Delaware | 26-0138832 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | x | Smaller reporting company | ¨ | |||
Emerging growth company | ¨ |
Page | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 6. | ||
• | our ability to retain and upgrade paying users; |
• | our ability to attract new users or convert registered users to paying users; |
• | our future financial performance, including trends in revenue, costs of revenue, gross profit or gross margin, operating expenses, paying users, and free cash flow; |
• | our ability to achieve or maintain profitability; |
• | the demand for our platform or for content collaboration solutions in general; |
• | possible harm caused by significant disruption of service or loss or unauthorized access to users’ content; |
• | our ability to effectively integrate our platform with others; |
• | our ability to compete successfully in competitive markets; |
• | our ability to respond to rapid technological changes; |
• | our expectations and management of future growth; |
• | our ability to grow due to our lack of a significant outbound sales force; |
• | our ability to attract large organizations as users; |
• | our ability to offer high-quality customer support; |
• | our ability to manage our international expansion; |
• | our ability to attract and retain key personnel and highly qualified personnel; |
• | our ability to protect our brand; |
• | our ability to prevent serious errors or defects in our platform; |
• | our ability to maintain, protect, and enhance our intellectual property; and |
• | our ability to successfully identify, acquire, and integrate companies and assets. |
As of | |||||||
September 30, 2018 | December 31, 2017 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 536.2 | $ | 430.0 | |||
Short-term investments | 502.9 | — | |||||
Trade and other receivables, net | 28.6 | 29.3 | |||||
Prepaid expenses and other current assets | 96.0 | 58.8 | |||||
Total current assets | 1,163.7 | 518.1 | |||||
Property and equipment, net | 295.9 | 341.9 | |||||
Intangible assets, net | 15.2 | 17.0 | |||||
Goodwill | 98.0 | 98.9 | |||||
Other assets | 50.3 | 44.0 | |||||
Total assets | $ | 1,623.1 | $ | 1,019.9 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 27.9 | $ | 31.9 | |||
Accrued and other current liabilities | 163.2 | 129.8 | |||||
Accrued compensation and benefits | 64.2 | 56.1 | |||||
Capital lease obligation(1) | 80.5 | 102.7 | |||||
Deferred revenue | 479.3 | 417.9 | |||||
Total current liabilities | 815.1 | 738.4 | |||||
Capital lease obligation, non-current(1) | 82.4 | 71.6 | |||||
Deferred rent, non-current | 73.4 | 69.8 | |||||
Other non-current liabilities | 8.8 | 37.2 | |||||
Total liabilities | 979.7 | 917.0 | |||||
Commitments and contingencies (Note 7) | |||||||
Stockholders’ equity: | |||||||
Convertible preferred stock | — | 615.3 | |||||
Preferred stock | — | — | |||||
Common stock | — | — | |||||
Additional paid-in capital | 2,285.0 | 533.1 | |||||
Accumulated deficit | (1,643.5 | ) | (1,049.7 | ) | |||
Accumulated other comprehensive income | 1.9 | 4.2 | |||||
Total stockholders’ equity | 643.4 | 102.9 | |||||
Total liabilities and stockholders’ equity | $ | 1,623.1 | $ | 1,019.9 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue | $ | 360.3 | $ | 286.7 | $ | 1,015.8 | $ | 801.3 | |||||||
Cost of revenue(1) | 90.2 | 91.5 | 300.3 | 277.2 | |||||||||||
Gross profit | 270.1 | 195.2 | 715.5 | 524.1 | |||||||||||
Operating expenses(1): | |||||||||||||||
Research and development | 133.2 | 97.2 | 631.4 | 276.3 | |||||||||||
Sales and marketing | 95.0 | 74.7 | 339.4 | 211.1 | |||||||||||
General and administrative(2) | 50.8 | 39.6 | 226.7 | 113.1 | |||||||||||
Total operating expenses | 279.0 | 211.5 | 1,197.5 | 600.5 | |||||||||||
Loss from operations | (8.9 | ) | (16.3 | ) | (482.0 | ) | (76.4 | ) | |||||||
Interest income (expense), net | 2.4 | (2.2 | ) | 3.2 | (9.4 | ) | |||||||||
Other income, net | 0.5 | 4.9 | 6.1 | 13.0 | |||||||||||
Loss before income taxes | (6.0 | ) | (13.6 | ) | (472.7 | ) | (72.8 | ) | |||||||
Benefit from (provision for) income taxes | 0.2 | (0.5 | ) | (2.7 | ) | (1.2 | ) | ||||||||
Net loss | $ | (5.8 | ) | $ | (14.1 | ) | $ | (475.4 | ) | $ | (74.0 | ) | |||
Net loss per share attributable to common stockholders, basic and diluted | $ | (0.01 | ) | $ | (0.07 | ) | $ | (1.39 | ) | $ | (0.38 | ) | |||
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | 403.9 | 197.2 | 342.0 | 195.5 |
(1) | Includes stock-based compensation as follows (in millions): |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cost of revenue | $ | 3.2 | $ | 2.9 | $ | 43.9 | $ | 9.3 | |||||||
Research and development | 28.2 | 22.9 | 339.0 | 66.4 | |||||||||||
Sales and marketing | 8.1 | 7.5 | 88.4 | 22.9 | |||||||||||
General and administrative | 15.5 | 6.4 | 125.3 | 18.6 |
(2) | General and administrative expense for the nine months ended September 30, 2017 includes $9.4 million related to a non-cash charitable contribution of common stock to the Dropbox Charitable Foundation, which is a related party of the Company. The Company made additional cash contributions to the Foundation of $0.4 million and $0.8 million during the three and nine months ended September 30, 2017, respectively. See Note 12 for further details. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net loss | $ | (5.8 | ) | $ | (14.1 | ) | $ | (475.4 | ) | $ | (74.0 | ) | |||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Change in foreign currency translation adjustments | (0.1 | ) | 1.7 | (2.1 | ) | 5.3 | |||||||||
Change in net unrealized losses on short-term investments | — | — | (0.2 | ) | — | ||||||||||
Total other comprehensive income (loss), net of tax | $ | (0.1 | ) | $ | 1.7 | $ | (2.3 | ) | $ | 5.3 | |||||
Comprehensive loss | $ | (5.9 | ) | $ | (12.4 | ) | $ | (477.7 | ) | $ | (68.7 | ) |
Nine months ended September 30, | |||||||
2018 | 2017 | ||||||
Cash flow from operating activities | |||||||
Net loss | $ | (475.4 | ) | $ | (74.0 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization | 121.6 | 138.9 | |||||
Stock-based compensation | 596.6 | 117.2 | |||||
Amortization of deferred commissions | 8.5 | 4.6 | |||||
Donation of common stock to charitable foundation | — | 9.4 | |||||
Other | (0.9 | ) | (1.8 | ) | |||
Changes in operating assets and liabilities: | |||||||
Trade and other receivables, net | 0.4 | (11.6 | ) | ||||
Prepaid expenses and other current assets | (47.3 | ) | 1.5 | ||||
Other assets | (10.4 | ) | (4.2 | ) | |||
Accounts payable | (3.9 | ) | (0.1 | ) | |||
Accrued and other current liabilities | 40.6 | 26.0 | |||||
Accrued compensation and benefits | 7.2 | 4.2 | |||||
Deferred revenue | 60.8 | 52.5 | |||||
Non-current liabilities | 3.9 | (3.4 | ) | ||||
Net cash provided by operating activities | 301.7 | 259.2 | |||||
Cash flow from investing activities | |||||||
Capital expenditures | (27.6 | ) | (12.0 | ) | |||
Purchases of intangible assets | (2.9 | ) | (0.8 | ) | |||
Cash received from equipment rebates | 2.3 | 1.9 | |||||
Purchases of short-term investments | (664.3 | ) | — | ||||
Proceeds from maturities of short-term investments | 101.9 | — | |||||
Proceeds from sales of short-term investments | 61.6 | — | |||||
Net cash used in investing activities | (529.0 | ) | (10.9 | ) | |||
Cash flow from financing activities | |||||||
Proceeds from initial public offering and private placement, net of underwriters' discounts and commissions | 746.6 | — | |||||
Payments of deferred offering costs | (4.5 | ) | — | ||||
Shares repurchased for tax withholdings on release of restricted stock | (326.7 | ) | (72.2 | ) | |||
Proceeds from issuance of common stock, net of repurchases | 9.8 | 0.5 | |||||
Principal payments against capital lease obligations(1) | (84.1 | ) | (102.3 | ) | |||
Other | (6.1 | ) | (7.1 | ) | |||
Net cash provided by (used in) financing activities | 335.0 | (181.1 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (1.5 | ) | 2.8 | ||||
Change in cash and cash equivalents | 106.2 | 70.0 | |||||
Cash and cash equivalents—beginning of period | 430.0 | 352.7 | |||||
Cash and cash equivalents—end of period | $ | 536.2 | $ | 422.7 | |||
Supplemental cash flow data: | |||||||
Property and equipment acquired under capital leases | $ | 72.7 | $ | 18.4 |
(1) | Includes amounts attributable to related party transactions. See Note 12 for further details. |
Note 1. | Description of the Business and Summary of Significant Accounting Policies |
• | Identification of the contract, or contracts, with a customer |
• | Identification of the performance obligations in the contract |
• | Determination of the transaction price |
• | Allocation of the transaction price to the performance obligations in the contract |
• | Recognition of revenue when, or as, the Company satisfies a performance obligation |
• | One-tier RSUs, which have a service-based vesting condition over a four-year period. These awards typically have a cliff vesting period of one year and continue to vest quarterly thereafter. The Company began granting one-tier RSUs under its 2008 Plan in August 2015 and it continues to grant one-tier RSUs under its 2018 Plan. The Company recognizes compensation expense associated with one-tier RSUs ratably on a straight-line basis over the requisite service period and accounts for forfeitures in the period in which they occur. |
• | Two-tier RSUs, which have both a service-based vesting condition and a Performance Vesting Condition. The service-based vesting period for these awards is typically four years with a cliff vesting period of one year and continue to vest monthly thereafter. Upon satisfaction of the Performance Vesting Condition, these awards vest quarterly. The Performance Vesting Condition is satisfied on the earlier of (i) an acquisition or change in control of the Company or (ii) the earlier of (a) six months after the Company’s initial public offering or (b) March 15 of the year following the Company’s initial public offering. During the first quarter of 2018, the Company's Board of Directors approved the acceleration of the Performance Vesting Condition for which the service condition was satisfied, to occur upon the effectiveness of the registration statement related to the Company's IPO. Prior to August 2015, the Company granted two-tier RSUs under the 2008 Plan. The last grant date for two-tier RSUs was |
Property and equipment | Useful life | |
Buildings | 20 to 30 years | |
Datacenter and other computer equipment | 3 to 5 years | |
Office equipment and other | 3 to 7 years | |
Leasehold improvements | Lesser of estimated useful life or remaining lease term |
Note 2. | Cash, Cash Equivalents and Short-Term Investments |
As of September 30, 2018 | |||||||||||||||
Amortized cost | Unrealized gain | Unrealized loss | Estimated fair value | ||||||||||||
Cash | $ | 96.3 | $ | — | $ | — | $ | 96.3 | |||||||
Cash equivalents | |||||||||||||||
Money market funds | 415.4 | — | — | 415.4 | |||||||||||
Commercial paper | 24.5 | — | — | 24.5 | |||||||||||
Total cash and cash equivalents | $ | 536.2 | $ | — | $ | — | $ | 536.2 | |||||||
Short-term investments | |||||||||||||||
Corporate notes and obligations | 206.7 | 0.1 | (0.2 | ) | 206.6 | ||||||||||
U.S. Treasury securities | 183.3 | — | (0.1 | ) | 183.2 | ||||||||||
Certificates of deposit | 58.9 | — | — | 58.9 | |||||||||||
U.S. agency obligations | 36.4 | — | — | 36.4 | |||||||||||
Commercial paper | 17.8 | — | — | 17.8 | |||||||||||
Total short-term investments | 503.1 | 0.1 | (0.3 | ) | 502.9 | ||||||||||
Total | $ | 1,039.3 | $ | 0.1 | $ | (0.3 | ) | $ | 1,039.1 |
As of September 30, 2018 | |||||||
Amortized cost | Estimated fair value | ||||||
Due within one year | $ | 321.4 | $ | 321.2 | |||
Due between one to three years | 181.7 | 181.7 | |||||
Total | $ | 503.1 | $ | 502.9 |
Note 3. | Fair Value Measurements |
As of September 30, 2018 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Cash equivalents | |||||||||||||||
Money market funds | $ | 415.4 | $ | — | $ | — | $ | 415.4 | |||||||
Commercial paper | — | 24.5 | — | 24.5 | |||||||||||
Total cash equivalents | $ | 415.4 | $ | 24.5 | $ | — | $ | 439.9 | |||||||
Short-term investments | |||||||||||||||
Corporate notes and obligations | — | 206.6 | — | 206.6 | |||||||||||
U.S. Treasury securities | — | 183.2 | — | 183.2 | |||||||||||
Certificates of deposit | — | 58.9 | — | 58.9 | |||||||||||
U.S. agency obligations | — | 36.4 | — | 36.4 | |||||||||||
Commercial paper | — | 17.8 | — | 17.8 | |||||||||||
Total short-term investments | $ | — | $ | 502.9 | $ | — | $ | 502.9 | |||||||
Total cash equivalents and short-term investments | $ | 415.4 | $ | 527.4 | $ | — | $ | 942.8 |
Note 4. | Property and Equipment, Net |
As of | |||||||
September 30, 2018 | December 31, 2017 | ||||||
Building | $ | — | $ | 36.6 | |||
Datacenter and other computer equipment | 741.7 | 663.1 | |||||
Furniture and fixtures | 23.3 | 21.2 | |||||
Leasehold improvements | 120.9 | 118.6 | |||||
Construction in process | 6.8 | 7.2 | |||||
Total property and equipment | 892.7 | 846.7 | |||||
Accumulated depreciation and amortization | (596.8 | ) | (504.8 | ) | |||
Property and equipment, net | $ | 295.9 | $ | 341.9 |
Note 5. | Goodwill |
Note 6. | Revolving Credit Facility |
Note 7. | Commitments and Contingencies |
Capital lease commitments | Operating lease commitments(1) | Other commitments | |||||||||
Remainder of 2018 | $ | 27.1 | $ | 24.5 | $ | 16.9 | |||||
2019 | 74.5 | 94.1 | 54.9 | ||||||||
2020 | 38.0 | 103.3 | 37.0 | ||||||||
2021 | 23.0 | 95.7 | 1.9 | ||||||||
2022 | 10.6 | 89.0 | — | ||||||||
Thereafter | 0.7 | 711.7 | 0.3 | ||||||||
Future minimum payments | 173.9 | $ | 1,118.3 | $ | 111.0 | ||||||
Less interest and taxes | (11.0 | ) | |||||||||
Less current portion of the present value of minimum lease payments | (80.5 | ) | |||||||||
Capital lease obligations, net of current portion | $ | 82.4 |
(1) | Consists of future non-cancelable minimum rental payments under operating leases for the Company’s offices and datacenters, excluding rent payments from the Company’s sub-tenants, variable operating expenses, and tenant improvement reimbursements. Non-cancelable rent payments from the Company’s sub-tenants as of September 30, 2018, are expected to be $44.2 million through 2023. |
Note 8. | Accrued and Other Current Liabilities |
As of | |||||||
September 30, 2018 | December 31, 2017 | ||||||
Non-income taxes payable | $ | 72.1 | $ | 69.7 | |||
Deferred rent | 45.7 | 14.6 | |||||
Accrued legal and other external fees | 28.9 | 21.3 | |||||
Financing obligations, current | 3.3 | 9.7 | |||||
Accrued infrastructure costs | 5.3 | 2.6 | |||||
Accrued property and equipment purchases | 1.4 | 1.8 | |||||
Income taxes payable | 0.1 | 0.4 | |||||
Other accrued and current liabilities | 6.4 | 9.7 | |||||
Total accrued and other current liabilities | $ | 163.2 | $ | 129.8 |
Note 9. | Stockholders’ Equity |
Options outstanding | Restricted stock outstanding | |||||||||||||||||
Number of shares available for issuance under the Plans | Number of shares outstanding under the Plans | Weighted- average exercise price per share | Weighted- average remaining contractual term (In years) | Number of shares outstanding under the Plans | Weighted- average grant date fair value per share | |||||||||||||
Balance at December 31, 2017 | 9.0 | 5.0 | $ | 10.52 | 5.5 | 54.9 | $ | 15.60 | ||||||||||
Reserved for issuance under the 2018 Plan | 41.4 | — | — | — | — | |||||||||||||
Additional shares authorized | 1.3 | — | — | — | — | |||||||||||||
Options exercised and RSUs released | — | (1.7 | ) | 6.48 | (37.6 | ) | 15.26 | |||||||||||
Options and RSUs canceled | 4.6 | — | — | (4.6 | ) | 16.70 | ||||||||||||
Shares repurchased for tax withholdings on release of restricted stock | 14.5 | — | — | — | — | |||||||||||||
Restricted stock granted | (13.3 | ) | — | 13.3 | 19.25 | |||||||||||||
Balance at September 30, 2018 | 57.5 | 3.3 | $ | 12.59 | 2.2 | 26.0 | $ | 17.80 | ||||||||||
Vested at September 30, 2018 | 3.3 | $ | 12.46 | 2.2 | — | $ | — | |||||||||||
Unvested at September 30, 2018 | — | $ | — | 26.0 | $ | 17.80 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Intrinsic value of options exercised | $ | 32.0 | $ | — | $ | 34.0 | $ | 1.0 |
Note 10. | Net Loss Per Share |
Three months ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
Class A | Class B | Class A | Class B | ||||||||||||
Numerator: | |||||||||||||||
Net loss attributable to common stockholders | $ | (1.9 | ) | $ | (3.9 | ) | $ | (0.5 | ) | $ | (13.6 | ) | |||
Denominator: | |||||||||||||||
Weighted-average number of common shares outstanding used in computing basic and diluted net loss per common share | 133.2 | 270.7 | 6.6 | 190.6 | |||||||||||
Net loss per common share, basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.07 | ) | $ | (0.07 | ) |
Nine months ended September 30, | |||||||||||||||
2018 | 2017 | ||||||||||||||
Class A | Class B | Class A | Class B | ||||||||||||
Numerator: | |||||||||||||||
Net loss attributable to common stockholders | $ | (105.5 | ) | $ | (369.9 | ) | $ | (2.3 | ) | $ | (71.7 | ) | |||
Denominator: | |||||||||||||||
Weighted-average number of common shares outstanding used in computing basic and diluted net loss per common share | 75.9 | 266.1 | 6.1 | 189.4 | |||||||||||
Net loss per common share, basic and diluted | $ | (1.39 | ) | $ | (1.39 | ) | $ | (0.38 | ) | $ | (0.38 | ) |
Three months ended September 30, | Nine months ended September 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Convertible preferred stock | — | 147.6 | — | 147.6 | |||||||
Restricted stock units | 28.7 | 53.5 | 38.0 | 52.1 | |||||||
Options to purchase shares of common stock | 4.3 | 5.0 | 4.7 | 5.1 | |||||||
Co-Founder Grants | 14.7 | — | 14.7 | — | |||||||
Shares subject to repurchase from early-exercised options and unvested restricted stock | — | 0.1 | 0.1 | 0.2 | |||||||
Total | 47.7 | 206.2 | 57.5 | 205.0 |
Note 11. | Income Taxes |
Note 12. | Related Party Transactions |
Note 13. | Geographic Areas |
As of | |||||||
September 30, 2018 | December 31, 2017 | ||||||
United States | $ | 278.1 | $ | 323.7 | |||
International(1) | 17.8 | 18.2 | |||||
Total property and equipment, net | $ | 295.9 | $ | 341.9 |
(1) | No single country other than the United States had a property and equipment balance greater than 10% of total property and equipment, net, as of September 30, 2018 and December 31, 2017. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
United States | $ | 182.6 | $ | 146.1 | $ | 516.5 | $ | 417.8 | |||||||
International(1) | 177.7 | 140.6 | 499.3 | 383.5 | |||||||||||
Total revenue | $ | 360.3 | $ | 286.7 | $ | 1,015.8 | $ | 801.3 |
(1) | No single country outside of the United States accounted for more than 10% of total revenue during the three and nine months ended September 30, 2018 and 2017. |
As of | ||||||||
September 30, 2018 | December 31, 2017 | September 30, 2017 | ||||||
(In millions) | ||||||||
Paying users | 12.3 | 11.0 | 10.4 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
ARPU | $ | 118.60 | $ | 112.05 | $ | 116.94 | $ | 111.53 |
Nine months ended September 30, | |||||||
2018 | 2017 | ||||||
(In millions) | |||||||
Net cash provided by operating activities | $ | 301.7 | $ | 259.2 | |||
Capital expenditures | (27.6 | ) | (12.0 | ) | |||
Free cash flow | $ | 274.1 | $ | 247.2 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(In millions) | |||||||||||||||
Revenue | $ | 360.3 | $ | 286.7 | $ | 1,015.8 | $ | 801.3 | |||||||
Cost of revenue(1) | 90.2 | 91.5 | 300.3 | 277.2 | |||||||||||
Gross profit | 270.1 | 195.2 | 715.5 | 524.1 | |||||||||||
Operating expenses(1): | |||||||||||||||
Research and development | 133.2 | 97.2 | 631.4 | 276.3 | |||||||||||
Sales and marketing | 95.0 | 74.7 | 339.4 | 211.1 | |||||||||||
General and administrative(2) | 50.8 | 39.6 | 226.7 | 113.1 | |||||||||||
Total operating expenses | 279.0 | 211.5 | 1,197.5 | 600.5 | |||||||||||
Loss from operations | (8.9 | ) | (16.3 | ) | (482.0 | ) | (76.4 | ) | |||||||
Interest income (expense), net | 2.4 | (2.2 | ) | 3.2 | (9.4 | ) | |||||||||
Other income, net | 0.5 | 4.9 | 6.1 | 13.0 | |||||||||||
Loss before income taxes | (6.0 | ) | (13.6 | ) | (472.7 | ) | (72.8 | ) | |||||||
Benefit from (provision for) income taxes | 0.2 | (0.5 | ) | (2.7 | ) | (1.2 | ) | ||||||||
Net loss | $ | (5.8 | ) | $ | (14.1 | ) | $ | (475.4 | ) | $ | (74.0 | ) |
(1) | Includes stock-based compensation as follows: |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(In millions) | |||||||||||||||
Cost of revenue | $ | 3.2 | $ | 2.9 | $ | 43.9 | $ | 9.3 | |||||||
Research and development | 28.2 | 22.9 | 339.0 | 66.4 | |||||||||||
Sales and marketing | 8.1 | 7.5 | 88.4 | 22.9 | |||||||||||
General and administrative | 15.5 | 6.4 | 125.3 | 18.6 | |||||||||||
Total stock-based compensation | $ | 55.0 | $ | 39.7 | $ | 596.6 | $ | 117.2 |
(2) | General and administrative expense for the nine months ended September 30, 2017, includes $9.4 million related to a non-cash charitable contribution of common stock to the Dropbox Charitable Foundation, which is a related party of the Company. We made additional cash contributions to the Foundation of $0.4 million and $0.8 million during the three and nine months ended September 30, 2017, respectively. See Note 12, "Related Party Transactions" to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further information. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
(As a % of revenue) | |||||||||||
Revenue | 100 | % | 100 | % | 100 | % | 100 | % | |||
Cost of revenue(1) | 25 | 32 | 30 | 35 | |||||||
Gross profit | 75 | 68 | 70 | 65 | |||||||
Operating expenses(1): | |||||||||||
Research and development | 37 | 34 | 62 | 34 | |||||||
Sales and marketing | 26 | 26 | 33 | 26 | |||||||
General and administrative | 14 | 14 | 22 | 14 | |||||||
Total operating expenses | 77 | 74 | 118 | 75 | |||||||
Loss from operations | (2 | ) | (6 | ) | (47 | ) | (10 | ) | |||
Interest income (expense), net | 1 | (1 | ) | — | (1 | ) | |||||
Other income, net | — | 2 | 1 | 2 | |||||||
Loss before income taxes | (2 | ) | (5 | ) | (47 | ) | (9 | ) | |||
Benefit from (provision for) income taxes | — | — | — | — | |||||||
Net loss | (2 | )% | (5 | )% | (47 | )% | (9 | )% |
