(Mark One) | |||||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
☒ | Accelerated filer | ☐ | ||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
Emerging growth company |
Page | ||||||||
As of | |||||||||||
March 31, 2021 | December 31, 2020 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowances of $ | |||||||||||
Inventory | |||||||||||
Prepaid expenses and other assets | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Operating lease, right of use asset, net | |||||||||||
Intangible assets, net | |||||||||||
Goodwill | |||||||||||
Other assets | |||||||||||
Deferred tax assets, net | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued liabilities | |||||||||||
Deferred revenues, current | |||||||||||
Warranty obligations, current (includes $ | |||||||||||
Debt, current | |||||||||||
Total current liabilities | |||||||||||
Long-term liabilities: | |||||||||||
Deferred revenues, noncurrent | |||||||||||
Warranty obligations, noncurrent (includes $ | |||||||||||
Other liabilities | |||||||||||
Debt, noncurrent | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 9) | |||||||||||
Stockholders’ equity: | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Accumulated other comprehensive income | |||||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Net revenues | $ | $ | |||||||||
Cost of revenues | |||||||||||
Gross profit | |||||||||||
Operating expenses: | |||||||||||
Research and development | |||||||||||
Sales and marketing | |||||||||||
General and administrative | |||||||||||
Total operating expenses | |||||||||||
Income from operations | |||||||||||
Other income (expense), net | |||||||||||
Interest income | |||||||||||
Interest expense | ( | ( | |||||||||
Other (expense) income, net | ( | ||||||||||
Loss on partial settlement of convertible notes | ( | ||||||||||
Change in fair value of derivatives | |||||||||||
Total other income (expense), net | ( | ||||||||||
Income (loss) before income taxes | ( | ||||||||||
Income tax benefit | |||||||||||
Net income | $ | $ | |||||||||
Net income per share: | |||||||||||
Basic | $ | $ | |||||||||
Diluted | $ | $ | |||||||||
Shares used in per share calculation: | |||||||||||
Basic | |||||||||||
Diluted |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Net income | $ | $ | |||||||||
Other comprehensive income (loss): | |||||||||||
Foreign currency translation adjustments | ( | ||||||||||
Comprehensive income | $ | $ |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Common stock and paid-in capital | |||||||||||
Balance, beginning of period | $ | $ | |||||||||
Issuance of common stock from exercise of equity awards | |||||||||||
Payment of withholding taxes related to net share settlement of equity awards | ( | ( | |||||||||
Equity component of convertible notes issued, net of tax | — | ||||||||||
Cost of convertible notes hedge related to the convertible notes issued, net of tax | ( | — | |||||||||
Sale of warrants related to the convertible notes issued | — | ||||||||||
Equity component of partial settlement of convertible notes | ( | — | |||||||||
Cost of reacquired equity component on partial settlement of convertible notes | — | ||||||||||
Stock-based compensation expense | |||||||||||
Balance, end of period | $ | $ | |||||||||
Accumulated deficit | |||||||||||
Balance, beginning of period | $ | ( | $ | ( | |||||||
Net income | |||||||||||
Balance, end of period | $ | ( | $ | ( | |||||||
Accumulated other comprehensive income (loss) | |||||||||||
Balance, beginning of period | $ | $ | ( | ||||||||
Foreign currency translation adjustments | ( | ||||||||||
Balance, end of period | $ | $ | ( | ||||||||
Total stockholders' equity, ending balance | $ | $ |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Provision for doubtful accounts | |||||||||||
Non-cash interest expense | |||||||||||
Loss on partial settlement of convertibles notes | |||||||||||
Deemed repayment of convertible notes attributable to accreted debt discount | ( | ||||||||||
Change in fair value of debt security | ( | ||||||||||
Stock-based compensation | |||||||||||
Change in fair value of derivatives | ( | ||||||||||
Deferred income taxes | ( | ( | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | ( | ||||||||||
Inventory | ( | ||||||||||
Prepaid expenses and other assets | ( | ( | |||||||||
Accounts payable, accrued and other liabilities | ( | ||||||||||
Warranty obligations | |||||||||||
Deferred revenues | ( | ||||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Investment in a private company | ( | ||||||||||
Business acquisitions, net of cash acquired | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Issuance of convertible notes, net of issuance costs | |||||||||||
Purchase of convertible note hedges | ( | ( | |||||||||
Sale of warrants | |||||||||||
Principal payments and financing fees on debt | ( | ( | |||||||||
Partial repurchase of convertible notes | ( | ||||||||||
Proceeds from exercise of equity awards and employee stock purchase plan | |||||||||||
Payment of withholding taxes related to net share settlement of equity awards | ( | ( | |||||||||
Net cash provided by financing activities | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | ( | ( | |||||||||
Net increase in cash, cash equivalents and restricted cash | |||||||||||
Cash, cash equivalents and restricted cash—Beginning of period | |||||||||||
Cash. cash equivalents and restricted cash—End of period | $ | $ |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets | |||||||||||
Cash and cash equivalents | |||||||||||
Restricted cash | |||||||||||
Total cash, cash equivalents, and restricted cash | $ | $ | |||||||||
Supplemental cash flow disclosure: | |||||||||||
Supplemental disclosures of non-cash investing and financing activities: | |||||||||||
Purchases of fixed assets included in accounts payable | $ | $ | |||||||||
Contingent consideration in connection with the acquisition | $ | $ | |||||||||
Convertible senior note issuance costs included in accounts payable and accrued expense | $ | $ | |||||||||
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
(In thousands) | |||||||||||
Primary geographical markets: | |||||||||||
U.S. | $ | $ | |||||||||
International | |||||||||||
Total | $ | $ | |||||||||
Timing of revenue recognition: | |||||||||||
Products delivered at a point in time | $ | $ | |||||||||
Products and services delivered over time | |||||||||||
Total | $ | $ |
March 31, 2021 | December 31, 2020 | ||||||||||
(In thousands) | |||||||||||
Receivables | $ | $ | |||||||||
Short-term contract assets (Prepaid expenses and other assets) | |||||||||||
Long-term contract assets (Other assets) | |||||||||||
Short-term contract liabilities (Deferred revenues) | |||||||||||
Long-term contract liabilities (Deferred revenues) | |||||||||||
Contract Assets | |||||
Contract Assets, beginning of period | $ | ||||
Amount recognized | ( | ||||
Increase | |||||
Contract Assets, end of period | $ |
Contract Liabilities | |||||
Contract Liabilities, beginning of period | $ | ||||
Revenue recognized | ( | ||||
Increase due to billings | |||||
Contract Liabilities, end of period | $ | ||||
March 31, 2021 | |||||
(In thousands) | |||||
Fiscal year: | |||||
2021 (remaining nine months) | $ | ||||
2022 | |||||
2023 | |||||
2024 | |||||
2025 | |||||
Thereafter | |||||
Total | $ | ||||
March 31, 2021 | December 31, 2020 | ||||||||||
(In thousands) | |||||||||||
Raw materials | $ | $ | |||||||||
Finished goods | |||||||||||
Total inventory | $ | $ |
March 31, 2021 | December 31, 2020 | ||||||||||
(In thousands) | |||||||||||
Salaries, commissions, incentive compensation and benefits | $ | $ | |||||||||
Customer rebates and sales incentives | |||||||||||
Freight | |||||||||||
Operating lease liabilities, current | |||||||||||
Liability due to supply agreements | |||||||||||
Contingent consideration | |||||||||||
Other | |||||||||||
Total accrued liabilities | $ | $ |
Cash consideration | $ | |||||||
Fair value of contingent consideration | ||||||||
Total | $ |
Net tangible assets acquired | $ | |||||||
Intangible assets | ||||||||
Deferred tax asset | ||||||||
Goodwill | ||||||||
Net assets acquired | $ |
Preliminary Fair Value | Useful Life | |||||||||||||
(In thousands) | (Years) | |||||||||||||
Developed technology | $ | |||||||||||||
Customer relationship | ||||||||||||||
Trade Name | ||||||||||||||
Total identifiable intangible assets | $ |
Net tangible assets acquired | $ | |||||||
Intangible assets | ||||||||
Goodwill | ||||||||
Net assets acquired | $ |
Preliminary Fair Value | Useful Life | |||||||||||||
(In thousands) | (Years) | |||||||||||||
Customer relationship | $ | |||||||||||||
March 31, 2021 | December 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
Gross | Additions | Accumulated Amortization | Net | Gross | Additions | Accumulated Amortization | Net | ||||||||||||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | $ | $ | $ | — | $ | $ | $ | — | $ | — | $ | ||||||||||||||||||||||||||||||||||||
Intangible assets: | |||||||||||||||||||||||||||||||||||||||||||||||
Other indefinite-lived intangibles | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Intangible assets with finite lives: | |||||||||||||||||||||||||||||||||||||||||||||||
Developed technology | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Customer relationships | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Trade names | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Total purchased intangible assets | $ | $ | $ | ( | $ | $ | $ | $ | ( | $ |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
(In thousands) | |||||||||||
Developed technology | $ | $ | |||||||||
Customer relationships | |||||||||||
Trade names | |||||||||||
Total amortization expense | $ | $ |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
(In thousands) | |||||||||||
Warranty obligations, beginning of period | $ | $ | |||||||||
Accruals for warranties issued during period | |||||||||||
Changes in estimates | |||||||||||
Settlements | ( | ( | |||||||||
Increase due to accretion expense | |||||||||||
Other | ( | ( | |||||||||
Warranty obligations, end of period | |||||||||||
Less: current portion | ( | ( | |||||||||
Noncurrent | $ | $ |
March 31, 2021 | December 31, 2020 | ||||||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||
Cash and cash equivalents: | |||||||||||||||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Other assets | |||||||||||||||||||||||||||||||||||
Investment in debt security | |||||||||||||||||||||||||||||||||||
Total assets measured at fair value | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||
Accrued liabilities | |||||||||||||||||||||||||||||||||||
Contingent consideration | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Warranty obligations | |||||||||||||||||||||||||||||||||||
Current | |||||||||||||||||||||||||||||||||||
Non-current | |||||||||||||||||||||||||||||||||||
Total warranty obligations measured at fair value | |||||||||||||||||||||||||||||||||||
Total liabilities measured at fair value | $ | $ | $ | $ | $ | $ |
Three Months Ended March 31, | |||||
2021 | |||||
(In thousands) | |||||
Initial investment (January 2021) | $ | ||||
Fair value adjustments included in other income (expenses), net | |||||
Balance at end of period | $ |
Three Months Ended March 31, | |||||
2021 | |||||
(In thousands) | |||||
Balance at acquisition (January 25, 2021) | $ | ||||
Fair value adjustments included in other income (expense), net | |||||
Balance at end of period | $ |
Three Months Ended March 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
(In thousands) | ||||||||||||||
Balance at beginning of period | $ | $ | ||||||||||||
Accruals for warranties issued during period | ||||||||||||||
Changes in estimates | ||||||||||||||
Settlements | ( | ( | ||||||||||||
Increase due to accretion expense | ||||||||||||||
Other | ( | ( | ||||||||||||
Balance at end of period | $ | $ |
Percent Used (Weighted Average) | ||||||||||||||||||||||||||
Item Measured at Fair Value | Valuation Technique | Description of Significant Unobservable Input | March 31, 2021 | December 31, 2020 | ||||||||||||||||||||||
Warranty obligations for microinverters sold since January 1, 2014 | Discounted cash flows | Profit element and risk premium | ||||||||||||||||||||||||
Credit-adjusted risk-free rate | ||||||||||||||||||||||||||
March 31, 2021 | December 31, 2020 | ||||||||||
(In thousands) | |||||||||||
Convertible notes | |||||||||||
Notes due 2028 | $ | $ | |||||||||
Less: unamortized discount and issuance costs | ( | ||||||||||
Carrying amount of Notes due 2028 | |||||||||||
Notes due 2026 | |||||||||||
Less: unamortized discount and issuance costs | ( | ||||||||||
Carrying amount of Notes due 2026 | |||||||||||
Notes due 2025 | |||||||||||
Less: unamortized discount and issuance costs | ( | ( | |||||||||
Carrying amount of Notes due 2025 | |||||||||||
Notes due 2024 | |||||||||||
Less: unamortized discount and issuance costs | ( | ( | |||||||||
Carrying amount of Notes due 2024 | |||||||||||
Notes due 2023 | |||||||||||
Less: unamortized issuance costs | ( | ( | |||||||||
Carrying amount of Notes due 2023 | |||||||||||
Sale of long-term financing receivable recorded as debt | |||||||||||
Total carrying amount of debt | |||||||||||
Less: current portion of convertible notes and long-term financing receivable recorded as debt | ( | ( | |||||||||
Long-term debt | $ | $ |
Three Months Ended March 31, | |||||
2021 | |||||
(In thousands) | |||||
Amortization of debt discount | $ | ||||
Amortization of debt issuance costs | |||||
Total interest cost recognized | $ |
Three Months Ended March 31, | |||||
2021 | |||||
(In thousands) | |||||
Amortization of debt discount | $ | ||||
Amortization of debt issuance costs | |||||
Total interest cost recognized | $ |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
(In thousands) | |||||||||||
Contractual interest expense | $ | $ | |||||||||
Amortization of debt discount | |||||||||||
Amortization of debt issuance costs | |||||||||||
Total interest cost recognized | $ | $ |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
(In thousands) | |||||||||||
Contractual interest expense | $ | $ | |||||||||
Amortization of debt discount | |||||||||||
Amortization of debt issuance costs | |||||||||||
Total interest cost recognized | $ | $ |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
(In thousands) | |||||||||||
Contractual interest expense | $ | $ | |||||||||
Amortization of debt issuance costs | |||||||||||
Total interest costs recognized | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
(In thousands) | ||||||||||||||
Operating lease costs | $ | $ |
March 31, 2021 | December 31, 2020 | ||||||||||
(In thousands) | |||||||||||
$ | $ | ||||||||||
Total operating lease liabilities | $ | $ | |||||||||
Supplemental lease information: | |||||||||||
Weighted average remaining lease term | |||||||||||
Weighted average discount rate |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
(In thousands) | |||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
Operating cash flows from operating leases | $ | $ | |||||||||
Non-cash investing activities: | |||||||||||
Lease liabilities arising from obtaining right-of-use assets | $ | $ |
Lease Amounts | |||||
(In thousands) | |||||
Year: | |||||
2021 (remaining nine months) | $ | ||||
2022 | |||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 and thereafter | |||||
Total lease payments | |||||
Less: imputed lease interest | ( | ||||
Total lease liabilities | $ |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
(In thousands) | |||||||||||
Cost of revenues | $ | $ | |||||||||
Research and development | |||||||||||
