Form 10-Q |
ý | QUARTERLY 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 |
HEALTHEQUITY, INC. | ||
Delaware | 7389 | 52-2383166 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common stock, par value $0.0001 per share | HQY | The NASDAQ Global Select Market |
Large accelerated filer | þ | Accelerated filer | ¨ |
Non-accelerated filer | ¨ | Smaller reporting company | ¨ |
Emerging growth Company | ¨ |
Page | ||
Part I. FINANCIAL INFORMATION | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Part II. OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 6. | ||
(in thousands, except par value) | April 30, 2019 | January 31, 2019 | |||||
(unaudited) | |||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 329,310 | $ | 361,475 | |||
Accounts receivable, net of allowance for doubtful accounts as of April 30, 2019 and January 31, 2019 of $111 and $125, respectively | 27,022 | 25,668 | |||||
Other current assets | 8,244 | 7,534 | |||||
Total current assets | 364,576 | 394,677 | |||||
Other investments | 78,065 | 709 | |||||
Property and equipment, net | 8,481 | 8,223 | |||||
Operating lease right-of-use assets | 37,367 | — | |||||
Intangible assets, net | 81,437 | 79,666 | |||||
Goodwill | 4,651 | 4,651 | |||||
Deferred tax asset | 551 | 1,677 | |||||
Other assets | 21,511 | 20,413 | |||||
Total assets | $ | 596,639 | $ | 510,016 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 1,964 | $ | 3,520 | |||
Accrued compensation | 8,501 | 16,981 | |||||
Accrued liabilities | 9,127 | 8,552 | |||||
Operating lease liabilities | 3,786 | — | |||||
Total current liabilities | 23,378 | 29,053 | |||||
Operating lease liabilities, non-current | 36,243 | — | |||||
Deferred tax liability | 7,332 | 916 | |||||
Other long-term liabilities | 387 | 2,968 | |||||
Total liabilities | 67,340 | 32,937 | |||||
Commitments and contingencies (see note 6) | |||||||
Stockholders’ equity | |||||||
Preferred stock, $0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of April 30, 2019 and January 31, 2019, respectively | — | — | |||||
Common stock, $0.0001 par value, 900,000 shares authorized, 62,718 and 62,446 shares issued and outstanding as of April 30, 2019 and January 31, 2019, respectively | 6 | 6 | |||||
Additional paid-in capital | 315,621 | 305,223 | |||||
Accumulated earnings | 213,672 | 171,850 | |||||
Total stockholders’ equity | 529,299 | 477,079 | |||||
Total liabilities and stockholders’ equity | $ | 596,639 | $ | 510,016 |
(in thousands, except per share data) | Three months ended April 30, | ||||||
2019 | 2018 | ||||||
Revenue: | |||||||
Service revenue | $ | 26,808 | $ | 24,821 | |||
Custodial revenue | 41,952 | 28,434 | |||||
Interchange revenue | 18,292 | 16,649 | |||||
Total revenue | 87,052 | 69,904 | |||||
Cost of revenue: | |||||||
Service costs | 20,649 | 18,047 | |||||
Custodial costs | 4,123 | 3,439 | |||||
Interchange costs | 4,527 | 4,062 | |||||
Total cost of revenue | 29,299 | 25,548 | |||||
Gross profit | 57,753 | 44,356 | |||||
Operating expenses: | |||||||
Sales and marketing | 8,970 | 6,860 | |||||
Technology and development | 10,905 | 7,979 | |||||
General and administrative | 8,709 | 7,507 | |||||
Amortization of acquired intangible assets | 1,491 | 1,470 | |||||
Total operating expenses | 30,075 | 23,816 | |||||
Income from operations | 27,678 | 20,540 | |||||
Other income (expense), net | 23,600 | (1 | ) | ||||
Income before income taxes | 51,278 | 20,539 | |||||
Income tax provision (benefit) | 9,456 | (2,038 | ) | ||||
Net income and comprehensive income | $ | 41,822 | $ | 22,577 | |||
Net income per share: | |||||||
Basic | $ | 0.67 | $ | 0.37 | |||
Diluted | $ | 0.65 | $ | 0.36 | |||
Weighted-average number of shares used in computing net income per share: | |||||||
Basic | 62,326 | 61,170 | |||||
Diluted | 63,901 | 62,693 |
(in thousands) | Three months ended April 30, | ||||||
2019 | 2018 | ||||||
Total stockholders' equity, beginning balances (audited) | $ | 477,079 | $ | 346,274 | |||
Common stock: | |||||||
Beginning balance | 6 | 6 | |||||
Issuance of common stock upon exercise of stock options, and for restricted stock | — | — | |||||
Ending balance | 6 | 6 | |||||
Additional paid-in capital: | |||||||
Beginning balance | 305,223 | 261,237 | |||||
Issuance of common stock upon exercise of stock options, and for restricted stock | 4,370 | 10,964 | |||||
Stock-based compensation | 6,028 | 4,239 | |||||
Ending balance | 315,621 | 276,440 | |||||
Accumulated comprehensive loss: | |||||||
Beginning balance | — | (269 | ) | ||||
Cumulative effect from adoption of ASU 2016-01 | — | 269 | |||||
Ending balance | — | — | |||||
Accumulated earnings: | |||||||
Beginning balance | 171,850 | 85,300 | |||||
Net income | 41,822 | 22,577 | |||||
Cumulative effect from adoption of ASC 606 | — | 13,007 | |||||
Cumulative effect from adoption of ASU 2016-01 | — | (356 | ) | ||||
Ending balance | $ | 213,672 | $ | 120,528 | |||
Total stockholders' equity, ending balances | $ | 529,299 | $ | 396,974 |
Three months ended April 30, | |||||||
(in thousands) | 2019 | 2018 | |||||
Cash flows from operating activities: | |||||||
Net income | $ | 41,822 | $ | 22,577 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 4,773 | 4,520 | |||||
Unrealized (gains) losses on marketable equity securities and other | (23,484 | ) | 140 | ||||
Deferred taxes | 7,542 | 1,989 | |||||
Stock-based compensation | 6,028 | 4,239 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (1,354 | ) | (1,420 | ) | |||
Other assets | (1,694 | ) | (5,471 | ) | |||
Operating lease right-of-use assets | 635 | — | |||||
Accounts payable | (1,577 | ) | 87 | ||||
Accrued compensation | (8,480 | ) | (4,909 | ) | |||
Accrued liabilities and other current liabilities | 1,769 | 881 | |||||
Operating lease liabilities, non-current | (627 | ) | — | ||||
Other long-term liabilities | (17 | ) | 71 | ||||
Net cash provided by operating activities | 25,336 | 22,704 | |||||
Cash flows from investing activities: | |||||||
Purchases of intangible member assets | (1,262 | ) | — | ||||
Purchases of marketable equity securities | (53,845 | ) | (180 | ) | |||
Purchases of property and equipment | (1,126 | ) | (1,121 | ) | |||
Purchases of software and capitalized software development costs | (5,497 | ) | (2,097 | ) | |||
Net cash used in investing activities | (61,730 | ) | (3,398 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from exercise of common stock options | 4,229 | 10,167 | |||||
Net cash provided by financing activities | 4,229 | 10,167 | |||||
Increase (decrease) in cash and cash equivalents | (32,165 | ) | 29,473 | ||||
Beginning cash and cash equivalents | 361,475 | 199,472 | |||||
Ending cash and cash equivalents | $ | 329,310 | $ | 228,945 | |||
Supplemental cash flow data: | |||||||
Interest expense paid in cash | $ | 50 | $ | 50 | |||
Income taxes paid in cash, net of refunds received | (51 | ) | 39 | ||||
Supplemental disclosures of non-cash investing and financing activities: | |||||||
Purchases of property and equipment included in accounts payable or accrued liabilities at period end | $ | 21 | $ | 491 | |||
Purchases of software and capitalized software development costs included in accounts payable or accrued liabilities at period end | 158 | 117 | |||||
Exercise of common stock options receivable | 141 | 797 |
(in thousands, except per share data) | Three months ended April 30, | |||||||
2019 | 2018 | |||||||
Numerator (basic and diluted): | ||||||||
Net income | $ | 41,822 | $ | 22,577 | ||||
Denominator (basic): | ||||||||
Weighted-average common shares outstanding | 62,326 | 61,170 | ||||||
Denominator (diluted): | ||||||||
Weighted-average common shares outstanding | 62,326 | 61,170 | ||||||
Weighted-average dilutive effect of stock options and restricted stock units | 1,575 | 1,523 | ||||||
Diluted weighted-average common shares outstanding | 63,901 | 62,693 | ||||||
Net income per share: | ||||||||
Basic | $ | 0.67 | $ | 0.37 | ||||
Diluted | $ | 0.65 | $ | 0.36 |
(in thousands) | April 30, 2019 | January 31, 2019 | ||||||
Leasehold improvements | $ | 3,753 | $ | 3,583 | ||||
Furniture and fixtures | 4,828 | 4,476 | ||||||
Computer equipment | 9,839 | 9,242 | ||||||
Property and equipment, gross | 18,420 | 17,301 | ||||||
Accumulated depreciation | (9,939 | ) | (9,078 | ) | ||||
Property and equipment, net | $ | 8,481 | $ | 8,223 |
(in thousands) | April 30, 2019 | January 31, 2019 | ||||||
Marketable equity securities, at fair value | $ | 77,356 | $ | — | ||||
Non-marketable equity securities | 500 | 500 | ||||||
Equity method investments | 209 | 209 | ||||||
Total equity investments | $ | 78,065 | $ | 709 |
Three months ended April 30, | ||||||||
(in thousands) | 2019 | 2018 | ||||||
