 31, | |||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
(in thousands) | |||||||||||||||||||
Cost of revenues | $ | 30,971 | $ | 26,057 | $ | 17,189 | $ | 5,283 | $ | 1,217 | |||||||||
Research and development | 129,388 | 89,197 | 60,777 | 20,829 | 6,170 | ||||||||||||||
Sales and marketing | 161,164 | 130,054 | 90,064 | 30,012 | 8,093 | ||||||||||||||
General and administrative | 56,518 | 46,949 | 46,149 | 13,244 | 4,000 |
As of January 31, | |||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
(in thousands) | |||||||||||||||||||
Consolidated Balance Sheet Data: | |||||||||||||||||||
Cash, cash equivalents and short-term investments | $ | 1,083,442 | $ | 1,009,039 | $ | 850,164 | $ | 897,453 | $ | 305,939 | |||||||||
Working capital | 693,000 | 719,503 | 653,185 | 784,966 | 259,789 | ||||||||||||||
Total assets | 1,718,546 | 1,536,839 | 1,247,791 | 1,040,331 | 390,445 | ||||||||||||||
Deferred revenue, current and long-term | 625,459 | 449,503 | 304,085 | 192,321 | 114,712 | ||||||||||||||
Total stockholders’ equity | 805,161 | 859,414 | 813,321 | 784,908 | 237,544 |
• | Extend our technological capabilities. |
• | Continue to expand our direct and indirect sales organization, including our channel relationships, to increase our sales capacity and enable greater market presence. |
• | Further penetrate our existing customer base and drive enterprise-wide adoption. |
• | Enhance our value proposition through a focus on solutions which address core and expanded use cases. |
• | Grow our user communities and partner ecosystem to increase awareness of our brand, target new use cases, drive operational leverage and deliver more targeted, higher value solutions. |
• | Continue to deliver a rich developer environment to enable rapid development of enterprise applications that leverage machine data and the Splunk platform. |
Fiscal Year Ended January 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Net cash provided by operating activities | $ | 201,834 | $ | 155,622 | $ | 103,980 | |||||
Less purchases of property and equipment | (45,349 | ) | (51,332 | ) | (13,950 | ) | |||||
Free cash flow (non-GAAP) | $ | 156,485 | $ | 104,290 | $ | 90,030 | |||||
Net cash used in investing activities | $ | (127,461 | ) | $ | (153,490 | ) | $ | (645,160 | ) | ||
Net cash provided by (used in) financing activities | $ | (77,862 | ) | $ | 35,485 | $ | 31,610 |
GAAP | Stock-based compensation | Employer payroll tax on employee stock plans | Amortization of acquired intangible assets | Adjustments related to financing lease obligation | Adjustments related to facility exits | Non-GAAP | ||||||||||||||||||||||
Cost of revenues | $ | 191,053 | $ | (30,971 | ) | $ | (801 | ) | $ | (11,261 | ) | $ | 849 | $ | — | $ | 148,869 | |||||||||||
Gross margin | 79.9 | % | 3.2 | % | 0.1 | % | 1.2 | % | (0.1 | )% | — | % | 84.3 | % | ||||||||||||||
Research and development | 295,850 | (129,388 | ) | (2,651 | ) | (233 | ) | 1,713 | — | 165,291 | ||||||||||||||||||
Sales and marketing | 653,524 | (161,164 | ) | (3,394 | ) | (432 | ) | 3,508 | — | 492,042 | ||||||||||||||||||
General and administrative | 153,359 | (56,518 | ) | (1,827 | ) | — | 745 | (11,364 | ) | 84,395 | ||||||||||||||||||
Operating income (loss) | (343,831 | ) | 378,041 | 8,673 | 11,926 | (6,815 | ) | 11,364 | 59,358 | |||||||||||||||||||
Operating margin | (36.2 | )% | 39.7 | % | 0.9 | % | 1.3 | % | (0.7 | )% | 1.2 | % | 6.2 | % | ||||||||||||||
Net income (loss) | $ | (355,189 | ) | $ | 378,041 | $ | 8,673 | $ | 11,926 | $ | 890 | (2) | $ | 11,364 | $ | 55,705 | ||||||||||||
Net income (loss) per share (1) | $ | (2.65 | ) | $ | 0.41 |
GAAP | Stock-based compensation | Employer payroll tax on employee stock plans | Amortization of acquired intangible assets | Acquisition-related costs and income tax effects | Adjustments related to financing lease obligation | Non-GAAP | ||||||||||||||||||||||
Cost of revenues | $ | 114,122 | $ | (26,057 | ) | $ | (953 | ) | $ | (8,271 | ) | $ | — | $ | — | $ | 78,841 | |||||||||||
Gross margin | 82.9 | % | 3.9 | % | 0.1 | % | 1.3 | % | — | % | — | % | 88.2 | % | ||||||||||||||
Research and development | 215,309 | (89,197 | ) | (2,837 | ) | (296 | ) | — | — | 122,979 | ||||||||||||||||||
Sales and marketing | 505,348 | (130,054 | ) | (3,442 | ) | (623 | ) | — | — | 371,229 | ||||||||||||||||||
General and administrative | 121,579 | (46,949 | ) | (1,736 | ) | — | (1,993 | ) | (888 | ) | 70,013 | |||||||||||||||||
Operating income (loss) | (287,923 | ) | 292,257 | 8,968 | 9,190 | 1,993 | 888 | 25,373 | ||||||||||||||||||||
Operating margin | (43.1 | )% | 43.8 | % | 1.3 | % | 1.4 | % | 0.3 | % | 0.1 | % | 3.8 | % | ||||||||||||||
Net income (loss) | $ | (278,772 | ) | $ | 292,257 | $ | 8,968 | $ | 9,190 | $ | (8,931 | ) | (2) | $ | 888 | $ | 23,600 | |||||||||||
Net income (loss) per share (1) | $ | (2.20 | ) | $ | 0.18 |
GAAP | Stock-based compensation | Employer payroll tax on employee stock plans | Amortization of acquired intangible assets | Adjustments related to financing lease obligation | Non-GAAP | |||||||||||||||||||
Cost of revenues | $ | 68,378 | $ | (17,189 | ) | $ | (639 | ) | $ | (3,004 | ) | $ | — | $ | 47,546 | |||||||||
Gross Margin | 84.8 | % | 3.9 | % | 0.1 | % | 0.7 | % | — | % | 89.5 | % | ||||||||||||
Research and development | 150,790 | (60,777 | ) | (3,219 | ) | (776 | ) | — | 86,018 | |||||||||||||||
Sales and marketing | 344,471 | (90,064 | ) | (2,850 | ) | (597 | ) | — | 250,960 | |||||||||||||||
General and administrative | 103,046 | (46,149 | ) | (2,160 | ) | — | (666 | ) | 54,071 | |||||||||||||||
Operating income (loss) | (215,810 | ) | 214,179 | 8,868 | 4,377 | 666 | 12,280 | |||||||||||||||||
Operating margin | (47.9 | )% | 47.5 | % | 2.0 | % | 1.0 | % | 0.1 | % | 2.7 | % | ||||||||||||
Net income (loss) | $ | (217,116 | ) | $ | 214,179 | $ | 8,868 | $ | 4,377 | $ | 666 | $ | 10,974 | |||||||||||
Net income (loss) per share (1) | $ | (1.81 | ) | $ | 0.09 |
Total revenues | $ | 949,955 | ||
Increase in deferred revenue | 175,956 | |||
Billings (Non-GAAP) | $ | 1,125,911 |
Total Splunk Cloud revenues | $ | 47,773 | ||
Increase in Splunk Cloud deferred revenue | 47,745 | |||
Splunk Cloud billings (Non-GAAP) | $ | 95,518 |
Fiscal Year Ended January 31, | |||||||||||||||||||||
2017 | 2016 | 2015 | |||||||||||||||||||
(in thousands and as % of revenues) | |||||||||||||||||||||
Consolidated Statement of Operations Data: | |||||||||||||||||||||
Revenues | |||||||||||||||||||||
License | $ | 546,925 | 57.6 | % | $ | 405,399 | 60.6 | % | $ | 283,191 | 62.8 | % | |||||||||
Maintenance and services | 403,030 | 42.4 | 263,036 | 39.4 | 167,684 | 37.2 | |||||||||||||||
Total revenues | 949,955 | 100.0 | 668,435 | 100.0 | 450,875 | 100.0 | |||||||||||||||
Cost of revenues | |||||||||||||||||||||
License (1) | 11,965 | 2.2 | 9,080 | 2.2 | 1,859 | 0.7 | |||||||||||||||
Maintenance and services (1) | 179,088 | 44.4 | 105,042 | 39.9 | 66,519 | 39.7 | |||||||||||||||
Total cost of revenues | 191,053 | 20.1 | 114,122 | 17.1 | 68,378 | 15.2 | |||||||||||||||
Gross profit | 758,902 | 79.9 | 554,313 | 82.9 | 382,497 | 84.8 | |||||||||||||||
Operating expenses | |||||||||||||||||||||
Research and development | 295,850 | 31.1 | 215,309 | 32.2 | 150,790 | 33.4 | |||||||||||||||
Sales and marketing | 653,524 | 68.8 | 505,348 | 75.6 | 344,471 | 76.4 | |||||||||||||||
General and administrative | 153,359 | 16.1 | 121,579 | 18.2 | 103,046 | 22.9 | |||||||||||||||
Total operating expenses | 1,102,733 | 116.1 | 842,236 | 126.0 | 598,307 | 132.7 | |||||||||||||||
Operating loss | (343,831 | ) | (36.2 | ) | (287,923 | ) | (43.1 | ) | (215,810 | ) | (47.9 | ) | |||||||||
Other income (expense), net | |||||||||||||||||||||
Interest income (expense), net | (2,829 | ) | (0.3 | ) | 1,798 | 0.3 | 754 | 0.3 | |||||||||||||
Other income (expense), net | (3,022 | ) | (0.3 | ) | (519 | ) | (0.1 | ) | 216 | — | |||||||||||
Total other income (expense), net | (5,851 | ) | (0.6 | ) | 1,279 | 0.2 | 970 | 0.3 | |||||||||||||
Loss before income taxes | (349,682 | ) | (36.8 | ) | (286,644 | ) | (42.9 | ) | (214,840 | ) | (47.6 | ) | |||||||||
Provision for income taxes (benefit) | 5,507 | 0.6 | (7,872 | ) | (1.2 | ) | 2,276 | 0.6 | |||||||||||||
Net loss | $ | (355,189 | ) | (37.4 | )% | $ | (278,772 | ) | (41.7 | )% | $ | (217,116 | ) | (48.2 | )% |
(1) | Calculated as a percentage of the associated revenues. |
Fiscal Year Ended January 31, | ||||||||||||||||||
2017 to 2016 % Change | 2016 to 2015 % Change | |||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||
(in thousands) | ||||||||||||||||||
Revenues | ||||||||||||||||||
License | $ | 546,925 | $ | 405,399 | $ | 283,191 | 34.9 | % | 43.2 | % | ||||||||
Maintenance and services | 403,030 | 263,036 | 167,684 | 53.2 | % | 56.9 | % | |||||||||||
Total revenues | $ | 949,955 | $ | 668,435 | $ | 450,875 | 42.1 | % | 48.3 | % | ||||||||
Percentage of revenues | ||||||||||||||||||
License | 57.6 | % | 60.6 | % | 62.8 | % | ||||||||||||
Maintenance and services | 42.4 | 39.4 | 37.2 | |||||||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % |
Fiscal Year Ended January 31, | ||||||||||||||||||
2017 to 2016 % Change | 2016 to 2015 % Change | |||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||
(in thousands) | ||||||||||||||||||
Cost of revenues (1) | ||||||||||||||||||
License | $ | 11,965 | $ | 9,080 | $ | 1,859 | 31.8 | % | 388.4 | % | ||||||||
Maintenance and services | 179,088 | 105,042 | 66,519 | 70.5 | % | 57.9 | % | |||||||||||
Total cost of revenues | $ | 191,053 | $ | 114,122 | $ | 68,378 | 67.4 | % | 66.9 | % | ||||||||
Gross margin | ||||||||||||||||||
License | 97.8 | % | 97.8 | % | 99.3 | % | ||||||||||||
Maintenance and services | 55.6 | % | 60.1 | % | 60.3 | % | ||||||||||||
Total gross margin | 79.9 | % | 82.9 | % | 84.8 | % |
Cost of revenues | $ | 30,971 | $ | 26,057 | $ | 17,189 |
Fiscal Year Ended January 31, | ||||||||||||||||||
2017 to 2016 % Change | 2016 to 2015 % Change | |||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||
(in thousands) | ||||||||||||||||||
Operating expenses (1) | ||||||||||||||||||
Research and development | $ | 295,850 | $ | 215,309 | $ | 150,790 | 37.4 | % | 42.8 | % | ||||||||
Sales and marketing | 653,524 | 505,348 | 344,471 | 29.3 | % | 46.7 | % | |||||||||||
General and administrative | 153,359 | 121,579 | 103,046 | 26.1 | % | 18.0 | % | |||||||||||
Total operating expenses | $ | 1,102,733 | $ | 842,236 | $ | 598,307 | 30.9 | % | 40.8 | % | ||||||||
Percentage of revenues | ||||||||||||||||||
Research and development | 31.1 | % | 32.2 | % | 33.4 | % | ||||||||||||
Sales and marketing | 68.8 | 75.6 | 76.4 | |||||||||||||||
General and administrative | 16.2 | 18.2 | 22.9 | |||||||||||||||
Total | 116.1 | % | 126.0 | % | 132.7 | % |
Research and development | $ | 129,388 | $ | 89,197 | $ | 60,777 | ||||||||||
Sales and marketing | 161,164 | 130,054 | 90,064 | |||||||||||||
General and administrative | 56,518 | 46,949 | 46,149 | |||||||||||||
Total stock-based compensation expense | $ | 347,070 | $ | 266,200 | $ | 196,990 |
Fiscal Year Ended January 31, | ||||||||||||||||||
2017 to 2016 % Change | 2016 to 2015 % Change | |||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||
(in thousands) | ||||||||||||||||||
Interest and other income (expense), net | ||||||||||||||||||
Interest income (expense), net | $ | (2,829 | ) | $ | 1,798 | $ | 754 | (257.3 | )% | 138.5 | % | |||||||
Other income (expense), net | (3,022 | ) | (519 | ) | 216 | 482.3 | % | (340.3 | )% | |||||||||
Total interest and other income (expense), net | $ | (5,851 | ) | $ | 1,279 | $ | 970 | (557.5 | )% | 31.9 | % |
Fiscal Year Ended January 31, | ||||||||||||||||||
2017 to 2016 % Change | 2016 to 2015 % Change | |||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||
(in thousands) | ||||||||||||||||||
Provision for income taxes (benefit) | $ | 5,507 | $ | (7,872 | ) | $ | 2,276 | (170.0 | )% | (445.9 | )% |
Three Months Ended | |||||||||||||||||||||||||||||||
Jan 31, 2017 | Oct 31, 2016 | July 31, 2016 | Apr 30, 2016 | Jan 31, 2016 | Oct 31, 2015 | July 31, 2015 | Apr 30, 2015 | ||||||||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||||||||||||||
Consolidated Statement of Operations Data: | |||||||||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||||
License | $ | 190,513 | $ | 139,725 | $ | 115,695 | $ | 100,992 | $ | 141,403 | $ | 104,164 | $ | 87,960 | $ | 71,872 | |||||||||||||||
Maintenance and services | 115,948 | 105,064 | 97,058 | 84,960 | 78,621 | 70,256 | 60,366 | 53,793 | |||||||||||||||||||||||
Total revenues | 306,461 | 244,789 | 212,753 | 185,952 | 220,024 | 174,420 | 148,326 | 125,665 | |||||||||||||||||||||||
Cost of revenues | |||||||||||||||||||||||||||||||
License | 3,252 | 2,883 | 2,868 | 2,962 | 2,970 | 3,136 | 1,813 | 1,161 | |||||||||||||||||||||||
Maintenance and services | 55,011 | 45,791 | 41,748 | 36,538 | 32,436 | 27,455 | 23,227 | 21,924 | |||||||||||||||||||||||
Total cost of revenues (1) | 58,263 | 48,674 | 44,616 | 39,500 | 35,406 | 30,591 | 25,040 | 23,085 | |||||||||||||||||||||||
Gross profit | 248,198 | 196,115 | 168,137 | 146,452 | 184,618 | 143,829 | 123,286 | 102,580 | |||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||
Research and development (1) | 75,596 | 85,659 | 67,224 | 67,371 | 66,117 | 56,186 | 48,308 | 44,698 | |||||||||||||||||||||||
Sales and marketing (1) | 190,815 | 167,330 | 150,228 | 145,151 | 161,442 | 130,131 | 111,786 | 101,989 | |||||||||||||||||||||||
General and administrative (1) | 52,895 | 34,079 | 34,312 | 32,073 | 36,090 | 29,857 | 28,760 | 26,872 | |||||||||||||||||||||||
Total operating expenses | 319,306 | 287,068 | 251,764 | 244,595 | 263,649 | 216,174 | 188,854 | 173,559 | |||||||||||||||||||||||
Operating loss | (71,108 | ) | (90,953 | ) | (83,627 | ) | (98,143 | ) | (79,031 | ) | (72,345 | ) | (65,568 | ) | (70,979 | ) | |||||||||||||||
Interest and other income (expense), net | |||||||||||||||||||||||||||||||
Interest income (expense), net | (806 | ) | (823 | ) | (797 | ) | (403 | ) | 636 | 377 | 425 | 360 | |||||||||||||||||||
Other income (expense), net | (486 | ) | (348 | ) | (1,063 | ) | (1,125 | ) | (42 | ) | (271 | ) | (295 | ) | 89 | ||||||||||||||||
Total interest and other income (expense), net | (1,292 | ) | (1,171 | ) | (1,860 | ) | (1,528 | ) | 594 | 106 | 130 | 449 | |||||||||||||||||||
Loss before income taxes | (72,400 | ) | (92,124 | ) | (85,487 | ) | (99,671 | ) | (78,437 | ) | (72,239 | ) | (65,438 | ) | (70,530 | ) | |||||||||||||||
Income tax provision (benefit) | 1,805 | 1,367 | 1,110 | 1,225 | 886 | 735 | (10,149 | ) | 656 | ||||||||||||||||||||||
Net loss | $ | (74,205 | ) | $ | (93,491 | ) | $ | (86,597 | ) | $ | (100,896 | ) | $ | (79,323 | ) | $ | (72,974 | ) | $ | (55,289 | ) | $ | (71,186 | ) | |||||||
Net loss per share, basic and diluted: | $ | (0.54 | ) | $ | (0.69 | ) | $ | (0.65 | ) | $ | (0.77 | ) | $ | (0.61 | ) | $ | (0.57 | ) | $ | (0.44 | ) | $ | (0.57 | ) |
(1) | Includes stock-based compensation expense as follows: |
Three Months Ended | |||||||||||||||||||||||||||||||
Jan 31, 2017 | Oct 31, 2016 | July 31, 2016 | Apr 30, 2016 | Jan 31, 2016 | Oct 31, 2015 | July 31, 2015 | Apr 30, 2015 | ||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||
Cost of revenues | $ | 8,496 | $ | 7,610 | $ | 7,310 | $ | 7,555 | $ | 7,479 | $ | 6,384 | $ | 5,662 | $ | 6,532 | |||||||||||||||
Research and development | 27,085 | 45,355 | 27,742 | 29,206 | 27,287 | 22,534 | 19,301 | 20,075 | |||||||||||||||||||||||
Sales and marketing | 42,810 | 38,750 | 39,371 | 40,233 | 38,987 | 33,247 | 28,210 | 29,610 | |||||||||||||||||||||||
General and administrative | 14,403 | 13,299 | 14,440 | 14,376 | 14,622 | 11,999 | 10,436 | 9,892 |
Three Months Ended | |||||||||||||||||||||||
Jan 31, 2017 | Oct 31, 2016 | July 31, 2016 | Apr 30, 2016 | Jan 31, 2016 | Oct 31, 2015 | July 31, 2015 | Apr 30, 2015 | ||||||||||||||||
(as % of revenues) | |||||||||||||||||||||||
Consolidated Statement of Operations Data: | |||||||||||||||||||||||
Revenues | |||||||||||||||||||||||
License | 62.2 | % | 57.1 | % | 54.4 | % | 54.3 | % | 64.3 | % | 59.7 | % | 59.3 | % | 57.2 | % | |||||||
Maintenance and services | 37.8 | 42.9 | 45.6 | 45.7 | 35.7 | 40.3 | 40.7 | 42.8 | |||||||||||||||
Total revenues | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||
Cost of revenues | |||||||||||||||||||||||
License (1) | 1.7 | 2.1 | 2.5 | 2.9 | 2.1 | 3.0 | 2.1 | 1.6 | |||||||||||||||
Maintenance and services (1) | 47.4 | 43.6 | 43.0 | 43.0 | 41.3 | 39.1 | 38.5 | 40.8 | |||||||||||||||
Total cost of revenues | 19.0 | 19.9 | 21.0 | 21.2 | 16.1 | 17.5 | 16.9 | 18.4 | |||||||||||||||
Gross profit | 81.0 | 80.1 | 79.0 | 78.8 | 83.9 | 82.5 | 83.1 | 81.6 | |||||||||||||||
Operating expenses | |||||||||||||||||||||||
Research and development | 24.7 | 35.0 | 31.6 | 36.2 | 30.0 | 32.2 | 32.6 | 35.6 | |||||||||||||||
Sales and marketing | 62.3 | 68.4 | 70.6 | 78.1 | 73.4 | 74.6 | 75.4 | 81.2 | |||||||||||||||
General and administrative | 17.2 | 13.9 | 16.1 | 17.3 | 16.4 | 17.2 | 19.3 | 21.3 | |||||||||||||||
Total operating expenses | 104.2 | 117.3 | 118.3 | 131.6 | 119.8 | 124.0 | 127.3 | 138.1 | |||||||||||||||
Operating loss | (23.2 | ) | (37.2 | ) | (39.3 | ) | (52.8 | ) | (35.9 | ) | (41.5 | ) | (44.2 | ) | (56.5 | ) | |||||||
Interest and other income (expense), net | |||||||||||||||||||||||
Interest income (expense), net | (0.2 | ) | (0.3 | ) | (0.4 | ) | (0.2 | ) | 0.3 | 0.2 | 0.3 | 0.3 | |||||||||||
Other income (expense), net | (0.2 | ) | (0.1 | ) | (0.5 | ) | (0.6 | ) | — | (0.1 | ) | (0.2 | ) | 0.1 | |||||||||
Total interest and other income (expense), net | (0.4 | ) | (0.4 | ) | (0.9 | ) | (0.8 | ) | 0.3 | 0.1 | 0.1 | 0.4 | |||||||||||
Loss before income taxes | (23.6 | ) | (37.6 | ) | (40.2 | ) | (53.6 | ) | (35.6 | ) | (41.4 | ) | (44.1 | ) | (56.1 | ) | |||||||
Income tax provision (benefit) | 0.6 | 0.6 | 0.5 | 0.7 | 0.5 | 0.4 | (6.8 | ) | 0.5 | ||||||||||||||
Net loss | (24.2 | )% | (38.2 | )% | (40.7 | )% | (54.3 | )% | (36.1 | )% | (41.8 | )% | (37.3 | )% | (56.6 | )% |
As of January 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(in thousands) | |||||||||||
Cash and cash equivalents | $ | 421,346 | $ | 424,541 | $ | 387,315 | |||||
Investments, current portion | 662,096 | 584,498 | 462,849 | ||||||||
Investments, non-current | 5,000 | 1,500 | 165,082 |
Fiscal Year Ended January 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(in thousands) | |||||||||||
Cash provided by operating activities | $ | 201,834 | $ | 155,622 | $ | 103,980 | |||||
Cash used in investing activities | (127,461 | ) | (153,490 | ) | (645,160 | ) | |||||
Cash provided by (used in) financing activities | (77,862 | ) | 35,485 | 31,610 |
Payments Due by Period* | ||||||||||||||||||||
Total | Less Than 1 year | 1-3 years | 3-5 years | More Than 5 years | ||||||||||||||||
Operating lease commitments * | $ | 177,160 | $ | 20,399 | $ | 44,582 | $ | 36,745 | $ | 75,434 |
Fiscal Period: | ||||
Fiscal 2018 | $ | 11,683 | ||
Fiscal 2019 | 12,510 | |||
Fiscal 2020 | 12,886 | |||
Fiscal 2021 | 13,272 | |||
Fiscal 2022 | 13,670 | |||
Thereafter | 21,977 | |||
Total future minimum lease payments | $ | 85,998 |
Page No. | |
January 31, 2017 | January 31, 2016 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 421,346 | $ | 424,541 | |||
Investments, current portion | 662,096 | 584,498 | |||||
Accounts receivable, net | 238,281 | 181,665 | |||||
Prepaid expenses and other current assets | 38,650 | 26,565 | |||||
Total current assets | 1,360,373 | 1,217,269 | |||||
Investments, non-current | 5,000 | 1,500 | |||||
Property and equipment, net | 166,395 | 134,995 | |||||
Intangible assets, net | 37,713 | 49,482 | |||||
Goodwill | 124,642 | 123,318 | |||||
Other assets | 24,423 | 10,275 | |||||
Total assets | $ | 1,718,546 | $ | 1,536,839 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 7,503 | $ | 4,868 | |||
Accrued payroll and compensation | 100,092 | 95,898 | |||||
Accrued expenses and other liabilities | 81,071 | 49,879 | |||||
Deferred revenue, current portion | 478,707 | 347,121 | |||||
Total current liabilities | 667,373 | 497,766 | |||||
Deferred revenue, non-current | 146,752 | 102,382 | |||||
Other liabilities, non-current | 99,260 | 77,277 | |||||
Total non-current liabilities | 246,012 | 179,659 | |||||
Total liabilities | 913,385 | 677,425 | |||||
Commitments and contingencies (Note 3) | |||||||
Stockholders’ equity | |||||||
Preferred stock: $0.001 par value; 20,000,000 shares authorized; no shares issued or outstanding at January 31, 2017 and January 31, 2016 | — | — | |||||
Common stock: $0.001 par value; 1,000,000,000 shares authorized; 137,169,481 shares issued and outstanding at January 31, 2017, and 131,543,467 shares issued and outstanding at January 31, 2016 | 137 | 132 | |||||
Accumulated other comprehensive loss | (3,013 | ) | (3,770 | ) | |||
Additional paid-in capital | 1,828,821 | 1,528,647 | |||||
Accumulated deficit | (1,020,784 | ) | (665,595 | ) | |||
Total stockholders’ equity | 805,161 | 859,414 | |||||
Total liabilities and stockholders’ equity | $ | 1,718,546 | $ | 1,536,839 |
Fiscal Year Ended January 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Revenues | |||||||||||
License | $ | 546,925 | $ | 405,399 | $ | 283,191 | |||||
Maintenance and services | 403,030 | 263,036 | 167,684 | ||||||||
Total revenues | 949,955 | 668,435 | 450,875 | ||||||||
Cost of revenues (1) | |||||||||||
License | 11,965 | 9,080 | 1,859 | ||||||||
Maintenance and services | 179,088 | 105,042 | 66,519 | ||||||||
Total cost of revenues | 191,053 | 114,122 | 68,378 | ||||||||
Gross profit | 758,902 | 554,313 | 382,497 | ||||||||
Operating expenses (1) | |||||||||||
Research and development | 295,850 | 215,309 | 150,790 | ||||||||
Sales and marketing | 653,524 | 505,348 | 344,471 | ||||||||
General and administrative | 153,359 | 121,579 | 103,046 | ||||||||
Total operating expenses | 1,102,733 | 842,236 | 598,307 | ||||||||
Operating loss | (343,831 | ) | (287,923 | ) | (215,810 | ) | |||||
Interest and other income (expense), net | |||||||||||
Interest income (expense), net | (2,829 | ) | 1,798 | 754 | |||||||
Other income (expense), net | (3,022 | ) | (519 | ) | 216 | ||||||
Total interest and other income (expense), net | (5,851 | ) | 1,279 | 970 | |||||||
Loss before income taxes | (349,682 | ) | (286,644 | ) | (214,840 | ) | |||||
Provision for income taxes (benefit) | 5,507 | (7,872 | ) | 2,276 | |||||||
Net loss | $ | (355,189 | ) | $ | (278,772 | ) | $ | (217,116 | ) | ||
Basic and diluted net loss per share | $ | (2.65 | ) | $ | (2.20 | ) | $ | (1.81 | ) | ||
Weighted-average shares used in computing basic and diluted net loss per share | 133,910 | 126,746 | 119,775 |
Cost of revenues | $ | 30,971 | $ | 26,057 | $ | 17,189 | |||||
Research and development | 129,388 | 89,197 | 60,777 | ||||||||
Sales and marketing | 161,164 | 130,054 | 90,064 | ||||||||
General and administrative | 56,518 | 46,949 | 46,149 |
Fiscal Year Ended January 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Net loss | $ | (355,189 | ) | $ | (278,772 | ) | $ | (217,116 | ) | ||
Other comprehensive income (loss): | |||||||||||
Net unrealized gain (loss) on investments (net of tax) | (174 | ) | (66 | ) | 2 | ||||||
Foreign currency translation adjustments | 931 | (2,867 | ) | (897 | ) | ||||||
Total other comprehensive income (loss) | 757 | (2,933 | ) | (895 | ) | ||||||
Comprehensive loss | $ | (354,432 | ) | $ | (281,705 | ) | $ | (218,011 | ) |
Common Stock | ||||||||||||||||||||||
