10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________

FORM 10-Q

___________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

☐ 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

___________________________________

WORKIVA INC.

(Exact name of registrant as specified in its charter)

___________________________________

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)
___________________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Class A common stock, par value $.001	WK	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý	Accelerated filer o
Non-accelerated filer o	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ý

As of November 4, 2019, there were approximately 37,820,028 shares of the registrant's Class A common stock and 8,640,596 shares of the registrant's Class B common stock outstanding.

WORKIVA INC.

TABLE OF CONTENTS

		Page
	Part I. Financial Information
Item 1.	Unaudited Consolidated Financial Statements:	1
	Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2019 and 2018	3
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2019 and 2018	4
	Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the Three and Nine Months Ended September 30, 2019 and 2018	5
	Condensed Consolidated Statements of Cash Flows for the Three and Nine Months Ended September 30, 2019 and 2018	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	38
Item 4.	Controls and Procedures	39
	Part II. Other Information
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 6.	Exhibits	44
	Signatures	S-1

i

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical facts, including statements regarding our future results of operations and financial position, our business strategy and plans and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2018, in “Item 1A. Risk Factors” in Part II of this Quarterly Report on Form 10-Q and in any subsequent filing we make with the SEC, as well as in any documents incorporated by reference that describe risks and factors that could cause results to differ materially from those projected in these forward-looking statements.

Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements or events and circumstances reflected in the forward-looking statements will occur. We are under no duty to update any of these forward-looking statements after completion of this Quarterly Report on Form 10-Q to conform these statements to actual results or revised expectations.

ii

Part I. Financial Information

Item 1.  Financial Statements

WORKIVA INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
	As of September 30, 2019		As of December 31, 2018
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	389,124	$	77,584
Marketable securities	95,644		20,764
Accounts receivable, net of allowance for doubtful accounts of $890 and $956 at September 30, 2019 and December 31, 2018, respectively	43,590		65,107
Deferred commissions	12,740		8,178
Other receivables	1,651		1,181
Prepaid expenses	8,148		4,417
Total current assets	550,897		177,231
Property and equipment, net	40,292		41,468
Operating lease right-of-use assets	15,917		—
Deferred commissions, non-current	13,940		10,569
Intangible assets, net	1,795		1,266
Other assets	3,920		577
Total assets	$	626,761	$	231,111

1

WORKIVA INC. CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(in thousands, except share and per share amounts)
	As of September 30, 2019		As of December 31, 2018
	(unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	4,895	$	5,461
Accrued expenses and other current liabilities	47,302		36,353
Deferred revenue	156,352		148,545
Current portion of financing obligations	1,295		1,222
Total current liabilities	209,844		191,581
Convertible senior notes, net	278,422		—
Deferred revenue, non-current	31,467		25,171
Other long-term liabilities	1,387		6,891
Operating lease liabilities, non-current	19,273		—
Financing obligations, non-current	16,234		17,208
Total liabilities	556,627		240,851
Stockholders’ equity (deficit)
Class A common stock, $0.001 par value per share, 1,000,000,000 shares authorized, 37,780,966 and 34,498,391 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively	38		34
Class B common stock, $0.001 par value per share, 500,000,000 shares authorized, 8,640,596 and 9,545,596 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively	9		10
Preferred stock, $0.001 par value per share, 100,000,000 shares authorized, no shares issued and outstanding	—		—
Additional paid-in-capital	408,656		297,145
Accumulated deficit	(338,863)		(307,027)
Accumulated other comprehensive income	294		98
Total stockholders’ equity (deficit)	70,134		(9,740)
Total liabilities and stockholders’ equity (deficit)	$	626,761	$	231,111

See accompanying notes.

2

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,
	2019		2018		2019		2018
Revenue
Subscription and support	$	63,022	$	51,306	$	179,617	$	146,613
Professional services	11,157		9,567		38,009		33,296
Total revenue	74,179		60,873		217,626		179,909
Cost of revenue
Subscription and support	10,924		8,139		30,935		25,578
Professional services	10,827		7,520		31,029		22,888
Total cost of revenue	21,751		15,659		61,964		48,466
Gross profit	52,428		45,214		155,662		131,443
Operating expenses
Research and development	22,899		19,984		66,705		60,829
Sales and marketing	32,990		24,068		86,568		67,326
General and administrative	12,017		11,864		33,626		45,286
Total operating expenses	67,906		55,916		186,899		173,441
Loss from operations	(15,478)		(10,702)		(31,237)		(41,998)
Interest income	1,460		341		2,593		843
Interest expense	(1,959)		(448)		(2,832)		(1,347)
Other income (expense), net	24		(138)		(259)		195
Loss before provision for income taxes	(15,953)		(10,947)		(31,735)		(42,307)
Provision for income taxes	98		17		101		43
Net loss	$	(16,051)	$	(10,964)	(31,836)		(42,350)
Net loss per common share:
Basic and diluted	$	(0.34)	$	(0.25)	$	(0.69)	$	(0.98)
Weighted-average common shares outstanding - basic and diluted	46,731,663		43,973,428		46,048,037		43,359,939

See accompanying notes.

3

WORKIVA INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) (unaudited)
	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Net loss	$	(16,051)	$	(10,964)	$	(31,836)	$	(42,350)
Other comprehensive income, net of tax
Foreign currency translation adjustment, net of income tax expense of $11 and $5 for the three months ended September 30, 2019 and 2018, respectively, and net of income tax expense of $16 and $5 for the nine months ended September 30, 2019 and 2018, respectively	19		(10)		34		21
Unrealized gain (loss) on available-for-sale securities, net of income tax benefit (expense) of $(10) and $1 for the three months ended September 30, 2019 and 2018, respectively, and net of income tax benefit (expense) of $(51) and $1 for the nine months ended September 30, 2019 and 2018, respectively	43		22		162		(6)
Other comprehensive income, net of tax	62		12		196		15
Comprehensive loss	$	(15,989)	$	(10,952)	$	(31,640)	$	(42,335)

See accompanying notes.

4

WORKIVA INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(in thousands) (unaudited)
	Common Stock (Class A and B)
	Shares	Amount		Additional Paid-in-Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders' Equity (Deficit)
Balances at December 31, 2018	44,044	$	44	$	297,145	$	98	$	(307,027)	$	(9,740)
Stock-based compensation expense	—	—		8,193		—		—		8,193
Issuance of common stock upon exercise of stock options	961	1		11,054		—		—		11,055
Issuance of common stock under employee stock purchase plan	101	—		2,149		—		—		2,149
Issuance of restricted stock units	25	—		—		—		—		—
Tax withholding related to net share settlements of stock-based compensation awards	(10)	—		(390)		—		—		(390)
Net loss	—	—		—		—		(7,463)		(7,463)
Other comprehensive income	—	—		—		52		—		52
Balances at March 31, 2019	45,121	$	45	$	318,151	$	150	$	(314,490)	$	3,856
Stock-based compensation expense	—	—		8,513		—		—		8,513
Issuance of common stock upon exercise of stock options	455	1		5,497		—		—		5,498
Issuance of restricted stock units	323	—		—		—		—		—
Net loss	—	—		—		—		(8,322)		(8,322)
Other comprehensive income	—	—		—		82		—		82
Balances at June 30, 2019	45,899	$	46	$	332,161	$	232	$	(322,812)	$	9,627
Stock-based compensation expense	—	—		9,223		—		—		9,223
Issuance of common stock upon exercise of stock options	401	1		5,939		—		—		5,940
Issuance of common stock under employee stock purchase plan	87	—		2,773		—		—		2,773
Issuance of restricted stock units	35	—		—		—		—		—
Equity component of convertible senior notes, net	—	—		58,560		—		—		58,560
Net loss	—	—		—		—		(16,051)		(16,051)
Other comprehensive income	—	—		—		62		—		62
Balances at September 30, 2019	46,422	$	47	$	408,656	$	294	$	(338,863)	$	70,134

5

WORKIVA INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)(continued)
(in thousands) (unaudited)
	Common Stock (Class A and B)
	Shares	Amount		Additional Paid-in-Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders' Deficit
Balances at December 31, 2017	42,369	$	42	$	248,289	$	72	$	(265,337)	$	(16,934)
Cumulative-effect adjustment in connection with the adoption of ASU 2014-09	—	—		—		—		8,381		8,381
Stock-based compensation expense	—	—		5,905		—		—		5,905
Issuance of common stock upon exercise of stock options	296	1		3,075		—		—		3,076
Issuance of common stock under employee stock purchase plan	80	—		1,370		—		—		1,370
Issuance of restricted stock units	9	—		—		—		—		—
Tax withholding related to net share settlements of stock-based compensation awards	(61)	—		(1,342)		—		—		(1,342)
Net loss	—	—		—		—		(9,618)		(9,618)
Other comprehensive loss	—	—		—		(56)		—		(56)
Balances at March 31, 2018	42,693	$	43	$	257,297	$	16	$	(266,574)	$	(9,218)
Stock-based compensation expense	—	—		10,465		—		—		10,465
Issuance of common stock upon exercise of stock options	328	—		3,317		—		—		3,317
Issuance of restricted stock units	64	—		—		—		—		—
Tax withholding related to net share settlements of stock-based compensation awards	(23)	—		(519)		—		—		(519)
Net loss	—	—		—		—		(21,768)		(21,768)
Other comprehensive income	—	—		—		59		—		59
Balances at June 30, 2018	43,062	$	43	$	270,560	$	75	$	(288,342)	$	(17,664)
Stock-based compensation expense	—	—		6,949		—		—		6,949
Issuance of common stock upon exercise of stock options	635	1		7,533		—		—		7,534
Issuance of common stock under employee stock purchase plan	99	—		1,846		—		—		1,846
Issuance of restricted stock units	4	—		—		—		—		—
Net loss	—	—		—		—		(10,964)		(10,964)
Other comprehensive income	—	—		—		12		—		12
Balances at September 30, 2018	43,800	$	44	$	286,888	$	87	$	(299,306)	$	(12,287)

See accompanying notes.

6

WORKIVA INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Cash flows from operating activities
Net loss	$	(16,051)	$	(10,964)	$	(31,836)	$	(42,350)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	1,058		1,133		2,932		2,881
Stock-based compensation expense	9,223		6,949		25,929		23,319
(Recovery of) provision for doubtful accounts	(104)		128		(58)		311
Amortization (accretion) of premiums and discounts on marketable securities, net	15		(66)		(89)		(63)
Amortization of debt discount and issuance costs	1,083		—		1,083		—
Deferred income tax	(21)		(4)		(67)		(4)
Changes in assets and liabilities:
Accounts receivable	3,579		(1,691)		21,530		4,615
Deferred commissions	(2,106)		(1,939)		(7,968)		(5,608)
Operating lease right-of-use asset	581		—		1,805		—
Other receivables	(417)		(591)		(470)		(416)
Prepaid expenses and other	(191)		2,501		(3,737)		712
Other assets	(943)		(389)		(2,349)		(557)
Accounts payable	516		616		160		1,999
Deferred revenue	3,830		8,630		14,112		15,032
Operating lease liability	(758)		—		(2,226)		—
Accrued expenses and other liabilities	5,403		3,269		9,828		6,948
Net cash provided by operating activities	4,697		7,582		28,579		6,819
Cash flows from investing activities
Purchase of property and equipment	(663)		(523)		(2,860)		(742)
Purchase of marketable securities	(54,749)		(6,441)		(95,466)		(17,724)
Sale of marketable securities	498		—		498		—
Maturities of marketable securities	1,500		4,600		20,390		9,000
Purchase of intangible assets	(51)		(46)		(712)		(174)
Other investments	(1,000)		—		(1,000)		—
Net cash used in investing activities	(54,465)		(2,410)		(79,150)		(9,640)

7

WORKIVA INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in thousands) (unaudited)
	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Cash flows from financing activities
Proceeds from option exercises	5,940		7,534		22,493		13,927
Taxes paid related to net share settlements of stock-based compensation awards	—		—		(390)		(1,861)
Proceeds from shares issued in connection with employee stock purchase plan	2,773		1,846		4,922		3,216
Proceeds from the issuance of convertible senior notes, net of issuance costs	335,899		—		335,899		—
Principal payments on capital lease and financing obligations	(306)		(287)		(901)		(879)
Proceeds from government grants	—		—		—		22
Net cash provided by financing activities	344,306		9,093		362,023		14,425
Effect of foreign exchange rates on cash	(127)		83		88		(94)
Net increase in cash and cash equivalents	294,411		14,348		311,540		11,510
Cash and cash equivalents at beginning of period	94,713		57,495		77,584		60,333
Cash and cash equivalents at end of period	$	389,124	$	71,843	$	389,124	$	71,843
Supplemental cash flow disclosure
Cash paid for interest	$	408	$	436	$	1,294	$	1,304
Cash paid for income taxes, net of refunds	$	80	$	—	$	341	$	56
Supplemental disclosure of noncash investing and financing activities
Allowance for tenant improvements	$	—	$	1,153	$	—	$	1,280
Purchases of property and equipment, accrued but not paid	$	—	$	105	$	—	$	105

See accompanying notes.

8

WORKIVA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Significant Accounting Policies

Organization

Workiva Inc., a Delaware corporation, and its wholly-owned subsidiaries (the “Company” or “we” or “us”) is a leading provider of cloud-based solutions for connected reporting and compliance. Our platform, Wdesk, is used by thousands of public and private companies, government agencies and higher-education institutions. Wdesk offers controlled collaboration, data linking, data integrations, granular permissions, process management and a full audit trail. We sell to customers in the areas of: finance and accounting; risk and controls; regulatory reporting; financial close, management and performance reporting; and statutory and corporate tax reporting. Our operational headquarters are located in Ames, Iowa, with additional offices located in the United States, Europe, the Asia-Pacific region and Canada.

We updated our accounting policies on the use of estimates, impairment of long-lived assets and leases as a result of our adopting Financial Accounting Standards Board (FASB) guidance issued in accounting standards codification (ASC) 842, Leases, under the Accounting Standards Update (ASU) 2016-02 (collectively the new lease 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, 2018, filed with the SEC on February 20, 2019, 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, 2018 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, 2019 are not necessarily indicative of the results expected for the full year ending December 31, 2019.

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, 2018 filed with the SEC on February 20, 2019.

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. Additionally, certain prior period amounts have been reclassified for consistency with the current year presentation. The reclassification of the prior period amounts were not material to the previously reported consolidated financial statements.

9

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, discount rates used in the valuation of right-of-use assets and lease liabilities, the fair value of the liability and equity components of the convertible senior notes, 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.

Impairment of Long-Lived Assets

Long-lived assets, such as property, equipment, right-of-use assets and software and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If circumstances require that a long-lived asset or asset group be tested for possible impairment, we first compare the undiscounted cash flows expected to be generated by that long-lived asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value.

Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities on our condensed consolidated balance sheets. We currently have no finance leases.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Our variable lease payments consist of non-lease services related to the lease. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components. We have elected to account for these lease and non-lease components as a single lease component. We are also electing not to apply the recognition requirements to short-term leases of 12 months or less and instead will recognize lease payments as expense on a straight-line basis over the lease term.

10

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“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).

In July 2018, the FASB issued an update (ASU 2018-11) to the existing transition guidance that allows entities to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Effective January 1, 2019, we adopted ASC 842 using this new transition guidance. The comparative information has not been restated and continues to be reported under the accounting standard in effect for those periods.

We have elected 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 did not elect the hindsight practical expedient, which permits entities to use hindsight in determining the lease term and assessing impairment.

Adoption of the new standard had a material impact on our condensed consolidated balance sheets. The most significant impacts related to the recognition of right-of-use assets and lease liabilities for operating leases. The adoption of ASC 842 had no impact on our condensed consolidated statements of operations or total cash flows from operations.

The cumulative effect of the changes made to our consolidated January 1, 2019 balance sheet for the adoption of ASC 842 were as follows (in thousands):

	As of December 31, 2018		Adjustments due to ASC 842 adoption		As of January 1, 2019
Assets
Operating right-of-use asset	$	—	$	15,694	$	15,694
Liabilities
Accrued expenses and other current liabilities	36,353		2,319		38,672
Other long-term liabilities	6,891		(6,007)		884
Operating lease liabilities, non-current	—		19,382		19,382

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 adopted this standard prospectively effective April 1, 2019. The adoption of this new guidance did not have a material impact on our consolidated financial statements.

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New Accounting Pronouncements Not Yet Adopted

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 that reflects probable losses rather than the incurred loss model for recognizing credit losses. 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.

2. Supplemental Consolidated Balance Sheet Information

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

	As of September 30, 2019		As of December 31, 2018
Accrued vacation	$	8,095	$	6,906
Accrued commissions	4,574		7,265
Accrued bonuses	11,348		5,643
Estimated health insurance claims	1,150		1,100
ESPP employee contributions	2,026		2,156
Customer deposits	10,814		7,395
Operating lease liabilities	2,827		—
Accrued other liabilities	6,468		5,888
	$	47,302	$	36,353

3. Cash Equivalents and Marketable Securities

At September 30, 2019, marketable securities consisted of the following (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Fair Value
Money market funds	$	368,634	$	—	$	—	$	368,634
U.S. treasury debt securities	10,284		2		(1)		10,285
U.S. corporate debt securities	85,216		148		(5)		85,359
	$	464,134	$	150	$	(6)	$	464,278
Included in cash and cash equivalents	$	368,634	$	—	$	—	$	368,634
Included in marketable securities	$	95,500	$	150	$	(6)	$	95,644

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At December 31, 2018, marketable securities consisted of the following (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Fair Value
Money market funds	$	52,068	$	—	$	—	$	52,068
Commercial paper	7,448		—		—		7,448
U.S. treasury debt securities	2,494		—		(1)		2,493
U.S. corporate debt securities	10,890		—		(67)		10,823
	$	72,900	$	—	$	(68)	$	72,832
Included in cash and cash equivalents	$	52,068	$	—	$	—	$	52,068
Included in marketable securities	$	20,832	$	—	$	(68)	$	20,764

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, 2019, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in thousands):

	As of September 30, 2019
	Less than 12 months				12 months or greater
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. treasury debt securities	$	6,339	$	(1)	$	—	$	—
U.S. corporate debt securities	7,691		(3)		3,000		(2)
Total	$	14,030	$	(4)	$	3,000	$	(2)

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, 2019 to hold these investments until the cost basis is recovered.

4. 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.

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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, 2019, 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):

	Fair Value Measurements as of September 30, 2019						Fair Value Measurements as of December 31, 2018
Description	Total		Level 1		Level 2		Total		Level 1		Level 2
Money market funds	$	368,634	$	368,634	$	—	$	52,068	$	52,068	$	—
Commercial paper	—		—		—		7,448		—		7,448
U.S. treasury debt securities	10,285		—		10,285		2,493		—		2,493
U.S. corporate debt securities	85,359		—		85,359		10,823		—		10,823
	$	464,278	$	368,634	$	95,644	$	72,832	$	52,068	$	20,764
Included in cash and cash equivalents	$	368,634					$	52,068
Included in marketable securities	$	95,644					$	20,764

Convertible Senior Notes

As of September 30, 2019, the fair value of our convertible senior notes was $314.2 million. The fair value was determined based on the quoted price of the convertible senior notes in an over-the-counter market on the last trading day of the reporting period and has been classified as Level 2 in the fair value hierarchy. See Note 6 to the condensed consolidated financial statements for more information.

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5. Leases

Operating Leases

We lease certain office and residential space under non-cancelable operating leases with various lease terms through June 2043. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Certain office leases include one or more options to renew, with renewal terms that can extend the lease term from 3 to 5 years. The exercise of lease renewal options is at our sole discretion and is generally excluded from the lease term at lease inception. Our leases generally require us to pay a proportionate share of real estate taxes, insurance, common area maintenance, and other operating costs in addition to a base or fixed rent.

The components of lease expense were as follows (in thousands):

	Three months ended September 30, 2019		Nine months ended September 30, 2019
Operating lease cost	$	837	$	2,600
Short-term lease cost	347		885
Variable lease cost	259		691
	$	1,443	$	4,176

Supplemental cash flow information related to leases was as follows (in thousands):

	Three months ended September 30, 2019		Nine months ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,031	$	3,111
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	—	$	2,033

Other supplemental information related to leases was as follows:

	As of September 30, 2019
Weighted Average Remaining Lease Term (in years)
Operating leases	7.9
Weighted Average Discount Rate
Operating leases	5.7	%

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As of September 30, 2019, future estimated minimum lease payments under non-cancelable operating leases were as follows (in thousands):

	Operating Leases
Remainder of 2019	$	910
2020	4,153
2021	4,237
2022	3,872
2023	3,540
Thereafter	11,255
Total minimum lease payments	27,967
Less: Amount representing interest	(5,867)
Total	$	22,100

As of September 30, 2019, we did not have additional operating or financing leases that had not yet commenced.

6. Debt

Other Long-Term Debt

In August 2014, we entered into a credit facility with Silicon Valley Bank, which provided us with a revolving line of credit. Under the agreement, we could borrow up to $15.0 million with interest accrued at the bank's prime lending rate. In August 2019,we terminated our credit facility with Silicon Valley Bank. No amounts were outstanding at the time of termination.

Convertible Senior Notes

In August 2019, we issued $345.0 million aggregate principal amount of 1.125% convertible senior notes due 2026 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, including the exercise in full by the initial purchasers of their option to purchase an additional $45.0 million principal amount (the “Notes”). The Notes were issued pursuant to an indenture and are senior, unsecured obligations of the Company. The Notes bear interest at a fixed rate of 1.125% per annum, payable semi-annually in arrears on February 15 and August 15 of each year, commencing on February 15, 2020. Proceeds from the issuance of the Notes totaled $335.9 million, net of initial purchaser discounts and issuance costs.

The initial conversion rate is 12.4756 shares of our common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $80.16 per share, subject to adjustment upon the occurrence of specified events. The Notes will be convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding May 15, 2026 only under the following circumstances:

•during any calendar quarter commencing after the calendar quarter ending on September 30, 2019 (and only during such calendar quarter), if the last reported sale price of our Class A common stock, par value $0.001 per share (which we refer to in this offering memorandum as our “Class A common stock”), for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

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•during the five consecutive business day period immediately following any ten consecutive trading day period (the “measurement period”) in which the trading price (as defined below) per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A common stock and the conversion rate on each such trading day;

•if we call any or all of the Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or

•upon the occurrence of certain specified corporate events as set forth in the indenture.