Interest income, net | $ | 1,280 | $ | 191 | ||||
Unrealized gain on marketable equity securities | 23,511 | — | ||||||
Acquisition-related costs | (1,184 | ) | (1 | ) | ||||
Other | (7 | ) | (191 | ) | ||||
Total other income (expense), net | $ | 23,600 | $ | (1 | ) |
Three months ended | ||||
(in thousands, except for term and percentages) | April 30, 2019 | |||
Operating lease expense | $ | 1,074 | ||
Weighted average remaining lease term | 11.49 years | |||
Weighted average discount rate | 4.37 | % |
Fiscal year ending January 31, (in thousands) | Operating leases | |||
Remaining 2020 | $ | 2,865 | ||
2021 | 4,105 | |||
2022 | 4,205 | |||
2023 | 4,233 | |||
2024 | 4,288 | |||
Thereafter | 31,930 | |||
Total lease payments | 51,626 | |||
Less imputed interest | (11,597 | ) | ||
Present value of lease liabilities | $ | 40,029 | ||
Current | $ | 3,786 | ||
Non-current | 36,243 | |||
Total lease liabilities | $ | 40,029 |
Three months ended | ||||
(in thousands) | April 30, 2019 | |||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows from operating leases | $ | 977 | ||
ROU assets obtained in exchange for new operating lease obligations | $ | 199 |
(in thousands) | April 30, 2019 | January 31, 2019 | ||||||
Amortized intangible assets: | ||||||||
Capitalized software development costs | $ | 44,328 | $ | 40,583 | ||||
Software | 6,162 | 4,252 | ||||||
Other intangible assets | 2,882 | 2,882 | ||||||
Acquired intangible member assets | 85,110 | 85,110 | ||||||
Intangible assets, gross | 138,482 | 132,827 | ||||||
Accumulated amortization | (57,045 | ) | (53,161 | ) | ||||
Intangible assets, net | $ | 81,437 | $ | 79,666 |
Three months ended April 30, | ||||||||
(in thousands) | 2019 | 2018 | ||||||
Cost of revenue | $ | 860 | $ | 413 | ||||
Sales and marketing | 1,007 | 705 | ||||||
Technology and development | 1,499 | 991 | ||||||
General and administrative | 2,662 | 2,130 | ||||||
Total stock-based compensation expense | $ | 6,028 | $ | 4,239 |
Three months ended April 30, | ||||||||
(in thousands) | 2019 | 2018 | ||||||
Stock options | $ | 1,783 | $ | 1,764 | ||||
Performance stock options | — | 153 | ||||||
Restricted stock units | 2,926 | 1,542 | ||||||
Performance restricted stock units | 651 | 514 | ||||||
Restricted stock awards | 163 | 55 | ||||||
Performance restricted stock awards | 505 | 211 | ||||||
Total stock-based compensation expense | $ | 6,028 | $ | 4,239 |
Three months ended April 30, | ||||||
2019 | 2018 | |||||
Expected dividend yield | — | % | — | % | ||
Expected stock price volatility | 35.98% - 36.53% | 37.84 | % | |||
Risk-free interest rate | 2.21% - 2.43% | 2.52% - 2.68% | ||||
Expected life of options | 4.95 - 5.09 years | 5.17 - 6.25 years |
Outstanding stock options | |||||||||||||||
(in thousands, except for exercise prices and term) | Number of options | Range of exercise prices | Weighted- average exercise price | Weighted- average contractual term (in years) | Aggregate intrinsic value | ||||||||||
Outstanding as of January 31, 2019 | 2,444 | $0.10 - 82.39 | $ | 27.37 | 6.74 | $ | 85,971 | ||||||||
Granted | 108 | $63.64 - 73.61 | $ | 73.27 | |||||||||||
Exercised | (178 | ) | $0.10 - 44.53 | $ | 24.49 | ||||||||||
Forfeited | (18 | ) | $24.36 - 44.53 | $ | 30.92 | ||||||||||
Outstanding as of April 30, 2019 | 2,356 | $0.10 - 82.39 | $ | 29.66 | 6.62 | $ | 90,701 | ||||||||
Vested and expected to vest as of April 30, 2019 | 2,356 | $ | 29.66 | 6.62 | $ | 90,701 | |||||||||
Exercisable as of April 30, 2019 | 1,503 | $ | 21.82 | 5.91 | $ | 69,042 |
RSUs and PRSUs | RSAs and PRSAs | |||||||||||||
(in thousands, except weighted-average grant date fair value) | Shares | Weighted-average grant date fair value | Shares | Weighted-average grant date fair value | ||||||||||
Outstanding as of January 31, 2019 | 648 | $ | 55.20 | 256 | $ | 61.93 | ||||||||
Granted | 421 | 73.02 | — | — | ||||||||||
Vested | (94 | ) | 52.35 | (11 | ) | 62.75 | ||||||||
Forfeited | (19 | ) | 54.48 | (10 | ) | 61.72 | ||||||||
Outstanding as of April 30, 2019 | 956 | $ | 63.33 | 235 | $ | 61.91 |
• | Level 1—quoted prices in active markets for identical assets or liabilities; |
• | Level 2—inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and |
• | Level 3—unobservable inputs based on the Company’s own assumptions. |
April 30, 2019 | ||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | |||||||||
Other investments: | ||||||||||||
Marketable equity securities | $ | 77,356 | $ | — | $ | — |
(in millions, except percentages) | April 30, 2019 | April 30, 2018 | % Change | January 31, 2019 | ||||||||
HSA Members | 4,054 | 3,476 | 17 | % | 3,994 | |||||||
Average HSA Members - Year-to-date | 4,026 | 3,444 | 17 | % | 3,608 | |||||||
Average HSA Members - Quarter-to-date | 4,026 | 3,444 | 17 | % | 3,813 | |||||||
New HSA Members - Year-to-date | 89 | 98 | (9 | )% | 679 | |||||||
New HSA Members - Quarter-to-date | 89 | 98 | (9 | )% | 341 | |||||||
Active HSA Members | 3,245 | 2,882 | 13 | % | 3,241 | |||||||
HSA Members with investments | 177 | 134 | 32 | % | 163 |
(in millions, except percentages) | April 30, 2019 | April 30, 2018 | % Change | January 31, 2019 | |||||||||||
Custodial cash | $ | 6,404 | $ | 5,511 | 16 | % | $ | 6,428 | |||||||
Custodial investments | 1,917 | 1,351 | 42 | % | 1,670 | ||||||||||
Total custodial assets | $ | 8,321 | $ | 6,862 | 21 | % | $ | 8,098 | |||||||
Average daily custodial cash - Year-to-date | $ | 6,407 | $ | 5,467 | 17 | % | $ | 5,586 | |||||||
Average daily custodial cash - Quarter-to-date | $ | 6,407 | $ | 5,467 | 17 | % | $ | 5,837 |
Three months ended April 30, | ||||||||
(in thousands) | 2019 | 2018 | ||||||
Net income | $ | 41,822 | $ | 22,577 | ||||
Interest income | (1,343 | ) | (258 | ) | ||||
Interest expense | 63 | 67 | ||||||
Income tax provision (benefit) | 9,456 | (2,038 | ) | |||||
Depreciation and amortization | 3,282 | 3,050 | ||||||
Amortization of acquired intangible assets | 1,491 | 1,470 | ||||||
Stock-based compensation expense | 6,028 | 4,239 | ||||||
Unrealized gain on marketable equity securities | (23,511 | ) | — | |||||
Other (1) | 1,635 | 520 | ||||||
Adjusted EBITDA | $ | 38,923 | $ | 29,627 |
(1) | For the three months ended April 30, 2019 and 2018, Other consisted of non-income-based taxes of $13 and $104, other (income)/costs of $(6) and $88, acquisition-related costs of $1,184 and $1, and amortization of incremental costs to obtain a contract of $444 and $327, respectively. |
Three months ended April 30, | |||||||||||
(in thousands, except percentages) | 2019 | 2018 | $ Change | % Change | |||||||
Adjusted EBITDA | $ | 38,923 | $ | 29,627 | $ | 9,296 | 31 | % | |||
As a percentage of revenue | 45 | % | 42 | % |
Three months ended April 30, | |||||||||||||||
(in thousands, except percentages) | 2019 | 2018 | $ Change | % Change | |||||||||||
Service revenue | $ | 26,808 | $ | 24,821 | $ | 1,987 | 8 | % | |||||||
Custodial revenue | 41,952 | 28,434 | 13,518 | 48 | % | ||||||||||
Interchange revenue | 18,292 | 16,649 | 1,643 | 10 | % | ||||||||||
Total revenue | $ | 87,052 | $ | 69,904 | $ | 17,148 | 25 | % |
(in thousands, except percentages) | Three months ended April 30, | ||||||||||||||
2019 | 2018 | $ Change | % Change | ||||||||||||
Service costs | $ | 20,649 | $ | 18,047 | $ | 2,602 | 14 | % | |||||||
Custodial costs | 4,123 | 3,439 | 684 | 20 | % | ||||||||||
Interchange costs | 4,527 | 4,062 | 465 | 11 | % | ||||||||||
Total cost of revenue | $ | 29,299 | $ | 25,548 | $ | 3,751 | 15 | % |
(in thousands, except percentages) | Three months ended April 30, | ||||||||||||||
2019 | 2018 | $ Change | % Change | ||||||||||||
Sales and marketing | $ | 8,970 | $ | 6,860 | $ | 2,110 | 31 | % | |||||||
Technology and development | 10,905 | 7,979 | 2,926 | 37 | % | ||||||||||
General and administrative | 8,709 | 7,507 | 1,202 | 16 | % | ||||||||||
Amortization of acquired intangible assets | 1,491 | 1,470 | 21 | 1 | % | ||||||||||
Total operating expenses | $ | 30,075 | $ | 23,816 | $ | 6,259 | 26 | % |
Three months ended April 30, | ||||||||
(in thousands) | 2019 | 2018 | ||||||
Net cash provided by operating activities | $ | 25,336 | $ | 22,704 | ||||
Net cash used in investing activities | (61,730 | ) | (3,398 | ) | ||||
Net cash provided by financing activities | 4,229 | 10,167 | ||||||
Increase (decrease) in cash and cash equivalents | (32,165 | ) | 29,473 | |||||
Beginning cash and cash equivalents | 361,475 | 199,472 | ||||||
Ending cash and cash equivalents | $ | 329,310 | $ | 228,945 |
Incorporate by reference | ||||||
Exhibit no. | Description | Form | File No. | Exhibit | Filing Date | |
10.1+ | ||||||
31.1+ | ||||||
31.2+ | ||||||
32.1*# | ||||||
32.2*# | ||||||