Shares | Amount | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||
Balances at January 31, 2014 | 116,099,516 | $ | 116 | $ | 954,441 | $ | 58 | $ | (169,707 | ) | $ | 784,908 | ||||||||||
Stock-based compensation | — | — | 214,179 | — | — | 214,179 | ||||||||||||||||
Issuance of common stock upon exercise of options | 4,213,746 | 4 | 16,788 | — | — | 16,792 | ||||||||||||||||
Vesting of early exercised options | — | — | 112 | — | — | 112 | ||||||||||||||||
Vesting of restricted stock units | 2,862,027 | 3 | (3 | ) | — | — | — | |||||||||||||||
Issuance of common stock upon ESPP purchase | 363,203 | — | 14,494 | — | — | 14,494 | ||||||||||||||||
Excess tax benefits from employee stock plans | — | — | 847 | — | — | 847 | ||||||||||||||||
Unrealized gain from investments | — | — | — | 2 | — | 2 | ||||||||||||||||
Net change in cumulative translation adjustments | — | — | — | (897 | ) | — | (897 | ) | ||||||||||||||
Net loss | — | — | — | — | (217,116 | ) | (217,116 | ) | ||||||||||||||
Balances at January 31, 2015 | 123,538,492 | 123 | 1,200,858 | (837 | ) | (386,823 | ) | 813,321 | ||||||||||||||
Stock-based compensation | — | — | 292,257 | — | — | 292,257 | ||||||||||||||||
Issuance of common stock upon exercise of options | 2,755,556 | 3 | 15,266 | — | — | 15,269 | ||||||||||||||||
Vesting of early exercised options | — | — | 55 | — | — | 55 | ||||||||||||||||
Vesting of restricted stock units | 4,136,073 | 5 | (5 | ) | — | — | — | |||||||||||||||
Issuance of common stock upon ESPP purchase | 441,564 | — | 19,342 | — | — | 19,342 | ||||||||||||||||
Issuance of restricted stock awards | 671,782 | 1 | — | — | — | 1 | ||||||||||||||||
Excess tax benefits from employee stock plans | — | — | 874 | — | — | 874 | ||||||||||||||||
Unrealized loss from investments | — | — | — | (66 | ) | — | (66 | ) | ||||||||||||||
Net change in cumulative translation adjustments | — | — | — | (2,867 | ) | — | (2,867 | ) | ||||||||||||||
Net loss | — | — | — | — | (278,772 | ) | (278,772 | ) | ||||||||||||||
Balances at January 31, 2016 | 131,543,467 | 132 | 1,528,647 | (3,770 | ) | (665,595 | ) | 859,414 | ||||||||||||||
Stock-based compensation | — | — | 378,041 | — | — | 378,041 | ||||||||||||||||
Issuance of common stock upon exercise of options | 1,642,599 | 2 | 7,746 | — | — | 7,748 | ||||||||||||||||
Vesting of restricted stock units | 3,571,873 | 3 | — | — | — | 3 | ||||||||||||||||
Taxes paid related to net share settlement of equity awards | — | — | (113,707 | ) | — | — | (113,707 | ) | ||||||||||||||
Issuance of common stock upon ESPP purchase | 597,545 | — | 27,412 | — | — | 27,412 | ||||||||||||||||
Forfeited restricted stock awards | (186,003 | ) | — | — | — | — | — | |||||||||||||||
Excess tax benefits from employee stock plans | — | — | 682 | — | — | 682 | ||||||||||||||||
Unrealized loss from investments | — | — | — | (174 | ) | — | (174 | ) | ||||||||||||||
Net change in cumulative translation adjustments | — | — | — | 931 | — | 931 | ||||||||||||||||
Net loss | — | — | — | — | (355,189 | ) | (355,189 | ) | ||||||||||||||
Balances at January 31, 2017 | 137,169,481 | $ | 137 | $ | 1,828,821 | $ | (3,013 | ) | $ | (1,020,784 | ) | $ | 805,161 |
Fiscal Year Ended January 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Cash flows from operating activities | |||||||||||
Net loss | $ | (355,189 | ) | $ | (278,772 | ) | $ | (217,116 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 32,113 | 19,491 | 12,494 | ||||||||
Amortization of investment premiums | 840 | 1,332 | 775 | ||||||||
Stock-based compensation expense | 378,041 | 292,257 | 214,179 | ||||||||
Deferred income taxes | (326 | ) | (11,140 | ) | (327 | ) | |||||
Excess tax benefits from employee stock plans | (682 | ) | (874 | ) | (847 | ) | |||||
Facility exit charge | 8,625 | — | — | ||||||||
Accelerated depreciation of property and equipment | 2,739 | — | — | ||||||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||||||
Accounts receivable, net | (56,616 | ) | (53,252 | ) | (45,065 | ) | |||||
Prepaid expenses, other current and non-current assets | (25,726 | ) | 4,675 | (11,284 | ) | ||||||
Accounts payable | 2,720 | 965 | 1,766 | ||||||||
Accrued payroll and compensation | 4,194 | 30,026 | 21,344 | ||||||||
Accrued expenses and other liabilities | 35,145 | 5,496 | 16,297 | ||||||||
Deferred revenue | 175,956 | 145,418 | 111,764 | ||||||||
Net cash provided by operating activities | 201,834 | 155,622 | 103,980 | ||||||||
Cash flows from investing activities | |||||||||||
Purchases of investments | (683,787 | ) | (480,610 | ) | (820,710 | ) | |||||
Maturities of investments | 605,175 | 522,645 | 192,000 | ||||||||
Acquisitions, net of cash acquired | — | (142,693 | ) | (2,500 | ) | ||||||
Purchases of property and equipment | (45,349 | ) | (51,332 | ) | (13,950 | ) | |||||
Other investment activities | (3,500 | ) | (1,500 | ) | — | ||||||
Net cash used in investing activities | (127,461 | ) | (153,490 | ) | (645,160 | ) | |||||
Cash flows from financing activities | |||||||||||
Proceeds from exercise of stock options | 7,751 | 15,269 | 16,792 | ||||||||
Excess tax benefits from employee stock plans | 682 | 874 | 847 | ||||||||
Proceeds from employee stock purchase plan | 27,412 | 19,342 | 14,494 | ||||||||
Taxes paid related to net share settlement of equity awards | (113,707 | ) | — | — | |||||||
Payment related to financing lease obligation | — | — | (523 | ) | |||||||
Net cash provided by (used in) financing activities | (77,862 | ) | 35,485 | 31,610 | |||||||
Effect of exchange rate changes on cash and cash equivalents | 294 | (391 | ) | (568 | ) | ||||||
Net increase (decrease) in cash and cash equivalents | (3,195 | ) | 37,226 | (510,138 | ) | ||||||
Cash and cash equivalents | |||||||||||
Beginning of period | 424,541 | 387,315 | 897,453 | ||||||||
End of period | $ | 421,346 | $ | 424,541 | $ | 387,315 | |||||
Supplemental disclosures | |||||||||||
Cash paid for income taxes | $ | 3,021 | $ | 1,408 | $ | 1,080 | |||||
Cash paid for interest expense related to financing lease obligation | 4,132 | — | — | ||||||||
Non-cash investing and financing activities | |||||||||||
Increase (decrease) in accrued purchases of property and equipment | (1,121 | ) | (775 | ) | 1,057 | ||||||
Vesting of early exercised options | — | 56 | 112 | ||||||||
Increase in capitalized construction costs related to build-to-suit lease | 10,065 | 42,825 | 29,360 |
• | there is persuasive evidence of an arrangement; |
• | the software or services have been delivered to the customer; |
• | the amount of fees to be paid by the customer is fixed or determinable; and |
• | the collection of the related fees is probable. |
Fiscal Year Ended January 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Balance at beginning of period | $ | 531 | $ | 473 | $ | 758 | |||||
Add: bad debt expense | — | 98 | — | ||||||||
Less: write-offs, net of recoveries | (56 | ) | (40 | ) | (285 | ) | |||||
Balance at end of period | $ | 475 | $ | 531 | $ | 473 |
Useful Life | |
Computer equipment and software | 3 years |
Furniture and fixtures | 5 years |
Leasehold improvements | Shorter of the useful life of the asset or the lease term |
January 31, 2017 | January 31, 2016 | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Money market funds | $ | 345,959 | $ | — | $ | — | $ | 345,959 | $ | 374,571 | $ | — | $ | — | $ | 374,571 | ||||||||||||||||
U.S. treasury securities | — | 662,096 | — | 662,096 | — | 607,892 | — | 607,892 | ||||||||||||||||||||||||
Other | — | — | 3,000 | 3,000 | — | — | 1,500 | 1,500 | ||||||||||||||||||||||||
Reported as: | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 345,959 | $ | 397,965 | ||||||||||||||||||||||||||||
Investments, current portion | 662,096 | 584,498 | ||||||||||||||||||||||||||||||
Investments, non-current | 3,000 | 1,500 | ||||||||||||||||||||||||||||||
Total | $ | 1,011,055 | $ | 983,963 |
January 31, 2017 | ||||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | |||||||||||||
Investments, current portion: | ||||||||||||||||
U.S. treasury securities | $ | 662,327 | $ | 32 | $ | (263 | ) | $ | 662,096 | |||||||
Total available-for-sale investments | $ | 662,327 | $ | 32 | $ | (263 | ) | $ | 662,096 |
January 31, 2016 | ||||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | |||||||||||||
Cash and cash equivalents: | ||||||||||||||||
U.S. treasury securities | $ | 23,399 | $ | — | $ | (5 | ) | $ | 23,394 | |||||||
Investments, current portion: | ||||||||||||||||
U.S. treasury securities | 584,554 | 158 | (214 | ) | 584,498 | |||||||||||
Total available-for-sale investments | $ | 607,953 | $ | 158 | $ | (219 | ) | $ | 607,892 |
Less than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
U.S. treasury securities | $ | 446,073 | $ | (263 | ) | $ | — | $ | — | $ | 446,073 | $ | (263 | ) |
Less than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
U.S. treasury securities | $ | 212,532 | $ | (138 | ) | $ | 164,298 | $ | (81 | ) | $ | 376,830 | $ | (219 | ) |
January 31, 2017 | ||||
Due within one year | $ | 662,096 | ||
Total | $ | 662,096 |
Payments Due by Period* | ||||||||||||||||||||
Total | Less Than 1 year | 1-3 years | 3-5 years | More Than 5 years | ||||||||||||||||
Operating lease commitments (1) | $ | 177,160 | $ | 20,399 | $ | 44,582 | $ | 36,745 | $ | 75,434 |
Fiscal Period: | ||||
Fiscal 2018 | $ | 11,683 | ||
Fiscal 2019 | 12,510 | |||
Fiscal 2020 | 12,886 | |||
Fiscal 2021 | 13,272 | |||
Fiscal 2022 | 13,670 | |||
Thereafter | 21,977 | |||
Total future minimum lease payments | $ | 85,998 |
As of January 31, | ||||||||
2017 | 2016 | |||||||
Computer equipment and software | $ | 59,396 | $ | 43,883 | ||||
Furniture and fixtures | 16,194 | 13,398 | ||||||
Leasehold improvements (1) | 58,569 | 41,028 | ||||||
Building (2) | 82,250 | 72,186 | ||||||
216,409 | 170,495 | |||||||
Less: accumulated depreciation and amortization | (50,014 | ) | (35,500 | ) | ||||
Property and equipment, net | $ | 166,395 | $ | 134,995 |
Fair Value | Useful Life (months) | |||||
Developed technology | $ | 44,300 | 72 | |||
In-process research and development | 1,300 | Indefinite* | ||||
Customer relationships | 190 | 36 | ||||
Total intangible assets acquired | $ | 45,790 |
Fiscal Year Ended January 31, | ||||||||
2016 | 2015 | |||||||
Revenues | $ | 668,435 | $ | 450,875 | ||||
Net loss | $ | (301,527 | ) | $ | (229,755 | ) | ||
Basic and diluted net loss per share | $ | (2.38 | ) | $ | (1.92 | ) |
Fair Value | Useful Life (months) | ||||
Developed technology | $ | 2,300 | 48 | ||
Other acquired intangible assets | 370 | 36 | |||
Total intangible assets acquired | $ | 2,670 |
Fiscal Year Ended January 31, | ||||||||
2017 | 2016 | |||||||
Beginning balance | $ | 123,318 | $ | 19,070 | ||||
Goodwill acquired | — | 105,916 | ||||||
Foreign currency translation adjustments | 1,324 | (1,668 | ) | |||||
Ending balance | $ | 124,642 | $ | 123,318 |
Gross Fair Value | Accumulated Amortization | Net Book Value | Weighted-Average Remaining Useful Life (months) | |||||||||||
Developed technology | $ | 59,370 | $ | (23,222 | ) | $ | 36,148 | 50 | ||||||
Customer relationships | 1,810 | (1,720 | ) | 90 | 17 | |||||||||
Other acquired intangible assets | 1,180 | (1,005 | ) | 175 | 17 | |||||||||
Total intangible assets subject to amortization | $ | 62,360 | $ | (25,947 | ) | $ | 36,413 |
Fiscal Period: | ||||
Fiscal 2018 | $ | 10,296 | ||
Fiscal 2019 | 8,035 | |||
Fiscal 2020 | 7,623 | |||
Fiscal 2021 | 7,383 | |||
Fiscal 2022 | 3,076 | |||
Total amortization expense | $ | 36,413 |
Options Outstanding | RSUs and PSUs Outstanding | ||||||||||||||||||
Available for Grant | Shares | Weighted- Average Exercise Price Per Share | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value (1) | Shares | ||||||||||||||
(in thousands) | |||||||||||||||||||
Balances as of January 31, 2015 | 6,718,878 | 6,536,855 | $ | 5.76 | 5.59 | $ | 301,532 | 12,480,368 | |||||||||||
Additional shares authorized | 6,176,924 | ||||||||||||||||||
Options granted from acquisitions (2) | (86,753 | ) | 86,753 | 1.30 | |||||||||||||||
Options exercised | (2,755,556 | ) | 5.54 | ||||||||||||||||
Options forfeited and expired | 152,053 | (152,053 | ) | 32.80 | |||||||||||||||
RSUs and PSUs granted | (7,905,929 | ) | 7,905,929 | ||||||||||||||||
RSUs vested | (4,136,073 | ) | |||||||||||||||||
RSUs forfeited and canceled | 1,497,971 | (1,497,971 | ) | ||||||||||||||||
Balances as of January 31, 2016 | 6,553,144 | 3,715,999 | $ | 4.72 | 4.24 | $ | 154,696 | 14,752,253 | |||||||||||
Additional shares authorized | 6,577,173 | ||||||||||||||||||
Options exercised | (1,642,599 | ) | 4.72 | ||||||||||||||||
Options forfeited and expired | 15,506 | (15,506 | ) | 11.36 | |||||||||||||||
RSUs and PSUs granted | (6,278,185 | ) | 6,278,185 | ||||||||||||||||
RSUs and PSUs vested | (5,644,893 | ) | |||||||||||||||||
Shares withheld related to net share settlement of RSUs and PSUs | 2,073,020 | ||||||||||||||||||
RSUs and PSUs forfeited and canceled | 1,461,131 | (1,461,131 | ) | ||||||||||||||||
Balances as of January 31, 2017 | 10,401,789 | 2,057,894 | $ | 4.67 | 3.28 | $ | 109,571 | 13,924,414 | |||||||||||
Vested and expected to vest | 2,057,799 | $ | 4.67 | 3.28 | $ | 109,565 | 13,552,042 | ||||||||||||
Exercisable as of January 31, 2017 | 2,020,331 | $ | 4.73 | 3.20 | $ | 107,446 |
Fiscal Year Ended January 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Cost of revenues | $ | 30,971 | $ | 26,057 | $ | 17,189 | ||||||
Research and development | 129,388 | 89,197 | 60,777 | |||||||||
Sales and marketing | 161,164 | 130,054 | 90,064 | |||||||||
General and administrative | 56,518 | 46,949 | 46,149 | |||||||||
Total stock-based compensation expense | $ | 378,041 | $ | 292,257 | $ | 214,179 |
Fiscal Year Ended January 31, | ||||||
2016 | 2015 | |||||
Expected volatility | 62.8 | % | 49.4 | % | ||
Risk-free rate | 1.58 | % | 1.96 | % | ||
Dividend yield | — | — | ||||
Expected term (in years) | 5.29 | 6.04 |
Fiscal Year Ended January 31, | |||
2015 | |||
Expected volatility | 50.5 - 51.4% | ||
Risk-free rate | 1.85 - 2.43% | ||
Dividend yield | — | ||
Expected term (in years) | 6.70 - 7.96 |
Fiscal Year Ended January 31, | |||||||||
2017 | 2016 | 2015 | |||||||
Expected volatility | 37.4 - 57.6% | 37.3 - 57.1% | 38.4 - 59.0% | ||||||
Risk-free rate | 0.28 - 0.91% | 0.11 - 0.69% | 0.07 - 0.22% | ||||||
Dividend yield | — | — | — | ||||||
Expected term (in years) | 0.50 - 1.00 | 0.50 - 1.00 | 0.50 - 1.00 |
Fiscal Year Ended January 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
United States | $ | 725,451 | $ | 501,802 | $ | 342,728 | |||||
International | 224,504 | 166,633 | 108,147 | ||||||||
Total revenues | $ | 949,955 | $ | 668,435 | $ | 450,875 |
As of January 31, | |||||||
2017 | 2016 | ||||||
United States | $ | 159,428 | $ | 129,268 | |||
International | 6,967 | 5,727 | |||||
Total property and equipment, net | $ | 166,395 | $ | 134,995 |
Fiscal Year Ended January 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
United States | $ | (362,505 | ) | $ | (294,624 | ) | $ | (221,041 | ) | ||
International | 12,823 | 7,980 | 6,201 | ||||||||
Total | $ | (349,682 | ) | $ | (286,644 | ) | $ | (214,840 | ) |
Fiscal Year Ended January 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Current tax provision: | |||||||||||
Federal | $ | — | $ | — | $ | — | |||||
State | 274 | 223 | 138 | ||||||||
Foreign | 5,559 | 3,045 | 2,465 | ||||||||
Total current tax provision | 5,833 | 3,268 | 2,603 | ||||||||
Deferred tax provision: | |||||||||||
Federal | 165 | (10,437 | ) | (170 | ) | ||||||
State | 15 | (487 | ) | (14 | ) | ||||||
Foreign | (506 | ) | (216 | ) | (143 | ) | |||||
Total deferred tax provision | (326 | ) | (11,140 | ) | (327 | ) | |||||
Total tax provision (benefit) | $ | 5,507 | $ | (7,872 | ) | $ | 2,276 |
Fiscal Year Ended January 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Expected provision at United States federal statutory rate | $ | (118,892 | ) | $ | (97,459 | ) | $ | (73,635 | ) | ||
State income taxes - net of federal benefit | (10,711 | ) | (8,730 | ) | (3,914 | ) | |||||
Stock options | 21,772 | 10,734 | 9,570 | ||||||||
Research and development tax credits | (13,496 | ) | (11,965 | ) | (6,647 | ) | |||||
Tax reserve for uncertain tax positions | 18 | 26 | (10 | ) | |||||||
Change in valuation allowance | 124,220 | 108,300 | 75,910 | ||||||||
Non-deductible expenses | 2,694 | 2,632 | 1,006 | ||||||||
Release of valuation allowance due to acquisitions | — | (10,924 | ) | — | |||||||
Other | (98 | ) | (486 | ) | (4 | ) | |||||
Total tax provision (benefit) | $ | 5,507 | $ | (7,872 | ) | $ | 2,276 |
Fiscal Year Ended January 31, | |||||||
2017 | 2016 | ||||||
Deferred tax assets: | |||||||
Net operating loss carryforwards | $ | 220,818 | $ | 151,917 | |||
Accrued liabilities | 14,848 | 7,995 | |||||
Tax credit carryforwards | 49,280 | 35,826 | |||||
Stock-based compensation | 36,074 | 34,912 | |||||
Deferred revenue | 40,046 | 22,200 | |||||
Valuation allowance | (356,782 | ) | (236,174 | ) | |||
Total deferred tax assets | 4,284 | 16,676 | |||||
Deferred tax liabilities: | |||||||
Depreciation and amortization | (3,459 | ) | (16,184 | ) | |||
Total deferred tax liabilities | (3,459 | ) | (16,184 | ) | |||
Net deferred taxes | 825 | 492 | |||||
Recorded as: | |||||||
Non-current deferred tax assets | 357,607 | 236,666 | |||||
Non-current valuation allowance | (356,782 | ) | (236,174 | ) | |||
Net deferred tax assets | $ | 825 | $ | 492 |
Amount | Expiration years | ||||
Net operating loss, federal | $ | 1,395,563 | 2025 - 2038 | ||
Net operating loss, state | 939,720 | 2019 - 2038 | |||
Tax credit, federal | 40,260 | 2026 - 2038 | |||
Tax credit, state | 38,697 | N/A |
Fiscal Year Ended January 31, | |||||||||||
(in thousands) | 2017 | 2016 | 2015 | ||||||||
Balance at beginning of year | $ | 12,493 | $ | 8,462 | $ | 4,862 | |||||
Increase related to prior year tax positions | — | — | 889 | ||||||||
Decrease related to prior year tax positions | — | — | (24 | ) | |||||||
Increase related to current year tax positions | 4,262 | 4,031 | 2,735 | ||||||||
Balance at end of year | $ | 16,755 | $ | 12,493 | $ | 8,462 |
Fiscal Year Ended January 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Numerator: | |||||||||||
Net loss | $ | (355,189 | ) | $ | (278,772 | ) | $ | (217,116 | ) | ||
Denominator: | |||||||||||
Weighted-average common shares outstanding | 134,357 | 127,415 | 119,813 | ||||||||
Less: Weighted-average unvested common shares subject to repurchase or forfeiture | (447 | ) | (669 | ) | (38 | ) | |||||
Weighted-average shares used to compute net loss per share, basic and diluted | 133,910 | 126,746 | 119,775 | ||||||||
Net loss per share, basic and diluted | $ | (2.65 | ) | $ | (2.20 | ) | $ | (1.81 | ) |
As of January 31, | ||||||||
2017 | 2016 | 2015 | ||||||
Shares subject to outstanding common stock options | 2,057,894 | 3,715,999 | 6,536,855 | |||||
Shares subject to outstanding RSUs, PSUs and RSAs | 14,002,733 | 15,374,151 | 12,480,368 | |||||
Employee stock purchase plan | 668,761 | 548,221 | 281,716 | |||||
Total | 16,729,388 | 19,638,371 | 19,298,939 |
1. | Consolidated Financial Statements: Our Consolidated Financial Statements are listed in the “Index to Consolidated Financial Statements” Under Part II, Item 8 of this report. |
2. | Financial Statement Schedules: Financial statement schedules have been omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto. |
3. | Exhibits: The documents listed in the Exhibit Index of this report are incorporated by reference or are filed with this report, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K). |
Exhibit Number | Description | |
3.1 | Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 filed with the Registrant’s Quarterly Report on Form 10-Q filed on June 13, 2012). | |
3.2 | Amended and Restated Bylaws of the Registrant (incorporated by referenced to Exhibit 3.1 filed with the Registrant’s Current Report on Form 8-K filed on March 11, 2016). | |
4.1 | Specimen common stock certificate of the Registrant (incorporated by reference to Exhibit 4.1 filed with the Registrant’s Registration Statement on Form S-1 filed on April 6, 2012). | |
10.1# | Form of Indemnification Agreement between the Registrant and its directors and officers (incorporated by reference to Exhibit 10.1 filed with the Registrant’s Registration Statement on Form S-1 filed on January 12, 2012). | |
10.2# | 2003 Equity Incentive Plan, as amended, and Forms of Stock Option Agreement under 2003 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 filed with the Registrant’s Registration Statement on Form S-1 filed on January 12, 2012). | |
10.3# | 2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 filed with the Registrant’s Registration Statement on Form S-1 filed on April 6, 2012). | |
10.4# | 2012 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.4 filed with the Registrant’s Registration Statement on Form S-1 filed on April 6, 2012). | |
10.5 | Office Lease, dated as of March 6, 2008, as amended, between Brannan Propco, LLC and the Registrant (incorporated by reference to Exhibit 10.5 filed with the Registrant’s Registration Statement on Form S-1 filed on January 12, 2012). | |
10.6 | First Amendment to Office Lease, dated as of June 10, 2011, between Kilroy Realty, L.P. and the Registrant (incorporated by reference to Exhibit 10.6 filed with the Registrant’s Registration Statement on Form S-1 filed on January 12, 2012). | |
10.7 | Second Amendment to Office Lease, dated as of November 20, 2012, between Kilroy Realty, L.P. and Splunk Inc. (incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on November 26, 2012). | |
10.8 | Third Amendment to Office Lease, dated as of December 11, 2015, between Kilroy Realty, L.P. and the Registrant (incorporated by reference to Exhibit 10.1 filed with the Registrant’s Quarterly Report on Form 10-Q filed on September 8, 2016). | |
10.9 | Office Lease, dated as of April 29, 2014, between 270 Brannan Street, LLC and the Registrant (incorporated by reference to Exhibit 10.2 filed with the Registrant’s Quarterly Report on Form 10-Q filed on June 9, 2014). | |
10.10 | Office Lease, dated as of August 24, 2015, between FRIT San Jose Town and Country Village, LLC and the Registrant (incorporated by reference to Exhibit 10.1 filed with the Registrant’s Quarterly Report on Form 10-Q filed on December 10, 2015). | |
10.11 | First Amendment to Office Lease, dated as of May 23, 2016, between FRIT San Jose Town and Country Village, LLC and the Registrant (incorporated by reference to Exhibit 10.2 filed with the Registrant’s Quarterly Report on Form 10-Q filed on September 8, 2016). | |
10.12 | Second Amendment to Office Lease, dated as of December 12, 2016, between FRIT San Jose Town and Country Village, LLC and the Registrant. | |
10.13# | Employment Offer Letter between the Registrant and David F. Conte, dated as of January 11, 2012 (incorporated by reference to Exhibit 10.10 filed with the Registrant’s Registration Statement on Form S-1 filed on February 17, 2012). | |
10.14# | Employment Offer Letter between the Registrant and Leonard R. Stein, dated as of January 11, 2012 (incorporated by reference to Exhibit 10.12 filed with the Registrant’s Registration Statement on Form S-1 filed on February 17, 2012). | |
10.15# | Employment Offer Letter between the Registrant and Steven R. Sommer, dated as of January 19, 2012(incorporated by reference to Exhibit 10.10 filed with the Registrant’s Annual Report on Form 10-K filed on March 31, 2014). | |
