x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 27-0989767 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
1740 Technology Drive, Suite 150 San Jose, CA 95110 | ||
(Address of principal executive offices, including zip code) | ||
(408) 216-8360 | ||
(Registrant's telephone number, including area code) |
Large accelerated filer | o | Accelerated filer | o | ||
Non-accelerated filer | x (Do not check if a smaller reporting company) | Smaller reporting company | o | ||
Emerging growth company | x | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | x |
PAGE | |||
INDEX TO EXHIBITS |
• | our future revenue, cost of revenue, and operating expenses, as well as changes in the cost of product revenue, component costs, product gross margins and support and other services revenue, and changes in research and development, sales and marketing and general and administrative expenses; |
• | anticipated trends, growth rates and challenges in our business and in the markets in which we operate, including the productivity of our sales team; |
• | our beliefs and objectives for future operations, including plans to continue to invest in our global engineering, research and development, and sales and marketing teams, and the impact of such investments on our operations; |
• | our ability to increase sales of our solutions; |
• | maintaining and expanding our end-customer base and our relationships with our channel and OEM partners; |
• | our expectations concerning relationships with third parties, including our ability to compress and stabilize sales cycles; |
• | our expectations concerning future shifts in the mix of whether our solutions are sold as an appliance or as software-only, and in the mix of the types of appliances we sell; and |
• | sufficiency of cash to meet cash needs for at least the next 12 months. |
As of | |||||||
July 31, 2016 | April 30, 2017 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 99,209 | $ | 200,774 | |||
Short-term investments | 85,991 | 149,571 | |||||
Accounts receivable—net | 110,659 | 170,335 | |||||
Deferred commissions—current | 17,864 | 22,260 | |||||
Prepaid expenses and other current assets | 16,138 | 44,313 | |||||
Total current assets | 329,861 | 587,253 | |||||
Property and equipment—net | 42,218 | 53,545 | |||||
Deferred commissions—non-current | 19,029 | 28,039 | |||||
Intangible assets—net | — | 26,609 | |||||
Goodwill | — | 16,636 | |||||
Other assets—non-current | 7,978 | 6,225 | |||||
Total assets | $ | 399,086 | $ | 718,307 | |||
Liabilities, Convertible Preferred Stock and Stockholders’ (Deficit) Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 52,111 | $ | 83,869 | |||
Accrued compensation and benefits | 24,547 | 56,834 | |||||
Accrued expenses and other liabilities | 5,537 | 9,018 | |||||
Deferred revenue—current | 130,569 | 207,018 | |||||
Total current liabilities | 212,764 | 356,739 | |||||
Deferred revenue—non-current | 165,896 | 255,982 | |||||
Senior notes | 73,260 | — | |||||
Convertible preferred stock warrant liability | 9,679 | — | |||||
Early exercised stock options liability | 2,320 | 1,185 | |||||
Other liabilities—non-current | 1,103 | 9,163 | |||||
Total liabilities | 465,022 | 623,069 | |||||
Commitments and contingencies (Note 7) | |||||||
Convertible preferred stock | 310,379 | — | |||||
Stockholders’ (deficit) equity: | |||||||
Common stock | 1 | 4 | |||||
Additional paid-in capital | 65,629 | 904,507 | |||||
Accumulated other comprehensive loss | (12 | ) | (96 | ) | |||
Accumulated deficit | (441,933 | ) | (809,177 | ) | |||
Total stockholders’ (deficit) equity | (376,315 | ) | 95,238 | ||||
Total liabilities, convertible preferred stock and stockholders’ (deficit) equity | $ | 399,086 | $ | 718,307 |
Three Months Ended April 30, | Nine Months Ended April 30, | ||||||||||||||
2016 | 2017 | 2016 | 2017 | ||||||||||||
Revenue: | |||||||||||||||
Product | $ | 89,957 | $ | 143,142 | $ | 241,582 | $ | 411,307 | |||||||
Support and other services | 24,733 | 48,621 | 63,561 | 129,460 | |||||||||||
Total revenue | 114,690 | 191,763 | 305,143 | 540,767 | |||||||||||
Cost of revenue: | |||||||||||||||
Product | 33,427 | 62,593 | 91,061 | 173,206 | |||||||||||
Support and other services | 9,966 | 20,613 | 25,347 | 56,608 | |||||||||||
Total cost of revenue | 43,393 | 83,206 | 116,408 | 229,814 | |||||||||||
Gross profit | 71,297 | 108,557 | 188,735 | 310,953 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing | 75,849 | 128,007 | 200,576 | 368,026 | |||||||||||
Research and development | 31,390 | 74,607 | 81,271 | 220,802 | |||||||||||
General and administrative | 8,761 | 15,610 | 23,976 | 60,463 | |||||||||||
Total operating expenses | 116,000 | 218,224 | 305,823 | 649,291 | |||||||||||
Loss from operations | (44,703 | ) | (109,667 | ) | (117,088 | ) | (338,338 | ) | |||||||
Other income (expense)—net | (2,106 | ) | 303 | (331 | ) | (25,830 | ) | ||||||||
Loss before provision for income taxes | (46,809 | ) | (109,364 | ) | (117,419 | ) | (364,168 | ) | |||||||
Provision for income taxes | 11 | 2,613 | 1,151 | 3,190 | |||||||||||
Net loss | $ | (46,820 | ) | $ | (111,977 | ) | $ | (118,570 | ) | $ | (367,358 | ) | |||
Net loss per share attributable to common stockholders—basic and diluted | $ | (1.05 | ) | $ | (0.78 | ) | $ | (2.72 | ) | $ | (3.07 | ) | |||
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted | 44,441,954 | 144,054,432 | 43,643,451 | 119,851,586 |
Three Months Ended April 30, | Nine Months Ended April 30, | ||||||||||||||
2016 | 2017 | 2016 | 2017 | ||||||||||||
Net loss | $ | (46,820 | ) | $ | (111,977 | ) | $ | (118,570 | ) | $ | (367,358 | ) | |||
Other comprehensive (loss) income —net of tax: | |||||||||||||||
Change in unrealized loss on available-for-sale securities, net of tax | (8 | ) | 74 | (9 | ) | (84 | ) | ||||||||
Total other comprehensive (loss) income—net of tax | (8 | ) | 74 | (9 | ) | (84 | ) | ||||||||
Comprehensive loss | $ | (46,828 | ) | $ | (111,903 | ) | $ | (118,579 | ) | $ | (367,442 | ) |
Nine Months Ended April 30, | |||||||
2016 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (118,570 | ) | $ | (367,358 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization | 18,975 | 27,934 | |||||
Stock-based compensation | 15,380 | 193,686 | |||||
Loss on debt extinguishment | — | 3,320 | |||||
Change in fair value of convertible preferred stock warrant liability | (567 | ) | 21,133 | ||||
Other | (187 | ) | 777 | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable—net | (24,295 | ) | (58,841 | ) | |||
Deferred commission | (14,190 | ) | (13,406 | ) | |||
Prepaid expenses and other assets | (421 | ) | (29,628 | ) | |||
Accounts payable | (3,551 | ) | 32,468 | ||||
Accrued compensation and benefits | 4,819 | 32,000 | |||||
Accrued expenses and other liabilities | (2,147 | ) | 5,291 | ||||
Deferred revenue | 126,024 | 160,527 | |||||
Net cash provided by operating activities | 1,270 | 7,903 | |||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (33,419 | ) | (37,797 | ) | |||
Purchases of investments | (85,740 | ) | (156,420 | ) | |||
Maturities of investments | 66,613 | 59,542 | |||||
Sale of investments | — | 32,640 | |||||
Payments for business acquisitions, net of cash acquired | — | (184 | ) | ||||
Net cash used in investing activities | (52,546 | ) | (102,219 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from initial public offering, net of underwriting discounts and commissions | — | 254,455 | |||||
Payments of offering costs, net | (2,791 | ) | (1,609 | ) | |||
Proceeds from sales of shares through employee equity incentive plans, net of repurchases | 2,747 | 26,662 | |||||
Repayment of senior notes | — | (75,000 | ) | ||||
Debt extinguishment costs | — | (1,580 | ) | ||||
Payment of debt in conjunction with a business acquisition | — | (7,124 | ) | ||||
Proceeds from long-term debt - net of issuance costs | 73,319 | — | |||||
Other | 836 | 77 | |||||
Net cash provided by financing activities | 74,111 | 195,881 | |||||
Net increase in cash and cash equivalents | 22,835 | 101,565 | |||||
Cash and cash equivalents—beginning of period | 67,879 | 99,209 | |||||
Cash and cash equivalents—end of period | $ | 90,714 | $ | 200,774 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid for income taxes | $ | 2,093 | $ | 3,559 | |||
Cash paid for interest | $ | — | $ | 1,271 | |||
Supplemental disclosures of non-cash investing and financing information: | |||||||
Vesting of early exercised stock options | $ | 2,658 | $ | 1,293 | |||
Purchases of property and equipment included in accounts payable | $ | 2,932 | $ | 4,496 | |||
Offering costs included in accounts payable | $ | 980 | $ | 51 | |||
Conversion of convertible preferred stock to common stock, net of issuance costs | $ | — | $ | 310,379 | |||
Reclassification of convertible preferred stock warrant liability to additional paid-in capital | $ | — | $ | 30,812 | |||
Issuance of common stock for business acquisitions | $ | — | $ | 27,063 |
1. | ORGANIZATION |
2. | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Revenue | Accounts Receivable as of | |||||||||||||||||
Three Months Ended April 30, | Nine Months Ended April 30, | |||||||||||||||||
Customers | 2016 | 2017 | 2016 | 2017 | July 31, 2016 | April 30, 2017 | ||||||||||||
Partner A | 15 | % | * | 16 | % | 10 | % | * | * | |||||||||
Partner B | 21 | % | 18 | % | 20 | % | 20 | % | 17 | % | 12 | % | ||||||
Partner C | 16 | % | 19 | % | 13 | % | 17 | % | 12 | % | 13 | % | ||||||
Partner D | * | * | * | * | 23 | % | * | |||||||||||
Partner E | 10 | % | * | 11 | % | * | 11 | % | 10 | % | ||||||||
Partner F | 12 | % | 14 | % | 16 | % | 13 | % | * | 12 | % |
* | Less than 10% |
3. | BUSINESS COMBINATIONS |
Cash and cash equivalents | $ | 1,051 | |
Accounts receivable | 718 | ||
Goodwill | 11,817 | ||
Intangible assets | 24,270 | ||
Other assets | 761 | ||
Deferred revenue | (6,007 | ) | |
Debt | (7,124 | ) | |
Other liabilities | (2,479 | ) | |
Total | $ | 23,007 |
Amount | Estimated Useful Life (in years) | ||||
In-process R&D | $ | 16,100 | — | ||
Developed technology | 3,570 | 5 | |||
Customer relationships | 4,600 | 6 | |||
$ | 24,270 |
Nine Months Ended April 30, | |||||||
2016 | 2017 | ||||||
Revenue | $ | 312,493 | $ | 541,579 | |||
Net loss | $ | (141,281 | ) | $ | (367,764 | ) | |
Basic and diluted net loss per share | $ | (3.12 | ) | $ | (3.03 | ) |
4. | FAIR VALUE MEASUREMENTS |
As of July 31, 2016 | |||||||||||||||
Level I | Level II | Level III | Total | ||||||||||||
Financial Assets: | |||||||||||||||
Cash equivalents: | |||||||||||||||
Money market funds | $ | 47,305 | $ | — | $ | — | $ | 47,305 | |||||||
Commercial paper | — | 4,999 | — | 4,999 | |||||||||||