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.PRE | XBRL Taxonomy presentation linkbase document |
+ | Filed herewith. | |
* | Furnished herewith. | |
# | These certifications are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference in any filing the registrant makes under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, irrespective of any general incorporation language in any filings. |
HEALTHEQUITY, INC. | |||
Date: June 6, 2019 | By: | /s/ Darcy Mott | |
Name: | Darcy Mott | ||
Title: | Executive Vice President and Chief Financial Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of HealthEquity, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Jon Kessler | |
Name: | Jon Kessler | |
Title: | Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of HealthEquity, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Darcy Mott | |
Name: | Darcy Mott | |
Title: | Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
1. | Our Quarterly Report on Form 10-Q for the quarter ended April 30, 2019 (the “Report”), of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ Jon Kessler | |
Name: | Jon Kessler | |
Title: | Chief Executive Officer (Principal Executive Officer) |
1. | Our Quarterly Report on Form 10-Q for the quarter ended April 30, 2019 (the “Report”), of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ Darcy Mott | |
Name: | Darcy Mott | |
Title: | Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
Document and Entity Information - shares |
3 Months Ended | |
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Apr. 30, 2019 |
May 31, 2019 |
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Document and Entity Information [Abstract] | ||
Entity Registrant Name | HEALTHEQUITY INC | |
Entity Central Index Key | 0001428336 | |
Current Fiscal Year End Date | --01-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Document Type | 10-Q | |
Document Period End Date | Apr. 30, 2019 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 62,724,780 |
Condensed consolidated balance sheets (Parenthetical) - USD ($) $ in Thousands |
Apr. 30, 2019 |
Jan. 31, 2019 |
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Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 111 | $ 125 |
Preferred stock, par value (usd per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (usd per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized (in shares) | 900,000,000 | 900,000,000 |
Common stock, issued (in shares) | 62,718,000 | 62,446,000 |
Common stock, outstanding (in shares) | 62,718,000 | 62,446,000 |
Condensed consolidated statements of stockholders' equity (unaudited) - USD ($) $ in Thousands |
Total |
Common stock |
Additional paid-in capital |
Accumulated comprehensive loss |
Accumulated earnings |
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Beginning balance at Jan. 31, 2018 | $ 346,274 | $ 6 | $ 261,237 | $ (269) | $ 85,300 |
Issuance of common stock upon exercise of stock options, and for restricted stock | 10,964 | ||||
Stock-based compensation | 4,239 | ||||
Net income | 22,577 | 22,577 | |||
Ending balance at Apr. 30, 2018 | 396,974 | 6 | 276,440 | 0 | 120,528 |
Beginning balance at Jan. 31, 2019 | 477,079 | 6 | 305,223 | 0 | 171,850 |
Issuance of common stock upon exercise of stock options, and for restricted stock | 4,370 | ||||
Stock-based compensation | 6,028 | ||||
Net income | 41,822 | 41,822 | |||
Ending balance at Apr. 30, 2019 | $ 529,299 | $ 6 | $ 315,621 | $ 0 | $ 213,672 |
Summary of business and significant accounting policies |
3 Months Ended |
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Apr. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of business and significant accounting policies | Summary of business and significant accounting policies HealthEquity, Inc. was incorporated in the state of Delaware on September 18, 2002. The Company offers a full range of innovative solutions for managing health care accounts (Health Savings Accounts, Health Reimbursement Arrangements, and Flexible Spending Accounts) for health plans, insurance companies, and third-party administrators. Certain reclassifications have been made to prior year amounts to conform to the current year presentation. Principles of consolidation The condensed consolidated financial statements include the accounts of HealthEquity, Inc. and its wholly owned subsidiaries, HealthEquity Trust Company, HEQ Insurance Services, Inc., HealthEquity Advisors, LLC and HealthEquity Retirement Services, LLC (collectively referred to as the "Company"). The Company has a 4% ownership interest in a public company that is a leader in administering Consumer-Directed Benefits. The Company measures the investment at fair value, and all gains and losses on the investment, realized and unrealized, are recognized in other income (expense), net in the consolidated statements of operations and comprehensive income. The investment was valued at $77.4 million as of April 30, 2019 and is included in other investments on the accompanying condensed consolidated balance sheet. The Company has a 22% ownership interest in a limited partnership for investment in and the management of early stage companies in the healthcare industry; this partnership interest is accounted for using the equity method of accounting. The investment was approximately $0.2 million as of April 30, 2019 and is included in other investments on the accompanying condensed consolidated balance sheet. The Company has a 1% ownership interest in a limited partnership that engages in the development of technology-based financial healthcare products. The Company elected the measurement alternative for non-marketable equity investments to account for the investment. The investment was valued at $0.5 million as of April 30, 2019 and is included in other investments on the accompanying condensed consolidated balance sheet. Acquisitions of businesses are accounted for as business combinations, and accordingly, the results of operations of acquired businesses are included in the condensed consolidated financial statements from the date of acquisition. All significant intercompany balances and transactions have been eliminated. Basis of presentation The accompanying condensed consolidated financial statements as of April 30, 2019 and for the three months ended April 30, 2019 and 2018 are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. In the opinion of management, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended January 31, 2019. The fiscal year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. Significant accounting policies There have been no material changes in the Company’s significant accounting policies, other than the additions of the policies described below for leases and investments in equity securities, as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended January 31, 2019. Leases. The Company determines if a contract contains a lease at inception or any modification of the contract. A contract contains a lease if the contract conveys the right to control the use of an identified asset for a specified period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. The Company has entered into various operating leases consisting of office space and data storage facilities with remaining lease terms of approximately 3 to 12 years, often with one or more Company options to renew. These renewal terms can extend the lease term from 3 to 10 years and are included in the lease term when it is reasonably certain that the Company will exercise the option. Leases with an expected term of 12 months or less at commencement are not accounted for on the balance sheet. All operating lease expense is recognized on a straight-line basis over the expected lease term. Certain leases also include obligations to pay for non-lease services, such as utilities and common area maintenance. The services are accounted for separately from lease components, and the Company allocates payments to the lease and other services components based on estimated stand-alone prices. Operating lease right-of-use ("ROU") assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement date. As the rate implicit in each lease is not readily determinable, management uses the Company’s incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The Company used its incremental borrowing rate on February 1, 2019 for all leases that commenced prior to that date. Operating leases are included in Operating lease right-of-use assets, Operating lease liabilities and Operating lease liabilities, non-current on the condensed consolidated balance sheets beginning February 1, 2019. Investments. Marketable equity securities are strategic equity investments with readily determinable