On or after May 15, 2026 until the close of business on the business day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances.

Upon conversion, we will pay or deliver, as the case may be, cash, shares of our Class A common stock or a combination of cash and shares of our Class A common stock, at our election, in the manner and subject to the terms and conditions provided in the indenture. It is our current intent to settle conversions through a combination settlement of cash and shares of our Class A common stock with a specified dollar amount per $1,000 principal amount of Notes of $1,000.

If we undergo a fundamental change (as defined in the indenture), holders may require us to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, following certain corporate events that occur prior to the maturity date or if we deliver a notice of redemption, we will increase, in certain circumstances, the conversion rate for a holder who elects to convert its Notes in connection with such corporate event or notice of redemption, as the case may be. During the three months ended September 30, 2019, the conditions allowing holders of the Notes to convert were not met. The Notes were therefore not convertible during the three months ended September 30, 2019 and are classified as long-term debt on our condensed consolidated balance sheets.

We may not redeem the Notes prior to August 21, 2023. We may redeem for cash all or any portion of the Notes, at our option, on or after August 21, 2023 if the last reported sale price of our Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

In accounting for the issuance of the Notes, we separated the Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of similar debt instruments that do not have an associated convertible feature. The carrying amount of the equity component, representing the conversion option, was determined by deducting the fair value of the liability components from the par value of the Notes. The difference represents the debt discount that is amortized to interest expense at an effective interest rate of 4.3% over the term of the Notes. The carrying amount of the equity component was $60.1 million and is recorded in additional paid-in-capital. The equity component is not remeasured as long as it continues to meet the conditions for equity classification.

In accounting for the issuance costs related to the Notes, we allocated the total amount incurred to the liability and equity components of the Notes based on the proportion of the proceeds allocated to the debt and equity components. Issuance costs attributable to the liability component were $7.5 million. The issuance costs allocated to the liability component are amortized to interest expense under the effective

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interest rate method over the contractual term of the Notes. Issuance costs attributable to the equity component of the Notes were $1.6 million and are netted against the equity components representing the conversion option in additional paid-in capital.

The net carrying amount of the liability and equity components of the Notes was as follows (in thousands):

	September 30, 2019
Liability component:
Principal	$	345,000
Unamortized discount	(59,184)
Unamortized issuance costs	(7,394)
Net carrying amount	$	278,422
Equity component, net of purchase discounts and issuance costs	$	58,560

Interest expense related to the Notes is as follows (in thousands):

	Three and Nine Months Ended September 30, 2019
Contractual interest expense	$	468
Amortization of debt discount	963
Amortization of issuance costs	120
Total interest expense	$	1,551

7. Commitments and Contingencies

Other Purchase Commitments

During 2019, we entered into certain non-cancelable agreements with third-party providers for our use of cloud services in the ordinary course of business. Under these agreements, we are committed to purchase $18,000 in fiscal year 2019, $1.2 million in fiscal year 2020, $2.3 million in fiscal year 2021, and $1.2 million in fiscal year 2022.

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. We evaluate the development of legal matters on a regular basis and accrue a liability when we believe a loss is probable and the amount can be reasonably estimated. 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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8. 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, 2019, 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.

As of September 30, 2019, 2,295,587 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, 2019, 4,632,233 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 six-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):

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Cost of revenue
Subscription and support	$	386	$	161	$	1,142	$	560
Professional services	456		153		1,296		449
Operating expenses
Research and development	2,265		1,624		6,016		4,140
Sales and marketing	2,203		1,397		6,199		3,950
General and administrative	3,913		3,614		11,276		14,220
Total	$	9,223	$	6,949	$	25,929	$	23,319

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Stock Options

The following table summarizes the option activity under the Plans for the nine months ended September 30, 2019:

	Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
					(in thousands)
Outstanding at December 31, 2018	6,400,175	$	13.65	6.1	$	142,340
Granted	—	—
Forfeited	(40,203)	16.79
Exercised	(1,817,243)	12.38
Outstanding at September 30, 2019	4,542,729	$	14.13	5.7	$	134,913
Exercisable at September 30, 2019	3,786,843	$	13.57	5.4	$	114,571

Options to purchase Class A common stock generally vest over a three- or four-year period and are generally granted for a term of ten years. The total intrinsic value of options exercised during the nine months ended September 30, 2019 and 2018 was $69.6 million and $22.1 million, respectively.

No options were granted during the nine months ended September 30, 2019 and 2018. The total fair value of options vested during the nine months ended September 30, 2019 and 2018 was approximately $5.0 million and $10.3 million, respectively. Total unrecognized compensation expense of $4.5 million related to options will be recognized over a weighted-average period of 1.5 years.

Restricted Stock Units

Restricted stock units granted to employees generally vest over a three- or four-year period in equal, annual installments or with three-year cliff vesting. Restricted stock units granted to non-employee members of our Board of Directors generally have one-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, 2019 and 2018 was approximately $7.3 million and $7.2 million, respectively.

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The following table summarizes the restricted stock unit activity under the Plan for the nine months ended September 30, 2019:

	Number of Shares	Weighted- Average Grant Date Fair Value
Unvested at December 31, 2018	2,359,261	$	23.95
Granted	906,173	43.40
Forfeited	(62,767)	28.56
Vested(1)	(358,511)	20.35
Unvested at September 30, 2019	2,844,156	$	30.50

(1) During the nine months ended September 30, 2019, in accordance with our Nonqualified Deferred Compensation Plan, recipients of 250,750 shares had elected to defer settlement of the vested restricted stock units and 274,079 shares were released from deferral. This resulted in total deferred units of 531,292 as of September 30, 2019. 

Compensation expense associated with unvested restricted stock units is recognized on a straight-line basis over the vesting period. At September 30, 2019, there was approximately $58.3 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

The fair value of each share issued under the ESPP is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on the historical volatility of our common stock. The expected term represents the period of time the ESPP purchase rights are expected to be outstanding. 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 ESPP purchase rights.

The fair value of our ESPP purchase rights was estimated assuming no expected dividends and the following weighted-average assumptions:

	Nine months ended September 30,
	2019	2018
Expected term (in years)	0.5	0.5
Risk-free interest rate	1.9% - 2.6%	1.8% - 2.4%
Expected volatility	35.2% - 48.6%	22.2% - 36.4%

During the nine months ended September 30, 2019, 188,390 shares of common stock were purchased under the ESPP at a weighted-average price of $26.13 per share, resulting in cash proceeds of $4.9 million.

Compensation expense associated with ESPP purchase rights is recognized on a straight-line basis over the vesting period. At September 30, 2019, there was approximately $681,000 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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9. Revenue Recognition

Disaggregation of Revenue

The following table presents our revenues disaggregated by industry (in thousands). Certain prior year amounts have been reclassified to conform with current period presentation. These reclassifications have no impact on total revenue.

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Information technology	$	9,734	$	7,698	$	28,897	$	22,843
Consumer discretionary	8,324		7,248		24,632		20,918
Industrials	8,190		6,890		24,194		20,706
Diversified financials	8,570		6,847		24,271		20,198
Banks	7,476		6,044		21,099		17,628
Healthcare	6,949		5,347		20,463		15,786
Energy	5,515		4,805		16,605		14,303
Other	19,421		15,994		57,465		47,527
Total revenues	$	74,179	$	60,873	$	217,626	$	179,909

The following table presents our revenues disaggregated by type of good or service (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Subscription and support	$	63,022	$	51,306	$	179,617	$	146,613
XBRL professional services	7,767		6,312		28,699		23,080
Other services	3,390		3,255		9,310		10,216
Total revenues	$	74,179	$	60,873	$	217,626	$	179,909

Deferred Revenue

We recognized $59.0 million and $47.2 million of revenue during the three months ended September 30, 2019 and 2018, respectively, that was included in the deferred revenue balances at the beginning of the respective periods. We recognized $114.4 million and $93.9 million of revenue during the nine months ended September 30, 2019 and 2018, respectively, that was included in the deferred revenue balances at the beginning of the respective periods.

Transaction Price Allocated to the Remaining Performance Obligations

As of September 30, 2019, we expect revenue of approximately $212.9 million to be recognized from remaining performance obligations for subscription contracts. We expect to recognize approximately $162.6 million of these remaining performance obligations over the next 12 months, with the balance recognized thereafter.

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10. 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 convertible senior notes, outstanding stock options, stock related to unvested restricted stock units, and common stock issuable pursuant to the ESPP to the extent dilutive. Basic and diluted net loss per share was the same for each period presented, as the inclusion of all potential common shares outstanding would have been anti-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.

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):

	Three months ended
	September 30, 2019				September 30, 2018
	Class A		Class B		Class A		Class B
Numerator
Net loss	$	(12,978)	$	(3,073)	$	(8,532)	$	(2,432)
Denominator
Weighted-average common shares outstanding - basic and diluted	37,785,850		8,945,813		34,221,118		9,752,310
Basic and diluted net loss per share	$	(0.34)	$	(0.34)	$	(0.25)	$	(0.25)

	Nine months ended
	September 30, 2019				September 30, 2018
	Class A		Class B		Class A		Class B
Numerator
Net loss	$	(25,422)	$	(6,414)	$	(32,616)	$	(9,734)
Denominator
Weighted-average common shares outstanding - basic and diluted	36,771,232		9,276,805		33,393,426		9,966,513
Basic and diluted net loss per share	$	(0.69)	$	(0.69)	$	(0.98)	$	(0.98)

The anti-dilutive securities excluded from the weighted-average shares used to calculate the diluted net loss per common share were as follows:

	As of
	September 30, 2019	September 30, 2018
Shares subject to outstanding common stock options	4,542,729	6,693,724
Shares subject to unvested restricted stock units	3,375,448	2,215,129
Shares issuable pursuant to the ESPP	77,788	108,929

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this report and in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 20, 2019. In addition to historical consolidated financial information, this discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to these differences include, but are not limited to, those identified below, and those discussed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2018, in “Item 1A. Risk Factors” in Part II of this Quarterly Report on Form 10-Q and in any subsequent filing we make with the SEC.

Overview

Workiva is a leading provider of cloud-based solutions for connected reporting and compliance. Our platform, Wdesk, is used by thousands of public and private companies, government agencies and higher-education institutions. Wdesk offers controlled collaboration, data linking, data integrations, granular permissions, process management and a full audit trail. Wdesk users are able to combine narrative with their data, which greatly improves insight in their financial, regulatory and management reporting processes. As of September 30, 2019, 3,454 organizations, including more than 75% of Fortune 500^® companies, subscribed to our Wdesk platform.⁽¹⁾

(1) Claim not confirmed by FORTUNE or Fortune Media IP Limited. FORTUNE^® and FORTUNE 500^® are registered trademarks of Fortune Media IP Limited and are used under license. FORTUNE and Fortune Media IP Limited are not affiliated with, and do not endorse products or services of, Workiva Inc.

Our customers can connect Wdesk with data in more than 100 cloud and on-premise applications. In June 2018, we expanded our Wdesk platform with Wdata, which combines new data preparation capabilities with existing connectors and Application Programming Interfaces (APIs) to help our customers more easily capture, enrich and connect large datasets to Wdesk. Integrating enterprise business systems with our platform eliminates manual steps in the reporting and analysis process after the data leaves our customers' Enterprise Resource Planning (ERP) and other data systems and enables data assurance throughout the entire reporting process with an immutable audit trail. Wdata also enables a broader set of business users to explore complex data at scale and better manage data transformations in the office of the CFO.

We market our solutions under six broad categories: SEC Reporting, Management Reporting, Integrated Risk, Capital Markets, Global Statutory Reporting, and Regulated Reporting. Within those categories, Workiva offers the following solutions: SEC Reporting, SEDAR Reporting, Financial Reporting, Connected Financials, Management Reporting, Audit Management, Controls Management, Enterprise Risk Management, Policies and Procedures, Capital Markets, Prospectus Fund, Shareholder Reports, Insurance Statutory Reporting, Insurance Prospectus, CAFR/AFR, Stress Testing, Living Will, Tax Reporting, CASS Compliance, Global Statutory Reporting, and IFRS 17.

We operate our business on a Software-as-a-Service (SaaS) model. Customers enter into annual or multi-year subscription contracts to gain access to Wdesk. Our subscription fee includes the use of our software and technical support. Prior to the third quarter of 2018, our subscription pricing was based primarily on the number of corporate entities, number of users, level of customer support and length of contract. Thereafter, we began converting existing customer orders to, and signing new orders primarily based on, a solution-based licensing model. Under this new model, operating metrics related to a customer's expected use of each solution determine the price. The solution-based model has a higher contract value than the seat-based model because it typically offers customers unlimited seats per solution and a reduced administrative workload. We expect a substantial majority of our subscription revenue will

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be priced on the solution-based licensing model by year-end 2019. We charge customers additional fees primarily for document setup and XBRL tagging services.

We generate sales primarily through our direct sales force and, to a lesser extent, our customer success and professional services teams. In addition, we augment our direct sales channel with partnerships. Our advisory and service partners offer a wider range of domain and functional expertise that broadens the capabilities of Wdesk, bringing scale and support to customers and prospects. Our technology partners enable more data and process integrations to help customers connect critical transactional systems directly to Wdesk, which becomes a central repository of trusted data, with powerful linking, auditability and control features.

Our integrated platform, subscription-based model and exceptional customer support have contributed to a low rate of customer turnover while achieving strong revenue growth. Our subscription and support revenue retention rate was 94.5% (excluding add-on seats) for the twelve months ended September 30, 2019.

We continue to invest in the development of our solutions, infrastructure and sales and marketing to drive long-term growth. Our full-time employee headcount expanded to 1,512 at September 30, 2019 from 1,293 at September 30, 2018, an increase of 16.9%.

We have achieved significant revenue growth in recent periods. Our revenue grew to $74.2 million and $217.6 million during the three and nine months ended September 30, 2019, respectively, from $60.9 million and $179.9 million during the three and nine months ended September 30, 2018, respectively. We incurred net losses of $16.1 million and $31.8 million during the three and nine months ended September 30, 2019, respectively, compared to $11.0 million and $42.4 million during the three and nine months ended September 30, 2018, respectively.

Converting existing customer orders to a solution-based licensing model has contributed to the acceleration of growth in our subscription revenue year-to-date, and we expect it to continue to do so through the remainder of 2019. This conversion has also contributed to the improvement in our subscription and support revenue retention rate including add-ons for the same periods. We expect the benefit of this contribution to wane beginning in the last quarter of 2019. Accordingly, we will need to find new sources of revenue to sustain our growth rate beyond 2019. To maintain our revenue growth for the longer term, we have been accelerating our investments in talent, processes and technology, particularly for expansion in EMEA, integrated risk, statutory reporting and Wdata. If these investments do not meet our expectations, we may be unable to sustain our revenue growth rate. We expect these investments to increase operating losses in absolute terms and as a percentage of revenue at least through the fourth quarter of 2019, ahead of any incremental revenue contribution they may generate after 2019.

Key Factors Affecting Our Performance

Generate Growth From Existing Customers. Wdesk can exhibit a powerful network effect within an enterprise, meaning that the usefulness of our platform attracts additional users and more data. Since solution-based licensing offers our customers an unlimited number of seats for each solution purchased, we expect customers to add more seats in Wdesk over time. As more employees in an enterprise use Wdesk, additional opportunities for collaboration and automation drive demand among their colleagues for additional solutions. Furthermore, converting customer orders to solution-based licensing typically generates a one-time increase in contract value for each solution.

Pursue New Customers. Our first software solution enabled customers to streamline and automate their SEC regulatory filing process. In 2013, we began expanding into adjacent markets challenged with managing large, complex processes with many contributors and disparate sets of business data. We currently sell to new customers in the areas of finance and accounting; risk and controls; regulatory

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reporting; financial close, management and performance reporting; and statutory and corporate tax reporting. We intend to continue to build our sales and marketing organization and leverage our brand equity to attract new customers.

Offer More Solutions. We intend to introduce new solutions to continue to meet growing demand for our Wdesk platform. Our close and trusted relationships with our customers are a source for new use cases, features and solutions. We have a disciplined process for tracking, developing and releasing new solutions that are designed to have immediate, broad applicability; a strong value proposition; and a high return on investment for both Workiva and our customers. Our advance planning team assesses customer needs, conducts industry-based research and defines new markets. This vetting process involves our sales, product marketing, customer success, professional services, research and development, finance and senior management teams.

Expand Across Enterprises. Our success in delivering multiple solutions has created demand from customers for a broader-based, enterprise-wide Wdesk platform. In response, we have been improving our technology and realigning sales and marketing to capitalize on our growing enterprise-wide opportunities. We believe this expansion will add seats and revenue and continue to support our high revenue retention rates. However, we expect that enterprise-wide deals will be larger and more complex, which tend to lengthen the sales cycle.

Add Partners. We continue to expand our relationships with partners, including consulting and advisory firms, technology partners, and implementation partners. Our global partners, including global strategic consulting and advisory firms, identify opportunities for our platform to help companies transform financial reporting and integrated risk processes. We also partner with regional accounting, consulting and implementation partners. These highly skilled regional partners provide subject-matter expertise in the implementation of specific solutions and extend our direct sales force by referring opportunities to us. Technology partners expand the ecosystem of our connected reporting and compliance platform and enable data connections and process integrations to further transform critical business functions, as we capitalize on growing demand for enterprise-wide opportunities. We believe that our partner ecosystem extends our global reach, accelerates the usage and adoption of our platform, and enables more efficient delivery of professional services.

Investment in growth. We plan to continue to invest in the development of our Wdesk platform to enhance our current offerings and build new features. In addition, we expect to continue to invest in our sales, marketing, professional services and customer success organizations to drive additional revenue and support the needs of our growing customer base and to take advantage of opportunities that we have identified in EMEA, as well as use cases for integrated risk, statutory reporting and Wdata.

Seasonality. Our revenue from professional services has some degree of seasonality. Many of our customers employ our professional services just before they file their Form 10-K, often in the first calendar quarter. Our sales and marketing expense also has some degree of seasonality. Sales and marketing expense is generally higher in the third quarter since we hold 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.

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Key Performance Indicators

	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
	(dollars in thousands)
Financial metrics
Total revenue	$	74,179		$	60,873		$	217,626		$	179,909
Percentage increase in total revenue	21.9		%	16.9		%	21.0		%	17.3		%
Subscription and support revenue	$	63,022		$	51,306		$	179,617		$	146,613
Percentage increase in subscription and support revenue	22.8		%	18.7		%	22.5		%	18.5		%
Subscription and support as a percent of total revenue	85.0		%	84.3		%	82.5		%	81.5		%

	As of September 30,
	2019	2018
Operating metrics
Number of customers	3,454	3,289
Subscription and support revenue retention rate	94.5%	95.9%
Subscription and support revenue retention rate including add-ons	112.8%	104.7%
Number of customers with annual contract value $100k+	611	398
Number of customers with annual contract value $150k+	261	173

Total customers. We believe total number of customers is a key indicator of our financial success and future revenue potential. We define a customer as an entity with an active subscription contract as of the measurement date. Our customer is typically a parent company or, in a few cases, a significant subsidiary that works with us directly. Companies with publicly listed securities account for a substantial majority of our customers.

Subscription and support revenue retention rate. We calculate our subscription and support revenue retention rate based on all customers that were active at the end of the same calendar quarter of the prior year (“base customers”). We begin by annualizing the subscription and support revenue recorded in the same calendar quarter of the prior year for those base customers who are still active at the end of the current quarter. We divide the result by the annualized subscription and support revenue in the same quarter of the prior year for all base customers.

Our subscription and support revenue retention rate was 94.5% as of September 30, 2019, down slightly compared to the rate as of September 30, 2018. We believe that our success in maintaining a high rate of revenue retention is attributable primarily to our robust technology platform and strong customer service.

Subscription and support revenue retention rate including add-ons. Add-on revenue includes the change in both solutions and seats purchased and pricing for existing customers. We calculate our subscription and support revenue retention rate including add-ons by annualizing the subscription and support revenue recorded in the current quarter for our base customers that were active at the end of the current quarter. We divide the result by the annualized subscription and support revenue in the same quarter of the prior year for all base customers.

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Our subscription and support revenue retention rate including add-ons was 112.8% as of the quarter ended September 30, 2019, up from 104.7% as of September 30, 2018.

In the first quarter of 2019, we began calculating revenue retention rates using quarterly ASC 606 revenue instead of our prior method using monthly ASC 605 revenue. We expect quarterly measurements will be less variable than the single month measurements we previously reported.

Annual contract value. Our annual contract value (“ACV”) for each customer is calculated by annualizing the subscription and support revenue recognized during each quarter. We believe the increase in the number of larger contracts shows our progress in expanding our customers' adoption of Wdesk.

Components of Results of Operations

Revenue

We generate revenue through the sale of subscriptions to our cloud-based software and the delivery of professional services. We serve a wide range of customers in many industries, and our revenue is not concentrated with any single customer or small group of customers. For the nine months ended September 30, 2019 and 2018, no single customer represented more than 1% of our revenue, and our largest 10 customers accounted for less than 5% of our revenue in the aggregate.

We generate sales directly through our sales force and partners. We also identify some sales opportunities with existing customers through our customer success and professional services teams.

Our customer contracts typically range in length from twelve to 36 months. We typically invoice our customers for subscription fees in advance, with payment due at the start of the subscription term. From time to time, we offer limited incentives for customers to enter into contract terms of more than one year, typically for terms of two or three years. Our arrangements do not contain general rights of return.

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. Amounts that are invoiced are initially recorded as deferred revenue.

Professional Services Revenue. We believe our professional services facilitate the sale of our subscription service to certain customers. To date, most of our professional services have consisted of document set up, XBRL tagging, and consulting with our customers on business processes and best practices for using Wdesk. Our professional services are not required for customers to utilize our solution. We recognize revenue 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.

