(Mark One) | |||||
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 30, 2018 | |||||
OR | |||||
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For transition period from to | |||||
Commission File Number 001-36773 |
Delaware (State or other jurisdiction of incorporation or organization) | 47-2509828 (I.R.S. Employer Identification Number) | ||||||||||
2900 University Blvd Ames, IA 50010 (888) 275-3125 | |||||||||||
(Address of principal executive offices and zip code) | |||||||||||
(888) 275-3125 | |||||||||||
(Registrant's telephone number, including area code) | |||||||||||
___________________________________ |
Large accelerated filer o | Accelerated filer ý | ||||
Non-accelerated filer o | Smaller reporting company o | ||||
Emerging growth company ý |
Page | |||||||||||
WORKIVA INC. CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
(in thousands, except share and per share amounts) | |||||||||||
As of September 30, 2018 | As of December 31, 2017 | ||||||||||
(unaudited) | |||||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Marketable securities | |||||||||||
Accounts receivable, net of allowance for doubtful accounts of $719 and $388 at September 30, 2018 and December 31, 2017, respectively | |||||||||||
Deferred commissions | |||||||||||
Other receivables | |||||||||||
Prepaid expenses | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Deferred commissions, non-current | |||||||||||
Intangible assets, net | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
WORKIVA INC. CONDENSED CONSOLIDATED BALANCE SHEETS (continued) | |||||||||||
(in thousands, except share and per share amounts) | |||||||||||
As of September 30, 2018 | As of December 31, 2017 | ||||||||||
(unaudited) | |||||||||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses and other current liabilities | |||||||||||
Deferred revenue | |||||||||||
Deferred government grant obligation | |||||||||||
Current portion of capital lease and financing obligations | |||||||||||
Total current liabilities | |||||||||||
Deferred revenue, non-current | |||||||||||
Deferred government grant obligation | |||||||||||
Other long-term liabilities | |||||||||||
Capital lease and financing obligations | |||||||||||
Total liabilities | |||||||||||
Stockholders’ deficit | |||||||||||
Class A common stock, $0.001 par value per share, 1,000,000,000 shares authorized, 34,077,670 and 32,165,407 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively | |||||||||||
Class B common stock, $0.001 par value per share, 500,000,000 shares authorized, 9,722,484 and 10,203,371 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively | |||||||||||
Preferred stock, $0.001 par value per share, 100,000,000 shares authorized, no shares issued and outstanding | |||||||||||
Additional paid-in-capital | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Accumulated other comprehensive income | |||||||||||
Total stockholders’ deficit | ( | ( | |||||||||
Total liabilities and stockholders’ deficit | $ | $ | |||||||||
WORKIVA INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share amounts) (unaudited) | |||||||||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Revenue | |||||||||||||||||||||||
Subscription and support | $ | $ | $ | $ | |||||||||||||||||||
Professional services | |||||||||||||||||||||||
Total revenue | |||||||||||||||||||||||
Cost of revenue | |||||||||||||||||||||||
Subscription and support | |||||||||||||||||||||||
Professional services | |||||||||||||||||||||||
Total cost of revenue | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Loss from operations | ( | ( | ( | ( | |||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Other income, net | |||||||||||||||||||||||
Loss before provision for income taxes | ( | ( | ( | ( | |||||||||||||||||||
Provision for income taxes | |||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Net loss per common share: | |||||||||||||||||||||||
Basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Weighted-average common shares outstanding - basic and diluted |
WORKIVA INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) (unaudited) | |||||||||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Other comprehensive income (loss), net of tax | |||||||||||||||||||||||
Foreign currency translation adjustment, net of income tax benefit (expense) of ($5) and $0 for the three months ended September 30, 2018 and 2017, respectively, and net of income tax benefit (expense) of ($5) and $2 for the nine months ended September 30, 2018 and 2017, respectively | ( | ( | ( | ||||||||||||||||||||
Unrealized gain (loss) on available-for-sale securities, net of income tax benefit (expense) of $1 and $0 for the three months ended September 30, 2018 and 2017, respectively, and net of income tax benefit (expense) of $1 and ($2) for the nine months ended September 30, 2018 and 2017, respectively | ( | ( | ( | ||||||||||||||||||||
Other comprehensive income (loss), net of tax | ( | ( | |||||||||||||||||||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
WORKIVA INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||
(in thousands) (unaudited) | |||||||||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Cash flows from operating activities | |||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Adjustments to reconcile net loss to net cash provided by operating activities | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Stock-based compensation expense | |||||||||||||||||||||||
Provision for (recovery of) doubtful accounts | ( | ( | |||||||||||||||||||||
(Accretion) amortization of premiums and discounts on marketable securities, net | ( | ( | |||||||||||||||||||||
Recognition of deferred government grant obligation | ( | ( | ( | ||||||||||||||||||||
Deferred income tax | ( | ( | |||||||||||||||||||||
Changes in assets and liabilities: | |||||||||||||||||||||||
Accounts receivable | ( | ( | ( | ||||||||||||||||||||
Deferred commissions | ( | ( | ( | ( | |||||||||||||||||||
Other receivables | ( | ( | |||||||||||||||||||||
Prepaid expenses and other | |||||||||||||||||||||||
Other assets | ( | ( | ( | ( | |||||||||||||||||||
Accounts payable | |||||||||||||||||||||||
Deferred revenue | |||||||||||||||||||||||
Accrued expenses and other liabilities | ( | ||||||||||||||||||||||
Net cash provided by operating activities | |||||||||||||||||||||||
Cash flows from investing activities | |||||||||||||||||||||||
Purchase of property and equipment | ( | ( | ( | ( | |||||||||||||||||||
Purchase of marketable securities | ( | ( | ( | ( | |||||||||||||||||||
Maturities of marketable securities | |||||||||||||||||||||||
Purchase of intangible assets | ( | ( | ( | ( | |||||||||||||||||||
Net cash used in investing activities | ( | ( | ( | ( | |||||||||||||||||||
WORKIVA INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) | |||||||||||||||||||||||
(in thousands) (unaudited) | |||||||||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Cash flows from financing activities | |||||||||||||||||||||||
Proceeds from option exercises | |||||||||||||||||||||||
Taxes paid related to net share settlements of stock-based compensation awards | ( | ( | |||||||||||||||||||||
Proceeds from shares issued in connection with employee stock purchase plan | |||||||||||||||||||||||
Repayment of other long-term debt | ( | ( | |||||||||||||||||||||
Principal payments on capital lease and financing obligations | ( | ( | ( | ( | |||||||||||||||||||
Proceeds from government grants | |||||||||||||||||||||||
Deferred financing costs | ( | ( | |||||||||||||||||||||
Net cash provided by financing activities | |||||||||||||||||||||||
Effect of foreign exchange rates on cash | ( | ||||||||||||||||||||||
Net increase in cash and cash equivalents | |||||||||||||||||||||||
Cash and cash equivalents at beginning of period | |||||||||||||||||||||||
Cash and cash equivalents at end of period | $ | $ | $ | $ | |||||||||||||||||||
Supplemental cash flow disclosure | |||||||||||||||||||||||
Cash paid for interest | $ | $ | $ | $ | |||||||||||||||||||
Cash paid for income taxes, net of refunds | $ | $ | $ | $ | |||||||||||||||||||
Supplemental disclosure of noncash investing and financing activities | |||||||||||||||||||||||
Allowance for tenant improvements | $ | $ | $ | $ | |||||||||||||||||||
Purchases of property and equipment, accrued but not paid | $ | $ | $ | $ |
As of December 31, 2017 | Adjustments Due to ASU 2014-09 | As of January 1, 2018 | |||||||||||||||
Assets | |||||||||||||||||
Accounts receivable, net | $ | $ | $ | ||||||||||||||
Deferred commissions | |||||||||||||||||
Deferred commissions, non-current | |||||||||||||||||
Liabilities | |||||||||||||||||
Accrued expenses and other current liabilities | |||||||||||||||||
Deferred revenue | |||||||||||||||||
Deferred revenue, non-current | |||||||||||||||||
Equity | |||||||||||||||||
Accumulated deficit | $ | ( | $ | $ | ( |
As of September 30, 2018 | |||||||||||||||||
As Reported | Balances Without Adoption of ASC 606 | Effect of Change | |||||||||||||||
Assets | |||||||||||||||||
Accounts receivable, net | $ | $ | $ | ||||||||||||||
Deferred commissions | |||||||||||||||||
Deferred commissions, non-current | |||||||||||||||||
Liabilities | |||||||||||||||||
Accrued expenses and other current liabilities | |||||||||||||||||
Deferred revenue | |||||||||||||||||
Deferred revenue, non-current | |||||||||||||||||
Equity | |||||||||||||||||
Accumulated deficit | $ | ( | $ | ( | $ |
Three months ended September 30, 2018 | Nine months ended September 30, 2018 | ||||||||||||||||||||||||||||||||||
As Reported | Balances Without Adoption of ASC 606 | Effect of Change | As Reported | Balances Without Adoption of ASC 606 | Effect of Change | ||||||||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||||||||
Subscription and support | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Professional services | ( | ( | |||||||||||||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||
Sales and marketing | ( | ( | |||||||||||||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||
Net loss per common share | |||||||||||||||||||||||||||||||||||
Basic and diluted | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ |
September 30, 2018 | December 31, 2017 | ||||||||||
Accrued vacation | $ | $ | |||||||||
Accrued commissions | |||||||||||
Accrued bonuses | |||||||||||
Estimated health insurance claims | |||||||||||
ESPP employee contributions | |||||||||||
Customer deposits | |||||||||||
Accrued other liabilities | |||||||||||
$ | $ |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Interest income | $ | $ | $ | $ | |||||||||||||||||||