10.16# | Employment Offer Letter between the Registrant and Doug Merritt, dated as of November 16, 2015 (incorporated by reference to Exhibit 10.21 filed with the Registrant’s Annual Report on Form 10-K filed on March 30, 2016). | |
10.17# | Employment Offer Letter between the Registrant and Susan St. Ledger, dated as of March 3, 2016 (incorporated by reference to Exhibit 10.1 filed with the Registrant’s Quarterly Report on Form 10-Q filed on June 9, 2016). | |
10.18# | Transition Letter Agreement between the Registrant and Steve Sommer, dated as of July 27, 2016 (incorporated by reference to Exhibit 10.3 filed with the Registrant’s Quarterly Report on Form 10-Q filed on September 8, 2016). | |
10.19# | Employment Offer Letter between the Registrant and Richard Campione, dated as of October 12, 2016 (incorporated by reference to Exhibit 10.1 filed with the Registrant’s Quarterly Report on Form 10-Q filed on December 9, 2016). | |
10.20# | Executive Bonus Plan (incorporated by reference to Exhibit 10.15 filed with the Registrant’s Registration Statement on Form S-1 filed on April 6, 2012). | |
10.21# | Form of Stock Option Agreement under the 2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 filed with the Registrant’s Current Report on Form 8-K filed on April 24, 2012). | |
10.22# | Form of Restricted Stock Unit Agreement under the 2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 filed with the Registrant’s Current Report on Form 8-K filed on April 24, 2012). | |
10.23# | Form of Subscription Agreement under the 2012 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.3 filed with the Registrant’s Current Report on Form 8-K filed on April 24, 2012). | |
10.24# | Form of Performance Unit Award Agreement under the 2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 filed with the Registrant’s Quarterly Report on Form 10-Q filed on June 9, 2015). | |
21.1 | List of subsidiaries of the Registrant. | |
23.1 | Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm. | |
31.1 | Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended. | |
31.2 | Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended. | |
32.1 | Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350. | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Schema Linkbase Document | |
101.CAL | XBRL Taxonomy Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Labels Linkbase Document | |
101.RE | XBRL Taxonomy Presentation Linkbase Document |
# | Indicates management contract or compensatory plan. | |
SPLUNK INC. | ||
By: | /s/ Douglas S. Merritt | |
Douglas S. Merritt President and Chief Executive Officer |
Signature | Title | Date |
/s/ Douglas S. Merritt | President and Chief Executive Officer (Principal Executive Officer) | March 29, 2017 |
Douglas S. Merritt | ||
/s/ David F. Conte | Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | March 29, 2017 |
David F. Conte | ||
/s/ Godfrey R. Sullivan | Chairman and Director | March 29, 2017 |
Godfrey R. Sullivan | ||
/s/ Mark T. Carges | Director | March 29, 2017 |
Mark T. Carges | ||
/s/ Amy L. Chang | Director | March 29, 2017 |
Amy L. Chang | ||
/s/ John G. Connors | Director | March 29, 2017 |
John G. Connors | ||
/s/ David M. Hornik | Director | March 29, 2017 |
David M. Hornik | ||
/s/ Patricia B. Morrison | Director | March 29, 2017 |
Patricia B. Morrison | ||
/s/ Thomas M. Neustaetter | Director | March 29, 2017 |
Thomas M. Neustaetter | ||
/s/ Stephen G. Newberry | Director | March 29, 2017 |
Stephen G. Newberry | ||
/s/ Graham V. Smith | Director | March 29, 2017 |
Graham V. Smith | ||
Entity Name | Jurisdiction |
Splunk Cayman Holding Ltd. | Cayman Islands |
Splunk Information Technology (Shanghai) Co., Ltd. | Shanghai, PRC |
Splunk Ireland Limited | Ireland |
Splunk Services Australia Pty. Ltd. | Australia |
Splunk Services Belgium BVBA | Belgium |
Splunk Serviços do Brasil Ltda. | Brazil |
Splunk Services Canada Inc. | British Columbia, Canada |
Splunk Services Cayman Ltd. | Cayman Islands |
Splunk Services France SAS | France |
Splunk Services FZ-LLC | Dubai, UAE |
Splunk Services Germany GmbH | Germany |
Splunk Services Hong Kong Ltd | Hong Kong |
Splunk Services India Private Limited | India |
Splunk Services Japan GK | Japan |
Splunk Services Korea | Republic of Korea |
Splunk Services LLC | Delaware, U.S. |
Splunk Services Malaysia Sdn. Bhd. | Malaysia |
Splunk Services Netherlands B.V. | The Netherlands |
Splunk Services New Zealand Limited | New Zealand |
Splunk Services Singapore Pte Ltd | Singapore |
Splunk Services Sweden AB | Sweden |
Splunk Services UK Limited | United Kingdom |
Splunk Technology Consulting (Beijing) Co., Ltd. | Beijing, PRC |
Bugsense, Inc. | Delaware, U.S. |
Caspida, Inc. | Delaware, U.S. |
Cloudmeter, Inc. | Delaware, U.S. |
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; |
Date: March 29, 2017 | |
/s/ Douglas S. Merritt | |
Douglas S. Merritt | |
President and Chief Executive Officer | |
(Principal Executive Officer) |
Date: March 29, 2017 | |
/s/ David F. Conte | |
David F. Conte | |
Senior Vice President and Chief Financial Officer | |
(Principal Financial and Accounting Officer) |
/s/ Douglas S. Merritt | ||
Douglas S. Merritt | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) |
/s/ David F. Conte | ||
David F. Conte | ||
Senior Vice President and Chief Financial Officer | ||
(Principal Financial and Accounting Officer) |
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2017 |
Mar. 21, 2017 |
Jul. 29, 2016 |
|
Document and Entity Information | |||
Entity Registrant Name | SPLUNK INC | ||
Entity Central Index Key | 0001353283 | ||
Document Type | 10-K | ||
Document Period End Date | Jan. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --01-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 5,154,380,131 | ||
Entity Common Stock, Shares Outstanding | 138,246,501 | ||
Document Fiscal Year Focus | 2017 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Jan. 31, 2017 |
Jan. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 137,169,481 | 131,543,467 |
Common stock, shares outstanding | 137,169,481 | 131,543,467 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Jan. 31, 2017 |
Jan. 31, 2016 |
Jan. 31, 2015 |
||||
Revenues | ||||||
License | $ 546,925 | $ 405,399 | $ 283,191 | |||
Maintenance and services | 403,030 | 263,036 | 167,684 | |||
Total revenues | 949,955 | 668,435 | 450,875 | |||
Cost of revenues | ||||||
License | [1] | 11,965 | 9,080 | 1,859 | ||
Maintenance and services | [1] | 179,088 | 105,042 | 66,519 | ||
Total cost of revenues | [1] | 191,053 | 114,122 | 68,378 | ||
Gross profit | 758,902 | 554,313 | 382,497 | |||
Operating expenses | ||||||
Research and development | [1] | 295,850 | 215,309 | 150,790 | ||
Sales and marketing | [1] | 653,524 | 505,348 | 344,471 | ||
General and administrative | [1] | 153,359 | 121,579 | 103,046 | ||
Total operating expenses | [1] | 1,102,733 | 842,236 | 598,307 | ||
Operating loss | (343,831) | (287,923) | (215,810) | |||
Interest and other income (expense), net | ||||||
Interest income (expense), net | (2,829) | 1,798 | 754 | |||
Other income (expense), net | (3,022) | (519) | 216 | |||
Total interest and other income (expense), net | (5,851) | 1,279 | 970 | |||
Loss before income taxes | (349,682) | (286,644) | (214,840) | |||
Provision for income taxes (benefit) | 5,507 | (7,872) | 2,276 | |||
Net loss | $ (355,189) | $ (278,772) | $ (217,116) | |||
Basic and diluted net loss per share (in dollars per share) | $ (2.65) | $ (2.20) | $ (1.81) | |||
Weighted-average shares used in computing basic and diluted net loss per share (in shares) | 133,910 | 126,746 | 119,775 | |||
|
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2017 |
Jan. 31, 2016 |
Jan. 31, 2015 |
|
Stock-based compensation expense | $ 378,041 | $ 292,257 | $ 214,179 |
Cost of revenues | |||
Stock-based compensation expense | 30,971 | 26,057 | 17,189 |
Research and development | |||
Stock-based compensation expense | 129,388 | 89,197 | 60,777 |
Sales and marketing | |||
Stock-based compensation expense | 161,164 | 130,054 | 90,064 |
General and administrative | |||
Stock-based compensation expense | $ 56,518 | $ 46,949 | $ 46,149 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2017 |
Jan. 31, 2016 |
Jan. 31, 2015 |
|
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (355,189) | $ (278,772) | $ (217,116) |
Other comprehensive income (loss): | |||
Net unrealized gain (loss) on investments | (174) | (66) | 2 |
Foreign currency translation adjustments | 931 | (2,867) | (897) |
Total other comprehensive income (loss) | 757 | (2,933) | (895) |
Comprehensive loss | $ (354,432) | $ (281,705) | $ (218,011) |
Description of the Business and Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Description of the Business and Significant Accounting Policies | Description of the Business and Significant Accounting Policies Business Splunk Inc. (“we,” “us,” “our”) provides innovative software solutions that enable organizations to gain real-time operational intelligence by harnessing the value of their data. Our offerings enable users to collect, index, search, explore, monitor, correlate and analyze data regardless of format or source. Our offerings address large and diverse data sets, commonly referred to as big data, and are specifically tailored for machine data. Machine data is produced by nearly every software application and electronic device and contains a definitive, time-stamped record of various activities, such as transactions, customer and user activities and security threats. Our offerings help users derive new insights from machine data that can be used to, among other things, improve service levels, reduce operational costs, mitigate security risks, demonstrate and maintain compliance, and drive better business decisions. We were incorporated in California in October 2003 and reincorporated in Delaware in May 2006. Fiscal Year Our fiscal year ends on January 31. References to fiscal 2017, for example, refer to the fiscal year ended January 31, 2017. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods covered by the financial statements and accompanying notes. In particular, we make estimates with respect to the fair value of multiple elements in revenue recognition, uncollectible accounts receivable, the assessment of the useful life and recoverability of long-lived assets (property and equipment, goodwill and identified intangibles), stock-based compensation expense, the fair value of assets acquired and liabilities assumed for business combinations, income taxes, leases and contingencies. Actual results could differ from those estimates. Segments We operate our business as one operating segment: the development and marketing of software solutions that enable our customers to gain real-time operational intelligence by harnessing the value of their data. Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance and allocating resources. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Splunk Inc. and its direct and indirect wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. Foreign Currency The functional currency of our foreign subsidiaries is their respective local currency. Translation adjustments arising from the use of differing exchange rates from period to period are included in "Accumulated other comprehensive loss" within the consolidated statements of stockholders’ equity. Foreign currency transaction gains and losses are included in "Other income (expense), net" and were not material for the three years ended January 31, 2017. All assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Expenses are translated at the average exchange rate during the period. Equity transactions are translated using historical exchange rates. Foreign Currency Contracts We use foreign currency forward contracts as a part of our strategy to manage exposure related to foreign currency denominated monetary assets and liabilities. These contracts typically have maturities of one month. They are not designated as cash flow or fair value hedges under ASC Topic 815, Derivatives and Hedging. These contracts hedge assets and liabilities that are denominated in foreign currencies and are carried at fair value as either assets or liabilities on the consolidated balance sheets with changes in the fair value recorded to "Other income (expense), net" in the consolidated statements of operations. Business Combinations We use our best estimates and assumptions to allocate the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Our estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. In addition, uncertain tax positions and tax-related valuation allowances are initially established in connection with a business combination as of the acquisition date. We continue to collect information and reevaluate these estimates and assumptions quarterly and record any adjustments to our preliminary estimates to goodwill provided that we are within the measurement period. Upon the conclusion of the final determination of the fair value of assets acquired or liabilities assumed during the measurement period, any subsequent adjustments are recorded to our consolidated statements of operations. Revenue Recognition We generate revenues primarily in the form of software license fees and related maintenance and services fees. License fees include perpetual license fees, term license fees and royalties. Maintenance and services primarily consist of fees for maintenance services (including support and unspecified upgrades and enhancements when and if they are available), training, professional services that are not essential to functionality and subscription software services. We recognize revenues when all of the following conditions are met:
Signed agreements are used as evidence of an arrangement. If a contract signed by the customer does not exist, we use a purchase order as evidence of an arrangement. In cases where both a signed contract and a purchase order exist, we consider the signed contract to be the final persuasive evidence of an arrangement. Electronic delivery occurs when we provide the customer with access to the software via a license key. We assess whether a fee is fixed or determinable at the outset of the arrangement, primarily based on the payment terms associated with the transaction. We assess collectability of the fee based on a number of factors such as collection history and creditworthiness of the customer. If we determine that collectability is not probable, revenue is deferred until collectability becomes probable, generally upon receipt of cash. When contracts contain software-related multiple elements wherein vendor specific objective evidence (“VSOE”) exists for all undelivered elements and the services, if any, are not essential to the functionality of the delivered elements, we account for the delivered elements in accordance with the “Residual Method.” Perpetual license arrangements are typically accompanied by maintenance agreements. Maintenance revenues consist of fees for providing software updates on a when-and-if-available basis and technical support for software products for an initial term. Maintenance revenues are recognized ratably over the term of the agreement. We have established fair value for maintenance on perpetual licenses due to consistently priced standalone sales of maintenance. Revenues related to term license fees are recognized ratably over the contract term beginning on the date the customer has access to the software license key and continuing through the end of the contract term. In these cases, we do not have VSOE of fair value for maintenance, as fees for support and maintenance are bundled with the license over the entire term of the contract. License arrangements may also include professional services and training services, which are typically delivered early in the contract term. In determining whether professional services revenues should be accounted for separately from license revenues, we evaluate whether the professional services are considered essential to the functionality of the software using factors such as the nature of our software products; whether they are ready for use by the customer upon receipt; the nature of our implementation services, which typically do not involve significant customization to or development of the underlying software code; the availability of services from other vendors; whether the timing of payments for license revenues is coincident with performance of services; and whether milestones or acceptance criteria exist that affect the realizability of the software license fee. Substantially all of our professional services arrangements are billed on a time and materials basis and, accordingly, are recognized as the services are performed. Training revenues are recognized as training services are delivered. VSOE of fair value of professional and training services is based upon stand-alone sales of those services. Payments received in advance of services performed are deferred and recognized when the related services are performed. We are unable to establish VSOE of fair value for all undelivered elements in certain multiple element arrangements due to the lack of VSOE for maintenance services that are generally bundled with term licenses. In these instances, all revenue is recognized ratably over the period that the services are expected to be performed, commencing when all service periods have started. In arrangements where the expected service periods of maintenance services and professional or training services differ, we recognize all revenue over the longer of the expected service periods, which is generally the maintenance period. We do not offer credits or refunds and therefore have not recorded any sales return allowance for any of the periods presented. Upon a periodic review of outstanding accounts receivable, amounts that are deemed to be uncollectible are written off against the allowance for doubtful accounts. Our policy is to record revenues net of any applicable sales, use or excise taxes. We recognize revenues from the indirect sales channel upon sell-through by the partner or distributor. Sell-through is determined when we receive an order form from a reseller for a specific end-user sale. We do not offer right of return, product rotation or price protection to any of our channel partners. We also have licensing arrangements with OEM customers for which royalty fees are generally recognized as revenue upon receipt of reports of units shipped, respectively. Provided all other revenue criteria are met, the upfront, minimum, non-refundable license fees from OEM customers are recognized upon delivery, and on-going royalty fees are recognized upon reports of units shipped. In our consolidated statements of operations, revenues are categorized as license or maintenance and services revenues. We allocate revenues from arrangements containing multiple elements to each of these categories based on the VSOE of fair value for elements in each revenue arrangement and the application of the residual method for arrangements in which we have established VSOE of fair value for all undelivered elements. In arrangements where we are not able to establish VSOE of fair value for all undelivered elements, we first allocate revenues to any undelivered elements for which VSOE of fair value has been established, then allocate revenues to any undelivered elements for which VSOE of fair value has not been established based upon management’s best estimate of fair value of those undelivered elements and apply a residual method to determine the license fee. Management’s best estimate of fair value of undelivered elements for which VSOE of fair value has not been established is based upon the VSOE of similar offerings and other objective criteria. For multiple-element arrangements containing our non-software services, we: (1) determine whether each element constitutes a separate unit of accounting; (2) determine the fair value of each element using the selling price hierarchy of VSOE of selling price, third-party evidence (“TPE”) of selling price or best-estimated selling price (“BESP”), as applicable; and (3) allocate the total price to each separate unit of accounting based on the relative selling price method. An element constitutes a separate unit of accounting when the delivered item has standalone value and delivery of the undelivered element is probable and within our control. We determine BESP by considering our overall pricing objectives and market conditions. Significant pricing practices taken into consideration include our discounting practices, the size and volume of our transactions, our price lists, our go-to-market strategy, historical standalone sales and contract prices. As our go-to-market strategies evolve, we may modify our pricing practices in the future, which could result in changes in relative selling prices, including both VSOE and BESP. For multiple-element arrangements that contain both software and non-software elements, we allocate revenue to software or software-related elements as a group and any non-software elements separately based on the selling price hierarchy. We determine the selling price for each deliverable using VSOE of selling price, if it exists, or TPE of selling price. If neither VSOE nor TPE of selling price exist for a deliverable, we use BESP. Once revenue is allocated to software or software-related elements as a group, we recognize revenue in conformance with software revenue accounting guidance. Revenue is recognized when revenue recognition criteria are met for each element. In our subscription software services agreements, we include service level commitments to customers relating to levels of uptime availability and permitting those customers to receive credits in the event that we fail to meet those levels. To date, we have not incurred any material costs as a result of such commitments and have not accrued any liabilities related to such obligations in the accompanying consolidated financial statements. Deferred revenue consists substantially of amounts invoiced in advance of revenue recognition for our products and services described above. We recognize deferred revenue as revenue only when the revenue recognition criteria are met. Cash and Cash Equivalents We consider all highly liquid instruments with original maturities of 90 days or less at the date of purchase to be cash equivalents. Cash and cash equivalents are recorded at cost, which approximates fair value. We do not hold or issue financial instruments for trading purposes. Investments We determine the appropriate classification of our investments at the time of purchase and reevaluate such determination at each balance sheet date. Securities are classified as available-for-sale and are carried at fair value, with the change in unrealized gains and losses, net of tax, reported as a separate component on the consolidated statements of comprehensive income (loss). Fair value is determined based on quoted market rates when observable or utilizing data points that are observable, such as quoted prices, interest rates and yield curves. Declines in fair value judged to be other-than-temporary on securities available for sale are included as a component of investment income. In order to determine whether a decline in value is other-than-temporary, we evaluate, among other factors, the duration and extent to which the fair value has been less than the carrying value and our intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value. The cost of securities sold is based on the specific-identification method. Interest on securities classified as available-for-sale is included as a component of Interest income, net. Concentration of Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents, investments and accounts receivable. We maintain the majority of our cash balance at two financial institutions that management believes are high-credit, quality financial institutions and invest our cash equivalents in highly rated money market funds. At January 31, 2017, one channel partner represented 30% of total accounts receivable. At January 31, 2016, one channel partner represented 26% and one customer represented 16% of total accounts receivable. Our accounts receivable is subject to collection risk. Our gross accounts receivable is reduced for this risk by an allowance for doubtful accounts. This allowance is for estimated losses resulting from the inability of our customers to make required payments. It is an estimate and is regularly evaluated for adequacy by taking into consideration a combination of factors. We look at factors such as past collection experience, credit quality of the customer, age of the receivable balance, and current economic conditions. These factors are reviewed to determine whether an allowance for bad debts should be recorded to reduce the receivable balance to the amount believed to be collectible. The following table presents the changes in the allowance for doubtful accounts (in thousands):