Sales and marketing | |||||||||||
General and administrative | |||||||||||
Total | $ | $ | |||||||||
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
(In thousands) | |||||||||||
Stock options, RSUs, and PSUs | $ | $ | |||||||||
Employee stock purchase plan | |||||||||||
Total | $ | $ |
Number of Shares Outstanding | Weighted- Average Exercise Price per Share | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value (1) | ||||||||||||||||||||
(In thousands) | (Years) | (In thousands) | |||||||||||||||||||||
Outstanding at December 31, 2020 | $ | ||||||||||||||||||||||
Granted | |||||||||||||||||||||||
Exercised | ( | $ | |||||||||||||||||||||
Canceled | ( | ||||||||||||||||||||||
Outstanding at March 31, 2021 | $ | $ | |||||||||||||||||||||
Vested and expected to vest at March 31, 2021 | $ | $ | |||||||||||||||||||||
Exercisable at March 31, 2021 | $ | $ |
Options Outstanding | Options Exercisable | |||||||||||||||||||||||||||||||
Range of Exercise Prices | Number of Shares | Weighted- Average Remaining Life | Weighted- Average Exercise Price | Number of Shares | Weighted- Average Exercise Price | |||||||||||||||||||||||||||
(In thousands) | (Years) | (In thousands) | ||||||||||||||||||||||||||||||
$ | $ | $ | ||||||||||||||||||||||||||||||
$ | ||||||||||||||||||||||||||||||||
$ | ||||||||||||||||||||||||||||||||
$ | ||||||||||||||||||||||||||||||||
$ | ||||||||||||||||||||||||||||||||
Total | $ | $ |
Number of Shares Outstanding | Weighted- Average Fair Value per Share at Grant Date | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value (1) | ||||||||||||||||||||
(In thousands) | (Years) | (In thousands) | |||||||||||||||||||||
Outstanding at December 31, 2020 | $ | ||||||||||||||||||||||
Granted | |||||||||||||||||||||||
Vested | ( | $ | |||||||||||||||||||||
Canceled | ( | ||||||||||||||||||||||
Outstanding at March 31, 2021 | $ | $ | |||||||||||||||||||||
Expected to vest at March 31, 2021 | $ | $ |
Number of Shares Outstanding | Weighted- Average Fair Value per Share at Grant Date | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value (1) | ||||||||||||||||||||
(In thousands) | (Years) | (In thousands) | |||||||||||||||||||||
Outstanding at December 31, 2020 | $ | ||||||||||||||||||||||
Granted | |||||||||||||||||||||||
Vested | ( | $ | |||||||||||||||||||||
Canceled | ( | ||||||||||||||||||||||
Outstanding at March 31, 2021 | $ | $ |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
(In thousands, except per share data) | |||||||||||
Numerator: | |||||||||||
Net income | $ | $ | |||||||||
Notes due 2023 interest and financing costs, net | |||||||||||
Adjusted net income | $ | $ | |||||||||
Denominator: | |||||||||||
Shares used in basic per share amounts: | |||||||||||
Weighted average common shares outstanding | |||||||||||
Shares used in diluted per share amounts: | |||||||||||
Weighted average common shares outstanding | |||||||||||
Effect of dilutive securities: | |||||||||||
Employee stock-based awards | |||||||||||
Notes due 2023 | |||||||||||
Notes due 2024 | |||||||||||
2024 Warrants | |||||||||||
Notes due 2025 | |||||||||||
2025 Warrants | |||||||||||
Weighted average common shares outstanding for diluted calculation | |||||||||||
Basic and diluted net income per share | |||||||||||
Net income per share, basic | $ | $ | |||||||||
Net income per share, diluted | $ | $ |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
(In thousands) | |||||||||||
Employee stock-based awards | |||||||||||
Notes due 2026 | |||||||||||
2026 Warrants | |||||||||||
Notes due 2028 | |||||||||||
2028 Warrants | |||||||||||
Total |
Three Months Ended March 31, | Change in | ||||||||||||||||||||||
2021 | 2020 | $ | % | ||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||
Net revenues | $ | 301,754 | $ | 205,545 | $ | 96,209 | 47 | % |
Three Months Ended March 31, | Change in | ||||||||||||||||||||||
2021 | 2020 | $ | % | ||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||
Cost of revenues | $ | 178,805 | $ | 124,870 | $ | 53,935 | 43 | % | |||||||||||||||
Gross profit | 122,949 | 80,675 | 42,274 | 52 | % | ||||||||||||||||||
Gross margin | 40.7 | % | 39.2 | % | 1.5 | % | |||||||||||||||||
Three Months Ended March 31, | Change in | ||||||||||||||||||||||
2021 | 2020 | $ | % | ||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||
Research and development | $ | 21,818 | $ | 11,876 | $ | 9,942 | 84 | % | |||||||||||||||
Percentage of net revenues | 7 | % | 6 | % | |||||||||||||||||||
Three Months Ended March 31, | Change in | ||||||||||||||||||||||
2021 | 2020 | $ | % | ||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||
Sales and marketing | $ | 19,622 | $ | 11,772 | $ | 7,850 | 67 | % | |||||||||||||||
Percentage of net revenues | 7 | % | 6 | % | |||||||||||||||||||
Three Months Ended March 31, | Change in | ||||||||||||||||||||||
2021 | 2020 | $ | % | ||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||
General and administrative | $ | 20,123 | $ | 12,315 | $ | 7,808 | 63 | % | |||||||||||||||
Percentage of net revenues | 7 | % | 6 | % | |||||||||||||||||||
Three Months Ended March 31, | Change in | ||||||||||||||||||||||
2021 | 2020 | $ | % | ||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||
Interest income | $ | 73 | $ | 1,091 | $ | (1,018) | (93) | % | |||||||||||||||
Interest expense | (7,329) | (3,155) | (4,174) | 132 | % | ||||||||||||||||||
Other (expense) income, net | 573 | (924) | 1,497 | (162) | % | ||||||||||||||||||
Change in fair value of derivatives | — | 15,344 | (15,344) | (100) | % | ||||||||||||||||||
Loss on partial settlement of convertible notes | (56,369) | — | (56,369) | **% | |||||||||||||||||||
Total other income (expense), net | $ | (63,052) | $ | 12,356 | $ | (75,408) | (610) | % |
Three Months Ended March 31, | Change in | ||||||||||||||||||||||
2021 | 2020 | $ | % | ||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||
Income tax benefit | $ | 33,364 | $ | 11,868 | $ | 21,496 | 181 | % | |||||||||||||||
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
(In thousands) | |||||||||||
Net cash provided by operating activities | $ | 75,841 | $ | 39,222 | |||||||
Net cash used in investing activities | (90,179) | (3,353) | |||||||||
Net cash provided by financing activities | 824,671 | 262,071 | |||||||||
Effect of exchange rate changes on cash | (702) | (205) | |||||||||
Net increase in cash and cash equivalents | $ | 809,631 | $ | 297,735 |
Payments Due by Period | |||||||||||||||||||||||||||||
Total | 2021 (remaining nine months) | 2022-2023 | 2024-2025 | Beyond 2025 | |||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||
Notes due 2024 principal and interest | $ | 1,106 | $ | 11 | $ | 22 | $ | 1,073 | $ | — | |||||||||||||||||||
Notes due 2025 principal and interest (1) | 103,284 | 213 | 512 | 102,559 | — | ||||||||||||||||||||||||
Notes due 2026 principal and interest | 632,500 | — | — | — | 632,500 | ||||||||||||||||||||||||
Notes due 2028 principal and interest | 575,000 | — | — | — | 575,000 | ||||||||||||||||||||||||
Total | $ | 1,311,890 | $ | 224 | $ | 534 | $ | 103,632 | $ | 1,207,500 |
Period Ended | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs | ||||||||||||||||||||||
January 2021 | — | $ | — | — | $ | 200,000 | ||||||||||||||||||||
February 2021 | — | $ | — | — | $ | 200,000 | ||||||||||||||||||||
March 2021 | — | $ | — | — | $ | 200,000 | ||||||||||||||||||||
Total | — | — |
Incorporation by Reference | ||||||||||||||||||||||||||||||||||||||
Exhibit Number | Exhibit Description | Form | SEC File No. | Exhibit | Filing Date | Filed Herewith | ||||||||||||||||||||||||||||||||
8-K | 001-35480 | 3.1 | 4/6/2012 | |||||||||||||||||||||||||||||||||||
10-Q | 001-35480 | 3.1 | 8/9/2017 | |||||||||||||||||||||||||||||||||||
10-Q | 001-35480 | 2.1 | 8/6/2018 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 3.1 | 5/27/2020 | |||||||||||||||||||||||||||||||||||
S-1/A | 333-174925 | 3.5 | 3/12/2012 | |||||||||||||||||||||||||||||||||||
S-1/A | 333-174925 | 4.1 | 3/12/2012 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 4.1 | 8/17/2018 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 4.1 | 8/17/2018 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 4.1 | 6/5/2019 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 4.1 | 6/5/2019 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 4.1 | 3/9/2020 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 4.1 | 3/9/2020 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 4.1 | 3/1/2021 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 4.2 | 3/1/2021 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 4.1 | 3/1/2021 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 4.4 | 3/1/2021 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 10.1 | 3/1/2021 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 10.2 | 3/1/2021 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 10.3 | 3/1/2021 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 10.4 | 3/1/2021 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 10.5 | 3/1/2021 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 10.6 | 3/1/2021 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 10.7 | 3/1/2021 |
Incorporation by Reference | ||||||||||||||||||||||||||||||||||||||
Exhibit Number | Exhibit Description | Form | SEC File No. | Exhibit | Filing Date | Filed Herewith | ||||||||||||||||||||||||||||||||
8-K | 001-35480 | 10.8 | 3/1/2021 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 10.9 | 3/1/2021 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 10.1 | 3/8/2021 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 10.1 | 3/15/2021 | |||||||||||||||||||||||||||||||||||
8-K | 001-35480 | 10.2 | 3/15/2021 | |||||||||||||||||||||||||||||||||||
X | ||||||||||||||||||||||||||||||||||||||
X | ||||||||||||||||||||||||||||||||||||||
32.1* | X | |||||||||||||||||||||||||||||||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||||||||||||||||||||||||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document. | X | ||||||||||||||||||||||||||||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | X | ||||||||||||||||||||||||||||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | X | ||||||||||||||||||||||||||||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | X | ||||||||||||||||||||||||||||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Document. | X | ||||||||||||||||||||||||||||||||||||
104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). | X |
ENPHASE ENERGY, INC. | ||||||||||||||
By: | /s/ Eric Branderiz | |||||||||||||
Eric Branderiz | ||||||||||||||
Executive Vice President and Chief Financial Officer | ||||||||||||||
(Duly Authorized Officer) |
/s/ BADRINARAYANAN KOTHANDARAMAN | |||||
Badrinarayanan Kothandaraman | |||||
President and Chief Executive Officer (Principal Executive Officer) |
/s/ ERIC BRANDERIZ | |||||
Eric Branderiz | |||||
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
/s/ BADRINARAYANAN KOTHANDARAMAN | /s/ ERIC BRANDERIZ | |||||||
Badrinarayanan Kothandaraman | Eric Branderiz | |||||||
President and Chief Executive Officer | Executive Vice President and Chief Financial Officer |
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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance | $ 746 | $ 462 |
Product warranty, measured at fair value, current | 10,163 | 8,267 |
Product warranty, measured at fair value, noncurrent | $ 23,156 | $ 20,469 |
Common stock, par value (in usd per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 135,691,000 | 128,962,000 |
Common stock, shares outstanding (in shares) | 135,691,000 | 128,962,000 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2021 |
Mar. 31, 2020 |
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Statement of Comprehensive Income [Abstract] | ||
Net income | $ 31,698 | $ 68,936 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | 206 | (168) |
Comprehensive income | $ 31,904 | $ 68,768 |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION |
3 Months Ended |
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Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of Business Enphase Energy, Inc. (the “Company”) is a global energy technology company. The Company delivers smart, easy-to-use solutions that manage solar generation, storage and communication on one platform. The Company revolutionized the solar industry with its microinverter technology and produces a fully integrated solar-plus-storage solution. Basis of Presentation and Consolidation The accompanying condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“U.S.”), or GAAP. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Unaudited Interim Financial Information These accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC for interim financial reporting. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring items, considered necessary to present fairly the Company’s financial condition, results of operations, comprehensive income, stockholders’ equity and cash flows for the interim periods indicated. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the operating results for the full year. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Significant estimates and assumptions reflected in the financial statements include revenue recognition, allowance for doubtful accounts, stock-based compensation, inventory valuation, accrued warranty obligations, fair value of investments, debt derivatives, convertible notes and contingent consideration, fair value of acquired intangible assets and goodwill, useful lives of acquired intangible assets and property and equipment, incremental borrowing rate for right-of-use assets and lease liability, legal contingencies, and tax valuation allowance. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ materially from management’s estimates using different assumptions or under different conditions. In light of the ongoing and quickly evolving COVID-19 pandemic, management has considered the impacts of the COVID-19 pandemic on the Company’s critical and significant accounting estimates and as of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, judgments or revise the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s condensed financial statements. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the U.S. The Company filed audited consolidated financial statements, which included all information and notes necessary for such a complete presentation in conjunction with its Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 16, 2021 (“Form 10‑K”).Summary of Significant Accounting Policies There have been no significant changes to the Company’s significant accounting policies in Note 2, “Summary of Significant Accounting Policies,” of the notes to consolidated financial statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020. Recently Issued Accounting Pronouncements Not Yet Effective In August 2020, the FASB issued Account Standard Update (“ASU”) 2020-06, “Debt - Debt with Conversion and Other Options (subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (subtopic 815-40),” which reduces the number of accounting models in ASC 470-20 that require separate accounting for embedded conversion features. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the effective interest rate of convertible debt instruments will be closer to the coupon interest rate. Further, the diluted net income per share calculation for convertible instruments will require the Company to use the if-converted method. The treasury stock method should no longer be used to calculate diluted net income per share for convertible instruments. The amendment will be effective for the Company with annual period beginning January 1, 2022. The Company is evaluating the accounting, transition and disclosure requirements of the standard