Short-term investments: | |||||||||||||||
Corporate bonds | — | 64,360 | — | 64,360 | |||||||||||
Commercial paper | — | 21,631 | — | 21,631 | |||||||||||
Total measured at fair value | 47,305 | 90,990 | — | 138,295 | |||||||||||
Cash | 46,905 | ||||||||||||||
Total cash, cash equivalents and short-term investments | $ | 185,200 | |||||||||||||
Financial Liabilities: | |||||||||||||||
Convertible preferred stock warrant liability | $ | — | $ | — | $ | 9,679 | $ | 9,679 |
As of April 30, 2017 | |||||||||||||||
Level I | Level II | Level III | Total | ||||||||||||
Financial Assets: | |||||||||||||||
Cash equivalents: | |||||||||||||||
Money market funds | $ | 78,795 | $ | — | $ | — | $ | 78,795 | |||||||
Commercial paper | — | 49,690 | — | 49,690 | |||||||||||
Short-term investments: | |||||||||||||||
Corporate bonds | — | 100,774 | — | 100,774 | |||||||||||
Commercial paper | — | 38,810 | — | 38,810 | |||||||||||
U.S. government securities | — | 9,987 | — | 9,987 | |||||||||||
Total measured at fair value | $ | 78,795 | $ | 199,261 | $ | — | 278,056 | ||||||||
Cash | 72,289 | ||||||||||||||
Total cash, cash equivalents and short-term investments | $ | 350,345 | |||||||||||||
Financial Liabilities: | |||||||||||||||
Contingent consideration | $ | — | $ | — | $ | 2,547 | $ | 2,547 |
Nine Months Ended April 30, | |||||||
2016 | 2017 | ||||||
Convertible preferred stock warrant liability—beginning balance | $ | 11,683 | $ | 9,679 | |||
Change in fair value* | (567 | ) | 21,133 | ||||
Reclassification of unexercised warrants to additional paid-in capital upon the IPO | — | (30,812 | ) | ||||
Convertible preferred stock warrant liability—ending balance | $ | 11,116 | $ | — |
* | Recorded in the consolidated statements of operations within other income (expense)—net. |
Nine Months Ended April 30, 2017 | |||
Contingent consideration—beginning balance | $ | — | |
Assumed in the PernixData Acquisition | 2,371 | ||
Change in fair value* | 176 | ||
Contingent consideration—ending balance | $ | 2,547 |
* | Recorded in the consolidated statements of operations within general and administrative expenses |
5. | BALANCE SHEET COMPONENTS |
As of April 30, 2017 | |||
Due within 1 year | $ | 126,291 | |
Due after 1 year through 3 years | 23,280 | ||
Total | $ | 149,571 |
Estimated Useful Life (In months) | As of | ||||||||
July 31, 2016 | April 30, 2017 | ||||||||
Computer, production, engineering and other equipment | 36 | $ | 54,161 | $ | 78,616 | ||||
Demonstration units | 12 | 33,184 | 41,882 | ||||||
Leasehold improvements | * | 6,619 | 8,773 | ||||||
Furniture and fixtures | 60 | 3,641 | 4,296 | ||||||
Total property and equipment—gross | 97,605 | 133,567 | |||||||
Less accumulated depreciation and amortization | (55,387 | ) | (80,022 | ) | |||||
Total property and equipment—net | $ | 42,218 | $ | 53,545 |
* | Leasehold improvements are amortized over the shorter of the estimated useful lives of the improvements or the remaining lease term. |
As of April 30, 2017 | |||
Indefinite-lived intangible asset: | |||
In-process R&D | $ | 16,100 | |
Finite-lived intangible assets: | |||
Developed technology | 7,300 | ||
Customer relationships | 4,830 | ||
Total finite-lived intangible assets, gross | 12,130 | ||
Total intangible assets, gross | 28,230 | ||
Less: | |||
Accumulated amortization of developed technology | (665 | ) | |
Accumulated amortization of customer relationships | (956 | ) | |
Total accumulated amortization | (1,621 | ) | |
Intangible assets, net | $ | 26,609 |
Nine Months Ended April 30, 2017 | |||
Intangible assets, net—beginning balance | $ | — | |
Acquired in the Calm Acquisition | 3,960 | ||
Acquired in the PernixData Acquisition | 24,270 | ||
Amortization of intangible assets * | (1,621 | ) | |
Intangible assets, net—ending balance | $ | 26,609 |
* | Represents amortization expense of finite-lived intangible assets recorded in the condensed consolidated statement of operations during the period within product cost of revenue and sales and marketing expenses. |
Year Ending July 31: | (In thousands) | ||
2017 (remaining three months) | $ | 607 | |
2018 | 2,220 | ||
2019 | 2,201 | ||
2020 | 2,201 | ||
2021 | 2,201 | ||
Thereafter | 1,079 | ||
Total | $ | 10,509 |
As of | |||||||
July 31, 2016 | April 30, 2017 | ||||||
Accrued commissions | $ | 14,203 | $ | 12,979 | |||
Accrued vacation | 3,490 | 6,172 | |||||
Contributions to ESPP withheld | — | 3,773 | |||||
Accrued bonus | 3,592 | 4,709 | |||||
Payroll taxes payable | 1,234 | 24,198 | |||||
Other | 2,028 | 5,003 | |||||
Total accrued compensation and benefits | $ | 24,547 | $ | 56,834 |
As of | |||||||
July 31, 2016 | April 30, 2017 | ||||||
Accrued professional services | $ | 3,585 | $ | 4,181 | |||
Income taxes payable | 1,417 | 3,446 | |||||
Other | 535 | 1,391 | |||||
Total accrued expenses and other liabilities | $ | 5,537 | $ | 9,018 |
6. | DEBT |
Year Ending July 31: | (In thousands) | ||
2017 (remaining three months) | $ | 3,073 | |
2018 | 12,560 | ||
2019 | 11,832 | ||
2020 | 10,454 | ||
2021 | 7,597 | ||
Thereafter | 2,934 | ||
Total | $ | 48,450 |
8. | CONVERTIBLE PREFERRED STOCK WARRANTS |
Fair Value as of | ||||||||||||||||||
Class of Shares | Issuance Date | Contractual Term | Number of Shares | Exercise Price per Share | July 31, 2016 | IPO Date(1) | ||||||||||||
Series A warrants | December 21, 2009 | 10 years | 683,644 | $ | 0.234 | $ | 8,259 | $ | 25,883 | |||||||||
Series A warrants | May 10, 2010 | 10 years | 85,450 | $ | 0.234 | 1,032 | 3,235 | |||||||||||
Series D warrants | November 26, 2013 | 10 years | 10,000 | $ | 7.289 | 77 | 308 | |||||||||||
Series D warrants | December 12, 2013 | 7 years | 45,000 | $ | 7.289 | 311 | 1,386 | |||||||||||
824,094 | $ | 9,679 | (2) | $ | 30,812 |
(1) | Immediately prior to the closing of the Company’s IPO. |
9. | CONVERTIBLE PREFERRED STOCK |
Shares Authorized | Shares Issued and Outstanding | Aggregate Liquidation Preference | |||||||
(In thousands) | |||||||||
Series A | 28,165,300 | 27,396,198 | $ | 15,494 | |||||
Series B | 16,558,441 | 16,558,441 | 25,250 | ||||||
Series C | 7,683,710 | 7,683,710 | 33,000 | ||||||
Series D | 13,912,438 | 13,857,438 | 151,500 | ||||||
Series E | 11,943,420 | 10,823,724 | 145,000 | ||||||
78,263,309 | 76,319,511 | $ | 370,244 |
10. | STOCKHOLDERS’ EQUITY |
11. | EQUITY AWARD PLANS |
Number of Shares | Grant Date Fair Value per Share | |||||
Outstanding—July 31, 2016 | 12,265,369 | $ | 13.23 | |||
Granted | 11,543,670 | $ | 21.91 | |||
Released | (4,249,756 | ) | $ | 16.30 | ||
Canceled/forfeited | (617,159 | ) | $ | 16.36 | ||
Outstanding—April 30, 2017 | 18,942,124 | $ | 17.76 |
Nine Months Ended April 30, 2017 | ||
Expected term (in years) | 0.75 | |
Risk-free interest rate | 0.6 | % |
Volatility | 51.0 | % |
Dividend yield | — | % |
Three Months Ended April 30, | Nine Months Ended April 30, | ||||||||||||||
2016 | 2017 | 2016 | 2017 | ||||||||||||
Cost of revenue: | |||||||||||||||
Product | $ | 98 | $ | 610 | $ | 311 | $ | 2,424 | |||||||
Support and other services | 230 | 2,471 | 764 | 8,210 | |||||||||||
Sales and marketing | 2,029 | 15,726 | 6,111 | 65,145 | |||||||||||
Research and development | 1,519 | 27,041 | 4,760 | 89,826 | |||||||||||
General and administrative | 1,168 | 4,503 | 3,434 | 28,081 | |||||||||||
Total stock-based compensation expense | $ | 5,044 | $ | 50,351 | $ | 15,380 | $ | 193,686 |
Three Months Ended April 30, | Nine Months Ended April 30, | ||||||||||||||
2016 | 2017 | 2016 | 2017 | ||||||||||||
RSUs * | $ | — | $ | 34,875 | $ | — | $ | 153,883 | |||||||
Stock options * | 5,044 | 5,308 | 15,380 | 16,321 | |||||||||||
ESPP | — | 10,168 | — | 23,482 | |||||||||||
Total stock-based compensation expense | $ | 5,044 | $ | 50,351 | $ | 15,380 | $ | 193,686 |
* | Includes stock-compensation expense related to stock awards with performance conditions, which vesting was deemed probable during the nine months ended April 30, 2017. |
12. | INCOME TAXES |
13. | NET LOSS PER SHARE |
Three Months Ended April 30, | Nine Months Ended April 30, | ||||||||||||||
2016 | 2017 | 2016 | 2017 | ||||||||||||
Numerator: | |||||||||||||||
Net loss | $ | (46,820 | ) | $ | (111,977 | ) | $ | (118,570 | ) | $ | (367,358 | ) | |||
Denominator: | |||||||||||||||
Weighted-average shares—basic and diluted | 44,441,954 | 144,054,432 | 43,643,451 | 119,851,586 | |||||||||||
Net loss per share attributable to common stockholders—basic and diluted | $ | (1.05 | ) | $ | (0.78 | ) | $ | (2.72 | ) | $ | (3.07 | ) |
Three and Nine Months Ended April 30, | |||||
2016 | 2017 | ||||
Stock awards | 37,614,944 | 41,204,043 | |||
Common stock subject to repurchase | 1,227,131 | 383,736 | |||
Common stock warrants | — | 34,180 | |||
Convertible preferred stock | 76,319,511 | — | |||
Convertible preferred stock warrants | 824,094 | — | |||
Total | 115,985,680 | 41,621,959 |
14. | SEGMENT INFORMATION |
Three Months Ended April 30, | Nine Months Ended April 30, | ||||||||||||||
2016 | 2017 | 2016 | 2017 | ||||||||||||
U.S. | $ | 75,201 | $ | 112,218 | $ | 193,649 | $ | 317,262 | |||||||
Europe, the Middle East and Africa | 19,234 | 38,023 | 56,577 | 95,543 | |||||||||||
Asia-Pacific | 16,278 | 35,508 | 41,113 | 101,798 | |||||||||||
Other Americas | 3,977 | 6,014 | 13,804 | 26,164 | |||||||||||
Total revenue | $ | 114,690 | $ | 191,763 | $ | 305,143 | $ | 540,767 |
15. | RELATED PARTY TRANSACTIONS |
As of and for the | |||||||||||||||
Three Months Ended April 30, | Nine Months Ended April 30, | ||||||||||||||
2016 | 2017 | 2016 | 2017 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Total revenue | $ | 114,690 | $ | 191,763 | $ | 305,143 | $ | 540,767 | |||||||
Billings | $ | 159,505 | $ | 234,147 | $ | 431,167 | $ | 701,294 | |||||||
Gross margin percentage | 62 | % | 57 | % | 62 | % | 58 | % | |||||||
Adjusted gross margin percentage | 62 | % | 58 | % | 62 | % | 60 | % | |||||||
Total deferred revenue | $ | 229,622 | $ | 463,000 | $ | 229,622 | $ | 463,000 | |||||||
Net cash provided by (used in) operating activities | $ | 2,413 | $ | (16,009 | ) | $ | 1,270 | $ | 7,903 | ||||||
Free cash flow | $ | (10,985 | ) | $ | (29,190 | ) | $ | (32,149 | ) | $ | (29,894 | ) | |||
Total end-customers | 3,111 | 6,172 | 3,111 | 6,172 |
• | are used by our management and board of directors to understand and evaluate our performance and trends as well as provide a useful measure for period-to-period comparisons of our core business; |
• | are widely used by investors and other parties in understanding and evaluating companies in our industry as a measure of financial performance; and |
• | are used by management to prepare and approve our annual budget and to develop short-term and long-term operational and compensation plans, as well as to assess the extent of achievement of goals. |