(1) | Includes stock-based compensation as a percentage of revenue as follows: |
Three months ended September 30, | Nine months ended September 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
(As a % of revenue) | |||||||||||
Cost of revenue | 1 | % | 1 | % | 4 | % | 1 | % | |||
Research and development | 8 | 8 | 33 | 8 | |||||||
Sales and marketing | 2 | 3 | 9 | 3 | |||||||
General and administrative | 4 | 2 | 12 | 2 | |||||||
Total stock-based compensation | 15 | % | 14 | % | 59 | % | 15 | % |
Three months ended September 30, | ||||||||||||||
2018 | 2017 | $ Change | % Change | |||||||||||
(In millions) | ||||||||||||||
Revenue | $ | 360.3 | $ | 286.7 | $ | 73.6 | 26 | % |
Three months ended September 30, | ||||||||||||||
2018 | 2017 | $ Change | % Change | |||||||||||
(In millions) | ||||||||||||||
Cost of revenue | $ | 90.2 | $ | 91.5 | $ | (1.3 | ) | (1 | )% | |||||
Gross profit | 270.1 | 195.2 | 74.9 | 38 | % | |||||||||
Gross margin | 75 | % | 68 | % |
Three months ended September 30, | ||||||||||||||
2018 | 2017 | $ Change | % Change | |||||||||||
(In millions) | ||||||||||||||
Research and development | $ | 133.2 | $ | 97.2 | $ | 36.0 | 37 | % |
Three months ended September 30, | ||||||||||||||
2018 | 2017 | $ Change | % Change | |||||||||||
(In millions) | ||||||||||||||
Sales and marketing | $ | 95.0 | $ | 74.7 | $ | 20.3 | 27 | % |
Three months ended September 30, | ||||||||||||||
2018 | 2017 | $ Change | % Change | |||||||||||
(In millions) | ||||||||||||||
General and administrative | $ | 50.8 | $ | 39.6 | $ | 11.2 | 28 | % |
Nine months ended September 30, | ||||||||||||||
2018 | 2017 | $ Change | % Change | |||||||||||
(In millions) | ||||||||||||||
Revenue | $ | 1,015.8 | $ | 801.3 | $ | 214.5 | 27 | % |
Nine months ended September 30, | ||||||||||||||
2018 | 2017 | $ Change | % Change | |||||||||||
(In millions) | ||||||||||||||
Cost of revenue | $ | 300.3 | $ | 277.2 | $ | 23.1 | 8 | % | ||||||
Gross profit | 715.5 | 524.1 | 191.4 | 37 | % | |||||||||
Gross margin | 70 | % | 65 | % |
Nine months ended September 30, | ||||||||||||||
2018 | 2017 | $ Change | % Change | |||||||||||
(In millions) | ||||||||||||||
Research and development | $ | 631.4 | $ | 276.3 | $ | 355.1 | 129 | % |
Nine months ended September 30, | ||||||||||||||
2018 | 2017 | $ Change | % Change | |||||||||||
(In millions) | ||||||||||||||
Sales and marketing | $ | 339.4 | $ | 211.1 | $ | 128.3 | 61 | % |
Nine months ended September 30, | ||||||||||||||
2018 | 2017 | $ Change | % Change | |||||||||||
(In millions) | ||||||||||||||
General and administrative | $ | 226.7 | $ | 113.1 | $ | 113.6 | 100 | % |
Nine months ended September 30, | |||||||
2018 | 2017 | ||||||
(In millions) | |||||||
Net cash provided by operating activities | $ | 301.7 | $ | 259.2 | |||
Net cash used in investing activities | (529.0 | ) | (10.9 | ) | |||
Net cash provided by (used in) used in financing activities | 335.0 | (181.1 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (1.5 | ) | 2.8 | ||||
Net increase in cash and cash equivalents | $ | 106.2 | $ | 70.0 |
Total | Less than 1 year | 1 - 3 years | 3 - 5 years | More than 5 years | |||||||||||||||
(In millions) | |||||||||||||||||||
Operating lease commitments(1) | $ | 1,118.3 | $ | 94.4 | $ | 199.5 | $ | 168.4 | $ | 656.0 | |||||||||
Capital lease commitments(2) | 173.9 | 88.3 | 69.0 | 16.6 | — | ||||||||||||||
Other commitments(3) | 111.0 | 59.7 | 51.2 | — | 0.1 | ||||||||||||||
Total contractual obligations | $ | 1,403.2 | $ | 242.4 | $ | 319.7 | $ | 185.0 | $ | 656.1 |
(1) | Consists of future non-cancelable minimum rental payments under operating leases for our offices and datacenters, excluding rent payments from our sub-tenants, variable operating expenses and tenant improvement reimbursements. Non-cancelable rent payments from our sub-tenants as of September 30, 2018, for the next five years is expected to be $44.2 million. |
(2) | Consists of future non-cancelable minimum rental payments under capital leases primarily for our infrastructure. |
(3) | Consists of commitments to third-party vendors for services related to our infrastructure, infrastructure warranty contracts, asset retirement obligations for office modifications, and a note payable related to financing of our infrastructure. |
• | One-tier RSUs, which have a service-based vesting condition over a four-year period. These awards typically have a cliff vesting period of one year and continue to vest quarterly thereafter. We recognize compensation expense associated with one-tier RSUs ratably on a straight-line basis over the requisite service period. |
• | Two-tier RSUs, which have both a service-based vesting condition and a liquidity event-related performance vesting condition. These awards typically have a service-based vesting period of four years with a cliff vesting period of one year and continue to vest monthly thereafter. Upon satisfaction of the Performance Vesting Condition, these awards vest quarterly. The Performance Vesting Condition is satisfied on the earlier of (i) an acquisition or change in control of the Company or (ii) the earlier of (a) six months after our initial public offering or (b) March 15 of the year following our initial public offering. Our Board of Directors approved the acceleration of the Performance Vesting Condition for which the service condition was satisfied, to occur upon the effectiveness of the registration statement related to our IPO, which was on March 22, 2018. Our last grant date for two-tier RSUs was May 2015. We recognize compensation expense associated with two-tier RSUs using the accelerated attribution method over the requisite service period. |
Company Stock Price Target | Shares Eligible to Vest for Mr. Houston | Shares Eligible to Vest for Mr. Ferdowsi | ||
$30.00 | 2,066,667 | 880,000 | ||
$37.50 | 1,033,334 | 440,000 | ||
$45.00 | 1,033,334 | 440,000 | ||
$52.50 | 1,033,333 | 440,000 | ||
$60.00 | 1,033,333 | 440,000 | ||
$67.50 | 1,033,333 | 440,000 | ||
$75.00 | 1,033,333 | 440,000 | ||
$82.50 | 1,033,333 | 440,000 | ||
$90.00 | 1,033,333 | 440,000 |
• | awareness of the content collaboration category generally; |
• | availability of products and services that compete with ours; |
• | ease of adoption and use; |
• | features and platform experience; |
• | performance; |
• | brand; |
• | security and privacy; |
• | customer support; and |
• | pricing. |
• | user-centric design; |
• | ease of adoption and use; |
• | scale of user network; |
• | features and platform experience |
• | performance; |
• | brand; |
• | security and privacy |
• | accessibility across several devices, operating system, and applications; |
• | third-party integration; |
• | customer support; |
• | continued innovation; and |
• | pricing. |
• | our ability to retain and upgrade paying users; |
• | our ability to attract new paying users and convert registered to paying users; |
• | the timing of expenses and recognition of revenue; |
• | the amount and timing of operating expenses related to the maintenance and expansion of our business, operations, and infrastructure, as well as entry into operating and capital leases; |
• | the timing of expenses related to acquisitions; |
• | any large indemnification payments to our users or other third parties; |
• | changes in our pricing policies or those of our competitors; |
• | the timing and success of new product feature and service introductions by us or our competitors; |
• | network outages or actual or perceived security breaches; |
• | changes in the competitive dynamics of our industry, including consolidation among competitors; |
• | changes in laws and regulations that impact our business; and |
• | general economic and market conditions. |
• | recruiting and retaining talented and capable employees outside the United States, and maintaining our company culture across all of our offices; |
• | providing our platform and operating our business across a significant distance, in different languages and among different cultures, including the potential need to modify our platform and features to ensure that they are culturally appropriate and relevant in different countries; |
• | compliance with applicable international laws and regulations, including laws and regulations with respect to privacy, data protection, consumer protection, and unsolicited email, and the risk of penalties to our users and individual members of management or employees if our practices are deemed to be out of compliance; |
• | management of an employee base in jurisdictions that may not give us the same employment and retention flexibility as does the United States; |
• | operating in jurisdictions that do not protect intellectual property rights to the same extent as does the United States; |
• | compliance by us and our business partners with anti-corruption laws, import and export control laws, tariffs, trade barriers, economic sanctions, and other regulatory limitations on our ability to provide our platform in certain international markets; |
• | foreign exchange controls that might require significant lead time in setting up operations in certain geographic territories and might prevent us from repatriating cash earned outside the United States; |
• | political and economic instability; |
• | changes in diplomatic and trade relationships, including the imposition of new trade restrictions, trade protection measures, import or export requirements, trade embargoes and other trade barriers; |
• | double taxation of our international earnings and potentially adverse tax consequences due to changes in the income and other tax laws of the United States or the international jurisdictions in which we operate; and |
• | higher costs of doing business internationally, including increased accounting, travel, infrastructure, and legal compliance costs. |
• | implement usage-based pricing; |
• | discount pricing for competitive products; |
• | otherwise materially change their pricing rates or schemes; |
• | charge us to deliver our traffic at certain levels or at all; |
• | throttle traffic based on its source or type; |
• | implement bandwidth caps or other usage restrictions; or |
• | otherwise try to monetize or control access to their networks. |
• | cause a reduction in revenue or delay in market acceptance of our platform; |
• | require us to issue refunds to our users or expose us to claims for damages; |
• | cause us to lose existing users and make it more difficult to attract new users; |
• | divert our development resources or require us to make extensive changes to our platform, which would increase our expenses; |
• | increase our technical support costs; and |
• | harm our reputation and brand. |
• | require repayment of any outstanding lease obligations; |
• | terminate our leasing arrangements; |
• | terminate our access to the leased datacenters we utilize; |
• | stop delivery of ordered equipment; |
• | sell or require us to return our leased equipment; |
• | require repayment of any outstanding amounts drawn on our revolving credit facility; |
• | terminate our revolving credit facility; or |
• | require us to pay significant fees, penalties, or damages. |
• | price and volume fluctuations in the overall stock market from time to time; |
• | volatility in the trading prices and trading volumes of technology stocks |
• | changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; |
• | sales of shares of our Class A common stock by us or our stockholders, as well as the anticipation of lock-up releases; |
• | failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; |
• | the financial projections we may provide to the public, any changes in those projections, or our failure to meet those projections; |
• | announcements by us or our competitors of new products, features, or services; |
• | the public’s reaction to our press releases, other public announcements, and filings with the SEC |
• | rumors and market speculation involving us or other companies in our industry; |
• | actual or anticipated changes in our results of operations or fluctuations in our results of operations; |
• | actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; |
• | litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors; |
• | developments or disputes concerning our intellectual property or other proprietary rights; |
• | announced or completed acquisitions of businesses, products, services, or technologies by us or our competitors; |
• | new laws or regulations or new interpretations of existing laws or regulations applicable to our business; |
• | changes in accounting standards, policies, guidelines, interpretations, or principles; |
• | any significant change in our management; and |
• | general economic conditions and slow or negative growth of our markets. |
• | any transaction that would result in a change in control of our company requires the approval of a majority of our outstanding Class B common stock voting as a separate class; |
• | our multi-class common stock structure, which provides our holders of Class B common stock with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding Class A common stock, Class B common stock, and Class C common stock; |
• | when the outstanding shares of Class B common stock represent less than a majority of the total combined voting power of our Class A and Class B common stock, or the Voting Threshold Date, our Board of Directors will be classified into three classes of directors with staggered three-year terms, and directors will only be able to be removed from office for cause; |
• | until the Class B common stock, as a class, converts to Class A common stock, any amendments to our restated certificate of incorporation will require the approval of two-thirds of the combined vote of our then-outstanding shares of Class A common stock and Class B common stock; and following the conversion of our Class B common stock, as a class, to Class A common stock, certain amendments to our amended and restated certificate of incorporation will require the approval of two-thirds of our then outstanding voting power; |
• | four amended and restated bylaws will provide that approval of stockholders holding two-thirds of our outstanding voting power voting as a single class is required for stockholders to amend or adopt any provision of our bylaws; |
• | after the Voting Threshold Date our stockholders will only be able to take action at a meeting of stockholders, and will not be able to take action by written consent for any matter; |
• | until the Voting Threshold Date, our stockholders will be able to act by written consent only if the action is first recommended or approved by the Board of Directors; |
• | vacancies on our Board of Directors will be able to be filled only by our Board of Directors and not by stockholders; |
• | only our chairman of the Board of Directors, chief executive officer, a majority of Board of Directors or until the Class B common stock, as a class, converts to Class A common stock, a stockholder holding thirty percent of the combined voting power of our Class A and Class B common stock are authorized to call a special meeting of stockholders; |
• | certain litigation against us can only be brought in Delaware; |
• | our restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued, without the approval of the holders of Class A common stock; and |
• | advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders. |
Exhibit Number | Description | Form | File Number | Incorporated by Reference from Exhibit Number | Filed with SEC | |||||
31.1 | ||||||||||
31.2 | ||||||||||
32.1† | ||||||||||
101.INS | XBRL Instance Document. | |||||||||
101.SCH | XBRL Taxonomy Extension Schema Document. | |||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
DROPBOX, INC. | ||||
Date: | November 9, 2018 | By: | /s/ Andrew W. Houston | |
Andrew W. Houston | ||||
Chief Executive Officer | ||||
(Principal Executive Officer) |
Date: | November 9, 2018 | By: | /s/ Ajay V. Vashee | |
Ajay V. Vashee | ||||
Chief Financial Officer | ||||
(Principal Financial Officer) |
Date: | November 9, 2018 | By: | /s/ Timothy J. Regan | |
Timothy J. Regan | ||||
Chief Accounting Officer | ||||
(Principal Accounting Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Dropbox, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(c) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
DROPBOX, INC. | ||
By: | /s/ Andrew W. Houston | |
Name: | Andrew W. Houston | |
Title: | Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Dropbox, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(c) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
DROPBOX, INC. | ||
By: | /s/ Ajay V. Vashee | |
Name: | Ajay V. Vashee | |
Title: | Chief Financial Officer (Principal Financial Officer) |
Date: | November 9, 2018 | By: | /s/ Andrew W. Houston |
Name: | Andrew W. Houston | ||
Title: | Chief Executive Officer | ||
(Principal Executive Officer) |
Date: | November 9, 2018 | By: | /s/ Ajay V. Vashee |
Name: | Ajay V. Vashee | ||
Title: | Chief Financial Officer | ||
(Principal Financial Officer) |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Oct. 31, 2018 |
|
Document Information [Line Items] | ||
Entity Registrant Name | Dropbox, Inc. | |
Entity Central Index Key | 0001467623 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Class A common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 167,969,877 | |
Class B common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 238,553,683 | |
Class C common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 0 |
Condensed Consolidated Balance Sheets - USD ($) |
Sep. 30, 2018 |
Dec. 31, 2017 |
|||
---|---|---|---|---|---|
Current assets: | |||||
Cash and cash equivalents | $ 536,200,000 | $ 430,000,000 | |||
Short-term investments | 502,900,000 | 0 | |||
Trade and other receivables, net | 28,600,000 | 29,300,000 | |||
Prepaid expenses and other current assets | 96,000,000 | 58,800,000 | |||
Total current assets | 1,163,700,000 | 518,100,000 | |||
Property and equipment, net | 295,900,000 | 341,900,000 | |||
Intangible assets, net | 15,200,000 | 17,000,000 | |||
Goodwill | 98,000,000 | 98,900,000 | |||
Other assets | 50,300,000 | 44,000,000 | |||
Total assets | 1,623,100,000 | 1,019,900,000 | |||
Current liabilities: | |||||
Accounts payable | 27,900,000 | 31,900,000 | |||
Accrued and other current liabilities | 163,200,000 | 129,800,000 | |||
Accrued compensation and benefits | 64,200,000 | 56,100,000 | |||
Capital lease obligation | [1] | 80,500,000 | 102,700,000 | ||
Deferred revenue | 479,300,000 | 417,900,000 | |||
Total current liabilities | 815,100,000 | 738,400,000 | |||
Capital lease obligation, non-current | [1] | 82,400,000 | 71,600,000 | ||
Deferred rent, non-current | 73,400,000 | 69,800,000 | |||
Other non-current liabilities | 8,800,000 | 37,200,000 | |||
Total liabilities | 979,700,000 | 917,000,000 | |||
Commitments and contingencies (Note 7) | |||||
Stockholders’ equity: | |||||
Preferred stock | 0 | 0 | |||
Common stock | 0 | 0 | |||
Additional paid-in capital | 2,285,000,000 | 533,100,000 | |||
Accumulated deficit | (1,643,500,000) | (1,049,700,000) | |||
Accumulated other comprehensive income | 1,900,000 | 4,200,000 | |||
Total stockholders’ equity | 643,400,000 | 102,900,000 | |||
Total liabilities and stockholders’ equity | 1,623,100,000 | 1,019,900,000 | |||
Convertible preferred stock | |||||
Stockholders’ equity: | |||||
Preferred stock | $ 0 | $ 615,300,000 | |||
|
Condensed Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
||||||
Income Statement [Abstract] | |||||||||
Revenue | $ 360.3 | $ 286.7 | $ 1,015.8 | $ 801.3 | |||||
Cost of revenue | [1] | 90.2 | 91.5 | 300.3 | 277.2 | ||||
Gross profit | 270.1 | 195.2 | 715.5 | 524.1 | |||||
Operating expenses | |||||||||
Research and development | [1] | 133.2 | 97.2 | 631.4 | 276.3 | ||||
Sales and marketing | [1] | 95.0 | 74.7 | 339.4 | 211.1 | ||||
General and administrative | [1],[2] | 50.8 | 39.6 | 226.7 | 113.1 | ||||
Total operating expenses | [1] | 279.0 | 211.5 | 1,197.5 | 600.5 | ||||
Loss from operations | (8.9) | (16.3) | (482.0) | (76.4) | |||||
Interest income (expense), net | 2.4 | (2.2) | 3.2 | (9.4) | |||||
Other income, net | 0.5 | 4.9 | 6.1 | 13.0 | |||||
Loss before income taxes | (6.0) | (13.6) | (472.7) | (72.8) | |||||
Benefit from (provision for) income taxes | 0.2 | (0.5) | (2.7) | (1.2) | |||||
Net loss | $ (5.8) | $ (14.1) | $ (475.4) | $ (74.0) | |||||
Net loss per share attributable to common stockholders, basic and diluted (in dollars per share) | $ (0.01) | $ (0.07) | $ (1.39) | $ (0.38) | |||||
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted (in shares) | 403.9 | 197.2 | 342.0 | 195.5 | |||||
|
Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
||||
Donation of common stock to charitable foundation | $ 0.0 | $ 9.4 | |||||
Cash contributions to charitable foundation | [1] | $ 0.4 | 0.8 | ||||
Cost of revenue | |||||||
Allocated share-based compensation expense | $ 3.2 | 2.9 | 43.9 | 9.3 | |||
Research and development | |||||||
Allocated share-based compensation expense | 28.2 | 22.9 | 339.0 | 66.4 | |||
Sales and marketing | |||||||
Allocated share-based compensation expense | 8.1 | 7.5 | 88.4 | 22.9 | |||
General and administrative | |||||||
Allocated share-based compensation expense | $ 15.5 | $ 6.4 | $ 125.3 | 18.6 | |||
Donation of common stock to charitable foundation | [1] | $ 9.4 | |||||
|
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (5.8) | $ (14.1) | $ (475.4) | $ (74.0) |
Other comprehensive income (loss), net of tax: | ||||
Change in foreign currency translation adjustments | (0.1) | 1.7 | (2.1) | 5.3 |
Change in net unrealized losses on short-term investments | 0.0 | 0.0 | (0.2) | 0.0 |
Total other comprehensive income (loss), net of tax | (0.1) | 1.7 | (2.3) | 5.3 |
Comprehensive loss | $ (5.9) | $ (12.4) | $ (477.7) | $ (68.7) |