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REVENUE RECOGNITION |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE RECOGNITION | REVENUE RECOGNITION Disaggregated Revenue The Company has one business activity, which is the design, manufacture and sale of solutions for the solar photovoltaic (“PV”) industry. Disaggregated revenue by primary geographical market and timing of revenue recognition for the Company’s single product line are as follows:
Contract Balances Receivables, and contract assets and contract liabilities from contracts with customers are as follows:
The Company receives payments from customers based upon contractual billing schedules. Accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets include deferred product costs and commissions associated with the deferred revenue and will be amortized along with the associated revenue. The Company had no asset impairment charges related to contract assets in the three months ended March 31, 2021. Significant changes in the balances of contract assets (prepaid expenses and other assets) during the period are as follows (in thousands):
Contract liabilities are recorded as deferred revenue on the accompanying condensed consolidated balance sheets and include payments received in advance of performance obligations under the contract and are realized when the associated revenue is recognized under the contract. Significant changes in the balances of contract liabilities (deferred revenues) during the period are as follows (in thousands):
Remaining Performance Obligations Estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period are as follows:
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OTHER FINANCIAL INFORMATION |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER FINANCIAL INFORMATION | OTHER FINANCIAL INFORMATION Inventory Inventory consist of the following:
Accrued Liabilities Accrued liabilities consist of the following:
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BUSINESS COMBINATION |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS COMBINATION | BUSINESS COMBINATION Acquisition of Sofdesk Inc. (“Sofdesk”) On January 25, 2021, the Company completed the acquisition of 100% of the shares of Sofdesk, a privately-held company. Sofdesk provides design tools and services software for residential solar installers and roofing companies and will enhance the Company’s digital transformation efforts. As part of the purchase price, the Company (i) paid approximately $32.0 million in cash on January 25, 2021 and (ii) is liable for up to approximately $3.7 million of contingent consideration payable during the first quarter of 2022, of which the Company recorded a liability of approximately $3.5 million representing the fair value of the contingent consideration. The contingent consideration is subject to remeasurement at each reporting period until paid. The acquisition date fair value of the purchase price was approximately $35.5 million, which consisted of the following (in thousands):
In addition to the purchase price discussed above, the Company will be obligated to pay up to approximately $3.7 million, during the first quarter of 2022, subject to continued employment of key employees of Sofdesk. As this payment is contingent upon the continuous service of the employees, it is being accounted for as a post-combination expense and will be recognized ratably over the one year period. The acquisition has been accounted for as a business combination under the acquisition method, and accordingly, the total purchase price is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair values on the acquisition date. The results of operations of Sofdesk have been included in the Company’s condensed consolidated statement of operations from the acquisition date, though Sofdesk’s results of operations was not material for the three months ended March 31, 2021. The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the acquisition date, which are subject to change within the measurement period as the fair value assessments are finalized (in thousands):
The excess of the consideration paid over the fair values assigned to the assets acquired and liabilities assumed represents the goodwill resulting from the acquisition. Goodwill is primarily attributable to expected synergies in the Company’s solar offerings and cross-selling opportunities. Intangible assets consist primarily of developed technology, customer relationship intangibles and trade name intangibles. Intangible assets attributable to developed technology include a combination of unpatented technology, trade secrets, computer software and research processes that represent the foundation for the existing and planned new products to facilitate the generation of new content. Customer relationship intangibles relate to Sofdesk’s software ability to sell current and future offerings, as well as products built around the current offering, to its existing customers. Trade name intangibles are attributable to marketing goods and services under the SolargrafTM and RoofgrafTM brands. The following table shows the fair value of the separately identifiable intangible assets at the time of acquisition and the period over which each intangible asset will be amortized:
The Company incurred costs related to this acquisition of $1.7 million that were recorded in general and administrative expenses in the accompanying condensed consolidated statements of operations for the three months ended March 31, 2021. Acquisition of DIN’s Solar Design Services Business (“DIN”) On March 31, 2021, the Company completed its acquisition of DIN’s solar design services business. DIN's solar design services business provides outsourced proposal drawings and permit plan sets for residential solar installers in North America and will enhance the Company’s digital transformation effort. As part of the purchase price, the Company paid approximately $24.8 million in cash at closing on March 31, 2021. The acquisition has been accounted for as a business combination under the acquisition method; accordingly, the total purchase price is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair values on the acquisition date. In addition to the purchase price summarized above, the Company will be obligated to pay up to i) approximately $5.0 million in equal monthly installments over the course of one year following the acquisition date and ii) approximately $5.0 million payable on the one year anniversary following the acquisition date subject to achievement of certain revenue and operational targets. As both the additional payments require continuous employment of certain key employees of DIN and are subject to other conditions, these payments are being accounted for as post-combination expense and will be recognized ratably over the one year period. The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the acquisition date, which are subject to change within the measurement period as the fair value assessments are finalized (in thousands):
The excess of the consideration paid over the fair values assigned to the assets acquired and liabilities assumed represents the goodwill resulting from the acquisition. Goodwill is primarily attributable to expected synergies in the Company’s solar offerings and cross-selling opportunities. Intangible assets consist primarily of customer relationship intangibles. Customer relationship intangibles relate to the ability of the acquired DIN solar design services business to sell current and future offering, as well as products built around the current offering, to its existing customers. The following table shows the fair value of the separately identifiable intangible assets at the time of acquisition and the period over which each intangible asset will be amortized:
The Company incurred costs related to this acquisition of $1.4 million that were recorded in general and administrative expenses in the accompanying condensed consolidated statements of operations for the three months ended March 31, 2021.
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GOODWILL AND INTANGIBLE ASSETS |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | The Company’s goodwill and purchased intangible assets as of March 31, 2021 and December 31, 2020 are as follows:
Amortization expense related to finite-lived intangible assets are as follows:
Amortization of developed technology, customer relationships and trade names is recorded to sales and marketing expense.
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WARRANTY OBLIGATIONS |
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Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WARRANTY OBLIGATIONS | WARRANTY OBLIGATIONS The Company’s warranty activities were as follows:
Changes in Estimates In the three months ended March 31, 2021 and 2020, the Company recorded a $6.3 million and $1.5 million, respectively, increase to warranty expense based on continuing analysis of field performance data and diagnostic root-cause failure analysis primarily relating to its prior generation products. The Company also recorded additional warranty expense of $1.3 million and $0.2 million in the three months ended March 31, 2021 and 2020, respectively, related to unit costs for prior generation microinverter replacement mainly driven by tariffs.
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FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value: •Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of such assets or liabilities do not entail a significant degree of judgment. •Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. •Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
Level 1. The Company considers all highly liquid investments, such as certificates of deposit and money market instruments with maturities of three months or less at the time of acquisition to be cash equivalents. For all periods presented, its cash balances consist of amounts held in non-interest-bearing and interest-bearing deposits and money market accounts and are within Level 1 of the fair value hierarchy because they are valued using quoted market prices for identical instruments in active markets. Level 2. Notes due 2028, Notes due 2026, Notes due 2025 and Notes due 2024. The Company carries the Notes due 2028, Notes due 2026, Notes due 2025 and Notes due 2024 (as defined below) at face value less unamortized discount and issuance costs on its condensed consolidated balance sheets. The fair value of the Notes due 2028, Notes due 2026, Notes due 2025 and Notes due 2024 was $538.3 million, $596.1 million, $218.7 million and $9.1 million, respectively, as of March 31, 2021 based on the closing trading prices per $100 principal amount as of the last day of trading for the period. The Company considers the fair value of the Notes due 2028, Notes due 2026, Notes due 2025 and Notes due 2024 to be a Level 2 measurement as they are not actively traded. Level 3. Investment in debt security. In January 2021, the Company invested approximately $25.0 million in a privately-held company. The Company concluded the investment qualifies as an investment in a debt security as it accrues interest and principal plus accrued interest become payable back to the Company at certain dates unless it is converted to equity at a pre-determined price. As the investment includes a conversion option, the Company has elected to account for this investment under the fair value option and any change in fair value of the investment is recognized in “Other income (expense)”, net in the Company’s condensed consolidated statement of operations for that period. Further, the Company has concluded that the Company’s investment in debt security is considered to be a Level 3 measurement due to the use of significant unobservable inputs in the valuation model. These assumption include implied yield and change in estimated term of investment being held-to-maturity.
Contingent consideration. The estimated fair value of the contingent consideration incurred in connection with the Company’s acquisition of Sofdesk is considered to be a Level 3 measurement due to the use of significant unobservable inputs. These unobservable inputs include probability assessment of expected future customer count over the period in which the obligation is expected to be settled. The value was determined using a discounted risk-neutral expected (probability-weighted) cash flow methodology. The resulting expected contingent consideration payment is discounted back to present value using our cost of debt. The fair value of contingent consideration arrangement is reassessed quarterly based on assumptions used in the Company’s latest projections and input provided by management. Any change in the fair value estimate, which could include accretion of interest expense due to passage of time as well as any changes in the inputs to the model, is recorded in the Company’s condensed consolidated statement of operations for that period. The following table reflects the activity for the Company’s contingent consideration liabilities measured at fair value using Level 3 inputs for the three months ended March 31, 2021 (in thousands):
Warranty obligations. Fair Value Option for Warranty Obligations Related to Microinverters and Other Products Sold Since January 1, 2014 The Company estimates the fair value of warranty obligations by calculating the warranty obligations in the same manner as for sales prior to January 1, 2014 and applying an expected present value technique to that result. The expected present value technique, an income approach, converts future amounts into a single current discounted amount. In addition to the key estimates of failure rates, claim rates and replacement costs, the Company used certain Level 3 inputs which are unobservable and significant to the overall fair value measurement. Such additional assumptions included a discount rate based on the Company’s credit-adjusted risk-free rate and compensation comprised of a profit element and risk premium required of a market participant to assume the obligation. The following table provides information regarding changes in nonfinancial liabilities related to the Company’s warranty obligations measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the periods indicated.
Quantitative and Qualitative Information about Level 3 Fair Value Measurements As of March 31, 2021 and December 31, 2020, the significant unobservable inputs used in the fair value measurement of the Company’s liabilities designated as Level 3 are as follows:
Sensitivity of Level 3 Inputs - Warranty Obligations Each of the significant unobservable inputs is independent of the other. The profit element and risk premium are estimated based on requirements of a third-party participant willing to assume the Company’s warranty obligations. The credit‑adjusted risk‑free rate (“discount rate”) is determined by reference to the Company’s own credit standing at the fair value measurement date. Increasing the profit element and risk premium input by 100 basis points would result in a $0.3 million increase to the liability. Decreasing the profit element and risk premium by 100 basis points would result in a $0.3 million reduction of the liability. Increasing the discount rate by 100 basis points would result in a $1.5 million reduction of the liability. Decreasing the discount rate by 100 basis points would result in a $1.7 million increase to the liability.