Three Months Ended April 30, | Nine Months Ended April 30, | ||||||||||||||
2016 | 2017 | 2016 | 2017 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Total revenue | $ | 114,690 | $ | 191,763 | $ | 305,143 | $ | 540,767 | |||||||
Change in deferred revenue (net of acquisitions) | 44,815 | 42,384 | 126,024 | 160,527 | |||||||||||
Billings | $ | 159,505 | $ | 234,147 | $ | 431,167 | $ | 701,294 | |||||||
Gross profit | $ | 71,297 | $ | 108,557 | $ | 188,735 | $ | 310,953 | |||||||
Stock-based compensation | 328 | 3,081 | 1,075 | 10,634 | |||||||||||
Amortization of intangible assets | — | 358 | — | 956 | |||||||||||
Adjusted gross profit (non-GAAP) | $ | 71,625 | $ | 111,996 | $ | 189,810 | $ | 322,543 | |||||||
Adjusted gross margin percentage (non-GAAP) | 62 | % | 58 | % | 62 | % | 60 | % | |||||||
Net cash provided by (used in) operating activities | $ | 2,413 | $ | (16,009 | ) | $ | 1,270 | $ | 7,903 | ||||||
Purchases of property and equipment | (13,398 | ) | (13,181 | ) | (33,419 | ) | (37,797 | ) | |||||||
Free cash flow (non-GAAP) | $ | (10,985 | ) | $ | (29,190 | ) | $ | (32,149 | ) | $ | (29,894 | ) |
Three Months Ended April 30, | Nine Months Ended April 30, | ||||||||||||||
2016 | 2017 | 2016 | 2017 | ||||||||||||
(In thousands) | |||||||||||||||
Consolidated Statements of Operations Data: | |||||||||||||||
Revenue: | |||||||||||||||
Product | $ | 89,957 | $ | 143,142 | $ | 241,582 | $ | 411,307 | |||||||
Support and other services | 24,733 | 48,621 | 63,561 | 129,460 | |||||||||||
Total revenue | 114,690 | 191,763 | 305,143 | 540,767 | |||||||||||
Cost of revenue: | |||||||||||||||
Product (1)(2) | 33,427 | 62,593 | 91,061 | 173,206 | |||||||||||
Support and other services (1) | 9,966 | 20,613 | 25,347 | 56,608 | |||||||||||
Total cost of revenue | 43,393 | 83,206 | 116,408 | 229,814 | |||||||||||
Gross profit | 71,297 | 108,557 | 188,735 | 310,953 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing (1)(2) | 75,849 | 128,007 | 200,576 | 368,026 | |||||||||||
Research and development (1) | 31,390 | 74,607 | 81,271 | 220,802 | |||||||||||
General and administrative (1) | 8,761 | 15,610 | 23,976 | 60,463 | |||||||||||
Total operating expenses | 116,000 | 218,224 | 305,823 | 649,291 | |||||||||||
Loss from operations | (44,703 | ) | (109,667 | ) | (117,088 | ) | (338,338 | ) | |||||||
Other income (expense)—net | (2,106 | ) | 303 | (331 | ) | (25,830 | ) | ||||||||
Loss before provision for income taxes | (46,809 | ) | (109,364 | ) | (117,419 | ) | (364,168 | ) | |||||||
Provision for income taxes | 11 | 2,613 | 1,151 | 3,190 | |||||||||||
Net loss | $ | (46,820 | ) | $ | (111,977 | ) | $ | (118,570 | ) | $ | (367,358 | ) | |||
(1) Includes stock-based compensation expense as follows: | |||||||||||||||
Product Cost of sales | $ | 98 | $ | 610 | $ | 311 | $ | 2,424 | |||||||
Support Cost of sales | 230 | 2,471 | 764 | 8,210 | |||||||||||
Sales and marketing | 2,029 | 15,726 | 6,111 | 65,145 | |||||||||||
Research and development | 1,519 | 27,041 | 4,760 | 89,826 | |||||||||||
General and administrative | 1,168 | 4,503 | 3,434 | 28,081 | |||||||||||
Total stock-based compensation | $ | 5,044 | $ | 50,351 | $ | 15,380 | $ | 193,686 | |||||||
(2) Includes amortization of intangible assets as follows: | |||||||||||||||
Product Cost of sales | $ | — | $ | 358 | $ | — | $ | 956 | |||||||
Sales and marketing | — | 250 | — | 665 | |||||||||||
Total amortization of intangible assets | $ | — | $ | 608 | $ | — | $ | 1,621 |
Three Months Ended April 30, | Nine Months Ended April 30, | ||||||||||
2016 | 2017 | 2016 | 2017 | ||||||||
(As a percentage of total revenue) | |||||||||||
Consolidated Statements of Operations Data: | |||||||||||
Revenue: | |||||||||||
Product | 78 | % | 75 | % | 79 | % | 76 | % | |||
Support and other services | 22 | % | 25 | % | 21 | % | 24 | % | |||
Total revenue | 100 | % | 100 | % | 100 | % | 100 | % | |||
Cost of revenue: | |||||||||||
Product | 29 | % | 33 | % | 30 | % | 32 | % | |||
Support and other services | 9 | % | 11 | % | 8 | % | 10 | % | |||
Total cost of revenue | 38 | % | 43 | % | 38 | % | 43 | % | |||
Gross profit | 62 | % | 57 | % | 62 | % | 58 | % | |||
Operating expenses: | |||||||||||
Sales and marketing | 66 | % | 67 | % | 66 | % | 68 | % | |||
Research and development | 27 | % | 39 | % | 27 | % | 41 | % | |||
General and administrative | 8 | % | 8 | % | 8 | % | 11 | % | |||
Total operating expenses | 101 | % | 114 | % | 100 | % | 120 | % | |||
Loss from operations | (39 | )% | (57 | )% | (38 | )% | (63 | )% | |||
Other income (expense)—net | (2 | )% | 0 | % | 0 | % | (5 | )% | |||
Loss before provision for income taxes | (41 | )% | (57 | )% | (39 | )% | (67 | )% | |||
Provision for income taxes | 0 | % | 1 | % | 0 | % | 1 | % | |||
Net loss | (41 | )% | (58 | )% | (39 | )% | (68 | )% |
Three Months Ended April 30, | Change | Nine Months Ended April 30, | Change | ||||||||||||||||||||||||||
2016 | 2017 | $ | % | 2016 | 2017 | $ | % | ||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||||||
Product | $ | 89,957 | $ | 143,142 | $ | 53,185 | 59 | % | $ | 241,582 | $ | 411,307 | $ | 169,725 | 70 | % | |||||||||||||
Support and other services | 24,733 | 48,621 | 23,888 | 97 | % | 63,561 | 129,460 | 65,899 | 104 | % | |||||||||||||||||||
Total revenue | $ | 114,690 | $ | 191,763 | $ | 77,073 | 67 | % | $ | 305,143 | $ | 540,767 | $ | 235,624 | 77 | % |
Three Months Ended April 30, | Change | Nine Months Ended April 30, | Change | ||||||||||||||||||||||||||
2016 | 2017 | $ | % | 2016 | 2017 | $ | % | ||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||||||
U.S. | $ | 75,201 | $ | 112,218 | $ | 37,017 | 49 | % | $ | 193,649 | $ | 317,262 | $ | 123,613 | 64 | % | |||||||||||||
Europe, the Middle East and Africa | 19,234 | 38,023 | 18,789 | 98 | % | 56,577 | 95,543 | 38,966 | 69 | % | |||||||||||||||||||
Asia-Pacific | 16,278 | 35,508 | 19,230 | 118 | % | 41,113 | 101,798 | 60,685 | 148 | % | |||||||||||||||||||
Other Americas | 3,977 | 6,014 | 2,037 | 51 | % | 13,804 | 26,164 | 12,360 | 90 | % | |||||||||||||||||||
Total revenue | $ | 114,690 | $ | 191,763 | $ | 77,073 | 67 | % | $ | 305,143 | $ | 540,767 | $ | 235,624 | 77 | % |
Three Months Ended April 30, | Change | Nine Months Ended April 30, | Change | ||||||||||||||||||||||||||
2016 | 2017 | $ | % | 2016 | 2017 | $ | % | ||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||||||
Cost of product revenue | $ | 33,427 | $ | 62,593 | $ | 29,166 | 87 | % | $ | 91,061 | $ | 173,206 | $ | 82,145 | 90 | % | |||||||||||||
Product gross margin | 63 | % | 56 | % | 62 | % | 58 | % | |||||||||||||||||||||
Cost of support and other services revenue | $ | 9,966 | $ | 20,613 | $ | 10,647 | 107 | % | $ | 25,347 | $ | 56,608 | $ | 31,261 | 123 | % | |||||||||||||
Support and other services gross margin | 60 | % | 58 | % | 60 | % | 56 | % | |||||||||||||||||||||
Total gross margin percentage | 62 | % | 57 | % | 62 | % | 58 | % |
Three Months Ended April 30, | Change | Nine Months Ended April 30, | Change | ||||||||||||||||||||||||||
2016 | 2017 | $ | % | 2016 | 2017 | $ | % | ||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||||||
Sales and marketing | $ | 75,849 | $ | 128,007 | $ | 52,158 | 69 | % | $ | 200,576 | $ | 368,026 | $ | 167,450 | 83 | % | |||||||||||||
Percent of total revenue | 66 | % | 67 | % | 66 | % | 68 | % |
Three Months Ended April 30, | Change | Nine Months Ended April 30, | Change | ||||||||||||||||||||||||||
2016 | 2017 | $ | % | 2016 | 2017 | $ | % | ||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||||||
Research and development | $ | 31,390 | $ | 74,607 | $ | 43,217 | 138 | % | $ | 81,271 | $ | 220,802 | $ | 139,531 | 172 | % | |||||||||||||
Percent of total revenue | 27 | % | 39 | % | 27 | % | 41 | % |
Three Months Ended April 30, | Change | Nine Months Ended April 30, | Change | ||||||||||||||||||||||||||
2016 | 2017 | $ | % | 2016 | 2017 | $ | % | ||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||||||
General and administrative | $ | 8,761 | $ | 15,610 | $ | 6,849 | 78 | % | $ | 23,976 | $ | 60,463 | $ | 36,487 | 152 | % | |||||||||||||
Percent of total revenue | 8 | % | 8 | % | 8 | % | 11 | % |
Three Months Ended April 30, | Change | Nine Months Ended April 30, | Change | ||||||||||||||||||||||||||
2016 | 2017 | $ | % | 2016 | 2017 | $ | % | ||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||||||
Other income (expense)-net | $ | (2,106 | ) | $ | 303 | $ | 2,409 | (114 | )% | $ | (331 | ) | $ | (25,830 | ) | $ | (25,499 | ) | 7,704 | % |
Three Months Ended April 30, | Change | Nine Months Ended April 30, | Change | ||||||||||||||||||||||||||
2016 | 2017 | $ | % | 2016 | 2017 | $ | % | ||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||||||
Provision for income taxes | $ | 11 | $ | 2,613 | $ | 2,602 | 23,655 | % | $ | 1,151 | $ | 3,190 | $ | 2,039 | 177 | % |
Nine Months Ended April 30, | |||||||
2016 | 2017 | ||||||
Net cash provided by operating activities | $ | 1,270 | $ | 7,903 | |||
Net cash used in investing activities | (52,546 | ) | (102,219 | ) | |||
Net cash provided by financing activities | 74,111 | 195,881 | |||||
$ | 22,835 | $ | 101,565 |
Payments Due by Period | |||||||||||||||||||
Total | Less than 1 year | 1 year to 3 Years | 3 to 5 Years | More than 5 Years | |||||||||||||||
Contractual Obligations: | |||||||||||||||||||
Operating lease obligations | $ | 48,450 | $ | 12,632 | $ | 22,624 | $ | 11,123 | $ | 2,071 | |||||||||
Other purchase commitments (1) | 23,788 | 23,788 | — | — | — | ||||||||||||||
Purchase commitments with contract manufacturers (2) | 58,349 | 58,349 | — | — | — | ||||||||||||||
Contingent consideration (3) | 5,690 | — | 5,690 | — | — | ||||||||||||||
$ | 136,277 | $ | 94,769 | $ | 28,314 | $ | 11,123 | $ | 2,071 |
• | software providers such as VMware, Inc., or VMware, and Red Hat, Inc., that offer a broad range of virtualization, infrastructure and management products to build and operate enterprise clouds; |
• | traditional IT systems vendors such as Hewlett Packard Enterprise Company, or HPE, Cisco Systems, Inc., or Cisco, Lenovo Group Ltd., Dell Technologies Inc., or Dell, Hitachi Data Systems Corporation, or Hitachi, and International Business Machines Corporation, or IBM, that offer integrated systems that include bundles of servers, storage and networking solutions, as well as a broad range of standalone server and storage products; and |
• | traditional storage array vendors such as Dell, NetApp, Inc., or NetApp, and Hitachi, which typically sell centralized storage products. |