Cost of Revenue

Cost of revenue consists primarily of personnel and related costs directly associated with our professional services, customer success teams and training personnel, including salaries, benefits, bonuses, and stock-based compensation; the costs of contracted third-party vendors; the costs of server usage by our customers; information technology costs; and facility costs. Costs of server usage are comprised primarily of fees paid to Google Cloud Platform and Amazon Web Services.

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Sales and Marketing Expenses

Sales and marketing expenses consist primarily of personnel and related costs, including salaries, benefits, bonuses, commissions, travel, and stock-based compensation. Other costs included in this expense are marketing and promotional events, our annual user conference, online marketing, product marketing, information technology costs, and facility costs. Sales commissions paid where the amortization period is one year or less are expensed as incurred. All other sales commissions are considered incremental costs of obtaining a contract with a customer and are deferred and amortized on a straight-line basis over a period of benefit that we have determined to be three years.

Research and Development Expenses

Research and development expenses consist primarily of personnel and related costs, including salaries, benefits, bonuses, and stock-based compensation; costs of server usage by our developers; information technology costs; and facility costs.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel and related costs for our executive, finance and accounting, legal, human resources, and administrative personnel, including salaries, benefits, bonuses, and stock-based compensation; legal, accounting, and other professional service fees; other corporate expenses; information technology costs; and facility costs.

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Results of Operations

The following table sets forth selected consolidated statement of operations data for each of the periods indicated:

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
	(in thousands)
Revenue
Subscription and support	$	63,022	$	51,306	$	179,617	$	146,613
Professional services	11,157		9,567		38,009		33,296
Total revenue	74,179		60,873		217,626		179,909
Cost of revenue
Subscription and support(1)	10,924		8,139		30,935		25,578
Professional services(1)	10,827		7,520		31,029		22,888
Total cost of revenue	21,751		15,659		61,964		48,466
Gross profit	52,428		45,214		155,662		131,443
Operating expenses
Research and development(1)	22,899		19,984		66,705		60,829
Sales and marketing(1)	32,990		24,068		86,568		67,326
General and administrative(1)	12,017		11,864		33,626		45,286
Total operating expenses	67,906		55,916		186,899		173,441
Loss from operations	(15,478)		(10,702)		(31,237)		(41,998)
Interest income	1,460		341		2,593		843
Interest expense	(1,959)		(448)		(2,832)		(1,347)
Other income and (expense), net	24		(138)		(259)		195
Loss before provision for income taxes	(15,953)		(10,947)		(31,735)		(42,307)
Provision for income taxes	98		17		101		43
Net loss	$	(16,051)	$	(10,964)	$	(31,836)	$	(42,350)

(1)  Stock-based compensation expense included in these line items was as follows:

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
	(in thousands)
Cost of revenue
Subscription and support	$	386	$	161	$	1,142	$	560
Professional services	456		153		1,296		449
Operating expenses
Research and development	2,265		1,624		6,016		4,140
Sales and marketing	2,203		1,397		6,199		3,950
General and administrative	3,913		3,614		11,276		14,220
Total stock-based compensation expense	$	9,223	$	6,949	$	25,929	$	23,319

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The following table sets forth our consolidated statement of operations data as a percentage of revenue for each of the periods indicated:

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Revenue
Subscription and support	85.0	%	84.3	%	82.5	%	81.5	%
Professional services	15.0		15.7		17.5		18.5
Total revenue	100.0		100.0		100.0		100.0
Cost of revenue
Subscription and support	14.7		13.4		14.2		14.2
Professional services	14.6		12.4		14.3		12.7
Total cost of revenue	29.3		25.8		28.5		26.9
Gross profit	70.7		74.2		71.5		73.1
Operating expenses
Research and development	30.9		32.8		30.7		33.8
Sales and marketing	44.5		39.5		39.8		37.4
General and administrative	16.2		19.5		15.5		25.2
Total operating expenses	91.6		91.8		86.0		96.4
Loss from operations	(20.9)		(17.6)		(14.5)		(23.3)
Interest income	2.0		0.6		1.2		0.5
Interest expense	(2.6)		(0.7)		(1.3)		(0.7)
Other expense, net	—		(0.2)		(0.1)		0.1
Loss before provision for income taxes	(21.5)		(17.9)		(14.7)		(23.4)
Provision for income taxes	0.1		—		—		—
Net loss	(21.6)	%	(17.9)	%	(14.7)	%	(23.4)	%

Comparison of Three and Nine Months Ended September 30, 2019 and 2018

Revenue

	Three months ended September 30,					Nine months ended September 30,
	2019		2018		% Change	2019		2018		% Change
	(dollars in thousands)
Revenue
Subscription and support	$	63,022	$	51,306	22.8%	$	179,617	$	146,613	22.5%
Professional services	$	11,157	$	9,567	16.6%	$	38,009	$	33,296	14.2%
Total revenue	$	74,179	$	60,873	21.9%	$	217,626	$	179,909	21.0%

Total revenue increased $13.3 million for the three months ended September 30, 2019 compared to the same quarter a year ago due primarily to a $11.7 million increase in subscription and support revenue. Growth in subscription and support revenue in the third quarter was attributable to strong demand for a broad range of solutions and the continued conversion of existing customer accounts to a solution-based licensing model. Additionally, professional services revenue increased $1.6 million due in part to $0.9 million in certain XBRL professional services that we do not expect to continue in the next quarter. The total number of our customers expanded 5.0% from September 30, 2018 to September 30, 2019.

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Total revenue increased $37.7 million for the nine months ended September 30, 2019 compared to the same period a year ago due primarily to a $33.0 million increase in subscription and support revenue. Growth in professional services revenue was attributable primarily to an increase in XBRL tagging services. Professional services revenue increased at a slower rate than subscription and support revenue for the nine months ended September 30, 2019 compared to the same period a year ago. As our customers become familiar with our platform, they typically become more self sufficient and require fewer professional services. We expect the revenue growth rate from subscription and support to continue to outpace revenue growth from professional services on an annual basis.

Cost of Revenue

	Three months ended September 30,					Nine months ended September 30,
	2019		2018		% Change	2019		2018		% Change
	(dollars in thousands)
Cost of revenue
Subscription and support	$	10,924	$	8,139	34.2%	$	30,935	$	25,578	20.9%
Professional services	10,827		7,520		44.0%	31,029		22,888		35.6%
Total cost of revenue	$	21,751	$	15,659	38.9%	$	61,964	$	48,466	27.9%

Cost of revenue increased $6.1 million during the three months ended September 30, 2019 compared to the same quarter a year ago due primarily to $4.0 million in higher cash-based compensation, benefits and travel costs due mostly to increased headcount, $0.5 million of additional stock-based compensation, a $0.7 million increase in consulting fees and $0.6 million rise in the cost of cloud-based software and infrastructure services. Continued investment in and support of our new platform and solutions drove increases in headcount, consulting fees and cloud computing costs.

Cost of revenue increased $13.5 million during the nine months ended September 30, 2019 compared to the same period a year ago, due primarily to an increase in cash-based compensation, benefits and travel costs of $8.6 million due mostly to higher headcount, $1.4 million of additional stock-based compensation, a $1.7 million increase in consulting fees and a $1.5 million rise in the cost of cloud-based software and infrastructure services to support our expanding customer base. The increases in headcount and consulting fees were the result of our continued investment in and support of our new platform and solutions.

Operating Expenses

	Three months ended September 30,					Nine months ended September 30,
	2019		2018		% Change	2019		2018		% Change
	(dollars in thousands)
Operating expenses
Research and development	$	22,899	$	19,984	14.6%	$	66,705	$	60,829	9.7%
Sales and marketing	32,990		24,068		37.1%	86,568		67,326		28.6%
General and administrative	12,017		11,864		1.3%	33,626		45,286		(25.7)%
Total operating expenses	$	67,906	$	55,916	21.4%	$	186,899	$	173,441	7.8%

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Research and Development

Research and development expenses increased $2.9 million in the three months ended September 30, 2019 compared to the same quarter a year ago due primarily to $1.4 million in higher cash-based compensation and benefits, $0.6 million in additional stock-based compensation and a $0.7 million increase in the cost of cloud infrastructure services. We continue to dedicate resources to developing the next generation of Wdesk, which has resulted in an increased investment in research and development.

Research and development expenses increased $5.9 million in the nine months ended September 30, 2019 compared to the same period a year ago due primarily to higher cash-based compensation, benefits, and travel costs of $2.3 million, additional stock-based compensation of $1.9 million and a $1.7 million increase in the cost of cloud-based software and infrastructure services.

Sales and Marketing

Sales and marketing expenses increased $8.9 million during the three months ended September 30, 2019 compared to the three months ended September 30, 2018 due primarily to $6.3 million in higher cash-based compensation, benefits, travel costs, $0.8 million in additional stock-based compensation, a $0.9 million increase in the cost of marketing programs and a $0.7 million increase related to consulting and recruiting. Headcount in sales and marketing increased 25.5% in the quarter ended September 30, 2019 compared to the same quarter a year ago. We expect to continue to invest in sales and marketing employees for future revenue growth. The increase in the cost of marketing programs is due to increased partnership and international expansion activity as well as costs related to our annual user conference.

Sales and marketing expenses increased $19.2 million during the nine months ended September 30, 2019 compared to the same period a year ago due primarily to higher cash-based compensation, benefits, and travel costs of $13.9 million, additional stock-based compensation of $2.2 million, an increase in professional service fees of $1.2 million related to consulting and recruiting, and an increase in the cost of marketing programs of $1.4 million. The increase in marketing programs was due to increased partnership and international marketing activities as well as an increase in costs related to our annual user conference.

General and Administrative

General and administrative expenses remained relatively flat in the three months ended September 30, 2019 compared to the same quarter a year ago. General and administrative expense as a percentage of revenue improved to 16.2% in the latest quarter from 19.5% the same quarter last year due primarily to a reduction of expenses for executive compensation. We expect a higher level of executive compensation expense beginning in the fourth quarter as a result of hiring a chief operating officer and associated staff.

General and administrative expenses decreased $11.7 million during the nine months ended September 30, 2019 compared to the same period a year ago. This decrease was due primarily to $8.5 million in lower cash-based compensation, benefits and travel as well as a $3.2 million decrease in stock-based compensation.

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Non-Operating Income (Expenses)

	Three months ended September 30,					Nine months ended September 30,
	2019		2018		% Change	2019		2018		% Change
	(dollars in thousands)
Interest income	$	1,460	$	341	328.2%	$	2,593	$	843	207.6%
Interest expense	(1,959)		(448)		337.3%	(2,832)		(1,347)		110.2%
Other income and (expense), net	24		(138)		(117.4)%	(259)		195		(232.8)%

Interest Income, Interest Expense and Other Income and (Expense), Net

During the three months ended September 30, 2019, interest income increased $1.1 million compared to the same quarter a year ago due to increases in our investment accounts. Interest expense increased $1.5 million during the same time period because of the issuance of our senior convertible notes.

During the nine months ended September 30, 2019, interest income increased $1.8 million compared to the same quarter a year ago due to increases in our investment accounts. Interest expense increased $1.5 million during the same time period due to the issuance of our senior convertible notes.

Liquidity and Capital Resources

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
	(in thousands)
Cash flow provided by operating activities	$	4,697	$	7,582	$	28,579	$	6,819
Cash flow used in investing activities	(54,465)		(2,410)		(79,150)		(9,640)
Cash flow provided by financing activities	344,306		9,093		362,023		14,425
Net increase in cash and cash equivalents, net of impact of exchange rates	$	294,411	$	14,348	$	311,540	$	11,510

As of September 30, 2019, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $484.8 million, which were held for working capital purposes. We have financed our operations primarily through the proceeds of offerings of equity, convertible debt, and cash from operating activities. We have generated significant operating losses and negative cash flows from operating activities as reflected in our accumulated deficit and consolidated statements of cash flows. While we expect to continue to incur operating losses in the future, we believe that current cash and cash equivalents and cash flow from operating activities will be sufficient to fund our operations for at least the next twelve months. We also may choose to seek additional equity or debt financing.

In August 2014, we entered into a credit facility with Silicon Valley Bank, which provided us with a revolving line of credit. Under the agreement, we could borrow up to $15.0 million with interest accrued at the bank's prime lending rate. In August 2019, we terminated the credit facility with Silicon Valley Bank. No amounts were outstanding at the time of termination.

We filed a universal shelf registration statement on Form S-3 with the SEC, which became effective August 10, 2017. Under the shelf registration statement, we may offer and sell, from time to time in the future in one or more public offerings, our Class A common stock, preferred stock, debt

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securities, warrants, rights and units. The aggregate initial offering price of all securities sold by us under the shelf registration statement will not exceed $250.0 million.

In August 2019, we issued $345.0 million aggregate principal amount of 1.125% convertible senior notes due 2026, including the exercise in full by the initial purchasers of their option to purchase an additional $45.0 million principal amount (the "Notes"). The Notes are senior, unsecured obligations and bear interest at a fixed rate of 1.125% per annum, payable semi-annually in arrears on February 15 and August 15 of each year, commencing on February 15, 2020. Proceeds from the issuance of the Notes totaled $335.9 million, net of initial purchaser discounts and issuance costs.

Operating Activities

For the three months ended September 30, 2019, cash provided by operating activities was $4.7 million. The primary factors affecting our operating cash flows during the period were our net loss of $16.1 million, adjusted for non-cash charges of $1.1 million for depreciation and amortization of our property and equipment and intangible assets, $9.2 million of stock-based compensation expense, $1.1 million for the amortization of our debt discount and issuance costs and a $9.5 million net change in operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $3.6 million decrease in accounts receivable, a $3.8 million increase in deferred revenue, and a $5.4 million increase in accrued expenses and other liabilities partially offset by a $2.1 million increase in deferred commissions and a $0.9 million increase in other assets. Customer growth and contract renewals for longer terms accounted for most of the increase in deferred revenue. We offer limited incentives for customers to enter into contract terms for more than one year. Deferred commissions increased due primarily to payments made to our sales force related to the direct and incremental costs of obtaining a customer contract. The decrease in accounts receivable and the increase in other assets were attributable primarily to the timing of our billings, cash collections, and cash payments. The increase in accrued expenses and other liabilities were attributable primarily to the timing of our payment of annual bonuses.

For the three months ended September 30, 2018, cash provided by operating activities was $7.6 million. The primary factors affecting our operating cash flows during the period were our net loss of $11.0 million, adjusted for non-cash charges of $1.1 million for depreciation and amortization of our property and equipment and intangible assets, $6.9 million of stock-based compensation expense, and a $10.4 million net change in operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $8.6 million increase in deferred revenue, a $3.3 million increase in accrued expenses and other liabilities, a $0.6 million increase in accounts payable, and a $2.5 million decrease in prepaid expenses partially offset by a $1.9 million increase in deferred commissions and a $1.7 million increase in accounts receivable. Customer growth accounted for most of the increase in deferred revenue. We offer limited incentives for customers to enter into contract terms for more than one year. Deferred commissions increased primarily due to additional payments made to our sales force related to the direct and incremental costs of obtaining a customer contract. The increases in accounts receivable and accounts payable were primarily attributable to the timing of our billings, cash collections, and cash payments. The increase in accrued expenses and other liabilities was attributable primarily to the timing of our payment of annual bonuses. The decrease in prepaid expenses was attributable primarily to the timing of payments for our annual user conference.

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For the nine months ended September 30, 2019, cash provided by operating activities was $28.6 million. The primary factors affecting our operating cash flows during the period were our net loss of $31.8 million, adjusted for non-cash charges of $2.9 million for depreciation and amortization of our property and equipment and intangible assets, $25.9 million of stock-based compensation expense, $1.1 million for amortization of our debt discount and issuance costs and a $30.7 million net change in operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $14.1 million increase in deferred revenue, a $9.8 million increase in accrued expenses and other liabilities, a $21.5 million decrease in accounts receivable and a $1.8 million decrease in our operating right-of-use asset partially offset by a $8.0 million increase in deferred commissions, a $3.7 million increase in prepaid expenses and other, a $2.3 million increase in other assets and a $2.2 million decrease in our operating lease liability. Customer growth and contract renewals for longer terms accounted for most of the increase in deferred revenue. The increase in deferred commissions was primarily due to payments made to our sales force related to the direct and incremental costs of obtaining a customer contract. The increase in accrued expenses and other liabilities and decrease in accounts receivable were primarily attributable to the timing of our billings, cash collections, and cash payments. The increases in other assets and prepaid expenses was attributable primarily to timing of payments relating to cloud infrastructure services and our annual user conference.

For the nine months ended September 30, 2018, cash used in operating activities was $6.8 million. The primary factors affecting our operating cash flows during the period were our net loss of $42.4 million, adjusted for non-cash charges of $2.9 million for depreciation and amortization of our property and equipment and intangible assets, $23.3 million of stock-based compensation expense and a $22.7 million net change in operating assets and liabilities. Included in our net loss during the nine months ended September 30, 2018 was a $6.6 million cash payment made to our former CEO pursuant to a separation agreement. The primary drivers of the changes in operating assets and liabilities were a $15.0 million increase in deferred revenue, a $6.9 million increase in accrued expenses and other liabilities, a $2.0 million increase in accounts payable, a $4.6 million decrease in accounts receivable and a $0.7 million decrease in prepaid expenses partially offset by a $5.6 million increase in deferred commissions. Customer growth accounted for most of the increase in deferred revenue. The increase in deferred commissions was primarily due to additional payments made to our sales force related to the direct and incremental costs of obtaining a customer contract. The increases in accounts payable and decrease in accounts receivable were primarily attributable to the timing of our billings, cash collections, and cash payments. The increase in accrued expenses and other liabilities was attributable primarily to the timing of our payment of annual bonuses. The decrease in prepaid expenses was attributable primarily to timing of payments for our annual user conference.

Investing Activities

Cash used in investing activities of $54.5 million for the three months ended September 30, 2019 was due primarily to $54.7 million in purchases of marketable securities partially offset by $1.5 million from maturities of marketable securities.

Cash used in investing activities of $2.4 million for the three months ended September 30, 2018 was due primarily to $6.4 million in purchases of marketable securities and $0.5 million of capital expenditures partially offset by proceeds of $4.6 million from maturities of marketable securities. Our capital expenditures were associated primarily with computer equipment in support of expanding our infrastructure and work force.

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Cash used in investing activities of $79.2 million for the nine months ended September 30, 2019 was due primarily to $95.5 million in purchases of marketable securities, $2.9 million in capital expenditures and $0.7 million in purchases of intangible assets partially offset by proceeds of $20.4 million from maturities of marketable securities. Our capital expenditures were associated primarily with computer and technology purchases in support of expanding our workforce.

Cash used in investing activities of $9.6 million for the nine months ended September 30, 2018 was due primarily to $17.7 million in purchases of marketable securities and $0.7 million of capital expenditures partially offset by proceeds of $9.0 million from maturities of marketable securities. Our capital expenditures were associated primarily with computer equipment in support of expanding our infrastructure and work force.

Financing Activities

Cash provided by financing activities of $344.3 million for the three months ended September 30, 2019 was due primarily to $335.9 million in proceeds from the issuance of our senior convertible notes, $5.9 million in proceeds from option exercises and $2.8 million in proceeds from shares issued in connection with our employee stock purchase plan.

Cash provided by financing activities of $9.1 million for the three months ended September 30, 2018 was due primarily to $7.5 million in proceeds from option exercises and $1.8 million in proceeds from shares issued in connection with our employee stock purchase plan.

Cash provided by financing activities of $362.0 million for the nine months ended September 30, 2019 was due primarily to $335.9 million in proceeds from the issuance of our senior convertible notes, $22.5 million in proceeds from option exercises and $4.9 million in proceeds from shares issued in connection with our employee stock purchase plan partially offset by $0.9 million in payments on financing obligations.

Cash provided by financing activities of $14.4 million for the nine months ended September 30, 2018 was due primarily to $13.9 million in proceeds from option exercises and $3.2 million in proceeds from shares issued in connection with our employee stock purchase plan partially offset by $1.9 million in taxes paid related to the net share settlements of stock-based compensation awards and $0.9 million in payments on capital lease and financing obligations.

Contractual Obligations and Commitments

During 2019, we entered into certain non-cancelable agreements with third-party providers for our use of cloud services in the ordinary course of business.

In August 2019, we issued $345.0 million aggregate principal amount of 1.125% Convertible Senior Notes due 2026 (the "2026 Notes"). The 2026 Notes will mature on August 15, 2026, unless earlier redeemed, repurchased or converted.

During 2019, we entered into certain non-cancelable agreements with third-party providers for our use of cloud services in the ordinary course of business. Under these agreements, we are committed to purchase $18,000 in fiscal year 2019, $1.2 million in fiscal year 2020, $2.3 million in fiscal year 2021, and $1.2 million in fiscal year 2022.

Other than the convertible senior notes and cloud services purchase commitments, there were no material changes in our contractual obligations and commitments from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on February 20, 2019.

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Off-Balance Sheet Arrangements

During all periods presented, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As a result, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in those types of relationships.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, income taxes and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

During the nine months ended September 30, 2019, there were no significant changes to our critical accounting policies and estimates as described in the financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on February 20, 2019.

Item 3. Quantitative and Qualitative Disclosures about Market Risk 

For quantitative and qualitative disclosures about market risk, see “Item 7A., Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the year ended December 31, 2018. Other than the items described below, our exposures to market risk have not changed materially since December 31, 2018.

Interest Rate Sensitivity

We had cash, cash equivalents and marketable securities totaling $484.8 million as of September 30, 2019. The cash, cash equivalents and marketable securities are held for working capital purposes, including the acquisition of, or investment in, complementary products, technologies, assets, solutions, or businesses. Our investments are made primarily for capital preservation purposes. We do not enter into investments for trading or speculative purposes.

Our cash and cash equivalents consist primarily of cash and money market funds. Our exposure to market risk for changes in interest rates is limited because our cash and cash equivalents have a short-term maturity and are used primarily for working capital purposes.