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Mar. 31, 2021 |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | Convertible Senior Notes due 2026 On March 1, 2021, the Company issued $575.0 million aggregate principal amount of 0.0% convertible senior notes due 2026 (the “Notes due 2026”). In addition, on March 12, 2021, the Company issued an additional $57.5 million aggregate principal amount of the Notes due 2026 pursuant to the initial purchasers’ full exercise of the over-allotment option for additional Notes due 2026. The Notes due 2026 will not bear regular interest, and the principal amount of the Notes due 2026 will not accrete. The Notes due 2026 are general unsecured obligations and are governed by an indenture between the Company and U.S. Bank National Association, as trustee. The Notes due 2026 will mature on March 1, 2026, unless earlier repurchased by the Company or converted at the option of the holders. The Company received approximately $623.0 million in net proceeds, after deducting the initial purchasers’ discount, from the issuance of the Notes due 2026. The initial conversion rate for the Notes due 2026 is 3.2523 shares of common stock per $1,000 principal amount of the Notes due 2026 (which represents an initial conversion price of approximately $307.47 per share). The conversion rate for the Notes due 2026 will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, if a make-whole fundamental change or a redemption with respect to the Notes due 2026 occurs prior to the maturity date, under certain circumstances as specified in the relevant indenture, the Company will increase the conversion rate for the Notes due 2026 by a number of additional shares of the Company’s common stock for a holder that elects to convert its notes in connection with such make-whole fundamental change or redemption. Upon conversion, the Company will settle conversions of Notes due 2026 through payment or delivery, as the case may be, of cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election. The Company may not redeem the Notes due 2026 prior to the September 6, 2023. The Company may redeem for cash all or any portion of the Notes due 2026, at the Company’s election, on or after September 6, 2023, if the last reported sale price of the Company’s common stock has been greater than or equal to 130% of the conversion price then in effect for the Notes due 2026 (i.e., $399.71, which is 130% of the current conversion price for the Notes due 2026) for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. The redemption price will equal 100% of the principal amount of the Notes due 2026 to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the relevant redemption date for the Notes due 2026. The redemption price will be increased as described in the relevant indentures by a number of additional shares of the Company in connection with such optional redemption by the Company. No sinking fund is provided for the Notes due 2026. The Notes due 2026 may be converted on any day prior to the close of business on the business day immediately preceding September 1, 2025, in multiples of $1,000 principal amount, at the option of the holder only under any of the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price of the Company’s 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 of the Notes due 2026 (i.e., $399.71, which is 130% of the current conversion price for the Notes due 2026) on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in the relevant indenture) 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 the Company’s common stock and the conversion rate for Notes due 2026 on each such trading day; (3) if the Company calls any or all of the Notes due 2026 for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On and after June 30, 2021 until the close of business on the second scheduled trading day immediately preceding the maturity date of March 1, 2026, holders of the Notes due 2026 may convert their notes at any time, regardless of the foregoing circumstances. Upon the occurrence of a fundamental change (as defined in the relevant indenture), holders may require the Company to repurchase all or a portion of their Notes due 2026 for cash at a price equal to 100% of the principal amount of the notes to be repurchased plus any accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date. In accounting for the issuance of the Notes due 2026 on March 1, 2021, the Company separated the Notes due 2026 into liability and equity components. The carrying amount of the liability component of approximately $509.0 million was calculated by using a discount rate of 4.44%, which was the Company’s borrowing rate on the date of the issuance of the Notes due 2026 for a similar debt instrument without the conversion feature. The carrying amount of the equity component of approximately $123.5 million, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the Notes due 2026. The equity component of the Notes due 2026 is included in additional paid-in capital in the condensed consolidated balance sheet and is not remeasured as long as it continues to meet the conditions for equity classification. The difference between the principal amount of the Notes due 2026 and the liability component (the “debt discount”) is amortized to interest expense using the effective interest method over the term of the Notes due 2026. Debt issuance costs for the issuance of the Notes due 2026 were approximately $10.0 million, consisting of initial purchasers' discount and other issuance costs. In accounting for the transaction costs, the Company allocated the total amount incurred to the liability and equity components using the same proportions as the proceeds from the Notes due 2026. Transaction costs attributable to the liability component were approximately $8.1 million, were recorded as debt issuance cost (presented as contra debt in the condensed consolidated balance sheet) and are being amortized to interest expense over the term of the Notes due 2026. The transaction costs attributable to the equity component were approximately $2.0 million and were netted with the equity component in stockholders’ equity. As of March 31, 2021, the unamortized deferred issuance cost for the Notes due 2026 was $7.9 million, on the condensed consolidated balance sheet. The following table presents the total amount of interest cost recognized in the statement of operations relating to the Notes due 2026:
The effective interest rate on the liability component Notes due 2026 was 4.44% for the three months ended March 31, 2021, which remains unchanged from the date of issuance. The remaining unamortized debt discount was $121.7 million as of March 31, 2021, and will be amortized over approximately 4.9 years from March 31, 2021. Notes due 2026 Hedge and Warrant Transactions In connection with the offering of the Notes due 2026 (including in connection with the issuance of additional Notes due 2026 upon the initial purchasers’ exercise of their over-allotment option), the Company entered into privately-negotiated convertible note hedge transactions (the “2026 Hedge Transactions”) pursuant to which the Company has the option to purchase a total of approximately 2.1 million shares of its common stock (subject to anti-dilution adjustments), which is the same number of shares initially issuable upon conversion of the Notes due 2026, at a price of $307.47 per share, which is the initial conversion price of the Notes due 2026. The total cost of the 2026 Hedge Transactions was approximately $124.6 million. The 2026 Hedge Transactions are expected generally to reduce potential dilution to the Company’s common stock upon any conversion of the Notes due 2026 and/or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, as the case may be. Additionally, the Company separately entered into privately-negotiated warrant transactions, including in connection with the issuance of additional Notes due 2026 upon the initial purchasers’ exercise of their over-allotment option (the “2026 Warrants”), whereby the Company sold warrants to acquire approximately 2.1 million shares of the Company’s common stock (subject to anti-dilution adjustments) at an initial strike price of $397.91 per share. The Company received aggregate proceeds of approximately $97.4 million from the sale of the 2026 Warrants. If the market value per share of the Company’s common stock, as measured under the 2026 Warrants, exceeds the strike price of the Warrants, the 2026 Warrants will have a dilutive effect on the Company’s earnings per share, unless the Company elects, subject to certain conditions, to settle the 2026 Warrants in cash. Taken together, the purchase of the 2026 Hedge Transactions and the sale of the 2026 Warrants are intended to reduce potential dilution from the conversion of the Notes due 2026 and to effectively increase the overall conversion price from $307.47 to $397.91 per share. The 2026 Warrants are only exercisable on the applicable expiration dates in accordance with the 2026 Warrants. Subject to the other terms of the 2026 Warrants, the first expiration date applicable to the Warrants is June 1, 2026, and the final expiration date applicable to the 2026 Warrants is July 27, 2026. Given that the transactions meet certain accounting criteria, the Notes due 2026 hedge and the warrants transactions are recorded in stockholders’ equity, and they are not accounted for as derivatives and are not remeasured each reporting period.
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DEBT The following table provides information regarding the Company’s debt.
Convertible Senior Notes due 2028 On March 1, 2021, the Company issued $575 million aggregate principal amount of 0.0% convertible senior notes due 2028 (the “Notes due 2028”). The Notes due 2028 will not bear regular interest, and the principal amount of the Notes due 2028 will not accrete. The Notes due 2028 are general unsecured obligations and are governed by an indenture between the Company and U.S. Bank National Association, as trustee. The Notes due 2028 will mature on March 1, 2028, unless earlier repurchased by the Company or converted at the option of the holders. The Company received approximately $566.4 million in net proceeds, after deducting the initial purchasers’ discount, from the issuance of the Notes due 2028. The initial conversion rate for the Notes due 2028 is 3.5104 shares of common stock per $1,000 principal amount of the Notes due 2028 (which represents an initial conversion price of approximately $284.87 per share). The conversion rate for the Notes due 2028 will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid special interest, if any. In addition, if a make-whole fundamental change or a redemption with respect to the Notes due 2028 occurs prior to the maturity date, under certain circumstances as specified in the relevant indenture, the Company will increase the conversion rate for the Notes due 2028 by a number of additional shares of the Company’s common stock for a holder that elects to convert its notes in connection with such make-whole fundamental change or redemption. Upon conversion, the Company will settle conversions of the Notes due 2028 through payment or delivery, as the case may be, of cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election. The Company may not redeem the Notes due 2028 prior to September 6, 2024. The Company may redeem for cash all or any portion of the Notes due 2028, at the Company’s election, on or after September 6, 2024, if the last reported sale price of the Company’s common stock has been greater than or equal to 130% of the conversion price then in effect for the Notes due 2028 (i.e. $370.33, which is 130% of the current conversion price for the Notes due 2028) for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. The redemption price will equal 100% of the principal amount of the Notes due 2028 to be redeemed, plus accrued and unpaid special interest, if any to, but excluding, the relevant redemption date. No sinking fund is provided for the Notes due 2028. The Notes due 2028 may be converted on any day prior to the close of business on the business day immediately preceding September 1, 2027, in multiples of $1,000 principal amount, at the option of the holder only under any of the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price of the Company’s 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 for the Notes due 2028 (i.e, $370.33 which is 130% of the current conversion price for the Notes due 2028) on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in the relevant indenture) 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 the Company’s common stock and the conversion rate for the Notes due 2028 on each such trading day; (3) if the Company calls any or all of the Notes due 2028 for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On and after September 1, 2027 until the close of business on the second scheduled trading day immediately preceding the maturity date of March 1, 2028, holders of the Notes due 2028 may convert their notes at any time, regardless of the foregoing circumstances. Upon the occurrence of a fundamental change (as defined in the relevant indenture), holders may require the Company to repurchase all or a portion of their Notes due 2028 for cash at a price equal to 100% of the principal amount of the notes to be repurchased plus any accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date. In accounting for the issuance of the Notes due 2028 on March 1, 2021, the Company separated the Notes due 2028 into liability and equity components. The carrying amount of the liability component of approximately $415.0 million was calculated by using a discount rate of 4.77%, which was the Company’s borrowing rate on the date of the issuance of the Notes due 2028 for a similar debt instrument without the conversion feature. The carrying amount of the equity component of approximately $160.0 million, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the Notes due 2028. The equity component of the Notes due 2028 is included in additional paid-in capital in the condensed consolidated balance sheet and is not remeasured as long as it continues to meet the conditions for equity classification. The difference between the principal amount of the Notes due 2028 and the liability component (the “debt discount”) is amortized to interest expense using the effective interest method over the term of the Notes due 2028. Debt issuance costs for the issuance of the Notes due 2028 were approximately $9.1 million, consisting of initial purchasers' discount and other issuance costs. In accounting for the transaction costs, the Company allocated the total amount incurred to the liability and equity components using the same proportions as the proceeds from the Notes due 2028. Transaction costs attributable to the liability component were approximately $6.6 million, were recorded as debt issuance cost (presented as contra debt in the condensed consolidated balance sheet) and are being amortized to interest expense over the term of the Notes due 2028. The transaction costs attributable to the equity component were approximately $2.5 million and were netted with the equity component in stockholders’ equity. As of March 31, 2021, the unamortized deferred issuance cost for the Notes due 2028 was $6.5 million, on the condensed consolidated balance sheet. The following table presents the total amount of interest cost recognized in the statement of operations relating to the Notes due 2028:
The effective interest rate on the liability component Notes due 2028 was 4.77% for the three months ended March 31, 2021, which remains unchanged from the date of issuance. The remaining unamortized debt discount was $158.4 million as of March 31, 2021, and will be amortized over approximately 6.9 years from March 31, 2021. Notes due 2028 Hedge and Warrant Transactions In connection with the offering of the Notes due 2028, the Company entered into privately-negotiated convertible note hedge transactions (“Notes due 2028 Hedge”) pursuant to which the Company has the option to purchase a total of approximately 2.0 million shares of its common stock (subject to anti-dilution adjustments), which is the same number of shares initially issuable upon conversion of the Notes due 2028, at a price of $284.87 per share, which is the initial conversion price of the Notes due 2028. The total cost of the convertible note hedge transactions was approximately $161.6 million. The convertible note hedge transactions are expected generally to reduce potential dilution to the Company’s common stock upon any conversion of the Notes due 2028 and/or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, as the case may be. Additionally, the Company separately entered into privately-negotiated warrant transactions (the “2028 Warrants”) whereby the Company sold warrants to acquire approximately 2.0 million shares of the Company’s common stock (subject to anti-dilution adjustments) at an initial strike price of $397.91 per share. The Company received aggregate proceeds of approximately $123.4 million from the sale of the Warrants. If the market value per share of the Company’s common stock, as measured under the 2028 Warrants, exceeds the strike price of the 2028 Warrants, the 2028 Warrants will have a dilutive effect on the Company’s earnings per share, unless the Company elects, subject to certain conditions, to settle the 2028 Warrants in cash. Taken together, the purchase of the Notes due 2028 Hedge and the sale of the 2028 Warrants are intended to reduce potential dilution from the conversion of the Notes due 2028 and to effectively increase the overall conversion price from $284.87 to $397.91 per share. The 2028 Warrants are only exercisable on the applicable expiration dates in accordance with the Notes due 2028 Hedge. Subject to the other terms of the Warrants, the first expiration date applicable to the Notes due 2028 Hedge is June 1, 2028, and the final expiration date applicable to the Notes due 2028 Hedge is July 27, 2028. Given that the transactions meet certain accounting criteria, the Notes due 2028 Hedge and the 2028 Warrants transactions are recorded in stockholders’ equity, and they are not accounted for as derivatives and are not remeasured each reporting period. Convertible Senior Notes due 2025 On March 9, 2020, the Company issued $320.0 million aggregate principal amount of the Notes due 2025 (the “Notes due 2025”). The Notes due 2025 are general unsecured obligations and bear interest at an annual rate of 0.25% per year, payable semi-annually on March 1 and September 1 of each year, beginning September 1, 2020. The Notes due 2025 are governed by an indenture between the Company and U.S. Bank National Association, as trustee. The Notes due 2025 will mature on March 1, 2025, unless earlier repurchased by the Company or converted at the option of the holders. The Company may not redeem the notes prior to the maturity date, and no sinking fund is provided for the notes. The Notes due 2025 may be converted, under certain circumstances as described below, based on an initial conversion rate of 12.2637 shares of common stock per $1,000 principal amount (which represents an initial conversion price of $81.54 per share). The conversion rate for the Notes due 2025 will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a make-whole fundamental change (as defined in the relevant indenture), the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its notes in connection with such make-whole fundamental change. The Company received approximately $313.0 million in net proceeds, after deducting the initial purchasers’ discount, from the issuance of the Notes due 2025. The Notes due 2025 may be converted prior to the close of business on the business day immediately preceding September 1, 2024, in multiples of $1,000 principal amount, at the option of the holder only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2020 (and only during such calendar quarter), if the last reported sale price of the Company’s 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; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in the relevant indenture) 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 the Company’s common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. On and after September 1, 2024 until the close of business on the second scheduled trading day immediately preceding the maturity date of March 1, 2025, holders may convert their notes at any time, regardless of the foregoing circumstances. Upon the occurrence of a fundamental change (as defined in the relevant indenture), holders may require the Company to repurchase all or a portion of their Notes due 2025 for cash at a price equal to 100% of the principal amount of the notes to be repurchased plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. As of March 31, 2021, the sale price of the Company’s common stock was greater than or equal to $106.00 (130% of the notes conversion price) for at least 20 trading days (whether consecutive or not) during a period of 30 consecutive trading days preceding the quarter-ended March 31, 2021. As a result, as of March 31, 2021, the Notes due 2025 are convertible at the holders’ option through June 30, 2021. Accordingly, the Company classified the net carrying amount of the Notes due 2025 of $102.3 million as Debt, current on the condensed consolidated balance sheet as of March 31, 2021. From April 1, 2021 through April 27, 2021, the Company has received the request for conversion of approximately $0.1 million in principal amount of Notes due 2025, of which the Company has elected to settle the aggregate principal amount of the Notes due 2025 in a combination of cash and any excess in shares of the Company’s common stock in accordance with the applicable indenture. Such conversion will be settled in May 2021. For the period from March 9, 2020, the issuance date, through May 19, 2020, the number of authorized and unissued shares of the Company’s common stock that are not reserved for other purposes was less than the maximum number of underlying shares that would be required to settle the Notes due 2025 into equity. Accordingly, unless and until the Company had a number of authorized shares that were not issued or reserved for any other purpose that equaled or exceeded the maximum number of underlying shares (“share reservation condition”), the Company would have been required to pay to the converting holder in respect of each $1,000 principal amount of notes being converted solely in cash in an amount equal to the sum of the daily conversion values for each of the 20 consecutive trading days during the related observation period. However, following satisfaction of the share reservation condition, the Company could settle conversions of notes through payment or delivery, as the case may be, of cash, shares of the Company’s common stock or a combination of cash and shares of its common stock, at the Company’s election. As further discussed below, the Company satisfied the share reservation condition during May 2020. In accounting for the issuance of the Notes due 2025, on March 9, 2020, the conversion option of the Notes due 2025 was deemed an embedded derivative requiring bifurcation from the Notes due 2025 (“host contract”) and separate accounting as an embedded derivative liability, as a result of the Company not having the necessary number of authorized but unissued shares of its common stock available to settle the conversion option of the Notes due 2025 in shares. The proceeds from the Notes due 2025 were first allocated to the embedded derivative liability and the remaining proceeds were then allocated to the host contract. On March 9, 2020, the carrying amount of the embedded derivative liability of $68.7 million representing the conversion option was determined using the Binomial Lattice model and the remaining $251.3 million was allocated to the host contract. The difference between the principal amount of the Notes due 2025 and the fair value of the host contract (the “debt discount”) is amortized to interest expense using the effective interest method over the term of the Notes due 2025. On May 20, 2020, at the Company’s annual meeting of stockholders, the stockholders approved an amendment to the Amended and Restated Certificate of Incorporation to increase the number of authorized shares of the Company’s common stock, par value $0.00001 per share, from 150,000,000 shares to 200,000,000 shares (the “Amendment”). The Amendment became effective upon filing with the Secretary of State of Delaware on May 20, 2020. As a result, the Company satisfied the share reservation condition. The Company may now settle the Notes due 2025 and warrants issued in conjunction with the Notes due 2025 through payment or delivery, as the case may be, of cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election. Accordingly, on May 20, 2020, the embedded derivative liability was remeasured at a fair value of $116.3 million and was then reclassified to additional paid-in-capital in the condensed consolidated balance sheet in the second quarter of 2020 and is no longer remeasured as long as it continues to meet the conditions for equity classification. The Company recorded the change in the fair value of the embedded derivative in other expense, net in the condensed consolidated statement of operations during the three months ended March 31, 2021. The Company separated the Notes due 2025 into liability and equity components, this resulted in a tax basis difference associated with the liability component that represents a temporary difference. The Company recognized the deferred taxes of $0.2 million for the tax effect of that temporary difference as an adjustment to the equity component included in additional paid-in capital in the condensed consolidated balance sheet. Debt issuance costs for the issuance of the Notes due 2025 were approximately $7.6 million, consisting of initial purchasers' discount and other issuance costs. In accounting for the transaction costs, the Company allocated the total amount incurred to the Notes due 2025 host contract. Transaction costs were recorded as debt issuance cost (presented as contra debt in the condensed consolidated balance sheet) and are being amortized to interest expense over the term of the Notes due 2025. Concurrently with the offering of the Notes due 2026 and Notes due 2028, the Company entered into separately- and privately-negotiated transactions to repurchase approximately $217.7 million aggregate principal amount of the Notes due 2025. The Company paid $217.7 million in cash and issued approximately 1.67 million shares of its common stock to the holders of the repurchased notes with an aggregate fair value of $302.7 million, representing the conversion value in excess of the principal amount of the Notes due 2025, which were fully offset by shares received from the Company’s settlement of the associated note hedging arrangements discussed below. The total amount of $217.7 million paid to partially settle the repurchases of the Notes due 2025 was allocated between the liability and equity components of the amount extinguished by determining the fair value of the liability component immediately prior to the notes repurchase and allocating that portion of the conversion price to the liability component in the amount of $184.5 million. The residual of the conversion price of $4.3 million of the repurchased Notes due 2025, net of inducement loss of $37.5 million for additional shares issued, was allocated to the equity component of the repurchased Notes due 2025 as an increase of additional paid-in capital. The fair value of the notes settlement for such repurchases was calculated using a discount rate of 4.35%, representing an estimate of the Company's borrowing rate at the date of repurchase with a remaining expected life of approximately 4.1 years. As part of the settlement of the repurchase of the Notes due 2025, the Company wrote-off the $38.5 million unamortized debt discount and $4.1 million debt issuance cost apportioned to the principal amount of Notes due 2025 repurchased. The Company recorded a loss on partial settlement of the repurchased Notes due 2025 of $9.4 million in Other income (expense), net, representing the difference between the consideration attributed to the liability component and the sum of the net carrying amount of the liability component and unamortized debt issuance costs. Further, the Company also recorded loss on inducement of $37.5 million in Other income (expense), net, representing the difference between the fair value of the shares that would have been issued under the original conversion terms with respect to the repurchased Notes due 2025. Following the repurchase transactions summarized above, as of March 31, 2021, $102.3 million aggregate principal amount of the Notes due 2025 remained outstanding. The following table presents the total amount of interest cost recognized relating to the Notes due 2025 (in thousands):
The derived effective interest rate on the Notes due 2025 host contract was determined to be 5.18%, which remain unchanged from the date of issuance. The remaining unamortized debt discount was $17.7 million and $58.6 million as of March 31, 2021 and December 31, 2020, respectively, and will be amortized over approximately 3.9 years from March 31, 2021. Notes due 2025 Hedge and Warrant Transactions In connection with the offering of the Notes due 2025, the Company entered into privately-negotiated convertible note hedge transactions (the “2025 Hedge Transactions”) pursuant to which the Company has the option to purchase a total of approximately 3.9 million shares of its common stock (subject to anti-dilution adjustments), which is the same number of shares initially issuable upon conversion of the notes, at a price of $81.54 per share, which is the initial conversion price of the Notes due 2025. The total cost of the convertible note hedge transactions was approximately $89.1 million. The convertible note hedge transactions are expected generally to reduce potential dilution to the Company’s common stock upon any conversion of the Notes due 2025 and/or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, as the case may be. Additionally, the Company separately entered into privately-negotiated warrant transactions in connection with the offering of the Notes due 2025 (the “2025 Warrants”) whereby the Company sold warrants to acquire approximately 3.9 million shares of the Company’s common stock (subject to anti-dilution adjustments) at an initial strike price of $106.94 per share. The Company received aggregate proceeds of approximately $71.6 million from the sale of the 2025 Warrants. If the market value per share of the Company’s common stock, as measured under the 2025 Warrants, exceeds the strike price of the 2025 Warrants, the 2025 Warrants will have a dilutive effect on the Company’s earnings per share, unless the Company elects, subject to certain conditions, to settle the 2025 Warrants in cash. Taken together, the purchase of the convertible note hedges in connection with the 2025 Hedge Transactions and the sale of the 2025 Warrants are intended to reduce potential dilution from the conversion of the Notes due 2025 and to effectively increase the overall conversion price from $81.54 to $106.94 per share. The 2025 Warrants are only exercisable on the applicable expiration dates in accordance with the agreements relating to each of the 2025 Warrants. Subject to the other terms of the 2025 Warrants, the first expiration date applicable to the 2025 Warrants is June 1, 2025, and the final expiration date applicable to the 2025 Warrants is September 23, 2025. During the first quarter of 2021, in connection with the repurchase of $217.7 million aggregate principal amount of the Notes due 2025 summarized above, the Company entered into partial unwind agreements with respect to certain of the “2025 Hedge Transactions and the 2025 Warrants. In connection with these unwind transactions, the Company received shares of the Company’s common stock as a termination payment for the portion of the 2025 Hedge Transactions that were unwound, and the Company issued shares of its common stock as a termination payment for the portion of the 2025 Warrants that were unwound. As a result of the unwind agreements for the 2025 Hedge Transactions and the 2025 Warrants, the Company received 1.9 million of the Company’s common stock from the 2025 Hedge Transactions settlement and issued 1.8 million of the Company’s common stock from the 2025 Warrants that were unwound. Following the unwind transactions summarized above, as of March 31, 2021, options to purchase approximately 1.3 million shares of common stock remained outstanding under the 2025 Hedge Transactions, and 2025 Warrants exercisable to purchase approximately 1.3 million shares remained outstanding. For the period from March 9, 2020, the issuance date of the 2025 Hedge Transactions and 2025 Warrants, through May 19, 2020, the number of authorized and unissued shares of the Company’s common stock that are not reserved for other purposes was less than the maximum number of underlying shares that will be required to settle the Notes due 2025 through the delivery of shares of the Company’s common stock. Accordingly, the 2025 Hedge Transactions and 2025 Warrants could only be settled on net cash settlement basis. As a result, the 2025 Hedge Transactions and 2025 Warrants were classified as a Convertible notes hedge asset and Warrants liability, respectively, in the condensed consolidated balance sheet and the change in fair value of derivatives was included in other expense, net in the condensed consolidated statement of operations. On May 20, 2020, at the Company’s annual meeting of stockholders, the stockholders approved the Amendment and satisfied the share reservation condition (as discussed above), and as a result, the Convertible notes hedge asset and Warrants liabilities were remeasured at a fair value of $117.1 million and $96.4 million, respectively, and were then reclassified to additional paid-in-capital in the condensed consolidated balance sheet in the second quarter of 2020 and is no longer remeasured as long as they continue to meet the conditions for equity classification. The change in the fair value of the Convertible notes hedge asset and Warrants liability were recorded in other expense, net in the condensed consolidated statements of operations during the three months ended March 31, 2021. Convertible Senior Notes due 2024 On June 5, 2019, the Company issued $132.0 million aggregate principal amount of 1.0% convertible senior notes due 2024 (the “Notes due 2024”). The Notes due 2024 are general unsecured obligations and bear interest at an annual rate of 1.0% per year, payable semi-annually on June 1 and December 1 of each year, beginning December 1, 2019. The Notes due 2024 are governed by an indenture between the Company and U.S. Bank National Association, as trustee. The Notes due 2024 will mature on June 1, 2024, unless earlier repurchased by the Company or converted at the option of the holders. The Company may not redeem the notes prior to the maturity date, and no sinking fund is provided for the notes. The Notes due 2024 may be converted, under certain circumstances as described below, based on an initial conversion rate of 48.7781 shares of common stock per $1,000 principal amount (which represents an initial conversion price of $20.50 per share). The conversion rate for the Notes due 2024 will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a make-whole fundamental change (as defined in the relevant indenture), the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its notes in connection with such make-whole fundamental change. The Company received approximately $128.0 million in net proceeds, after deducting the initial purchasers’ discount, from the issuance of the Notes due 2024. The Notes due 2024 may be converted on any day prior to the close of business on the business day immediately preceding December 1, 2023, in multiples of $1,000 principal amount, at the option of the holder only under any of the following circumstances: (1) 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 the Company’s 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 $26.65 (130% of the conversion price) on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in the relevant indenture) 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 the Company’s common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. On and after December 1, 2023 until the close of business on the second scheduled trading day immediately preceding the maturity date of June 1, 2024, holders may convert their notes at any time, regardless of the foregoing circumstances. Upon the occurrence of a fundamental change (as defined in the relevant indenture), holders may require the Company to repurchase all or a portion of their Notes due 2024 for cash at a price equal to 100% of the principal amount of the notes to be repurchased plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. As of March 31, 2021, the sale price of the Company’s common stock was greater than or equal to $26.65 (130% of the notes conversion price) for at least 20 trading days (whether consecutive or not) during a period of 30 consecutive trading days preceding the quarter-ended March 31, 2021. As a result, as of March 31, 2021, the Notes due 2024 are convertible at the holders’ option through June 30, 2021. Accordingly, the Company classified the net carrying amount of the Notes due 2024 of $0.9 million as Debt, current on the condensed consolidated balance sheet as of March 31, 2021. From April 1, 2021 through the date Form 10-Q is available to be issued, the Company has not received any requests for conversion of the Notes due 2024. In accounting for the issuance of the Notes due 2024, on June 5, 2019, the Company separated the Notes due 2024 into liability and equity components. The carrying amount of the liability component of approximately $95.6 million was calculated by using a discount rate of 7.75%, which was the Company’s borrowing rate on the date of the issuance of the Notes due 2024 for a similar debt instrument without the conversion feature. The carrying amount of the equity component of approximately $36.4 million, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the Notes due 2024. The equity component of the Notes due 2024 is included in additional paid-in capital in the condensed consolidated balance sheet and is not remeasured as long as it continues to meet the conditions for equity classification. The difference between the principal amount of the Notes due 2024 and the liability component (the “debt discount”) is amortized to interest expense using the effective interest method over the term of the Notes due 2024. The Company separated the Notes due 2024 into liability and equity components, this resulted in a tax basis difference associated with the liability component that represents a temporary difference. The Company recognized the deferred taxes of $0.3 million for the tax effect of that temporary difference