• | competition from companies that traditionally target larger enterprises, service providers and government entities and that may have pre-existing relationships or purchase commitments from such end-customers; |
• | increased purchasing power and leverage held by large end-customers in negotiating contractual arrangements with us; |
• | more stringent requirements in our support service contracts, including demand for quicker support response times and penalties for any failure to meet support requirements; and |
• | longer sales cycles and the associated risk that substantial time and resources may be spent on a potential end-customer that elects not to purchase our solutions. |
• | the timing and magnitude of orders, shipments and acceptance of our solutions in any quarter; |
• | our ability to attract new and retain existing end-customers; |
• | disruptions in our sales channels or termination of our relationship with important channel partners and OEMs; |
• | the timing of revenue recognition for our sales; |
• | reductions in end-customers’ budgets for information technology purchases; |
• | delays in end-customers’ purchasing cycles or deferments of end-customers’ purchases in anticipation of new products or updates from us or our competitors; |
• | fluctuations in demand and competitive pricing pressures for our solutions; |
• | the mix of solutions, sold, including the mix between appliance and software-only sales and the mix of the types of appliances that we sell, and the mix of revenue between products and support and other services; |
• | our ability to develop, introduce and ship in a timely manner new solutions and platform enhancements that meet customer requirements; |
• | the timing of product releases or upgrades or announcements by us or our competitors; |
• | any change in the competitive dynamics of our markets, including consolidation among our competitors or resellers, new entrants or discounting of prices; |
• | the amount and timing of expenses to grow our business and the extent to which we are able to take advantage of economies of scale or to leverage our relationships with OEM or channel partners; |
• | the costs associated with acquiring new businesses and technologies and the follow-on costs of integrating and consolidating the results of acquired businesses; |
• | the amount and timing of stock-based compensation expenses; |
• | our ability to control the costs of our solutions and their key components, or to pass along any cost increases to our end-customers; |
• | general economic, industry and market conditions; and |
• | future accounting pronouncements and changes in accounting policies. |
• | lost revenue or lost OEM or other channel partners or end-customers; |
• | increased costs, including warranty expense and costs associated with end-customer support as well as development costs to remedy the errors or defects; |
• | delays, cancellations, reductions or rescheduling of orders or shipments; |
• | product returns or discounts; and |
• | damage to our reputation and brand. |
• | public sector budgetary cycles and funding authorizations; |
• | changes in fiscal or contracting policies; |
• | decreases in available government funding; |
• | changes in government programs or applicable requirements; |
• | the adoption of new laws or regulations or changes to existing laws or regulations; |
• | potential delays or changes in the government appropriations or other funding authorization processes; and |
• | higher expenses associated with, or delays caused by, diligence and qualifying or maintaining qualification as a government vendor. |
• | business practices may differ from those in the United States and may require us in the future to include terms other than our standard terms in customer, channel partner, employee, consultant and other contracts; |
• | political, economic and social instability or uncertainty around the world; |
• | potential changes in trade relations arising from policy initiatives implemented by the Trump administration, which has been critical of existing and proposed trade agreements; |
• | greater difficulty in enforcing contracts, judgments and arbitration awards in international courts, and in collecting accounts receivable and longer payment and collection periods; |
• | greater risk of unexpected changes in regulatory practices, tariffs, and tax laws and treaties; |
• | risks associated with trade restrictions and foreign legal requirements, including the importation, certification and localization of our solutions required in foreign countries; |
• | greater risk of a failure of foreign employees, partners, distributors and resellers to comply with both U.S. and foreign laws, including antitrust regulations, the FCPA, the U.K. Bribery Act, U.S. or foreign sanctions regimes and export or import control laws, and any trade regulations ensuring fair trade practices; |
• | heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements; |
• | requirements to comply with foreign privacy, data protection and information security laws and regulations and the risks and costs of non-compliance; |
• | reduced or uncertain protection for intellectual property rights in some countries; |
• | impediments to the flow of foreign exchange capital payments and receipts due to exchange controls instituted by certain foreign governments; |
• | increased expenses incurred in establishing and maintaining office space and equipment for our international operations; |
• | difficulties in managing and staffing international offices and increased travel, infrastructure and legal compliance costs associated with multiple international locations; |
• | greater difficulty in identifying, attracting and retaining local experienced personnel, and the costs and expenses associated with such activities; |
• | the challenge of managing a development team in geographically disparate locations; |
• | management communication and integration problems resulting from cultural and geographic dispersion; |
• | differing employment practices and labor relations issues; |
• | fluctuations in exchange rates between the U.S. dollar and foreign currencies in markets where we do business; and |
• | treatment of revenue from international sources for tax purposes and changes in tax laws, regulations or official interpretations, including being subject to foreign tax laws and being liable for paying withholding, income or other taxes in foreign jurisdictions. |
• | If open source software programmers, most of whom we do not employ, do not continue to develop and enhance open source technologies, our development expenses could be increased and our product release and upgrade schedules could be delayed. |
• | Open source software is open to further development or modification by anyone. As a result, others may develop such software to be competitive with our platform, and may make such competitive software available as open source. It is also possible for competitors to develop their own solutions using open source software, potentially reducing the demand for, and putting price pressure on, our solutions. |
• | The licenses under which we license certain types of open source software may require that, if we modify the open source software we receive, we are required to make such modified software and other related proprietary software of ours publicly available without cost and on the same terms. Accordingly, we monitor our use of open source software in an effort to avoid subjecting our proprietary software to such conditions and others we do not intend. Although we believe that we have complied with our obligations under the various applicable licenses for open source software that we use, our processes used to monitor how open source software is used could be subject to error. In addition, there is little or no legal precedent governing the interpretation of terms in most of these licenses. Therefore, any improper usage of open source could result in unanticipated obligations regarding our solutions and technologies, which could have an adverse impact on our intellectual property rights and our ability to derive revenue from solutions incorporating the open source software. |
• | If an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur legal expenses defending against such allegations, or engineering expenses in developing a substitute solution. |
• | price and volume fluctuations in the overall stock market from time to time; |
• | volatility in the market prices and trading volumes of high technology stocks; |
• | changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; |
• | failure of financial analysts to maintain coverage of us, changes in financial estimates by any 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 these projections or our failure to meet these projections; |
• | announcements by us or our competitors of new products or new or terminated significant contracts, commercial relationships or capital commitments; |
• | public analyst or investor 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 or fluctuations in our operating results; |
• | actual or anticipated developments in our business or 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 our solutions, or third-party proprietary rights; |
• | rumored, announced or completed acquisitions of businesses 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 major changes in our management or our board of directors; |
• | general economic conditions and slow or negative growth of our markets; and |
• | other events or factors, including those resulting from war, incidents of terrorism or responses to these events. |
• | our amended and restated certificate of incorporation provides for a dual class common stock structure for 17 years following the completion of our initial public offering; |
• | a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors; |
• | the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; |
• | upon the conversion of our Class A common stock and Class B common stock into a single class of common stock, the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; |
• | upon the conversion of our Class A common stock and Class B common stock into a single class of common stock, a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; |
• | the requirement that a special meeting of stockholders may be called only by the chairman of our board of directors, our lead independent director, our president, our secretary or a majority vote of our board of directors, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; |