Our portfolio of marketable securities was invested primarily in commercial paper and U.S. corporate and U.S. treasury debt securities and is subject to market risk due primarily to changes in interest rates. Fixed rate securities may have their market value adversely affected due to a rise in interest rates. Accordingly, our future investment income may fluctuate as a result of changes in interest rates, or we may suffer losses in principal if we are forced to sell securities that decline in market value as a result of changes in interest rates. However, because we classify our marketable securities as “available for sale,” no gains or losses are recognized due to changes in interest rates unless such securities are sold prior to maturity or declines in fair value are determined to be other-than-temporary.

An immediate increase of 100 basis points in interest rates would have resulted in an $853,000 market value reduction in our investment portfolio as of September 30, 2019. This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur. Fluctuations in the value of our investment securities caused by a change in interest rates (gains or losses on the

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carrying value) are recorded in other comprehensive income, and are realized only if we sell the underlying securities.

In August 2019, we issued $345.0 million aggregate principal amount of 1.125% convertible senior notes due 2026. As these Notes have a fixed annual interest rate, we have no financial or economic interest exposure associated with changes in interest rates. However, the fair value of fixed rate debt instruments fluctuates when interest rates change. Additionally, the fair value can be affected when the market price of our common stock fluctuates. We carry the Notes at face value less unamortized discount on our balance sheet, and we present the fair value for required disclosure purposes only.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our principal executive officer and principal financial officer, our management conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. Our disclosure controls and procedures are intended to provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on management’s evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are designed to, and are effective to, provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recently completed fiscal quarter. Based on that evaluation, our principal executive officer and principal financial officer concluded that there has not been any material change in our internal control over financial reporting during the quarter covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

From time to time we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently a party to any legal proceedings that in the opinion of our management, if determined adversely to us, would have a material adverse effect on our business, financial condition, operating results 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.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 2018 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. Other than the item noted below, there have been no material changes during fiscal 2019 to the risk factors that were included in the Form 10-K.

Risks Related to Our Business and Industry

Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States, including those related to leases.

Generally accepted accounting principles in the United States are subject to interpretation by the Financial Accounting Standards Board (FASB), the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results and could affect the reporting of transactions completed before the announcement of a change.

In February 2016, the FASB issued guidance codified in ASC 842, Leases (ASU 2016-02), which amends the guidance in former ASC 840, Leases. We adopted this new standard on the effective date of January 1, 2019. The application of this guidance resulted in the addition of right-of-use assets and lease liabilities on the consolidated balance sheet. We have implemented changes to our accounting processes, internal controls and disclosures to support the new standard. See Note 1 to our accompanying condensed consolidated financial statements for information about ASU 2016-02.

Any difficulties in implementing new or revised accounting principles could cause us to fail to meet our financial reporting obligations, which could result in regulatory discipline, harm investors’ confidence in us, and adversely affect our stock price.

Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.

In general, under Section 382 of the United States Internal Revenue Code of 1986, as amended (the "Code"), a corporation that undergoes an ownership change within the meaning of Section 382 of the Code and the underlying regulations is subject to limitations on its ability to utilize its pre-change net operating losses ("NOLs"), to offset future taxable income. If our existing NOLs are subject to limitations arising from previous ownership changes, our ability to utilize NOLs could be limited by Section 382 of the Code. Future changes in our stock ownership, some of which are outside of our control, could result in an ownership change under Section 382 of the Code. Furthermore, our ability to utilize the NOLs of companies that we may acquire in the future may be subject to limitations. There is also a risk that either under prior regulations or other unforeseen reasons, our prior year NOLs could expire or otherwise be

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unavailable to offset future income tax liabilities. For these reasons, we may not be able to realize a tax benefit from the use of our NOLs, whether or not we attain profitability.

We have broad discretion to use the net proceeds from the offering of our convertible senior notes, which we may not use effectively.

We intend to use the net proceeds from our convertible note offering for working capital and other general corporate purposes, as well as the acquisition of, or investment in, complementary products, technologies, solutions, or businesses, although we currently have no commitments or agreements to enter into any such transactions. The net proceeds from that offering may be invested with a view towards long-term benefits for our stockholders and this may not increase our results of operations or market value. The failure by our management to apply those funds effectively may adversely affect our operations or business prospects.

The conditional conversion feature of our convertible senior notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditional conversion feature of our convertible senior notes is triggered, holders of notes will be entitled to convert the notes at any time during specified periods at their option. If one or more holders elect to convert their notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our Class A common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

Conversion of our convertible senior notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our Class A common stock.

The conversion of some or all of our convertible senior notes may dilute the ownership interests of our stockholders. Upon conversion of the notes, we have the option to pay or deliver, as the case may be, cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock. If we elect to settle our conversion obligation in shares of our Class A common stock or a combination of cash and shares of our Class A common stock, any sales in the public market of our Class A common stock issuable upon such conversion could adversely affect prevailing market prices of our Class A common stock. In addition, the existence of the notes may encourage short selling by market participants that engage in hedging or arbitrage activity, and anticipated conversion of the notes into shares of our Class A common stock could depress the price of our Class A common stock.

Certain provisions in the indenture governing the notes offered in our convertible note offering may delay or prevent an otherwise beneficial takeover attempt of us.

Certain provisions in the indenture governing our convertible senior notes may make it more difficult or expensive for a third party to acquire us. For example, the indenture governing the notes will require us to repurchase the notes for cash upon the occurrence of a fundamental change (as defined in the indenture governing the notes) of us and, in certain circumstances, to increase the conversion rate for a holder that converts its notes in connection with a make-whole fundamental change. A takeover of us may trigger the requirement that we repurchase the notes and/or increase the conversion rate, which could make it more costly for a potential acquirer to engage in such takeover. Such additional costs may have the effect of delaying or preventing a takeover of us that would otherwise be beneficial to investors.

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Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.

Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including our convertible senior notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. In addition, holders of the notes will have the right to require us to repurchase their notes for cash upon the occurrence of certain fundamental changes. Upon conversion of the notes, unless we elect to deliver solely shares of our Class A common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the notes being converted. Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

The accounting method for convertible debt securities that may be settled in cash, such as our convertible senior notes, could have a material effect on our reported financial results.

Under FASB Accounting Standards Codification 470-20, Debt with Conversion and Other Options, (ASC 470-20), an entity must separately account for the liability and equity components of convertible debt instruments (such as our convertible senior notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. ASC 470-20 requires the value of the conversion option of the notes, representing the equity component, to be recorded as additional paid-in capital within stockholders’ equity in our consolidated balance sheet and as a discount to the notes, which reduces their initial carrying value. The carrying value of the notes, net of the discount and issuance costs, will be accreted up to the principal amount of the notes from the issuance date until maturity, which will result in non-cash charges to interest expense in our consolidated statement of operations. Accordingly, we will report lower net income or higher net loss in our financial results because ASC 470-20 requires interest to include both the current period’s accretion of the debt discount and issuance costs and the instrument’s coupon interest, which could adversely affect our reported or future financial results, the trading price of our Class A common stock and the trading price of the notes.

In addition, under certain circumstances, convertible debt instruments (such as the notes) that may be settled entirely or partly in cash are currently accounted for utilizing the treasury stock method, the effect of which is that the shares issuable upon conversion of the notes are not included in the calculation of diluted earnings per share except to the extent that the conversion value of the notes exceeds their principal amount, and the effect of the conversion on diluted earnings per share is not antidilutive. Under the treasury stock method, for diluted earnings per share purposes, the transaction is accounted for as if the number of shares of Class A common stock that would be necessary to settle such excess, if we elected to settle such excess in shares, are issued. We cannot be sure that the accounting standards in the future will continue to permit the use of the treasury stock method. If we are unable to use the treasury stock method in accounting for the shares issuable upon conversion of the notes, then our diluted earnings per share would be adversely affected.

We may still incur substantially more debt or take other actions which would intensify the risks discussed above or in our Annual Report on Form 10-K.

We and our subsidiaries may incur substantial additional debt in the future, some of which may be secured debt. We will not be restricted under the terms of the indenture governing the notes from

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incurring additional debt, securing existing or future debt, recapitalizing our debt, repurchasing our stock, pledging our assets, making investments, paying dividends, guaranteeing debt, or taking a number of other actions that are not limited by the terms of the indenture governing the notes that could have the effect of diminishing our ability to make payments on the notes when due.

Item 2. Unregistered Sales of Securities and Use of Proceeds

Sales of Unregistered Securities

Not applicable.

Use of Proceeds from Public Offerings of Common Stock

There has been no material change in the planned use of proceeds from our initial public offering as described in our final prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act on December 12, 2014.

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Item 6. Exhibits

The following exhibits are being filed herewith or incorporated by reference herein:

Exhibit Number	Description
4.1	Indenture, dated August 16, 2019, between Workiva Inc. and U.S. Bank National Association (incorporated by reference from Exhibit 4.1 to the Company's Current Report on Form 8-K filed on August 16,2019).
4.2	Form of 1.125% Convertible Senior Note due 2026 (incorporated by reference from Exhibit A to the Indenture filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on August 16, 2019).
10.1	Employment agreement, dated September 6, 2019, between the Company and Julie Iskow.
31.1	Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial information from Workiva Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Loss, (iv) the Consolidated Statements of Changes in Stockholders Equity (Deficit), (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.
104	Cover Page Interactive Data File - (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 6th day of November, 2019.

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

S-1

EX-10.1

EXECUTION COPY

Employment Agreement

This Employment Agreement (the “Agreement”) is made and entered into as of September 6, 2019, by and between Julie Iskow (the “Executive”) and WORKIVA INC., a Delaware corporation (the “Company”).

WHEREAS, the Company desires to employ the Executive on the terms and conditions set forth herein; and

WHEREAS, the Executive desires to be employed by the Company on such terms and conditions.

NOW, THEREFORE, in consideration of the mutual covenants, promises and obligations set forth herein, the parties agree as follows:

1. Term. The term of the Executive’s employment hereunder shall commence as of October 1, 2019, unless other agreed in writing by the Company and the Executive (the “Effective Date”). The period during which the Executive is employed by the Company hereunder is hereinafter referred to as the “Employment Term.”

2. Position and Duties.

2.1 Position. During the Employment Term, the Executive shall serve as the Executive Vice President and Chief Operating Officer of the Company, reporting to the Chief Executive Officer. In such position, the Executive shall have such duties, authority and responsibility as shall be determined from time to time by the Company’s Chief Executive Officer, which duties, authority and responsibility are consistent with the Executive’s position. The Executive shall, if requested by the Company, also serve as a member of the board of directors of the Company (the “Board”) or as an officer or director of any affiliate of the Company for no additional compensation.

2.2 Duties. During the Employment Term, the Executive shall devote substantially all of Executive’s business time and attention to the performance of the Executive’s duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the performance of such services either directly or indirectly without the prior written consent of the Company’s Chief Executive Officer. Notwithstanding the foregoing, the Executive will be permitted to (a) serve as a director of Vocera Communications, Inc., (b) with the prior written consent of the Board (which consent shall not be unreasonably withheld by the Board in its discretion) act or serve as a director, trustee, committee member or principal of any type of business, civic or charitable organization as long as such activities are disclosed in writing to the Company’s General Counsel in accordance with any Company conflict of interest policy that may be in effect from to time to time, and (c) purchase or own less than five percent (5%) of the publicly traded securities of any corporation; provided that, such ownership represents a passive investment and that the Executive is not a controlling person of, or a member of a group that controls, such corporation and that with respect to such ownership the Executive complies with any Company Customer Confidentiality and Securities Trading Policy in effect from time to time; provided further that, the activities described in clauses (b) and (c) do not interfere with the performance of the

Executive’s duties and responsibilities to the Company as provided hereunder, including, but not limited to, the obligations set forth in Section 2 hereof.

3. Place of Performance. The principal place of Executive’s employment shall be the Executive’s home currently located in Los Altos, California; provided that the Executive may be required to travel on Company business during the Employment Term.

4. Compensation.

4.1 Base Salary. The Company shall pay the Executive an annual rate of base salary of $575,000 in periodic installments in accordance with the Company’s customary payroll practices, but no less frequently than monthly. The Executive’s base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term. The Executive’s annual base salary, as in effect from time to time, is hereinafter referred to as “Base Salary”.

4.2 Annual Bonus.  

(a) For each complete fiscal year of the Employment Term commencing with the fiscal year ending December 31, 2020, the Executive shall have the opportunity to earn an annual bonus (the “Annual Bonus”), which bonus, if any, shall be determined in the sole and absolute discretion of the Board or any Compensation Committee of the Board (the “Compensation Committee”). The Board or the Compensation Committee, if any, shall also have the sole and absolute discretion to adopt a performance-based bonus plan or arrangement, in which case the Executive shall participate in such plan or arrangement on terms commensurate with other executive employees of the Company, provided that the Board or the Compensation Committee, if any, shall have the sole and absolute discretion to establish the level of target bonus (“Target Bonus”) for each participant in any such plan based on the relative seniority and responsibility levels of the participants. Notwithstanding the foregoing, for the fiscal year ending December 31, 2019, the amount of the Executive’s Annual Bonus shall be determined as follows: (i) if the Effective Date is on or before October 1, 2019, and the Executive is employed by the Company on the last day of the fiscal year ending December 31, 2019, then the Executive shall receive an Annual Bonus of $575,000; and (ii) if the Effective date is on or after October 2, 2019, and the Executive is employed by the Company on the last day of the fiscal year ending December 31, 2019, then the amount of the Executive’s Annual Bonus, if any, shall be determined in the sole and absolute discretion of the Board or the Compensation Committee.

(b) The Annual Bonus, if any, will be paid within two and a half (2 1/2) months after the end of the applicable fiscal year.

(c) Except as otherwise provided in Section 5, in order to be eligible to receive an Annual Bonus, the Executive must be employed by the Company on the last day of the applicable fiscal year.

4.3 Signing Bonus. The Company shall pay the Executive a lump sum cash signing bonus of $300,000 (the “Signing Bonus”) on the first normal payroll date following the Effective Date.

4.4 Equity Awards. In consideration of the Executive entering into this Agreement and as an inducement to join the Company, on the Effective Date, the Company will grant to the Executive pursuant to the Workiva Inc. Equity Compensation Plan (or any successor plan thereto) (the “Equity Plan”) restricted stock units (“RSUs”) with a grant date value of

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$6,000,000, vesting in three equal annual installments commencing on the first anniversary of the grant date. All terms and conditions of the RSUs shall be governed by the terms and conditions of the Equity Plan and the award agreement relating to the RSUs, which shall be in substantially the form attached hereto as Annex A hereto and which the Executive shall be required to execute in order to receive the RSUs. In addition, during the Employment Term the Executive shall be eligible to receive additional grants pursuant to the Equity Plan, subject to the terms of the Equity Plan, as determined by the Board or the Compensation Committee, in its discretion.

4.5 Fringe Benefits and Perquisites. During the Employment Term, the Executive shall be entitled to fringe benefits and perquisites consistent with the practices of the Company, and to the extent the Company provides similar benefits or perquisites (or both) to similarly situated executives of the Company.

4.6 Employee Benefits. During the Employment Term, the Executive shall be entitled to participate in all employee benefit plans, practices and programs maintained by the Company, as in effect from time to time (collectively, “Employee Benefit Plans”), on a basis which is no less favorable than is provided to other similarly situated executives of the Company, to the extent consistent with applicable law and the terms of the applicable Employee Benefit Plans. The Company reserves the right to amend or cancel any Employee Benefit Plans at any time in its sole discretion, subject to the terms of such Employee Benefit Plan and applicable law.

4.7 Vacation. During the Employment Term, the Executive shall be entitled to a minimum of fifteen paid vacation days per calendar year (prorated for partial years) in accordance with the Company’s vacation policies, as in effect from time to time.

4.8 Business Expenses. The Executive shall be entitled to reimbursement for all reasonable and necessary out-of-pocket business, entertainment and travel expenses incurred by the Executive in connection with the performance of the Executive’s duties hereunder in accordance with the Company’s expense reimbursement policies and procedures.

4.9 Indemnification.

(a) In the event that the Executive is made a party or threatened to be made a party to any action, suit, or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), other than any Proceeding initiated by the Executive or the Company related to any contest or dispute between the Executive and the Company or any of its affiliates with respect to this Agreement or the Executive’s employment hereunder, by reason of the fact that the Executive is or was an employee, director or officer of the Company, or any affiliate of the Company, or is or was serving at the request of the Company as a director, officer, member, employee or agent of another corporation or a partnership, joint venture, trust or other enterprise, the Executive shall be indemnified and held harmless by the Company to the maximum extent permitted under applicable law from and against any liabilities, costs, claims and expenses, including all costs and expenses incurred in defense of any Proceeding (including attorneys’ fees). Costs and expenses incurred by the Executive in defense of such Proceeding (including attorneys’ fees) shall be paid by the Company in advance of the final disposition of such litigation upon receipt by the Company of: (i) a written request for payment; (ii) appropriate documentation evidencing the incurrence, amount and nature of the costs and expenses for which payment is being sought; and (iii) an undertaking adequate under applicable law made by or on behalf of the Executive to repay the amounts so paid if it shall ultimately be

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determined that the Executive is not entitled to be indemnified by the Company under this Agreement.

(b) During the Employment Term and for a period of six (6) years thereafter, the Company or any successor to the Company shall purchase and maintain, at its own expense, directors’ and officers’ liability insurance providing coverage to the Executive on terms that are no less favorable than the coverage provided to other directors and senior officers of the Company.

4.10 Clawback Provisions. Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation, or any other compensation, paid to the Executive pursuant to this Agreement or any other agreement or arrangement with the Company which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement).

5. Termination of Employment. The Employment Term and the Executive’s employment hereunder may be terminated by either the Company or the Executive at any time and for any reason; provided that, unless otherwise provided herein, either party shall be required to give the other party advance written notice of any termination of the Executive’s employment in accordance with Section 5.5. Upon termination of the Executive’s employment during the Employment Term, the Executive shall be entitled to the compensation and benefits described in this Section 5 and shall have no further rights to any compensation or any other benefits from the Company or any of its affiliates.

5.1 Termination for Cause or Without Good Reason.  

(a) The Executive’s employment hereunder may be terminated by the Company for Cause or by the Executive without Good Reason. If the Executive’s employment is terminated by the Company for Cause or by the Executive without Good Reason, the Executive shall be entitled to receive:

(i)any accrued but unpaid Base Salary and accrued but unused vacation or other paid time off through the Termination Date, which shall be paid on the pay date immediately following the Termination Date (as defined below) in accordance with the Company’s customary payroll procedures;

(ii)any earned but unpaid Annual Bonus with respect to any completed fiscal year immediately preceding the Termination Date, which shall be paid on the otherwise applicable payment date except to the extent payment is otherwise deferred pursuant to any applicable deferred compensation arrangement;

(iii)reimbursement for unreimbursed business expenses properly incurred by the Executive, which shall be subject to and paid in accordance with the Company’s expense reimbursement policy; and

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(iv)such employee benefits, if any, as to which the Executive may be entitled under the Company’s employee benefit plans as of the Termination Date; provided that, in no event shall the Executive be entitled to any payments in the nature of severance or termination payments except as specifically provided herein.

Items 5.1(a)(i) through 5.1(a)(iv) are referred to herein collectively as the “Accrued Amounts”. The treatment of any outstanding equity awards shall be determined in accordance with the terms of the Equity Plan and the applicable award agreements.

(b) For purposes of this Agreement, “Cause” shall mean:

(i)any action by the Executive while employed by the Company involving willful gross misconduct having a material adverse effect on the Company;

(ii)the Executive’s willful failure to perform Executive’ duties (other than any such failure resulting from incapacity due to physical or mental illness); or

(iii)the Executive being convicted of (a) a felony under the laws of the United States or any state or (b) a felony under the laws of any other country or political subdivision thereof involving moral turpitude.

For purposes of this provision, no act or failure to act on the part of the Executive shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company.

Termination of the Executive’s employment shall not be deemed to be for Cause unless and until the Company delivers to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the Board (after reasonable written notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that the Executive has engaged in the conduct described in any of (i)-(iii) above.

(c) For purposes of this Agreement, “Good Reason” shall mean the occurrence of any of the following, in each case during the Employment Term:

(i)a reduction in the Executive’s Base Salary without the Executive’s written consent, other than a general reduction in Base Salary that affects all similarly situated executives in substantially the same proportions;

(ii)a reduction in the Executive’s Target Bonus opportunity from any Target Bonus opportunity in effect for the prior fiscal year without the Executive’s written consent;

(iii)a relocation of the Executive’s principal place of employment by more than 50 miles without the Executive’s written consent;

(iv)any material breach by the Company of any material provision of this Agreement or any material provision of any other agreement between the Executive and the Company (including for the avoidance of doubt, the Equity Documents);

(v)any Change of Control of the Company;

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(vi)the Company’s failure to obtain an agreement from any successor to the Company to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no succession had taken place, except where such assumption occurs by operation of law;

(vii)a material, adverse change in the Executive’s title, authority, duties or responsibilities (other than temporarily while the Executive is physically or mentally incapacitated or as required by applicable law) without the Executive’s written consent; or

(viii)a material adverse change in the reporting structure applicable to the Executive without the Executive’s written consent.

The Executive cannot terminate the Executive’s employment for Good Reason (other than pursuant to Section 5.1(c)(v)) unless Executive has provided written notice to the Company of the existence of the circumstances providing grounds for termination for Good Reason within 90 calendar days of the date the Executive first becomes aware of the initial existence of such grounds and the Company has had at least 15 calendar days from the date on which such notice is provided to cure such circumstances. If the Executive does not provide a Notice of Termination within 120 days after the Executive first becomes aware of the occurrence of the applicable grounds (other than Section 5.1(c)(v)), then the Executive will be deemed to have waived the Executive’s right to terminate for Good Reason with respect to such grounds.

5.2 Termination Without Cause or for Good Reason. The Employment Term and the Executive’s employment hereunder may be terminated by the Executive for Good Reason or by the Company without Cause. In the event of such termination, the Executive shall be entitled to receive the Accrued Amounts and, subject to the Executive’s compliance with Section 6, Section 7 and Section 8 of this Agreement and the Executive’s execution of a release of claims in favor of the Company, its affiliates and their respective officers and directors in substantially the form attached hereto as Annex C (the “Release”), the Executive shall be entitled to receive the following:

(a) A lump sum payment, which shall be paid within 30 days following the Termination Date, equal to two (2) times the sum of the Executive’s Base Salary and Target Bonus for the year in which the Termination Date occurs.