as an adjustment to the equity component included in additional paid-in capital in the condensed consolidated balance sheet. Debt issuance costs for the issuance of the Notes due 2024 were approximately $4.6 million, consisting of initial purchasers' discount and other issuance costs. In accounting for the transaction costs, the Company allocated the total amount incurred to the liability and equity components using the same proportions as the proceeds from the Notes due 2024. Transaction costs attributable to the liability component were approximately $3.3 million, were recorded as debt issuance cost (presented as contra debt in the condensed consolidated balance sheet) and are being amortized to interest expense over the term of the Notes due 2024. The transaction costs attributable to the equity component were approximately $1.3 million and were netted with the equity component in stockholders’ equity. As of March 31, 2021 and December 31, 2020, the unamortized deferred issuance cost for the Notes due 2024 was less than $0.1 million and $1.5 million, respectively, on the condensed consolidated balance sheets. During the first quarter of 2021, $87.1 million in aggregate principal amount of the Notes due 2024 were converted or repurchased by the Company, and the principal amount of the converted and repurchased Notes due 2024 was repaid in cash. Of the $87.1 million in aggregate principal amount, $25.5 million in aggregate principal amount of Notes due 2024 were repurchased by the Company pursuant to separately- and privately-negotiated exchange agreements entered into in March 2021 concurrently with the issuance of Notes due 2026 and Notes due 2028. In connection with such conversions and repurchases, during the first quarter of 2021, the Company also issued 3.8 million shares of its common stock to the holders of the converted and repurchased Notes due 2024, with an aggregate fair value of $659.4 million, representing the conversion value in excess of the principal amount of the Notes due 2024. The total amount of $87.1 million paid to settle the conversions and repurchases of the Notes due 2024 during the first quarter of 2021 was allocated between the liability and equity components of the amount extinguished by determining the fair value of the liability component immediately prior to the notes settlement and allocating that portion of the conversion price to the liability component in the amount of $78.4 million. The residual of the conversion price of $8.6 million was allocated to the equity component of the Notes due 2024 as a reduction of additional paid-in capital. The fair value of the notes conversions and repurchases during the first quarter of 2021 was calculated using a discount rate of 4.25%, representing an estimate of the Company's borrowing rate at the date of repurchase with a remaining expected life of approximately 3.3 years. As part of the settlement of the conversions and repurchases, the Company wrote-off the $16.7 million unamortized debt discount and $1.4 million debt issuance cost apportioned to the principal amount of Notes due 2024 were converted and repurchased. The Company also recorded a loss on partial settlement of the converted and repurchased Notes due 2024 of $9.5 million in Other income (expense), net, representing the difference between the consideration attributed to the liability component and the sum of the net carrying amount of the liability component and unamortized debt issuance costs. Following the conversions and repurchases summarized above, as of March 31, 2021, $1.1 million aggregate principal amount of the Notes due 2024 remained outstanding. The following table presents the total amount of interest cost recognized in the statement of operations relating to the Notes due 2024:
The effective interest rate on the liability component Notes due 2024 was 7.75% for the three months ended March 31, 2021, which remains unchanged from the date of issuance. The remaining unamortized debt discount was $0.2 million and $17.6 million as of March 31, 2021 and December 31, 2020, respectively, and will be amortized over approximately 3.2 years from March 31, 2021. Notes due 2024 Hedge and Warrant Transactions In connection with the offering of the Notes due 2024, the Company entered into privately-negotiated convertible note hedge transactions (the “2024 Hedge Transactions”) pursuant to which the Company has the option to purchase a total of approximately 6.4 million shares of its common stock (subject to anti-dilution adjustments), which is the same number of shares initially issuable upon conversion of the notes, at a price of $20.50 per share, which is the initial conversion price of the Notes due 2024. The total cost of the convertible note hedge transactions was approximately $36.3 million. The 2024 Hedge Transactions are expected generally to reduce potential dilution to the Company’s common stock upon any conversion of the Notes due 2024 and/or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, as the case may be. Additionally, the Company separately entered into privately-negotiated warrant transactions in connection with the offering of the Notes due 2024 (the “2024 Warrants”) whereby the Company sold warrants to acquire approximately 6.4 million shares of the Company’s common stock (subject to anti-dilution adjustments) at an initial strike price of $25.23 per share. The Company received aggregate proceeds of approximately $29.8 million from the sale of the 2024 Warrants. If the market value per share of the Company’s common stock, as measured under the 2024 Warrants, exceeds the strike price of the 2024 Warrants, the 2024 Warrants will have a dilutive effect on the Company’s earnings per share, unless the Company elects, subject to certain conditions, to settle the 2024 Warrants in cash. Taken together, the purchase of the convertible note hedges in connection with the 2024 Hedge Transactions and the sale of the 2024 Warrants are intended to reduce potential dilution from the conversion of the Notes due 2024 and to effectively increase the overall conversion price from $20.50 to $25.23 per share. The 2024 Warrants are only exercisable on the applicable expiration dates in accordance with the 2024 Warrants. Subject to the other terms of the Warrants, the first expiration date applicable to the 2024 Warrants is September 1, 2024, and the final expiration date applicable to the 2024 Warrants is April 22, 2025. During the first quarter of 2021, in connection with the repurchase of $25.5 million aggregate principal amount of the Notes due 2024 summarized above, the Company entered into partial unwind agreements with respect to certain of the 2024 Hedge Transactions and received 1.1 million shares of its common stock as a termination payment for the portion of the 2024 Hedge Transactions that were unwound. In addition to the unwind transactions discussed above, the Company also received 2.7 million shares of the Company’s common stock from the 2024 Hedge Transactions settlements as a result of conversion of $61.5 million in aggregate principal amount of the Notes due 2024 in the first quarter of 2021. In addition, the Company entered into partial unwind agreements with respect to certain of the 2024 Warrants in connection with the repurchase and conversion of $87.1 million in aggregate principal amount of the Notes due 2024 during the first quarter of 2021 and issued 3.8 million shares of its common stock as a termination payment for the portion of the 2024 Warrants that were unwound. Following the transactions summarized above, as of March 31, 2021, options to purchase a total of approximately 0.1 million shares remained outstanding under the 2024 Hedge Transactions and 2024 Warrants exercisable to purchase a total of approximately 0.1 million shares remained outstanding under the 2024 Warrants. Given that the transactions meet certain accounting criteria, the Notes due 2024 hedge and the warrants transactions are recorded in stockholders’ equity, and they are not accounted for as derivatives and are not remeasured each reporting period. Convertible Senior Notes due 2023 In August 2018, the Company sold $65.0 million aggregate principal amount of 4.0% convertible senior notes due 2023 (the “Notes due 2023”) in a private placement. On May 30, 2019, the Company entered into separately and privately-negotiated transactions with certain holders of the Notes due 2023 resulting in the repurchase and exchange, as of June 5, 2019, of $60.0 million aggregate principal amount of the notes in consideration for the issuance of 10,801,080 shares of common stock and separate cash payments totaling $6.0 million. As of both March 31, 2021 and December 31, 2020, $5.0 million aggregate principal amount of the Notes due 2023 remained outstanding. The remaining outstanding Notes due 2023 are general unsecured obligations and bear interest at a rate of 4.0% per year, payable semi-annually on February 1 and August 1 of each year. The Notes due 2023 are governed by an indenture between the Company and U.S. Bank National Association, as trustee. The remaining outstanding Notes due 2023 will mature on August 1, 2023, unless earlier repurchased by the Company or converted at the option of the holders. The Company may not redeem the remaining Notes due 2023 prior to the maturity date, and no sinking fund is provided for such notes. The remaining Notes due 2023 are convertible, at a holder’s election, in multiples of $1,000 principal amount, into shares of the Company’s common stock based on the applicable conversion rate. The initial conversion rate for such notes is 180.018 shares of common stock per $1,000 principal amount of notes (which is equivalent to an initial conversion price of approximately $5.56 per share). The conversion rate and the corresponding conversion price are subject to adjustment upon the occurrence of certain events but will not be adjusted for any accrued and unpaid interest. Holders of the remaining Notes due 2023 who convert their notes in connection with a make-whole fundamental change (as defined in the applicable indenture) are, under certain circumstances, entitled to an increase in the conversion rate. Additionally, in the event of a fundamental change, holders of the remaining Notes due 2023 may require the Company to repurchase all or a portion of their notes at a price equal to 100% of the principal amount of notes, plus any accrued and unpaid interest, including any additional interest to, but excluding, the repurchase date. Holders may convert all or any portion of their Notes due 2023 at their option at any time prior to the close of business on the business day immediately preceding the maturity date, in multiples of $1,000 principal amount. The following table presents the amount of interest cost recognized relating to the contractual interest coupon and the amortization of debt issuance costs of the Notes due 2023.
Sale of Long-Term Financing Receivables The Company entered into an agreement with a third party in the fourth quarter of 2017 to sell certain current and future receivables at a discount. In December 2017, the third party made an initial purchase of receivables that resulted in net proceeds to the Company of $2.8 million. This transaction was recorded as debt on the accompanying consolidated balance sheets, and the debt balance was relieved in January 2019 as the underlying receivables were settled. During the year ended December 31, 2018, the third party made three additional purchases of receivables that resulted in total net proceeds to the Company of $5.6 million. These transactions were recorded as debt on the accompanying condensed consolidated balance sheets, and the total associated debt balance will be relieved by September 2021 as the underlying receivables are settled. As of March 31, 2021, the total sale of long-term financing receivable recorded as debt of $0.9 million remained outstanding.
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COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases office facilities under noncancelable operating leases that expire on various dates through 2031, some of which may include options to extend the leases for up to 12 years. The components of lease expense are presented as follows:
The components of lease liabilities are presented as follows:
Supplemental cash flow and other information related to operating leases, are as follows:
Undiscounted cash flows of operating lease liabilities as of March 31, 2021 are as follows:
Purchase Obligations The Company has contractual obligations related to component inventory that its contract manufacturers procure on its behalf in accordance with its production forecast as well as other inventory related purchase commitments. As of March 31, 2021, these purchase obligations totaled approximately $177.2 million. Litigation The Company is subject to various legal proceedings relating to claims arising out of its operations that have not been fully resolved. The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts above management’s expectations, the Company’s business, results of operations, financial position and cash flows for that reporting period could be materially adversely affected. As of April 27, 2021, the Company is not currently a party to any matters that the management expects will have an adverse material effect on the Company’s condensed consolidated financial position, results of operations or cash flows. Contingencies On March 26, 2020, the Office of the United States Trade Representative (the “USTR”) announced certain exclusion requests related to tariffs on Chinese imported microinverter products that fit the dimensions and weight limits within a Section 301 Tariff exclusion under U.S. note 20(ss)(40) to subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States (the “Tariff Exclusion”). The Tariff Exclusion applies to covered products under the China Section 301 Tariff Actions (“Section 301 Tariffs”) taken by the USTR exported from China to the United States from September 24, 2018 until August 7, 2020. Accordingly, the Company sought refunds totaling approximately $38.9 million plus approximately $0.6 million accrued interest on tariffs previously paid from September 24, 2018 to March 31, 2020 for certain microinverters that qualify for the Tariff Exclusion. The refund request was subject to review and approval by the U.S. Customs and Border Protection; therefore, the Company assessed the probable loss recovery in the year ended December 31, 2020 was equal to the approved refund requests available to the Company. As of December 31, 2020, the Company had received $24.8 million of tariff refunds and accrued for the remaining $14.7 million tariff refunds that were approved, however, not yet received on or before December 31, 2020. As of March 31, 2021, the Company received the remaining $14.7 million tariff refunds. For the year ended December 31, 2020, the Company recorded $38.9 million as a reduction to cost of revenues in the Company’s condensed consolidated statement of operations as the approved refunds relate to paid tariffs previously recorded to cost of revenues, therefore, the Company recorded the corresponding approved tariff refunds as credits to cost of revenues in the fourth quarter of 2020. For the year ended December 31, 2020, the Company recorded the $0.6 million accrued interest as interest income in the condensed consolidated statement of operations. The tariff refund receivable of zero and $14.7 million was recorded as a reduction of accounts payable to Flex Ltd. and affiliates (“Flex”), the Company’s manufacturing partner and the importer of record who will first receive the tariff refunds, on the Company’s condensed consolidated balance sheet as of March 31, 2021 and December 31, 2020, respectively. The Tariff Exclusion expired on August 7, 2020 and those microinverter products now are subject to tariffs. The Company continues to pay Section 301 Tariffs on its storage and communication products and other accessories imported from China which are not subject to the Tariff Exclusion.
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STOCK-BASED COMPENSATION |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock-based Compensation Expense Stock-based compensation expense for all stock-based awards expected to vest is measured at fair value on the date of grant and recognized ratably over the requisite service period. The following table summarizes the components of total stock-based compensation expense included in the condensed consolidated statements of operations for the periods presented.
The following table summarizes the various types of stock-based compensation expense for the periods presented.
As of March 31, 2021, there was approximately $107.4 million of total unrecognized stock-based compensation expense related to unvested equity awards, which are expected to be recognized over a weighted-average period of 3.0 years. Equity Awards Activity Stock Options The following is a summary of stock option activity.
(1) The intrinsic value of options exercised is based upon the value of the Company’s stock at exercise. The intrinsic value of options outstanding, vested and expected to vest, and exercisable as of March 31, 2021 is based on the closing price of the last trading day during the period ended March 31, 2021. The Company’s stock fair value used in this computation was $162.16 per share. The following table summarizes information about stock options outstanding at March 31, 2021.
Restricted Stock Units The following is a summary of RSU activity.
(1) The intrinsic value of RSUs vested is based upon the value of the Company’s stock when vested. The intrinsic value of RSUs outstanding and expected to vest as of March 31, 2021 is based on the closing price of the last trading day during the period ended March 31, 2021. The Company’s stock fair value used in this computation was $162.16 per share. Performance Stock Units The following is a summary of PSU activity.
(1) The intrinsic value of PSUs vested is based upon the value of the Company’s stock when vested. The intrinsic value of PSUs outstanding and expected to vest as of March 31, 2021 is based on the closing price of the last trading day during the period ended March 31, 2021. The Company’s stock fair value used in this computation was $162.16 per share.
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INCOME TAXES |
3 Months Ended |
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Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES For the three months ended March 31, 2021 the Company’s income tax benefit of $33.4 million on a net loss before income taxes of $1.7 million was calculated using the annualized effective tax rate method and was primarily due to tax deduction from employee stock compensation as a discrete event, partially offset by projected tax expense in the U.S. and foreign jurisdictions that are profitable. For the three months ended March 31, 2020, the Company’s income tax benefit of $11.9 million, on a net income before income taxes of $57.1 million was calculated using the annualized effective tax rate method and was primarily due to tax deduction from employee stock compensation as a discrete event, partially offset by projected tax expense in the U.S. and foreign jurisdictions that are profitable. For the three months ended March 31, 2021 and March 31, 2020, in accordance with FASB guidance for interim reporting of income tax, the Company has computed its benefit for income taxes based on a projected annual effective tax rate while excluding loss jurisdictions which cannot be benefited.