fair values and for which the Company does not have the ability to exercise significant influence are accounted for at fair value and are classified as other investments on the condensed consolidated balance sheets. All gains and losses on these investments, realized and unrealized, are recognized in other income (expense), net in the consolidated statements of operations and comprehensive income. Non-marketable equity securities are strategic equity investments without readily determinable fair values and for which the Company does not have the ability to exercise significant influence are accounted for using the measurement alternative and are classified as other investments on the condensed consolidated balance sheets. All gains and losses on these investments, realized and unrealized, are recognized in other income (expense), net on the consolidated statements of operations and comprehensive income. Equity method investments are equity securities in investees the Company does not control but over which the Company has the ability to exercise significant influence. Equity-method investments are included in other investments on the condensed consolidated balance sheets. The Company's share of the earnings or losses as reported by equity-method investees, amortization of basis differences, and related gains or losses, if any, are recognized in other income (expense), net on the consolidated statements of operations and comprehensive income. The Company assesses whether an other-than-temporary impairment loss on equity method investments and an impairment loss on non-marketable equity securities has occurred due to declines in fair value or other market conditions. If any impairment is considered other than temporary for equity method investments or impairment is identified for non-marketable equity securities, the Company will write down the investment to its fair value and record the corresponding charge through other income (expense), net in the consolidated statements of operations and comprehensive income. See Note 3—Supplemental financial statement information for additional information. Recent adopted accounting pronouncements In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (codified as "ASC 842"), which requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. ASC 842 requires that a lessee recognize a liability to make lease payments (the lease liability) and a ROU asset representing its right to use the underlying asset for the lease term on the balance sheet. The Company adopted ASC 842 on February 1, 2019 using the modified retrospective transition method with the adoption date as the date of initial application. Consequently, prior period balances and disclosures have not been restated. The Company has elected the package of practical expedients, which allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any existing leases as of the adoption date. The adoption of ASC 842 on February 1, 2019 resulted in the recognition on the Company's condensed consolidated balance sheet of both operating lease liabilities of $40.6 million and ROU assets of $38.0 million, which equals the lease liabilities net of accrued rent previously recorded on its consolidated balance sheet under previous guidance. The adoption of ASC 842 did not have an impact on the Company's condensed consolidated statement of operations, stockholders’ equity and cash flows for the three-month period ended April 30, 2019. Recent issued accounting pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which requires financial assets measured at amortized cost be presented at the net amount expected to be collected. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company does not plan to early adopt this ASU. The Company believes the adoption of this ASU will not have a material impact on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which removes step two from the goodwill impairment test. As a result, an entity should perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units' fair value. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the timing of adoption; however, it does not believe this ASU will have a material impact on the Company's consolidated financial statements. In August 2018, FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which amends ASC 820, "Fair Value Measurement." ASU 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying and adding certain disclosures. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. As this relates to disclosure only, the Company believes the adoption of this ASU will not have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This ASU allows the capitalization of implementation costs incurred in a hosting arrangement. This ASU is effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the potential effect of this ASU on the consolidated financial statements. |
Net income per share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income per share | Net income per share The following table sets forth the computation of basic and diluted net income per share:
For the three months ended April 30, 2019 and 2018, approximately 0.2 million shares attributable to stock options and restricted stock units were excluded from the calculation of diluted earnings per share as their inclusion would have been anti-dilutive. |
Supplemental financial statement information |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental financial statement information | Supplemental financial statement information Selected condensed consolidated balance sheet and condensed consolidated statement of operations and comprehensive income components consist of the following: Property and equipment Property and equipment consisted of the following as of April 30, 2019 and January 31, 2019:
Depreciation expense for the three months ended April 30, 2019 and 2018 was $0.9 million and $0.8 million, respectively. Other investments Other investments consisted of the following equity investments as of April 30, 2019 and January 31, 2019:
Unrealized gain recognized during the three months ended April 30, 2019 for equity investments held as of April 30, 2019 was $23.5 million, which was attributable to an increase in fair value of marketable equity securities. Note 3. Supplemental financial statement information (continued) Other income (expense), net Other income (expense), net, consisted of the following:
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company has entered into various non-cancelable operating lease agreements for office space and data storage facilities with remaining lease terms of approximately 3 to 12 years, often with one or more Company options to renew. These renewal terms can extend the lease term from 3 to 10 years and are included in the lease term when it is reasonably certain that the Company will exercise the option. The components of operating lease costs, lease term and discount rate are as follows:
Maturities of operating lease liabilities as of April 30, 2019 were as follows:
As of April 30, 2019, the Company had an additional operating lease for office space that has not yet commenced with undiscounted lease payments of $17.1 million. This operating lease will commence in fiscal year 2021 with a lease term of approximately 11 years. Note 4. Leases (continued) Supplemental cash flow information related to the Company's operating leases was as follows:
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Intangible assets and goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible assets and goodwill | Intangible assets and goodwill During the three months ended April 30, 2019 and 2018, the Company capitalized software development costs of $3.7 million and $2.1 million, respectively, related to significant enhancements and upgrades to its proprietary system. The gross carrying amount and associated accumulated amortization of intangible assets were as follows as of April 30, 2019 and January 31, 2019:
During the three months ended April 30, 2019 and 2018, the Company expensed a total of $3.9 million and $3.2 million, respectively, in software development costs primarily related to the post-implementation and operation stages of its proprietary software. Amortization expense for the three months ended April 30, 2019 and 2018 was $3.9 million and $3.7 million, respectively. There were no changes to the goodwill carrying value during the three months ended April 30, 2019 and 2018. |
Commitments and contingencies |
3 Months Ended |