Income from training reimbursement program | |||||||||||||||||||||||
Other | ( | ( | ( | ( | |||||||||||||||||||
$ | $ | $ | $ |
Amortized Cost | Unrealized Gains | Unrealized Losses | Aggregate Fair Value | ||||||||||||||||||||
Money market funds | $ | $ | — | $ | — | $ | |||||||||||||||||
Commercial paper | — | — | |||||||||||||||||||||
U.S. treasury debt securities | ( | ||||||||||||||||||||||
U.S. corporate debt securities | ( | ||||||||||||||||||||||
$ | $ | $ | ( | $ | |||||||||||||||||||
Included in cash and cash equivalents | $ | $ | — | $ | — | $ | |||||||||||||||||
Included in marketable securities | $ | $ | $ | ( | $ |
Amortized Cost | Unrealized Gains | Unrealized Losses | Aggregate Fair Value | ||||||||||||||||||||
Money market funds | $ | $ | — | $ | — | $ | |||||||||||||||||
U.S. treasury debt securities | ( | ||||||||||||||||||||||
U.S. corporate debt securities | ( | ||||||||||||||||||||||
$ | $ | $ | ( | $ | |||||||||||||||||||
Included in cash and cash equivalents | $ | $ | — | $ | — | $ | |||||||||||||||||
Included in marketable securities | $ | $ | $ | ( | $ |
As of September 30, 2018 | |||||||||||||||||||||||
Less than 12 months | 12 months or greater | ||||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||||
U.S. treasury debt securities | $ | $ | ( | $ | $ | ||||||||||||||||||
U.S. corporate debt securities | ( | ( | |||||||||||||||||||||
Total | $ | $ | ( | $ | $ | ( |
Fair Value Measurements as of September 30, 2018 | Fair Value Measurements as of December 31, 2017 | |||||||||||||||||||||||||||||||||||||
Description | Total | Level 1 | Level 2 | Total | Level 1 | Level 2 | ||||||||||||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Commercial paper | ||||||||||||||||||||||||||||||||||||||
U.S. treasury debt securities | ||||||||||||||||||||||||||||||||||||||
U.S. corporate debt securities | ||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
Included in cash and cash equivalents | $ | $ | ||||||||||||||||||||||||||||||||||||
Included in marketable securities | $ | $ |
Operating Leases | |||||
Remainder of 2018 | $ | ||||
2019 | |||||
2020 | |||||
2021 | |||||
2022 | |||||
Thereafter | |||||
Total minimum lease payments | $ |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Cost of revenue | |||||||||||||||||||||||
Subscription and support | $ | $ | $ | $ | |||||||||||||||||||
Professional services | |||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Stock Options | |||||||||||||||||||||||
Expected term (in years) | — | — | 6.0 - 6.1 | ||||||||||||||||||||
Risk-free interest rate | 1.9% - 2.1% | 1.9% - 2.1% | |||||||||||||||||||||
Expected volatility | 38.9% - 39.1% | 38.9% - 43.8% | |||||||||||||||||||||
ESPP | |||||||||||||||||||||||
Expected term (in years) | |||||||||||||||||||||||
Risk-free interest rate | 1.8% - 2.4% | ||||||||||||||||||||||
Expected volatility | 22.2% - 36.4% |
Options | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Outstanding at December 31, 2017 | $ | $ | |||||||||||||||||||||
Granted | |||||||||||||||||||||||
Forfeited | ( | ||||||||||||||||||||||
Exercised | ( | ||||||||||||||||||||||
Outstanding at September 30, 2018 | $ | $ | |||||||||||||||||||||
Exercisable at September 30, 2018 | $ | $ |
Number of Shares | Weighted- Average Grant Date Fair Value | ||||||||||
Unvested at December 31, 2017 | $ | ||||||||||
Granted | |||||||||||
Forfeited | |||||||||||
Vested | ( | ||||||||||
Unvested at September 30, 2018 | $ |
Number of Shares | Weighted- Average Grant Date Fair Value | ||||||||||
Unvested at December 31, 2017 | $ | ||||||||||
Granted | |||||||||||
Forfeited | ( | ||||||||||
Vested(1) | ( | ||||||||||
Unvested at September 30, 2018 | $ |
Three months ended September 30, 2018 | Nine months ended September 30, 2018 | ||||||||||
Information technology | $ | $ | |||||||||
Consumer discretionary | |||||||||||
Industrials | |||||||||||
Diversified financials | |||||||||||
Banks | |||||||||||
Healthcare | |||||||||||
Energy | |||||||||||
Other | |||||||||||
Total revenues | $ | $ |
Three months ended September 30, 2018 | Nine months ended September 30, 2018 | ||||||||||
Subscription and support | $ | $ | |||||||||
XBRL professional services | |||||||||||
Other services | |||||||||||
Total revenues | $ | $ |
Three months ended | |||||||||||||||||||||||
September 30, 2018 | September 30, 2017 | ||||||||||||||||||||||
Class A | Class B | Class A | Class B | ||||||||||||||||||||
Numerator | |||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Denominator | |||||||||||||||||||||||
Weighted-average common shares outstanding - basic and diluted | |||||||||||||||||||||||
Basic and diluted net loss per share | $ | ( | $ | ( | $ | ( | $ | ( |
Nine months ended | |||||||||||||||||||||||
September 30, 2018 | September 30, 2017 | ||||||||||||||||||||||
Class A | Class B | Class A | Class B | ||||||||||||||||||||
Numerator | |||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Denominator | |||||||||||||||||||||||
Weighted-average common shares outstanding - basic and diluted | |||||||||||||||||||||||
Basic and diluted net loss per share | $ | ( | $ | ( | $ | ( | $ | ( |
As of | |||||||||||
September 30, 2018 | September 30, 2017 | ||||||||||
Shares subject to outstanding common stock options | |||||||||||
Shares subject to unvested restricted stock awards | |||||||||||
Shares issuable pursuant to the ESPP |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Financial metrics | |||||||||||||||||||||||
Total revenue | $ | 60,873 | $ | 52,068 | $ | 179,909 | $ | 153,363 | |||||||||||||||
Percentage increase in total revenue | 16.9 | % | 16.5 | % | 17.3 | % | 15.9 | % | |||||||||||||||
Subscription and support revenue | $ | 51,306 | $ | 43,214 | $ | 146,613 | $ | 123,734 | |||||||||||||||
Percentage increase in subscription and support revenue | 18.7 | % | 19.3 | % | 18.5 | % | 18.1 | % | |||||||||||||||
Subscription and support as a percent of total revenue | 84.3 | % | 83.0 | % | 81.5 | % | 80.7 | % |
As of September 30, | |||||||||||
2018 | 2017 | ||||||||||
Operating metrics | |||||||||||
Number of customers | 3,289 | 2,991 | |||||||||
Subscription and support revenue retention rate | 95.9% | 96.5% | |||||||||
Subscription and support revenue retention rate including add-ons | 104.7% | 108.6% | |||||||||
Annual contract value $100k+ | 398 | 302 | |||||||||
Annual contract value $150k+ | 173 | 131 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Revenue | |||||||||||||||||||||||
Subscription and support | $ | 51,306 | $ | 43,214 | $ | 146,613 | $ | 123,734 | |||||||||||||||
Professional services | 9,567 | 8,854 | 33,296 | 29,629 | |||||||||||||||||||
Total revenue | 60,873 | 52,068 | 179,909 | 153,363 | |||||||||||||||||||
Cost of revenue | |||||||||||||||||||||||
Subscription and support(1) | 8,139 | 8,472 | 25,578 | 23,867 | |||||||||||||||||||
Professional services(1) | 7,520 | 7,180 | 22,888 | 20,289 | |||||||||||||||||||
Total cost of revenue | 15,659 | 15,652 | 48,466 | 44,156 | |||||||||||||||||||
Gross profit | 45,214 | 36,416 | 131,443 | 109,207 | |||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Research and development(1) | 19,984 | 17,527 | 60,829 | 49,302 | |||||||||||||||||||
Sales and marketing(1) | 24,068 | 23,712 | 67,326 | 62,212 | |||||||||||||||||||
General and administrative(1) | 11,864 | 8,959 | 45,286 | 27,323 | |||||||||||||||||||
Total operating expenses | 55,916 | 50,198 | 173,441 | 138,837 | |||||||||||||||||||
Loss from operations | (10,702) | (13,782) | (41,998) | (29,630) | |||||||||||||||||||
Interest expense | (448) | (464) | (1,347) | (1,394) | |||||||||||||||||||
Other income, net | 203 | 198 | 1,038 | 986 | |||||||||||||||||||
Loss before provision for income taxes | (10,947) | (14,048) | (42,307) | (30,038) | |||||||||||||||||||
Provision for income taxes | 17 | 25 | 43 | 67 | |||||||||||||||||||
Net loss | $ | (10,964) | $ | (14,073) | $ | (42,350) | $ | (30,105) |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Cost of revenue | |||||||||||||||||||||||
Subscription and support | $ | 161 | $ | 204 | $ | 560 | $ | 522 | |||||||||||||||
Professional services | 153 | 129 | 449 | 329 | |||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Research and development | 1,624 | 601 | 4,140 | 1,566 | |||||||||||||||||||
Sales and marketing | 1,397 | 788 | 3,950 | 2,141 | |||||||||||||||||||
General and administrative | 3,614 | 2,942 | 14,220 | 8,642 | |||||||||||||||||||
Total stock-based compensation expense | $ | 6,949 | $ | 4,664 | $ | 23,319 | $ | 13,200 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Revenue | |||||||||||||||||||||||
Subscription and support | 84.3 | % | 83.0 | % | 81.5 | % | 80.7 | % | |||||||||||||||
Professional services | 15.7 | 17.0 | 18.5 | 19.3 | |||||||||||||||||||
Total revenue | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||||||
Cost of revenue | |||||||||||||||||||||||
Subscription and support | 13.4 | 16.3 | 14.2 | 15.6 | |||||||||||||||||||
Professional services | 12.4 | 13.8 | 12.7 | 13.2 | |||||||||||||||||||
Total cost of revenue | 25.8 | 30.1 | 26.9 | 28.8 | |||||||||||||||||||
Gross profit | 74.2 | 69.9 | 73.1 | 71.2 | |||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Research and development | 32.8 | 33.7 | 33.8 | 32.1 | |||||||||||||||||||
Sales and marketing | 39.5 | 45.5 | 37.4 | 40.6 | |||||||||||||||||||
General and administrative | 19.5 | 17.2 | 25.2 | 17.8 | |||||||||||||||||||
Total operating expenses | 91.8 | 96.4 | 96.4 | 90.5 | |||||||||||||||||||
Loss from operations | (17.6) | (26.5) | (23.3) | (19.3) | |||||||||||||||||||
Interest expense | (0.7) | (0.9) | (0.7) | (0.9) | |||||||||||||||||||
Other income, net | 0.3 | 0.4 | 0.6 | 0.6 | |||||||||||||||||||
Loss before provision for income taxes | (18.0) | (27.0) | (23.4) | (19.6) | |||||||||||||||||||
Provision (benefit) for income taxes | — | — | — | — | |||||||||||||||||||
Net loss | (18.0) | % | (27.0) | % | (23.4) | % | (19.6) | % |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | ||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||||||||
Subscription and support | $ | 51,306 | $ | 43,214 | 18.7% | $ | 146,613 | $ | 123,734 | 18.5% | |||||||||||||||||||||||||
Professional services | 9,567 | 8,854 | 8.1% | 33,296 | 29,629 | 12.4% | |||||||||||||||||||||||||||||
Total revenue | $ | 60,873 | $ | 52,068 | 16.9% | $ | 179,909 | $ | 153,363 | 17.3% |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | ||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||
Cost of revenue | |||||||||||||||||||||||||||||||||||
Subscription and support | $ | 8,139 | $ | 8,472 | (3.9)% | $ | 25,578 | $ | 23,867 | 7.2% | |||||||||||||||||||||||||