Description of the Business and Summary of Significant Accounting Policies |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Description of the Business and Summary of Significant Accounting Policies | Description of the Business and Summary of Significant Accounting Policies Business Dropbox, Inc. (the “Company” or “Dropbox”) is a global collaboration platform. Dropbox was incorporated in May 2007 as Evenflow, Inc., a Delaware corporation, and changed its name to Dropbox, Inc. in October 2009. The Company is headquartered in San Francisco, California. Basis of presentation and consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the United States of America generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. The accompanying unaudited condensed consolidated financial statements include the accounts of Dropbox and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated balance sheet as of December 31, 2017 included herein was derived from the audited financial statements as of that date. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the balance sheets, statements of operations, statements of comprehensive loss and the statements of cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year ended December 31, 2018 or any future period. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2017, included in the Company's prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on March 23, 2018, referred to as the Prospectus. Initial public offering and private placement On March 27, 2018, the Company closed its initial public offering ("IPO"), in which the Company issued and sold 26,822,409 shares of Class A common stock at $21.00 per share. The Company received aggregate proceeds of $538.2 million, net of underwriters' discounts and commissions, before deducting offering costs of $6.9 million, net of reimbursements. Immediately prior to the closing of the Company’s IPO, 147,310,563 shares of convertible preferred stock outstanding converted into an equivalent number of shares of Class B common stock. Further, pursuant to transfer agreements with certain of the Company’s stockholders, 258,620 shares of the Company’s convertible preferred stock and 2,609,951 shares of the Company’s Class B common stock automatically converted into an equivalent number of shares of Class A common stock. Immediately subsequent to the closing of the Company's IPO, Salesforce Ventures LLC purchased 4,761,905 shares of Class A common stock from the Company at $21.00 per share. The Company received aggregate proceeds of $100.0 million and did not pay any underwriting discounts or commissions with respect to the shares that were sold in the private placement. On March 28, 2018, the underwriters exercised their option to purchase an additional 5,400,000 shares of the Company's Class A common stock at $21.00 per share. This transaction closed on April 3, 2018, resulting in additional proceeds of $108.4 million, net of underwriters' discounts and commissions. The Company’s net proceeds from the IPO, the concurrent private placement, and underwriters' option totaled $746.6 million, before deducting offering costs of $6.9 million, net of reimbursements. Upon the effectiveness of the registration statement for the Company's IPO, which was March 22, 2018, the liquidity event-related performance vesting condition, referred to as the Performance Vesting Condition, associated with the Company's two-tier RSUs was satisfied. As a result, the Company recognized the cumulative unrecognized stock-based compensation related to its two-tier restricted stock units ("RSUs") using the accelerated attribution method of $418.7 million attributable to service prior to such effective date. As of September 30, 2018, the remaining unamortized stock-based compensation related to the two-tier RSUs was $0.4 million, which will be recognized if the requisite service is provided over a weighted average period of 0.3 years. During the first quarter of 2018, the Company's Board of Directors approved the acceleration of the Performance Vesting Condition for which the service condition was satisfied, to occur upon the effectiveness of the registration statement for the Company's IPO, rather than six months following an IPO. As a result, the Company released 26.8 million shares of common stock underlying the two-tier RSUs for which the Performance Vesting Condition was satisfied, and recorded $13.9 million in employer related payroll tax expenses associated with these same awards. See “—Stock-based compensation” for further discussion regarding the Company's two-tier RSUs. Stock split On March 7, 2018, the Company effected a 1-for-1.5 reverse stock split of its capital stock. All of the share and per share information referenced throughout the condensed consolidated financial statements and notes to the condensed consolidated financial statements have been retroactively adjusted to reflect this reverse stock split. Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the Company’s condensed consolidated financial statements and accompanying notes. These estimates are based on information available as of the date of the condensed consolidated financial statements. Management evaluates these estimates and assumptions on a regular basis. Actual results may differ materially from these estimates. The Company’s most significant estimates and judgments involve recognition of revenue, the measurement of the Company’s stock-based compensation, including the estimation of the underlying deemed fair value of common stock in periods prior to the date of the Company's IPO, the estimation of the fair value of market-based awards, and the valuation of acquired intangible assets and goodwill from business combinations. Financial information about segments and geographic areas The Company manages its operations and allocates resources as a single operating segment. Further, the Company manages, monitors, and reports its financials as a single reporting segment. The Company’s chief operating decision-maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources. See Note 13, "Geographic Areas" for information regarding the Company’s long-lived assets and revenue by geography. Foreign currency transactions The assets and liabilities of the Company’s foreign subsidiaries are translated from their respective functional currencies into U.S. dollars at the exchange rates in effect at the balance sheet date. Revenue and expense amounts are translated at the average exchange rate for the period. Foreign currency translation gains and losses are recorded in other comprehensive income (loss). Gains and losses realized from foreign currency transactions (those transactions denominated in currencies other than the foreign subsidiaries’ functional currency) are included in other income (expense), net. Monetary assets and liabilities are remeasured using foreign currency exchange rates at the end of the period, and non-monetary assets are remeasured based on historical exchange rates. The Company recorded net foreign currency transaction losses of $1.0 million and $1.4 million during the three and nine months ended September 30, 2018, respectively, and net foreign currency transaction gains of $2.9 million and $6.9 million during the three and nine months ended September 30, 2017, respectively. Revenue recognition The Company derives its revenue from subscription fees from customers for access to its platform. The Company’s policy is to exclude sales and other indirect taxes when measuring the transaction price of its subscription agreements. The Company accounts for revenue contracts with customers through the following steps:
The Company’s subscription agreements generally have monthly or annual contractual terms and a small percentage have multi-year contractual terms. Revenue is recognized ratably over the related contractual term beginning on the date that the platform is made available to a customer. Access to the platform represents a series of distinct services as the Company continually provides access to, and fulfills its obligation to the end customer over the subscription term. The series of distinct services represents a single performance obligation that is satisfied over time. The Company recognizes revenue ratably because the customer receives and consumes the benefits of the platform throughout the contract period. The Company’s contracts are generally non-cancelable. The Company bills in advance for monthly contracts and typically bills annually in advance for contracts with terms of one year or longer. The Company also recognizes an immaterial amount of contract assets, or unbilled receivables, primarily relating to consideration for services completed but not billed at the reporting date. Unbilled receivables are classified as receivables when the Company has the right to invoice the customer. The Company records contract liabilities when cash payments are received or due in advance of performance to deferred revenue. Deferred revenue primarily relates to the advance consideration received from the customer. The price of subscriptions is generally fixed at contract inception and therefore, the Company’s contracts do not contain a significant amount of variable consideration. As a result, the amount of revenue recognized in the periods presented from performance obligations satisfied (or partially satisfied) in previous periods was not material. The Company recognized $213.2 million and $390.1 million of revenue during the three and nine months ended September 30, 2018, respectively, and recognized $178.0 million and $324.6 million of revenue during the three and nine months ended September 30, 2017, respectively, that was included in the deferred revenue balances at the beginning of their respective periods. As of September 30, 2018, future estimated revenue related to performance obligations that were unsatisfied or partially unsatisfied was $523.3 million. The substantial majority of the unsatisfied performance obligations will be satisfied over the next twelve months. Stock-based compensation The Company has granted RSUs to its employees and members of the Board of Directors under the 2008 Equity Incentive Plan (“2008 Plan”), the 2017 Equity Incentive Plan (“2017 Plan”), and the 2018 Equity Incentive Plan ("2018 Plan"). The Company had two types of RSUs outstanding as of September 30, 2018:
The Performance Vesting Condition for the two-tier RSUs was satisfied upon the effectiveness of the registration statement related to the Company's IPO, which was March 22, 2018. On that date, the Company recognized the cumulative unrecognized expense of the two-tier RSUs, using the accelerated attribution method, which is included in the Company's results for the nine months ended September 30, 2018. See "—Initial public offering and private placement” for further discussion. As of September 30, 2018, the remaining unamortized stock-based compensation related to the two-tier RSUs was $0.4 million, which will be recognized if the requisite service is provided over a weighted average period of 0.3 years. Since August 2015, the Company has granted RSUs as the only stock-based payment awards to its employees, with the exception of awards granted to its co-founders, and has not granted any stock options since then. The fair values of the common stock underlying the RSUs granted in periods prior to the date of the Company's IPO were determined by the Board of Directors, with input from management and contemporaneous third-party valuations, which were performed at least quarterly. For valuations after the Company's IPO, the Board of Directors will determine the fair value of each share of underlying common stock based on the closing price of the Company's Class A common stock as reported on the Nasdaq Global Select Market on the date of the grant. In December 2017, the Board of Directors approved a grant to the Company’s co-founders of restricted stock awards (“RSAs”) with respect to 14.7 million shares of Class A Common Stock in the aggregate (collectively, the “Co-Founder Grants”), of which 10.3 million RSAs were granted to Mr. Houston, the Company’s co-founder and Chief Executive Officer, and 4.4 million RSAs were granted to Mr. Ferdowsi, the Company’s co-founder and Director. These Co-Founder Grants have service-based, market-based, and performance-based vesting conditions. The Co-Founder Grants comprise nine tranches that are eligible to vest based on the achievement of stock price goals, or, each, a Stock Price Target. The Company estimated the grant date fair value of the Co-Founder Grants using a model based on multiple stock price paths developed through the use of a Monte Carlo simulation that incorporates into the valuation the possibility that the Stock Price Targets may not be satisfied. The average grant date fair value of each Co-Founder Grant was estimated to be $10.60 per share, and the Company will recognize aggregate stock-based compensation expense of $156.2 million over the requisite service period of each tranche, which ranged from 2.9 to 6.9 years, using the accelerated attribution method. If the Stock Price Targets are met sooner than the derived service period, the Company will adjust its stock-based compensation to reflect the cumulative expense associated with the vested awards. The Company will recognize expense if the requisite service is provided, regardless of whether the market conditions are achieved. The Co-Founder Grants contain an implied performance-based vesting condition because the Stock Price Targets are based on the trailing 30-day average price of the shares from an established national securities exchange or automated quotation system. Accordingly, no vesting could occur until the completion of the Company’s IPO. The relevant performance-based vesting condition for the Co-Founder Grants was satisfied on the date the Company’s shares of Class A common stock commenced trading on the Nasdaq Global Select Market, in connection with the Company’s IPO, which was March 23, 2018. The Company recognized $8.8 million and $28.1 million in stock-based compensation related to the Co-Founder Grants during the three and nine months ended September 30, 2018, respectively. Cash and cash equivalents Cash consists primarily of cash on deposit with banks and includes amounts in transit from payment processors for credit and debit card transactions, which typically settle within five business days. Cash equivalents include highly liquid investments purchased with an original maturity date of 90 days or less from the date of purchase. Short-term investments The Company’s short-term investments are primarily comprised of corporate notes and obligations, U.S. treasury securities, certificates of deposits, U.S. agency obligations, and commercial paper. The Company determines the appropriate classification of its short-term investments at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified and accounted for its short-term investments as available-for-sale securities as the Company may sell these securities at any time for use in its current operations or for other purposes, even prior to maturity. As a result, the Company classifies its short-term investments, including securities with stated maturities beyond twelve months, within current assets in the condensed consolidated balance sheets. The Company's short-term investments are classified as available-for-sale securities and are recorded at fair value each reporting period. Unrealized gains and losses on these short-term investments are reported as a separate component of accumulated other comprehensive income (loss) in the condensed consolidated balance sheets until realized. Interest income is reported within interest income (expense), net in the condensed consolidated statements of operations. The Company periodically evaluates its short-term investments to assess whether those with unrealized loss positions are other-than-temporarily impaired. The Company considers various factors in determining whether to recognize an impairment charge, including the length of time the investment has been in a loss position, the extent to which the fair value is less than the Company’s cost basis, and the financial condition and near-term prospects of the investee. Realized gains and losses are determined based on the specific identification method and are reported in other income (expense), net in the condensed consolidated statements of operations. If the Company determines that the decline in an investment’s fair value is other-than-temporary, the difference is recognized as an impairment loss in the condensed consolidated statements of operations. Concentrations of credit risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, accounts receivable, and short-term investments. The Company places its cash and cash equivalents and short-term investments with well-established financial institutions. Trade accounts receivables are typically unsecured and are derived from revenue earned from customers located around the world. Two customers accounted for 13% and 40% of total trade and other receivables, net as of September 30, 2018. Two customers accounted for 18% and 27% of total trade and other receivables, net as of December 31, 2017. No customer accounted for more than 10% of the Company’s revenue in the periods presented. Non-trade receivables The Company records non-trade receivables to reflect amounts due for activities outside of its subscription agreements. Historically, the Company’s non-trade receivables have related primarily to receivables resulting from tenant improvement allowances. Non-trade receivables totaled $44.8 million and $5.2 million, as of September 30, 2018 and December 31, 2017, respectively, and are classified within prepaid expenses and other current assets and other assets in the accompanying condensed consolidated balance sheets. The Company recognized its initial tenant improvement allowance receivable related to its new corporate headquarters once it took initial possession of the first phase in June 2018. As of September 30, 2018, $40.5 million is included in prepaid expenses and other current assets related to this tenant improvement allowance receivable. See "—Lease obligations” for further discussion on the corresponding recording of the lease incentive obligation. Deferred commissions, net Deferred commissions, net is stated as gross deferred commissions less accumulated amortization. Sales commissions earned by the Company’s sales force and third-party resellers, as well as related payroll taxes, are considered to be incremental and recoverable costs of obtaining a contract with a customer. These amounts have been capitalized as deferred commissions within prepaid and other current assets and other assets on the condensed consolidated balance sheets. The Company deferred incremental costs of obtaining a contract of $7.4 million and $24.9 million during the three and nine months ended September 30, 2018, respectively, and $6.3 million and $16.0 million during the three and nine months ended September 30, 2017, respectively. Deferred commissions, net included in prepaid and other current assets were $13.0 million and $8.1 million as of September 30, 2018 and December 31, 2017, respectively. Deferred commissions, net included in other assets were $36.3 million and $24.8 million as of September 30, 2018 and December 31, 2017, respectively. Deferred commissions are amortized over a period of benefit of five years. The period of benefit was estimated by considering factors such as historical customer attrition rates, the useful life of the Company’s technology, and the impact of competition in its industry. Amortized costs were $3.2 million and $8.5 million for the three and nine months ended September 30, 2018, respectively, and $2.0 million and $4.6 million for the three and nine months ended September 30, 2017, respectively. Amortized costs are included in sales and marketing expense in the accompanying condensed consolidated statements of operations. There was no impairment loss in relation to the deferred costs for any period presented. Property and equipment, net Equipment is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of the related asset, which is generally three to seven years. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the term of the related lease. In the first quarter of 2018, the Company determined that the useful lives of certain infrastructure equipment, which are depreciated through cost of revenue, should be increased from three to four years. The Company accounted for this as a change in estimate that was applied prospectively, effective as of January 1, 2018. This change in useful life resulted in a reduction in depreciation expense within cost of revenue of $2.8 million and $13.6 million during the three and nine months ended September 30, 2018, respectively. The following table presents the estimated useful lives of property and equipment:
Lease obligations The Company leases office space, datacenters, and equipment under non-cancelable capital and operating leases with various expiration dates through 2033. Certain of the Company’s operating lease agreements contain tenant improvement allowances from its landlords. These allowances are accounted for as lease incentive obligations and are amortized as reductions to rent expense over the lease term. In June 2018, the Company took initial possession of the first phase of its new corporate headquarters and recorded a lease incentive obligation related to this phase. As of September 30, 2018, $2.6 million was included in accrued and other current liabilities and $37.0 million was included in deferred rent, non-current in the Company's condensed consolidated balance sheets. In addition, certain of the operating lease agreements contain rent concession, rent escalation, and option to renew provisions. Rent concession and rent escalation provisions are considered in determining the straight-line rent expense to be recorded over the lease term. Lease expense is recognized on a straight-line basis over the lease term commencing on the date the Company has the right to use the leased property. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed to be reasonably assured at lease inception. In 2012, the Company undertook a series of structural improvements to the floor that it occupied in its previous corporate headquarters. As a result of the requirement to fund construction costs and its responsibility for cost overruns during the construction period, the Company was considered the deemed owner of the floor for accounting purposes. Due to the presence of a standby letter of credit as a security deposit, the Company was deemed to have continuing involvement after the construction period. As such, it accounted for this arrangement as owned real estate and recorded a building asset and an imputed financing obligation for its liability to the legal owners. In September 2018, the Company terminated its master lease for its previous corporate headquarters, the impact of which is described in Note 4, "Property and Equipment, Net". The Company leases certain equipment from various third parties, including from a related party, through equipment financing leases under capital leases. See Note 12, “Related Party Transactions” for additional details. These leases either include a bargain purchase option, a full transfer of ownership at the completion of the lease term, or the terms of the leases are at least 75 percent of the useful lives of the assets and are therefore classified as capital leases. These leases are capitalized in property and equipment and the related amortization of assets under capital leases is included in depreciation and amortization expense in the Company’s condensed consolidated statements of operations. Initial asset values and lease obligations are based on the present value of future minimum lease payments. Long-lived assets, including goodwill and other acquired intangible assets, net The Company evaluates the recoverability of its property and equipment and finite-lived intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. The evaluation is performed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If such review determines that the carrying amount of specific property and equipment or intangible assets is not recoverable, the carrying amount of such assets is reduced to its fair value. The Company reviews goodwill for impairment at least annually in the fourth quarter, or more frequently if events or changes in circumstances would more likely than not reduce the fair value of its single reporting unit below its carrying value. The Company has not recorded impairment charges on property and equipment, goodwill, or intangible assets for the periods presented in these condensed consolidated financial statements. Acquired property and equipment and finite-lived intangible assets are amortized over their useful lives. The Company evaluates the estimated remaining useful life of these assets when events or changes in circumstances warrant a revision to the remaining period of amortization. If the Company revises the estimated useful life assumption for any asset, the remaining unamortized balance is amortized or depreciated over the revised estimated useful life on a prospective basis. See "—Property and equipment, net” for further discussion regarding a change in useful life applied during the nine months ended September 30, 2018. Income taxes Deferred income tax balances reflect the effects of temporary differences between the financial reporting and tax bases of the Company’s assets and liabilities using enacted tax rates expected to apply when taxes are actually paid or recovered. In addition, deferred tax assets are recorded for net operating loss and credit carryforwards. A valuation allowance is provided against deferred tax assets unless it is more likely than not that they will be realized based on all available positive and negative evidence. Such evidence includes, but is not limited to, recent cumulative earnings or losses, expectations of future taxable income by taxing jurisdiction, and the carry-forward periods available for the utilization of deferred tax assets. The Company uses a two-step approach to recognizing and measuring uncertain income tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. Although the Company believes that it has adequately reserved for its uncertain tax positions, it can provide no assurance that the final tax outcome of these matters will not be materially different. The Company evaluates its uncertain tax positions on a regular basis and evaluations are based on a number of factors, including changes in facts and circumstances, changes in tax law, such as the 2017 Tax Cuts and Jobs Act ("2017 Tax Reform Act"), correspondence with tax authorities during the course of an audit, and effective settlement of audit issues. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on the Company’s financial condition and results of operations. Fair value measurement The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company 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 fair value measurements for assets and liabilities, the Company considers the principal or most advantageous market in which it would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions, and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3—Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. Recently issued accounting pronouncements not yet adopted In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842). Most prominent among the changes in the standard is the recognition of right of use assets and lease liabilities by lessees for those leases classified as operating leases under current GAAP. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company is required to adopt the standard using the modified retrospective approach and has elected to use the optional transition method related to comparative reporting at adoption. The new standard is effective for fiscal years beginning after December 15, 2018. Early adoption by public entities is permitted. The Company is in the process of finalizing changes to its systems, processes, disclosures and controls in order to adopt the new standard on January 1, 2019. The Company anticipates the adoption of this standard will result in a substantial increase in its non-current assets and liabilities recorded on the condensed consolidated balance sheets. The adoption of the standard is not expected to have a material impact on the consolidated statement of operations. While the Company is assessing all potential impacts of the adoption of the standard, it currently expects the most significant impact to be the capitalization of right-of-use assets and lease liabilities for its office space and datacenter operating leases. The Company expects its accounting for capital leases related to infrastructure equipment to remain substantially unchanged under the new standard. In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. Under existing U.S. GAAP, the effects of changes in tax rates and laws on deferred tax balances are recorded as a component of income tax expense in the period in which the law was enacted. When deferred tax balances related to items originally recorded in accumulated other comprehensive income are adjusted, certain tax effects become stranded in accumulated other comprehensive income. The amendments in ASU No. 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the 2017 Tax Reform Act. The amendments in ASU No. 2018-02 also require certain disclosures about stranded tax effects. The guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption in any period is permitted. The Company is currently evaluating the impact and timing of adopting ASU No. 2018-02. In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting. Under existing U.S. GAAP, the measurement date for equity awards granted to nonemployees is the earlier of the performance commitment date or the date the performance is complete. The amendments in ASU No. 2018-07 allow for measurement of these awards on the grant date, consistent with equity awards granted to employees. The guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption in any period is permitted. The Company does not expect the impact of adoption to have a material impact on its condensed consolidated financial statements and is currently evaluating the timing of adopting ASU No. 2018-07. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), which amends disclosure requirements for fair value measurements by requiring new disclosures, modifying existing requirements, and eliminating others. The amendments are the result of a broader disclosure project, which aims to improve the effectiveness of disclosures. ASU No. 2018-13 is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption to have a significant impact on its disclosures and is currently evaluating the timing of adopting ASU No. 2018-13. In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. Under existing U.S. GAAP, there is diversity in practice in accounting for the costs of implementing cloud computing arrangements that are service contracts. The amendments in ASU No. 2018-15 amend the definition of a hosting arrangement and requires a customer in a hosting arrangement that is a service contract to capitalize certain costs as if the arrangement were an internal-use software project. The guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact and timing of adopting ASU No. 2018-15. Recently adopted accounting pronouncements In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825), which primarily affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The accounting for other financial instruments, such as loans, investments in debt securities and financial liabilities is largely unchanged. The Company adopted ASU No. 2016-01 on January 1, 2018. The adoption of the standard did not have a material impact on the Company's condensed consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes: Intra-Entity Transfers Other than Inventory (Topic 740), which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The Company adopted ASU No. 2016-16 on January 1, 2018. The adoption of the guidance did not have a material impact on the Company's condensed consolidated financial statements. |
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, Cash Equivalents and Short-Term Investments | Cash, Cash Equivalents and Short-Term Investments The amortized cost, unrealized gains and losses and estimated fair value of the Company's cash, cash equivalents and short-term investments as of September 30, 2018 consisted of the following:
The Company's cash and cash equivalents at December 31, 2017 consisted of cash of $62.9 million and money market funds of $367.1 million. The Company did not have short-term investments as of December 31, 2017. Included in cash and cash equivalents is cash in transit from payment processors for credit and debit card transactions of $17.5 million and $13.3 million as of September 30, 2018 and December 31, 2017, respectively. All short-term investments were designated as available-for-sale securities as of September 30, 2018. The Company had 143 short-term investments in unrealized loss positions as of September 30, 2018. There were no material gross unrealized losses from available-for-sale securities and no material realized gains or losses from available-for-sale securities that were reclassified out of accumulated other comprehensive income for the three and nine months ended September 30, 2018. For investments in available-for-sale debt securities that have unrealized losses, the Company evaluates whether (i) it has the intention to sell any of these investments and (ii) whether it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis. Based on this evaluation, the Company determined that there were no other-than-temporary impairments associated with short-term investments as of September 30, 2018. The following table presents the contractual maturities of the Company’s short-term investments as of September 30, 2018:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Company measures its financial instruments at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following table presents information about the Company’s financial instruments that are measured at fair value on a recurring basis using the input categories discussed in Note 1:
The total cash equivalents held by the Company as of December 31, 2017 were $367.1 million and were entirely comprised of money market funds classified within Level 1 of the fair value hierarchy. The Company had no transfers between levels of the fair value hierarchy. The carrying amounts of certain financial instruments, including cash held in banks, accounts receivable and accounts payable approximate fair value due to their short-term maturities and are excluded from the fair value table above. |
Property and Equipment, Net |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net consisted of the following:
As described in Note 1, "Description of the Business and Summary of Significant Accounting Policies", the Company terminated its master lease for its previous corporate headquarters in September 2018. The termination resulted in de-recognizing the gross building asset of $36.6 million, related accumulated depreciation of $12.2 million, and an imputed financing obligation of $25.5 million, of which $2.8 million was included in accrued and other current liabilities and $22.7 million was included in other non-current liabilities. The Company recorded the difference between the net asset and liability that were de-recognized to other income (expense), net during the period. The Company leases certain infrastructure from various third parties, including from a related party, through equipment financing leases that are accounted for as capital leases. See Note 12, “Related Party Transactions” for additional details. Infrastructure assets as of September 30, 2018 and December 31, 2017, respectively included a total of $368.3 million and $417.9 million acquired under capital lease agreements. These leases are capitalized in property and equipment, and the related amortization of assets under capital leases is included in depreciation and amortization expense. The accumulated depreciation of the infrastructure under capital leases totaled $219.1 million and $259.0 million as of September 30, 2018 and December 31, 2017, respectively. Construction in process includes costs primarily related to construction of leasehold improvements for office buildings and datacenters. Depreciation expense related to property and equipment was $43.3 million and $115.4 million for the three and nine months ended September 30, 2018, respectively, and $42.0 million and $130.1 million for the three and nine months ended September 30, 2017, respectively. |
Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Goodwill amounts are not amortized, but tested for impairment on an annual basis. There was no impairment of goodwill as of September 30, 2018 and December 31, 2017. The Company did not complete any business combinations in any of the periods presented. |
Accrued and Other Current Liabilities |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued and Other Current Liabilities | Accrued and Other Current Liabilities Accrued and other current liabilities consisted of the following:
Deferred rent as of September 30, 2018 increased from December 31, 2017 primarily due to the amendment of the lease for the Company's current corporate headquarters and the shortening of its lease term in May 2018, as described further in Note 7, "Commitments and Contingencies". This lease modification resulted in a reclassification of deferred rent from deferred rent, non-current to accrued and other current liabilities, and is included in the deferred rent amount in the table above. |
Revolving Credit Facility |
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Debt Disclosure [Abstract] | |
Revolving Credit Facility | Revolving Credit Facility In April 2017, the Company entered into an amended and restated credit and guaranty agreement which provided for a $600.0 million revolving loan facility (the “revolving credit facility”). In conjunction with the revolving credit facility, the Company paid upfront issuance fees of $2.6 million, which are being amortized over the five-year term of the agreement. In February 2018, the Company amended its revolving credit facility to, among other things, permit the Company to make certain investments, enter into an unsecured standby letter of credit facility and increase its standby letter of credit sublimit to $187.5 million. The Company increased its borrowing capacity under the revolving credit facility from $600.0 million to $725.0 million. The Company may from time to time request increases in its borrowing capacity under the revolving credit facility of up to $275.0 million, provided no event of default has occurred or is continuing or would result from such increase. In conjunction with the amendment, the Company paid upfront issuance fees of $0.4 million, which are being amortized over the remaining term of the agreement. Pursuant to the terms of the revolving credit facility, the Company may issue letters of credit under the revolving credit facility, which reduce the total amount available for borrowing. Pursuant to the terms of the revolving credit facility, the Company is required to pay an annual commitment fee that accrues at a rate of 0.20% per annum on the unused portion of the borrowing commitments under the revolving credit facility. In addition, the Company is required to pay a fee in connection with letters of credit issued under the revolving credit facility, which accrues at a rate of 1.5% per annum on the amount of such letters of credit outstanding. There is an additional fronting fee of 0.125% per annum multiplied by the average aggregate daily maximum amount available under all letters of credit. Borrowings under the revolving credit facility bear interest, at the Company’s option, at an annual rate based on LIBOR plus a spread of 1.50% or at an alternative base rate plus a spread of 0.50%. The revolving credit facility contains customary conditions to borrowing, events of default and covenants, including covenants that restrict the Company’s ability to incur indebtedness, grant liens, make distributions to holders of the Company or its subsidiaries’ equity interests, make investments, or engage in transactions with its affiliates. In addition, the revolving credit facility contains financial covenants, including a consolidated leverage ratio covenant and a minimum liquidity balance of $100.0 million, which includes any available borrowing capacity. The Company was in compliance with the covenants of the revolving credit facility as of September 30, 2018 and December 31, 2017, respectively. The Company had an aggregate of $71.8 million of letters of credit outstanding under the revolving credit facility as of September 30, 2018, and the Company’s total available borrowing capacity under the revolving credit facility was $653.2 million as of September 30, 2018. The Company’s letters of credit expire between April of 2019 and April of 2022. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Leases The Company has entered into various non-cancelable operating lease agreements for certain offices and datacenters with contractual lease periods expiring at various dates through 2033. The facility lease agreements generally provide for escalating rental payments and for options to renew, which could increase future minimum lease payments if exercised. The Company recognizes rent expense on a straight-line basis over the lease period and accounts for the difference between straight-line rent and actual lease payments as deferred rent. Gross rent expense was $21.4 million and $64.4 million for the three and nine months ended September 30, 2018, respectively, and $19.0 million and $51.4 million for the three and nine months ended September 30, 2017, respectively. Sublease income, which is recorded as a reduction of rental expense, was $2.8 million and $9.4 million for the three and nine months ended September 30, 2018, respectively, and $3.4 million and $7.2 million for the three and nine months ended September 30, 2017, respectively. Sublease income in excess of the Company’s original lease obligation is split with the original lessor per the terms of the sublease agreement, with the Company’s portion recorded to other income (expense), net. In 2017, the Company entered into a new lease agreement for office space in San Francisco, California, to serve as its new corporate headquarters. The Company took initial possession of the new corporate headquarters in June 2018 and began to recognize rent expense during the three months ended June 30, 2018. The Company expects to start making recurring rental payments under the lease in the third quarter of 2019. Included in the operating lease commitments below are total expected minimum obligations under the lease agreement of $831.6 million, which exclude expected tenant improvement reimbursements from the landlord of approximately $75.0 million and variable operating expenses. The Company’s obligations under the lease are supported by a $34.2 million letter of credit, which reduced the borrowing capacity under the revolving credit facility. In May 2018, the Company amended its lease agreement for its current corporate headquarters, modifying the original lease termination date from 2027 to 2019. As a result of the amendment, the Company expects to vacate its current corporate headquarters in August 2019, but is obligated to pay rent through February 2020. Accordingly, the Company's future operating lease commitments were reduced by $192.4 million. As described in Note 1, "Description of the Business and Summary of Significant Accounting Policies”, the Company was considered the deemed owner of a floor in its previous corporate headquarters, for accounting purposes, as part of a build-to-suit lease agreement. In September 2018, the Company terminated its master lease for its previous corporate headquarters. As the master lease was nearing expiration, the early termination did not have a material impact on the Company's future operating lease commitments. Other commitments Other commitments include payments to third-party vendors for services related to the Company’s infrastructure, infrastructure warranty contracts, asset retirement obligations for office modifications, and a note payable related to financing of infrastructure. Future minimum payments under the Company’s capital leases, non-cancelable operating leases, and other commitments as of September 30, 2018, are as follows.