Goodwill, Intangible Assets, Long-Lived Assets and Impairment Assessments Goodwill and indefinite-lived intangible assets are carried at cost and are evaluated annually for impairment, or more frequently if circumstances exist that indicate that impairment may exist. When conducting our annual goodwill impairment assessment, we perform a quantitative evaluation of whether goodwill is impaired using the two-step impairment test. The first step is comparing the fair value of our reporting unit to its carrying value. We consider the enterprise to be the reporting unit for this analysis. If step one indicates that impairment potentially exists, the second step is performed to measure the amount of impairment, if any. We record the amount by which the carrying value of the goodwill exceeds its implied fair value, if any, as impairment. Finite-lived intangible assets are amortized over their useful lives. Each period we evaluate the estimated remaining useful life of our finite-lived intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. The carrying amounts of these assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets, then the carrying amount of such assets is reduced to fair value. In-process research and development is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When in-process research and development projects are completed, the corresponding amount is reclassified as an amortizable intangible asset and is amortized over the asset’s estimated useful life. We evaluate the recoverability of our long-lived assets including intangible and tangible assets. Acquired finite-lived intangible assets are amortized over their useful lives. We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. We recognize such impairment in the event the net book value of such assets exceeds their fair value. If the fair value of the long-lived assets exceeds the carrying value of the net assets assigned, then the assets are not impaired and no further testing is performed. If the carrying value of the net assets assigned exceeds the fair value of the assets, then we must perform the second step of the impairment test in order to determine the implied fair value. Property and Equipment Property and equipment are stated at cost net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets ranging from generally three to five years. Leasehold improvements are amortized over the shorter of the estimated useful life or the remaining lease term. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in the consolidated statements of operations. Maintenance and repairs that do not improve or extend the lives of the respective assets are charged to expense in the period incurred. The following table presents the estimated useful lives of our property and equipment:
Capitalized Software Development Costs Capitalization of software development costs for software to be sold, leased, or otherwise marketed begins upon the establishment of technological feasibility, which is generally the completion of a working prototype that has been certified as having no critical bugs and is a release candidate. Amortization begins once the software is ready for its intended use, generally based on the pattern in which the economic benefits will be consumed. We did not capitalize any internal software development costs for fiscal 2017 and 2016 because the cost incurred and the time between technological feasibility and product release was insignificant. We had no amortization expense from capitalized purchased technology during fiscal 2017, 2016 or 2015. Costs related to software acquired, developed or modified solely to meet our internal requirements, with no substantive plans to market such software at the time of development, are capitalized. Costs incurred during the preliminary planning and evaluation stage of the project and during post implementation operational stage are expensed as incurred. Costs incurred during the application development stage of the project are capitalized. We define the design, configuration, and coding process as the application development stage. We did not capitalize any costs related to computer software developed for internal use in fiscal 2017 or 2016. Commissions Commissions are recorded as a component of sales and marketing expenses and consist of the variable compensation paid to our sales force. Sales commissions are earned and recorded at the time that a customer has entered into a binding purchase agreement. Commissions paid to sales personnel are recoverable only in the case that we cannot collect the invoiced amounts associated with a sales order. Commission expense was $109.1 million, $88.5 million and $61.0 million for fiscal 2017, 2016 and 2015, respectively. Leases We primarily lease our facilities under operating leases. For leases that contain rent escalation or rent concession provisions, we record the total rent expense during the lease term on a straight-line basis over the term of the lease. We record the difference between the rent paid and the straight-line rent expense as a current and non-current deferred rent liability in "Accrued expenses and other liabilities" and "Other liabilities, non-current," respectively, on the consolidated balance sheets. Rent expense for our operating leases was $28.1 million, $11.9 million and $9.8 million during fiscal 2017, 2016 and 2015, respectively. Facility Exit Costs Certain of our operating facility leases include office space that is not occupied or used by us. We calculate and record a liability at the "cease-use" date related to those operating leases based on the difference between the present value of estimated future sublease rental income and the present value of our remaining lease obligations, adjusted for the effects of any prepaid or deferred items. The short-term portion of the liability is recorded in "Accrued expenses and other liabilities" and the long-term portion of the liability is recorded in "Other liabilities, non-current," on the consolidated balance sheets. Associated with the recognition of the liability, we also record a corresponding charge to "General and administrative" expenses in the consolidated statements of operations. Advertising Expense We expense advertising costs as incurred. We incurred $10.0 million, $13.3 million and $8.4 million in advertising expenses for fiscal 2017, 2016 and 2015, respectively. Advertising costs are recorded in "Sales and marketing" expenses in the consolidated statements of operations. Stock-Based Compensation We recognize compensation expense for all share-based payment awards, including stock options, restricted stock units (“RSUs”), performance units (“PSUs”) and restricted stock awards (“RSAs”), based on the estimated fair value of the award on the grant date in the consolidated statements of operations over the related vesting periods. The expense recorded is based on awards ultimately expected to vest and therefore is reduced by estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We calculate the fair value of options using the Black-Scholes method and expense using the straight-line attribution approach. We account for equity awards issued to non-employees, such as consultants, in accordance with the guidance relating to equity instruments that are issued to other than employees for acquiring, or in conjunction with selling, goods or services, using the Black-Scholes method to determine the fair value of such instruments. Awards granted to non-employees are remeasured over the vesting period, and the resulting value is recorded as an expense over the period the services are received. The fair value of each option grant and stock purchase right granted under the Employee Stock Purchase Plan (“ESPP”) was estimated on the date of grant using the Black-Scholes option pricing model. We recognize stock-based compensation expense related to our ESPP on a straight-line basis over the offering period, which is twelve months. Stock-based compensation expense is recognized net of estimated forfeiture activity. The determination of the grant date fair value of options using an option-pricing model is affected by assumptions regarding a number of other complex and subjective variables, which include our expected stock price volatility over the expected term of the options, stock option exercise and cancellation behaviors, risk-free interest rates and expected dividends. The number of PSUs earned and eligible to vest will be determined based on achievement of certain company financial performance measures and the recipient’s continued service with us. The number of shares of our stock to be received at vesting can range from 0% to 200% of the target amount. Compensation expense for PSUs is measured using the fair value at the date of grant and recorded over the vesting period under the graded-vesting attribution method, and may be adjusted over the vesting period based on interim estimates of performance against the pre-set objectives. Income Taxes Income taxes are accounted for under the asset and liability method in accordance with authoritative guidance for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The guidance on accounting for uncertainty in income taxes requires us to identify, evaluate and measure all uncertain tax positions taken or to be taken on tax returns and to record liabilities for the amount of these positions that may not be sustained, or may only partially be sustained, upon examination by the relevant taxing authorities. Although we believe that our estimates and judgments were reasonable, actual results may differ from these estimates. Some or all of these judgments are subject to review by the taxing authorities. Recently Issued Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04 (Topic 350) Intangibles - Goodwill and Other. The new standard simplifies how companies are required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The standard is effective for our first quarter of fiscal 2021, although early adoption is permitted. We are currently evaluating whether this standard will have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01 (Topic 805) Business Combinations - Clarifying the Definition of a Business. The new standard narrows the definition of a business to assist companies with evaluating when a set of transferred assets and activities is a business. The standard is effective for our first quarter of fiscal 2019, although early adoption is permitted. We are currently evaluating whether this standard will have a material impact on our consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-16 (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory. The new standard will require companies to recognize, as opposed to defer, the tax effects from intercompany transfers of certain assets when the transfer occurs. The standard is effective for our first quarter of fiscal 2019, although early adoption is permitted. We are currently evaluating whether this standard will have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13 (Topic 326), Financial Instruments - Credit Losses. The amendments in this update require a financial asset (or a group of financial assets) measured at an amortized cost basis to be presented at the net amount expected to be collected. The new approach to estimating credit losses (referred to as the current expected credit losses model) applies to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans and held-to-maturity debt securities. The standard is effective for our first quarter of fiscal 2021, although early adoption is permitted. We are currently evaluating whether this standard will have a material impact on our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09 (Topic 718), Compensation - Stock Compensation, which has been issued as part of its Simplification Initiative. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The standard is effective for our first quarter of fiscal 2018. We do not expect this pronouncement to have a material impact on our consolidated financial statements upon adoption. In February 2016, the FASB issued ASU No. 2016-02 (Topic 842), Leases, which supersedes the lease recognition requirements in ASC Topic 840, Leases. The standard requires an entity to recognize right-of-use assets and lease liabilities arising from a lease for operating leases, initially measured at the present value of the lease payments on the consolidated balance sheets. The impact of such leases on the consolidated statements of operations and cash flows will continue to be treated in a similar manner under current GAAP. The standard also requires additional qualitative and quantitative disclosures. The standard is effective for our first quarter of fiscal 2020, although early adoption is permitted. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures. We anticipate that most of our office leases will be recognized as lease liabilities and corresponding right-of-use assets, and will accordingly have a material impact on our consolidated balance sheets upon adoption. In May 2014, the FASB issued ASU No. 2014-09 (Topic 606), Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in Accounting Standards Codification 605, Revenue Recognition and establishes a new revenue standard. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenues and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, which clarifies the guidance in the new revenue standard on assessing whether an entity is a principal or an agent in a revenue transaction. This conclusion impacts whether an entity reports revenue on a gross or net basis. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies the guidance in the new revenue standard regarding an entity’s identification of its performance obligations in a contract. In May 2016, the FASB issued ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients, which amends the guidance in the new revenue standard on collectability, non-cash consideration, presentation of sales tax, and transition. In December 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, which clarifies narrow aspects of ASC 606 or corrects unintended application of the guidance. The new revenue standard, as amended by ASU No. 2015-14, is effective in the first quarter of fiscal 2019 and may be applied retrospectively to each prior period presented or with the cumulative effect recognized as of the date of initial application. We currently plan to adopt the standard using the cumulative effect transition method. Early adoption is permitted, but not earlier than the original effective date for annual and interim periods. While we are still evaluating the total impact of the new revenue standard, we believe the adoption of this new standard will have a material impact on our consolidated financial statements, including the way we account for arrangements involving a term license, deferred revenue and sales commissions. Under the new revenue standard, we would be required to recognize term license revenues upfront and the associated maintenance revenues over the contract period. Under the current revenue standard, we recognize both the term license and maintenance revenues ratably over the contract period. In addition, some deferred revenue recorded in accordance with the current revenue standard could be eliminated upon adoption of the new revenue standard. We have also considered the impact of the guidance in ASC 340-40, Other Assets and Deferred Costs; Contracts with Customers, under Topic 606. Under ASC 340-40, we would be required to capitalize and amortize incremental costs of obtaining a contract, such as sales commission costs. Under our current accounting policy, we do not capitalize sales commission costs and recognize these costs when they are incurred. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments and Fair Value Measurements | Investments and Fair Value Measurements The carrying amounts of certain of our financial instruments including cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short-term maturities. Assets and liabilities recorded at fair value in the financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels that are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities are as follows: Level 1—Observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The following table sets forth the fair value of our financial assets and liabilities that were measured on a recurring basis as of January 31, 2017 and 2016 (in thousands):
Our investments in money market funds are measured at fair value on a recurring basis. These money market funds are actively traded and reported daily through a variety of sources. The fair value of the money market fund investments is classified as Level 1. We invested in U.S. treasury securities during the fiscal year ended January 31, 2017 and 2016, which we have classified as available-for-sale securities. The following table presents our available-for-sale investments as of January 31, 2017 (in thousands):
The following table presents our available-for-sale investments as of January 31, 2016 (in thousands):
As of January 31, 2017, the following marketable securities were in an unrealized loss position (in thousands):
As of January 31, 2016, the following marketable securities were in an unrealized loss position (in thousands):
As of January 31, 2017 and 2016, we did not consider any of our investments to be other-than-temporarily impaired. The contractual maturities of our investments are as follows (in thousands):
Investments with maturities of less than 12 months from the balance sheet date are classified as current assets, which are available for use to fund current operations. Investments with maturities greater than 12 months from the balance sheet date are classified as long-term assets. Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs During the fiscal year ended January 31, 2016 we made an investment in the form of a convertible promissory note in a privately-held company that we have classified as an available-for-sale investment, which is included in "Investments, non-current," on our consolidated balance sheets. During fiscal 2017, we made an additional $1.5 million convertible promissory note investment in this privately-held company. These investments are recorded at fair value using significant unobservable inputs or data in an inactive market and the valuation requires our judgment due to the absence of quoted prices in active markets and inherent lack of liquidity. Unrealized gains and losses on our available-for-sale investments are excluded from earnings and reported, net of tax, as a separate component on the consolidated statements of comprehensive income (loss). During the fiscal year ended January 31, 2017, we have not recognized any unrealized gains or losses or any other-than-temporary impairment charges on these investments. The carrying value of these investments were $3.0 million and $1.5 million as of January 31, 2017 and January 31, 2016, respectively. |
Commitments and Contingencies |
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Commitments and Contingencies | Commitments and Contingencies Operating Lease Commitments We lease our office spaces under non-cancelable leases. Rent expense for our operating leases was $28.1 million, $11.9 million and $9.8 million during fiscal 2017, 2016 and 2015, respectively. On August 24, 2015, we entered into an office lease for approximately 235,000 square feet located at 3098 Olsen Drive, San Jose, California for a term of 129 months. Rent expense for this lease commenced in the third quarter of fiscal 2017. Our total obligation for the base rent is approximately $120.5 million. The following summarizes our operating lease commitments as of January 31, 2017 (in thousands):