Professional services | 7,520 | 7,180 | 4.7% | 22,888 | 20,289 | 12.8% | |||||||||||||||||||||||||||||
Total cost of revenue | $ | 15,659 | $ | 15,652 | —% | $ | 48,466 | $ | 44,156 | 9.8% |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | ||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||
Research and development | $ | 19,984 | $ | 17,527 | 14.0% | $ | 60,829 | $ | 49,302 | 23.4% | |||||||||||||||||||||||||
Sales and marketing | 24,068 | 23,712 | 1.5% | 67,326 | 62,212 | 8.2% | |||||||||||||||||||||||||||||
General and administrative | 11,864 | 8,959 | 32.4% | 45,286 | 27,323 | 65.7% | |||||||||||||||||||||||||||||
Total operating expenses | $ | 55,916 | $ | 50,198 | 11.4% | $ | 173,441 | $ | 138,837 | 24.9% |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Interest expense | $ | (448) | $ | (464) | $ | (1,347) | $ | (1,394) | |||||||||||||||
Other income, net | 203 | 198 | 1,038 | 986 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Cash flow provided by operating activities | $ | 7,582 | $ | 5,186 | $ | 6,819 | $ | 11,748 | |||||||||||||||
Cash flow used in investing activities | (2,410) | (3,229) | (9,640) | (4,964) | |||||||||||||||||||
Cash flow provided by financing activities | 9,093 | 682 | 14,425 | 4,466 | |||||||||||||||||||
Net increase in cash and cash equivalents, net of impact of exchange rates | $ | 14,348 | $ | 2,732 | $ | 11,510 | $ | 11,437 |
Payments due by period | ||||||||||||||||||||||||||||||||
Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||
Operating lease obligations relating to office facilities | $ | 27,546 | $ | 1,047 | $ | 6,960 | $ | 6,221 | $ | 13,318 |
Exhibit Number | Description | |||||||
31.1 | ||||||||
31.2 | ||||||||
32.1 | ||||||||
32.2 | ||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
101.SCH | XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
WORKIVA INC. | |||||
By: | /s/ Martin J. Vanderploeg, Ph.D. | ||||
Name: | Martin J. Vanderploeg, Ph.D. | ||||
Title: | President and Chief Executive Officer | ||||
By: | /s/ J. Stuart Miller | ||||
Name: | J. Stuart Miller | ||||
Title: | Executive Vice President and Chief Financial Officer | ||||
By: | /s/ Jill Klindt | ||||
Name: | Jill Klindt | ||||
Title: | Senior Vice President, Treasurer and Chief Accounting Officer | ||||
November 7, 2018 | /s/ Martin J. Vanderploeg, Ph.D. Martin J. Vanderploeg, Ph.D. President and Chief Executive Officer (Principal Executive Officer) |
November 7, 2018 | /s/ J. Stuart Miller J. Stuart Miller Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
November 7, 2018 | /s/ Martin J. Vanderploeg, Ph.D. Martin J. Vanderploeg, Ph.D. President and Chief Executive Officer (Principal Executive Officer) |
November 7, 2018 | /s/ J. Stuart Miller J. Stuart Miller Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Nov. 05, 2018 |
|
Entity Information [Line Items] | ||
Entity Registrant Name | WORKIVA INC | |
Entity Central Index Key | 0001445305 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Class A Common Stock | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 34,126,724 | |
Class B Common Stock | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 9,722,484 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Allowance for doubtful accounts | $ 719 | $ 388 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Class A Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, share authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 34,077,670 | 32,165,407 |
Common stock, shares outstanding | 34,077,670 | 32,165,407 |
Class B Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, share authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 9,722,484 | 10,203,371 |
Common stock, shares outstanding | 9,722,484 | 10,203,371 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Revenue | ||||
Total revenues | $ 60,873 | $ 52,068 | $ 179,909 | $ 153,363 |
Cost of revenue | ||||
Total cost of revenue | 15,659 | 15,652 | 48,466 | 44,156 |
Gross profit | 45,214 | 36,416 | 131,443 | 109,207 |
Operating expenses | ||||
Research and development | 19,984 | 17,527 | 60,829 | 49,302 |
Sales and marketing | 24,068 | 23,712 | 67,326 | 62,212 |
General and administrative | 11,864 | 8,959 | 45,286 | 27,323 |
Total operating expenses | 55,916 | 50,198 | 173,441 | 138,837 |
Loss from operations | (10,702) | (13,782) | (41,998) | (29,630) |
Interest expense | (448) | (464) | (1,347) | (1,394) |
Other income, net | 203 | 198 | 1,038 | 986 |
Loss before provision for income taxes | (10,947) | (14,048) | (42,307) | (30,038) |
Provision for income taxes | 17 | 25 | 43 | 67 |
Net loss | $ (10,964) | $ (14,073) | $ (42,350) | $ (30,105) |
Net loss per common share: | ||||
Basic and diluted (in dollars per share) | $ (0.25) | $ (0.34) | $ (0.98) | $ (0.73) |
Weighted-average common shares outstanding - basic and diluted (in shares) | 43,973,428 | 41,815,139 | 43,359,939 | 41,453,736 |
Subscription and support | ||||
Revenue | ||||
Total revenues | $ 51,306 | $ 43,214 | $ 146,613 | $ 123,734 |
Cost of revenue | ||||
Total cost of revenue | 8,139 | 8,472 | 25,578 | 23,867 |
Professional Services | ||||
Revenue | ||||
Total revenues | 9,567 | 8,854 | 33,296 | 29,629 |
Cost of revenue | ||||
Total cost of revenue | $ 7,520 | $ 7,180 | $ 22,888 | $ 20,289 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Foreign currency translation adjustment, tax (expense) benefit | $ (5) | $ 0 | $ (5) | $ 2 |
Unrealized gain on available-for-sale securities, tax benefit (expense) | $ 1 | $ 0 | $ 1 | $ (2) |
Organization and Significant Accounting Policies |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Significant Accounting Policies | Organization and Significant Accounting Policies Organization Workiva Inc., a Delaware corporation, and its wholly-owned subsidiaries (the “Company” or “we” or “us”) created Wdesk, an intuitive cloud platform that modernizes how people work within thousands of organizations. Wdesk is built on a data management engine, offering controlled collaboration, data connections, granular permissions and a full audit trail. We offer Wdesk solutions for a wide range of use cases in the following markets: finance and accounting, audit and internal controls, risk and compliance, and performance and management reporting. Our operational headquarters are located in Ames, Iowa, with additional offices located in the United States, Europe, and Canada. We updated our accounting policies on the use of estimates, revenue recognition, deferred revenue, and deferred commissions as a result of our adopting Financial Accounting Standards Board (FASB) guidance issued in accounting standards codification (ASC) 606, Revenue Recognition - Revenue from Contracts with Customers, under the Accounting Standards Update (ASU) 2014-09 (collectively the new revenue standard). Otherwise, there have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 22, 2018, that have had a material impact on our condensed consolidated financial statements and related notes. Basis of Presentation and Principles of Consolidation The financial information presented in the accompanying unaudited condensed consolidated financial statements has been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and in accordance with rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, the financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The condensed consolidated balance sheet data as of December 31, 2017 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting primarily of normal recurring accruals, necessary for a fair presentation of our financial position and results of operations. The operating results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results expected for the full year ending December 31, 2018. Seasonality has affected our revenue, expenses and cash flows from operations. Revenue from professional services has been higher in the first quarter as many of our customers file their Form 10-K in the first calendar quarter. Sales and marketing expense has been higher in the third quarter due to our annual user conference in September. In addition, the timing of the payments of cash bonuses to employees during the first and fourth calendar quarters may result in some seasonality in operating cash flow. The condensed consolidated financial information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in this report and the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the SEC on February 22, 2018. The unaudited condensed consolidated financial statements include the accounts of Workiva Inc. and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and various other assumptions believed to be reasonable. These estimates include, but are not limited to, the allowance for doubtful accounts, the determination of the relative selling prices of our services, the measurement of material rights, health insurance claims incurred but not yet reported, valuation of available-for-sale marketable securities, useful lives of deferred contract costs, intangible assets and property and equipment, income taxes and certain assumptions used in the valuation of equity awards. While these estimates are based on our best knowledge of current events and actions that may affect us in the future, actual results may differ materially from these estimates. Revenue Recognition We generate revenue through the sale of subscriptions to our cloud-based software and the delivery of professional services. We recognize revenue when control of these services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those services. We determine revenue recognition through the following steps: • Identification of the contract, or contracts, with a customer • Identification of the performance obligations in the contract • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract • Recognition of revenue when, or as, we satisfy a performance obligation We report revenue net of sales and other taxes collected from customers to be remitted to government authorities. Subscription and Support Revenue We recognize subscription and support revenue on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our subscription contracts are generally to 36 months in duration, are billed in advance and are non-cancelable. We consider the access to Wdesk and related support services in a customer contract to be a series of distinct services which comprise a single performance obligation because they are substantially the same and have the same pattern of transfer. Professional Services Revenue and Customer Options Professional services revenues primarily consist of fees for document set up, XBRL tagging, and consulting with our customers on business processes and best practices for using Wdesk. We have determined that an agreement to purchase these professional services constitutes an option to purchase services in accordance with ASC 606 rather than an agreement that creates enforceable rights and obligations because of the customer's contractual right to cancel services that have not yet been used. In the limited case of agreements where we determined that the option provides the customer with a material right, we allocate a portion of the transaction price to the material right. Professional service agreements that do not contain a material right are accounted for when the customer exercises its option to purchase additional services. Revenue is recognized for document set ups when the service is complete and control has transferred to the customer. Revenues from XBRL tagging and consulting services are recognized as the services are performed. Contracts with Multiple Performance Obligations Some of our contracts with customers contain multiple performance obligations in the event that we determine a material right exists. For these contracts, we account for the individual performance obligations separately when they are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. If these criteria are not met, the promised services are accounted for as a combined performance obligation. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. We determine the standalone selling prices based on our overall pricing objectives, taking into consideration market conditions and entity-specific factors, including the size of our arrangements, length of term, customer demographics and the numbers and types of users within our arrangements. Deferred Revenue We typically invoice our customers for subscription and support fees in advance on a quarterly, annual, two- or three-year basis, with payment due at the start of the subscription term. Unpaid invoice amounts for non-cancelable services starting in future periods are included in accounts receivable and deferred revenue. The portion of deferred revenue that we anticipate will be recognized after the succeeding twelve-month period is recorded as non-current deferred revenue, and the remaining portion is recorded as current deferred revenue. Customer Deposits As an agreement to purchase professional services constitutes a customer option, fees received in advance of these services being performed are considered customer deposits and are included in accrued expenses and other current liabilities on the condensed consolidated balance sheet. Unpaid invoice amounts for these professional services starting in future periods are excluded from accounts receivable and accrued expenses and other current liabilities. Deferred Commissions Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions paid where the amortization period is one year or less are expensed as incurred. All other sales commissions are deferred and then amortized on a straight-line basis over a period of benefit that we have determined to be three years. We determined the period of benefit by taking into consideration our standard contract terms and conditions, rate of technological change and other factors. Amortization expense is included in sales and marketing expense in the accompanying condensed consolidated statements of operations. Income Taxes On December 22, 2017, the U.S. federal government enacted legislation commonly referred to as the “Tax Cuts and Jobs Act” (the “TCJA”). The TCJA makes widespread changes to the Internal Revenue Code, including, among other items, the introduction of a new international “Global Intangible Low-Taxed Income” (“GILTI”) regime effective January 1, 2018. Companies may adopt one of two views in regards to establishing deferred taxes in accordance with the new (“GILTI”) regime under ASC 740. Companies may account for the effects of GILTI either (1) in the period the entity becomes subject to GILTI, or (2) establish deferred taxes (similar to the guidance that currently exists with respect to basis differences that will reverse under current Subpart F rules) for basis differences that upon reversal will be subject to GILTI. We have elected to account for the effects of GILTI in the period incurred. Adjustments related to GILTI have been offset by a corresponding reduction to the valuation allowance and as a result have zero impact on our effective tax rate. We will continue to refine our calculations as additional guidance is released during the measurement period as permitted by SEC Staff Accounting Bulletin 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act. Recently Adopted Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, also known as Accounting Standards Codification Topic 606 (ASC 606), which amends the guidance in former ASC 605, Revenue Recognition. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised 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. Additionally, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Effective January 1, 2018, we adopted ASU 2014-09 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of our accumulated deficit. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The primary impact on accounts receivables and deferred revenue of adopting the new standard relates to recording deferred revenue when payments are due in advance of our performance of subscription based contracts. This recording has resulted in an offsetting increase in accounts receivable and deferred revenue. The effect of adopting the new standard on accrued expenses and other current liabilities relates to the reclassification of amounts collected in advance related to the purchase of professional services from deferred revenue to accrued expenses and other current liabilities as these agreements to purchase professional services constitute a customer option. The primary impact of adopting the new standard on our sales and marketing expense relates to the deferral of incremental commission costs of obtaining subscription contracts. Under the previous guidance, we deferred only direct and incremental commission costs to obtain a contract and amortized those costs on a straight-line basis over the lesser of 12 months or the non-cancelable term of the customer contract based on the terms of our commission arrangements. Under the new standard, we defer all incremental commission costs to obtain the contract. We amortize these costs on a straight-line basis over a period of benefit that we have determined to be three years. The adoption of ASC 606 primarily resulted in an acceleration of revenue as of December 31, 2017, which in turn reduced our existing deferred tax asset for amounts that had previously been included in deferred revenue. Additionally, the amortization of the costs of obtaining a contract has generated additional deferred tax liabilities that ultimately reduced our net deferred tax asset position. As we have provided a full valuation allowance against our net deferred tax assets in the jurisdictions impacted by the adoption of ASC 606, this aggregate impact was offset by a corresponding reduction to the valuation allowance. The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASU 2014-09 were as follows (in thousands):
In accordance with the new revenue standard requirements, the impact of adoption on our condensed consolidated balance sheet as of September 30, 2018 and statement of operations for the three and nine months ended September 30, 2018 was as follows (in thousands, except per share data):
The adoption of ASC 606 had no impact on our total cash flows from operations. In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The ASU is effective for annual periods beginning after December 15, 2017 and interim periods within those annual periods. Effective January 1, 2018, we adopted this standard. The adoption of this new guidance did not have a material impact on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This ASU simplifies the accounting for nonemployee share-based payment transactions. Under the new guidance, equity-classified share-based payment awards issued to nonemployees will now be measured on the grant date, instead of the previous requirement to remeasure the awards through performance completion date. Awards that include performance conditions will recognize compensation cost when the achievement of the performance condition is probable, rather than upon achievement of the performance condition. Finally, the current requirement to reassess the classification (equity or liability) for nonemployee awards upon vesting will be eliminated, except for awards in the form of convertible instruments. The ASU is effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. Early adoption is permitted, including interim periods, but no earlier than the adoption of ASC 606. Effective June 20, 2018, we adopted this standard. The adoption of this new guidance did not have a material impact on our consolidated financial statements. New Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued guidance codified in ASC 842, Leases, which supersedes the guidance in former ASC 840, Leases, to increase transparency and comparability among organizations by requiring recognition of right-of-use assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements (with the exception of short-term leases). The standard will become effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements that allows entities to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We plan to elect this new transition guidance when we adopt the standard on January 1, 2019. We have formed a team to identify and analyze our arrangements for leases and have begun assessing our lease population for the new standard and evaluating the impact to our consolidated financial statements. We currently expect to use the package of practical expedients which allows us to not (1) reassess whether any expired or existing contracts are considered or contain leases; (2) reassess the lease classification for any expired or existing leases; and (3) reassess the initial direct costs for any existing leases. We anticipate the standard will have a material impact on our balance sheet. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the current accounting guidance and requires the measurement of all expected losses based on historical experience, current conditions and reasonable and supportable forecasts. For trade receivables, loans, and other financial instruments, we will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. The standard will become effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. Application of the amendments is through a cumulative-effect adjustment to retained earnings as of the effective date. We plan to adopt this standard on the effective date and are currently evaluating the impact of this new standard on our 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, which clarifies the accounting for implementation costs in cloud computing arrangements. The update will become effective for interim and annual periods beginning after December 15, 2019 and may be adopted either retrospectively or prospectively. Early adoption is permitted. We plan to adopt this standard prospectively on the effective date. We are currently evaluating the impacts that adoption of this ASU will have on our consolidated financial statements.