(b) With respect to the fiscal year in which the Termination Date occurs, an amount equal to (X) the Annual Bonus paid to Executive in respect of the last calendar year for which Executive received a bonus prior to the Termination Date, multiplied by (Y) a fraction, the numerator of which is the number of days between first day of the calendar year in which the Termination Date occurs and the Termination Date and the denominator of which is 365, payable in a single payment concurrent with the payment of the amounts due under Section 5.2(a) hereof;

(c) If the Executive timely and properly elects continuation coverage under the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse the Executive the difference between the monthly COBRA premium paid by the Executive for the Executive and the Executive’s dependents and the monthly premium amount paid by similarly situated active executives. Such reimbursement shall be paid to the Executive on the tenth day of the month immediately following the month in which the Executive timely remits

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the premium payment. The Executive shall be eligible to receive such reimbursement until the earliest of: (i) the eighteen-month anniversary of the Termination Date; (ii) the date the Executive is no longer eligible to receive COBRA continuation coverage; and (iii) the date on which the Executive becomes eligible to receive substantially similar coverage from another employer.

(d) The treatment of any outstanding equity awards shall be determined in accordance with the terms of the Equity Plan and the applicable award agreements; provided that notwithstanding the terms of the Equity Plan or any applicable award agreements all outstanding unvested stock or equity unit options, appreciation units, stock appreciation rights and any other equity-based compensation awards, granted to the Executive during the Employment Term shall become fully vested and exercisable for the remainder of their full term; provided, that any delays in the settlement or payment of such awards that are set forth in the applicable award agreement and that are required under Section 409A (“Section 409A”) Internal Revenue Code of 1986, as amended (the “Code”)shall remain in effect.

(e) Upon any termination of Executive’s employment by the Company other than for Cause or upon termination by the Executive for Good Reason, Executive shall be released from the restrictive covenants set forth in Section 7 of this Agreement.

5.3 Death or Disability.  

(a) The Executive’s employment hereunder shall terminate automatically upon the Executive’s death during the Employment Term, and the Company may terminate the Executive’s employment on account of the Executive’s Disability.

(b) If the Executive’s employment is terminated during the Employment Term on account of the Executive’s death or Disability, the Executive (or the Executive’s estate and/or beneficiaries, as the case may be) shall be entitled to receive the following:

(i)the Accrued Amounts;

(ii)a lump sum payment, which shall be paid within 30 days following the Termination Date, equal to the sum of the Executive’s Base Salary and Target Bonus for the year in which the Termination Date occurs;

(iii)with respect to the fiscal year in which the Termination Date occurs, an amount equal to (X) the Annual Bonus paid to Executive in respect of the last calendar year for which Executive received a bonus prior to the Termination Date, multiplied by (Y) a fraction, the numerator of which is the number of days between first day of the calendar year in which the Termination Date occurs and the Termination Date and the denominator of which is 365, payable in a single payment concurrent with the payment of the amounts due under Section 5.3(b)(ii) hereof; and

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(iv)the treatment of any outstanding equity awards shall be determined in accordance with the terms of the Equity Plan and the applicable award agreements; provided that notwithstanding the terms of the Equity Plan or any applicable award agreements, all outstanding unvested stock or equity unit options, appreciation units, stock appreciation rights and any other equity-based compensation awards, granted to the Executive during the Employment Term shall become fully vested and exercisable for the remainder of their full term; provided, that any delays in the settlement or payment of such awards that are set forth in the applicable award agreement and that are required under Section 409A of the Code shall remain in effect.

Notwithstanding any other provision contained herein, all payments made in connection with the Executive’s Disability shall be provided in a manner which is consistent with federal and state law.

(c) For purposes of this Agreement, “Disability” shall mean the Executive is entitled to receive long-term disability benefits under the Company’s long-term disability plan, or if there is no such plan, the Executive’s inability, due to physical or mental incapacity, to substantially perform the Executive’s duties and responsibilities under this Agreement for one hundred eighty (180) days out of any three hundred sixty-five (365) day period or one hundred twenty (120) consecutive days; provided however, in the event the Company temporarily replaces the Executive, or transfers the Executive’s duties or responsibilities to another individual on account of the Executive’s inability to perform such duties due to a mental or physical incapacity which is, or is reasonably expected to become, a Disability, then the Executive’s employment shall not be deemed terminated by the Company and the Executive shall not be able to resign with Good Reason as a result thereof. Any question as to the existence of the Executive’s Disability as to which the Executive and the Company cannot agree shall be determined in writing by a qualified, board-certified independent physician mutually acceptable to the Executive and the Company. If the Executive and the Company cannot agree as to such a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and the Executive shall be final and conclusive for all purposes of this Agreement.

5.4 Change in Control.  

(a) Notwithstanding any other provision contained herein, if the Executive’s employment hereunder is terminated by the Executive for Good Reason or by the Company without Cause (other than on account of the Executive’s death or Disability), in each case within three (3) months prior to or twelve (12) months following a Change in Control, the Executive shall be entitled to receive the Accrued Amounts and, subject to the Executive’s compliance with Section 6 and Section 8 of this Agreement and the Executive’s execution of a Release, the Executive shall be entitled to receive the following:

(i)a lump sum payment equal to three (3) times the sum of the Executive’s Base Salary and Target Bonus for the year in which the Termination Date occurs (or if greater, the year immediately preceding the year in which the Change in Control occurs), which shall be paid within 30 days following the Termination Date; and

(ii)a lump sum payment equal to the Executive’s Target Bonus for the fiscal year in which the Date of Termination occurs (or if greater, the year in which the Change in Control occurs), which shall be paid within 30 days following the Termination Date;

(b) If the Executive timely and properly elects continuation coverage under COBRA, the Company shall reimburse the Executive the difference between the monthly COBRA premium paid by the Executive for the Executive and the Executive’s dependents and the monthly premium amount paid by similarly situated active executives. Such reimbursement

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shall be paid to the Executive on the tenth of the month immediately following the month in which the Executive timely remits the premium payment. The Executive shall be eligible to receive such reimbursement until the earliest of: (i) the eighteen-month anniversary of the Termination Date; (ii) the date the Executive is no longer eligible to receive COBRA continuation coverage; and (iii) the date on which the Executive becomes eligible to receive substantially similar coverage from another employer.

(c) Notwithstanding the terms of any equity incentive plan or award agreements, as applicable, in the event of a Change in Control, all outstanding unvested stock or equity unit options, appreciation units, stock appreciation rights and any other equity-based compensation awards granted to the Executive during the Employment Term shall become fully vested and exercisable for the remainder of their full term; provided that, any delays in the settlement or payment of such awards that are set forth in the applicable award agreement and that are required under Section 409A of the Code shall remain in effect.

(d) For purposes of this Agreement, “Change in Control” shall mean the occurrence of any of the following:

(i)one person (or more than one person acting as a group) acquires beneficial ownership of voting securities of the Company that, together with the voting securities held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the Company’s then outstanding voting securities;

(ii)one person (or more than one person acting as a group) acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition) beneficial ownership of the Company’s voting securities possessing 30% or more of the total voting power of the Company’s then outstanding voting securities;

(iii)a majority of the members of the Board are replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the Board before the date of appointment or election; or

(iv)the sale of all or substantially all of the Company’s assets.

Notwithstanding the foregoing, a Change in Control shall not occur unless such transaction constitutes a change in the ownership of the Company, a change in effective control of the Company, or a change in the ownership of a substantial portion of the Company’s assets under Section 409A.

5.5 Notice of Termination. Any termination of the Executive’s employment hereunder by the Company or by the Executive during the Employment Term (other than termination pursuant to Section 5.3(a) on account of the Executive’s death) shall be communicated by written notice of termination (“Notice of Termination”) to the other party hereto in accordance with Section 20. The Notice of Termination shall specify:

(a) The termination provision of this Agreement relied upon;

(b) To the extent applicable, the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated; and

(c) The applicable Termination Date.

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5.6 Termination Date. The Executive’s Termination Date shall be:

(a) If the Executive’s employment hereunder terminates on account of the Executive’s death, the date of the Executive’s death;

(b) If the Executive’s employment hereunder is terminated on account of the Executive’s Disability, the date that it is determined that the Executive has a Disability;

(c) If the Company terminates the Executive’s employment hereunder for Cause, the date the Notice of Termination is delivered to the Executive;

(d) If the Company terminates the Executive’s employment hereunder without Cause, the date that is ten (10) days following the date on which the Notice of Termination is delivered; provided that, the Company shall have the option to provide the Executive with a lump sum payment equal to ten days’ Base Salary in lieu of such notice, which shall be paid in a lump sum on the Executive’s Termination Date and for all purposes of this Agreement, the Executive’s Termination Date shall be the date on which such Notice of Termination is delivered; and

(e) If the Executive terminates the Executive’s employment hereunder with or without Good Reason, the date specified in the Executive’s Notice of Termination, which shall be no less than ten days following the date on which the Notice of Termination is delivered; provided that, the Company may waive all or any part of the ten-day notice period for no consideration by giving written notice to the Executive and for all purposes of this Agreement, the Executive’s Termination Date shall be the date determined by the Company.

Notwithstanding anything contained herein, the Termination Date shall not occur until the date on which the Executive incurs a “separation from service” within the meaning of Section 409A.

5.7 Mitigation. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and except as provided in Section 5.2(c), any amounts payable pursuant to this Section 5 shall not be reduced by compensation the Executive earns on account of employment with another employer.

5.8 Resignation of All Other Positions. Upon termination of the Executive’s employment hereunder for any reason, the Executive shall be deemed to have resigned from all positions that the Executive holds as an officer or member of the board of directors (or a committee thereof) of the Company or any of its affiliates.

5.9 Section 280G.  

(a) Notwithstanding any other provision of this Agreement or any other plan, arrangement or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Company or its affiliates to the Executive or for the Executive’s benefit pursuant to the terms of this Agreement or otherwise (“Covered Payments”) constitute parachute payments (“Parachute Payments”) within the meaning of Section 280G of the Code and would, but for this Section 5.9 be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the “Excise Tax”), then the Covered Payments shall be either (i) reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax (that amount, the “Reduced Amount”) or (ii) payable in full if the Executive’s receipt on an after-tax basis of the full

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amount of payments and benefits (after taking into account the applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax)) would result in the Executive receiving an amount greater than the Reduced Amount on an after-tax basis. Any reduction in the Covered Payments shall be made in a manner that maximizes the Executive’s economic position. In applying this principle, the reduction shall be made in a manner consistent with the requirements of Section 409A of the Code, and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis but not below zero.

(b) All calculations and determinations under this Section 5.9 shall be made by an independent accounting firm or independent tax counsel appointed by the Company (the “Tax Counsel”) whose determinations shall be conclusive and binding on the Company and the Executive for all purposes. For purposes of making the calculations and determinations required by this Section 5.9, the Tax Counsel may rely on reasonable, good faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code. The Company and the Executive shall furnish the Tax Counsel with such information and documents as the Tax Counsel may reasonably request in order to make its determinations under this Section 5.9. The Company shall bear all costs the Tax Counsel may reasonably incur in connection with its services.

6. Confidential Information. As a condition to the commencement of employment, on or prior to the Effective Date, the Executive shall execute and deliver to the Company the Company Confidential Information and Invention Assignment Agreement, a copy of which is attached hereto as Annex B (the “Confidentiality Agreement”). Nothing in this Agreement, the Confidentiality Agreement, or elsewhere shall prevent: (i) the Executive from cooperating with, or participating in, any investigation conducted by any governmental agency; (ii) the Executive from making truthful statements, or disclosing documents and information, (x) to the extent reasonably necessary in connection with any litigation, arbitration or mediation involving the Executive’s rights or obligations under this Agreement or otherwise or (y) when required by law, legal process or by any court, arbitrator, mediator or legislative body (including any committee thereof) with actual or apparent jurisdiction to order the Executive to make such statements or to disclose or make accessible such documents and information; (iii) the Executive from retaining, and using appropriately (e.g., not in connection with violating any non-competition or non-solicitation restriction), documents and information relating to her personal rights and obligations and her contact list; (iv) the Executive from disclosing her post-employment restrictions in confidence in connection with any potential new employment or business venture; (v) the Executive from disclosing documents and information in confidence to any attorney, financial advisor, tax preparer, or other professional for the purpose of securing professional advice; (vi) the Executive from using and disclosing documents and information at the request of the Company or its attorneys and agents; or (vii) the Executive using and disclosing documents and information in connection with good faith performance of her duties for the Company or any of its affiliates.

7. Restrictive Covenants.

7.1 Executive acknowledges and agrees that (i) by virtue of Executive’s employment with the Company will learn valuable trade secrets and other confidential, proprietary information, including the Company’s customer and potential customer lists, relating to the Company’s business, (ii) Executive’s skills, knowledge and services to the Company are unique in nature,

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(iii) the Company’s business is international in scope and (iv) the Company would be irreparably damaged if Executive were to violate the restrictions contained in this Agreement. Accordingly, as a condition of and inducement to the Company to enter into this Agreement, Executive agrees that during the Employment Term and, except as otherwise provided in Section 5.2(e) hereof or the last paragraph of this Section 7, for an additional six (6) months thereafter (such period being referred to herein as the “Restricted Period”), neither Executive nor any Affiliate of Executive (as defined below) shall, directly or indirectly, either for Executive or for any other person or entity:

(a) in any area in which the Company conducts any phase of its business including production, promotional, and marketing activities engage or participate in, or assist, advise or be connected with (including as an employee, owner, partner, shareholder, officer, director, advisor, consultant, agent or otherwise), or permit Executive’s name to be used by or render services for, any person or entity engaged in a Competing Business (as hereinafter defined); provided, however, that nothing in this Agreement shall prevent Executive from acquiring or owning, as a passive investment, up to two percent (2%) of the outstanding voting securities of an entity engaged in a Competing Business which are publicly traded on any recognized national securities market, subject to the requirement that Executive comply with the Company Customer Confidentiality and Securities Trading Policy in effect from time to time;

(b) take any action, in connection with a Competing Business, which might divert from the Company or an Affiliate of the Company any opportunity which would be within the scope of the Company’s or such Affiliate’s then business;

(c) solicit or attempt to solicit any person or entity who is or has been (i) a customer of the Company at any time (A) up to the date hereof or (B) during the Restricted Period to purchase Competing Products or Services (as herein defined) from any person or entity (other than the Company) or (ii) a customer, supplier, licensor, licensee or other business relation of the Company at any time (A) up to the date hereof or (B) during the Restricted Period to cease doing business with the Company; provided, however, that this subsection (c) shall only apply to customers, suppliers, licensors or other business relations of the Company with which the Executive had contact or of which the Executive had knowledge as a result of Executive’s employment; or

(d) induce, entice, hire, employ, attempt to hire or employ, solicit or endeavor to entice away from the Company any person employed by the Company or its affiliates at any time during Executive’s employment or the Restricted Period, in order to accept employment or association with the Executive, or any other person, firm, corporation or entity whatsoever; approach any such person for any such purpose, or authorize or knowingly cooperate with the taking of any such action by any other person, firm, corporation or entity; provided that the foregoing shall not be violated by general solicitation not targeted at the prohibited group or by the Executive serving as a reference upon request.

        As used herein, a “Competing Business” shall mean a business which engages or is making plans to engage, in whole or in part, in the production, marketing or distributing of products, or the performance, marketing and sale of services, which are competitive with, and are similar to, may be used as substitutes for, or may detract from any products or services of the Company or any Affiliate thereof during the Restricted Period, whether, in the case of products, such products are or were produced by or for the Company for sale by the Company or purchased as finished goods for resale by the Company, or, in the case of services, such services

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were performed by the Company or by another company or person on behalf of the Company; the products and services subject to these restrictive covenants being herein referred to as “Competing Products and Services”. As used herein, an “Affiliate” shall mean and include any person or entity which controls a party, which such party controls or which is under common control with such party. “Control” means the power, direct or indirect, to influence or cause the direction of the management and policies of a person or entity through voting securities, contract or otherwise.

8. Non-disparagement. The Executive agrees and covenants that the Executive will not at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments or statements concerning the Company or its businesses, or any of its employees, officers, and existing and prospective customers, suppliers, investors and other associated third parties. The Company agrees and covenants not to permit its officers, directors and senior management team not to, at any time, make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments or statements concerning the Executive.

This Section 8 does not, in any way, restrict or impede the parties from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation or order. To the extent permissible, the Executive shall, as soon as reasonably practicable, provide written notice of any such order to the Company’s Chief Executive Officer.

9. Acknowledgement. The Executive acknowledges and agrees that the services to be rendered by the Executive to the Company are of a special and unique character; that the Executive will obtain knowledge and skill relevant to the Company’s industry, methods of doing business and marketing strategies by virtue of the Executive’s employment; and that the restrictive covenants and other terms and conditions of this Agreement are reasonable and reasonably necessary to protect the legitimate business interest of the Company.

The Executive further acknowledges that the amount of the Executive’s compensation reflects, in part, the Executive’s obligations and the Company’s rights under Section 6, Section 7 and Section 8 of this Agreement; that the Executive has no expectation of any additional compensation, royalties or other payment of any kind not otherwise referenced herein in connection herewith; that the Executive will not be subject to undue hardship by reason of the Executive’s full compliance with the terms and conditions of Section 6, Section 7 and Section 8 of this Agreement or the Company’s enforcement thereof.

10. Remedies. In the event of a breach or threatened breach by the Executive of Section 6, Section 7 or Section 8 of this Agreement, the Executive hereby consents and agrees that the Company shall be entitled to seek, in addition to other available remedies, a temporary or permanent injunction or other equitable relief against such breach or threatened breach from any court of competent jurisdiction, without the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The aforementioned equitable relief shall be in addition to, not in lieu of, legal remedies, monetary damages or other available forms of relief.

11. Security.

13

11.1 Security and Access. The Executive agrees and covenants (a) to comply with all Company security policies and procedures as in force from time to time including without limitation those regarding computer equipment, telephone systems, voicemail systems, facilities access, monitoring, key cards, access codes, passwords, Company intranet, internet, social media and instant messaging systems, computer systems, e-mail systems, computer networks, software, data security, and any and all other Company facilities, IT resources and communication technologies (“Facilities Information Technology and Access Resources”); (b) not to access or use any Facilities and Information Technology Resources except as authorized by the Company; and (iii) not to access or use any Facilities and Information Technology Resources in any manner after the termination of the Executive’s employment by the Company, whether termination is voluntary or involuntary. The Executive agrees to notify the Company promptly in the event the Executive learns of any violation of the foregoing by others, or of any other misappropriation or unauthorized access, use, reproduction or reverse engineering of, or tampering with any Facilities and Information Technology Access Resources or other Company property or materials by others.

11.2 Exit Obligations. Upon (a) voluntary or involuntary termination of the Executive’s employment or (b) the Company’s request at any time during the Executive’s employment, the Executive shall (i) provide or return to the Company any and all (x) Company property, including keys, key cards, access cards, identification cards, security devices, employer credit cards, network access devices, computers, cell phones, smartphones, PDAs, pagers, fax machines, equipment, speakers, webcams, manuals, reports, files, books, compilations, work product, e-mail messages, recordings, tapes, disks, thumb drives or other removable information storage devices, hard drives, and (y) all Company data and documents and materials belonging to the Company and stored in any fashion, constituting or containing any Confidential Information (as defined in the Confidentiality Agreement) or work product, that are in the possession or control of the Executive, whether they were provided to the Executive by the Company or any of its business associates or created by the Executive in connection with the Executive’s employment by the Company; and (ii) delete or destroy all copies of any such documents and materials not returned to the Company that remain in the Executive’s possession or control, including those stored on any non-Company devices, networks, storage locations and media in the Executive’s possession or control. constituting or containing Confidential Information. Notwithstanding the foregoing, nothing herein shall prohibit the Executive from retaining documents and information relating to the Executive’s personal rights and obligations and the Executive’s contact list.

12. Governing Law: Jurisdiction and Venue. This Agreement, for all purposes, shall be construed in accordance with the laws of Iowa without regard to conflicts of law principles. Any action or proceeding by either of the parties to enforce this Agreement shall be brought only in a state or federal court located in the state of Iowa, county of Story. The parties hereby irrevocably submit to the non-exclusive jurisdiction of such courts and waive the defense of inconvenient forum to the maintenance of any such action or proceeding in such venue.

13. Entire Agreement. Unless specifically provided herein, this Agreement contains all of the understandings and representations between the Executive and the Company pertaining to the subject matter hereof and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject

14

matter. The parties mutually agree that the Agreement can be specifically enforced in court and can be cited as evidence in legal proceedings alleging breach of the Agreement.

14. Modification and Waiver. No provision of this Agreement may be amended or modified unless such amendment or modification is agreed to in writing and signed by the Executive and by the Chief Executive Officer of the Company. No waiver by either of the parties of any breach by the other party hereto of any condition or provision of this Agreement to be performed by the other party hereto shall be deemed a waiver of any similar or dissimilar provision or condition at the same or any prior or subsequent time, nor shall the failure of or delay by either of the parties in exercising any right, power or privilege hereunder operate as a waiver thereof to preclude any other or further exercise thereof or the exercise of any other such right, power or privilege.

15. Severability. Should any provision of this Agreement be held by a court of competent jurisdiction to be enforceable only if modified, or if any portion of this Agreement shall be held as unenforceable and thus stricken, such holding shall not affect the validity of the remainder of this Agreement, the balance of which shall continue to be binding upon the parties with any such modification to become a part hereof and treated as though originally set forth in this Agreement.

The parties further agree that any such court is expressly authorized to modify any such unenforceable provision of this Agreement in lieu of severing such unenforceable provision from this Agreement in its entirety, whether by rewriting the offending provision, deleting any or all of the offending provision, adding additional language to this Agreement or by making such other modifications as it deems warranted to carry out the intent and agreement of the parties as embodied herein to the maximum extent permitted by law.