• | the requirement for the affirmative vote of holders of at least 66 2⁄3% of the voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend the provisions of our amended and restated certificate of incorporation relating to the issuance of preferred stock and management of our business or our amended and restated bylaws, which may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt; |
• | the ability of our board of directors, by majority vote, to amend our amended and restated bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend our amended and restated bylaws to facilitate an unsolicited takeover attempt; and |
• | advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us. |
Date: June 2, 2017 | /s/ Duston M. Williams | |
Duston M. Williams | ||
Chief Financial Officer | ||
(Principal Financial Officer) |
Incorporated by Reference | ||||||
Number | Exhibit Title | Form | File No. | Exhibit | Filing Date | Filed Herewith |
3.1 | Amended and Restated Certificate of Incorporation. | 10-Q | 001-37883 | 3.1 | 12/8/2016 | |
3.2 | Amended and Restated Bylaws. | S-1/A | 333-208711 | 3.4 | 5/27/2016 | |
10.1† | Memorandum of Understanding by and between Nutanix, Inc. and Flextronics Telecom Systems Limited, executed on March 13, 2017 | X | ||||
31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | X | ||||
31.2 | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | X | ||||
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* | X | ||||
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* | X | ||||
101.INS | XBRL Instance Document. | X | ||||
101.SCH | XBRL Taxonomy Extension Schema Document. | X | ||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | X | ||||
101. | XBRL Taxonomy Extension Definition. | X | ||||
101. | XBRL Taxonomy Extension Label Linkbase | X | ||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | X |
1. | The Parties will work in good faith to finalize and execute an MSA by the target date listed above. |
2. | Flextronics shall perform the Services for Nutanix starting as of the execution of this MOU. The performance of the Services shall be subject to the following provisions: |
a. | Each month Nutanix shall provide to Flextronics an updated rolling forecast of its proposed purchases of Products for the next six (6) months. Flextronics should use such forecasts to plan for the procurement of Components and the manufacture of the Products. Except for Nutanix’ component inventory liability pursuant to section 2g below, such forecasts shall not be considered binding until Nutanix issues a purchase order for Products. Should Flextronics procure more Components than are needed to meet the 6 month forecast, Nutanix shall have no liability for the Components that are the subject of such excess procurement, unless such excess purchases were agreed for in writing (email is sufficient), e.g. in order to meet minimum order quantities, risk buys, etc. |
b. | Nutanix shall issue purchase orders for Product(s) to Flextronics. Flextronics will accept Nutanix purchase orders and provide a date of shipment of the Product(s) via electronic data interchange within two (2) hours. For the purpose of clarity, Flextronics does not have the right to reject a purchase order that is consistent with this MOU (including the then current pricing), or within Nutanix’s credit limit. |
c. | In acknowledging a purchase orders from Nutanix, Flextronics shall indicate the expected ship date for the Product. Flextronics shall make commercially reasonable efforts to meet the following lead times: for Products in which all the components are available in the supermarket, the lead time shall be delivery of the Product within [***] of receipt of the purchase order; and for orders which will be new builds, the lead time for delivery of the Product shall be within [***] of receipt of the purchase order. |
d. | The shipment and risk of loss for the distribution of the Products shall be [***]. Nutanix will provide Flextronics with any requested documentation and any necessary information, documentation or required assistance in order to determine the export license requirements for Nutanix products. |
e. | Nutanix may reschedule or cancel any purchase order up to the time of shipment. |
f. | Nutanix has provided Flextronics with a bill of materials (“BOM”) of third party components, raw materials, and parts (“Components”) to be included in the Products by Flextronics as part of the performance of the Services. Flextronics has agreed to provide line item pricing on the costed BOMs related to the Products. The fees charged by Flextronics to Nutanix for the Services performed for each Product shall be the [***]. The [***] shall be the Transformation Costs related to the Products (“Transformation Costs” are described further in Section 3 below). All prices are in U.S. Dollars, and Nutanix shall make all payments in US Dollars within [***] of the date of the invoice. If any [***]. If a Product has been shipped and it does not operate in conformance with the written specifications for the Product due to a breach of Flextronics’s warranty pursuant to Exhibit A (“DOA Product”), then Nutanix shall notify Flextronics of such DOA Product within [***] of the shipment date and Flextronics shall replace the DOA Product with a new Product. In such a situation, Flextronics shall be responsible for all freight charges related to return of the DOA Product and the shipment of the new Product. |
g. | Component Inventory. |
i. | Flextronics will manage availability of Components (inventory, SMI, CRP, etc.) sufficient to achieve [***] of the Nutanix monthly forecast. In addition, with [***] notice that Nutanix intends to order sufficient Products, Flextronics shall manage availability of Components (inventory, SMI, CRP, etc.) sufficient to achieve [***] of the Nutanix monthly forecast. |
ii. | For Component demand greater than forecasted by Nutanix, Flextronics will use commercially reasonable efforts to prioritize Nutanix’ Component demand. |
iii. | Nutanix agrees to purchase any Products (finished goods) and unique Nutanix work in process (“WIP”) that has been held by Flextronics for more than [***], or pay Flextronics to tear down such WIP and restock Components. |
iv. | Nutanix and Flextronics shall jointly agree in writing on all Nutanix unique Components and non-cancellable and non-returnable Components (collectively “Custom Components”). For Custom Components that have been held by Flextronics for more than [***]. For any Custom Components that have been held by Flextronics between [***]. Nutanix will purchase any Custom Components held by Flextronics for more than [***]. Once a month, Nutanix and Flextronics will review the inventory report and determine inventory aging. Flextronics shall obtain Nutanix’s written approval prior to purchasing any Custom Components that exceed the applicable monthly forecasts. |
3. | Certain exceptional items, including but not limited to expedited freight, will be agreed upon in advance and in writing and will be charged separately by Flextronics and paid by Nutanix. The Parties have agreed that the [***] for the Transformation Costs shall be valid until [***] based on the forecasted sales by Flextronics to Nutanix beginning on [***] of a minimum of [***]. Transformation Costs include the following: |
4. | A revaluation process will be used in connection with quarterly pricing reviews between the Parties. The parties agree that material price will be reviewed and adjusted on a quarterly basis, and product quotes will be updated accordingly. For the term of this MOU, Component price changes will be identified and implemented as part of the revaluation process for Products. Any purchase order in backlog from Nutanix priced at the [***] pricing will be repriced to the new standard priced BOM plus the Transformation Costs described in this MOU. Any adjustments to the cost of Components due to a revaluation process must be completed before purchase orders are revalued. The Parties shall settle any price adjustment(s) at the beginning of the next Nutanix fiscal quarter as part of the revaluation process. |
5. | The Parties agree that time is of the essence in the performance of the Services. In the event that a Flextronics committed order is delayed by more than [***] from the committed shipment date due to reasons solely within Flextronics’s control, which shall include delays caused by subcontractors or suppliers selected by Flextronics, (“Late Delivery”), Nutanix shall be allowed to cancel such order at Nutanix’s sole discretion. [***]. |
6. | Non-Recurring Expenses (“NRE”): Based on the current assumptions and based on information provided by Nutanix, the NREs for setting up the Nutanix business in Milpitas are as described below and Nutanix shall issue a purchase order for the amounts listed below [***] of the execution of this MOU: |
• | For EDI setup: [***]; and |
• | For Manufacturing Test Setup: [***]. |
7. | This MOU shall continue to be in effect until it is terminated by either Party or until the Parties execute the MSA. The MOU may be terminated for any reason by either Party upon [***] written notice to the other Party. |
8. | Excluding payment obligations, neither Party shall be liable to the other Party if it is unable to perform its obligations for any cause beyond the reasonable control of the Party. Each Party will bear its own expenses incurred in connection with this MOU and the proposed engagement between the Parties. |
9. | The Parties will make commercially reasonable efforts to ensure that the time from execution of this MOU to first shipment of Products is approximately [***]. |
10. | FOR PURPOSES OF THIS MOU, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES INCLUDING, BUT NOT LIMITED TO LOST PROFITS, LOSS OF DATA, OR LOSS OF REVENUE ARISING OUT OF OR RELATING TO THIS MOU OR THE SALE OF PRODUCTS HEREUNDER, WHETHER SUCH LIABILITY IS ASSERTED ON THE BASIS OF CONTRACT, TORT (INCLUDING THE POSSIBILITY OF NEGLIGENCE OR STRICT LIABILITY) OR OTHERWISE, EVEN IF THE PARTY HAS BEEN WARNED OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE. IN ADDITION, IN NO EVENT SHALL EITHER PARTY’S LIABILITY FOR ALL CLAIMS ARISING OUT OF OR RELATING TO THIS MOU EXCEED [***], EXCEPT FOR NUTANIX’S PAYMENT OBLIGATIONS FOR PRODUCT AND COMPONENTS HEREUNDER AND FLEXTRONICS’S WARRANTY OBLIGATIONS UNDER SECTION 1.1 c) OF EXHIBIT A. |