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Supplemental Consolidated Balance Sheet and Statement of Operations Information |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Consolidated Balance Sheet and Statement of Operations Information | Supplemental Consolidated Balance Sheet and Statement of Operations Information Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of (in thousands):
Other Income, net Other income, net for the three and nine months ended September 30, 2018 and 2017 consisted of (in thousands):
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Cash Equivalents and Marketable Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Equivalents and Marketable Securities | Cash Equivalents and Marketable Securities At September 30, 2018, marketable securities consisted of the following (in thousands):
At December 31, 2017, marketable securities consisted of the following (in thousands):
The following table presents gross unrealized losses and fair values for those marketable securities that were in an unrealized loss position as of September 30, 2018, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in thousands):
We do not believe any of the unrealized losses represented an other-than-temporary impairment based on our evaluation of available evidence, which includes our intent as of September 30, 2018 to hold these investments until the cost basis is recovered.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements We determine the fair values of our financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value assumes that the transaction to sell the asset or transfer the liability occurs in the principal or most advantageous market for the asset or liability and establishes that the fair value of an asset or liability shall be determined based on the assumptions that market participants would use in pricing the asset or liability. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. The fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value: Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 - Inputs are unobservable inputs based on our assumptions. Financial Assets Cash equivalents primarily consist of AAA-rated money market funds with overnight liquidity and no stated maturities. We classified cash equivalents as Level 1 due to the short-term nature of these instruments and measured the fair value based on quoted prices in active markets for identical assets. When available, our marketable securities are valued using quoted prices for identical instruments in active markets. If we are unable to value our marketable securities using quoted prices for identical instruments in active markets, we value our investments using broker reports that utilize quoted market prices for comparable instruments. We validate, on a sample basis, the derived prices provided by the brokers by comparing their assessment of the fair values of our investments against the fair values of the portfolio balances of another third-party professional pricing service. As of September 30, 2018, all of our marketable securities were valued using quoted prices for comparable instruments in active markets and are classified as Level 2. Based on our valuation of our money market funds and marketable securities, we concluded that they are classified in either Level 1 or Level 2 and we have no financial assets measured using Level 3 inputs. The following table presents information about our assets that are measured at fair value on a recurring basis using the above input categories (in thousands):
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Deferred Costs |
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Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Deferred Costs | Deferred CostsDeferred costs, which primarily consist of costs to obtain contracts with customers, were $13.3 million as of September 30, 2018. Amortization expense for the deferred costs was $2.5 million and $6.9 million for the three and nine months ended September 30, 2018, respectively. There was no significant impairment loss in relation to the costs capitalized for the periods presented. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Lease Commitments As of September 30, 2018, future estimated minimum lease payments under non-cancelable operating leases were as follows (in thousands):
There have been no material changes in our future estimated minimum lease payments under non-cancelable capital and financing leases, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2017. Litigation From time to time we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of any currently pending legal proceedings to which we are a party will not have a material adverse effect on our business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
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Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation We grant stock-based incentive awards to attract, motivate and retain qualified employees, non-employee directors and consultants, and to align their financial interests with those of our stockholders. We utilize stock-based compensation in the form of restricted stock awards, restricted stock units, options to purchase Class A common stock and Employee Stock Purchase Plan (“ESPP”) purchase rights. As of September 30, 2018, awards outstanding under the 2009 Plan consisted of stock options, and awards outstanding under the 2014 Plan consisted of stock options and restricted stock units. In June 2018, stockholders approved an amendment to the 2014 Plan that increased the number of shares available for grant by 3,000,000. As of September 30, 2018, 3,187,998 shares of Class A common stock were available for grant under the 2014 Plan. Our ESPP became effective on June 13, 2017. Under the ESPP, eligible employees are granted options to purchase shares of Class A common stock at the lower of 85% of the fair market value of the stock at the time of grant or 85% of the fair market value at the time of exercise. Options to purchase shares are granted twice yearly on or about January 15 and July 15 and are exercisable on or about the succeeding July 14 and January 14, respectively, of each year. As of September 30, 2018, 4,820,623 shares of Class A common stock were available for issuance under the ESPP. No participant may purchase more than $12,500 worth of common stock in a -month offering period. Stock-Based Compensation Expense Stock-based compensation expense was recorded in the following cost and expense categories consistent with the respective employee or service provider’s related cash compensation (in thousands):
The fair value of each option grant and each share issued under the ESPP is estimated on the date of grant using the Black-Scholes option-pricing model. For stock options, expected volatility is based on the historical volatility of our common stock and historical volatilities for publicly traded stock of comparable companies over the estimated expected life of the options. For the ESPP purchase rights, expected volatility is based on the historical volatility of our common stock. The expected term represents the period of time the options and the ESPP purchase rights are expected to be outstanding. For stock options, the expected term is based on the “simplified method” as defined by SEC Staff Accounting Bulletin No. 110 (Topic 14.D.2). We use the “simplified method” due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the options. The expected term for the ESPP purchase rights approximates the offering period. The risk-free interest rate is based on yields on U.S. Treasury STRIPS (Separate Trading of Registered Interest and Principal of Securities) with a maturity similar to the estimated expected term of the options and ESPP purchase rights. The fair value of our stock options and ESPP purchase rights was estimated assuming no expected dividends and the following weighted-average assumptions:
Stock Options The following table summarizes the option activity under the Plans for the nine months ended September 30, 2018:
Options to purchase Class A common stock generally vest over a - or -year period and are generally granted for a term of years. The total intrinsic value of options exercised during the nine months ended September 30, 2018 and 2017 was $22.1 million and $5.5 million, respectively. The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2017 was $6.41. No options were granted during the nine months ended September 30, 2018. The total fair value of options vested during the nine months ended September 30, 2018 and 2017 was approximately $10.3 million and $7.7 million, respectively. Total unrecognized compensation expense of $10.4 million related to options will be recognized over a weighted-average period of 2.2 years. Restricted Stock Awards We have granted restricted stock awards to our executive officers that vest in equal annual installments from the date of grant. The recipient of an award of restricted stock under the Plan may vote and receive dividends on the shares of restricted stock covered by the award. The fair value for restricted stock awards is calculated based on the stock price on the date of grant. The total fair value of restricted stock awards vested during the nine months ended September 30, 2018 and 2017 was approximately $2.2 million and $2.4 million, respectively. The following table summarizes the restricted stock award activity under the Plan for the nine months ended September 30, 2018:
Compensation expense associated with unvested restricted stock awards is recognized on a straight-line basis over the vesting period. At September 30, 2018, there was no unrecognized compensation expense related to restricted stock awards. Restricted Stock Units Restricted stock units granted to employees generally vest over a - or -year period in equal, annual installments or with -year cliff vesting. Restricted stock units granted to non-employee members of our Board of Directors generally have -year cliff vesting from the date of grant. The recipient of a restricted stock unit award under the Plan will have no rights as a stockholder until share certificates are issued by us, but, at the discretion of our Compensation Committee, has the right to receive a dividend equivalent payment in the form of additional restricted stock units. Additionally, until the shares are issued, they have no voting rights and may not be bought or sold. The fair value for restricted stock units is calculated based on the stock price on the date of grant. The total fair value of restricted stock units vested during the nine months ended September 30, 2018 and 2017 was approximately $7.2 million and $2.5 million, respectively. The following table summarizes the restricted stock unit activity under the Plan for the nine months ended September 30, 2018:
(1) As of September 30, 2018, recipients of 554,621 shares had elected to defer settlement of the vested restricted stock units in accordance with our Nonqualified Deferred Compensation Plan. Compensation expense associated with unvested restricted stock units is recognized on a straight-line basis over the vesting period. At September 30, 2018, there was approximately $40.9 million of total unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 2.4 years. Employee Stock Purchase Plan During the nine months ended September 30, 2018, 179,377 shares of common stock were purchased under the ESPP at a weighted-average price of $17.93 per share, resulting in cash proceeds of $3.2 million. Compensation expense associated with ESPP purchase rights is recognized on a straight-line basis over the vesting period. At September 30, 2018, there was approximately $407,000 of total unrecognized compensation expense related to the ESPP, which is expected to be recognized over a weighted-average period of 0.3 years.
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Revenue Recognition |
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Revenue Recognition | Revenue Recognition Disaggregation of Revenue The following table presents our revenues disaggregated by industry (in thousands). Certain year-to-date amounts have been reclassified to conform with current period presentation. These reclassifications have no impact on total revenue.
The following table presents our revenues disaggregated by type of good or service (in thousands):
Deferred Revenue During the three months ended September 30, 2018, we recognized $47.2 million of revenue that was included in the deferred revenue balance at the beginning of the period. During the nine months ended September 30, 2018, we recognized $93.9 million of revenue that was included in the deferred revenue balance at the beginning of the period. Transaction Price Allocated to the Remaining Performance Obligations As of September 30, 2018, revenue of approximately $149.1 million is expected to be recognized from remaining performance obligations for subscription contracts. We expect to recognize approximately $128.4 million of these remaining performance obligations over the next 12 months, with the balance recognized thereafter.
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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. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including our outstanding stock options, stock related to unvested restricted stock awards, and common stock issuable pursuant to the ESPP to the extent dilutive. The net loss per share is allocated based on the participation rights of the Class A and Class B common shares as if the loss for the year has been distributed. As the liquidation and dividend rights are identical, the net loss is allocated on a proportionate basis. We consider unvested restricted stock awards granted under the 2014 Equity Incentive Plan to be participating securities because holders of such shares have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares. In future periods to the extent we are profitable, we will subtract earnings allocated to these participating securities from net income to determine net income attributable to common stockholders. A reconciliation of the denominator used in the calculation of basic and diluted loss per share is as follows (in thousands, except share and per share data):
The anti-dilutive securities excluded from the weighted-average shares used to calculate the diluted net loss per common share were as follows:
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Organization and Significant Accounting Policies (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Principles of Consolidation | The financial information presented in the accompanying unaudited condensed consolidated financial statements has been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and in accordance with rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, the financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The condensed consolidated balance sheet data as of December 31, 2017 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting primarily of normal recurring accruals, necessary for a fair presentation of our financial position and results of operations. The operating results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results expected for the full year ending December 31, 2018. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of Estimates | The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and various other assumptions believed to be reasonable. These estimates include, but are not limited to, the allowance for doubtful accounts, the determination of the relative selling prices of our services, the measurement of material rights, health insurance claims incurred but not yet reported, valuation of available-for-sale marketable securities, useful lives of deferred contract costs, intangible assets and property and equipment, income taxes and certain assumptions used in the valuation of equity awards. While these estimates are based on our best knowledge of current events and actions that may affect us in the future, actual results may differ materially from these estimates. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | We generate revenue through the sale of subscriptions to our cloud-based software and the delivery of professional services. We recognize revenue when control of these services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those services. We determine revenue recognition through the following steps: • Identification of the contract, or contracts, with a customer • Identification of the performance obligations in the contract • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract • Recognition of revenue when, or as, we satisfy a performance obligation We report revenue net of sales and other taxes collected from customers to be remitted to government authorities. Subscription and Support Revenue We recognize subscription and support revenue on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our subscription contracts are generally to 36 months in duration, are billed in advance and are non-cancelable. We consider the access to Wdesk and related support services in a customer contract to be a series of distinct services which comprise a single performance obligation because they are substantially the same and have the same pattern of transfer. Professional Services Revenue and Customer Options Professional services revenues primarily consist of fees for document set up, XBRL tagging, and consulting with our customers on business processes and best practices for using Wdesk. We have determined that an agreement to purchase these professional services constitutes an option to purchase services in accordance with ASC 606 rather than an agreement that creates enforceable rights and obligations because of the customer's contractual right to cancel services that have not yet been used. In the limited case of agreements where we determined that the option provides the customer with a material right, we allocate a portion of the transaction price to the material right. Professional service agreements that do not contain a material right are accounted for when the customer exercises its option to purchase additional services. Revenue is recognized for document set ups when the service is complete and control has transferred to the customer. Revenues from XBRL tagging and consulting services are recognized as the services are performed.
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Contracts with Multiple Performance Obligations | Some of our contracts with customers contain multiple performance obligations in the event that we determine a material right exists. For these contracts, we account for the individual performance obligations separately when they are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. If these criteria are not met, the promised services are accounted for as a combined performance obligation. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. We determine the standalone selling prices based on our overall pricing objectives, taking into consideration market conditions and entity-specific factors, including the size of our arrangements, length of term, customer demographics and the numbers and types of users within our arrangements. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Revenue/Customer Deposits | Deferred Revenue We typically invoice our customers for subscription and support fees in advance on a quarterly, annual, two- or three-year basis, with payment due at the start of the subscription term. Unpaid invoice amounts for non-cancelable services starting in future periods are included in accounts receivable and deferred revenue. The portion of deferred revenue that we anticipate will be recognized after the succeeding twelve-month period is recorded as non-current deferred revenue, and the remaining portion is recorded as current deferred revenue. Customer Deposits As an agreement to purchase professional services constitutes a customer option, fees received in advance of these services being performed are considered customer deposits and are included in accrued expenses and other current liabilities on the condensed consolidated balance sheet. Unpaid invoice amounts for these professional services starting in future periods are excluded from accounts receivable and accrued expenses and other current liabilities.