_________________________ (1) We entered into sublease agreements for portions of our office space and the future rental income of $1.0 million from these agreements has been included as an offset to our future minimum rental payments. Financing Lease Obligation On April 29, 2014, we entered into an office lease (the “Lease”) for approximately 182,000 square feet located at 270 Brannan Street, San Francisco, California (the “Premises”). The Premises is allocated between the "Initial Premises" and "Additional Premises," which are each approximately 91,000 square feet of rentable space. The term of the Additional Premises begins one year after the Initial Premises and each have a term of 84 months. Our total obligation for the base rent is approximately $92.0 million. On May 13, 2014, we entered into an irrevocable, standby letter of credit with Silicon Valley Bank for $6.0 million to serve as a security deposit for the Lease. As a result of our involvement during the construction period, whereby we had certain indemnification obligations related to the construction, we were considered for accounting purposes only, the owner of the construction project under build-to-suit lease accounting. We have recorded project construction costs incurred by the landlord as an asset and a corresponding long term liability in “Property and equipment, net” and “Other liabilities, non-current,” respectively, on our consolidated balance sheets. We moved into the Premises in February 2016. We have determined that the lease does not meet the criteria for “sale-leaseback” treatment, due to our continuing involvement in the project resulting from our standby letter of credit. Accordingly, the Lease will continue to be accounted for as a financing obligation. As of January 31, 2017, future payments on the financing lease obligation are as follows (in thousands):
Facility Exit Costs In fiscal 2017, we relocated certain corporate offices in the San Francisco Bay Area and as a result, some of our leased office spaces are no longer in use. Accordingly, we calculated and recorded a liability at the "cease-use" date related to those operating leases based on the difference between the present value of the estimated future sublease rental income and the present value of our remaining lease obligations, adjusted for the effects of any prepaid or deferred items. We recorded a facility exit charge of approximately $8.6 million to "General and administrative" expenses in the consolidated statements of operations associated with the recognition of the liability. The short-term portion of the liability is recorded in "Accrued expenses and other liabilities" and the long-term portion of the liability is recorded in "Other liabilities, non-current," on the consolidated balance sheets. In addition, we also recognized $2.7 million of expense related to the acceleration of depreciation on certain property and equipment related to these facility exits. Legal Proceedings We are subject to certain routine legal and regulatory proceedings, as well as demands and claims that arise in the normal course of our business. We make a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. In our opinion, resolution of any pending claims (either individually or in the aggregate) is not expected to have a material adverse impact on our consolidated results of operations, cash flows or financial position, nor is it possible to provide an estimated amount of any such loss. However, depending on the nature and timing of any such dispute, an unfavorable resolution of a matter could materially affect our future results of operations or cash flows, or both, in a particular quarter. Indemnification Arrangements During the ordinary course of business, we may indemnify, hold harmless and agree to reimburse for losses suffered or incurred, our customers, vendors, and each of their affiliates for certain intellectual property infringement and other claims by third parties with respect to our offerings, in connection with our commercial license arrangements or related to general business dealings with those parties. As permitted under Delaware law, we have entered into indemnification agreements with our officers, directors and certain employees, indemnifying them for certain events or occurrences while they serve as our officers or directors or those of our direct and indirect subsidiaries. To date, there have not been any costs incurred in connection with such indemnification obligations; therefore, there is no accrual of such amounts at January 31, 2017. We are unable to estimate the maximum potential impact of these indemnifications on our future results of operations. |
Property and Equipment |
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Property and Equipment | Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. These assets are depreciated and amortized using the straight-line method over their estimated useful lives. Property and equipment consisted of the following (in thousands):
(1) Includes costs related to assets not yet placed into service of $1.0 million and $28.9 million, as of January 31, 2017 and 2016, respectively. (2) This relates to the capitalization of construction costs in connection with our financing lease obligation, where we are considered the owner of the asset, for accounting purposes only. There is a corresponding long-term liability for this obligation on our consolidated balance sheets under “Other liabilities, non-current.” Refer to Note 3 “Commitments and Contingencies” for details. Depreciation and amortization expense on Property and Equipment, net was $22.8 million, $10.3 million and $8.0 million for the fiscal years ended January 31, 2017, 2016 and 2015, respectively. Included in depreciation and amortization expense for the fiscal year ended January 31, 2017 is $2.7 million of expense related to the acceleration of depreciation on certain property and equipment due to the "cease-use" of certain operating facility leases during the fourth fiscal quarter of January 31, 2017. |
Acquisitions, Goodwill and Other Intangible Assets |
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Acquisitions, Goodwill and Intangible Assets | Acquisitions, Goodwill and Intangible Assets Caspida On July 9, 2015, we acquired 100% of the voting equity interest of Caspida, Inc. (“Caspida”), a privately-held Delaware corporation, which develops technology that provides behavioral analytics to help detect, respond to and mitigate advanced security and insider security threats. This acquisition has been accounted for as a business combination. The purchase price of $128.4 million, paid in cash, was preliminarily allocated as follows: $45.8 million to identifiable intangible assets, $11.4 million to net deferred tax liability and $1.2 million to net assets acquired, with the excess $92.8 million of the purchase price over the fair value of net tangible and intangible assets acquired recorded as goodwill, allocated to our one operating segment. Goodwill is primarily attributable to the value expected from the synergies of the combination, including combined selling opportunities with our products as well as our ability to sell into the security market. This goodwill is not deductible for income tax purposes. The results of operations of Caspida, which are not material, have been included in our consolidated financial statements from the date of purchase. Additionally, we recognized $1.7 million of acquisition-related costs as "General and administrative" expense on our consolidated statements of operations. Per the terms of the merger agreement with Caspida, certain unvested shares of stock and unvested outstanding stock options held by Caspida employees were canceled and exchanged for unvested restricted stock units and replacement stock options to purchase shares of our common stock under our 2012 Equity Incentive Plan. Additionally, certain shares of stock held by key employees of Caspida were canceled and exchanged for unregistered restricted shares of our common stock subject to vesting. The fair value of $61.6 million of these issued awards, which are subject to the recipient’s continued service with us and thus excluded from the purchase price, will be recognized ratably as stock-based compensation expense over the required service period. The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands, except useful life):
______________________ *The in-process research and development is considered an indefinite-lived intangible asset until the completion or abandonment of the associated research and development efforts. Unaudited Pro Forma Financial Information The following unaudited pro forma information presents the combined results of operations as if the acquisition of Caspida had been completed on February 1, 2014, the beginning of the comparable prior annual reporting period. The unaudited pro forma results include: (i) amortization associated with preliminary estimates for the acquired intangible assets; (ii) recognition of post-acquisition stock-based compensation; and (iii) the associated tax impact on these unaudited pro forma adjustments. The unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies or the effect of the incremental costs incurred in integrating the two companies. Accordingly, these unaudited pro forma results are presented for informational purpose only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations (in thousands, except per share amounts):
Metafor Software On June 23, 2015, we acquired 100% of the voting equity interest of Metafor Software Inc., a privately-held British Columbia corporation, which develops technology that provides anomaly detection and behavioral analytics for IT operations. This acquisition has been accounted for as a business combination. The purchase price of $16.4 million, paid in cash, was preliminarily allocated as follows: $2.7 million to identifiable intangible assets, $0.5 million to net assets acquired and $0.1 million to net deferred tax assets, with the excess $13.1 million of the purchase price over the fair value of net tangible and intangible assets acquired recorded as goodwill, allocated to our one operating segment. Goodwill is primarily attributable to the value expected from the synergies of the combination, including accelerating our anomaly detection capabilities for our core IT operations and security use cases. This goodwill is not deductible for income tax purposes. The results of operations of Metafor Software, which are not material, have been included in our consolidated financial statements from the date of purchase. Pro forma results of operations of Metafor Software have not been presented as we do not consider the results to have a material effect on any of the periods presented in our consolidated statements of operations. The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands, except useful life):
Goodwill Goodwill balances are presented below (in thousands):
Intangible Assets Intangible assets subject to amortization realized from acquisitions as of January 31, 2017 are as follows (in thousands, except useful life):
Additionally, we obtained $1.3 million of in-process research and development upon the acquisition of Caspida, which has an indefinite useful life. We will assess the carrying value and useful life of the asset once the associated research and development efforts are completed. Amortization expense from acquired intangible assets was $11.9 million, $9.2 million and $4.4 million for the fiscal year ended January 31, 2017, 2016 and 2015, respectively. The expected future amortization expense for acquired intangible assets as of January 31, 2017 is as follows (in thousands):
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Debt Financing Facilities |
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Debt Disclosure [Abstract] | |
Debt Financing Facilities | Debt Financing Facilities On May 9, 2013 we entered into a Loan Agreement with Silicon Valley Bank, which was most recently amended in May 2015. As amended, the agreement provides for a revolving line of credit facility, which expires May 9, 2017. Under the agreement, we are able to borrow up to $25 million. Interest on any drawdown under the revolving line of credit accrues either at the prime rate (3.75% in January 2017) or the LIBOR rate plus 2.75%. As of January 31, 2017, we had no balance outstanding under this agreement. The agreement includes restrictive covenants, in each case subject to certain exceptions, that limit our ability to: sell or otherwise dispose of our business or property; change our business, liquidate or dissolve or undergo a change in control; enter into mergers, consolidations and acquisitions; incur indebtedness; create liens; pay dividends or make distributions; make investments; enter into material transactions with affiliates; pay any subordinated debt or amend certain terms thereof; or become an investment company. We were in compliance with all covenants as of January 31, 2017. |
Stockholder's Equity |
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Equity [Abstract] | |
Stockholders Equity | Stockholders’ Equity Common Stock Our certificate of incorporation, as amended and restated, authorizes us to issue 1,000,000,000 shares of common stock, $0.001 par value per share. At January 31, 2017 and January 31, 2016, 137,169,481 shares and 131,543,467 shares of common stock were issued and outstanding, respectively. |
Stock Compensation Plans |
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Stock Compensation Plans | Stock Compensation Plans Equity Incentive Plans In November 2003, our board adopted the 2003 Equity Incentive Plan (the “2003 Plan”). The 2003 Plan authorizes the granting of common stock options and restricted stock awards to employees, directors and consultants. In January 2012, our board approved the 2012 Equity Incentive Plan (the “2012 Plan”), which became effective on April 18, 2012. The 2012 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to our employees and any parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to our employees, directors and consultants and any parent or subsidiary corporations’ employees and consultants. Upon the effectiveness of the 2012 plan, all shares that were reserved but not issued under the 2003 Plan became available for issuance under the 2012 Plan and no further shares will be granted pursuant to the 2003 Plan. Canceled or forfeited equity awards under the 2003 Plan will also become available for issuance under the 2012 Plan. The term of an incentive stock option may not exceed 10 years, except that with respect to any participant who owns more than 10% of the voting power of all classes or our outstanding stock, the term must not exceed 5 years. Options and RSUs generally vest over 4 years. The 2012 plan provides for annual automatic increases on February 1 to the shares reserved for issuance. The automatic increase of the number of shares available for issuance under the 2012 Plan is equal to the least of 10 million shares, 5% of the outstanding shares of common stock as of the last day of our immediately preceding fiscal year or such other amount as our board may determine. The following table summarizes the stock option, RSU and PSU award activity during the fiscal years ended January 31, 2016 and 2017:
(1) The intrinsic value is calculated as the difference between the exercise price of the underlying stock option award and the closing market price of our common stock as of January 31, 2017. (2) Includes replacement stock options granted in conjunction with our acquisition of Caspida. Per the terms of the merger agreement with Caspida, certain unvested outstanding stock options held by Caspida employees were canceled and replaced with stock options to purchase shares of our common stock under our 2012 Equity Incentive Plan. Refer to Note 5 “Acquisitions, Goodwill and Intangible Assets” for details. During fiscal 2015 and 2016, we required that employees sell a portion of the shares that they receive upon the vesting of RSUs in order to cover any required withholding taxes. During fiscal 2017, upon each settlement date of our outstanding RSUs to current employees, RSUs were withheld to cover the required withholding tax, which was based on the value of the RSU on the settlement date as determined by the closing price of our common stock on the trading day of the applicable settlement date. The remaining shares were delivered to the recipient as shares of our common stock. The amount remitted to the tax authorities for the employees’ tax obligation was reflected as a financing activity within our consolidated statements of cash flows. These shares withheld by us as a result of the net settlement of RSUs were not considered issued and outstanding, thereby reducing our shares outstanding used to calculate earnings per share. These shares were returned to the reserves and were available for future issuance under our 2012 Equity Incentive Plan. During fiscal 2017 and 2016, we granted 626,250 PSUs and 235,000 PSUs, respectively, to certain executives under our 2012 Equity Incentive Plan. The number of PSUs earned and eligible to vest will be determined after a one-year performance period, based on achievement of certain company financial performance measures and the recipient’s continued service with us. The number of shares of our stock to be received at vesting can range from 0% to 200% of the target amount. Compensation expense for PSUs is measured using the fair value at the date of grant and recorded over the vesting period under the graded-vesting attribution method, and may be adjusted over the vesting period based on interim estimates of performance against the pre-set objectives. During fiscal 2017, $0.7 million in tax benefits have been realized from exercised stock options. At January 31, 2017, there was a total unrecognized compensation cost of $2.2 million related to these stock options, adjusted for estimated forfeitures, which is expected to be recognized over a weighted-average period of 1.5 years. At January 31, 2017, there was a total unrecognized compensation cost of $620.5 million related to RSUs, adjusted for estimated forfeitures, which is expected to be recognized over the next 2.7 years. At January 31, 2017, total unrecognized compensation cost was $14.7 million related to PSUs, adjusted for estimated forfeitures, which is expected to be recognized over the next 2.9 years. Additionally, during the fiscal year ended January 31, 2016, we issued 671,782 RSAs as a result of an acquisition and at January 31, 2017, total unrecognized compensation cost was $4.5 million related to RSAs, adjusted for estimated forfeitures, which is expected to be recognized over the next 1.9 years. At January 31, 2017, 407,460 RSAs were vested, 186,003 RSAs were forfeited and canceled and 78,319 RSAs were outstanding. The aggregate intrinsic value of options exercised during the fiscal year ended January 31, 2017 was $83.5 million. The weighted-average grant date fair value of RSUs granted was $54.80 per share for the fiscal year ended January 31, 2017. The aggregate intrinsic value of RSUs vested during the fiscal year ended January 31, 2017 was $300.5 million. The weighted-average grant date fair value of PSUs granted was $49.25 per share for the fiscal year ended January 31, 2017. The weighted-average grant date fair value of RSAs granted was $69.00 per share for the fiscal year ended January 31, 2016. No RSAs were granted during the fiscal year ended January 31, 2017. The aggregate intrinsic value of options exercised during fiscal 2016 and 2015 was $162.3 million and $270.1 million, respectively. The weighted-average grant date fair value of options granted was $67.81 per share and $43.31 per share for fiscal 2016 and 2015, respectively. Employee Stock Purchase Plan Our 2012 Employee Stock Purchase Plan (the “ESPP”) allows eligible employees to purchase shares of our common stock at a discount through payroll deductions of up to 15% of their eligible compensation, at not less than 85% of the fair market value, as defined in the ESPP, subject to any plan limitations. The ESPP provides for consecutive 12-month offering periods, starting on the first trading day on or after June 15 and December 15 of each year. The ESPP provides for an automatic increase of the number of shares available for issuance under the ESPP equal to the least of 4 million shares, 2% of the outstanding shares of our common stock on the last day of the immediately preceding fiscal year, or such other amount as may be determined by our board of directors. Stock-Based Compensation Expense Stock-based compensation expense related to our stock-based awards, employee stock purchases and restricted stock units was allocated as follows (in thousands):
Valuation Assumptions We estimated the fair values of each option awarded on the date of grant using the Black-Scholes option pricing model utilizing the assumptions noted below. The expected term of the options is based on the average period the stock options are expected to remain outstanding calculated as the midpoint of the options’ vesting terms and contractual expiration periods, as we do not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. The expected stock price volatility for our stock was determined by examining the historical volatilities of a group of our industry peers as we do not have sufficient trading history of our common stock. The risk-free interest rate was calculated using the average of the published interest rates United States Treasury zero-coupon issues with maturities that approximate the expected term. The dividend yield assumption is zero as we do not have any history of, nor plans to make, dividend payments. We did not grant any employee options during the year ended January 31, 2017. The following assumptions were used to estimate the fair value of options granted to employees:
Forfeitures were estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differed from those estimates. Forfeitures were estimated based on historical experience. We did not grant any options to nonemployees during the years ended January 31, 2017 and 2016. The following assumptions were used to estimate the fair value of nonemployee options:
The following assumptions were used to estimate the fair value of the ESPP:
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Geographic Information | Geographic Information Revenues Revenues by geography are based on the shipping address of the customer. The following tables present our revenues by geographic region for the periods presented (in thousands):
Other than the United States, no other individual country exceeded 10% of total revenues during any of the periods presented. One channel partner represented 28% and a second channel partner represented 16% of total revenues during fiscal 2017. One channel partner represented 14% and a second channel partner represented 13% of total revenues during fiscal 2016. One channel partner represented 12% of total revenues during fiscal 2015. The revenues from these channel partners are comprised of a number of customer transactions, none of which were individually greater than 10% of total revenues during fiscal 2017, 2016 or 2015. At January 31, 2017, one channel partner represented 30% of total accounts receivable. At January 31, 2016, one channel partner represented 26% and one customer represented 16% of total accounts receivable. Property and Equipment The following tables present our property and equipment by geographic region for the periods presented (in thousands):
Other than the United States, no other individual country exceeded 10% of total property and equipment as of January 31, 2017 or 2016. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Loss before income tax expense consists of the following for the periods shown below (in thousands):
Income tax expense (benefit) consists of the following for the periods shown below (in thousands):
For the fiscal year ended January 31, 2017, our tax provision consisted principally of state taxes in the United States and foreign taxes from legal entities established in foreign jurisdictions and withholding taxes paid. For the fiscal year ended January 31, 2016, our tax provision consisted principally of state taxes in the United States and foreign taxes from legal entities established in foreign jurisdictions and withholding taxes paid offset by a partial release of valuation allowance on our United States deferred tax assets as a result of an acquisition during the 2016 fiscal year. For the fiscal year ended January 31, 2015, our tax provision consisted principally of state and foreign income tax expense. The reconciliation of federal statutory income tax rate to our effective income tax rate is as follows (in thousands):
Deferred tax assets and liabilities consist of the following (in thousands):
Net operating loss and tax credit carryforwards as of January 31, 2017 are as follows (in thousands):