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Apr. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and contingencies The Company’s principal commitments consist of operating lease obligations for office space and data storage facilities, a processing services agreement with a vendor, and contractual commitments related to network infrastructure, equipment, and certain maintenance agreements under long-term, non-cancelable operating leases. These commitments as of January 31, 2019 are disclosed in the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended January 31, 2019, and did not change materially during the three months ended April 30, 2019. |
Indebtedness |
3 Months Ended |
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Apr. 30, 2019 | |
Debt Disclosure [Abstract] | |
Indebtedness | Indebtedness On September 30, 2015, the Company entered into a new credit facility (the "Credit Agreement") that provides for a secured revolving credit facility in the aggregate principal amount of $100.0 million for a term of five years. The proceeds of borrowings under the Credit Agreement may be used for general corporate purposes. No amounts have been drawn under the Credit Agreement as of April 30, 2019. Borrowings under the Credit Agreement bear interest equal to, at the Company's option, a) an adjusted LIBOR rate or b) a customary base rate, in each case with an applicable spread to be determined based on the Company's Note 7. Indebtedness (continued) leverage ratio as of the most recent fiscal quarter. The applicable spread for borrowing under the Credit Agreement ranges from 1.50% to 2.00% with respect to adjusted LIBOR rate borrowings and 0.50% to 1.00% with respect to customary base rate borrowings. Additionally, the Company pays a commitment fee ranging from 0.20% to 0.30% on the daily amount of the unused commitments under the Credit Agreement payable in arrears at the end of each fiscal quarter. The Company's material subsidiaries are required to guarantee the obligations of the Company under the Credit Agreement. The obligations of the Company and the guarantors under the Credit Agreement and the guarantees are secured by substantially all assets of the Company and the guarantors, subject to customary exclusions and exceptions. The Credit Agreement requires the Company to maintain a total leverage ratio of not more than 3.00 to 1.00 as of the end of each fiscal quarter and a minimum interest coverage ratio of at least 3.00 to 1.00 as of the end of each fiscal quarter. In addition, the Credit Agreement includes customary representations and warranties, affirmative and negative covenants, and events of default. The restrictive covenants include customary restrictions on the Company's ability to incur additional indebtedness; make investments, loans or advances; grant or incur liens on assets; engage in mergers, consolidations, liquidations or dissolutions; engage in transactions with affiliates; and make dividend payments. The Company was in compliance with these covenants as of April 30, 2019. |
Income taxes |
3 Months Ended |
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Apr. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes The Company follows FASB Accounting Standards Codification 740-270, Income Taxes - Interim Reporting, for the computation and presentation of its interim period tax provision. Accordingly, management estimated the effective annual tax rate and applied this rate to the year-to-date pre-tax book income to determine the interim provision for income taxes. For the three months ended April 30, 2019, the Company recorded income tax expense of $9.5 million. This resulted in an effective income tax expense rate of 18.4% for the three months ended April 30, 2019, compared with an effective income tax benefit rate of 9.9% for the three months ended April 30, 2018. For the three months ended April 30, 2019 and 2018, the net impact of discrete tax items caused a 4.5 and 31.8 percentage point decrease, respectively, to the effective income tax rate primarily due to the excess tax benefit on stock-based compensation expense recognized in the provision for income taxes in the condensed consolidated statements of operations and comprehensive income. The increase in the effective income tax rate from the same period last year is primarily due to a decrease in excess tax benefits on stock-based compensation expense recognized in the provision for income taxes relative to pre-tax book income. As of April 30, 2019 and January 31, 2019, the Company’s total gross unrecognized tax benefit was $1.9 million and $1.7 million, respectively. Certain unrecognized tax benefits have been netted against their related deferred tax assets; therefore, no unrecognized tax benefit has been recorded as of April 30, 2019 and January 31, 2019. If recognized, $1.7 million of the total gross unrecognized tax benefits would affect the Company's effective tax rate as of April 30, 2019. The Company files income tax returns with U.S. federal and state taxing jurisdictions and is not currently under examination with any jurisdiction. The Company remains subject to examination by federal and various state taxing jurisdictions for tax years after 2003. |
Stock-based compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | Stock-based compensation The following table shows a summary of stock-based compensation in the Company's condensed consolidated statements of operations and comprehensive income during the periods presented:
The following table shows stock-based compensation by award type:
Stock options The Company currently grants stock options under the 2014 Equity Incentive Plan (as amended and restated, the"Incentive Plan"), which provided for the issuance of stock options to the directors and team members of the Company to purchase up to an aggregate of 2.6 million shares of common stock. In addition, under the Incentive Plan, the number of shares of common stock reserved for issuance under the Incentive Plan automatically increases on February 1 of each year, beginning as of February 1, 2015 and continuing through and including February 1, 2024, by 3% of the total number of shares of the Company’s capital stock outstanding on January 31 of the preceding fiscal year, or a lesser number of shares determined by the board of directors. Under the terms of the Incentive Plan, the Company has the ability to grant incentive and nonqualified stock options. Incentive stock options may be granted only to Company team members. Nonqualified stock options may be granted to Company executive officers, other team members, directors and consultants. Such options are to be exercisable at prices, as determined by the board of directors, which must be equal to no less than the fair value of the Company's common stock at the date of the grant. Stock options granted under the Incentive Plan generally expire 10 years from the date of issuance, or are forfeited 90 days after termination of employment. Shares of common stock underlying stock options that are forfeited or that expire are returned to the Incentive Plan. Valuation assumptions. The Company has adopted the provisions of Topic 718, which requires the measurement and recognition of compensation for all stock-based awards made to team members and directors, based on estimated fair values. Under Topic 718, the Company uses the Black-Scholes option pricing model as the method of valuation for stock options. The determination of the fair value of stock-based awards on the date of grant is affected by the fair value of the stock as well as assumptions regarding a number of complex and subjective variables. The variables include, but are not limited to, 1) the expected life of the option, 2) the expected volatility of the fair value of the Company's common stock over the term of the award estimated by averaging the Company's historical volatility in addition to published volatilities of a relative peer group, 3) risk-free interest rate, and 4) expected dividends. Note 9. Stock-based compensation (continued) The key input assumptions that were utilized in the valuation of the stock options granted during the periods presented:
The Company historically used the "simplified" method to estimate the expected life of an option as determined under Staff Accounting Bulletin No. 110 due to limited option exercise history as a public company. Commencing February 1, 2019, the Company began estimating the expected life of an option using its own historical option exercise and termination data. Expected volatility is determined using weighted average volatility of the Company's historical common stock price in addition to published volatilities of publicly traded peer companies. The risk-free interest rate is determined by using published zero coupon rates on treasury notes for each grant date given the expected term on the options. The dividend yield of zero is based on the fact that the Company expects to invest cash in operations. A summary of stock option activity is as follows:
The aggregate intrinsic value in the table above represents the difference between the estimated fair value of common stock and the exercise price of outstanding, in-the-money stock options. As of April 30, 2019, the weighted-average vesting period of non-vested awards expected to vest is approximately 1.9 years; the amount of compensation expense the Company expects to recognize for stock options vesting in future periods is approximately $12.4 million. Restricted stock units and restricted stock awards The Company grants restricted stock units ("RSUs") and restricted stock awards ("RSAs") to certain team members, officers, and directors under the Incentive Plan. RSUs and RSAs vest upon service-based criteria and performance-based criteria. Generally, service-based RSUs and RSAs vest over a four-year period in equal annual installments commencing upon the first anniversary of the grant date. RSUs and RSAs are valued based on the current value of the Company's closing stock price on the date of grant less the present value of future expected dividends discounted at the risk-free interest rate. Performance restricted stock units and awards. In March 2017, the Company awarded 146,964 performance-based RSUs ("PRSUs"). Vesting of the PRSUs is dependent upon the achievement of certain financial criteria and cliff vest on January 31, 2020. The Company records stock-based compensation related to PRSUs when it is Note 9. Stock-based compensation (continued) considered probable that the performance conditions will be met. Issuance of the underlying shares occurs at vesting. The Company believes it is probable that the PRSUs will vest at least in part. The vesting of the PRSUs will ultimately range from 0% to 150% of the number of shares underlying the PRSU grant based on the level of achievement of the performance goals. In March 2018, the Company awarded 227,760 performance-based RSAs ("PRSAs"). Vesting of the PRSAs is dependent upon the achievement of certain financial criteria and cliff vest on January 31, 2021. The Company records stock-based compensation related to PRSAs when it is considered probable that the performance conditions will be met. Issuance of the underlying shares occured at the grant date. The Company believes it is probable that the PRSAs will vest at least in part. The vesting of the PRSAs will ultimately range from 0% to 200% based on the level of achievement of the performance goals. The PRSAs were issued at the 200% level of achievement. As the underlying shares were issued at grant date, they are subject to clawback based on actual Company performance. In March 2019, the Company awarded 129,963 PRSUs. Vesting of the PRSUs is dependent upon the achievement of certain financial criteria and cliff vest on January 31, 2022. The Company records stock-based compensation related to PRSUs when it is considered probable that the performance conditions will be met. Issuance of the underlying shares occurs at vesting. The Company believes it is probable that the PRSUs will vest at least in part. The vesting of the PRSUs will ultimately range from 0% to 200% of the number of shares underlying the PRSU grant based on the level of achievement of the performance goals. A summary of the RSU and RSA activity is as follows:
For the three months ended April 30, 2019, the aggregate intrinsic value of RSUs and RSAs vested was $6.9 million and $0.8 million, respectively. For the three months ended April 30, 2018, the aggregate intrinsic value of RSUs vested was $2.9 million. Total unrecorded stock-based compensation expense as of April 30, 2019 associated with RSUs and PRSUs was $52.0 million, which is expected to be recognized over a weighted-average period of 2.8 years. Total unrecorded stock-based compensation expense as of April 30, 2019 associated with RSAs and PRSAs was $6.2 million, which is expected to be recognized over a weighted-average period of 2.1 years. |
Fair value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value | Fair Value Fair value measurements are made at a specific point in time, based on relevant market information. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards specify a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair value hierarchy:
Note 10. Fair Value (continued) Level 1 instruments are valued based on publicly available daily net asset values. Level 1 instruments consist primarily of marketable equity securities. The following table summarizes the assets measured at fair value on a recurring basis and indicates the level within the fair value hierarchy reflecting the valuation techniques utilized to determine fair value:
The Company did not have any assets measured at fair value on a recurring basis as of January 31, 2019. The Company has classified cash and cash equivalents and marketable equity securities as Level 1 in the fair value hierarchy. |
Summary of business and significant accounting policies (Policies) |
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Apr. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Reclassifications | Certain reclassifications have been made to prior year amounts to conform to the current year presentation. |
Principles of consolidation | Principles of consolidation The condensed consolidated financial statements include the accounts of HealthEquity, Inc. and its wholly owned subsidiaries, HealthEquity Trust Company, HEQ Insurance Services, Inc., HealthEquity Advisors, LLC and HealthEquity Retirement Services, LLC (collectively referred to as the "Company"). The Company has a 4% ownership interest in a public company that is a leader in administering Consumer-Directed Benefits. The Company measures the investment at fair value, and all gains and losses on the investment, realized and unrealized, are recognized in other income (expense), net in the consolidated statements of operations and comprehensive income. The investment was valued at $77.4 million as of April 30, 2019 and is included in other investments on the accompanying condensed consolidated balance sheet. The Company has a 22% ownership interest in a limited partnership for investment in and the management of early stage companies in the healthcare industry; this partnership interest is accounted for using the equity method of accounting. The investment was approximately $0.2 million as of April 30, 2019 and is included in other investments on the accompanying condensed consolidated balance sheet. The Company has a 1% ownership interest in a limited partnership that engages in the development of technology-based financial healthcare products. The Company elected the measurement alternative for non-marketable equity investments to account for the investment. The investment was valued at $0.5 million as of April 30, 2019 and is included in other investments on the accompanying condensed consolidated balance sheet. Acquisitions of businesses are accounted for as business combinations, and accordingly, the results of operations of acquired businesses are included in the condensed consolidated financial statements from the date of acquisition. All significant intercompany balances and transactions have been eliminated. |
Basis of presentation | Basis of presentation The accompanying condensed consolidated financial statements as of April 30, 2019 and for the three months ended April 30, 2019 and 2018 are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. In the opinion of management, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended January 31, 2019. The fiscal year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. |
Leases | Leases. The Company determines if a contract contains a lease at inception or any modification of the contract. A contract contains a lease if the contract conveys the right to control the use of an identified asset for a specified period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. The Company has entered into various operating leases consisting of office space and data storage facilities with remaining lease terms of approximately 3 to 12 years, often with one or more Company options to renew. These renewal terms can extend the lease term from 3 to 10 years and are included in the lease term when it is reasonably certain that the Company will exercise the option. Leases with an expected term of 12 months or less at commencement are not accounted for on the balance sheet. All operating lease expense is recognized on a straight-line basis over the expected lease term. Certain leases also include obligations to pay for non-lease services, such as utilities and common area maintenance. The services are accounted for separately from lease components, and the Company allocates payments to the lease and other services components based on estimated stand-alone prices. Operating lease right-of-use ("ROU") assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement date. As the rate implicit in each lease is not readily determinable, management uses the Company’s incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The Company used its incremental borrowing rate on February 1, 2019 for all leases that commenced prior to that date. Operating leases are included in Operating lease right-of-use assets, Operating lease liabilities and Operating lease liabilities, non-current on the condensed consolidated balance sheets beginning February 1, 2019. |
