Balance Sheet Components

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Components

Balance Sheet Components

Accounts Receivable, Net

As of September 30, 2020 and December 31, 2019, the Company’s allowance for doubtful accounts was $1.5 million and $0.5 million, respectively. Bad debt expense for the three months ended September 30, 2020 and 2019 was $0.3 million and $0.4 million, respectively and $2.8 million and $0.9 million for the nine months ended September 30, 2020 and 2019, respectively. For the three months ended September 30, 2020 and 2019, write-off of uncollectible accounts receivable was $0.4 million and $0.4 million, respectively, and $1.9 million and $0.4 million for the nine months ended September 30, 2020 and 2019, respectively.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

	September 30, 2020		December 31, 2019
	(in thousands)
Prepaid expenses	$	13,464	$	10,913
Deposits	3,638		2,773
Other	5,924		3,308
Total prepaid expenses and other current assets	$	23,026	$	16,994

Property and Equipment, Net

Property and equipment, net consisted of the following:

	September 30, 2020		December 31, 2019
	(in thousands)
Property and equipment:
Servers—network infrastructure	$	114,564	$	84,979
Buildings	—		13,035
Construction in progress	13,525		8,692
Capitalized internal-use software	48,047		31,171
Office and computer equipment	18,870		13,528
Office furniture	6,736		6,124
Software	2,203		1,025
Leasehold improvements	11,472		9,870
Asset retirement obligation	429		231
Gross property and equipment	215,846		168,655
Less accumulated depreciation and amortization	(93,423)		(67,189)
Total property and equipment, net	$	122,423	$	101,466

In connection with the adoption of ASC 842, the Company derecognized the building asset of $13.0 million as of January 1, 2020, which was initially recorded as a result of build-to-suit lease accounting and reclassified a portion of the balance, $1.6 million, to leasehold improvements. This amount reflects the lessee-owned assets of the construction project and is being depreciated over the remaining lease term. For further details on the adoption of ASC 842, refer to Note 2 to these condensed consolidated financial statements.

Depreciation and amortization expense on property and equipment for the three months ended September 30, 2020 and 2019 was $12.1 million and $7.7 million, respectively, and $32.8 million and $20.8 million for the nine months ended September 30, 2020 and 2019, respectively. This includes amortization expense for capitalized internal-use software which totaled $3.4 million and $1.8 million for the three months ended September 30, 2020 and 2019, respectively, and $8.7 million and $4.6 million for the nine months ended September 30, 2020 and 2019, respectively.

Goodwill

As of September 30, 2020 and December 31, 2019, the Company's goodwill was $17.2 million and $4.1 million, respectively. During the nine months ended September 30, 2020, the Company recorded $13.1 million of goodwill in connection with the acquisition of S2 Systems Corporation (S2). For further detail on the acquisition, refer to Note 14 to these condensed consolidated financial statements. No goodwill impairments were recorded during the nine months ended September 30, 2020 and 2019.

Acquired Intangible Assets, Net

Acquired intangible assets, net consisted of the following:

	September 30, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Book Value
	(in thousands)
Developed technology	$	5,600	$	2,100	$	3,500
Total acquired intangible assets, net	$	5,600	$	2,100	$	3,500

	December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Net Book Value
	(in thousands)
Developed technology	$	250	$	219	$	31
Total acquired intangible assets, net	$	250	$	219	$	31

During the nine months ended September 30, 2020, the Company recorded $5.6 million of developed technology in connection with the acquisition of S2. For further details on the acquisition, refer to Note 14 to these condensed consolidated financial statements.

Amortization of acquired intangible assets for the three months ended September 30, 2020 and 2019 was $0.7 million and $0.03 million, respectively, and $2.1 million and $0.09 million for the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020, the estimated future amortization expense of acquired intangible assets was as follows:

	Estimated Amortization
	(in thousands)
Year ending December 31,
2020 (remaining three months)	$	700
2021	2,800
Total	$	3,500

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

	September 30, 2020		December 31, 2019
	(in thousands)
Accrued compensation and benefits	$	21,990	$	14,970
Accrued expenses	3,650		5,331
Customer refunds and credits	1,560		3,328
Accrued co-location and bandwidth	3,979		2,696
Indemnity holdback	2,187		—
Other	5,264		1,989
Total accrued expenses and other current liabilities	$	38,630	$	28,314

Other Noncurrent Liabilities

Other noncurrent liabilities consisted of the following:

	September 30, 2020		December 31, 2019
	(in thousands)
Accrued taxes	$	6,295	$	4,862
Deferred rent	—		2,342
Other	1,656		2,599
Total other noncurrent liabilities	$	7,951	$	9,803

In connection with the adoption of ASC 842, the Company derecognized the deferred rent as of January 1, 2020. For further details on the adoption of ASC 842, refer to Note 2 to these condensed consolidated financial statements.