ASC Topic 740, Income Taxes, requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that we assess that realization is more likely than not. Realization of the future tax benefits is dependent on our ability to generate sufficient taxable income within the carryforward period. Due to our history of U.S. operating losses, we believe the recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not more likely than not to be realized and, accordingly, have provided a full valuation allowance against net U.S. deferred tax assets. The valuation allowance totaled $356.8 million, $236.2 million and $135.7 million for fiscal 2017, 2016, and 2015, respectively. The gross increase in the valuation allowance was $120.6 million between fiscal 2017 and 2016. At January 31, 2017, we had federal and state net operating loss carryforwards of $1,395.6 million and $939.7 million, respectively. The net operating losses for federal and state purposes begin to expire starting in 2025 and 2017, respectively. Additionally, we had federal and state research and development tax credit carryforwards of $76.7 million and $55.8 million as of January 31, 2017 and 2016, respectively. Our federal tax credits will start to expire in 2026 if not utilized. At January 31, 2017, we also had $2.3 million of California Enterprise Zone credits. The California Enterprise Zone credits will expire in 2024 if not utilized. If certain factors change, we may determine that there is sufficient positive evidence to support a reversal of, or decrease in, the valuation allowance. If we were to reverse all or some part of our valuation allowance, our consolidated financial statements in the period of reversal would likely reflect an increase in assets on our balance sheet and a corresponding tax benefit to our consolidated statements of operations in the amount of the reversal. Because of certain prior period ownership changes, the utilization of a portion of our United States federal and state NOL and tax credit carryforwards may be limited. The excess tax benefits associated with stock option exercises are recorded to stockholders’ equity only when they reduce income taxes payable. As a result, the excess tax benefits are included in the net operating carryforwards, however, are not reflected in deferred tax assets for fiscal 2017 and 2016. The excess tax benefits for fiscal year 2017 and 2016 are $301.6 million and $279.8 million, respectively. Our policy with regard to providing for income tax expense when excess tax benefits are utilized is to follow the “with-and-without” approach as described in ASC 740-20 and ASC 718. As of January 31, 2017, our liability for uncertain tax positions was $16.8 million, of which $0.4 million would, if recognized, impact our effective tax rate. The remainder will not, if recognized, affect the effective income tax rate due to the valuation allowance that currently offsets deferred tax assets.
We are required to identify, evaluate and measure all uncertain tax positions taken or to be taken on tax returns and to record liabilities for the amount of these positions that may not be sustained, or may only partially be sustained, upon examination by the relevant taxing authorities. Although we believe that our estimates and judgments were reasonable, actual results may differ from these estimates. Some or all of these judgments are subject to review by the taxing authorities. We are subject to income taxes in United States federal and various state and local jurisdictions. Generally, we are no longer subject to United States federal, state and local tax examinations for tax years ended before January 31, 2013. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses or tax credits were generated and carried forward, and make adjustments up to the amount of the net operating loss or credit carryforward. We accrue interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of January 31, 2017 and 2016, there was accrued interest and penalties of $0.1 million. We intend either to invest our non-U.S. earnings indefinitely in foreign operations or to remit these earnings to our United States entities in a tax-free manner. For this reason, we do not record federal income taxes on the undistributed earnings of $16.1 million of our foreign subsidiaries. The determination of the amount of deferred taxes on these earnings is not practicable since the computation would depend on a number of factors that cannot be known unless a decision is made to repatriate the earnings. |
Net Loss Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share | Net Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, less the weighted-average unvested common stock subject to repurchase or forfeiture. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including preferred stock, stock options, RSUs, PSUs and RSAs, to the extent dilutive. The following table sets forth the computation of historical basic and diluted net loss per share (in thousands, except per share data):
Since we were in a net loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods as the inclusion of all potentially dilutive securities outstanding would have been anti-dilutive. Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:
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Related Party Transactions |
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Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Certain members of our board of directors (“Board”) serve on the board of directors of and/or are executive officers of, and, in some cases, are investors in, companies that are customers or vendors of ours. Certain of our executive officers also serve on the board of directors of companies that are customers or vendors of ours. All contracts with related parties are executed in the ordinary course of business. We recognized revenue from sales to these companies of $7.3 million, $5.1 million, and $3.1 million for the fiscal years ended January 31, 2017, 2016 and 2015, respectively. There were $1.9 million and $0.5 million in accounts receivable due from these companies as of January 31, 2017 and 2016, respectively. We also recorded $0.4 million, $2.3 million, and $2.0 million in expenses related to purchases from these companies during the fiscal years ended January 31, 2017, 2016 and 2015, respectively. There were no accounts payable to these companies as of January 31, 2017 or January 31, 2016. |
Description of the Business and Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fiscal Year | Fiscal Year Our fiscal year ends on January 31. References to fiscal 2017, for example, refer to the fiscal year ended January 31, 2017. |
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods covered by the financial statements and accompanying notes. In particular, we make estimates with respect to the fair value of multiple elements in revenue recognition, uncollectible accounts receivable, the assessment of the useful life and recoverability of long-lived assets (property and equipment, goodwill and identified intangibles), stock-based compensation expense, the fair value of assets acquired and liabilities assumed for business combinations, income taxes, leases and contingencies. Actual results could differ from those estimates. |
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Segments | Segments We operate our business as one operating segment: the development and marketing of software solutions that enable our customers to gain real-time operational intelligence by harnessing the value of their data. Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance and allocating resources. |
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Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of Splunk Inc. and its direct and indirect wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. |
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Foreign Currency | Foreign Currency The functional currency of our foreign subsidiaries is their respective local currency. Translation adjustments arising from the use of differing exchange rates from period to period are included in "Accumulated other comprehensive loss" within the consolidated statements of stockholders’ equity. Foreign currency transaction gains and losses are included in "Other income (expense), net" and were not material for the three years ended January 31, 2017. All assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Expenses are translated at the average exchange rate during the period. Equity transactions are translated using historical exchange rates. Foreign Currency Contracts We use foreign currency forward contracts as a part of our strategy to manage exposure related to foreign currency denominated monetary assets and liabilities. These contracts typically have maturities of one month. They are not designated as cash flow or fair value hedges under ASC Topic 815, Derivatives and Hedging. These contracts hedge assets and liabilities that are denominated in foreign currencies and are carried at fair value as either assets or liabilities on the consolidated balance sheets with changes in the fair value recorded to "Other income (expense), net" in the consolidated statements of operations. |
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Business Combinations | Business Combinations We use our best estimates and assumptions to allocate the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Our estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. In addition, uncertain tax positions and tax-related valuation allowances are initially established in connection with a business combination as of the acquisition date. We continue to collect information and reevaluate these estimates and assumptions quarterly and record any adjustments to our preliminary estimates to goodwill provided that we are within the measurement period. Upon the conclusion of the final determination of the fair value of assets acquired or liabilities assumed during the measurement period, any subsequent adjustments are recorded to our consolidated statements of operations. |
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Revenue Recognition | Revenue Recognition We generate revenues primarily in the form of software license fees and related maintenance and services fees. License fees include perpetual license fees, term license fees and royalties. Maintenance and services primarily consist of fees for maintenance services (including support and unspecified upgrades and enhancements when and if they are available), training, professional services that are not essential to functionality and subscription software services. We recognize revenues when all of the following conditions are met:
Signed agreements are used as evidence of an arrangement. If a contract signed by the customer does not exist, we use a purchase order as evidence of an arrangement. In cases where both a signed contract and a purchase order exist, we consider the signed contract to be the final persuasive evidence of an arrangement. Electronic delivery occurs when we provide the customer with access to the software via a license key. We assess whether a fee is fixed or determinable at the outset of the arrangement, primarily based on the payment terms associated with the transaction. We assess collectability of the fee based on a number of factors such as collection history and creditworthiness of the customer. If we determine that collectability is not probable, revenue is deferred until collectability becomes probable, generally upon receipt of cash. When contracts contain software-related multiple elements wherein vendor specific objective evidence (“VSOE”) exists for all undelivered elements and the services, if any, are not essential to the functionality of the delivered elements, we account for the delivered elements in accordance with the “Residual Method.” Perpetual license arrangements are typically accompanied by maintenance agreements. Maintenance revenues consist of fees for providing software updates on a when-and-if-available basis and technical support for software products for an initial term. Maintenance revenues are recognized ratably over the term of the agreement. We have established fair value for maintenance on perpetual licenses due to consistently priced standalone sales of maintenance. Revenues related to term license fees are recognized ratably over the contract term beginning on the date the customer has access to the software license key and continuing through the end of the contract term. In these cases, we do not have VSOE of fair value for maintenance, as fees for support and maintenance are bundled with the license over the entire term of the contract. License arrangements may also include professional services and training services, which are typically delivered early in the contract term. In determining whether professional services revenues should be accounted for separately from license revenues, we evaluate whether the professional services are considered essential to the functionality of the software using factors such as the nature of our software products; whether they are ready for use by the customer upon receipt; the nature of our implementation services, which typically do not involve significant customization to or development of the underlying software code; the availability of services from other vendors; whether the timing of payments for license revenues is coincident with performance of services; and whether milestones or acceptance criteria exist that affect the realizability of the software license fee. Substantially all of our professional services arrangements are billed on a time and materials basis and, accordingly, are recognized as the services are performed. Training revenues are recognized as training services are delivered. VSOE of fair value of professional and training services is based upon stand-alone sales of those services. Payments received in advance of services performed are deferred and recognized when the related services are performed. We are unable to establish VSOE of fair value for all undelivered elements in certain multiple element arrangements due to the lack of VSOE for maintenance services that are generally bundled with term licenses. In these instances, all revenue is recognized ratably over the period that the services are expected to be performed, commencing when all service periods have started. In arrangements where the expected service periods of maintenance services and professional or training services differ, we recognize all revenue over the longer of the expected service periods, which is generally the maintenance period. We do not offer credits or refunds and therefore have not recorded any sales return allowance for any of the periods presented. Upon a periodic review of outstanding accounts receivable, amounts that are deemed to be uncollectible are written off against the allowance for doubtful accounts. Our policy is to record revenues net of any applicable sales, use or excise taxes. We recognize revenues from the indirect sales channel upon sell-through by the partner or distributor. Sell-through is determined when we receive an order form from a reseller for a specific end-user sale. We do not offer right of return, product rotation or price protection to any of our channel partners. We also have licensing arrangements with OEM customers for which royalty fees are generally recognized as revenue upon receipt of reports of units shipped, respectively. Provided all other revenue criteria are met, the upfront, minimum, non-refundable license fees from OEM customers are recognized upon delivery, and on-going royalty fees are recognized upon reports of units shipped. In our consolidated statements of operations, revenues are categorized as license or maintenance and services revenues. We allocate revenues from arrangements containing multiple elements to each of these categories based on the VSOE of fair value for elements in each revenue arrangement and the application of the residual method for arrangements in which we have established VSOE of fair value for all undelivered elements. In arrangements where we are not able to establish VSOE of fair value for all undelivered elements, we first allocate revenues to any undelivered elements for which VSOE of fair value has been established, then allocate revenues to any undelivered elements for which VSOE of fair value has not been established based upon management’s best estimate of fair value of those undelivered elements and apply a residual method to determine the license fee. Management’s best estimate of fair value of undelivered elements for which VSOE of fair value has not been established is based upon the VSOE of similar offerings and other objective criteria. For multiple-element arrangements containing our non-software services, we: (1) determine whether each element constitutes a separate unit of accounting; (2) determine the fair value of each element using the selling price hierarchy of VSOE of selling price, third-party evidence (“TPE”) of selling price or best-estimated selling price (“BESP”), as applicable; and (3) allocate the total price to each separate unit of accounting based on the relative selling price method. An element constitutes a separate unit of accounting when the delivered item has standalone value and delivery of the undelivered element is probable and within our control. We determine BESP by considering our overall pricing objectives and market conditions. Significant pricing practices taken into consideration include our discounting practices, the size and volume of our transactions, our price lists, our go-to-market strategy, historical standalone sales and contract prices. As our go-to-market strategies evolve, we may modify our pricing practices in the future, which could result in changes in relative selling prices, including both VSOE and BESP. For multiple-element arrangements that contain both software and non-software elements, we allocate revenue to software or software-related elements as a group and any non-software elements separately based on the selling price hierarchy. We determine the selling price for each deliverable using VSOE of selling price, if it exists, or TPE of selling price. If neither VSOE nor TPE of selling price exist for a deliverable, we use BESP. Once revenue is allocated to software or software-related elements as a group, we recognize revenue in conformance with software revenue accounting guidance. Revenue is recognized when revenue recognition criteria are met for each element. In our subscription software services agreements, we include service level commitments to customers relating to levels of uptime availability and permitting those customers to receive credits in the event that we fail to meet those levels. To date, we have not incurred any material costs as a result of such commitments and have not accrued any liabilities related to such obligations in the accompanying consolidated financial statements. Deferred revenue consists substantially of amounts invoiced in advance of revenue recognition for our products and services described above. We recognize deferred revenue as revenue only when the revenue recognition criteria are met. |
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Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid instruments with original maturities of 90 days or less at the date of purchase to be cash equivalents. Cash and cash equivalents are recorded at cost, which approximates fair value. We do not hold or issue financial instruments for trading purposes. |
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Investments | Investments We determine the appropriate classification of our investments at the time of purchase and reevaluate such determination at each balance sheet date. Securities are classified as available-for-sale and are carried at fair value, with the change in unrealized gains and losses, net of tax, reported as a separate component on the consolidated statements of comprehensive income (loss). Fair value is determined based on quoted market rates when observable or utilizing data points that are observable, such as quoted prices, interest rates and yield curves. Declines in fair value judged to be other-than-temporary on securities available for sale are included as a component of investment income. In order to determine whether a decline in value is other-than-temporary, we evaluate, among other factors, the duration and extent to which the fair value has been less than the carrying value and our intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value. The cost of securities sold is based on the specific-identification method. Interest on securities classified as available-for-sale is included as a component of Interest income, net. |
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Concentration of Risk | Concentration of Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents, investments and accounts receivable. We maintain the majority of our cash balance at two financial institutions that management believes are high-credit, quality financial institutions and invest our cash equivalents in highly rated money market funds. At January 31, 2017, one channel partner represented 30% of total accounts receivable. At January 31, 2016, one channel partner represented 26% and one customer represented 16% of total accounts receivable. Our accounts receivable is subject to collection risk. Our gross accounts receivable is reduced for this risk by an allowance for doubtful accounts. This allowance is for estimated losses resulting from the inability of our customers to make required payments. It is an estimate and is regularly evaluated for adequacy by taking into consideration a combination of factors. We look at factors such as past collection experience, credit quality of the customer, age of the receivable balance, and current economic conditions. These factors are reviewed to determine whether an allowance for bad debts should be recorded to reduce the receivable balance to the amount believed to be collectible. The following table presents the changes in the allowance for doubtful accounts (in thousands):
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Goodwill and Intangible Assets | Goodwill, Intangible Assets, Long-Lived Assets and Impairment Assessments Goodwill and indefinite-lived intangible assets are carried at cost and are evaluated annually for impairment, or more frequently if circumstances exist that indicate that impairment may exist. When conducting our annual goodwill impairment assessment, we perform a quantitative evaluation of whether goodwill is impaired using the two-step impairment test. The first step is comparing the fair value of our reporting unit to its carrying value. We consider the enterprise to be the reporting unit for this analysis. If step one indicates that impairment potentially exists, the second step is performed to measure the amount of impairment, if any. We record the amount by which the carrying value of the goodwill exceeds its implied fair value, if any, as impairment. Finite-lived intangible assets are amortized over their useful lives. Each period we evaluate the estimated remaining useful life of our finite-lived intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. The carrying amounts of these assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets, then the carrying amount of such assets is reduced to fair value. In-process research and development is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When in-process research and development projects are completed, the corresponding amount is reclassified as an amortizable intangible asset and is amortized over the asset’s estimated useful life. |
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Long-Lived Assets and Impairment Assessments | We evaluate the recoverability of our long-lived assets including intangible and tangible assets. Acquired finite-lived intangible assets are amortized over their useful lives. We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. We recognize such impairment in the event the net book value of such assets exceeds their fair value. If the fair value of the long-lived assets exceeds the carrying value of the net assets assigned, then the assets are not impaired and no further testing is performed. If the carrying value of the net assets assigned exceeds the fair value of the assets, then we must perform the second step of the impairment test in order to determine the implied fair value. |