The parties expressly agree that this Agreement as so modified by the court shall be binding upon and enforceable against each of them. In any event, should one or more of the provisions of this Agreement be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions hereof, and if such provision or provisions are not modified as provided above, this Agreement shall be construed as if such invalid, illegal or unenforceable provisions had not been set forth herein.

16. Captions. Captions and headings of the sections and paragraphs of this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the caption or heading of any section or paragraph.

17. Counterparts. This Agreement may be executed in separate counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

18. Section 409A. This Agreement is intended to comply with Section 409A or an exemption thereunder and shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment shall only be made upon a “separation from service” under Section

15

409A. Except as specifically permitted by Section 409A, the benefits and reimbursements provided to the Executive during any calendar year shall not affect the benefits and reimbursements to be provided to the Executive in any other calendar year, and the right to such benefits and reimbursements may not be liquidated or exchanged for any other benefit, in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv) or any successor thereto. Furthermore, reimbursement payments shall be made to the Executive as soon as practicable following the date that the applicable expense is incurred, but in no event later than the last day of the calendar year following the calendar year in which the underlying expense is incurred, in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv) or any successor thereto. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.

Notwithstanding any other provision of this Agreement, if any payment or benefit provided to the Executive in connection with the Executive’s termination of employment is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A and the Executive is determined to be a “specified employee” as defined in Section 409A(a)(2)(b)(i), then such payment or benefit shall not be paid until the first payroll date to occur following the six-month anniversary of the Termination Date (the “Specified Employee Payment Date”). The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment Date shall be paid to the Executive in a lump sum on the Specified Employee Payment Date and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule.

19. Successors and Assigns. This Agreement is personal to the Executive and shall not be assigned by the Executive. Any purported assignment by the Executive shall be null and void from the initial date of the purported assignment. The Company may assign this Agreement to any successor or assign (whether direct or indirect, by Conversion, purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company. This Agreement shall inure to the benefit of the Company and permitted successors and assigns.

20. Notice. Notices and all other communications provided for in this Agreement shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, or by overnight carrier to the parties at the addresses set forth below (or such other addresses as specified by the parties by like notice):

If to the Company:

WORKIVA INC.

2900 University Blvd

Ames, Iowa 50010

Attention: Chief Executive Officer

If to the Executive, to the Executive’s address on file with the Company.

21. Representations of the Executive. The Executive represents and warrants to the Company that:

16

21.1 The Executive’s acceptance of employment with the Company and the performance of the Executive’s duties hereunder will not conflict with or result in a violation of, a breach of, or a default under any contract, agreement or understanding to which the Executive is a party or is otherwise bound.

21.2 The Executive’s acceptance of employment with the Company and the performance of the Executive’s duties hereunder will not violate any non-solicitation, non-competition or other similar covenant or agreement of a prior employer.

22. Withholding. The Company shall have the right to withhold from any amount payable hereunder any Federal, state and local taxes in order for the Company to satisfy any withholding tax obligation it may have with respect to such amount under any applicable law or regulation.

23. Survival. Upon the expiration or other termination of this Agreement, the respective rights and obligations of the parties hereto shall survive such expiration or other termination to the extent necessary to carry out the intentions of the parties under this Agreement.

24. Acknowledgment of Full Understanding. THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT THE EXECUTIVE HAS FULLY READ, UNDERSTANDS AND VOLUNTARILY ENTERS INTO THIS AGREEMENT. THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT THE EXECUTIVE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS AND CONSULT WITH AN ATTORNEY OF THE EXECUTIVE’S CHOICE BEFORE SIGNING THIS AGREEMENT.

[SIGNATURE PAGE FOLLOWS]

17

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

WORKIVA INC.

By: /s/ Martin J. Vanderploeg

Name: Martin J. Vanderploeg

Title: President and CEO

EXECUTIVE

Signature: /s/ Julie Iskow

Print Name: Julie Iskow

18

EX-31.1

CERTIFICATION UNDER SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Martin J. Vanderploeg, Ph.D., certify that:

1.  I have reviewed this Quarterly Report on Form 10-Q of Workiva Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a.  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.  Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

November 6, 2019 /s/ Martin J. Vanderploeg, Ph.D. Martin J. Vanderploeg, Ph.D. President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

CERTIFICATION UNDER SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, J. Stuart Miller, certify that:

1.  I have reviewed this Quarterly Report on Form 10-Q of Workiva Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a.  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.  Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

November 6, 2019 /s/ J. Stuart Miller J. Stuart Miller Executive Vice President and Chief Financial Officer (Principal Financial Officer)

EX-32.1

CERTIFICATION UNDER SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

I, Martin J. Vanderploeg, President and Chief Executive Officer of Workiva Inc. (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.the Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.

November 6, 2019 /s/ Martin J. Vanderploeg, Ph.D. Martin J. Vanderploeg, Ph.D. President and Chief Executive Officer (Principal Executive Officer)

EX-32.2

CERTIFICATION UNDER SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

I, J. Stuart Miller, Chief Financial Officer of Workiva Inc. (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.the Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.

November 6, 2019 /s/ J. Stuart Miller J. Stuart Miller Executive Vice President and Chief Financial Officer (Principal Financial Officer)

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Cash Equivalents and Marketable Securities (Tables)

9 Months Ended

Sep. 30, 2019

Investments, Debt and Equity Securities [Abstract]

Schedule of Marketable Securities

At September 30, 2019, marketable securities consisted of the following (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Fair Value
Money market funds	$	368,634	$	—	$	—	$	368,634
U.S. treasury debt securities	10,284		2		(1)		10,285
U.S. corporate debt securities	85,216		148		(5)		85,359
	$	464,134	$	150	$	(6)	$	464,278
Included in cash and cash equivalents	$	368,634	$	—	$	—	$	368,634
Included in marketable securities	$	95,500	$	150	$	(6)	$	95,644

At December 31, 2018, marketable securities consisted of the following (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Fair Value
Money market funds	$	52,068	$	—	$	—	$	52,068
Commercial paper	7,448		—		—		7,448
U.S. treasury debt securities	2,494		—		(1)		2,493
U.S. corporate debt securities	10,890		—		(67)		10,823
	$	72,900	$	—	$	(68)	$	72,832
Included in cash and cash equivalents	$	52,068	$	—	$	—	$	52,068
Included in marketable securities	$	20,832	$	—	$	(68)	$	20,764

Schedule of Cash and Cash Equivalents

At September 30, 2019, marketable securities consisted of the following (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Fair Value
Money market funds	$	368,634	$	—	$	—	$	368,634
U.S. treasury debt securities	10,284		2		(1)		10,285
U.S. corporate debt securities	85,216		148		(5)		85,359
	$	464,134	$	150	$	(6)	$	464,278
Included in cash and cash equivalents	$	368,634	$	—	$	—	$	368,634
Included in marketable securities	$	95,500	$	150	$	(6)	$	95,644

At December 31, 2018, marketable securities consisted of the following (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Fair Value
Money market funds	$	52,068	$	—	$	—	$	52,068
Commercial paper	7,448		—		—		7,448
U.S. treasury debt securities	2,494		—		(1)		2,493
U.S. corporate debt securities	10,890		—		(67)		10,823
	$	72,900	$	—	$	(68)	$	72,832
Included in cash and cash equivalents	$	52,068	$	—	$	—	$	52,068
Included in marketable securities	$	20,832	$	—	$	(68)	$	20,764

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, 2019, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in thousands):

	As of September 30, 2019
	Less than 12 months				12 months or greater
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. treasury debt securities	$	6,339	$	(1)	$	—	$	—
U.S. corporate debt securities	7,691		(3)		3,000		(2)
Total	$	14,030	$	(4)	$	3,000	$	(2)

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [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):

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Cost of revenue
Subscription and support	$	386	$	161	$	1,142	$	560
Professional services	456		153		1,296		449
Operating expenses
Research and development	2,265		1,624		6,016		4,140
Sales and marketing	2,203		1,397		6,199		3,950
General and administrative	3,913		3,614		11,276		14,220
Total	$	9,223	$	6,949	$	25,929	$	23,319

Schedule of Stock-Option Activity

The following table summarizes the option activity under the Plans for the nine months ended September 30, 2019:

	Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
					(in thousands)
Outstanding at December 31, 2018	6,400,175	$	13.65	6.1	$	142,340
Granted	—	—
Forfeited	(40,203)	16.79
Exercised	(1,817,243)	12.38
Outstanding at September 30, 2019	4,542,729	$	14.13	5.7	$	134,913
Exercisable at September 30, 2019	3,786,843	$	13.57	5.4	$	114,571

Summary of Restricted Stock Units

The following table summarizes the restricted stock unit activity under the Plan for the nine months ended September 30, 2019:

	Number of Shares	Weighted- Average Grant Date Fair Value
Unvested at December 31, 2018	2,359,261	$	23.95
Granted	906,173	43.40
Forfeited	(62,767)	28.56
Vested(1)	(358,511)	20.35
Unvested at September 30, 2019	2,844,156	$	30.50

(1) During the nine months ended September 30, 2019, in accordance with our Nonqualified Deferred Compensation Plan, recipients of 250,750 shares had elected to defer settlement of the vested restricted stock units and 274,079 shares were released from deferral. This resulted in total deferred units of 531,292 as of September 30, 2019.

Schedule of Valuation Assumptions, Employee Stock Purchase Plans

The fair value of our ESPP purchase rights was estimated assuming no expected dividends and the following weighted-average assumptions:

	Nine months ended September 30,
	2019	2018
Expected term (in years)	0.5	0.5
Risk-free interest rate	1.9% - 2.6%	1.8% - 2.4%
Expected volatility	35.2% - 48.6%	22.2% - 36.4%

XML

Net Loss Per Share - Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
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)	4,542,729	6,693,724
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)	3,375,448	2,215,129
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)	77,788	108,929

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Stock-Based Compensation - Employee Stock Purchase Plan (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Proceeds from shares issued in connection with employee stock purchase plan	$ 2,773	$ 1,846	$ 4,922	$ 3,216
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)			6 months	6 months
Risk-free interest rate, min (as percent)			1.90%	1.80%
Risk-free interest rate, max (as percent)			2.60%	2.40%
Expected volatility, min (as percent)			35.20%	22.20%
Expected volatility, max (as percent)			48.60%	36.40%
Unrecognized compensation expense	$ 681		$ 681
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 (in shares)			188,390
Shares issued during period, weighted average price per share (in dollars per share)			$ 26.13
Proceeds from shares issued in connection with employee stock purchase plan			$ 4,900

XML

Net Loss Per Share

9 Months Ended

Sep. 30, 2019

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 convertible senior notes, outstanding stock options, stock related to unvested restricted stock units, and common stock issuable pursuant to the ESPP to the extent dilutive. Basic and diluted net loss per share was the same for each period presented, as the inclusion of all potential common shares outstanding would have been anti-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.

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):

	Three months ended
	September 30, 2019				September 30, 2018
	Class A		Class B		Class A		Class B
Numerator
Net loss	$	(12,978)	$	(3,073)	$	(8,532)	$	(2,432)
Denominator
Weighted-average common shares outstanding - basic and diluted	37,785,850		8,945,813		34,221,118		9,752,310
Basic and diluted net loss per share	$	(0.34)	$	(0.34)	$	(0.25)	$	(0.25)

	Nine months ended
	September 30, 2019				September 30, 2018
	Class A		Class B		Class A		Class B
Numerator
Net loss	$	(25,422)	$	(6,414)	$	(32,616)	$	(9,734)
Denominator
Weighted-average common shares outstanding - basic and diluted	36,771,232		9,276,805		33,393,426		9,966,513
Basic and diluted net loss per share	$	(0.69)	$	(0.69)	$	(0.98)	$	(0.98)

The anti-dilutive securities excluded from the weighted-average shares used to calculate the diluted net loss per common share were as follows:

	As of
	September 30, 2019	September 30, 2018
Shares subject to outstanding common stock options	4,542,729	6,693,724
Shares subject to unvested restricted stock units	3,375,448	2,215,129
Shares issuable pursuant to the ESPP	77,788	108,929

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Organization and Significant Accounting Policies

9 Months Ended

Sep. 30, 2019

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”) is a leading provider of cloud-based solutions for connected reporting and compliance. Our platform, Wdesk, is used by thousands of public and private companies, government agencies and higher-education institutions. Wdesk offers controlled collaboration, data linking, data integrations, granular permissions, process management and a full audit trail. We sell to customers in the areas of: finance and accounting; risk and controls; regulatory reporting; financial close, management and performance reporting; and statutory and corporate tax reporting. Our operational headquarters are located in Ames, Iowa, with additional offices located in the United States, Europe, the Asia-Pacific region and Canada.

We updated our accounting policies on the use of estimates, impairment of long-lived assets and leases as a result of our adopting Financial Accounting Standards Board (FASB) guidance issued in accounting standards codification (ASC) 842, Leases, under the Accounting Standards Update (ASU) 2016-02 (collectively the new lease 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, 2018, filed with the SEC on February 20, 2019, 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, 2018 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, 2019 are not necessarily indicative of the results expected for the full year ending December 31, 2019.

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, 2018 filed with the SEC on February 20, 2019.

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. Additionally, certain prior period amounts have been reclassified for consistency with the current year presentation. The reclassification of the prior period amounts were not material to the previously reported consolidated financial statements.

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, discount rates used in the valuation of right-of-use assets and lease liabilities, the fair value of the liability and equity components of the convertible senior notes, 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.

Impairment of Long-Lived Assets

Long-lived assets, such as property, equipment, right-of-use assets and software and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If circumstances require that a long-lived asset or asset group be tested for possible impairment, we first compare the undiscounted cash flows expected to be generated by that long-lived asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value.

Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities on our condensed consolidated balance sheets. We currently have no finance leases.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Our variable lease payments consist of non-lease services related to the lease. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components. We have elected to account for these lease and non-lease components as a single lease component. We are also electing not to apply the recognition requirements to short-term leases of 12 months or less and instead will recognize lease payments as expense on a straight-line basis over the lease term.

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“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).

In July 2018, the FASB issued an update (ASU 2018-11) to the existing transition guidance that allows entities to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Effective January 1, 2019, we adopted ASC 842 using this new transition guidance. The comparative information has not been restated and continues to be reported under the accounting standard in effect for those periods.

We have elected 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 did not elect the hindsight practical expedient, which permits entities to use hindsight in determining the lease term and assessing impairment.

Adoption of the new standard had a material impact on our condensed consolidated balance sheets. The most significant impacts related to the recognition of right-of-use assets and lease liabilities for operating leases. The adoption of ASC 842 had no impact on our condensed consolidated statements of operations or total cash flows from operations.

The cumulative effect of the changes made to our consolidated January 1, 2019 balance sheet for the adoption of ASC 842 were as follows (in thousands):

	As of December 31, 2018		Adjustments due to ASC 842 adoption		As of January 1, 2019
Assets
Operating right-of-use asset	$	—	$	15,694	$	15,694
Liabilities
Accrued expenses and other current liabilities	36,353		2,319		38,672
Other long-term liabilities	6,891		(6,007)		884
Operating lease liabilities, non-current	—		19,382		19,382

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 adopted this standard prospectively effective April 1, 2019. The adoption of this new guidance did not have a material impact on our consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted

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 that reflects probable losses rather than the incurred loss model for recognizing credit losses. 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.

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Supplemental Consolidated Balance Sheet Information

9 Months Ended

Sep. 30, 2019

Payables and Accruals [Abstract]

Supplemental Consolidated Balance Sheet Information

Supplemental Consolidated Balance Sheet Information

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

	As of September 30, 2019		As of December 31, 2018
Accrued vacation	$	8,095	$	6,906
Accrued commissions	4,574		7,265
Accrued bonuses	11,348		5,643
Estimated health insurance claims	1,150		1,100
ESPP employee contributions	2,026		2,156
Customer deposits	10,814		7,395
Operating lease liabilities	2,827		—
Accrued other liabilities	6,468		5,888
	$	47,302	$	36,353

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Cover Page - shares	9 Months Ended
	Sep. 30, 2019	Nov. 04, 2019
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2019
Document Transition Report	false
Entity File Number	001-36773
Entity Registrant Name	WORKIVA INC
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-2509828
Entity Address, Address Line One	2900 University Blvd
Entity Address, City or Town	Ames
Entity Address, State or Province	IA
Entity Address, Postal Zip Code	50010
City Area Code	888
Local Phone Number	275-3125
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Title of 12(b) Security	Class A common stock, par value $.001
Trading Symbol	WK
Security Exchange Name	NYSE
Entity Central Index Key	0001445305
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2019
Amendment Flag	false
Class A Common Stock
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		37,820,028
Class B Common Stock
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		8,640,596

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement of Comprehensive Income [Abstract]
Net loss	$ (16,051)	$ (10,964)	$ (31,836)	$ (42,350)
Other comprehensive income, net of tax
Foreign currency translation adjustment, net of income tax expense of $11 and $5 for the three months ended September 30, 2019 and 2018, respectively, and net of income tax expense of $16 and $5 for the nine months ended September 30, 2019 and 2018, respectively	19	(10)	34	21
Unrealized gain (loss) on available-for-sale securities, net of income tax benefit (expense) of $(10) and $1 for the three months ended September 30, 2019 and 2018, respectively, and net of income tax benefit (expense) of $(51) and $1 for the nine months ended September 30, 2019 and 2018, respectively	43	22	162	(6)
Other comprehensive income, net of tax	62	12	196	15
Comprehensive loss	$ (15,989)	$ (10,952)	$ (31,640)	$ (42,335)

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Debt

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Debt

Debt

Other Long-Term Debt

In August 2014, we entered into a credit facility with Silicon Valley Bank, which provided us with a revolving line of credit. Under the agreement, we could borrow up to $15.0 million with interest accrued at the bank's prime lending rate. In August 2019,we terminated our credit facility with Silicon Valley Bank. No amounts were outstanding at the time of termination.

Convertible Senior Notes

In August 2019, we issued $345.0 million aggregate principal amount of 1.125% convertible senior notes due 2026 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, including the exercise in full by the initial purchasers of their option to purchase an additional $45.0 million principal amount (the “Notes”). The Notes were issued pursuant to an indenture and are senior, unsecured obligations of the Company. The Notes bear interest at a fixed rate of 1.125% per annum, payable semi-annually in arrears on February 15 and August 15 of each year, commencing on February 15, 2020. Proceeds from the issuance of the Notes totaled $335.9 million, net of initial purchaser discounts and issuance costs.

The initial conversion rate is 12.4756 shares of our common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $80.16 per share, subject to adjustment upon the occurrence of specified events. The Notes will be convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding May 15, 2026 only under the following circumstances:

•during any calendar quarter commencing after the calendar quarter ending on September 30, 2019 (and only during such calendar quarter), if the last reported sale price of our Class A common stock, par value $0.001 per share (which we refer to in this offering memorandum as our “Class A common stock”), for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

•during the five consecutive business day period immediately following any ten consecutive trading day period (the “measurement period”) in which the trading price (as defined below) per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A common stock and the conversion rate on each such trading day;

•if we call any or all of the Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or

•upon the occurrence of certain specified corporate events as set forth in the indenture.

On or after May 15, 2026 until the close of business on the business day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances.

Upon conversion, we will pay or deliver, as the case may be, cash, shares of our Class A common stock or a combination of cash and shares of our Class A common stock, at our election, in the manner and subject to the terms and conditions provided in the indenture. It is our current intent to settle conversions through a combination settlement of cash and shares of our Class A common stock with a specified dollar amount per $1,000 principal amount of Notes of $1,000.

If we undergo a fundamental change (as defined in the indenture), holders may require us to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, following certain corporate events that occur prior to the maturity date or if we deliver a notice of redemption, we will increase, in certain circumstances, the conversion rate for a holder who elects to convert its Notes in connection with such corporate event or notice of redemption, as the case may be. During the three months ended September 30, 2019, the conditions allowing holders of the Notes to convert were not met. The Notes were therefore not convertible during the three months ended September 30, 2019 and are classified as long-term debt on our condensed consolidated balance sheets.

We may not redeem the Notes prior to August 21, 2023. We may redeem for cash all or any portion of the Notes, at our option, on or after August 21, 2023 if the last reported sale price of our Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

In accounting for the issuance of the Notes, we separated the Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of similar debt instruments that do not have an associated convertible feature. The carrying amount of the equity component, representing the conversion option, was determined by deducting the fair value of the liability components from the par value of the Notes. The difference represents the debt discount that is amortized to interest expense at an effective interest rate of 4.3% over the term of the Notes. The carrying amount of the equity component was $60.1 million and is recorded in additional paid-in-capital. The equity component is not remeasured as long as it continues to meet the conditions for equity classification.

In accounting for the issuance costs related to the Notes, we allocated the total amount incurred to the liability and equity components of the Notes based on the proportion of the proceeds allocated to the debt and equity components. Issuance costs attributable to the liability component were $7.5 million. The issuance costs allocated to the liability component are amortized to interest expense under the effective

interest rate method over the contractual term of the Notes. Issuance costs attributable to the equity component of the Notes were $1.6 million and are netted against the equity components representing the conversion option in additional paid-in capital.