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NET INCOME PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME PER SHARE | NET INCOME PER SHARE Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed in a similar manner, but it also includes the effect of potential common shares outstanding during the period, when dilutive. Potential common shares include Stock Options, RSUs, PSUs, shares to be purchased under the Company’s ESPP, the Notes due 2023, Notes due 2024, 2024 Warrants, Notes due 2025, 2025 Warrants, Notes due 2026, 2026 Warrants, the Notes due 2028 and the 2028 Warrants. See Note 8. “Debt” of the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for additional information. The dilutive effect of potentially dilutive common shares is reflected in diluted earnings per share by application of the treasury stock method for stock options, RSUs, PSUs, the Notes due 2024, the 2024 Warrants, the Notes due 2025, the 2025 Warrants, the Notes due 2026, the 2026 Warrants, the Notes due 2028 and the 2028 Warrants. To the extent these potential common shares are antidilutive, they are excluded from the calculation of diluted net income per share. The following table presents the computation of basic and diluted net income per share for the periods presented.
The following outstanding shares of common stock equivalents were excluded from the calculation of the diluted net income per share attributable to common stockholders because their effect would have been antidilutive.
Diluted earnings per share for the three months ended March 31, 2021 includes the dilutive effect of stock options, RSUs, PSUs, shares to be purchased under the ESPP, the Notes due 2023, the Notes due 2024, the 2024 Warrants, the Notes due 2025 and the 2025 Warrants. Certain common stock issuable under stock options, RSUs, PSUs, the Notes due 2026, the 2026 Warrants, the Notes due 2028 and the 2028 Warrants have been omitted from the diluted net income per share calculation because including such shares would have been antidilutive. Diluted earnings per share for the three months ended March 31, 2020 includes the dilutive effect of stock options, RSUs, PSUs, shares to be purchased under the ESPP, the Notes due 2023, the Notes due 2024 and the 2024 Warrants. For the three months ended March 31, 2020, no shares were antidilutive and excluded from diluted earnings per share. Since the Company has the intent and ability to settle the aggregate principal amount of the Notes due 2024, Notes due 2025, Notes due 2026 and Notes due 2028 in cash and any excess in shares of the Company’s common stock, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. In order to compute the dilutive effect, the number of shares included in the denominator of diluted net income per share is determined by dividing the conversion spread value of the “in-the-money” Notes due 2024, Notes due 2025, Notes due 2026 and Notes due 2028 by the Company’s average share price during the period and including the resulting share amount in the diluted net income per share denominator. The conversion spread will have a dilutive impact on net income per share of common stock when the average market price of the Company’s common stock for a given period exceeds the conversion price of $20.50, $81.54, $307.47 and $284.87 per share for the Notes due 2024, Notes due 2025, Notes due 2026 and Notes due 2028, respectively.
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RELATED PARTY |
3 Months Ended |
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Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY | RELATED PARTYIn 2018, a member of the Company’s board of directors and one of its principal stockholders, Thurman John Rodgers, purchased $5.0 million aggregate principal amount of the Notes due 2023 in a concurrent private placement. As of both March 31, 2021 and December 31, 2020, $5.0 million aggregate principal amount of the Notes due 2023 were outstanding. For additional information related to this purchase, see Note 8, “Debt,” of the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q. |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Policies) |
3 Months Ended |
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Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The accompanying condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“U.S.”), or GAAP. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Significant estimates and assumptions reflected in the financial statements include revenue recognition, allowance for doubtful accounts, stock-based compensation, inventory valuation, accrued warranty obligations, fair value of investments, debt derivatives, convertible notes and contingent consideration, fair value of acquired intangible assets and goodwill, useful lives of acquired intangible assets and property and equipment, incremental borrowing rate for right-of-use assets and lease liability, legal contingencies, and tax valuation allowance. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ materially from management’s estimates using different assumptions or under different conditions. In light of the ongoing and quickly evolving COVID-19 pandemic, management has considered the impacts of the COVID-19 pandemic on the Company’s critical and significant accounting estimates and as of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, judgments or revise the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s condensed financial statements.
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Recently Issued Accounting Pronouncements Not Yet Effective and Recently Adopted Accounting Pronouncements | Recently Issued Accounting Pronouncements Not Yet Effective In August 2020, the FASB issued Account Standard Update (“ASU”) 2020-06, “Debt - Debt with Conversion and Other Options (subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (subtopic 815-40),” which reduces the number of accounting models in ASC 470-20 that require separate accounting for embedded conversion features. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the effective interest rate of convertible debt instruments will be closer to the coupon interest rate. Further, the diluted net income per share calculation for convertible instruments will require the Company to use the if-converted method. The treasury stock method should no longer be used to calculate diluted net income per share for convertible instruments. The amendment will be effective for the Company with annual period beginning January 1, 2022. The Company is evaluating the accounting, transition and disclosure requirements of the standard |
Fair Value Measurement | The accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value: •Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of such assets or liabilities do not entail a significant degree of judgment. •Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. •Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
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Earnings Per Share | Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed in a similar manner, but it also includes the effect of potential common shares outstanding during the period, when dilutive. Potential common shares include Stock Options, RSUs, PSUs, shares to be purchased under the Company’s ESPP, the Notes due 2023, Notes due 2024, 2024 Warrants, Notes due 2025, 2025 Warrants, Notes due 2026, 2026 Warrants, the Notes due 2028 and the 2028 Warrants. See Note 8. “Debt” of the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for additional information. The dilutive effect of potentially dilutive common shares is reflected in diluted earnings per share by application of the treasury stock method for stock options, RSUs, PSUs, the Notes due 2024, the 2024 Warrants, the Notes due 2025, the 2025 Warrants, the Notes due 2026, the 2026 Warrants, the Notes due 2028 and the 2028 Warrants. To the extent these potential common shares are antidilutive, they are excluded from the calculation of diluted net income per share.
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REVENUE RECOGNITION (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Revenue Disaggregation | Disaggregated revenue by primary geographical market and timing of revenue recognition for the Company’s single product line are as follows:
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Summary of Contract Assets and Contract Liabilities, and Changes in Balances from Contracts with Customers | Receivables, and contract assets and contract liabilities from contracts with customers are as follows:
Significant changes in the balances of contract assets (prepaid expenses and other assets) during the period are as follows (in thousands):
Significant changes in the balances of contract liabilities (deferred revenues) during the period are as follows (in thousands):
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Summary of Estimated Revenue Expected to be Recognized in Future Periods | Estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period are as follows:
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OTHER FINANCIAL INFORMATION (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | Inventory consist of the following:
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Schedule of Accrued Liabilities | Accrued liabilities consist of the following:
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BUSINESS COMBINATION (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of consideration transferred for business acquisition | The acquisition date fair value of the purchase price was approximately $35.5 million, which consisted of the following (in thousands):
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Summary of fair values of assets acquired and liabilities assumed | The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the acquisition date, which are subject to change within the measurement period as the fair value assessments are finalized (in thousands):
The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the acquisition date, which are subject to change within the measurement period as the fair value assessments are finalized (in thousands):
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Summary of intangible assets acquired | The following table shows the fair value of the separately identifiable intangible assets at the time of acquisition and the period over which each intangible asset will be amortized:
The following table shows the fair value of the separately identifiable intangible assets at the time of acquisition and the period over which each intangible asset will be amortized:
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GOODWILL AND INTANGIBLE ASSETS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill and Intangible Assets | The Company’s goodwill and purchased intangible assets as of March 31, 2021 and December 31, 2020 are as follows:
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Schedule of Amortization Expense | Amortization expense related to finite-lived intangible assets are as follows:
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WARRANTY OBLIGATIONS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Warranty Activities | The Company’s warranty activities were as follows:
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FAIR VALUE MEASUREMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis |
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Schedule of Changes in Nonfinancial Liabilities Related to Warrant Obligations Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs | The following table reflects the activity for the Company’s contingent consideration liabilities measured at fair value using Level 3 inputs for the three months ended March 31, 2021 (in thousands):
The following table provides information regarding changes in nonfinancial liabilities related to the Company’s warranty obligations measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the periods indicated.
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Summary of Significant Unobservable Inputs used in the Fair Value Measurement of Assets Designated as Level 3 | These assumption include implied yield and change in estimated term of investment being held-to-maturity.
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Summary of Significant Unobservable Inputs used in the Fair Value Measurement of Liabilities Designated as Level 3 | As of March 31, 2021 and December 31, 2020, the significant unobservable inputs used in the fair value measurement of the Company’s liabilities designated as Level 3 are as follows:
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DEBT (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | The following table provides information regarding the Company’s debt.
The following table presents the total amount of interest cost recognized in the statement of operations relating to the Notes due 2028:
The following table presents the total amount of interest cost recognized in the statement of operations relating to the Notes due 2026:
The following table presents the total amount of interest cost recognized relating to the Notes due 2025 (in thousands):
The following table presents the total amount of interest cost recognized in the statement of operations relating to the Notes due 2024:
The following table presents the amount of interest cost recognized relating to the contractual interest coupon and the amortization of debt issuance costs of the Notes due 2023.
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COMMITMENTS AND CONTINGENCIES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Lease | The components of lease expense are presented as follows:
The components of lease liabilities are presented as follows:
Supplemental cash flow and other information related to operating leases, are as follows:
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Schedule of Future Minimum Rental Payments for Operating Leases | Undiscounted cash flows of operating lease liabilities as of March 31, 2021 are as follows:
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STOCK-BASED COMPENSATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Components of Total Stock-Based Compensation Expense | The following table summarizes the components of total stock-based compensation expense included in the condensed consolidated statements of operations for the periods presented.
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Summary of Stock-Based Compensation Associated with Each Type of Award | The following table summarizes the various types of stock-based compensation expense for the periods presented.
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Summary of Stock Option Activity | The following is a summary of stock option activity.
(1) The intrinsic value of options exercised is based upon the value of the Company’s stock at exercise. The intrinsic value of options outstanding, vested and expected to vest, and exercisable as of March 31, 2021 is based on the closing price of the last trading day during the period ended March 31, 2021. The Company’s stock fair value used in this computation was $162.16 per share.
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Summary of Stock Option Outstanding | The following table summarizes information about stock options outstanding at March 31, 2021.
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Summary of Restricted Stock Unit Activity | The following is a summary of RSU activity.
(1) The intrinsic value of RSUs vested is based upon the value of the Company’s stock when vested. The intrinsic value of RSUs outstanding and expected to vest as of March 31, 2021 is based on the closing price of the last trading day during the period ended March 31, 2021. The Company’s stock fair value used in this computation was $162.16 per share.
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Share-based Compensation, Performance Shares Award Outstanding Activity | The following is a summary of PSU activity.
(1) The intrinsic value of PSUs vested is based upon the value of the Company’s stock when vested. The intrinsic value of PSUs outstanding and expected to vest as of March 31, 2021 is based on the closing price of the last trading day during the period ended March 31, 2021. The Company’s stock fair value used in this computation was $162.16 per share.
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NET INCOME PER SHARE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Computation of Basic and Diluted Net Income Per Share | The following table presents the computation of basic and diluted net income per share for the periods presented.
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Schedule of Potentially Dilutive Securities Excluded from the Computation of Diluted Net Income Per Share | The following outstanding shares of common stock equivalents were excluded from the calculation of the diluted net income per share attributable to common stockholders because their effect would have been antidilutive.