Investments | Investments. Marketable equity securities are strategic equity investments with readily determinable fair values and for which the Company does not have the ability to exercise significant influence are accounted for at fair value and are classified as other investments on the condensed consolidated balance sheets. All gains and losses on these investments, realized and unrealized, are recognized in other income (expense), net in the consolidated statements of operations and comprehensive income. Non-marketable equity securities are strategic equity investments without readily determinable fair values and for which the Company does not have the ability to exercise significant influence are accounted for using the measurement alternative and are classified as other investments on the condensed consolidated balance sheets. All gains and losses on these investments, realized and unrealized, are recognized in other income (expense), net on the consolidated statements of operations and comprehensive income. Equity method investments are equity securities in investees the Company does not control but over which the Company has the ability to exercise significant influence. Equity-method investments are included in other investments on the condensed consolidated balance sheets. The Company's share of the earnings or losses as reported by equity-method investees, amortization of basis differences, and related gains or losses, if any, are recognized in other income (expense), net on the consolidated statements of operations and comprehensive income. The Company assesses whether an other-than-temporary impairment loss on equity method investments and an impairment loss on non-marketable equity securities has occurred due to declines in fair value or other market conditions. If any impairment is considered other than temporary for equity method investments or impairment is identified for non-marketable equity securities, the Company will write down the investment to its fair value and record the corresponding charge through other income (expense), net in the consolidated statements of operations and comprehensive income. See Note 3—Supplemental financial statement information for additional information. |
Recent accounting pronouncements | Recent adopted accounting pronouncements In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (codified as "ASC 842"), which requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. ASC 842 requires that a lessee recognize a liability to make lease payments (the lease liability) and a ROU asset representing its right to use the underlying asset for the lease term on the balance sheet. The Company adopted ASC 842 on February 1, 2019 using the modified retrospective transition method with the adoption date as the date of initial application. Consequently, prior period balances and disclosures have not been restated. The Company has elected the package of practical expedients, which allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any existing leases as of the adoption date. The adoption of ASC 842 on February 1, 2019 resulted in the recognition on the Company's condensed consolidated balance sheet of both operating lease liabilities of $40.6 million and ROU assets of $38.0 million, which equals the lease liabilities net of accrued rent previously recorded on its consolidated balance sheet under previous guidance. The adoption of ASC 842 did not have an impact on the Company's condensed consolidated statement of operations, stockholders’ equity and cash flows for the three-month period ended April 30, 2019. Recent issued accounting pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which requires financial assets measured at amortized cost be presented at the net amount expected to be collected. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company does not plan to early adopt this ASU. The Company believes the adoption of this ASU will not have a material impact on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which removes step two from the goodwill impairment test. As a result, an entity should perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units' fair value. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the timing of adoption; however, it does not believe this ASU will have a material impact on the Company's consolidated financial statements. In August 2018, FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which amends ASC 820, "Fair Value Measurement." ASU 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying and adding certain disclosures. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. As this relates to disclosure only, the Company believes the adoption of this ASU will not have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This ASU allows the capitalization of implementation costs incurred in a hosting arrangement. This ASU is effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the potential effect of this ASU on the consolidated financial statements. |
Net income per share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share, basic and diluted | The following table sets forth the computation of basic and diluted net income per share:
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Supplemental financial statement information (Tables) |
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Apr. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment | Property and equipment consisted of the following as of April 30, 2019 and January 31, 2019:
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Other investments | Other investments consisted of the following equity investments as of April 30, 2019 and January 31, 2019:
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Other income (expense), net | Other income (expense), net, consisted of the following:
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Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease cost | The components of operating lease costs, lease term and discount rate are as follows:
Supplemental cash flow information related to the Company's operating leases was as follows:
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Operating lease liability maturity schedule | Maturities of operating lease liabilities as of April 30, 2019 were as follows:
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Intangible assets and goodwill (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of finite-lived intangible assets | The gross carrying amount and associated accumulated amortization of intangible assets were as follows as of April 30, 2019 and January 31, 2019:
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Stock-based compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of share based compensation recognized | The following table shows a summary of stock-based compensation in the Company's condensed consolidated statements of operations and comprehensive income during the periods presented:
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Summary of stock-based compensation expense by award type | The following table shows stock-based compensation by award type:
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Summary of assumptions | The key input assumptions that were utilized in the valuation of the stock options granted during the periods presented:
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Summary of stock option activity | A summary of stock option activity is as follows:
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Summary of restricted stock unit activity | A summary of the RSU and RSA activity is as follows:
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Fair value (Tables) |