Legal matters From time to time, the Company is a party to a variety of claims, lawsuits, and proceedings which arise in the ordinary course of business, including claims of alleged infringement of intellectual property rights. The Company records a liability when it believes that it is probable that a loss will be incurred and the amount of loss or range of loss can be reasonably estimated. In its opinion, resolution of pending matters is not likely to have a material adverse impact on its consolidated results of operations, cash flows, or its financial position. Given the unpredictable nature of legal proceedings, the Company bases its estimate on the information available at the time of the assessment. As additional information becomes available, the Company reassesses the potential liability and may revise the estimate. Indemnification The Company’s arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe a third party’s intellectual property rights. It is not possible to determine the maximum potential amount under these indemnification obligations due to the limited history of prior indemnification claims. |
Stockholders' Equity |
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Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity Common stock The Company’s amended and restated certificate of incorporation authorizes the issuance of Class A common stock, Class B common stock, and Class C common stock. Holders of Class A common stock, Class B common stock, and Class C common stock are entitled to dividends on a pro rata basis, when, as, and if declared by the Company’s Board of Directors, subject to the rights of the holders of the Company’s preferred stock. Holders of Class A common stock are entitled to one vote per share, holders of Class B common stock are entitled to 10 votes per share, and holders of Class C common stock are entitled to zero votes per share. During the three months ended September 30, 2018, holders of 61.3 million shares of Class B common stock voluntarily converted into an equivalent number of shares of Class A common stock. As of September 30, 2018, the Company had authorized 2,400.0 million shares of Class A common stock, 475.0 million shares of Class B common stock, and 800.0 million shares of Class C common stock, each at par value of $0.00001. As of September 30, 2018, 165.4 million shares of Class A common stock, 240.8 million shares of Class B common stock, and no shares of Class C common stock were issued and outstanding. As of December 31, 2017, 8.9 million shares of Class A common stock, 187.9 million shares of Class B common stock, and no shares of Class C common stock were issued and outstanding. Class A shares issued and outstanding as of September 30, 2018 and December 31, 2017 exclude 14.7 million unvested restricted stock awards granted to the Company’s co-founders. See "Co-Founder Grants" section below for further details. Convertible preferred stock Immediately prior to the closing of the Company’s IPO, all of the 147.3 million shares of convertible preferred stock converted into an equivalent number of shares of Class B common stock. Further, pursuant to transfer agreements with certain of the Company’s stockholders, 0.3 million shares of the Company’s convertible preferred stock automatically converted into an equivalent number of shares of Class A common stock. Preferred stock The Company's Board of Directors will have the authority, without further action by the Company's stockholders, to issue up to 240.0 million shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by the Board of Directors. Equity incentive plans Under the 2018 Plan, the Company may grant stock-based awards to purchase or directly issue shares of common stock to employees, directors, and consultants. Options are granted at a price per share equal to the fair market value of the Company's common stock at the date of grant. Options granted are exercisable over a maximum term of 10 years from the date of grant and generally vest over a period of four years. No options have been granted since August of 2015. RSUs and RSAs are also granted under the 2018 Plan. The 2018 Plan will terminate 10 years after the later of (i) its adoption or (ii) the most recent stockholder-approved increase in the number of shares reserved under the 2018 Plan, unless terminated earlier by the Company's Board of Directors. The 2018 Plan was adopted on March 22, 2018 with a reserve of 41.4 million shares of Class A common stock for future issuance. As of September 30, 2018, there were 29.3 million stock-based awards issued and outstanding and 57.5 million shares available for issuance under the 2008 Equity Incentive Plan, the 2017 Equity Incentive Plan, and the 2018 Plan (collectively, the "Plans"). Stock option and restricted stock activity for the Plans was as follows for the nine months ended September 30, 2018:
The following table summarizes information about the pre-tax intrinsic value of options exercised during the three and nine months ended September 30, 2018 and 2017:
As of September 30, 2018, unamortized stock-based compensation related to unvested stock options, restricted stock awards (excluding the Co-Founder Grants), and RSUs was $421.2 million. The weighted-average period over which such compensation expense will be recognized if the requisite service is provided is approximately 2.8 years as of September 30, 2018. Co-Founder Grants In December 2017, the Board of Directors approved a grant to the Company’s co-founders of non-Plan RSAs with respect to 14.7 million shares of Class A Common Stock in the aggregate (collectively, the “Co-Founder Grants”), of which 10.3 million RSAs were granted to Mr. Houston, the Company’s co-founder and Chief Executive Officer, and 4.4 million RSAs were granted to Mr. Ferdowsi, the Company’s co-founder and Director. These Co-Founder Grants have service-based, market-based, and performance-based vesting conditions. The Co-Founder Grants are excluded from Class A common stock issued and outstanding until the satisfaction of these vesting conditions. The Co-Founder Grants also provide the holders with certain stockholder rights, such as the right to vote the shares with the other holders of Class A common stock and a right to cumulative declared dividends. However, the Co-Founder Grants are not considered a participating security for purposes of calculating net loss per share attributable to common stockholders in Note 10, "Net Loss Per Share", as the right to the cumulative declared dividends is forfeitable if the service condition is not met. The Co-Founder Grants are eligible to vest over the ten-year period following the date the Company’s shares of Class A common stock commenced trading on the Nasdaq Global Select Market in connection with the Company’s IPO. The Co-Founder Grants comprise nine tranches that are eligible to vest based on the achievement of stock price goals, each of which are referred to as a Stock Price Target, measured over a consecutive thirty-day trading period during the Performance Period. The Performance Period will begin on January 1, 2019. During the first four years of the Performance Period, no more than 20% of the shares subject to each Co-Founder Grant would be eligible to vest in any calendar year. After the first four years, all shares are eligible to vest based on the achievement of the Stock Price Targets. The Company calculated the grant date fair value of the Co-Founder Grants based on multiple stock price paths developed through the use of a Monte Carlo simulation. A Monte Carlo simulation also calculates a derived service period for each of the nine vesting tranches, which is the measure of the expected time to achieve each Stock Price Target. A Monte Carlo simulation requires the use of various assumptions, including the underlying stock price, volatility, and the risk-free interest rate as of the valuation date, corresponding to the length of time remaining in the performance period, and expected dividend yield. The weighted-average grant date fair value of each Co-Founder Grant was estimated to be $10.60 per share. The weighted-average derived service period of each Co-Founder Grant was estimated to be 5.2 years, and ranged from 2.9 - 6.9 years. The Company will recognize aggregate stock-based compensation expense of $156.2 million over the derived service period of each tranche using the accelerated attribution method as long as the co-founders satisfy their service-based vesting conditions. If the Stock Price Targets are met sooner than the derived service period, the Company will adjust its stock-based compensation to reflect the cumulative expense associated with the vested awards. The Company will recognize expense if the requisite service is provided, regardless of whether the market conditions are achieved. The Performance Vesting Condition for the Co-Founder Grants was satisfied on the date the Company’s shares of Class A common stock commenced trading on the Nasdaq Global Select Market in connection with the Company’s IPO, which was March 23, 2018. The Company recognized $8.8 million and $28.1 million in stock-based compensation related to the Co-Founder Grants during the three and nine months ended September 30, 2018, respectively. As of September 30, 2018, unamortized stock-based compensation expense related to the Co-Founder Grants was $128.1 million. |
Net Loss Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share | Net Loss Per Share The Company computes net loss per share using the two-class method required for multiple classes of common stock and participating securities. The rights, including the liquidation and dividend rights, of the Class A common stock and Class B common stock are substantially identical, other than voting rights. Accordingly, the Class A common stock and Class B common stock share equally in the Company’s net losses. Before the IPO, the Company’s participating securities also included convertible preferred stock. The holders of convertible preferred stock did not have a contractual obligation to share in the Company’s losses, and as a result, net losses were not allocated to these participating securities. The following table sets forth the calculation of basic and diluted net loss per share attributable to common stockholders during the periods presented. The shares issued in the IPO and the private placement and the shares of Class A and Class B common stock issued upon conversion of the outstanding shares of convertible preferred stock in the IPO are included in the table below weighted for the period outstanding in the nine months ended September 30, 2018. Additionally, the voluntary conversions of Class B common stock into Class A common stock are included in the table below weighted for the period outstanding in the three and nine months ended September 30, 2018:
Since the Company was in a loss position for all periods presented, basic net loss per share attributable to common stockholders is the same as diluted net loss per share for all periods as the inclusion of all potential common shares outstanding would have been anti-dilutive. The weighted-average impact of potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive was as follows:
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Income Taxes |
9 Months Ended |
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Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company computed the year-to-date income tax provision by applying the estimated annual effective tax rate to the year-to-date pre-tax loss and adjusted for discrete tax items in the period. The Company's income tax was a benefit of $0.2 million and an expense of $2.7 million for the three and nine months ended September 30, 2018, respectively and an expense of $0.5 million and $1.2 million for the three and nine months ended September 30, 2017, respectively. Income tax benefit for the three months ended September 30, 2018 and income tax expense for the nine months ended September 30, 2018, was primarily attributable to U.S. state income taxes, foreign taxes, and increases in uncertain tax positions. For the periods presented, the difference between the U.S. statutory rate and the Company's effective tax rate is primarily due to the full valuation allowance on its U.S. and Irish deferred tax assets. The effective tax rate is also impacted by earnings realized in foreign jurisdictions with statutory tax rates lower than the federal statutory tax rate. The Company periodically evaluates the realizability of its net deferred tax assets based on all available evidence, both positive and negative. The realization of net deferred tax assets is dependent on the Company's ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets. As of September 30, 2018, the Company continues to maintain a full valuation allowance on its deferred tax assets in the U.S. and Ireland. However, the Company has partially benefited from its deferred tax assets due to the recognition of forecasted future income which is more likely than not to be earned in one of its foreign jurisdictions. The Company is subject to income tax audits in the U.S. and foreign jurisdictions. The Company records liabilities related to uncertain tax positions and believes that it has provided adequate reserves for income tax uncertainties in all open tax years. Unrecognized tax benefits increased by approximately $2.9 million and $19.1 million for the three and nine months ended September 30, 2018, of which $0.8 million and $1.4 million for the three and nine months ended September 30, 2018, if recognized, would affect the Company's effective tax rate. Impact of the Tax Cuts and Jobs Act ("2017 Tax Reform Act") The 2017 Tax Reform Act was enacted on December 22, 2017 and provides for significant changes to U.S. tax law. Among other provisions, the 2017 Tax Reform Act reduces the U.S. corporate income tax rate to 21% effective in 2018. The 2017 Tax Reform Act also contains a number of provisions that may impact the Company in future years. Since ongoing guidance and accounting interpretation is expected in the 12 months following enactment, the Company has made certain provisional accounting estimates, as permitted under Staff Accounting Bulletin No. 118, and continues to analyze its accounting policies in this area. The U.S. Treasury Department, the IRS, and other standard-setting bodies could interpret or issue guidance on how provisions of the 2017 Tax Reform Act will be applied or otherwise administered that is different from the Company’s interpretation. As the Company completes its analysis of the 2017 Tax Reform Act, collects and prepares necessary data, and interprets any additional guidance, the Company may make adjustments to provisional amounts that it has recorded that may materially impact the provision for income taxes in the period in which the adjustments are made. The final accounting analysis will occur no later than one year from the date the 2017 Tax Reform Act was enacted. As a result of the reduction in the corporate rate, the Company remeasured its U.S. deferred tax assets and liabilities as of December 31, 2017 to reflect the lower rate expected to apply when these temporary differences reverse. The Company provisionally estimated that the remeasurement resulted in a reduction in deferred tax assets of $63.1 million, which was fully offset by a corresponding change to the Company’s valuation allowance. Although the tax rate reduction was known, the Company had not collected the necessary data to complete its analysis of the effect of the 2017 Tax Reform Act on the underlying deferred taxes and as such, the amounts recorded as of December 31, 2017 were provisional. However, the Company anticipates that any adjustment to provisional amounts recorded would be fully offset by a corresponding change to the Company’s valuation allowance. The Company has not made any additional measurement-period adjustments related to these items during the quarter because the Company is continuing to gather additional information and expects to complete its accounting within the prescribed measurement period. The Company has also considered and estimated a number of provisions of the 2017 Tax Reform Act effective January 1, 2018 as part of the estimated annual effective tax rate as of September 30, 2018. Due to forecasted tax losses and a full valuation allowance in the U.S., these provisions had no material impact to the income tax provision as of September 30, 2018. The 2017 Tax Reform Act also repealed the corporate alternative minimum tax (“AMT”) effective beginning in 2018, and permits AMT credit carryforwards to be refunded to the extent unused through 2021. Since the Company does not anticipate the use of these credits to reduce future federal taxes, the Company was able to reasonably estimate the income tax benefit and income tax receivable of $1.4 million during the year ended December 31, 2017. The Company had not collected the necessary data to complete its analysis of the classification of the AMT credit as a receivable and as such, the amounts recorded as an income tax receivable as of December 31, 2017 were provisional. There have not been material changes to the provisional amounts as of September 30, 2018. The 2017 Tax Reform Act also provides for a transition to a new territorial system of taxation and generally requires companies to include certain untaxed foreign earnings of non-U.S. subsidiaries into taxable income in 2017 (“Transition Tax”). As a result of the cumulative deficits in the Company’s foreign subsidiaries, the Company estimated that it has no Transition Tax inclusion. As of September 30, 2018, the Company has made no changes to its estimated Transition Tax inclusion. The 2017 Tax Reform Act subjects a US shareholder to tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5 Accounting for GILTI, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. Given the complexity of this provision, the Company is still evaluating the effects of the provision on its condensed consolidated financial statements and has not yet determined its accounting policy as of September 30, 2018. The Company has, however, included the estimated impact related to current year operations only in its annual effective tax rate for 2018 and has not provided for additional impact on deferred items. The Company expects to complete its accounting within the prescribed measurement period. |
Related Party Transactions |
9 Months Ended |
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Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Dropbox Charitable Foundation During the year ended December 31, 2016, two of the Company’s controlling shareholders formed the Dropbox Charitable Foundation, a Delaware non-stock corporation (the “Foundation”). The primary purpose of the Foundation is to engage in charitable and educational activities within the meaning of Section 501(c)(3) of the Code. The Foundation is governed by a Board of Directors, a majority of which are independent. Both shareholders made contributions to the Foundation during the year ended December 31, 2016, comprised entirely of shares of Dropbox common stock. The Company has not consolidated the Foundation in the accompanying condensed consolidated financial statements, as the Company does not have control of the entity. During the three and nine months ended September 30, 2018, the Company did not make cash contributions to the Foundation. During the second quarter of 2017, the Company donated shares of Class B common stock to initially fund the Foundation and recorded $9.4 million of expense to general and administrative expenses based on the Company’s estimate of the then current fair value of the contributed shares, which is included in the results for the nine months ended September 30, 2018. The Company made additional cash contributions to the Foundation of $0.4 million and $0.8 million during the three and nine months ended September 30, 2017, respectively. Hewlett Packard Enterprise The Company has engaged in various commercial relationships with Hewlett Packard Enterprise (“HPE”), whose chief executive officer was appointed to the Dropbox Board of Directors in September 2017. The chief executive officer of HPE resigned effective February 1, 2018. The Company's commercial relationships with HPE include infrastructure equipment under capital leases, the purchase of commercial products and other services, and a multi-year subscription agreement for access to the Dropbox platform. From the beginning of the fiscal year through the date of the resignation of the former chief executive officer of HPE, the Company made payments of $5.5 million for infrastructure equipment under capital leases and for commercial products and services provided by HPE. |
Geographic Areas |
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Geographic Areas | Geographic Areas Long-lived assets The following table sets forth long-lived assets by geographic area:
Revenue Revenue by geography is generally based on the address of the customer as defined in the Company’s subscription agreement. The following table sets forth revenue by geographic area for the three and nine months ended September 30, 2018 and 2017.