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Deferred Commissions | Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions paid where the amortization period is one year or less are expensed as incurred. All other sales commissions are deferred and then amortized on a straight-line basis over a period of benefit that we have determined to be three years. We determined the period of benefit by taking into consideration our standard contract terms and conditions, rate of technological change and other factors. Amortization expense is included in sales and marketing expense in the accompanying condensed consolidated statements of operations. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | On December 22, 2017, the U.S. federal government enacted legislation commonly referred to as the “Tax Cuts and Jobs Act” (the “TCJA”). The TCJA makes widespread changes to the Internal Revenue Code, including, among other items, the introduction of a new international “Global Intangible Low-Taxed Income” (“GILTI”) regime effective January 1, 2018. Companies may adopt one of two views in regards to establishing deferred taxes in accordance with the new (“GILTI”) regime under ASC 740. Companies may account for the effects of GILTI either (1) in the period the entity becomes subject to GILTI, or (2) establish deferred taxes (similar to the guidance that currently exists with respect to basis differences that will reverse under current Subpart F rules) for basis differences that upon reversal will be subject to GILTI. We have elected to account for the effects of GILTI in the period incurred. Adjustments related to GILTI have been offset by a corresponding reduction to the valuation allowance and as a result have zero impact on our effective tax rate. We will continue to refine our calculations as additional guidance is released during the measurement period as permitted by SEC Staff Accounting Bulletin 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recently Adopted Accounting Pronouncements and New Accounting Pronouncements Not Yet Adopted | In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, also known as Accounting Standards Codification Topic 606 (ASC 606), which amends the guidance in former ASC 605, Revenue Recognition. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised 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. Additionally, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Effective January 1, 2018, we adopted ASU 2014-09 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of our accumulated deficit. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The primary impact on accounts receivables and deferred revenue of adopting the new standard relates to recording deferred revenue when payments are due in advance of our performance of subscription based contracts. This recording has resulted in an offsetting increase in accounts receivable and deferred revenue. The effect of adopting the new standard on accrued expenses and other current liabilities relates to the reclassification of amounts collected in advance related to the purchase of professional services from deferred revenue to accrued expenses and other current liabilities as these agreements to purchase professional services constitute a customer option. The primary impact of adopting the new standard on our sales and marketing expense relates to the deferral of incremental commission costs of obtaining subscription contracts. Under the previous guidance, we deferred only direct and incremental commission costs to obtain a contract and amortized those costs on a straight-line basis over the lesser of 12 months or the non-cancelable term of the customer contract based on the terms of our commission arrangements. Under the new standard, we defer all incremental commission costs to obtain the contract. We amortize these costs on a straight-line basis over a period of benefit that we have determined to be three years. The adoption of ASC 606 primarily resulted in an acceleration of revenue as of December 31, 2017, which in turn reduced our existing deferred tax asset for amounts that had previously been included in deferred revenue. Additionally, the amortization of the costs of obtaining a contract has generated additional deferred tax liabilities that ultimately reduced our net deferred tax asset position. As we have provided a full valuation allowance against our net deferred tax assets in the jurisdictions impacted by the adoption of ASC 606, this aggregate impact was offset by a corresponding reduction to the valuation allowance. The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASU 2014-09 were as follows (in thousands):
In accordance with the new revenue standard requirements, the impact of adoption on our condensed consolidated balance sheet as of September 30, 2018 and statement of operations for the three and nine months ended September 30, 2018 was as follows (in thousands, except per share data):
The adoption of ASC 606 had no impact on our total cash flows from operations. In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The ASU is effective for annual periods beginning after December 15, 2017 and interim periods within those annual periods. Effective January 1, 2018, we adopted this standard. The adoption of this new guidance did not have a material impact on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This ASU simplifies the accounting for nonemployee share-based payment transactions. Under the new guidance, equity-classified share-based payment awards issued to nonemployees will now be measured on the grant date, instead of the previous requirement to remeasure the awards through performance completion date. Awards that include performance conditions will recognize compensation cost when the achievement of the performance condition is probable, rather than upon achievement of the performance condition. Finally, the current requirement to reassess the classification (equity or liability) for nonemployee awards upon vesting will be eliminated, except for awards in the form of convertible instruments. The ASU is effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. Early adoption is permitted, including interim periods, but no earlier than the adoption of ASC 606. Effective June 20, 2018, we adopted this standard. The adoption of this new guidance did not have a material impact on our consolidated financial statements. New Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued guidance codified in ASC 842, Leases, which supersedes the guidance in former ASC 840, Leases, to increase transparency and comparability among organizations by requiring recognition of right-of-use assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements (with the exception of short-term leases). The standard will become effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements that allows entities to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We plan to elect this new transition guidance when we adopt the standard on January 1, 2019. We have formed a team to identify and analyze our arrangements for leases and have begun assessing our lease population for the new standard and evaluating the impact to our consolidated financial statements. We currently expect to use the package of practical expedients which allows us to not (1) reassess whether any expired or existing contracts are considered or contain leases; (2) reassess the lease classification for any expired or existing leases; and (3) reassess the initial direct costs for any existing leases. We anticipate the standard will have a material impact on our balance sheet. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the current accounting guidance and requires the measurement of all expected losses based on historical experience, current conditions and reasonable and supportable forecasts. For trade receivables, loans, and other financial instruments, we will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. The standard will become effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. Application of the amendments is through a cumulative-effect adjustment to retained earnings as of the effective date. We plan to adopt this standard on the effective date and are currently evaluating the impact of this new standard on our 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, which clarifies the accounting for implementation costs in cloud computing arrangements. The update will become effective for interim and annual periods beginning after December 15, 2019 and may be adopted either retrospectively or prospectively. Early adoption is permitted. We plan to adopt this standard prospectively on the effective date. We are currently evaluating the impacts that adoption of this ASU will have on our consolidated financial statements.
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Fair Value of Financial Instruments | Cash equivalents primarily consist of AAA-rated money market funds with overnight liquidity and no stated maturities. We classified cash equivalents as Level 1 due to the short-term nature of these instruments and measured the fair value based on quoted prices in active markets for identical assets. When available, our marketable securities are valued using quoted prices for identical instruments in active markets. If we are unable to value our marketable securities using quoted prices for identical instruments in active markets, we value our investments using broker reports that utilize quoted market prices for comparable instruments. We validate, on a sample basis, the derived prices provided by the brokers by comparing their assessment of the fair values of our investments against the fair values of the portfolio balances of another third-party professional pricing service. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Compensation | The fair value of each option grant and each share issued under the ESPP is estimated on the date of grant using the Black-Scholes option-pricing model. For stock options, expected volatility is based on the historical volatility of our common stock and historical volatilities for publicly traded stock of comparable companies over the estimated expected life of the options. For the ESPP purchase rights, expected volatility is based on the historical volatility of our common stock. The expected term represents the period of time the options and the ESPP purchase rights are expected to be outstanding. For stock options, the expected term is based on the “simplified method” as defined by SEC Staff Accounting Bulletin No. 110 (Topic 14.D.2). We use the “simplified method” due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the options. The expected term for the ESPP purchase rights approximates the offering period. The risk-free interest rate is based on yields on U.S. Treasury STRIPS (Separate Trading of Registered Interest and Principal of Securities) with a maturity similar to the estimated expected term of the options and ESPP purchase rights. |
Organization and Significant Accounting Policies (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASU 2014-09 were as follows (in thousands):
In accordance with the new revenue standard requirements, the impact of adoption on our condensed consolidated balance sheet as of September 30, 2018 and statement of operations for the three and nine months ended September 30, 2018 was as follows (in thousands, except per share data):
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Supplemental Consolidated Balance Sheet and Statement of Operations Information (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consisted of (in thousands):
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Schedule of Other Income and (Expense), net | Other income, net for the three and nine months ended September 30, 2018 and 2017 consisted of (in thousands):
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Cash Equivalents and Marketable Securities (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Marketable Securities | At September 30, 2018, marketable securities consisted of the following (in thousands):
At December 31, 2017, marketable securities consisted of the following (in thousands):
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Schedule of Cash and Cash Equivalents | At September 30, 2018, marketable securities consisted of the following (in thousands):
At December 31, 2017, marketable securities consisted of the following (in thousands):
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Schedule of Available-for-sale Securities, Continuous Unrealized Loss Position | The following table presents gross unrealized losses and fair values for those marketable securities that were in an unrealized loss position as of September 30, 2018, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in thousands):
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Fair Value Measurements (Tables) |
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets Measured on Recurring Basis | The following table presents information about our assets that are measured at fair value on a recurring basis using the above input categories (in thousands):
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Commitments and Contingencies (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Lease Payments Under Operating Leases | As of September 30, 2018, future estimated minimum lease payments under non-cancelable operating leases were as follows (in thousands):
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Stock-Based Compensation (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock-based Compensation Expense | Stock-based compensation expense was recorded in the following cost and expense categories consistent with the respective employee or service provider’s related cash compensation (in thousands):
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The fair value of our stock options and ESPP purchase rights was estimated assuming no expected dividends and the following weighted-average assumptions:
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Schedule of Share-based Payment Award, ESPP, Valuation Assumptions | The fair value of our stock options and ESPP purchase rights was estimated assuming no expected dividends and the following weighted-average assumptions:
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Schedule of Stock-Option Activity | The following table summarizes the option activity under the Plans for the nine months ended September 30, 2018:
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Summary of Restricted Stock Awards | The following table summarizes the restricted stock award activity under the Plan for the nine months ended September 30, 2018:
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Summary of Restricted Stock Units | The following table summarizes the restricted stock unit activity under the Plan for the nine months ended September 30, 2018:
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Revenue Recognition (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table presents our revenues disaggregated by industry (in thousands). Certain year-to-date amounts have been reclassified to conform with current period presentation. These reclassifications have no impact on total revenue.