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Apr. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets measured at fair value on a recurring basis | The following table summarizes the assets measured at fair value on a recurring basis and indicates the level within the fair value hierarchy reflecting the valuation techniques utilized to determine fair value:
|
Net income per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 30, 2019 |
Apr. 30, 2018 |
|
Numerator (basic and diluted): | ||
Net income | $ 41,822 | $ 22,577 |
Denominator (basic): | ||
Weighted-average common shares outstanding (in shares) | 62,326 | 61,170 |
Denominator (diluted): | ||
Weighted-average common shares outstanding (in shares) | 62,326 | 61,170 |
Weighted-average dilutive effect of stock options and restricted stock units (in shares) | 1,575 | 1,523 |
Diluted weighted-average common shares outstanding (in shares) | 63,901 | 62,693 |
Net income per share: | ||
Basic (in usd per share) | $ 0.67 | $ 0.37 |
Diluted (in usd per share) | $ 0.65 | $ 0.36 |
Antidilutive securities excluded from computation of earnings per share (in shares) | 200 | 200 |
Supplemental financial statement information (Property and equipment) (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Apr. 30, 2019 |
Apr. 30, 2018 |
Jan. 31, 2019 |
|
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 18,420 | $ 17,301 | |
Accumulated depreciation | (9,939) | (9,078) | |
Property and equipment, net | 8,481 | 8,223 | |
Depreciation expense | 900 | $ 800 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 3,753 | 3,583 | |
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 4,828 | 4,476 | |
Computer equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 9,839 | $ 9,242 |
Supplemental financial statement information (Other investments) (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Apr. 30, 2019 |
Apr. 30, 2018 |
Jan. 31, 2019 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Marketable equity securities, at fair value | $ 77,356 | $ 0 | |
Non-marketable equity securities | 500 | 500 | |
Equity method investments | 209 | 209 | |
Total equity investments | 78,065 | $ 709 | |
Unrealized gain on marketable equity securities | $ 23,511 | $ 0 |
Supplemental financial statement information (Other income (expense), net) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 30, 2019 |
Apr. 30, 2018 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Interest income, net | $ 1,280 | $ 191 |
Unrealized gain on marketable equity securities | 23,511 | 0 |
Acquisition-related costs | (1,184) | (1) |
Other | (7) | (191) |
Total other income (expense), net | $ 23,600 | $ (1) |
Leases (Narrative) (Details) $ in Millions |
3 Months Ended |
---|---|
Apr. 30, 2019
USD ($)
| |
Lessee, Lease, Description [Line Items] | |
Operating lease not yet commenced undiscounted amount | $ 17.1 |
Operating lease not yet commenced term of contract | 11 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining operating lease terms | 3 years |
Lease renewal terms extension | 3 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining operating lease terms | 12 years |
Lease renewal terms extension | 10 years |
Leases (Lease Cost) (Details) $ in Thousands |
3 Months Ended |
---|---|
Apr. 30, 2019
USD ($)
| |
Leases [Abstract] | |
Operating lease expense | $ 1,074 |
Weighted average remaining lease term | 11 years 5 months 26 days |
Weighted average discount rate | 4.37% |
Leases (Maturities of Operating Lease Liabilities) (Details) $ in Thousands |
Apr. 30, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
Remaining 2020 | $ 2,865 |
2021 | 4,105 |
2022 | 4,205 |
2023 | 4,233 |
2024 | 4,288 |
Thereafter | 31,930 |
Total lease payments | 51,626 |
Less imputed interest | (11,597) |
Total lease liabilities | 40,029 |
Operating lease liabilities | 3,786 |
Operating lease liabilities, non-current | $ 36,243 |
Leases (Supplemental Cash Flow Information) (Details) $ in Thousands |
3 Months Ended |
---|---|
Apr. 30, 2019
USD ($)
| |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating leases | $ 977 |
ROU assets obtained in exchange for new operating lease obligations | $ 199 |
Intangible assets and goodwill (Narrative) (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Apr. 30, 2019 |
Apr. 30, 2018 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Capitalized software development costs | $ 3,700,000 | $ 2,100,000 |
Software development costs incurred and expensed | 3,900,000 | 3,200,000 |
Amortization expense | 3,900,000 | 3,700,000 |
Change in goodwill | $ 0 | $ 0 |
Intangible assets and goodwill (Schedule of finite-lived intangible assets) (Details) - USD ($) $ in Thousands |
Apr. 30, 2019 |
Jan. 31, 2019 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 138,482 | $ 132,827 |
Accumulated amortization | (57,045) | (53,161) |
Intangible assets, net | 81,437 | 79,666 |
Capitalized software development costs | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 44,328 | 40,583 |
Software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 6,162 | 4,252 |
Other intangible assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 2,882 | 2,882 |
Acquired intangible member assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 85,110 | $ 85,110 |
Indebtedness (Details) - Line of Credit - Secured Revolving Credit Facility |
3 Months Ended | |
---|---|---|
Sep. 30, 2015
USD ($)
|
Apr. 30, 2019
USD ($)
|
|
Debt Instrument [Line Items] | ||
Secured revolving credit facility, aggregate principal | $ 100,000,000 | |
Facility term | 5 years | |
Amounts drawn under Credit Agreement | $ 0 | |
Minimum | ||
Debt Instrument [Line Items] | ||
Commitment fee percentage | 0.20% | |
Minimum interest coverage ratio | 3 | |
Maximum | ||
Debt Instrument [Line Items] | ||
Commitment fee percentage | 0.30% | |
Maximum leverage ratio | 3 | |
London Interbank Offered Rate (LIBOR) | Minimum | ||
Debt Instrument [Line Items] | ||
Variable rate borrowing spread | 1.50% | |
London Interbank Offered Rate (LIBOR) | Maximum | ||
Debt Instrument [Line Items] | ||
Variable rate borrowing spread | 2.00% | |
Customary Base Rate | Minimum | ||
Debt Instrument [Line Items] | ||
Variable rate borrowing spread | 0.50% | |
Customary Base Rate | Maximum | ||
Debt Instrument [Line Items] | ||
Variable rate borrowing spread | 1.00% |
Income taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Apr. 30, 2019 |
Apr. 30, 2018 |
Jan. 31, 2019 |
|
Income Tax Disclosure [Abstract] | |||
Income tax provision (benefit) | $ 9,456 | $ (2,038) | |
Effective tax rate - (benefit) expense | 18.40% | (9.90%) | |
Decrease in effective tax rate, primarily due to excess tax benefit on stock-based compensation expense | 4.50% | 31.80% | |
Unrecognized tax benefits | $ 1,900 | $ 1,700 | |
Unrecognized tax benefits that would impact the effective tax rate | $ 1,700 |
Stock-based compensation (Summary of share based compensation recognized) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 30, 2019 |
Apr. 30, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 6,028 | $ 4,239 |
Cost of revenue | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 860 | 413 |
Sales and marketing | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 1,007 | 705 |
Technology and development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 1,499 | 991 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 2,662 | $ 2,130 |
Stock-based compensation (Assumptions) (Details) |
3 Months Ended | |
---|---|---|
Apr. 30, 2019 |
Apr. 30, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected dividend yield | 0.00% | 0.00% |
Expected stock price volatility | 37.84% | |
Expected stock price volatility, minimum | 35.98% | |
Expected stock price volatility, maximum | 36.53% | |
Risk-free interest rate, minimum | 2.21% | 2.52% |
Risk-free interest rate, maximum | 2.43% | 2.68% |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected life of options | 4 years 11 months 12 days | 5 years 2 months 1 day |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected life of options | 5 years 1 month 2 days | 6 years 3 months |
Fair value (Details) - Recurring - Marketable equity securities $ in Thousands |
Apr. 30, 2019
USD ($)
|
---|---|
Level 1 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Other investments | $ 77,356 |
Level 2 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Other investments | 0 |
Level 3 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Other investments | $ 0 |
Label | Element | Value |
---|---|---|
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 13,007,000 |
Accounting Standards Update 2016-01 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (356,000) |
Accounting Standards Update 2016-01 [Member] | AOCI Attributable to Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 269,000 |
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