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Description of the Business and Summary of Significant Accounting Policies (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||
Basis of presentation | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the United States of America generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. The accompanying unaudited condensed consolidated financial statements include the accounts of Dropbox and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
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Basis of consolidation | The condensed consolidated balance sheet as of December 31, 2017 included herein was derived from the audited financial statements as of that date. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the balance sheets, statements of operations, statements of comprehensive loss and the statements of cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year ended December 31, 2018 or any future period. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2017, included in the Company's prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on March 23, 2018, referred to as the Prospectus. |
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Use of estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the Company’s condensed consolidated financial statements and accompanying notes. These estimates are based on information available as of the date of the condensed consolidated financial statements. Management evaluates these estimates and assumptions on a regular basis. Actual results may differ materially from these estimates. The Company’s most significant estimates and judgments involve recognition of revenue, the measurement of the Company’s stock-based compensation, including the estimation of the underlying deemed fair value of common stock in periods prior to the date of the Company's IPO, the estimation of the fair value of market-based awards, and the valuation of acquired intangible assets and goodwill from business combinations. |
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Financial information about segments and geographic areas | The Company manages its operations and allocates resources as a single operating segment. Further, the Company manages, monitors, and reports its financials as a single reporting segment. The Company’s chief operating decision-maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources. |
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Foreign currency transactions | The assets and liabilities of the Company’s foreign subsidiaries are translated from their respective functional currencies into U.S. dollars at the exchange rates in effect at the balance sheet date. Revenue and expense amounts are translated at the average exchange rate for the period. Foreign currency translation gains and losses are recorded in other comprehensive income (loss). Gains and losses realized from foreign currency transactions (those transactions denominated in currencies other than the foreign subsidiaries’ functional currency) are included in other income (expense), net. Monetary assets and liabilities are remeasured using foreign currency exchange rates at the end of the period, and non-monetary assets are remeasured based on historical exchange rates. |
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Revenue recognition | The Company derives its revenue from subscription fees from customers for access to its platform. The Company’s policy is to exclude sales and other indirect taxes when measuring the transaction price of its subscription agreements. The Company accounts for revenue contracts with customers through the following steps:
The Company’s subscription agreements generally have monthly or annual contractual terms and a small percentage have multi-year contractual terms. Revenue is recognized ratably over the related contractual term beginning on the date that the platform is made available to a customer. Access to the platform represents a series of distinct services as the Company continually provides access to, and fulfills its obligation to the end customer over the subscription term. The series of distinct services represents a single performance obligation that is satisfied over time. The Company recognizes revenue ratably because the customer receives and consumes the benefits of the platform throughout the contract period. The Company’s contracts are generally non-cancelable. The Company bills in advance for monthly contracts and typically bills annually in advance for contracts with terms of one year or longer. The Company also recognizes an immaterial amount of contract assets, or unbilled receivables, primarily relating to consideration for services completed but not billed at the reporting date. Unbilled receivables are classified as receivables when the Company has the right to invoice the customer. The Company records contract liabilities when cash payments are received or due in advance of performance to deferred revenue. Deferred revenue primarily relates to the advance consideration received from the customer. The price of subscriptions is generally fixed at contract inception and therefore, the Company’s contracts do not contain a significant amount of variable consideration. As a result, the amount of revenue recognized in the periods presented from performance obligations satisfied (or partially satisfied) in previous periods was not material. |
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Stock-based compensation | The Company has granted RSUs to its employees and members of the Board of Directors under the 2008 Equity Incentive Plan (“2008 Plan”), the 2017 Equity Incentive Plan (“2017 Plan”), and the 2018 Equity Incentive Plan ("2018 Plan"). The Company had two types of RSUs outstanding as of September 30, 2018:
The Performance Vesting Condition for the two-tier RSUs was satisfied upon the effectiveness of the registration statement related to the Company's IPO, which was March 22, 2018. On that date, the Company recognized the cumulative unrecognized expense of the two-tier RSUs, using the accelerated attribution method, which is included in the Company's results for the nine months ended September 30, 2018. See "—Initial public offering and private placement” for further discussion. As of September 30, 2018, the remaining unamortized stock-based compensation related to the two-tier RSUs was $0.4 million, which will be recognized if the requisite service is provided over a weighted average period of 0.3 years. Since August 2015, the Company has granted RSUs as the only stock-based payment awards to its employees, with the exception of awards granted to its co-founders, and has not granted any stock options since then. The fair values of the common stock underlying the RSUs granted in periods prior to the date of the Company's IPO were determined by the Board of Directors, with input from management and contemporaneous third-party valuations, which were performed at least quarterly. For valuations after the Company's IPO, the Board of Directors will determine the fair value of each share of underlying common stock based on the closing price of the Company's Class A common stock as reported on the Nasdaq Global Select Market on the date of the grant. In December 2017, the Board of Directors approved a grant to the Company’s co-founders of restricted stock awards (“RSAs”) with respect to 14.7 million shares of Class A Common Stock in the aggregate (collectively, the “Co-Founder Grants”), of which 10.3 million RSAs were granted to Mr. Houston, the Company’s co-founder and Chief Executive Officer, and 4.4 million RSAs were granted to Mr. Ferdowsi, the Company’s co-founder and Director. These Co-Founder Grants have service-based, market-based, and performance-based vesting conditions. The Co-Founder Grants comprise nine tranches that are eligible to vest based on the achievement of stock price goals, or, each, a Stock Price Target. The Company estimated the grant date fair value of the Co-Founder Grants using a model based on multiple stock price paths developed through the use of a Monte Carlo simulation that incorporates into the valuation the possibility that the Stock Price Targets may not be satisfied. The average grant date fair value of each Co-Founder Grant was estimated to be $10.60 per share, and the Company will recognize aggregate stock-based compensation expense of $156.2 million over the requisite service period of each tranche, which ranged from 2.9 to 6.9 years, using the accelerated attribution method. If the Stock Price Targets are met sooner than the derived service period, the Company will adjust its stock-based compensation to reflect the cumulative expense associated with the vested awards. The Company will recognize expense if the requisite service is provided, regardless of whether the market conditions are achieved. The Co-Founder Grants contain an implied performance-based vesting condition because the Stock Price Targets are based on the trailing 30-day average price of the shares from an established national securities exchange or automated quotation system. Accordingly, no vesting could occur until the completion of the Company’s IPO. The relevant performance-based vesting condition for the Co-Founder Grants was satisfied on the date the Company’s shares of Class A common stock commenced trading on the Nasdaq Global Select Market, in connection with the Company’s IPO, which was March 23, 2018. The Company recognized $8.8 million and $28.1 million in stock-based compensation related to the Co-Founder Grants during the three and nine months ended September 30, 2018, respectively. |
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Cash and cash equivalents | Cash consists primarily of cash on deposit with banks and includes amounts in transit from payment processors for credit and debit card transactions, which typically settle within five business days. Cash equivalents include highly liquid investments purchased with an original maturity date of 90 days or less from the date of purchase. |
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Short-term investments | The Company’s short-term investments are primarily comprised of corporate notes and obligations, U.S. treasury securities, certificates of deposits, U.S. agency obligations, and commercial paper. The Company determines the appropriate classification of its short-term investments at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified and accounted for its short-term investments as available-for-sale securities as the Company may sell these securities at any time for use in its current operations or for other purposes, even prior to maturity. As a result, the Company classifies its short-term investments, including securities with stated maturities beyond twelve months, within current assets in the condensed consolidated balance sheets. The Company's short-term investments are classified as available-for-sale securities and are recorded at fair value each reporting period. Unrealized gains and losses on these short-term investments are reported as a separate component of accumulated other comprehensive income (loss) in the condensed consolidated balance sheets until realized. Interest income is reported within interest income (expense), net in the condensed consolidated statements of operations. The Company periodically evaluates its short-term investments to assess whether those with unrealized loss positions are other-than-temporarily impaired. The Company considers various factors in determining whether to recognize an impairment charge, including the length of time the investment has been in a loss position, the extent to which the fair value is less than the Company’s cost basis, and the financial condition and near-term prospects of the investee. Realized gains and losses are determined based on the specific identification method and are reported in other income (expense), net in the condensed consolidated statements of operations. If the Company determines that the decline in an investment’s fair value is other-than-temporary, the difference is recognized as an impairment loss in the condensed consolidated statements of operations. |
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Concentrations of credit risk | Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, accounts receivable, and short-term investments. The Company places its cash and cash equivalents and short-term investments with well-established financial institutions. Trade accounts receivables are typically unsecured and are derived from revenue earned from customers located around the world. |
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Non-trade receivables | The Company records non-trade receivables to reflect amounts due for activities outside of its subscription agreements. Historically, the Company’s non-trade receivables have related primarily to receivables resulting from tenant improvement allowances. |
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Deferred commissions, net | Deferred commissions, net is stated as gross deferred commissions less accumulated amortization. Sales commissions earned by the Company’s sales force and third-party resellers, as well as related payroll taxes, are considered to be incremental and recoverable costs of obtaining a contract with a customer. These amounts have been capitalized as deferred commissions within prepaid and other current assets and other assets on the condensed consolidated balance sheets. |
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Property and equipment, net | Equipment is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of the related asset, which is generally three to seven years. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the term of the related lease. In the first quarter of 2018, the Company determined that the useful lives of certain infrastructure equipment, which are depreciated through cost of revenue, should be increased from three to four years. The Company accounted for this as a change in estimate that was applied prospectively, effective as of January 1, 2018. This change in useful life resulted in a reduction in depreciation expense within cost of revenue of $2.8 million and $13.6 million during the three and nine months ended September 30, 2018, respectively. The following table presents the estimated useful lives of property and equipment:
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Lease obligations | The Company leases office space, datacenters, and equipment under non-cancelable capital and operating leases with various expiration dates through 2033. Certain of the Company’s operating lease agreements contain tenant improvement allowances from its landlords. These allowances are accounted for as lease incentive obligations and are amortized as reductions to rent expense over the lease term. In June 2018, the Company took initial possession of the first phase of its new corporate headquarters and recorded a lease incentive obligation related to this phase. As of September 30, 2018, $2.6 million was included in accrued and other current liabilities and $37.0 million was included in deferred rent, non-current in the Company's condensed consolidated balance sheets. In addition, certain of the operating lease agreements contain rent concession, rent escalation, and option to renew provisions. Rent concession and rent escalation provisions are considered in determining the straight-line rent expense to be recorded over the lease term. Lease expense is recognized on a straight-line basis over the lease term commencing on the date the Company has the right to use the leased property. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed to be reasonably assured at lease inception. In 2012, the Company undertook a series of structural improvements to the floor that it occupied in its previous corporate headquarters. As a result of the requirement to fund construction costs and its responsibility for cost overruns during the construction period, the Company was considered the deemed owner of the floor for accounting purposes. Due to the presence of a standby letter of credit as a security deposit, the Company was deemed to have continuing involvement after the construction period. As such, it accounted for this arrangement as owned real estate and recorded a building asset and an imputed financing obligation for its liability to the legal owners. In September 2018, the Company terminated its master lease for its previous corporate headquarters, the impact of which is described in Note 4, "Property and Equipment, Net". The Company leases certain equipment from various third parties, including from a related party, through equipment financing leases under capital leases. See Note 12, “Related Party Transactions” for additional details. These leases either include a bargain purchase option, a full transfer of ownership at the completion of the lease term, or the terms of the leases are at least 75 percent of the useful lives of the assets and are therefore classified as capital leases. These leases are capitalized in property and equipment and the related amortization of assets under capital leases is included in depreciation and amortization expense in the Company’s condensed consolidated statements of operations. Initial asset values and lease obligations are based on the present value of future minimum lease payments. |
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Long-lived assets, including goodwill and other acquired intangible assets, net | The Company evaluates the recoverability of its property and equipment and finite-lived intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. The evaluation is performed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If such review determines that the carrying amount of specific property and equipment or intangible assets is not recoverable, the carrying amount of such assets is reduced to its fair value. The Company reviews goodwill for impairment at least annually in the fourth quarter, or more frequently if events or changes in circumstances would more likely than not reduce the fair value of its single reporting unit below its carrying value. The Company has not recorded impairment charges on property and equipment, goodwill, or intangible assets for the periods presented in these condensed consolidated financial statements. Acquired property and equipment and finite-lived intangible assets are amortized over their useful lives. The Company evaluates the estimated remaining useful life of these assets when events or changes in circumstances warrant a revision to the remaining period of amortization. If the Company revises the estimated useful life assumption for any asset, the remaining unamortized balance is amortized or depreciated over the revised estimated useful life on a prospective basis. |
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Income taxes | Deferred income tax balances reflect the effects of temporary differences between the financial reporting and tax bases of the Company’s assets and liabilities using enacted tax rates expected to apply when taxes are actually paid or recovered. In addition, deferred tax assets are recorded for net operating loss and credit carryforwards. A valuation allowance is provided against deferred tax assets unless it is more likely than not that they will be realized based on all available positive and negative evidence. Such evidence includes, but is not limited to, recent cumulative earnings or losses, expectations of future taxable income by taxing jurisdiction, and the carry-forward periods available for the utilization of deferred tax assets. The Company uses a two-step approach to recognizing and measuring uncertain income tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. Although the Company believes that it has adequately reserved for its uncertain tax positions, it can provide no assurance that the final tax outcome of these matters will not be materially different. The Company evaluates its uncertain tax positions on a regular basis and evaluations are based on a number of factors, including changes in facts and circumstances, changes in tax law, such as the 2017 Tax Cuts and Jobs Act ("2017 Tax Reform Act"), correspondence with tax authorities during the course of an audit, and effective settlement of audit issues. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on the Company’s financial condition and results of operations. |
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Fair value measurement | The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company 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 fair value measurements for assets and liabilities, the Company considers the principal or most advantageous market in which it would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions, and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3—Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. |
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Recently issued accounting pronouncements not yet adopted and Recently adopted accounting pronouncements | In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825), which primarily affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The accounting for other financial instruments, such as loans, investments in debt securities and financial liabilities is largely unchanged. The Company adopted ASU No. 2016-01 on January 1, 2018. The adoption of the standard did not have a material impact on the Company's condensed consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes: Intra-Entity Transfers Other than Inventory (Topic 740), which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The Company adopted ASU No. 2016-16 on January 1, 2018. The adoption of the guidance did not have a material impact on the Company's condensed consolidated financial statements. In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842). Most prominent among the changes in the standard is the recognition of right of use assets and lease liabilities by lessees for those leases classified as operating leases under current GAAP. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company is required to adopt the standard using the modified retrospective approach and has elected to use the optional transition method related to comparative reporting at adoption. The new standard is effective for fiscal years beginning after December 15, 2018. Early adoption by public entities is permitted. The Company is in the process of finalizing changes to its systems, processes, disclosures and controls in order to adopt the new standard on January 1, 2019. The Company anticipates the adoption of this standard will result in a substantial increase in its non-current assets and liabilities recorded on the condensed consolidated balance sheets. The adoption of the standard is not expected to have a material impact on the consolidated statement of operations. While the Company is assessing all potential impacts of the adoption of the standard, it currently expects the most significant impact to be the capitalization of right-of-use assets and lease liabilities for its office space and datacenter operating leases. The Company expects its accounting for capital leases related to infrastructure equipment to remain substantially unchanged under the new standard. In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. Under existing U.S. GAAP, the effects of changes in tax rates and laws on deferred tax balances are recorded as a component of income tax expense in the period in which the law was enacted. When deferred tax balances related to items originally recorded in accumulated other comprehensive income are adjusted, certain tax effects become stranded in accumulated other comprehensive income. The amendments in ASU No. 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the 2017 Tax Reform Act. The amendments in ASU No. 2018-02 also require certain disclosures about stranded tax effects. The guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption in any period is permitted. The Company is currently evaluating the impact and timing of adopting ASU No. 2018-02. In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting. Under existing U.S. GAAP, the measurement date for equity awards granted to nonemployees is the earlier of the performance commitment date or the date the performance is complete. The amendments in ASU No. 2018-07 allow for measurement of these awards on the grant date, consistent with equity awards granted to employees. The guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption in any period is permitted. The Company does not expect the impact of adoption to have a material impact on its condensed consolidated financial statements and is currently evaluating the timing of adopting ASU No. 2018-07. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), which amends disclosure requirements for fair value measurements by requiring new disclosures, modifying existing requirements, and eliminating others. The amendments are the result of a broader disclosure project, which aims to improve the effectiveness of disclosures. ASU No. 2018-13 is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption to have a significant impact on its disclosures and is currently evaluating the timing of adopting ASU No. 2018-13. In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. Under existing U.S. GAAP, there is diversity in practice in accounting for the costs of implementing cloud computing arrangements that are service contracts. The amendments in ASU No. 2018-15 amend the definition of a hosting arrangement and requires a customer in a hosting arrangement that is a service contract to capitalize certain costs as if the arrangement were an internal-use software project. The guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact and timing of adopting ASU No. 2018-15. |
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Goodwill | Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Goodwill amounts are not amortized, but tested for impairment on an annual basis. |
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Net loss per share | The Company computes net loss per share using the two-class method required for multiple classes of common stock and participating securities. The rights, including the liquidation and dividend rights, of the Class A common stock and Class B common stock are substantially identical, other than voting rights. Accordingly, the Class A common stock and Class B common stock share equally in the Company’s net losses. Before the IPO, the Company’s participating securities also included convertible preferred stock. The holders of convertible preferred stock did not have a contractual obligation to share in the Company’s losses, and as a result, net losses were not allocated to these participating securities. |
Description of the Business and Summary of Significant Accounting Policies (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Estimated Useful Lives of Property and Equipment | The following table presents the estimated useful lives of property and equipment:
Property and equipment, net consisted of the following:
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Cash, Cash Equivalents and Short-Term Investments (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash, Cash Equivalents and Short-Term Investments | The amortized cost, unrealized gains and losses and estimated fair value of the Company's cash, cash equivalents and short-term investments as of September 30, 2018 consisted of the following:
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Contractual Maturities of Short Term Investments | The following table presents the contractual maturities of the Company’s short-term investments as of September 30, 2018:
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Assets Measured On Recurring Basis | The following table presents information about the Company’s financial instruments that are measured at fair value on a recurring basis using the input categories discussed in Note 1:
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Property and Equipment, Net (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment, Net | The following table presents the estimated useful lives of property and equipment:
Property and equipment, net consisted of the following:
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Accrued and Other Current Liabilities (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Accrued And Other Current Liabilities | Accrued and other current liabilities consisted of the following:
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Commitments and Contingencies (Tables) |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Payments | Future minimum payments under the Company’s capital leases, non-cancelable operating leases, and other commitments as of September 30, 2018, are as follows.