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Property and Equipment | Property and Equipment Property and equipment are stated at cost net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets ranging from generally three to five years. Leasehold improvements are amortized over the shorter of the estimated useful life or the remaining lease term. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in the consolidated statements of operations. Maintenance and repairs that do not improve or extend the lives of the respective assets are charged to expense in the period incurred. The following table presents the estimated useful lives of our property and equipment:
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Capitalized Software Development Costs | Capitalized Software Development Costs Capitalization of software development costs for software to be sold, leased, or otherwise marketed begins upon the establishment of technological feasibility, which is generally the completion of a working prototype that has been certified as having no critical bugs and is a release candidate. Amortization begins once the software is ready for its intended use, generally based on the pattern in which the economic benefits will be consumed. We did not capitalize any internal software development costs for fiscal 2017 and 2016 because the cost incurred and the time between technological feasibility and product release was insignificant. We had no amortization expense from capitalized purchased technology during fiscal 2017, 2016 or 2015. Costs related to software acquired, developed or modified solely to meet our internal requirements, with no substantive plans to market such software at the time of development, are capitalized. Costs incurred during the preliminary planning and evaluation stage of the project and during post implementation operational stage are expensed as incurred. Costs incurred during the application development stage of the project are capitalized. We define the design, configuration, and coding process as the application development stage. We did not capitalize any costs related to computer software developed for internal use in fiscal 2017 or 2016. |
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Commissions | Commissions Commissions are recorded as a component of sales and marketing expenses and consist of the variable compensation paid to our sales force. Sales commissions are earned and recorded at the time that a customer has entered into a binding purchase agreement. Commissions paid to sales personnel are recoverable only in the case that we cannot collect the invoiced amounts associated with a sales order. |
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Leases | Leases We primarily lease our facilities under operating leases. For leases that contain rent escalation or rent concession provisions, we record the total rent expense during the lease term on a straight-line basis over the term of the lease. We record the difference between the rent paid and the straight-line rent expense as a current and non-current deferred rent liability in "Accrued expenses and other liabilities" and "Other liabilities, non-current," respectively, on the consolidated balance sheets. |
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Facility Exit Costs | Facility Exit Costs Certain of our operating facility leases include office space that is not occupied or used by us. We calculate and record a liability at the "cease-use" date related to those operating leases based on the difference between the present value of estimated future sublease rental income and the present value of our remaining lease obligations, adjusted for the effects of any prepaid or deferred items. The short-term portion of the liability is recorded in "Accrued expenses and other liabilities" and the long-term portion of the liability is recorded in "Other liabilities, non-current," on the consolidated balance sheets. Associated with the recognition of the liability, we also record a corresponding charge to "General and administrative" expenses in the consolidated statements of operations. |
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Advertising Expense | Advertising Expense We expense advertising costs as incurred. We incurred $10.0 million, $13.3 million and $8.4 million in advertising expenses for fiscal 2017, 2016 and 2015, respectively. Advertising costs are recorded in "Sales and marketing" expenses in the consolidated statements of operations. |
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Stock-Based Compensation | Stock-Based Compensation We recognize compensation expense for all share-based payment awards, including stock options, restricted stock units (“RSUs”), performance units (“PSUs”) and restricted stock awards (“RSAs”), based on the estimated fair value of the award on the grant date in the consolidated statements of operations over the related vesting periods. The expense recorded is based on awards ultimately expected to vest and therefore is reduced by estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We calculate the fair value of options using the Black-Scholes method and expense using the straight-line attribution approach. We account for equity awards issued to non-employees, such as consultants, in accordance with the guidance relating to equity instruments that are issued to other than employees for acquiring, or in conjunction with selling, goods or services, using the Black-Scholes method to determine the fair value of such instruments. Awards granted to non-employees are remeasured over the vesting period, and the resulting value is recorded as an expense over the period the services are received. The fair value of each option grant and stock purchase right granted under the Employee Stock Purchase Plan (“ESPP”) was estimated on the date of grant using the Black-Scholes option pricing model. We recognize stock-based compensation expense related to our ESPP on a straight-line basis over the offering period, which is twelve months. Stock-based compensation expense is recognized net of estimated forfeiture activity. The determination of the grant date fair value of options using an option-pricing model is affected by assumptions regarding a number of other complex and subjective variables, which include our expected stock price volatility over the expected term of the options, stock option exercise and cancellation behaviors, risk-free interest rates and expected dividends. The number of PSUs earned and eligible to vest will be determined based on achievement of certain company financial performance measures and the recipient’s continued service with us. The number of shares of our stock to be received at vesting can range from 0% to 200% of the target amount. Compensation expense for PSUs is measured using the fair value at the date of grant and recorded over the vesting period under the graded-vesting attribution method, and may be adjusted over the vesting period based on interim estimates of performance against the pre-set objectives. |
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Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method in accordance with authoritative guidance for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The guidance on accounting for uncertainty in income taxes requires us to identify, evaluate and measure all uncertain tax positions taken or to be taken on tax returns and to record liabilities for the amount of these positions that may not be sustained, or may only partially be sustained, upon examination by the relevant taxing authorities. Although we believe that our estimates and judgments were reasonable, actual results may differ from these estimates. Some or all of these judgments are subject to review by the taxing authorities. |
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Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04 (Topic 350) Intangibles - Goodwill and Other. The new standard simplifies how companies are required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The standard is effective for our first quarter of fiscal 2021, although early adoption is permitted. We are currently evaluating whether this standard will have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01 (Topic 805) Business Combinations - Clarifying the Definition of a Business. The new standard narrows the definition of a business to assist companies with evaluating when a set of transferred assets and activities is a business. The standard is effective for our first quarter of fiscal 2019, although early adoption is permitted. We are currently evaluating whether this standard will have a material impact on our consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-16 (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory. The new standard will require companies to recognize, as opposed to defer, the tax effects from intercompany transfers of certain assets when the transfer occurs. The standard is effective for our first quarter of fiscal 2019, although early adoption is permitted. We are currently evaluating whether this standard will have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13 (Topic 326), Financial Instruments - Credit Losses. The amendments in this update require a financial asset (or a group of financial assets) measured at an amortized cost basis to be presented at the net amount expected to be collected. The new approach to estimating credit losses (referred to as the current expected credit losses model) applies to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans and held-to-maturity debt securities. The standard is effective for our first quarter of fiscal 2021, although early adoption is permitted. We are currently evaluating whether this standard will have a material impact on our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09 (Topic 718), Compensation - Stock Compensation, which has been issued as part of its Simplification Initiative. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The standard is effective for our first quarter of fiscal 2018. We do not expect this pronouncement to have a material impact on our consolidated financial statements upon adoption. In February 2016, the FASB issued ASU No. 2016-02 (Topic 842), Leases, which supersedes the lease recognition requirements in ASC Topic 840, Leases. The standard requires an entity to recognize right-of-use assets and lease liabilities arising from a lease for operating leases, initially measured at the present value of the lease payments on the consolidated balance sheets. The impact of such leases on the consolidated statements of operations and cash flows will continue to be treated in a similar manner under current GAAP. The standard also requires additional qualitative and quantitative disclosures. The standard is effective for our first quarter of fiscal 2020, although early adoption is permitted. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures. We anticipate that most of our office leases will be recognized as lease liabilities and corresponding right-of-use assets, and will accordingly have a material impact on our consolidated balance sheets upon adoption. In May 2014, the FASB issued ASU No. 2014-09 (Topic 606), Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in Accounting Standards Codification 605, Revenue Recognition and establishes a new revenue standard. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenues and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, which clarifies the guidance in the new revenue standard on assessing whether an entity is a principal or an agent in a revenue transaction. This conclusion impacts whether an entity reports revenue on a gross or net basis. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies the guidance in the new revenue standard regarding an entity’s identification of its performance obligations in a contract. In May 2016, the FASB issued ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients, which amends the guidance in the new revenue standard on collectability, non-cash consideration, presentation of sales tax, and transition. In December 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, which clarifies narrow aspects of ASC 606 or corrects unintended application of the guidance. The new revenue standard, as amended by ASU No. 2015-14, is effective in the first quarter of fiscal 2019 and may be applied retrospectively to each prior period presented or with the cumulative effect recognized as of the date of initial application. We currently plan to adopt the standard using the cumulative effect transition method. Early adoption is permitted, but not earlier than the original effective date for annual and interim periods. While we are still evaluating the total impact of the new revenue standard, we believe the adoption of this new standard will have a material impact on our consolidated financial statements, including the way we account for arrangements involving a term license, deferred revenue and sales commissions. Under the new revenue standard, we would be required to recognize term license revenues upfront and the associated maintenance revenues over the contract period. Under the current revenue standard, we recognize both the term license and maintenance revenues ratably over the contract period. In addition, some deferred revenue recorded in accordance with the current revenue standard could be eliminated upon adoption of the new revenue standard. We have also considered the impact of the guidance in ASC 340-40, Other Assets and Deferred Costs; Contracts with Customers, under Topic 606. Under ASC 340-40, we would be required to capitalize and amortize incremental costs of obtaining a contract, such as sales commission costs. Under our current accounting policy, we do not capitalize sales commission costs and recognize these costs when they are incurred. |
Description of the Business and Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in the allowance for doubtful accounts | The following table presents the changes in the allowance for doubtful accounts (in thousands):
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Schedule of estimated useful lives of property and equipment | The following table presents the estimated useful lives of our property and equipment:
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value of financial assets and liabilities that were measured on a recurring basis | The following table sets forth the fair value of our financial assets and liabilities that were measured on a recurring basis as of January 31, 2017 and 2016 (in thousands):
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Schedule of Available-for-sale Securities Reconciliation | We invested in U.S. treasury securities during the fiscal year ended January 31, 2017 and 2016, which we have classified as available-for-sale securities. The following table presents our available-for-sale investments as of January 31, 2017 (in thousands):
The following table presents our available-for-sale investments as of January 31, 2016 (in thousands):
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Schedule of Unrealized Loss on Investments | As of January 31, 2017, the following marketable securities were in an unrealized loss position (in thousands):
As of January 31, 2016, the following marketable securities were in an unrealized loss position (in thousands):
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Investments Classified by Contractual Maturity Date | The contractual maturities of our investments are as follows (in thousands):
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Commitments and Contingencies (Tables) |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future minimum rental payments required under the operating lease agreements | The following summarizes our operating lease commitments as of January 31, 2017 (in thousands):
_________________________ (1) We entered into sublease agreements for portions of our office space and the future rental income of $1.0 million from these agreements has been included as an offset to our future minimum rental payments. |
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Schedule of future minimum lease payments required under financing lease agreements | As of January 31, 2017, future payments on the financing lease obligation are as follows (in thousands):
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Property and Equipment (Tables) |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of property and equipment | Property and equipment consisted of the following (in thousands):
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Acquisitions, Goodwill and Other Intangible Assets (Tables) |
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Schedule of Goodwill [Table Text Block] | Goodwill balances are presented below (in thousands):
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Schedule of finite-lived intangible assets | Intangible assets subject to amortization realized from acquisitions as of January 31, 2017 are as follows (in thousands, except useful life):
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Schedule of expected future amortization for capitalized computer software costs developed for internal use | The expected future amortization expense for acquired intangible assets as of January 31, 2017 is as follows (in thousands):
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Caspida | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of finite-lived intangible assets acquired as part of business combination | The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands, except useful life):
______________________ *The in-process research and development is considered an indefinite-lived intangible asset until the completion or abandonment of the associated research and development efforts. |
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Business Acquisition, Pro Forma Information [Table Text Block] | The following unaudited pro forma information presents the combined results of operations as if the acquisition of Caspida had been completed on February 1, 2014, the beginning of the comparable prior annual reporting period. The unaudited pro forma results include: (i) amortization associated with preliminary estimates for the acquired intangible assets; (ii) recognition of post-acquisition stock-based compensation; and (iii) the associated tax impact on these unaudited pro forma adjustments. The unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies or the effect of the incremental costs incurred in integrating the two companies. Accordingly, these unaudited pro forma results are presented for informational purpose only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations (in thousands, except per share amounts):
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Metafor Software | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of finite-lived intangible assets acquired as part of business combination | The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands, except useful life):
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Stock Compensation Plans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock option and RSU award activity | The following table summarizes the stock option, RSU and PSU award activity during the fiscal years ended January 31, 2016 and 2017:
(1) The intrinsic value is calculated as the difference between the exercise price of the underlying stock option award and the closing market price of our common stock as of January 31, 2017. (2) Includes replacement stock options granted in conjunction with our acquisition of Caspida. Per the terms of the merger agreement with Caspida, certain unvested outstanding stock options held by Caspida employees were canceled and replaced with stock options to purchase shares of our common stock under our 2012 Equity Incentive Plan. Refer to Note 5 “Acquisitions, Goodwill and Intangible Assets” for details. |
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Schedule of allocation of stock-based compensation expense related to stock-based awards, employee stock purchases and restricted stock units | Stock-based compensation expense related to our stock-based awards, employee stock purchases and restricted stock units was allocated as follows (in thousands):
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Valuation Assumptions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assumptions that were used to estimate the fair value of the ESPP | The following assumptions were used to estimate the fair value of the ESPP:
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Employees | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Valuation Assumptions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assumptions that were used to estimate the fair value of options granted | The following assumptions were used to estimate the fair value of options granted to employees:
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Nonemployees | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Valuation Assumptions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assumptions that were used to estimate the fair value of options granted | The following assumptions were used to estimate the fair value of nonemployee options:
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Geographic Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of revenues by geographic region | The following tables present our revenues by geographic region for the periods presented (in thousands):
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Schedule of property and equipment by geographic region | The following tables present our property and equipment by geographic region for the periods presented (in thousands):
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of income (loss) before income tax expense | Loss before income tax expense consists of the following for the periods shown below (in thousands):
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Schedule of components of income tax expense | Income tax expense (benefit) consists of the following for the periods shown below (in thousands):
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Schedule of reconciliation of federal statutory income tax provision to effective income tax provision | The reconciliation of federal statutory income tax rate to our effective income tax rate is as follows (in thousands):
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Schedule of components of deferred tax assets and liabilities | Deferred tax assets and liabilities consist of the following (in thousands):
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Schedule of net operating loss and tax credit carry forwards | Net operating loss and tax credit carryforwards as of January 31, 2017 are as follows (in thousands):
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Schedule of unrecognized tax positions | The remainder will not, if recognized, affect the effective income tax rate due to the valuation allowance that currently offsets deferred tax assets.