The net carrying amount of the liability and equity components of the Notes was as follows (in thousands):

	September 30, 2019
Liability component:
Principal	$	345,000
Unamortized discount	(59,184)
Unamortized issuance costs	(7,394)
Net carrying amount	$	278,422
Equity component, net of purchase discounts and issuance costs	$	58,560

Interest expense related to the Notes is as follows (in thousands):

	Three and Nine Months Ended September 30, 2019
Contractual interest expense	$	468
Amortization of debt discount	963
Amortization of issuance costs	120
Total interest expense	$	1,551

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Debt - Summary of Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Debt Disclosure [Abstract]
Contractual interest expense	$ 468	$ 468
Amortization of debt discount	963	963
Amortization of issuance costs	120	120
Total interest expense	$ 1,551	$ 1,551

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Fair Value Measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Cash and cash equivalents
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents - money market funds	$ 368,634	$ 52,068
Marketable securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	95,644	20,764
Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities		7,448
U.S. treasury debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	10,285	2,493
U.S. corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	85,359	10,823
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents - money market funds	368,634	52,068
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of convertible debt	314,200
Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	464,278	72,832
Recurring | Cash and cash equivalents
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents - money market funds	368,634	52,068
Recurring | Marketable securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	95,644	20,764
Recurring | Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	7,448
Recurring | U.S. treasury debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	10,285	2,493
Recurring | U.S. corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	85,359	10,823
Recurring | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents - money market funds	368,634	52,068
Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	368,634	52,068
Recurring | Level 1 | Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring | Level 1 | U.S. treasury debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring | Level 1 | U.S. corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	0
Recurring | Level 1 | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents - money market funds	368,634	52,068
Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	95,644	20,764
Recurring | Level 2 | Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0	7,448
Recurring | Level 2 | U.S. treasury debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	10,285	2,493
Recurring | Level 2 | U.S. corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	85,359	10,823
Recurring | Level 2 | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents - money market funds	$ 0	$ 0

XML

Label	Element	Value
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 8,381,000
Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 8,381,000

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Cash Equivalents and Marketable Securities

9 Months Ended

Sep. 30, 2019

Investments, Debt and Equity Securities [Abstract]

Cash Equivalents and Marketable Securities

Cash Equivalents and Marketable Securities

At September 30, 2019, marketable securities consisted of the following (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Fair Value
Money market funds	$	368,634	$	—	$	—	$	368,634
U.S. treasury debt securities	10,284		2		(1)		10,285
U.S. corporate debt securities	85,216		148		(5)		85,359
	$	464,134	$	150	$	(6)	$	464,278
Included in cash and cash equivalents	$	368,634	$	—	$	—	$	368,634
Included in marketable securities	$	95,500	$	150	$	(6)	$	95,644

At December 31, 2018, marketable securities consisted of the following (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Fair Value
Money market funds	$	52,068	$	—	$	—	$	52,068
Commercial paper	7,448		—		—		7,448
U.S. treasury debt securities	2,494		—		(1)		2,493
U.S. corporate debt securities	10,890		—		(67)		10,823
	$	72,900	$	—	$	(68)	$	72,832
Included in cash and cash equivalents	$	52,068	$	—	$	—	$	52,068
Included in marketable securities	$	20,832	$	—	$	(68)	$	20,764

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, 2019, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in thousands):

	As of September 30, 2019
	Less than 12 months				12 months or greater
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. treasury debt securities	$	6,339	$	(1)	$	—	$	—
U.S. corporate debt securities	7,691		(3)		3,000		(2)
Total	$	14,030	$	(4)	$	3,000	$	(2)

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, 2019 to hold these investments until the cost basis is recovered.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenue
Total revenue	$ 74,179	$ 60,873	$ 217,626	$ 179,909
Cost of revenue
Total cost of revenue	21,751	15,659	61,964	48,466
Gross profit	52,428	45,214	155,662	131,443
Operating expenses
Research and development	22,899	19,984	66,705	60,829
Sales and marketing	32,990	24,068	86,568	67,326
General and administrative	12,017	11,864	33,626	45,286
Total operating expenses	67,906	55,916	186,899	173,441
Loss from operations	(15,478)	(10,702)	(31,237)	(41,998)
Interest income	1,460	341	2,593	843
Interest expense	(1,959)	(448)	(2,832)	(1,347)
Other income (expense), net	24	(138)	(259)	195
Loss before provision for income taxes	(15,953)	(10,947)	(31,735)	(42,307)
Provision for income taxes	98	17	101	43
Net loss	$ (16,051)	$ (10,964)	$ (31,836)	$ (42,350)
Net loss per common share:
Basic and diluted (in dollars per share)	$ (0.34)	$ (0.25)	$ (0.69)	$ (0.98)
Weighted-average common shares outstanding - basic and diluted (in shares)	46,731,663	43,973,428	46,048,037	43,359,939
Subscription and support
Revenue
Total revenue	$ 63,022	$ 51,306	$ 179,617	$ 146,613
Cost of revenue
Total cost of revenue	10,924	8,139	30,935	25,578
Professional services
Revenue
Total revenue	11,157	9,567	38,009	33,296
Cost of revenue
Total cost of revenue	$ 10,827	$ 7,520	$ 31,029	$ 22,888

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Other Purchase Commitments

During 2019, we entered into certain non-cancelable agreements with third-party providers for our use of cloud services in the ordinary course of business. Under these agreements, we are committed to purchase $18,000 in fiscal year 2019, $1.2 million in fiscal year 2020, $2.3 million in fiscal year 2021, and $1.2 million in fiscal year 2022.

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. We evaluate the development of legal matters on a regular basis and accrue a liability when we believe a loss is probable and the amount can be reasonably estimated. 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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Organization and Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

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, 2018 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, 2019 are not necessarily indicative of the results expected for the full year ending December 31, 2019.

Principles of Consolidation

All intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

Additionally, certain prior period amounts have been reclassified for consistency with the current year presentation.

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, discount rates used in the valuation of right-of-use assets and lease liabilities, the fair value of the liability and equity components of the convertible senior notes, 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.

Impairment of Long-Lived Assets

Long-lived assets, such as property, equipment, right-of-use assets and software and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If circumstances require that a long-lived asset or asset group be tested for possible impairment, we first compare the undiscounted cash flows expected to be generated by that long-lived asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value.

Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities on our condensed consolidated balance sheets. We currently have no finance leases.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Our variable lease payments consist of non-lease services related to the lease. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components. We have elected to account for these lease and non-lease components as a single lease component. We are also electing not to apply the recognition requirements to short-term leases of 12 months or less and instead will recognize lease payments as expense on a straight-line basis over the lease term.

Recently Adopted Accounting Pronouncements and New Accounting Pronouncements Not Yet Adopted

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“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).

In July 2018, the FASB issued an update (ASU 2018-11) to the existing transition guidance that allows entities to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Effective January 1, 2019, we adopted ASC 842 using this new transition guidance. The comparative information has not been restated and continues to be reported under the accounting standard in effect for those periods.

We have elected 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 did not elect the hindsight practical expedient, which permits entities to use hindsight in determining the lease term and assessing impairment.

Adoption of the new standard had a material impact on our condensed consolidated balance sheets. The most significant impacts related to the recognition of right-of-use assets and lease liabilities for operating leases. The adoption of ASC 842 had no impact on our condensed consolidated statements of operations or total cash flows from operations.

The cumulative effect of the changes made to our consolidated January 1, 2019 balance sheet for the adoption of ASC 842 were as follows (in thousands):

	As of December 31, 2018		Adjustments due to ASC 842 adoption		As of January 1, 2019
Assets
Operating right-of-use asset	$	—	$	15,694	$	15,694
Liabilities
Accrued expenses and other current liabilities	36,353		2,319		38,672
Other long-term liabilities	6,891		(6,007)		884
Operating lease liabilities, non-current	—		19,382		19,382

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 adopted this standard prospectively effective April 1, 2019. The adoption of this new guidance did not have a material impact on our consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted

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 that reflects probable losses rather than the incurred loss model for recognizing credit losses. 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.

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 share issued under the ESPP is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on the historical volatility of our common stock. The expected term represents the period of time the ESPP purchase rights are expected to be outstanding. 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 ESPP purchase rights.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities
Net loss	$ (16,051)	$ (10,964)	$ (31,836)	$ (42,350)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	1,058	1,133	2,932	2,881
Stock-based compensation expense	9,223	6,949	25,929	23,319
(Recovery of) provision for doubtful accounts	(104)	128	(58)	311
Amortization (accretion) of premiums and discounts on marketable securities, net	15	(66)	(89)	(63)
Amortization of debt discount and issuance costs	1,083	0	1,083	0
Deferred income tax	(21)	(4)	(67)	(4)
Changes in assets and liabilities:
Accounts receivable	3,579	(1,691)	21,530	4,615
Deferred commissions	(2,106)	(1,939)	(7,968)	(5,608)
Operating lease right-of-use asset	581		1,805
Other receivables	(417)	(591)	(470)	(416)
Prepaid expenses and other	(191)	2,501	(3,737)	712
Other assets	(943)	(389)	(2,349)	(557)
Accounts payable	516	616	160	1,999
Deferred revenue	3,830	8,630	14,112	15,032
Operating lease liability	(758)		(2,226)
Accrued expenses and other liabilities	5,403	3,269	9,828	6,948
Net cash provided by operating activities	4,697	7,582	28,579	6,819
Cash flows from investing activities
Purchase of property and equipment	(663)	(523)	(2,860)	(742)
Purchase of marketable securities	(54,749)	(6,441)	(95,466)	(17,724)
Sale of marketable securities	498	0	498	0
Maturities of marketable securities	1,500	4,600	20,390	9,000
Purchase of intangible assets	(51)	(46)	(712)	(174)
Other investments	(1,000)	0	(1,000)	0
Net cash used in investing activities	(54,465)	(2,410)	(79,150)	(9,640)
Cash flows from financing activities
Proceeds from option exercises	5,940	7,534	22,493	13,927
Taxes paid related to net share settlements of stock-based compensation awards	0	0	(390)	(1,861)
Proceeds from shares issued in connection with employee stock purchase plan	2,773	1,846	4,922	3,216
Proceeds from the issuance of convertible senior notes, net of issuance costs	335,899	0	335,899	0
Principal payments on financing obligations	(306)		(901)
Principal payments on capital lease obligations		(287)		(879)
Proceeds from government grants	0	0	0	22
Net cash provided by financing activities	344,306	9,093	362,023	14,425
Effect of foreign exchange rates on cash	(127)	83	88	(94)
Net increase in cash and cash equivalents	294,411	14,348	311,540	11,510
Cash and cash equivalents at beginning of period	94,713	57,495	77,584	60,333
Cash and cash equivalents at end of period	389,124	71,843	389,124	71,843
Supplemental cash flow disclosure
Cash paid for interest	408	436	1,294	1,304
Cash paid for income taxes, net of refunds	80	0	341	56
Supplemental disclosure of noncash investing and financing activities
Allowance for tenant improvements	0	1,153	0	1,280
Purchases of property and equipment, accrued but not paid	$ 0	$ 105	$ 0	$ 105

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Debt - Summary of Convertible Debt (Details) - 1.125% Convertible Senior Notes Due 2026 - Convertible debt $ in Thousands	Sep. 30, 2019 USD ($)
Debt Instrument [Line Items]
Principal	$ 345,000
Unamortized discount	(59,184)
Unamortized issuance costs	(7,394)
Net carrying amount	278,422
Equity component, net of purchase discounts and issuance costs	$ 58,560

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Cash Equivalents and Marketable Securities - Continuous Unrealized Loss Position (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Fair Value
Less than 12 months	$ 14,030
12 months or greater	3,000
Unrealized Loss
Less than 12 months	(4)
12 months or greater	(2)
U.S. treasury debt securities
Fair Value
Less than 12 months	6,339
12 months or greater	0
Unrealized Loss
Less than 12 months	(1)
12 months or greater	0
U.S. corporate debt securities
Fair Value
Less than 12 months	7,691
12 months or greater	3,000
Unrealized Loss
Less than 12 months	(3)
12 months or greater	$ (2)

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2019

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):

	Fair Value Measurements as of September 30, 2019						Fair Value Measurements as of December 31, 2018
Description	Total		Level 1		Level 2		Total		Level 1		Level 2
Money market funds	$	368,634	$	368,634	$	—	$	52,068	$	52,068	$	—
Commercial paper	—		—		—		7,448		—		7,448
U.S. treasury debt securities	10,285		—		10,285		2,493		—		2,493
U.S. corporate debt securities	85,359		—		85,359		10,823		—		10,823
	$	464,278	$	368,634	$	95,644	$	72,832	$	52,068	$	20,764
Included in cash and cash equivalents	$	368,634					$	52,068
Included in marketable securities	$	95,644					$	20,764

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Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table presents our revenues disaggregated by industry (in thousands). Certain prior year amounts have been reclassified to conform with current period presentation. These reclassifications have no impact on total revenue.

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Information technology	$	9,734	$	7,698	$	28,897	$	22,843
Consumer discretionary	8,324		7,248		24,632		20,918
Industrials	8,190		6,890		24,194		20,706
Diversified financials	8,570		6,847		24,271		20,198
Banks	7,476		6,044		21,099		17,628
Healthcare	6,949		5,347		20,463		15,786
Energy	5,515		4,805		16,605		14,303
Other	19,421		15,994		57,465		47,527
Total revenues	$	74,179	$	60,873	$	217,626	$	179,909

The following table presents our revenues disaggregated by type of good or service (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Subscription and support	$	63,022	$	51,306	$	179,617	$	146,613
XBRL professional services	7,767		6,312		28,699		23,080
Other services	3,390		3,255		9,310		10,216
Total revenues	$	74,179	$	60,873	$	217,626	$	179,909

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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, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Denominator
Weighted-average common shares outstanding - basic and diluted (in shares)	46,731,663	43,973,428	46,048,037	43,359,939
Basic and diluted net loss per share (in dollars per share)	$ (0.34)	$ (0.25)	$ (0.69)	$ (0.98)
Class A Common Stock
Numerator
Net loss	$ (12,978)	$ (8,532)	$ (25,422)	$ (32,616)
Denominator
Weighted-average common shares outstanding - basic and diluted (in shares)	37,785,850	34,221,118	36,771,232	33,393,426
Basic and diluted net loss per share (in dollars per share)	$ (0.34)	$ (0.25)	$ (0.69)	$ (0.98)
Class B Common Stock
Numerator
Net loss	$ (3,073)	$ (2,432)	$ (6,414)	$ (9,734)
Denominator
Weighted-average common shares outstanding - basic and diluted (in shares)	8,945,813	9,752,310	9,276,805	9,966,513
Basic and diluted net loss per share (in dollars per share)	$ (0.34)	$ (0.25)	$ (0.69)	$ (0.98)

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Stock-Based Compensation - Restricted Stock Units (Details) - Restricted stock units - USD ($) $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested in period, fair value	$ 7.3	$ 7.2
Number of Shares (in shares)
Unvested at beginning of period (in shares)	2,359,261
Granted (in shares)	906,173
Forfeited (in shares)	(62,767)
Vested (in shares)	(358,511)
Unvested at end of period (in shares)	2,844,156
Weighted- Average Grant Date Fair Value (in dollars per share)
Unvested at beginning of period (in dollars per share)	$ 23.95
Granted (in dollars per share)	43.40
Forfeited (in dollars per share)	28.56
Vested (in dollars per share)	20.35
Unvested at end of period (in dollars per share)	$ 30.50
Number of vested shares recipient elected to defer settlement (in shares)	250,750
Number of vested shares recipients elected to defer settlement, released during period (in shares)	274,079
Number of deferred shares vested and outstanding (in shares)	531,292
Unrecognized compensation expense	$ 58.3
Unrecognized compensation expense, period for recognition (years)	2 years 4 months 24 days
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period (years)	3 years
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period (years)	4 years
Cliff-vesting
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period (years)	3 years
Cliff-vesting | Board of Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period (years)	1 year

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Leases (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2019 USD ($) renewal_option
Lease, Cost [Abstract]
Operating lease cost	$ 837	$ 2,600
Short-term lease cost	347	885
Variable lease cost	259	691
Total lease cost	1,443	4,176
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	1,031	3,111
Right-of-use assets obtained in exchange for lease obligations: Operating leases	$ 0	$ 2,033
Weighted Average Remaining Lease Term (in years) - Operating leases	7 years 10 months 24 days	7 years 10 months 24 days
Weighted Average Discount Rate - Operating leases	5.70%	5.70%
Operating Lease Liabilities, Payments Due [Abstract]
Remainder of 2019	$ 910	$ 910
2020	4,153	4,153
2021	4,237	4,237
2022	3,872	3,872
2023	3,540	3,540
Thereafter	11,255	11,255
Total minimum lease payments	27,967	27,967
Less: Amount representing interest	(5,867)	(5,867)
Total	$ 22,100	$ 22,100
Office
Lessee, Lease, Description [Line Items]
Number of renewal options (or more) | renewal_option		1
Office | Minimum
Lessee, Lease, Description [Line Items]
Renewal term	3 years	3 years
Office | Maximum
Lessee, Lease, Description [Line Items]
Renewal term	5 years	5 years

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Supplemental Consolidated Balance Sheet Information - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Accrued Liabilities and Other Liabilities [Abstract]
Accrued vacation	$ 8,095		$ 6,906
Accrued commissions	4,574		7,265
Accrued bonuses	11,348		5,643
Estimated health insurance claims	1,150		1,100
ESPP employee contributions	2,026		2,156
Customer deposits	10,814		7,395
Operating lease liabilities	2,827
Accrued other liabilities	6,468		5,888
Accrued expenses and other current liabilities	$ 47,302	$ 38,672	$ 36,353

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Commitments and Contingencies (Details) - Cloud Services Arrangement $ in Thousands	Sep. 30, 2019 USD ($)
Unrecorded Unconditional Purchase Obligation [Line Items]
Purchase commitment due in 2019	$ 18
Purchase commitment due in 2020	1,200
Purchase commitment due in 2021	2,300
Purchase commitment due in 2022	$ 1,200

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Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

Leases

Operating Leases

We lease certain office and residential space under non-cancelable operating leases with various lease terms through June 2043. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Certain office leases include one or more options to renew, with renewal terms that can extend the lease term from 3 to 5 years. The exercise of lease renewal options is at our sole discretion and is generally excluded from the lease term at lease inception. Our leases generally require us to pay a proportionate share of real estate taxes, insurance, common area maintenance, and other operating costs in addition to a base or fixed rent.

The components of lease expense were as follows (in thousands):

	Three months ended September 30, 2019		Nine months ended September 30, 2019
Operating lease cost	$	837	$	2,600
Short-term lease cost	347		885
Variable lease cost	259		691
	$	1,443	$	4,176

Supplemental cash flow information related to leases was as follows (in thousands):

	Three months ended September 30, 2019		Nine months ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,031	$	3,111
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	—	$	2,033

Other supplemental information related to leases was as follows:

	As of September 30, 2019
Weighted Average Remaining Lease Term (in years)
Operating leases	7.9
Weighted Average Discount Rate
Operating leases	5.7	%

As of September 30, 2019, future estimated minimum lease payments under non-cancelable operating leases were as follows (in thousands):

	Operating Leases
Remainder of 2019	$	910
2020	4,153
2021	4,237
2022	3,872
2023	3,540
Thereafter	11,255
Total minimum lease payments	27,967
Less: Amount representing interest	(5,867)
Total	$	22,100

As of September 30, 2019, we did not have additional operating or financing leases that had not yet commenced.

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 389,124	$ 77,584
Marketable securities	95,644	20,764
Accounts receivable, net of allowance for doubtful accounts of $890 and $956 at September 30, 2019 and December 31, 2018, respectively	43,590	65,107
Deferred commissions	12,740	8,178
Other receivables	1,651	1,181
Prepaid expenses	8,148	4,417
Total current assets	550,897	177,231
Property and equipment, net	40,292	41,468
Operating lease right-of-use assets	15,917
Deferred commissions, non-current	13,940	10,569
Intangible assets, net	1,795	1,266
Other assets	3,920	577
Total assets	626,761	231,111
Current liabilities
Accounts payable	4,895	5,461
Accrued expenses and other current liabilities	47,302	36,353
Deferred revenue	156,352	148,545
Current portion of financing obligations	1,295
Current portion of financing obligations		1,222
Total current liabilities	209,844	191,581
Convertible senior notes, net	278,422	0
Deferred revenue, non-current	31,467	25,171
Other long-term liabilities	1,387	6,891
Operating lease liabilities, non-current	19,273
Financing obligations, non-current	16,234
Financing obligations, non-current		17,208
Total liabilities	556,627	240,851
Stockholders’ equity (deficit)
Preferred stock, $0.001 par value per share, 100,000,000 shares authorized, no shares issued and outstanding	0	0
Additional paid-in-capital	408,656	297,145
Accumulated deficit	(338,863)	(307,027)
Accumulated other comprehensive income	294	98
Total stockholders’ equity (deficit)	70,134	(9,740)
Total liabilities and stockholders’ equity (deficit)	626,761	231,111
Class A Common Stock
Stockholders’ equity (deficit)
Common stock	38	34
Class B Common Stock
Stockholders’ equity (deficit)
Common stock	$ 9	$ 10

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement of Comprehensive Income [Abstract]
Foreign currency translation adjustment, tax expense	$ 11	$ 5	$ 16	$ 5
Unrealized gain on available-for-sale securities, tax benefit (expense)	$ (10)	$ 1	$ (51)	$ 1

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Revenue Recognition

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

Disaggregation of Revenue

The following table presents our revenues disaggregated by industry (in thousands). Certain prior year amounts have been reclassified to conform with current period presentation. These reclassifications have no impact on total revenue.

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Information technology	$	9,734	$	7,698	$	28,897	$	22,843
Consumer discretionary	8,324		7,248		24,632		20,918
Industrials	8,190		6,890		24,194		20,706
Diversified financials	8,570		6,847		24,271		20,198
Banks	7,476		6,044		21,099		17,628
Healthcare	6,949		5,347		20,463		15,786
Energy	5,515		4,805		16,605		14,303
Other	19,421		15,994		57,465		47,527
Total revenues	$	74,179	$	60,873	$	217,626	$	179,909

The following table presents our revenues disaggregated by type of good or service (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Subscription and support	$	63,022	$	51,306	$	179,617	$	146,613
XBRL professional services	7,767		6,312		28,699		23,080
Other services	3,390		3,255		9,310		10,216
Total revenues	$	74,179	$	60,873	$	217,626	$	179,909

Deferred Revenue

We recognized $59.0 million and $47.2 million of revenue during the three months ended September 30, 2019 and 2018, respectively, that was included in the deferred revenue balances at the beginning of the respective periods. We recognized $114.4 million and $93.9 million of revenue during the nine months ended September 30, 2019 and 2018, respectively, that was included in the deferred revenue balances at the beginning of the respective periods.

Transaction Price Allocated to the Remaining Performance Obligations

As of September 30, 2019, we expect revenue of approximately $212.9 million to be recognized from remaining performance obligations for subscription contracts. We expect to recognize approximately $162.6 million of these remaining performance obligations over the next 12 months, with the balance recognized thereafter.