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REVENUE RECOGNITION - Summary of Disaggregated Revenue by Primary Geographical Market and Timing of Revenue Recognition (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net revenues | $ 301,754 | $ 205,545 |
Products delivered at a point in time | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net revenues | 288,871 | 194,679 |
Products and services delivered over time | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net revenues | 12,883 | 10,866 |
U.S. | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net revenues | 247,782 | 179,600 |
International | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net revenues | $ 53,972 | $ 25,945 |
REVENUE RECOGNITION - Summary of Contract Assets and Contract Liabilities from Contracts with Customers (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Receivables | $ 236,090 | $ 182,165 |
Short-term contract assets (Prepaid expenses and other assets) | 19,338 | 17,879 |
Long-term contract assets (Other assets) | 57,400 | 51,986 |
Short-term contract liabilities (Deferred revenues) | 49,118 | 47,665 |
Long-term contract liabilities (Deferred revenues) | $ 142,985 | $ 125,473 |
REVENUE RECOGNITION - Narrative (Details) |
3 Months Ended |
---|---|
Mar. 31, 2021
USD ($)
| |
Revenue from Contract with Customer [Abstract] | |
Contract asset impairment charges | $ 0 |
REVENUE RECOGNITION - Summary of Significant Changes in the Balances of Contract Liabilities and Assets (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2021
USD ($)
| |
Contract Assets | |
Balance, beginning of period | $ 69,865 |
Amount recognized | (4,955) |
Increase | 11,828 |
Balance, end of period | 76,738 |
Contract Liabilities | |
Balance, beginning of period | 173,138 |
Revenue recognized | (16,235) |
Increase due to billings | 35,200 |
Balance, end of period | $ 192,103 |
OTHER FINANCIAL INFORMATION - Inventory (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 10,611 | $ 10,140 |
Finished goods | 24,265 | 31,624 |
Total inventory | $ 34,876 | $ 41,764 |
OTHER FINANCIAL INFORMATION - Accrued Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Salaries, commissions, incentive compensation and benefits | $ 17,466 | $ 6,634 |
Customer rebates and sales incentives | 55,397 | 36,622 |
Freight | 11,691 | 10,300 |
Operating lease liabilities, current | 4,772 | 4,542 |
Liability due to supply agreements | 4,310 | 5,500 |
Contingent consideration | 4,193 | 0 |
Other | 17,343 | 12,944 |
Total accrued liabilities | $ 115,172 | $ 76,542 |
BUSINESS COMBINATION - Summary of Consideration Transferred for Business Acquisition (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Jan. 25, 2021 |
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Business Acquisition [Line Items] | |||
Fair value of contingent consideration | $ 3,500 | $ 0 | |
Sofdesk | |||
Business Acquisition [Line Items] | |||
Cash consideration | $ 31,988 | ||
Fair value of contingent consideration | 3,500 | ||
Total | $ 35,488 |
BUSINESS COMBINATION - Summary of Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Jan. 25, 2021 |
Dec. 31, 2020 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 61,038 | $ 24,783 | |
Sofdesk | |||
Business Acquisition [Line Items] | |||
Net tangible assets acquired | $ 1,441 | ||
Intangible assets | 9,200 | ||
Deferred tax asset | 457 | ||
Goodwill | 24,390 | ||
Net assets acquired | 35,488 | ||
Sofdesk | Customer relationship | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 1,800 | ||
DIN's | |||
Business Acquisition [Line Items] | |||
Net tangible assets acquired | 1,541 | ||
Intangible assets | 11,700 | ||
Goodwill | 11,544 | ||
Net assets acquired | 24,785 | ||
DIN's | Customer relationship | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 11,700 |
BUSINESS COMBINATION - Summary of Identifiable Intangible Assets Acquired (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jan. 25, 2021 |
Mar. 31, 2021 |
|
Sofdesk | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 9,200 | |
Sofdesk | Developed technology | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 6,900 | |
Useful Life | 5 years | |
Sofdesk | Customer relationship | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 1,800 | |
Useful Life | 5 years | |
Sofdesk | Trade Name | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 500 | |
Useful Life | 5 years | |
DIN's | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 11,700 | |
DIN's | Customer relationship | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 11,700 | |
Useful Life | 5 years |
GOODWILL AND INTANGIBLE ASSETS - Schedule of Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2021 |
Dec. 31, 2020 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill, Gross | $ 24,783 | $ 24,783 |
Goodwill, Additions | 36,255 | |
Goodwill | 61,038 | 24,783 |
Intangible assets with finite lives: | ||
Other indefinite-lived intangibles | 286 | 286 |
Additions | 20,900 | 3,321 |
Accumulated Amortization | (12,790) | (10,999) |
Total purchased intangible assets, Gross | 39,807 | 36,486 |
Total purchased intangible assets, Net | 47,917 | 28,808 |
Developed technology | ||
Intangible assets with finite lives: | ||
Gross | 13,100 | 13,100 |
Additions | 6,900 | 0 |
Accumulated Amortization | (6,075) | (5,276) |
Net | 13,925 | 7,824 |
Customer relationship | ||
Intangible assets with finite lives: | ||
Gross | 26,421 | 23,100 |
Additions | 13,500 | 3,321 |
Accumulated Amortization | (6,653) | (5,723) |
Net | 33,268 | 20,698 |
Trade names | ||
Intangible assets with finite lives: | ||
Gross | 0 | 0 |
Additions | 500 | 0 |
Accumulated Amortization | (62) | 0 |
Net | $ 438 | $ 0 |
GOODWILL AND INTANGIBLE ASSETS - Amortization Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | $ 1,791 | $ 1,247 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | 799 | 546 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | 930 | 701 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | $ 62 | $ 0 |
WARRANTY OBLIGATIONS - Summary of Warranty Activities (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Dec. 31, 2020 |
|
Changes in the Company's product warranty liability | |||
Warranty obligations, beginning of period | $ 45,913 | $ 37,098 | |
Accruals for warranties issued during period | 3,894 | 1,524 | |
Changes in estimates | 7,655 | 1,677 | |
Settlements | (2,930) | (3,270) | |
Increase due to accretion expense | 943 | 774 | |
Other | (922) | (302) | |
Warranty obligations, end of period | 54,553 | 37,501 | |
Less: current portion | (14,303) | (9,678) | $ (11,260) |
Noncurrent | $ 40,250 | $ 27,823 | $ 34,653 |
WARRANTY OBLIGATIONS - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Product Warranty Liability [Line Items] | ||
Additional warranty expense | $ 7,655 | $ 1,677 |
Field Performance Data And Diagnostic Root-Cause Failure Analysis | ||
Product Warranty Liability [Line Items] | ||
Additional warranty expense | 6,300 | 1,500 |
Unit Costs For Prior Generation Microinverter Replacement Driven By Tariffs | ||
Product Warranty Liability [Line Items] | ||
Additional warranty expense | $ 1,300 | $ 200 |
FAIR VALUE MEASUREMENTS - Debt Securities Schedule of Fair Value (Details) $ in Thousands |
2 Months Ended |
---|---|
Mar. 31, 2021
USD ($)
| |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Initial investment (January 2021) | $ 25,000 |
Balance at end of period | 26,437 |
Investment in debt security | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Fair value adjustments included in other income (expenses), net | $ 1,437 |
FAIR VALUE MEASUREMENTS - Contingent Consideration Schedule of Fair Value (Details) $ in Thousands |
2 Months Ended |
---|---|
Mar. 31, 2021
USD ($)
| |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance at beginning of period | $ 3,500 |
Balance at end of period | 3,540 |
Contingent consideration | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Contingent consideration liability | $ 40 |
FAIR VALUE MEASUREMENTS - Schedule of Changes in Nonfinancial Liabilities Related to Warrant Obligations Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Details) - USD ($) $ in Thousands |
2 Months Ended | 3 Months Ended | |
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance at beginning of period | $ 3,500 | ||
Balance at end of period | 3,540 | $ 3,540 | |
Recurring | Total warranty obligations measured at fair value | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance at beginning of period | 28,736 | $ 19,806 | |
Accruals for warranties issued during period | 3,894 | 1,524 | |
Changes in estimates | 2,583 | 615 | |
Settlements | (1,915) | (1,993) | |
Increase due to accretion expense | 943 | 774 | |
Other | (922) | (301) | |
Balance at end of period | $ 33,319 | $ 33,319 | $ 20,425 |
FAIR VALUE MEASUREMENTS - Summary of Significant Unobservable Inputs used in the Fair Value Measurement of Liabilities Designated as Level 3 (Details) - Recurring - Level 3 - Warranty obligations for microinverters sold since January 1, 2014 |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Profit element and risk premium | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warranty obligations, measurement input | 15.00% | 15.00% |
Credit-adjusted risk-free rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warranty obligations, measurement input | 13.00% | 13.00% |
DEBT - Schedule of Convertible Senior Notes due in 2028 (Details) - Convertible Notes - Convertible Senior Notes Due 2028 $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2021
USD ($)
| |
Debt Instrument [Line Items] | |
Amortization of debt discount | $ 1,611 |
Amortization of debt issuance costs | 79 |
Total interest cost recognized | $ 1,690 |
DEBT - Schedule of Convertible Senior Notes due in 2026 (Details) - Convertible Notes - Convertible Senior Notes Due 2026 $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2021
USD ($)
| |
Debt Instrument [Line Items] | |
Amortization of debt discount | $ 1,786 |
Amortization of debt issuance costs | 135 |
Total interest cost recognized | $ 1,921 |
DEBT - Schedule of Convertible Senior Notes due in 2025 (Details) - Convertible Notes - Convertible Senior Notes Due 2025 - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Debt Instrument [Line Items] | ||
Contractual interest expense | $ 150 | $ 49 |
Amortization of debt discount | 2,389 | 743 |
Amortization of debt issuance costs | 294 | 87 |
Total interest cost recognized | $ 2,833 | $ 879 |
DEBT - Schedule of Convertible Senior Notes due 2024 (Details) - Convertible Notes - Convertible Senior Notes Due 2024 - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Debt Instrument [Line Items] | ||
Contractual interest expense | $ 3 | $ 330 |
Amortization of debt discount | 733 | 1,562 |
Amortization of debt issuance costs | 71 | 166 |
Total interest cost recognized | $ 807 | $ 2,058 |
DEBT - Convertible Senior Notes due 2023 Narrative (Details) - Convertible Notes - Convertible Senior Notes Due 2023 |
1 Months Ended | |||
---|---|---|---|---|
Jun. 05, 2019
USD ($)
shares
|
Aug. 31, 2018
USD ($)
$ / shares
|
Mar. 31, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
|
|
Debt Instrument [Line Items] | ||||
Debt instrument face amount | $ 65,000,000.0 | $ 5,000,000.0 | $ 5,000,000.0 | |
Interest rate | 4.00% | |||
Debt converted | $ 60,000,000.0 | |||
Conversion shares (in shares) | shares | 10,801,080 | |||
Fees paid for repurchase and exchange of convertible notes | $ 6,000,000.0 | |||
Debt conversion price (in USD per share) | $ / shares | $ 5.56 | |||
Conversion ratio | 0.1800180 | |||
Redemption price percentage | 100.00% |
DEBT - Schedule of Convertible Senior Notes due 2023 (Details) - Convertible Notes - Convertible Senior Notes Due 2023 - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Debt Instrument [Line Items] | ||
Contractual interest expense | $ 50 | $ 50 |
Amortization of debt issuance costs | 10 | 10 |
Total interest cost recognized | $ 60 | $ 60 |
DEBT - Sale of Long - Term Financing Receivables (Details) - Financing Receivable - Financing Receivable Recorded As Debt - USD ($) $ in Thousands |
1 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2018 |
Mar. 31, 2021 |
Dec. 31, 2020 |
|
Debt Instrument [Line Items] | ||||
Proceeds from debt, net of issuance costs | $ 2,800 | $ 5,600 | ||
Long-term debt, gross | $ 902 | $ 1,925 |
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2021 |
Dec. 31, 2020 |
Mar. 26, 2020 |
|
Line of Credit Facility [Line Items] | |||
Term of lease contract, maximum renewal term | 12 years | ||
Purchase obligation | $ 177,200,000 | ||
Section 301 Tariff Refunds | |||
Line of Credit Facility [Line Items] | |||
Potential positive impact of approval of requested Tariff refunds | $ 38,900,000 | ||
Tariff refund | 14,700,000 | $ 24,800,000 | |
Tariff refund receivable | $ 0 | 14,700,000 | |
Recognized in current period | 38,900,000 | ||
Section 301 Tariff Refunds, Accrued Interest | |||
Line of Credit Facility [Line Items] | |||
Potential positive impact of approval of requested Tariff refunds | $ 600,000 | ||
Recognized in current period | $ 600,000 |
COMMITMENTS AND CONTINGENCIES - Lease Expense Components (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease costs | $ 1,631 | $ 1,222 |
COMMITMENTS AND CONTINGENCIES - Lease Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease liabilities, current (Accrued liabilities) | $ 4,772 | $ 4,542 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccruedLiabilitiesCurrent | us-gaap:AccruedLiabilitiesCurrent |
Operating lease liabilities, noncurrent (Other liabilities) | $ 13,899 | $ 15,209 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilitiesNoncurrent | us-gaap:OtherLiabilitiesNoncurrent |
Total operating lease liabilities | $ 18,671 | $ 19,751 |
Weighted average remaining lease term | 6 years 3 months 18 days | 6 years 4 months 24 days |
Weighted average discount rate | 7.60% | 7.70% |
COMMITMENTS AND CONTINGENCIES - Supplemental Cash Flow and Other Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Operating cash flows from operating leases | $ 1,361 | $ 1,014 |
Lease liabilities arising from obtaining right-of-use assets | $ 0 | $ 2,941 |
COMMITMENTS AND CONTINGENCIES - Schedule of Minimum Lease Payments Under Noncancelable Operating Leases (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||
2021 (remaining nine months) | $ 4,457 | |
2022 | 4,660 | |
2023 | 4,038 | |
2024 | 3,053 | |
2025 | 2,262 | |
2026 and thereafter | 3,957 | |
Total lease payments | 22,427 | |
Less: imputed lease interest | (3,756) | |
Total lease liabilities | $ 18,671 | $ 19,751 |
STOCK-BASED COMPENSATION Narrative (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2021
USD ($)
| |
Share-based Payment Arrangement [Abstract] | |
Total unrecognized compensation cost | $ 107.4 |
Weighted-average recognition period for unrecognized compensation cost | 3 years |
STOCK-BASED COMPENSATION - Summary of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | $ 14,844 | $ 7,515 |
Cost of revenues | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | 982 | 606 |
Research and development | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | 5,749 | 1,919 |
Sales and marketing | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | 3,537 | 1,942 |
General and administrative | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | $ 4,576 | $ 3,048 |
STOCK-BASED COMPENSATION - Summary of Stock-Based Compensation Expense Associated with Each Type of Award (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 14,844 | $ 7,515 |
Stock options, RSUs, and PSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 13,840 | 7,077 |
Employee stock purchase plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 1,004 | $ 438 |
STOCK-BASED COMPENSATION - Summary of Performance Stock Unit Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2021
USD ($)
$ / shares
shares
| |
Aggregate Intrinsic Value | |
Share price (in usd per share) | $ 162.16 |
Performance shares | |
Number of Shares Outstanding | |
Outstanding, beginning balance (in shares) | shares | 494 |
Granted (in shares) | shares | 262 |
Vested (in shares) | shares | (494) |
Canceled (in shares) | shares | (247) |
Outstanding, ending balance (in shares) | shares | 15 |
Weighted Average Fair Value per Share at Grant Date | |
Outstanding, beginning balance (in usd per share) | $ 51.10 |
Granted (in usd per share) | 66.89 |
Vested (in usd per share) | 59.19 |
Canceled (in usd per share) | 42.00 |
Outstanding, ending balance (in usd per share) | $ 193.74 |
Weighted-Average Remaining Contractual Term | |
Weighted average remaining contractual term | 4 months 24 days |
Aggregate Intrinsic Value | |
Vested | $ | $ 91,803 |
Outstanding | $ | $ 2,432 |
INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Income Tax Disclosure [Abstract] | ||
Income tax benefit | $ 33,364 | $ 11,868 |
Income (loss) before income taxes | $ (1,666) | $ 57,068 |
RELATED PARTY - Narrative (Details) - Convertible Notes - Convertible Senior Notes Due 2023 - USD ($) |
Mar. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2018 |
Aug. 31, 2018 |
---|---|---|---|---|
Related Party Transaction [Line Items] | ||||
Debt instrument face amount | $ 5,000,000.0 | $ 5,000,000.0 | $ 65,000,000.0 | |
Thurman John Rodgers | ||||
Related Party Transaction [Line Items] | ||||
Debt instrument face amount | $ 5,000,000.0 | $ 5,000,000.0 | $ 5,000,000.0 |
Label | Element | Value |
---|---|---|
Restricted Cash | us-gaap_RestrictedCash | $ 0 |
Restricted Cash | us-gaap_RestrictedCash | $ 44,700,000 |
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