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Stockholders' Equity (Tables) |
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Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Option and Restricted Stock Activity | Stock option and restricted stock activity for the Plans was as follows for the nine months ended September 30, 2018:
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Schedule of Pre-Tax Intrinsic Value | The following table summarizes information about the pre-tax intrinsic value of options exercised during the three and nine months ended September 30, 2018 and 2017:
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Net Loss Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the calculation of basic and diluted net loss per share attributable to common stockholders during the periods presented. The shares issued in the IPO and the private placement and the shares of Class A and Class B common stock issued upon conversion of the outstanding shares of convertible preferred stock in the IPO are included in the table below weighted for the period outstanding in the nine months ended September 30, 2018. Additionally, the voluntary conversions of Class B common stock into Class A common stock are included in the table below weighted for the period outstanding in the three and nine months ended September 30, 2018:
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Schedule of Potentially Dilutive Securities Excluded from Computation of Earnings Per Share | The weighted-average impact of potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive was as follows:
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Geographic Areas (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-lived Assets by Geographic Areas | The following table sets forth long-lived assets by geographic area:
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Revenue by Geographic Areas | The following table sets forth revenue by geographic area for the three and nine months ended September 30, 2018 and 2017.
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Description of the Business and Summary of Significant Accounting Policies - Narrative (Details) |
1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 03, 2018
USD ($)
|
Mar. 28, 2018
USD ($)
$ / shares
shares
|
Mar. 27, 2018
USD ($)
$ / shares
shares
|
Mar. 26, 2018
shares
|
Mar. 22, 2018
USD ($)
|
Mar. 07, 2018 |
Dec. 31, 2017
USD ($)
tranche
$ / shares
shares
|
Sep. 30, 2018
USD ($)
shares
|
Mar. 31, 2018
USD ($)
shares
|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2018
USD ($)
award
$ / shares
shares
|
Sep. 30, 2017
USD ($)
|
Dec. 31, 2017
USD ($)
tranche
|
|
Conversion of Stock [Line Items] | |||||||||||||
Revenue, performance obligation, description of timing | one year or longer | ||||||||||||
Stock issued in IPO (in shares) | shares | 26,822,409 | ||||||||||||
Share price of stock issued in IPO (in dollars per share) | $ / shares | $ 21.00 | ||||||||||||
Proceeds from initial public offering and private placement | $ 538,200,000 | $ 746,600,000 | $ 0 | ||||||||||
Offering costs | $ 6,900,000 | 4,500,000 | 0 | ||||||||||
Reverse stock split ratio | 0.6667 | ||||||||||||
Net foreign currency transaction gain (loss) | $ (1,000,000) | $ 2,900,000 | (1,400,000) | 6,900,000 | |||||||||
Revenue recognized | 213,200,000 | 178,000,000 | 390,100,000 | 324,600,000 | |||||||||
Non-trade receivables | $ 5,200,000 | 44,800,000 | 44,800,000 | $ 5,200,000 | |||||||||
Tenant improvement allowance receivable related to the new corporate headquarters included in prepaid expenses and other current assets and other assets | 40,500,000 | 40,500,000 | |||||||||||
Additional contract costs deferred | 7,400,000 | 6,300,000 | $ 24,900,000 | 16,000,000 | |||||||||
Deferred contract costs, amortization period | 5 years | ||||||||||||
Amortization of deferred commissions | 3,200,000 | 2,000,000 | $ 8,500,000 | 4,600,000 | |||||||||
Impairment loss related to deferred costs | 0 | 0 | 0 | 0 | |||||||||
Reduction in depreciation expense | (43,300,000) | $ (42,000,000) | (115,400,000) | $ (130,100,000) | |||||||||
Change in Accounting Method Accounted for as Change in Estimate | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Reduction in depreciation expense | 2,800,000 | $ 13,600,000 | |||||||||||
Infrastructure Equipment | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Property and equipment, useful life | 4 years | 3 years | |||||||||||
Other Current Liabilities | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Lease incentive obligation | 2,600,000 | $ 2,600,000 | |||||||||||
Deferred rent, non-current | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Lease incentive obligation | 37,000,000 | 37,000,000 | |||||||||||
Deferred Commissions | Prepaid Expenses and Other Current Assets | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Deferred contract costs | 8,100,000 | 13,000,000 | 13,000,000 | $ 8,100,000 | |||||||||
Deferred Commissions | Other Assets | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Deferred contract costs | 24,800,000 | 36,300,000 | $ 36,300,000 | $ 24,800,000 | |||||||||
Customer Concentration Risk | Trade and Other Receivables | Customer A | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Concentration risk, percentage | 13.00% | 18.00% | |||||||||||
Customer Concentration Risk | Trade and Other Receivables | Customer B | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Concentration risk, percentage | 40.00% | 27.00% | |||||||||||
Two-Tier RSUs | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Recognized cumulative unrecognized stock-based compensation | $ 418,700,000 | ||||||||||||
Remaining unamortized stock-based compensation | 400,000 | $ 400,000 | |||||||||||
Unamortized stock-based compensation, requisite service period | 3 months 24 days | ||||||||||||
Shares released (in shares) | shares | 26,800,000 | ||||||||||||
Employer related payroll expense | $ 13,900,000 | ||||||||||||
Vesting period | 4 years | ||||||||||||
Two-Tier RSUs | Tranche One | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Vesting period | 1 year | ||||||||||||
Restricted Stock Units (RSUs) | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Number of award types | award | 2 | ||||||||||||
One-Tier RSU | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Vesting period | 4 years | ||||||||||||
One-Tier RSU | Tranche One | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Vesting period | 1 year | ||||||||||||
Restricted Stock | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Shares granted (in shares) | shares | 13,300,000 | ||||||||||||
Shares granted (in dollars per share) | $ / shares | $ 19.25 | ||||||||||||
Restricted Stock | Co-Founder Grants | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Remaining unamortized stock-based compensation | $ 156,200,000 | 128,100,000 | $ 128,100,000 | $ 156,200,000 | |||||||||
Shares granted (in shares) | shares | 14,700,000 | ||||||||||||
Number of tranches | tranche | 9 | 9 | |||||||||||
Shares granted (in dollars per share) | $ / shares | $ 10.60 | ||||||||||||
Award requisite period | 5 years 2 months 12 days | ||||||||||||
Allocated share-based compensation expense | $ 8,800,000 | $ 28,100,000 | |||||||||||
Restricted Stock | Co-Founder Grants | Tranche One | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Vesting period | 4 years | ||||||||||||
Restricted Stock | Co-Founder Grants | Chief Executive Officer | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Shares granted (in shares) | shares | 10,300,000 | ||||||||||||
Restricted Stock | Co-Founder Grants | Director | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Shares granted (in shares) | shares | 4,400,000 | ||||||||||||
Minimum | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Property and equipment, useful life | 3 years | ||||||||||||
Minimum | Restricted Stock | Co-Founder Grants | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Award requisite period | 2 years 10 months 25 days | 2 years 10 months 25 days | |||||||||||
Maximum | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Property and equipment, useful life | 7 years | ||||||||||||
Maximum | Restricted Stock | Co-Founder Grants | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Award requisite period | 6 years 10 months 25 days | 6 years 10 months 25 days | |||||||||||
Private Placement | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Proceeds from initial public offering and private placement | $ 100,000,000 | ||||||||||||
Convertible preferred stock | Conversion of Convertible Preferred Stock to Class B Common Stock | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Shares converted in conversion (in shares) | shares | 147,310,563 | ||||||||||||
Convertible preferred stock | Conversion of Convertible Preferred Stock to Class A Common Stock | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Shares converted in conversion (in shares) | shares | 258,620 | ||||||||||||
Class B common stock | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Shares converted in conversion (in shares) | shares | 61,300,000 | ||||||||||||
Class B common stock | Conversion of Convertible Preferred Stock to Class B Common Stock | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Shares issued in conversion (in shares) | shares | 147,310,563 | ||||||||||||
Class B common stock | Conversion of Class B Common Stock to Class A Common Stock | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Shares converted in conversion (in shares) | shares | 2,609,951 | ||||||||||||
Class A common stock | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Shares issued in conversion (in shares) | shares | 61,300,000 | ||||||||||||
Class A common stock | Conversion of Convertible Preferred Stock to Class A Common Stock | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Shares issued in conversion (in shares) | shares | 258,620 | ||||||||||||
Class A common stock | Conversion of Class B Common Stock to Class A Common Stock | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Shares issued in conversion (in shares) | shares | 2,609,951 | ||||||||||||
Class A common stock | Private Placement | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Sale of stock (in shares) | shares | 4,761,905 | ||||||||||||
Share price of stock sold in shares (in dollars per share) | $ / shares | $ 21.00 | ||||||||||||
Class A common stock | Underwriters Over-allotment Option | |||||||||||||
Conversion of Stock [Line Items] | |||||||||||||
Sale of stock (in shares) | shares | 5,400,000 | ||||||||||||
Share price of stock sold in shares (in dollars per share) | $ / shares | $ 21.00 | ||||||||||||
Proceeds received in sale of stock | $ 108,400,000 |
Description of the Business and Summary of Significant Accounting Policies - Performance Obligations (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Remaining performance obligation | $ 523.3 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation satisfaction period | 12 months |
Description of the Business and Summary of Significant Accounting Policies - Schedule of Estimated Useful Lives of Property and Equipment (Details) |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Minimum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 3 years |
Minimum | Buildings | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 20 years |
Minimum | Datacenter and other computer equipment | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 3 years |
Minimum | Office equipment and other | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 3 years |
Maximum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 7 years |
Maximum | Buildings | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 30 years |
Maximum | Datacenter and other computer equipment | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 5 years |
Maximum | Office equipment and other | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 7 years |
Cash, Cash Equivalents and Short-Term Investments - Schedule of Cash, Cash Equivalents and Short-Term Investments (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|
Cash and Cash Equivalents [Line Items] | ||||
Cash and cash equivalents | $ 536.2 | $ 430.0 | $ 422.7 | $ 352.7 |
Total cash equivalents | 536.2 | |||
Short-term investments, amortized cost | 503.1 | |||
Short-term investments, unrealized gain | 0.1 | |||
Short-term investments, unrealized loss | (0.3) | |||
Short-term investments, estimated fair value | 502.9 | |||
Total cash, cash equivalents, and short term investments, before unrealized gains (losses) on investments | 1,039.3 | |||
Total cash, cash equivalents, and short term investments | 1,039.1 | |||
Corporate notes and obligations | ||||
Cash and Cash Equivalents [Line Items] | ||||
Short-term investments, amortized cost | 206.7 | |||
Short-term investments, unrealized gain | 0.1 | |||
Short-term investments, unrealized loss | (0.2) | |||
Short-term investments, estimated fair value | 206.6 | |||
U.S. Treasury securities | ||||
Cash and Cash Equivalents [Line Items] | ||||
Short-term investments, amortized cost | 183.3 | |||
Short-term investments, unrealized gain | 0.0 | |||
Short-term investments, unrealized loss | (0.1) | |||
Short-term investments, estimated fair value | 183.2 | |||
Certificates of deposit | ||||
Cash and Cash Equivalents [Line Items] | ||||
Short-term investments, amortized cost | 58.9 | |||
Short-term investments, unrealized gain | 0.0 | |||
Short-term investments, unrealized loss | 0.0 | |||
Short-term investments, estimated fair value | 58.9 | |||
U.S. agency obligations | ||||
Cash and Cash Equivalents [Line Items] | ||||
Short-term investments, amortized cost | 36.4 | |||
Short-term investments, unrealized gain | 0.0 | |||
Short-term investments, unrealized loss | 0.0 | |||
Short-term investments, estimated fair value | 36.4 | |||
Commercial paper | ||||
Cash and Cash Equivalents [Line Items] | ||||
Short-term investments, amortized cost | 17.8 | |||
Short-term investments, unrealized gain | 0.0 | |||
Short-term investments, unrealized loss | 0.0 | |||
Short-term investments, estimated fair value | 17.8 | |||
Cash | ||||
Cash and Cash Equivalents [Line Items] | ||||
Cash and cash equivalents | 96.3 | 62.9 | ||
Total cash equivalents | 96.3 | |||
Money market funds | ||||
Cash and Cash Equivalents [Line Items] | ||||
Cash and cash equivalents | 415.4 | $ 367.1 | ||
Total cash equivalents | 415.4 | |||
Commercial paper | ||||
Cash and Cash Equivalents [Line Items] | ||||
Cash and cash equivalents | 24.5 | |||
Total cash equivalents | $ 24.5 |
Cash, Cash Equivalents and Short-Term Investments - Narrative (Details) |
9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2018
USD ($)
investment
|
Dec. 31, 2017
USD ($)
|
Sep. 30, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Cash and Cash Equivalents [Line Items] | ||||
Cash and cash equivalents | $ 536,200,000 | $ 430,000,000 | $ 422,700,000 | $ 352,700,000 |
Short-term investments | 502,900,000 | 0 | ||
Cash in transit for credit and debit card transactions | $ 17,500,000 | 13,300,000 | ||
Number of investments in unrealized loss positions | investment | 143 | |||
Other-than-temporary impairment loss | $ 0 | |||
Cash | ||||
Cash and Cash Equivalents [Line Items] | ||||
Cash and cash equivalents | 96,300,000 | 62,900,000 | ||
Money market funds | ||||
Cash and Cash Equivalents [Line Items] | ||||
Cash and cash equivalents | $ 415,400,000 | $ 367,100,000 |
Cash, Cash Equivalents and Short-Term Investments - Contractual Maturities of Short Term Investments (Details) $ in Millions |
Sep. 30, 2018
USD ($)
|
---|---|
Amortized Cost | |
Due within one year | $ 321.4 |
Due between one to three years | 181.7 |
Total | 503.1 |
Estimated Fair Value | |
Due within one year | 321.2 |
Due between one to three years | 181.7 |
Total | $ 502.9 |
Fair Value Measurements (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total cash equivalents | $ 536.2 | |
Total short-term investments | 502.9 | |
Corporate notes and obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 206.6 | |
U.S. Treasury securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 183.2 | |
Certificates of deposit | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 58.9 | |
U.S. agency obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 36.4 | |
Commercial paper | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 17.8 | |
Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total cash equivalents | 415.4 | |
Commercial paper | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total cash equivalents | 24.5 | |
Fair Value, Measurements, Recurring | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 502.9 | |
Total cash equivalents and short-term investments | 942.8 | |
Fair Value, Measurements, Recurring | Corporate notes and obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 206.6 | |
Fair Value, Measurements, Recurring | U.S. Treasury securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 183.2 | |
Fair Value, Measurements, Recurring | Certificates of deposit | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 58.9 | |
Fair Value, Measurements, Recurring | U.S. agency obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 36.4 | |
Fair Value, Measurements, Recurring | Commercial paper | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 17.8 | |
Fair Value, Measurements, Recurring | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total cash equivalents | 415.4 | |
Fair Value, Measurements, Recurring | Commercial paper | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total cash equivalents | 24.5 | |
Fair Value, Measurements, Recurring | Cash equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total cash equivalents | 439.9 | |
Fair Value, Measurements, Recurring | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 0.0 | |
Total cash equivalents and short-term investments | 415.4 | |
Fair Value, Measurements, Recurring | Level 1 | Corporate notes and obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 0.0 | |
Fair Value, Measurements, Recurring | Level 1 | U.S. Treasury securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 0.0 | |
Fair Value, Measurements, Recurring | Level 1 | Certificates of deposit | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 0.0 | |
Fair Value, Measurements, Recurring | Level 1 | U.S. agency obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 0.0 | |
Fair Value, Measurements, Recurring | Level 1 | Commercial paper | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 0.0 | |
Fair Value, Measurements, Recurring | Level 1 | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total cash equivalents | 415.4 | $ 367.1 |
Fair Value, Measurements, Recurring | Level 1 | Commercial paper | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total cash equivalents | 0.0 | |
Fair Value, Measurements, Recurring | Level 1 | Cash equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total cash equivalents | 415.4 | |
Fair Value, Measurements, Recurring | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 502.9 | |
Total cash equivalents and short-term investments | 527.4 | |
Fair Value, Measurements, Recurring | Level 2 | Corporate notes and obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 206.6 | |