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Organization and Significant Accounting Policies - Accounting Policies (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Assets
Operating lease right-of-use assets	$ 15,917	$ 15,694
Liabilities
Accrued expenses and other current liabilities	47,302	38,672	$ 36,353
Other long-term liabilities	1,387	884	$ 6,891
Operating lease liabilities, non-current	$ 19,273	19,382
Accounting Standards Update 2016-02
Assets
Operating lease right-of-use assets		15,694
Liabilities
Accrued expenses and other current liabilities		2,319
Other long-term liabilities		(6,007)
Operating lease liabilities, non-current		$ 19,382

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Supplemental Consolidated Balance Sheet Information (Tables)

9 Months Ended

Sep. 30, 2019

Payables and Accruals [Abstract]

Schedule of Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

	As of September 30, 2019		As of December 31, 2018
Accrued vacation	$	8,095	$	6,906
Accrued commissions	4,574		7,265
Accrued bonuses	11,348		5,643
Estimated health insurance claims	1,150		1,100
ESPP employee contributions	2,026		2,156
Customer deposits	10,814		7,395
Operating lease liabilities	2,827		—
Accrued other liabilities	6,468		5,888
	$	47,302	$	36,353

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Debt (Tables)

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Summary of Convertible Debt

The net carrying amount of the liability and equity components of the Notes was as follows (in thousands):

	September 30, 2019
Liability component:
Principal	$	345,000
Unamortized discount	(59,184)
Unamortized issuance costs	(7,394)
Net carrying amount	$	278,422
Equity component, net of purchase discounts and issuance costs	$	58,560

Interest expense related to the Notes is as follows (in thousands):

	Three and Nine Months Ended September 30, 2019
Contractual interest expense	$	468
Amortization of debt discount	963
Amortization of issuance costs	120
Total interest expense	$	1,551

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Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of Revenue [Line Items]
Total revenue	$ 74,179	$ 60,873	$ 217,626	$ 179,909
Subscription and support
Disaggregation of Revenue [Line Items]
Total revenue	63,022	51,306	179,617	146,613
XBRL professional services
Disaggregation of Revenue [Line Items]
Total revenue	7,767	6,312	28,699	23,080
Other services
Disaggregation of Revenue [Line Items]
Total revenue	3,390	3,255	9,310	10,216
Information technology
Disaggregation of Revenue [Line Items]
Total revenue	9,734	7,698	28,897	22,843
Consumer discretionary
Disaggregation of Revenue [Line Items]
Total revenue	8,324	7,248	24,632	20,918
Industrials
Disaggregation of Revenue [Line Items]
Total revenue	8,190	6,890	24,194	20,706
Diversified financials
Disaggregation of Revenue [Line Items]
Total revenue	8,570	6,847	24,271	20,198
Banks
Disaggregation of Revenue [Line Items]
Total revenue	7,476	6,044	21,099	17,628
Healthcare
Disaggregation of Revenue [Line Items]
Total revenue	6,949	5,347	20,463	15,786
Energy
Disaggregation of Revenue [Line Items]
Total revenue	5,515	4,805	16,605	14,303
Other
Disaggregation of Revenue [Line Items]
Total revenue	$ 19,421	$ 15,994	$ 57,465	$ 47,527

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Stock-Based Compensation - Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	$ 9,223	$ 6,949	$ 25,929	$ 23,319
Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	2,265	1,624	6,016	4,140
Sales and marketing
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	2,203	1,397	6,199	3,950
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	3,913	3,614	11,276	14,220
Subscription and support | Cost of revenue
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	386	161	1,142	560
Professional services | Cost of revenue
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	$ 456	$ 153	$ 1,296	$ 449

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Organization and Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2019

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, 2019 balance sheet for the adoption of ASC 842 were as follows (in thousands):

	As of December 31, 2018		Adjustments due to ASC 842 adoption		As of January 1, 2019
Assets
Operating right-of-use asset	$	—	$	15,694	$	15,694
Liabilities
Accrued expenses and other current liabilities	36,353		2,319		38,672
Other long-term liabilities	6,891		(6,007)		884
Operating lease liabilities, non-current	—		19,382		19,382

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Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Summary of Lease Expense Components, Supplemental Cash Flow Information and Other Information

The components of lease expense were as follows (in thousands):

	Three months ended September 30, 2019		Nine months ended September 30, 2019
Operating lease cost	$	837	$	2,600
Short-term lease cost	347		885
Variable lease cost	259		691
	$	1,443	$	4,176

Supplemental cash flow information related to leases was as follows (in thousands):

	Three months ended September 30, 2019		Nine months ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,031	$	3,111
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	—	$	2,033

Other supplemental information related to leases was as follows:

	As of September 30, 2019
Weighted Average Remaining Lease Term (in years)
Operating leases	7.9
Weighted Average Discount Rate
Operating leases	5.7	%

Summary of Future Estimated Minimum Lease Payments

As of September 30, 2019, future estimated minimum lease payments under non-cancelable operating leases were as follows (in thousands):

	Operating Leases
Remainder of 2019	$	910
2020	4,153
2021	4,237
2022	3,872
2023	3,540
Thereafter	11,255
Total minimum lease payments	27,967
Less: Amount representing interest	(5,867)
Total	$	22,100

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Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2019

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):

	Three months ended
	September 30, 2019				September 30, 2018
	Class A		Class B		Class A		Class B
Numerator
Net loss	$	(12,978)	$	(3,073)	$	(8,532)	$	(2,432)
Denominator
Weighted-average common shares outstanding - basic and diluted	37,785,850		8,945,813		34,221,118		9,752,310
Basic and diluted net loss per share	$	(0.34)	$	(0.34)	$	(0.25)	$	(0.25)

	Nine months ended
	September 30, 2019				September 30, 2018
	Class A		Class B		Class A		Class B
Numerator
Net loss	$	(25,422)	$	(6,414)	$	(32,616)	$	(9,734)
Denominator
Weighted-average common shares outstanding - basic and diluted	36,771,232		9,276,805		33,393,426		9,966,513
Basic and diluted net loss per share	$	(0.69)	$	(0.69)	$	(0.98)	$	(0.98)

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:

	As of
	September 30, 2019	September 30, 2018
Shares subject to outstanding common stock options	4,542,729	6,693,724
Shares subject to unvested restricted stock units	3,375,448	2,215,129
Shares issuable pursuant to the ESPP	77,788	108,929

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Revenue Recognition - Deferred Revenue and Transaction Price Allocated to the Remaining Performance Obligations (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenue from Contract with Customer [Abstract]
Deferred revenue recognized	$ 59.0	$ 47.2	$ 114.4	$ 93.9
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue expected to be recognized	212.9		212.9
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue expected to be recognized	$ 162.6		$ 162.6
Expected period of recognition	12 months		12 months

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Stock-Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Options (in shares):
Outstanding beginning of the period (in shares)	6,400,175
Granted (in shares)	0	0
Forfeited (in shares)	(40,203)
Exercised (in shares)	(1,817,243)
Outstanding end of the period (in shares)	4,542,729		6,400,175
Exercisable (in shares)	3,786,843
Weighted-Average Exercise Price (in dollars per share):
Outstanding beginning of the period (in dollars per share)	$ 13.65
Granted (in dollars per share)	0
Forfeited (in dollars per share)	16.79
Exercised (in dollars per share)	12.38
Outstanding end of the period (in dollars per share)	14.13		$ 13.65
Exercisable (in dollars per share)	$ 13.57
Outstanding, weighted-average remaining contractual term (years)	5 years 8 months 12 days		6 years 1 month 6 days
Exercisable, weighted-average remaining contractual term (years)	5 years 4 months 24 days
Outstanding, aggregate intrinsic value	$ 134,913		$ 142,340
Exercisable, aggregate intrinsic value	114,571
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Options exercised intrinsic value	69,600	$ 22,100
Options vested in period fair value	5,000	$ 10,300
Options unrecognized compensation expense	$ 4,500
Employee stock options
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Options unrecognized compensation expense, period for recognition (years)	1 year 6 months
Class A Common Stock | Employee stock options
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Expiration period (years)	10 years
Minimum | Class A Common Stock | Employee stock options
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Award vesting period (years)	3 years
Maximum | Class A Common Stock | Employee stock options
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Award vesting period (years)	4 years

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Stock-Based Compensation - Narrative (Details) - USD ($)		9 Months Ended
	Jun. 13, 2017	Sep. 30, 2019
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		4,632,233
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]
Number of shares available for grant		2,295,587

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Debt (Details)	1 Months Ended	3 Months Ended		9 Months Ended
	Aug. 31, 2019 USD ($) day $ / shares	Sep. 30, 2019 USD ($) $ / shares	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) $ / shares	Sep. 30, 2018 USD ($)	Dec. 31, 2018 $ / shares	Aug. 31, 2014 USD ($)
Debt Instrument [Line Items]
Proceeds from the issuance of convertible senior notes, net of issuance costs		$ 335,899,000	$ 0	$ 335,899,000	$ 0
Class A Common Stock
Debt Instrument [Line Items]
Common stock, par value (in dollars per share) | $ / shares		$ 0.001		$ 0.001		$ 0.001
Line of credit | Silicon Valley Bank
Debt Instrument [Line Items]
Maximum borrowing capacity							$ 15,000,000.0
Convertible debt | 1.125% Convertible Senior Notes Due 2026
Debt Instrument [Line Items]
Face amount of debt issued	$ 345,000,000.0
Stated interest percentage	1.125%
Proceeds from the issuance of convertible senior notes, net of issuance costs	$ 335,900,000
Conversion ratio	0.0124756
Conversion price (in dollars per share) | $ / shares	$ 80.16
Threshold percentage of stock price trigger	130.00%
Threshold percentage of stock trading price	98.00%
Redemption price, percentage	100.00%
Effective interest percentage	4.30%
Equity component, gross amount	$ 60,100,000
Issuance costs attributable to the liability component	7,500,000
Issuance costs attributable to the equity component	1,600,000
Convertible debt | Over-allotment option
Debt Instrument [Line Items]
Face amount of debt issued	$ 45,000,000.0
Debt Conversion Terms, One | Convertible debt | 1.125% Convertible Senior Notes Due 2026
Debt Instrument [Line Items]
Threshold number of trading days (day) | day	20
Threshold number of consecutive trading days (day) | day	30
Debt Conversion Terms, Two | Convertible debt | 1.125% Convertible Senior Notes Due 2026
Debt Instrument [Line Items]
Threshold number of trading days (day) | day	5
Threshold number of consecutive trading days (day) | day	10

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Cash Equivalents and Marketable Securities - Schedule of Marketable Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 389,124	$ 77,584
Debt Securities, Available-for-sale [Line Items]
Unrealized Gains	150	0
Unrealized Losses	(6)	(68)
Cash and cash equivalents and available-for-sale securities, amortized cost	464,134	72,900
Cash, cash equivalents, and available-for-sale securities	464,278	72,832
Commercial paper
Debt Securities, Available-for-sale [Line Items]
Amortized Cost		7,448
Unrealized Gains		0
Unrealized Losses		0
Aggregate Fair Value		7,448
U.S. treasury debt securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	10,284	2,494
Unrealized Gains	2	0
Unrealized Losses	(1)	(1)
Aggregate Fair Value	10,285	2,493
U.S. corporate debt securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	85,216	10,890
Unrealized Gains	148	0
Unrealized Losses	(5)	(67)
Aggregate Fair Value	85,359	10,823
Money market funds
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	368,634	52,068
Cash and cash equivalents, aggregate fair value	368,634	52,068
Cash and cash equivalents
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	368,634	52,068
Cash and cash equivalents, aggregate fair value	368,634	52,068
Marketable securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	95,500	20,832
Unrealized Gains	150	0
Unrealized Losses	(6)	(68)
Aggregate Fair Value	$ 95,644	$ 20,764

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Fair Value Measurements

9 Months Ended

Sep. 30, 2019

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, 2019, 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):

	Fair Value Measurements as of September 30, 2019						Fair Value Measurements as of December 31, 2018
Description	Total		Level 1		Level 2		Total		Level 1		Level 2
Money market funds	$	368,634	$	368,634	$	—	$	52,068	$	52,068	$	—
Commercial paper	—		—		—		7,448		—		7,448
U.S. treasury debt securities	10,285		—		10,285		2,493		—		2,493
U.S. corporate debt securities	85,359		—		85,359		10,823		—		10,823
	$	464,278	$	368,634	$	95,644	$	72,832	$	52,068	$	20,764
Included in cash and cash equivalents	$	368,634					$	52,068
Included in marketable securities	$	95,644					$	20,764

Convertible Senior Notes

As of September 30, 2019, the fair value of our convertible senior notes was $314.2 million. The fair value was determined based on the quoted price of the convertible senior notes in an over-the-counter market on the last trading day of the reporting period and has been classified as Level 2 in the fair value hierarchy. See Note 6 to the condensed consolidated financial statements for more information.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Allowance for doubtful accounts	$ 890	$ 956
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	37,780,966	34,498,391
Common stock, shares outstanding	37,780,966	34,498,391
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	8,640,596	9,545,596
Common stock, shares outstanding	8,640,596	9,545,596

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands	Total	Common Stock (Class A and B)	Additional Paid-in-Capital	Accumulated Other Comprehensive Income	Accumulated Deficit
Shares, Outstanding, Beginning at Dec. 31, 2017		42,369,000
Beginning of the period at Dec. 31, 2017	$ (16,934)	$ 42	$ 248,289	$ 72	$ (265,337)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense	5,905		5,905
Issuance of common stock upon exercise of stock options (in shares)		296,000
Issuance of common stock upon exercise of stock options	3,076	$ 1	3,075
Issuance of common stock under employee stock purchase plan (in shares)		80,000
Issuance of common stock under employee stock purchase plan	1,370		1,370
Issuance of restricted stock units (in shares)		9,000
Tax withholding related to net share settlements of stock-based compensation awards (in shares)		(61,000)
Tax withholding related to net share settlements of stock-based compensation awards	(1,342)		(1,342)
Net loss	(9,618)				(9,618)
Other comprehensive income (loss)	(56)			(56)
End of period at Mar. 31, 2018	(9,218)	$ 43	257,297	16	(266,574)
Shares, Outstanding, Ending at Mar. 31, 2018		42,693,000
Shares, Outstanding, Beginning at Dec. 31, 2017		42,369,000
Beginning of the period at Dec. 31, 2017	(16,934)	$ 42	248,289	72	(265,337)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(42,350)
Other comprehensive income (loss)	15
End of period at Sep. 30, 2018	(12,287)	$ 44	286,888	87	(299,306)
Shares, Outstanding, Ending at Sep. 30, 2018		43,800,000
Shares, Outstanding, Beginning at Mar. 31, 2018		42,693,000
Beginning of the period at Mar. 31, 2018	(9,218)	$ 43	257,297	16	(266,574)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense	10,465		10,465
Issuance of common stock upon exercise of stock options (in shares)		328,000
Issuance of common stock upon exercise of stock options	3,317	$ 0	3,317
Issuance of restricted stock units (in shares)		64,000
Tax withholding related to net share settlements of stock-based compensation awards (in shares)		(23,000)
Tax withholding related to net share settlements of stock-based compensation awards	(519)		(519)
Net loss	(21,768)				(21,768)
Other comprehensive income (loss)	59			59
End of period at Jun. 30, 2018	(17,664)	$ 43	270,560	75	(288,342)
Shares, Outstanding, Ending at Jun. 30, 2018		43,062,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense	6,949		6,949
Issuance of common stock upon exercise of stock options (in shares)		635,000
Issuance of common stock upon exercise of stock options	7,534	$ 1	7,533
Issuance of common stock under employee stock purchase plan (in shares)		99,000
Issuance of common stock under employee stock purchase plan	1,846		1,846
Issuance of restricted stock units (in shares)		4,000
Net loss	(10,964)				(10,964)
Other comprehensive income (loss)	12			12
End of period at Sep. 30, 2018	(12,287)	$ 44	286,888	87	(299,306)
Shares, Outstanding, Ending at Sep. 30, 2018		43,800,000
Shares, Outstanding, Beginning at Dec. 31, 2018		44,044,000
Beginning of the period at Dec. 31, 2018	(9,740)	$ 44	297,145	98	(307,027)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense	8,193		8,193
Issuance of common stock upon exercise of stock options (in shares)		961,000
Issuance of common stock upon exercise of stock options	11,055	$ 1	11,054
Issuance of common stock under employee stock purchase plan (in shares)		101,000
Issuance of common stock under employee stock purchase plan	2,149		2,149
Issuance of restricted stock units (in shares)		25,000
Tax withholding related to net share settlements of stock-based compensation awards (in shares)		(10,000)
Tax withholding related to net share settlements of stock-based compensation awards	(390)		(390)
Net loss	(7,463)				(7,463)
Other comprehensive income (loss)	52			52
End of period at Mar. 31, 2019	3,856	$ 45	318,151	150	(314,490)
Shares, Outstanding, Ending at Mar. 31, 2019		45,121,000
Shares, Outstanding, Beginning at Dec. 31, 2018		44,044,000
Beginning of the period at Dec. 31, 2018	$ (9,740)	$ 44	297,145	98	(307,027)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of stock options (in shares)	1,817,243
Net loss	$ (31,836)
Other comprehensive income (loss)	196
End of period at Sep. 30, 2019	70,134	$ 47	408,656	294	(338,863)
Shares, Outstanding, Ending at Sep. 30, 2019		46,422,000
Shares, Outstanding, Beginning at Mar. 31, 2019		45,121,000
Beginning of the period at Mar. 31, 2019	3,856	$ 45	318,151	150	(314,490)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense	8,513		8,513
Issuance of common stock upon exercise of stock options (in shares)		455,000
Issuance of common stock upon exercise of stock options	5,498	$ 1	5,497
Issuance of restricted stock units (in shares)		323,000
Net loss	(8,322)				(8,322)
Other comprehensive income (loss)	82			82
End of period at Jun. 30, 2019	9,627	$ 46	332,161	232	(322,812)
Shares, Outstanding, Ending at Jun. 30, 2019		45,899,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense	9,223		9,223
Issuance of common stock upon exercise of stock options (in shares)		401,000
Issuance of common stock upon exercise of stock options	5,940	$ 1	5,939
Issuance of common stock under employee stock purchase plan (in shares)		87,000
Issuance of common stock under employee stock purchase plan	2,773		2,773
Issuance of restricted stock units (in shares)		35,000
Equity component of convertible senior notes, net	58,560		58,560
Net loss	(16,051)				(16,051)
Other comprehensive income (loss)	62			62
End of period at Sep. 30, 2019	$ 70,134	$ 47	$ 408,656	$ 294	$ (338,863)
Shares, Outstanding, Ending at Sep. 30, 2019		46,422,000

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [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, 2019, 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.

As of September 30, 2019, 2,295,587 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, 2019, 4,632,233 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 six-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):

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Cost of revenue
Subscription and support	$	386	$	161	$	1,142	$	560
Professional services	456		153		1,296		449
Operating expenses
Research and development	2,265		1,624		6,016		4,140
Sales and marketing	2,203		1,397		6,199		3,950
General and administrative	3,913		3,614		11,276		14,220
Total	$	9,223	$	6,949	$	25,929	$	23,319

Stock Options

The following table summarizes the option activity under the Plans for the nine months ended September 30, 2019:

	Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
					(in thousands)
Outstanding at December 31, 2018	6,400,175	$	13.65	6.1	$	142,340
Granted	—	—
Forfeited	(40,203)	16.79
Exercised	(1,817,243)	12.38
Outstanding at September 30, 2019	4,542,729	$	14.13	5.7	$	134,913
Exercisable at September 30, 2019	3,786,843	$	13.57	5.4	$	114,571

Options to purchase Class A common stock generally vest over a three- or four-year period and are generally granted for a term of ten years. The total intrinsic value of options exercised during the nine months ended September 30, 2019 and 2018 was $69.6 million and $22.1 million, respectively.

No options were granted during the nine months ended September 30, 2019 and 2018. The total fair value of options vested during the nine months ended September 30, 2019 and 2018 was approximately $5.0 million and $10.3 million, respectively. Total unrecognized compensation expense of $4.5 million related to options will be recognized over a weighted-average period of 1.5 years.

Restricted Stock Units

Restricted stock units granted to employees generally vest over a three- or four-year period in equal, annual installments or with three-year cliff vesting. Restricted stock units granted to non-employee members of our Board of Directors generally have one-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, 2019 and 2018 was approximately $7.3 million and $7.2 million, respectively.

The following table summarizes the restricted stock unit activity under the Plan for the nine months ended September 30, 2019:

	Number of Shares	Weighted- Average Grant Date Fair Value
Unvested at December 31, 2018	2,359,261	$	23.95
Granted	906,173	43.40
Forfeited	(62,767)	28.56
Vested(1)	(358,511)	20.35
Unvested at September 30, 2019	2,844,156	$	30.50

(1) During the nine months ended September 30, 2019, in accordance with our Nonqualified Deferred Compensation Plan, recipients of 250,750 shares had elected to defer settlement of the vested restricted stock units and 274,079 shares were released from deferral. This resulted in total deferred units of 531,292 as of September 30, 2019. 

Compensation expense associated with unvested restricted stock units is recognized on a straight-line basis over the vesting period. At September 30, 2019, there was approximately $58.3 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

The fair value of each share issued under the ESPP is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on the historical volatility of our common stock. The expected term represents the period of time the ESPP purchase rights are expected to be outstanding. 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 ESPP purchase rights.

The fair value of our ESPP purchase rights was estimated assuming no expected dividends and the following weighted-average assumptions:

	Nine months ended September 30,
	2019	2018
Expected term (in years)	0.5	0.5
Risk-free interest rate	1.9% - 2.6%	1.8% - 2.4%
Expected volatility	35.2% - 48.6%	22.2% - 36.4%

During the nine months ended September 30, 2019, 188,390 shares of common stock were purchased under the ESPP at a weighted-average price of $26.13 per share, resulting in cash proceeds of $4.9 million.

Compensation expense associated with ESPP purchase rights is recognized on a straight-line basis over the vesting period. At September 30, 2019, there was approximately $681,000 of total unrecognized compensation expense related to the ESPP, which is expected to be recognized over a weighted-average period of 0.3 years.