The following table presents our revenues disaggregated by type of good or service (in thousands):
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Net Loss Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | A reconciliation of the denominator used in the calculation of basic and diluted loss per share is as follows (in thousands, except share and per share data):
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The anti-dilutive securities excluded from the weighted-average shares used to calculate the diluted net loss per common share were as follows:
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Organization and Significant Accounting Policies - Accounting Policies (Details) |
9 Months Ended |
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Sep. 30, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Capitalized cost, amortization period under new and prior guidance | 12 months |
Sales commissions amortization period | 3 years |
Accounting Standards Update 2014-09 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Capitalized cost, amortization period under new and prior guidance | 3 years |
Subscription and support | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Revenue recognition, customer contract period, min | 3 months |
Revenue recognition, customer contract period, max | 36 months |
Supplemental Consolidated Balance Sheet and Statement of Operations Information - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Accrued Liabilities and Other Liabilities [Abstract] | |||
Accrued vacation | $ 6,819 | $ 6,087 | |
Accrued commissions | 3,342 | 3,297 | |
Accrued bonuses | 9,672 | 4,419 | |
Estimated health insurance claims | 1,190 | 1,090 | |
ESPP employee contributions | 1,165 | 1,419 | |
Customer deposits | 7,048 | 0 | |
Accrued other liabilities | 4,910 | 3,900 | |
Accrued expenses and other current liabilities | $ 34,146 | $ 27,168 | $ 20,212 |
Supplemental Consolidated Balance Sheet and Statement of Operations Information - Other Income, Net (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
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Other Nonoperating Income (Expense) [Abstract] | ||||
Interest income | $ 341 | $ 168 | $ 843 | $ 388 |
Income from training reimbursement program | 0 | 207 | 208 | 943 |
Other | (138) | (177) | (13) | (345) |
Nonoperating income (expense) | $ 203 | $ 198 | $ 1,038 | $ 986 |
Cash Equivalents and Marketable Securities - Continuous Unrealized Loss Position (Details) $ in Thousands |
Sep. 30, 2018
USD ($)
|
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Fair Value | |
Less than 12 months | $ 8,095 |
12 months or greater | 4,515 |
Unrealized Loss | |
Less than 12 months | (27) |
12 months or greater | (49) |
U.S. treasury debt securities | |
Fair Value | |
Less than 12 months | 2,480 |
12 months or greater | 0 |
Unrealized Loss | |
Less than 12 months | (4) |
12 months or greater | 0 |
U.S. corporate debt securities | |
Fair Value | |
Less than 12 months | 5,615 |
12 months or greater | 4,515 |
Unrealized Loss | |
Less than 12 months | (23) |
12 months or greater | $ (49) |
Deferred Costs (Details) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2018
USD ($)
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Sep. 30, 2018
USD ($)
|
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Revenue from Contract with Customer [Abstract] | ||
Deferred costs | $ 13,300 | $ 13,300 |
Amortization expense for deferred costs | 2,500 | 6,900 |
Impairment loss | $ 0 | $ 0 |
Commitments and Contingencies - Minimum Lease Payments Under Operating Lease (Details) $ in Thousands |
Sep. 30, 2018
USD ($)
|
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Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
Remainder of 2018 | $ 1,047 |
2019 | 3,616 |
2020 | 3,344 |
2021 | 3,252 |
2022 | 2,969 |
Thereafter | 13,318 |
Total minimum lease payments | $ 27,546 |
Stock-Based Compensation - Narrative (Details) - USD ($) |
1 Months Ended | 9 Months Ended | |
---|---|---|---|
Jun. 13, 2017 |
Jun. 30, 2018 |
Sep. 30, 2018 |
|
Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock purchase offering period | 6 months | ||
Employee Stock Purchase Plan | Class A Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares available for grant | 4,820,623 | ||
Purchase price of common stock, percentage of fair market value | 85.00% | ||
Maximum stock purchase value per employee | $ 12,500 | ||
2014 Equity Incentive Plan | Class A Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Increase in number of shares available for grant | 3,000,000 | ||
Number of shares available for grant | 3,187,998 |
Stock-Based Compensation - Restricted Stock Awards (Details) - Restricted stock awards - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vested in period, fair value | $ 2,200,000 | $ 2,400,000 |
Number of Shares (in shares) | ||
Unvested at beginning of period (in shares) | 163,332 | |
Granted (in shares) | 0 | |
Forfeited (in shares) | 0 | |
Vested (in shares) | (163,332) | |
Unvested at end of period (in shares) | 0 | |
Weighted- Average Grant Date Fair Value (in dollars per share) | ||
Unvested at beginning of period (in dollars per share) | $ 13.40 | |
Granted (in dollars per share) | 0 | |
Forfeited (in dollars per share) | 0 | |
Vested (in dollars per share) | 13.40 | |
Unvested at end of period (in dollars per share) | $ 0 | |
Unrecognized compensation expense | $ 0 | |
Executive Officer | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period (years) | 3 years |
Stock-Based Compensation - Employee Stock Purchase Plan (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Proceeds from shares issued in connection with employee stock purchase plan | $ 1,846 | $ 0 | $ 3,216 | $ 0 |
Employee Stock Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense | $ 407 | $ 407 | ||
Unrecognized compensation expense, period for recognition (years) | 3 months 18 days | |||
Class A Common Stock | Employee Stock Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares issued during period | 179,377 | |||
Shares issued during period, weighted average price per share (in dollars per share) | $ 17.93 | |||
Proceeds from shares issued in connection with employee stock purchase plan | $ 3,200 |
Revenue Recognition - Deferred Revenue and Transaction Price Allocated to the Remaining Performance Obligations (Details) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2018
USD ($)
|
|
Revenue from Contract with Customer [Abstract] | ||
Deferred revenue recognized | $ 47.2 | $ 93.9 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue expected to be recognized | $ 128.4 | $ 128.4 |
Expected period of recognition | 12 months | 12 months |
Net Loss Per Share - Earnings Per Share Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Numerator | ||||
Net loss | $ (10,964) | $ (14,073) | $ (42,350) | $ (30,105) |
Denominator | ||||
Weighted-average common shares outstanding - basic and diluted (in shares) | 43,973,428 | 41,815,139 | 43,359,939 | 41,453,736 |
Basic and diluted net loss per share (in dollars per share) | $ (0.25) | $ (0.34) | $ (0.98) | $ (0.73) |
Class A Common Stock | ||||
Numerator | ||||
Net loss | $ (8,532) | $ (10,467) | $ (32,616) | $ (22,255) |
Denominator | ||||
Weighted-average common shares outstanding - basic and diluted (in shares) | 34,221,118 | 31,100,994 | 33,393,426 | 30,644,955 |
Basic and diluted net loss per share (in dollars per share) | $ (0.25) | $ (0.34) | $ (0.98) | $ (0.73) |
Class B Common Stock | ||||
Numerator | ||||
Net loss | $ (2,432) | $ (3,606) | $ (9,734) | $ (7,850) |
Denominator | ||||
Weighted-average common shares outstanding - basic and diluted (in shares) | 9,752,310 | 10,714,145 | 9,966,513 | 10,808,781 |
Basic and diluted net loss per share (in dollars per share) | $ (0.25) | $ (0.34) | $ (0.98) | $ (0.73) |
Net Loss Per Share - Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Shares subject to outstanding common stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 6,693,724 | 8,336,496 |
Shares subject to unvested restricted stock awards | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 176,665 |
Shares issuable pursuant to the ESPP | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 108,929 | 87,265 |