Fair Value, Measurements, Recurring | Level 2 | U.S. Treasury securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 183.2 | |
Fair Value, Measurements, Recurring | Level 2 | Certificates of deposit | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 58.9 | |
Fair Value, Measurements, Recurring | Level 2 | U.S. agency obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 36.4 | |
Fair Value, Measurements, Recurring | Level 2 | Commercial paper | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 17.8 | |
Fair Value, Measurements, Recurring | Level 2 | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total cash equivalents | 0.0 | |
Fair Value, Measurements, Recurring | Level 2 | Commercial paper | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total cash equivalents | 24.5 | |
Fair Value, Measurements, Recurring | Level 2 | Cash equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total cash equivalents | 24.5 | |
Fair Value, Measurements, Recurring | Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 0.0 | |
Total cash equivalents and short-term investments | 0.0 | |
Fair Value, Measurements, Recurring | Level 3 | Corporate notes and obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 0.0 | |
Fair Value, Measurements, Recurring | Level 3 | U.S. Treasury securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 0.0 | |
Fair Value, Measurements, Recurring | Level 3 | Certificates of deposit | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 0.0 | |
Fair Value, Measurements, Recurring | Level 3 | U.S. agency obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 0.0 | |
Fair Value, Measurements, Recurring | Level 3 | Commercial paper | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total short-term investments | 0.0 | |
Fair Value, Measurements, Recurring | Level 3 | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total cash equivalents | 0.0 | |
Fair Value, Measurements, Recurring | Level 3 | Commercial paper | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total cash equivalents | 0.0 | |
Fair Value, Measurements, Recurring | Level 3 | Cash equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total cash equivalents | $ 0.0 |
Property and Equipment, Net - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 892.7 | $ 846.7 |
Accumulated depreciation and amortization | (596.8) | (504.8) |
Property and equipment, net | 295.9 | 341.9 |
Building | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 0.0 | 36.6 |
Datacenter and other computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 741.7 | 663.1 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 23.3 | 21.2 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 120.9 | 118.6 |
Construction in process | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 6.8 | $ 7.2 |
Property and Equipment, Net - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Property, Plant and Equipment [Line Items] | |||||
Imputed financing lease obligation | $ 25.5 | $ 25.5 | |||
Property and equipment, gross | 892.7 | 892.7 | $ 846.7 | ||
Accumulated depreciation | 596.8 | 596.8 | 504.8 | ||
Depreciation | 43.3 | $ 42.0 | 115.4 | $ 130.1 | |
Building | |||||
Property, Plant and Equipment [Line Items] | |||||
Gross building asset, derecognized | 36.6 | 36.6 | |||
Accumulated depreciation, derecognized | 12.2 | 12.2 | |||
Property and equipment, gross | 0.0 | 0.0 | 36.6 | ||
Infrastructure Assets Held under Capital Leases | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 368.3 | 368.3 | 417.9 | ||
Accumulated depreciation | 219.1 | 219.1 | $ 259.0 | ||
Other Current Liabilities | |||||
Property, Plant and Equipment [Line Items] | |||||
Imputed financing lease obligation | 2.8 | 2.8 | |||
Other Noncurrent Liabilities | |||||
Property, Plant and Equipment [Line Items] | |||||
Imputed financing lease obligation | $ 22.7 | $ 22.7 |
Goodwill (Details) - USD ($) |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill impairment | $ 0 | $ 0 |
Accrued and Other Current Liabilities (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Non-income taxes payable | $ 72.1 | $ 69.7 |
Deferred rent | 45.7 | 14.6 |
Accrued legal and other external fees | 28.9 | 21.3 |
Financing obligations, current | 3.3 | 9.7 |
Accrued infrastructure costs | 5.3 | 2.6 |
Accrued property and equipment purchases | 1.4 | 1.8 |
Income taxes payable | 0.1 | 0.4 |
Other accrued and current liabilities | 6.4 | 9.7 |
Total accrued and other current liabilities | $ 163.2 | $ 129.8 |
Revolving Credit Facility (Details) - Credit And Guarantee Agreement - Line of Credit - USD ($) |
Apr. 30, 2017 |
Sep. 30, 2018 |
Feb. 28, 2018 |
---|---|---|---|
Line of Credit Facility [Line Items] | |||
Aggregate letters of credit outstanding amount | $ 71,800,000 | ||
Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Line of credit facility, maximum borrowing capacity | $ 600,000,000.0 | $ 725,000,000.0 | |
Debt issuance fees | $ 2,600,000 | 400,000 | |
Debt instrument, term | 5 years | ||
Line of credit facility, accordion feature, increase limit | 275,000,000.0 | ||
Unused capacity, commitment fee percentage | 0.20% | ||
Covenant terms, minimum liquidity balance | $ 100,000,000.0 | ||
Remaining borrowing capacity | $ 653,200,000 | ||
Revolving Credit Facility | LIBOR | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 1.50% | ||
Revolving Credit Facility | Base Rate | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 0.50% | ||
Letter of Credit | |||
Line of Credit Facility [Line Items] | |||
Line of credit facility, maximum borrowing capacity | $ 187,500,000.0 | ||
Commitment fee percentage | 1.50% | ||
Fronting fee | 0.125% |
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
May 31, 2018 |
Dec. 31, 2017 |
|
Loss Contingencies [Line Items] | ||||||
Gross rent expense | $ 21.4 | $ 19.0 | $ 64.4 | $ 51.4 | ||
Sublease income | $ 2.8 | $ 3.4 | $ 9.4 | $ 7.2 | ||
Operating lease, minimum obligation | $ 831.6 | |||||
Tenant improvement reimbursements | 75.0 | |||||
Operating leases, future minimum payments no longer obligated to pay | $ 192.4 | |||||
Letter of credit | ||||||
Loss Contingencies [Line Items] | ||||||
Letter of credit supporting obligations | $ 34.2 |
Commitments and Contingencies - Schedule of Future Minimum Payments (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
|||
---|---|---|---|---|---|
Capital lease commitments | |||||
Remainder of 2018 | $ 27.1 | ||||
2019 | 74.5 | ||||
2020 | 38.0 | ||||
2021 | 23.0 | ||||
2022 | 10.6 | ||||
Thereafter | 0.7 | ||||
Future minimum payments | 173.9 | ||||
Less interest and taxes | (11.0) | ||||
Less current portion of the present value of minimum lease payments | [1] | (80.5) | $ (102.7) | ||
Capital lease obligations, net of current portion | [1] | 82.4 | $ 71.6 | ||
Operating lease commitments | |||||
Remainder of 2018 | 24.5 | ||||
2019 | 94.1 | ||||
2020 | 103.3 | ||||
2021 | 95.7 | ||||
2022 | 89.0 | ||||
Thereafter | 711.7 | ||||
Future minimum payments | 1,118.3 | ||||
Other commitments | |||||
Remainder of 2018 | 16.9 | ||||
2019 | 54.9 | ||||
2020 | 37.0 | ||||
2021 | 1.9 | ||||
2022 | 0.0 | ||||
Thereafter | 0.3 | ||||
Future minimum payments | 111.0 | ||||
Rent payments from sub-tenants | $ 44.2 | ||||
|
Stockholders' Equity - Common Stock, Convertible Preferred Stock, Preferred Stock (Details) |
1 Months Ended | 3 Months Ended | 9 Months Ended | |
---|---|---|---|---|
Mar. 26, 2018
shares
|
Dec. 31, 2017
shares
|
Sep. 30, 2018
$ / shares
shares
|
Sep. 30, 2018
vote
$ / shares
shares
|
|
Class of Stock [Line Items] | ||||
Preferred stock, shares authorized (in shares) | 240,000,000.0 | 240,000,000.0 | ||
Restricted Stock | ||||
Class of Stock [Line Items] | ||||
Shares granted (in shares) | 13,300,000 | |||
Co-Founder Grants | Restricted Stock | ||||
Class of Stock [Line Items] | ||||
Shares granted (in shares) | 14,700,000 | |||
Class A common stock | ||||
Class of Stock [Line Items] | ||||
Votes per share | vote | 1 | |||
Common stock, shares authorized (in shares) | 2,400,000,000.0 | 2,400,000,000.0 | ||
Common stock, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | ||
Common stock, shares issued (in shares) | 8,900,000 | 165,400,000 | 165,400,000 | |
Common stock, shares outstanding (in shares) | 8,900,000 | 165,400,000 | 165,400,000 | |
Shares issued in conversion (in shares) | 61,300,000 | |||
Class A common stock | Conversion of Convertible Preferred Stock to Class A Common Stock | ||||
Class of Stock [Line Items] | ||||
Shares issued in conversion (in shares) | 258,620 | |||
Class B common stock | ||||
Class of Stock [Line Items] | ||||
Votes per share | vote | 10 | |||
Shares converted in conversion (in shares) | 61,300,000 | |||
Common stock, shares authorized (in shares) | 475,000,000.0 | 475,000,000.0 | ||
Common stock, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | ||
Common stock, shares issued (in shares) | 187,900,000 | 240,800,000 | 240,800,000 | |
Common stock, shares outstanding (in shares) | 187,900,000 | 240,800,000 | 240,800,000 | |
Class B common stock | Conversion of Convertible Preferred Stock to Class B Common Stock | ||||
Class of Stock [Line Items] | ||||
Shares issued in conversion (in shares) | 147,310,563 | |||
Class C common stock | ||||
Class of Stock [Line Items] | ||||
Votes per share | vote | 0 | |||
Common stock, shares authorized (in shares) | 800,000,000.0 | 800,000,000.0 | ||
Common stock, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | ||
Common stock, shares issued (in shares) | 0 | 0 | 0 | |
Common stock, shares outstanding (in shares) | 0 | 0 | 0 | |
Convertible preferred stock | Conversion of Convertible Preferred Stock to Class B Common Stock | ||||
Class of Stock [Line Items] | ||||
Shares converted in conversion (in shares) | 147,310,563 | |||
Convertible preferred stock | Conversion of Convertible Preferred Stock to Class A Common Stock | ||||
Class of Stock [Line Items] | ||||
Shares converted in conversion (in shares) | 258,620 |
Stockholders' Equity - Equity Incentive Plans (Details) - USD ($) $ in Millions |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
Mar. 22, 2018 |
Dec. 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares reserved for future issuance (in shares) | 41,400,000 | ||
Shares issued and outstanding (in shares) | 3,300,000 | 5,000,000 | |
2018 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expiration period | 10 years | ||
Vesting period | 4 years | ||
Options granted (in shares) | 0 | ||
Shares issued and outstanding (in shares) | 29,300,000 | ||
Shares available for grant (in shares) | 57,500,000 | ||
Remaining unamortized stock-based compensation | $ 421.2 | ||
Unamortized stock-based compensation, requisite service period | 2 years 9 months 24 days | ||
2018 Plan | Class A common stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares reserved for future issuance (in shares) | 41,400,000 | ||
2018 Plan | Employee Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expiration period | 10 years |
Stockholders' Equity - Schedule of Stock Option and Restricted Stock Activity (Details) - $ / shares shares in Millions |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2018 |
|
Number of shares available for issuance under the Plans | |||
Beginning balance (in shares) | 9.0 | ||
Reserved for issuance under the 2018 Plan (in shares) | 41.4 | ||
Additional shares authorized (in shares) | 1.3 | ||
Options and RSUs canceled (in shares) | 4.6 | ||
Shares repurchased for tax withholdings on release of restricted stock (unaudited) (in shares) | 14.5 | ||
Restricted stock granted (in shares) | (13.3) | ||
Ending balance (in shares) | 57.5 | 9.0 | |
Options Outstanding, Number of shares outstanding under the Plans | |||
Beginning balance (in shares) | 5.0 | ||
Options exercised (in shares) | (1.7) | ||
Ending balance (in shares) | 3.3 | 5.0 | |
Vested during period (in shares) | 3.3 | ||
Unvested at end of period (in shares) | 0.0 | ||
Options Outstanding, Weighted- average exercise price per share | |||
Beginning balance (in dollars per share) | $ 10.52 | ||
Options exercised (in dollars per share) | 6.48 | ||
Ending balance (in dollars per share) | 12.59 | $ 10.52 | |
Vested during period (in dollars per share) | $ 12.46 | ||
Unvested at end of period (in dollars per shares) | $ 0.00 | ||
Options Outstanding, Weighted- average remaining contractual term (In years) | |||
Weighted-average contractual term | 2 years 2 months 12 days | 5 years 6 months | |
Vested during period | 2 years 2 months 12 days | ||
Restricted Stock | |||
Restricted Stock Outstanding, Number of Plan shares outstanding | |||
Beginning balance (in shares) | 54.9 | ||
RSUs released (in shares) | (37.6) | ||
RSUs canceled (in shares) | (4.6) | ||
Restricted stock granted (in shares) | 13.3 | ||
Ending balance (in shares) | 26.0 | 54.9 | |
Unvested at end of period (in shares) | 54.9 | 54.9 | 26.0 |
Restricted Stock Outstanding, Weighted- average grant date fair value per share | |||
Beginning balance (in dollars per share) | $ 15.60 | ||
RSUs released (in dollars per share) | 15.26 | ||
RSUs canceled (in dollars per share) | 16.70 | ||
Restricted stock granted (in dollars per share) | 19.25 | ||
Ending balance (in dollars per share) | 17.80 | $ 15.60 | |
Unvested at end of period (in dollars per share) | $ 15.60 | $ 15.60 | $ 17.80 |
Stockholders' Equity - Schedule of Pre-Tax Intrinsic Value (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Stockholders' Equity Note [Abstract] | ||||
Intrinsic value of options exercised | $ 32.0 | $ 0.0 | $ 34.0 | $ 1.0 |
Stockholders' Equity - Co-Founder Grants (Details) $ / shares in Units, shares in Millions, $ in Millions |
1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended |
---|---|---|---|---|
Dec. 31, 2017
USD ($)
tranche
$ / shares
shares
|
Sep. 30, 2018
USD ($)
$ / shares
|
Sep. 30, 2018
USD ($)
$ / shares
shares
|
Dec. 31, 2017
USD ($)
tranche
$ / shares
|
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 0.00 | $ 0.00 | ||
Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares granted (in shares) | 13.3 | |||
Co-Founder Grants | Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares granted (in shares) | 14.7 | |||
Expiration period | 10 years | |||
Number of tranches | tranche | 9 | 9 | ||
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 10.60 | $ 10.60 | ||
Award requisite period | 5 years 2 months 12 days | |||
Remaining unamortized stock-based compensation | $ | $ 156.2 | $ 128.1 | $ 128.1 | $ 156.2 |
Stock-based compensation related to the Co-Founder Grants | $ | $ 8.8 | $ 28.1 | ||
Co-Founder Grants | Restricted Stock | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award requisite period | 2 years 10 months 25 days | 2 years 10 months 25 days | ||
Co-Founder Grants | Restricted Stock | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award requisite period | 6 years 10 months 25 days | 6 years 10 months 25 days | ||
Co-Founder Grants | Restricted Stock | Tranche One | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 4 years | |||
Co-Founder Grants | Restricted Stock | Tranche One | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Percentage vested maximum | 20.00% | |||
Co-Founder Grants | Chief Executive Officer | Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares granted (in shares) | 10.3 | |||
Co-Founder Grants | Director | Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares granted (in shares) | 4.4 |
Net Loss Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Class of Stock [Line Items] | ||||
Net loss attributable to common stockholders | $ (5.8) | $ (14.1) | $ (475.4) | $ (74.0) |
Weighted-average number of common shares outstanding used in computing basic and diluted net loss per common share (in shares) | 403.9 | 197.2 | 342.0 | 195.5 |
Net loss per common share, basic and diluted (in dollars per share) | $ (0.01) | $ (0.07) | $ (1.39) | $ (0.38) |
Class A | ||||
Class of Stock [Line Items] | ||||
Net loss attributable to common stockholders | $ (1.9) | $ (0.5) | $ (105.5) | $ (2.3) |
Weighted-average number of common shares outstanding used in computing basic and diluted net loss per common share (in shares) | 133.2 | 6.6 | 75.9 | 6.1 |
Net loss per common share, basic and diluted (in dollars per share) | $ (0.01) | $ (0.07) | $ (1.39) | $ (0.38) |
Class B | ||||
Class of Stock [Line Items] | ||||
Net loss attributable to common stockholders | $ (3.9) | $ (13.6) | $ (369.9) | $ (71.7) |
Weighted-average number of common shares outstanding used in computing basic and diluted net loss per common share (in shares) | 270.7 | 190.6 | 266.1 | 189.4 |
Net loss per common share, basic and diluted (in dollars per share) | $ (0.01) | $ (0.07) | $ (1.39) | $ (0.38) |
Net Loss Per Share - Schedule of Potentially Dilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 47.7 | 206.2 | 57.5 | 205.0 |
Convertible preferred stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0.0 | 147.6 | 0.0 | 147.6 |
Restricted stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 28.7 | 53.5 | 38.0 | 52.1 |
Options to purchase shares of common stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 4.3 | 5.0 | 4.7 | 5.1 |
Co-Founder Grants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 14.7 | 0.0 | 14.7 | 0.0 |
Shares subject to repurchase from early-exercised options and unvested restricted stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0.0 | 0.1 | 0.1 | 0.2 |
Income Taxes (Details) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | |||||
Income tax expense (benefit) | $ (200,000) | $ 500,000 | $ 2,700,000 | $ 1,200,000 | |
Increase in unrecognized tax benefits | 2,900,000 | 19,100,000 | |||
Unrecognized tax benefits that would impact effective tax rate | $ 800,000 | $ 1,400,000 | |||
Estimated reduction in deferred tax assets due to remeasurement | $ 63,100,000 | ||||
Estimated tax benefit from repealed corporate AMT | 1,400,000 | ||||
Estimated transition tax inclusion | $ 0 |
Related Party Transactions (Details) |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
Jun. 30, 2017
USD ($)
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
Dec. 31, 2016
shareholder
|
|||
Controlling Shareholders | Dropbox Charitable Foundation | ||||||||
Related Party Transaction [Line Items] | ||||||||
Number of controlling shareholders in related party transaction | shareholder | 2 | |||||||
Payments to related party | $ 0 | $ 400,000 | $ 0 | $ 800,000 | ||||
General and administrative expense from donated shares | $ 9,400,000 | |||||||
Affiliated Entity | Infrastructure Equipment Under Capital Leases and Commercial Products and Services | ||||||||
Related Party Transaction [Line Items] | ||||||||
Payments to related party | [1] | $ 5,500,000 | ||||||
|
Geographic Areas (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Segment Reporting Information [Line Items] | |||||
Property and equipment, net | $ 295.9 | $ 295.9 | $ 341.9 | ||
Total revenue | 360.3 | $ 286.7 | 1,015.8 | $ 801.3 | |
United States | |||||
Segment Reporting Information [Line Items] | |||||
Property and equipment, net | 278.1 | 278.1 | 323.7 | ||
Total revenue | 182.6 | 146.1 | 516.5 | 417.8 | |
International | |||||
Segment Reporting Information [Line Items] | |||||
Property and equipment, net | 17.8 | 17.8 | $ 18.2 | ||
Total revenue | $ 177.7 | $ 140.6 | $ 499.3 | $ 383.5 |
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