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Net Loss Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of computation of historical basic and diluted net loss per share | The following table sets forth the computation of historical basic and diluted net loss per share (in thousands, except per share data):
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Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive | Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:
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Description of the Business and Significant Accounting Policies (Details) - segment |
12 Months Ended | ||
---|---|---|---|
Jul. 09, 2015 |
Jun. 23, 2015 |
Jan. 31, 2017 |
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Segments | |||
Number of operating segments | 1 | 1 | 1 |
Description of the Business and Significant Accounting Policies (Details 2) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2017
USD ($)
financial_institution
customer
|
Jan. 31, 2016
USD ($)
customer
|
Jan. 31, 2015
USD ($)
|
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Changes in the allowance for doubtful accounts | |||
Balance at beginning of period | $ 531 | $ 473 | $ 758 |
Add: bad debt expense | 0 | 98 | 0 |
Less: write-offs, net of recoveries | (56) | (40) | (285) |
Balance at end of period | $ 475 | $ 531 | $ 473 |
Cash | Credit concentration | |||
Concentration of Risk | |||
Number of financial institutions | financial_institution | 2 | ||
Accounts receivable | Customer concentration | |||
Concentration of Risk | |||
Number of customers | customer | 1 | 2 | |
Concentration Risk, Percentage | 30.00% | 42.00% | |
Customer One [Member] | Accounts receivable | Customer concentration | |||
Concentration of Risk | |||
Concentration Risk, Percentage | 30.00% | 26.00% | |
Customer Two [Member] | Accounts receivable | Customer concentration | |||
Concentration of Risk | |||
Concentration Risk, Percentage | 16.00% |
Description of the Business and Significant Accounting Policies (Details 3) |
12 Months Ended |
---|---|
Jan. 31, 2017 | |
Minimum | |
Property and Equipment | |
Useful Life | 3 years |
Maximum | |
Property and Equipment | |
Useful Life | 5 years |
Computer equipment and software | |
Property and Equipment | |
Useful Life | 3 years |
Furniture and fixtures | |
Property and Equipment | |
Useful Life | 5 years |
Description of the Business and Significant Accounting Policies (Details 4) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2017 |
Jan. 31, 2016 |
Jan. 31, 2015 |
|
Commissions | |||
Commission expense | $ 109.1 | $ 88.5 | $ 61.0 |
Leases | |||
Lease rent expenses | 28.1 | 11.9 | 9.8 |
Advertising Expense | |||
Advertising expenses | $ 10.0 | $ 13.3 | $ 8.4 |
Fair Value Measurements - Amortized Cost To Fair Value Reconciliation (Details) - USD ($) $ in Thousands |
Jan. 31, 2017 |
Jan. 31, 2016 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | $ 662,327 | $ 607,953 |
Unrealized Gains | 32 | 158 |
Unrealized Losses | (263) | (219) |
Fair Value | 662,096 | 607,892 |
Cash and cash equivalents: | U.S. treasury securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 23,399 | |
Unrealized Gains | 0 | |
Unrealized Losses | (5) | |
Fair Value | 23,394 | |
Investments, current portion: | U.S. treasury securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 662,327 | 584,554 |
Unrealized Gains | 32 | 158 |
Unrealized Losses | (263) | (214) |
Fair Value | $ 662,096 | $ 584,498 |
Fair Value Measurements - Securities in Unrealized Loss Position (Details) - U.S. treasury securities - USD ($) $ in Thousands |
Jan. 31, 2017 |
Jan. 31, 2016 |
---|---|---|
Fair Value | ||
Less than 12 Months | $ 446,073 | $ 212,532 |
12 Months or Greater | 0 | 164,298 |
Total | 446,073 | 376,830 |
Unrealized Losses | ||
Less than 12 Months | (263) | (138) |
12 Months or Greater | 0 | (81) |
Total | $ (263) | $ (219) |
Fair Value Measurements - Contractual maturities (Details) - USD ($) $ in Thousands |
Jan. 31, 2017 |
Jan. 31, 2016 |
---|---|---|
Fair Value Measurements | ||
Due within one year | $ 662,096 | |
Total | 662,096 | $ 607,892 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value Measurements | ||
Total | $ 0 | $ 0 |
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2017 |
Jan. 31, 2016 |
Jan. 31, 2015 |
|
Commitments and Contingencies Disclosure [Abstract] | |||
Rent expense | $ 28,100 | $ 11,900 | $ 9,800 |
Facility exit charge | 8,625 | 0 | 0 |
Accelerated depreciation of property and equipment | 2,739 | $ 0 | $ 0 |
Office lease obligations | |||
Total | 177,160 | ||
Less Than 1 year | 20,399 | ||
1-3 years | 44,582 | ||
3-5 years | 36,745 | ||
More Than 5 years | 75,434 | ||
Operating lease obligations | |||
Future minimum sublease rental payments, as an offset to the future minimum rental payments | $ 1,000 |
Commitments and Contingencies - Office Lease (Details) ft² in Thousands |
Aug. 24, 2015
USD ($)
ft²
|
Apr. 29, 2014
USD ($)
ft²
|
Jan. 31, 2017
USD ($)
|
May 13, 2014
USD ($)
|
---|---|---|---|---|
Leases | ||||
Base rent obligation | $ 177,160,000 | |||
Indemnification Arrangements | ||||
Commitments and Contingencies | ||||
Loss Contingency Accrual | $ 0 | |||
San Jose, CA, 3098 Olsen Drive [Member] | ||||
Leases | ||||
Area of Real Estate Property | ft² | 235 | |||
Term of office lease | 129 months | |||
Base rent obligation | $ 120,500,000 | |||
San Francisco, CA , 270 Brannan St [Member] | ||||
Leases | ||||
Area of Real Estate Property | ft² | 182 | |||
Term of office lease | 84 months | |||
Base rent obligation | $ 92,000,000 | |||
Amount to be maintained in Letter of Credit as Security for Lease Arrangement | $ 6,000,000 | |||
San Francisco, CA , 270 Brannan Street [Member] | ||||
Leases | ||||
Area of Real Estate Property | ft² | 91 | |||
San Francisco, CA , 270 Brannan Street - Initial Premises [Member] | ||||
Leases | ||||
Area of Real Estate Property | ft² | 91 |
Commitments and Contingencies Commitments and Contingencies - Financing Lease Obligations (Details) $ in Thousands |
Jan. 31, 2017
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Fiscal 2018 | $ 11,683 |
Fiscal 2019 | 12,510 |
Fiscal 2020 | 12,886 |
Fiscal 2021 | 13,272 |
Fiscal 2022 | 13,670 |
Thereafter | 21,977 |
Total future minimum lease payments | $ 85,998 |
Property and Equipment (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2017 |
Jan. 31, 2016 |
Jan. 31, 2015 |
|
Property and Equipment | |||
Property and equipment, gross | $ 216,409 | $ 170,495 | |
Less: accumulated depreciation and amortization | (50,014) | (35,500) | |
Property and equipment, net | 166,395 | 134,995 | |
Depreciation and amortization expense | 22,800 | 10,300 | $ 8,000 |
Accelerated depreciation of property and equipment | 2,739 | 0 | $ 0 |
Leasehold Improvements Not In Service [Member] | |||
Property and Equipment | |||
Property and equipment, gross | 1,000 | 28,900 | |
Computer equipment and software | |||
Property and Equipment | |||
Property and equipment, gross | 59,396 | 43,883 | |
Furniture and fixtures | |||
Property and Equipment | |||
Property and equipment, gross | 16,194 | 13,398 | |
Leasehold improvements | |||
Property and Equipment | |||
Property and equipment, gross | 58,569 | 41,028 | |
Construction in Progress [Member] | |||
Property and Equipment | |||
Property and equipment, gross | $ 82,250 | $ 72,186 |
Acquisitions, Goodwill and Other Intangible Assets (Details 1) $ / shares in Units, $ in Thousands |
12 Months Ended | |
---|---|---|
Jan. 31, 2016
USD ($)
company
$ / shares
|
Jan. 31, 2015
USD ($)
$ / shares
|
|
Business Combinations [Abstract] | ||
Number of Businesses Acquired | company | 2 | |
Business Acquisition, Pro Forma Revenue | $ 668,435 | $ 450,875 |
Business Acquisition, Pro Forma Net Income (Loss) | $ (301,527) | $ (229,755) |
Business Acquisition, Pro Forma Earnings Per Share, Basic and Diluted | $ / shares | $ (2.38) | $ (1.92) |
Acquisitions, Goodwill and Other Intangible Assets (Details 2) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2017 |
Jan. 31, 2016 |
Jan. 31, 2015 |
|
Business Combinations [Abstract] | |||
Goodwill | $ 124,642 | $ 123,318 | $ 19,070 |
Goodwill, Acquired During Period | 105,916 | ||
Goodwill, Translation Adjustments | $ 1,324 | $ (1,668) |
Acquisitions, Goodwill and Other Intangible Assets Acquisitions, Goodwill and Other Intangible Assets (Details 4) $ in Thousands |
Jan. 31, 2017
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | $ 10,296 |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 8,035 |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 7,623 |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 7,383 |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 3,076 |
Finite-Lived Intangible Assets, Net | $ 36,413 |
Debt Financing Facilities (Details) - Revolving line of credit facility - USD ($) |
12 Months Ended | |
---|---|---|
Jan. 31, 2017 |
May 09, 2013 |
|
Debt Financing Facilities | ||
Maximum borrowing capacity | $ 25,000,000 | |
Prime rate (as a percent) | 3.75% | |
Amount outstanding | $ 0 | |
LIBOR | ||
Debt Financing Facilities | ||
Margin over prime rate (as a percent) | 2.75% |
Stockholders Equity (Details) |
12 Months Ended | |
---|---|---|
Jan. 31, 2017
$ / shares
shares
|
Jan. 31, 2016
$ / shares
shares
|
|
Equity [Abstract] | ||
Number of shares of common stock authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, par value per share (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 |
Shares of common stock issued | 137,169,481 | 131,543,467 |
Common stock, shares outstanding | 137,169,481 | 131,543,467 |
Early Exercise of Employee Options | ||
Portion of shares from early exercises of employee options for which the repurchase right lapses on the first anniversary of the vesting start date. | 0.25 | 0.25 |
Portion of shares from early exercises of employee options for which the repurchase right lapses on monthly basis after the first anniversary of the vesting start date. | 0.0208 | 0.0208 |
Stock Compensation Plans (Details) - shares |
12 Months Ended | |
---|---|---|
Jan. 31, 2017 |
Jan. 31, 2016 |
|
Available for Grant | ||
Balances at the beginning of the period (in shares) | 6,553,144 | 6,718,878 |
Additional shares authorized | 6,577,173 | 6,176,924 |
Options granted (in shares) | (86,753) | |
Options forfeited and expired (in shares) | 15,506 | 152,053 |
RSUs granted (in shares) | (6,278,185) | (7,905,929) |
Shares withheld related to net share settlement of RSUs (in shares) | 2,073,020 | |
RSU's forfeited (in shares) | 1,461,131 | 1,497,971 |
Balances at the end of the period (in shares) | 10,401,789 | 6,553,144 |
Stock Compensation Plans (Details 3) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2017 |
Jan. 31, 2016 |
Jan. 31, 2015 |
|
Stock-Based Compensation Expense | |||
Total stock-based compensation expense | $ 378,041 | $ 292,257 | $ 214,179 |
Cost of revenues | |||
Stock-Based Compensation Expense | |||
Total stock-based compensation expense | 30,971 | 26,057 | 17,189 |
Research and development | |||
Stock-Based Compensation Expense | |||
Total stock-based compensation expense | 129,388 | 89,197 | 60,777 |
Sales and marketing | |||
Stock-Based Compensation Expense | |||
Total stock-based compensation expense | 161,164 | 130,054 | 90,064 |
General and administrative | |||
Stock-Based Compensation Expense | |||
Total stock-based compensation expense | $ 56,518 | $ 46,949 | $ 46,149 |
Stock Compensation Plans (Details 4) |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2017 |
Jan. 31, 2016 |
Jan. 31, 2015 |
|
ESPP | |||
Assumptions used to determine the fair value of options | |||
Expected volatility, minimum (as a percent) | 37.40% | 37.30% | 38.40% |
Expected volatility, maximum (as a percent) | 57.60% | 57.10% | 59.00% |
Risk-free rate, minimum (as a percent) | 0.28% | 0.11% | 0.07% |
Risk-free rate, maximum (as a percent) | 0.91% | 0.69% | 0.22% |
Dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
ESPP | Minimum | |||
Assumptions used to determine the fair value of options | |||
Expected term | 6 months | 6 months | 6 months |
ESPP | Maximum | |||
Assumptions used to determine the fair value of options | |||
Expected term | 1 year | 1 year | 1 year |
Options | Employees | |||
Assumptions used to determine the fair value of options | |||
Expected volatility (as a percent) | 62.80% | 49.40% | |
Risk-free rate, minimum (as a percent) | |||
Risk-free rate (as a percent) | 1.58% | 1.96% | |
Risk-free rate, maximum (as a percent) | |||
Dividend yield (as a percent) | 0.00% | 0.00% | |
Expected term | 5 years 3 months 15 days | 6 years 15 days | |
Options | Nonemployees | |||
Assumptions used to determine the fair value of options | |||
Expected volatility, minimum (as a percent) | 50.50% | ||
Expected volatility, maximum (as a percent) | 51.40% | ||
Risk-free rate, minimum (as a percent) | 1.85% | ||
Risk-free rate, maximum (as a percent) | 2.43% | ||
Dividend yield (as a percent) | 0.00% | ||
Options | Nonemployees | Minimum | |||
Assumptions used to determine the fair value of options | |||
Expected term | 6 years 8 months 12 days | ||
Options | Nonemployees | Maximum | |||
Assumptions used to determine the fair value of options | |||
Expected term | 7 years 11 months 16 days |
Geographic Information (Details 1) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2017 |
Jan. 31, 2016 |
Jan. 31, 2015 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenues | $ 949,955 | $ 668,435 | $ 450,875 |
Property and equipment, net | 166,395 | 134,995 | |
United States | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenues | 725,451 | 501,802 | 342,728 |
Property and equipment, net | 159,428 | 129,268 | |
International | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenues | 224,504 | 166,633 | $ 108,147 |
Property and equipment, net | $ 6,967 | $ 5,727 |
Geographic Information (Details) - Customer concentration risk - customer |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2017 |
Jan. 31, 2016 |
Jan. 31, 2015 |
|
Sales Revenue, Goods, Net [Member] | |||
Concentration of Risk | |||
Number of customers accounting for 10 percent or more of the concentration risk | 2 | 2 | 1 |
Revenue | |||
Concentration of Risk | |||
Percentage of concentration | 44.00% | 27.00% | 12.00% |
Accounts receivable | |||
Concentration of Risk | |||
Number of customers accounting for 10 percent or more of the concentration risk | 1 | 2 | |
Percentage of concentration | 30.00% | 42.00% | |
Customer One [Member] | Sales Revenue, Goods, Net [Member] | |||
Concentration of Risk | |||
Percentage of concentration | 28.00% | 14.00% | 12.00% |
Customer One [Member] | Accounts receivable | |||
Concentration of Risk | |||
Percentage of concentration | 30.00% | 26.00% | |
Customer Two [Member] | Sales Revenue, Goods, Net [Member] | |||
Concentration of Risk | |||
Percentage of concentration | 16.00% | 13.00% | |
Customer Two [Member] | Accounts receivable | |||
Concentration of Risk | |||
Percentage of concentration | 16.00% |
Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2017 |
Jan. 31, 2016 |
Jan. 31, 2015 |
|
Loss before income tax expense | |||
United States | $ (362,505) | $ (294,624) | $ (221,041) |
International | 12,823 | 7,980 | 6,201 |
Loss before income taxes | (349,682) | (286,644) | (214,840) |
Current tax provision: | |||
Federal | 0 | 0 | 0 |
State | 274 | 223 | 138 |
Foreign | 5,559 | 3,045 | 2,465 |
Total current tax provision | 5,833 | 3,268 | 2,603 |
Deferred tax provision: | |||
Federal | 165 | (10,437) | (170) |
State | 15 | (487) | (14) |
Foreign | (506) | (216) | (143) |
Total deferred tax provision | (326) | (11,140) | (327) |
Total tax provision | 5,507 | (7,872) | 2,276 |
Reconciliation of federal statutory income tax provision to effective income tax provision | |||
Expected provision at United States federal statutory rate | (118,892) | (97,459) | (73,635) |
State income taxes - net of federal benefit | (10,711) | (8,730) | (3,914) |
Stock options | 21,772 | 10,734 | 9,570 |
Research and development tax credits | (13,496) | (11,965) | (6,647) |
Tax reserve for uncertain tax positions | 18 | 26 | (10) |
Change in valuation allowance | 124,220 | 108,300 | 75,910 |
Non-deductible expenses | 2,694 | 2,632 | 1,006 |
Release of valuation allowance due to acquisitions | 0 | (10,924) | 0 |
Other | (98) | (486) | (4) |
Total tax provision | $ 5,507 | $ (7,872) | $ 2,276 |
Income Taxes (Details 2) - USD ($) $ in Thousands |
Jan. 31, 2017 |
Jan. 31, 2016 |
Jan. 31, 2015 |
---|---|---|---|
Deferred tax assets: | |||
Net operating loss carryforwards | $ 220,818 | $ 151,917 | |
Accrued liabilities | 14,848 | 7,995 | |
Tax credit carryforwards | 49,280 | 35,826 | |
Stock-based compensation | 36,074 | 34,912 | |
Deferred revenue | 40,046 | 22,200 | |
Valuation allowance | (356,782) | (236,174) | $ (135,700) |
Total deferred tax assets | 4,284 | 16,676 | |
Deferred tax liabilities: | |||
Depreciation and amortization | (3,459) | (16,184) | |
Total deferred tax liabilities | (3,459) | (16,184) | |
Net deferred taxes | 825 | 492 | |
Recorded as: | |||
Non-current deferred tax assets | 357,607 | 236,666 | |
Non-current valuation allowance | (356,782) | (236,174) | |
Net deferred taxes | $ 825 | $ 492 |
Income Taxes (Details 3) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2017 |
Jan. 31, 2016 |
Jan. 31, 2015 |
|
Net operating loss and tax credit carry forwards | |||
Deferred tax assets valuation allowance | $ 356,782 | $ 236,174 | $ 135,700 |
Net change in valuation allowance | 120,600 | ||
Excess tax benefits from exercised stock options | 301,600 | 279,800 | |
Liability for unrecognized tax positions that would, if recognized, impact the entity's effective tax rate | 400 | ||
Unrecognized tax benefit | |||
Balance at beginning of year | 12,493 | 8,462 | 4,862 |
Increase related to prior year tax positions | 0 | 0 | 889 |
Decrease related to prior year tax positions | 0 | 0 | (24) |
Increase related to current year tax positions | 4,262 | 4,031 | 2,735 |
Balance at end of year | 16,755 | 12,493 | $ 8,462 |
Accrued interest and penalties related to unrecognized tax benefits | 117 | 106 | |
Undistributed earnings of foreign subsidiaries | 16,100 | ||
California Enterprise Zone | |||
Net operating loss and tax credit carry forwards | |||
Tax credit | 2,300 | ||
Federal | |||
Net operating loss and tax credit carry forwards | |||
Net operating loss | 1,395,563 | ||
Tax credit | 40,260 | ||
Federal | Research and development | |||
Net operating loss and tax credit carry forwards | |||
Tax credit | 76,700 | ||
State | |||
Net operating loss and tax credit carry forwards | |||
Net operating loss | 939,720 | ||
Tax credit | $ 38,697 | ||
State | Research and development | |||
Net operating loss and tax credit carry forwards | |||
Tax credit | $ 55,800 |
Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2017 |
Jan. 31, 2016 |
Jan. 31, 2015 |
|
Numerator | |||
Net loss | $ (355,189) | $ (278,772) | $ (217,116) |
Denominator: | |||
Weighted-average common shares outstanding | 134,357 | 127,415 | 119,813 |
Less: Weighted-average unvested common shares subject to repurchase or forfeiture | (447) | (669) | (38) |
Weighted-average shares used to compute net loss per share, basic and diluted | 133,910 | 126,746 | 119,775 |
Net loss per share | |||
Net loss per share, basic and diluted (in dollars per share) | $ (2.65) | $ (2.20) | $ (1.81) |
Net Loss Per Share (Details 2) - shares |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2017 |
Jan. 31, 2016 |
Jan. 31, 2015 |
|
Potentially dilutive securities | |||
Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive (in shares) | 16,729,388 | 19,638,371 | 19,298,939 |
Shares subject to outstanding common stock options | |||
Potentially dilutive securities | |||
Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive (in shares) | 2,057,894 | 3,715,999 | 6,536,855 |
Shares subject to outstanding RSUs | |||
Potentially dilutive securities | |||
Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive (in shares) | 14,002,733 | 15,374,151 | 12,480,368 |
Employee stock purchase plan | |||
Potentially dilutive securities | |||
Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive (in shares) | 668,761 | 548,221 | 281,716 |
Related Party Transactions (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2017 |
Jan. 31, 2016 |
Jan. 31, 2015 |
|
Related Party Transactions [Abstract] | |||
Revenue from sales to the related party | $ 7,300,000 | $ 5,100,000 | $ 3,100,000 |
Accounts receivable from the related party | 1,900,000 | 500,000 | |
Expenses related to purchases from the related party | $ 400,000 | $ 2,300,000 | $ 2,000,000 |
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