11. | Neither Party may assign this MOU in whole or in part without the express written consent of the other Party except to each party’s respective affiliates. Such consent shall not be unreasonably withheld. Any permitted assignment of this MOU shall be binding upon and enforceable by and against the Parties’ successors and assigns, provided that any unauthorized assignment shall be null and void and constitute a breach of this MOU. This MOU shall be governed by and interpreted in accordance with the laws of the state of California. Any dispute, claim or controversy arising from or related in any way to this MOU or the interpretation, application, breach, termination or validity thereof, will be submitted for resolution by binding arbitration in accordance with the Comprehensive Arbitration Rules & Procedures of JAMS. The arbitration will be held in Santa Clara County, California and it shall be conducted in the English language. Judgment on any award in arbitration may be entered in any court of competent jurisdiction. Notwithstanding the above, each Party shall have the right to file in the Santa Clara, California state court or the federal courts in and for the Northern District of California an application for temporary or preliminary injunctive relief, writ of attachment, writ of possession, temporary protective order, and/or appointment of a receiver on the grounds that the arbitration award to which the applicant may be entitled may be rendered ineffectual in the absence of such relief. IN THE EVENT OF ANY DISPUTE BETWEEN THE PARTIES, THE PARTIES HEREBY KNOWINGLY AND VOLUNTARILY AGREE THAT ANY AND ALL MATTERS SHALL BE DECIDED BY A JUDGE OR ARBITRATOR WITHOUT A JURY TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW. |
12. | New Product Introduction (“NPI”) cost structure: Post go-live and from time to time, Nutanix may decide to develop and ask Flextronics to produce new products. Flextronics would charge Nutanix for certain costs associated with the NPI including but not limited to the cost of acquisition for any required equipment or tooling needed in production, or for any certifications required to support the new product. The parties agree to a [***] Transformation Cost (as described in item #4 above) or [***] the transformation rate for manufacturing, to convert existing part numbers to new top level assemblies (“TLA”). This charge does not include Components which will be priced separately. The parties agree that the number of NPI’s would not exceed [***] TLAs per quarter and the number of NPI Products to be tested would be [***]. |
13. | Engineering Change Orders (“ECO”) price structure: Flextronics will support up to [***] ECOs per month within the current transformation cost noted in sections 3 and 13. The parties agree that for any volume above the [***] ECO processing charge would be utilized for each 2 hours’ effort in processing these additional ECO’s. Any inventory impacts or assembly cost impacts would be priced separately on each ECO. |
14. | Refurbishment price structure: The Parties agree to [***] per unit for refurbishment of a Product. This charge is to receive in, test, inspect and re-pack these Products. Any replacement parts not under warranty, additional labor and/or packaging will be priced separately. |
Nutanix Inc. | Flextronics Telecom Systems Ltd. |
1. | WARRANTY |
1. | I have reviewed this Quarterly Report on Form 10-Q of Nutanix, 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 officers 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 officers 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. |
Date: June 2, 2017 | /s/ Dheeraj Pandey | |
Dheeraj Pandey | ||
Chairman and Chief Executive Officer | ||
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Nutanix, 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 officers 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 officers 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. |
Date: June 2, 2017 | /s/ Duston M. Williams | |
Duston M. Williams | ||
Chief Financial Officer | ||
(Principal Financial Officer) |
Date: June 2, 2017 | /s/ Dheeraj Pandey | |
Dheeraj Pandey | ||
Chairman and Chief Executive Officer | ||
(Principal Executive Officer) |
Date: June 2, 2017 | /s/ Duston M. Williams | |
Duston M. Williams | ||
Chief Financial Officer | ||
(Principal Financial Officer) |
DOCUMENT AND ENTITY INFORMATION - shares |
9 Months Ended | |
---|---|---|
Apr. 30, 2017 |
May 19, 2017 |
|
Entity Information [Line Items] | ||
Entity Registrant Name | Nutanix, Inc. | |
Entity Central Index Key | 0001618732 | |
Current Fiscal Year End Date | --07-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Apr. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Common Class A | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding (in shares) | 80,293,207 | |
Common Class B | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding (in shares) | 71,236,428 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2017 |
Apr. 30, 2016 |
Apr. 30, 2017 |
Apr. 30, 2016 |
|
Revenue: | ||||
Product | $ 143,142 | $ 89,957 | $ 411,307 | $ 241,582 |
Support and other services | 48,621 | 24,733 | 129,460 | 63,561 |
Total revenue | 191,763 | 114,690 | 540,767 | 305,143 |
Cost of revenue: | ||||
Product | 62,593 | 33,427 | 173,206 | 91,061 |
Support and other services | 20,613 | 9,966 | 56,608 | 25,347 |
Total cost of revenue | 83,206 | 43,393 | 229,814 | 116,408 |
Gross profit | 108,557 | 71,297 | 310,953 | 188,735 |
Operating expenses: | ||||
Sales and marketing | 128,007 | 75,849 | 368,026 | 200,576 |
Research and development | 74,607 | 31,390 | 220,802 | 81,271 |
General and administrative | 15,610 | 8,761 | 60,463 | 23,976 |
Total operating expenses | 218,224 | 116,000 | 649,291 | 305,823 |
Loss from operations | (109,667) | (44,703) | (338,338) | (117,088) |
Other income (expense)—net | 303 | (2,106) | (25,830) | (331) |
Loss before provision for income taxes | (109,364) | (46,809) | (364,168) | (117,419) |
Provision for income taxes | 2,613 | 11 | 3,190 | 1,151 |
Net loss | $ (111,977) | $ (46,820) | $ (367,358) | $ (118,570) |
Net loss per share attributable to common stockholders—basic and diluted (in dollars per share) | $ (0.78) | $ (1.05) | $ (3.07) | $ (2.72) |
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted (in shares) | 144,054,432 | 44,441,954 | 119,851,586 | 43,643,451 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2017 |
Apr. 30, 2016 |
Apr. 30, 2017 |
Apr. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (111,977) | $ (46,820) | $ (367,358) | $ (118,570) |
Other comprehensive (loss) income —net of tax: | ||||
Change in unrealized loss on available-for-sale securities, net of tax | 74 | (8) | (84) | (9) |
Total other comprehensive (loss) income—net of tax | 74 | (8) | (84) | (9) |
Comprehensive loss | $ (111,903) | $ (46,828) | $ (367,442) | $ (118,579) |
ORGANIZATION |
9 Months Ended |
---|---|
Apr. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION Organization and Description of Business—Nutanix, Inc. was incorporated in the state of Delaware in September 2009. Nutanix, Inc. is headquartered in San Jose, California, and together with its wholly-owned subsidiaries (collectively, the “Company”) has operations throughout North America, Europe, Asia-Pacific, Middle East, Latin America and Africa. The Company’s enterprise cloud platform converges traditional silos of server, virtualization and storage into one integrated solution and can also connect to public cloud services. The Company primarily sells its products and services to end-customers through distributors and resellers (collectively “Partners”). During the three months ended October 31, 2016, the Company completed two acquisitions, Calm.io Pte. Ltd. ("Calm") and PernixData, Inc. ("PernixData") (see Note 3). Initial Public Offering—In October 2016, the Company completed its initial public offering (“IPO”) of Class A common stock, in which it sold 17,100,500 shares, including 2,230,500 shares pursuant to the underwriters’ over-allotment option. The shares were sold at an IPO price of $16.00 per share for net proceeds of $254.5 million, after deducting underwriting discounts and commissions of $19.2 million. Additionally, offering costs incurred by the Company totaled $5.2 million. Immediately prior to the closing of the Company’s IPO, all outstanding shares of common stock were reclassified as Class B common stock, and all outstanding shares of its convertible preferred stock automatically converted into 76,319,511 shares of common stock on a one-to-one basis and then reclassified as shares of Class B common stock. Following the IPO, the Company has two classes of authorized common stock, Class A common stock, which entitles holders to one vote per share, and Class B common stock which entitles holders to 10 votes per share. |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Significant Accounting Policies—The condensed consolidated financial statements, which include the accounts of Nutanix, Inc. and its wholly-owned subsidiaries including the acquisitions of Calm and PernixData, have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in our final prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended, with the Securities and Exchange Commission (“SEC”) on September 28, 2016. Use of Estimates—The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Such management estimates include, but are not limited to, the best estimate of selling prices for products and related support; determination of fair value of common stock and convertible preferred stock, fair value of stock options and convertible preferred stock warrant liability; accounting for income taxes, including the valuation reserve on deferred tax assets and uncertain tax positions; warranty liability; commissions expense; fair value of assets and liabilities acquired in business combinations; and contingencies and litigation. Management evaluates these estimates and assumptions on an ongoing basis using historical experience and other factors and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could materially differ from those estimates and assumptions. Concentration Risk: Concentration of Revenue and Accounts Receivable—The Company sells its products primarily through Partners, including distributors and resellers, and occasionally directly to end-customers. For the three and nine months ended April 30, 2016 and 2017, no end-customer accounted for 10% or more of total revenue. For each significant Partner, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable, net are as follows:
Business Combinations—The Company accounts for its acquisitions using the acquisition method. Goodwill is measured at the acquisition date as the excess of the purchase price over the fair value of the assets acquired and liabilities assumed. Significant estimates and assumptions are made by management to value such assets and liabilities. Although the Company believes that those estimates and assumptions are reasonable and appropriate, they are inherently uncertain and subject to refinement. Additional information related to the acquisition date fair value of acquired assets and assumed liabilities obtained during the measurement period, not to exceed one year, may result in changes to the recorded values of such assets and liabilities, resulting in an offsetting adjustment to the goodwill associated with the business acquired. Uncertain tax positions and tax-related valuation allowances are initially established in connection with a business combination as of the acquisition date. The Company continues to collect information and reevaluate these estimates and assumptions quarterly. The Company will record any adjustments to its preliminary estimates to goodwill provided that the Company is within the one year measurement period. Any contingent consideration payable is recognized at fair value at the acquisition date. Liability-classified contingent consideration is remeasured each reporting period with changes in fair value recognized in earnings until the contingent consideration is settled. Acquisition related costs incurred in connection with a business combination, other than those associated with the issuance of debt or equity securities, are expensed as incurred. Goodwill, Intangible Assets and Impairment Assessment—Goodwill represents the excess of the purchase price over the fair value of the assets acquired and liabilities assumed, if any, in a business combination, and is allocated to the Company's single reporting unit. The Company evaluates goodwill for impairment on an annual basis as of May 1st or more frequently if it believes impairment indicators exist. Goodwill is tested for impairment by comparing the reporting unit's carrying value, including goodwill, to the fair value of the reporting unit. The Company operates under one reporting unit and for its annual goodwill impairment test, it determines the fair value of its reporting unit based on its enterprise value. The Company may elect to utilize a qualitative assessment to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying value. If, after assessing the qualitative factors, the Company determines that it is more likely than not that the fair value of its reporting unit is less than its carrying value, the two-step impairment analysis will be performed. In the first step, to identify a potential impairment, the Company compares the fair value of its reporting unit with its carrying amount. If the carrying value of the reporting unit exceeds its fair value, the second step would need to be performed. In the second step, the Company compares the implied fair value of the reporting unit with its carrying amount. Any excess of the reporting unit carrying value over the respective implied fair value is recognized as an impairment loss. Recently Adopted Accounting Pronouncement— In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Stock Compensation, which is intended to simplify several aspects of the accounting for share-based payment award transactions. ASU 2016-09 (i) requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled, (ii) requires classification of excess tax benefits as an operating activity in the statement of cash flows rather than a financing activity, (iii) eliminates the requirement to defer recognition of an excess tax benefit until the benefit is realized through a reduction to taxes payable, (iv) modifies statutory withholding tax requirements and (v) provides for a policy election to account for forfeitures as they occur. The Company early adopted ASU 2016-09 during the three months ended October 31, 2016. As a result of the adoption of ASU 2016-09, the Company recorded excess tax benefits prospectively in its provision for income taxes. Upon adoption, the Company recognized the previously unrecognized foreign excess tax benefits, which resulted in a cumulative effect adjustment of $0.1 million that reduced its accumulated deficit and increased its foreign deferred tax assets, using a modified retrospective transition method. The previously unrecognized U.S. excess tax benefits were recorded as a deferred tax asset, which was fully offset by a valuation allowance resulting in no impact to the accumulated deficit. Additionally, the Company elected to account for forfeitures as they occur using a modified retrospective transition method, which requires the Company to record cumulative-effect adjustment to accumulated deficit, and determined that the cumulative impact was immaterial. The Company presents its excess tax benefits as a component of operating cash flows rather than financing cash flows on a prospective basis. Recently Issued and Not Yet Adopted Accounting Pronouncements— In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The guidance is effective for annual periods beginning after December 15, 2017, with early adoption permitted, including adoption in any interim period for which financial statements have not yet been issued. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805) to clarify the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance is effective for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. Early adoption is permitted under certain circumstances. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. An impairment charge will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for the Company beginning August 1, 2020, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. As the Company evaluates goodwill for impairment on an annual basis as of May 1st, the Company plans to early adopt ASU 2017-04 in fiscal 2017 and the Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 will require the Company to present the change in the amounts described as restricted cash or restricted cash equivalents in the statement of cash flows. ASU 2016-18 is effective for the Company beginning August 1, 2018, with early adoption permitted. The Company does not believe that adoption of this ASU will have a material impact on its consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 will require the Company to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 is effective for the Company beginning August 1, 2018, with early adoption permitted. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for the Company beginning August 1, 2018. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case the Company would be required to apply the amendments prospectively as of the earliest date practicable. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases, which requires recognition of right-to-use lease assets and lease liabilities for all leases (with the exception of short-term leases) on the balance sheet of lessees. ASU 2016-02 is effective for the Company beginning August 1, 2019, including interim periods within those fiscal years, with early adoption permitted. This new standard requires a modified retrospective transition approach and provides certain optional transition relief. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The standard is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The FASB has issued several amendments to the standard, including clarifications on disclosure of prior-period performance obligations and remaining performance obligations. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The new standard will be effective for the Company beginning August 1, 2018, and adoption as of the original effective date of August 1, 2017 is permitted. The Company is currently evaluating early adoption of the standard, as well as the method of adoption. The Company's ability to early adopt is dependent on system readiness, and the completion of its analysis of information necessary to restate prior period financial statements if the full retrospective method is utilized. While the Company is continuing to assess all potential impacts of the standard, it currently believes the most significant impact relates to the timing of revenue recognition for certain software licenses sold with post contract support ("PCS") for which it does not have vendor-specific objective evidence of fair value ("VSOE") under current guidance. Under the new standard the requirement to have VSOE for undelivered elements is eliminated and the Company will recognize revenue for such software licenses upon transfer of control to its customers. |
BUSINESS COMBINATIONS |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS Calm Acquisition On August 22, 2016, the Company completed the acquisition of all outstanding shares of Calm, a company based in Singapore which specializes in container and DevOps automation, for an aggregate purchase price of $7.7 million, net of cash acquired (the “Calm Acquisition”). Consideration consisted of 528,517 shares of the Company’s common stock and $1.4 million of cash. The preliminary purchase price allocation includes $4.8 million of goodwill and $4.0 million of identifiable intangible assets, which primarily consist of developed technology, with an expected useful life of approximately 4.8 years. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired, and is not expected to be deductible for income tax purposes. The goodwill in this transaction is primarily attributable to the acquired workforce and expected operating synergies. The Company incurred approximately $0.6 million of acquisition costs related to the Calm Acquisition. The results of operations of Calm are included in the results of the Company beginning on the date the acquisition was completed. Actual and pro forma results of operations have not been presented as the total amounts of revenue and net income are not material to the Company's consolidated results for the nine months ended April 30, 2017. PernixData Acquisition On September 6, 2016, the Company completed the acquisition of PernixData, a company based in the U.S., which specializes in scale-out data acceleration and analytics, for an aggregate purchase price of $23.0 million (the "PernixData Acquisition"). Total consideration consisted of 1,711,019 shares of the Company’s common stock and contingent consideration. Total potential contingent payments amount to $19.0 million, which may be payable over the next three years upon the achievement of certain operating milestones. Up to $7.5 million of the contingent payments are deemed to be part of the purchase price, which may be limited based on certain closing conditions, including PernixData's working capital upon completion of the acquisition. Up to $11.5 million of the payments also require future services to be provided to the Company by the related employees and will be recorded as compensation expense over the service period. The fair value of the contingent consideration considered to be part of the purchase price was $2.4 million as of the acquisition date, and is net of expected limitations of approximately $1.8 million due to closing conditions. The Company incurred approximately $0.7 million of acquisition costs related to the PernixData Acquisition. As of the date of the PernixData Acquisition, the preliminary purchase price allocation was as follows (in thousands):
Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and is not expected to be deductible for income tax purposes. The goodwill in this transaction is primarily attributable to the acquired workforce and expected operating synergies. The acquired identifiable intangible assets consist of (in thousands, except estimated useful life):
In-process R&D will be tested for impairment at least annually, or whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Once the in-process R&D is completed, the Company will determine a useful life of the asset resulting from the completed in-process R&D and will begin amortizing the asset over its estimated useful life. Once completed, the useful life of the in-process R&D is expected to be approximately 5 to 7 years. Unaudited Pro Forma Combined Consolidated Financial Information—The following unaudited pro forma combined consolidated financial information summarizes the combined results of operations of the Company and PernixData as though the PernixData Acquisition occurred on August 1, 2015. The unaudited pro forma combined consolidated financial information for all periods presented also included the business combination accounting effects resulting from this acquisition, including amortization charges from acquired intangible assets. The results of operations of PernixData are included in the results of the Company beginning on the date of the acquisition, and are not material. The unaudited pro forma combined consolidated financial information is as follows (in thousands, except per share data):
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FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The fair value of the Company’s financial assets and liabilities measured on a recurring basis is as follows (in thousands):
A summary of the changes in the fair value of the Company’s convertible preferred stock warrant liability is as follows (in thousands):
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A summary of the changes in the fair value of the Company’s contingent consideration is as follows (in thousands):
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The Company remeasures the fair value of its Level 3 contingent consideration liability using the Monte Carlo simulation on projected future payments. |
BALANCE SHEET COMPONENTS |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE SHEET COMPONENTS | BALANCE SHEET COMPONENTS Short-Term Investments—The amortized cost of the Company’s short-term investments approximate their fair value. As of July 31, 2016 and April 30, 2017, unrealized gains or losses from the Company’s short-term investments were immaterial and there were no securities in an unrealized loss position for more than 12 months. The following table summarizes the estimated fair value of the Company’s investments in marketable debt securities, by the contractual maturity date (in thousands):
Property and Equipment—Net—Property and equipment, net consists of the following (in thousands):
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Depreciation and amortization expense related to the Company's property and equipment was $7.2 million and $19.0 million, respectively, for the three and nine months ended April 30, 2016. Depreciation and amortization expense related to the Company's property and equipment was $9.2 million and $26.3 million, respectively, for the three and nine months ended April 30, 2017. Intangible Assets—Net—Intangible assets, net consists of the following (in thousands):
Changes in the net book value of intangible assets are as follows (in thousands):
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Estimated future amortization expense of finite-lived intangible assets is as follows:
Accrued Compensation and Benefits—Accrued compensation and benefits consists of the following (in thousands):
Payroll taxes payable as of April 30, 2017 included $21.9 million related to required tax withholdings on RSU releases made at the end of the three months ended April 30, 2017. As the money to settle these withholding taxes had not been received from the Company's third-party transfer agent as of April 30, 2017, there was a corresponding receivable recognized and shown as part of prepaid expenses and other current assets as of April 30, 2017, and thus had no impact on the Company's total cash from operating activities. Accrued Expenses and Other Liabilities—Accrued expenses and other liabilities consists of the following (in thousands):
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DEBT |
9 Months Ended |
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Apr. 30, 2017 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Senior Notes—In April 2016, the Company issued an aggregate principal amount of $75.0 million of senior notes due on April 15, 2019 (the “Senior Notes”) to a lender. The Senior Notes contained a guaranteed minimum return to the holder of the Senior Notes (the “Guaranteed Minimum Return”). In September 2016, the Company fully repaid all outstanding principal balance of the Senior Notes and incurred approximately $3.3 million of loss on debt extinguishment, which consisted of $1.7 million of unamortized debt issuance costs and $1.6 million of debt extinguishment costs primarily related to the Guaranteed Minimum Return. |
COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Operating Leases—The Company has commitments for future payments related to its office facility leases and other contractual obligations. The Company leases its office facilities under non-cancelable operating lease agreements expiring through the year ending 2024. Certain of these lease agreements have free or escalating rent payments. The Company recognizes rent expense under such agreements on a straight-line basis over the lease term, with any free or escalating rent payments amortized as a reduction or addition of rent expense over the lease term. Future minimum payments due under operating leases as of April 30, 2017 are as follows:
Rent expense incurred under operating leases was $2.2 million and $5.1 million for the three and nine months ended April 30, 2016, respectively. Rent expense incurred under operating leases was $3.0 million and $8.8 million for the three and nine months ended April 30, 2017, respectively. Purchase Commitments—In the normal course of business, the Company makes commitments with its third-party hardware contract manufacturers to manufacture its inventories and non-standard components based on its forecasts. These commitments consist of obligations for on-hand inventories and non-cancellable purchase orders for non-standard components. The Company records a charge for firm, non-cancellable and unconditional purchase commitments with its third-party hardware contract manufacturers for non-standard components when and if quantities exceed its future demand forecasts through a charge to cost of product sales. As of April 30, 2017, the Company had approximately $23.8 million of non-cancellable purchase commitments pertaining to its normal operations, and approximately $58.3 million of other purchase obligations with its contract manufacturers. Guarantees and Indemnification— The Company has entered into agreements with some of its Partners and customers that contain indemnification provisions in the event of claims alleging that the Company’s products infringe the intellectual property rights of a third party. The scope of such indemnification varies, and may include, in certain cases, the ability to cure the indemnification by modifying or replacing the product at the Company’s own expense, requiring the return and refund of the infringing product, procuring the right for the partner and/or customer to continue to use or distribute the product, as applicable, and/or defending the partner or customer against and paying any damages from third party actions based upon claims of infringement. Other guarantees or indemnification arrangements include guarantees of product and service performance. The fair value of liabilities related to indemnifications and guarantee provisions are not material and have not had any material impact on the consolidated financial statements to date. In addition, the Company’s amended and restated certificate of incorporation and amended and restated bylaws provide that the Company will indemnify its directors and officers and may indemnify its employees and other agents to the fullest extent permitted by the Delaware General Corporation Law against certain liabilities. The Company has also entered into indemnification agreements with its directors, officers and certain employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers, employees or agents of the Company or another entity for which they are serving in such role at the Company’s request. The Company has also succeeded to obligations requiring it to indemnify certain former officers, directors, and employees of acquired companies as a result of the acquisition of such companies. The Company maintains director and officer insurance, which may cover certain liabilities arising from its obligation to indemnify its current and former directors and officers, and former directors and officers of acquired companies, in certain circumstances. It is not possible to determine the aggregate maximum potential loss under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Such indemnification agreements might not be subject to maximum loss clauses. Historically, the Company has not incurred material costs as a result of obligations under these agreements and it has not accrued any material liabilities related to such indemnification obligations in its consolidated financial statements. Litigation — From time to time, the Company may become involved in various litigation and administrative proceedings relating to claims arising from its operations in the normal course of business. Management is not currently aware of any matters that may have a material adverse impact on the Company’s business, financial position, results of operations or cash flows nor has the Company made any reserves for damages. |
CONVERTIBLE PREFERRED STOCK WARRANTS |
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Other Liabilities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONVERTIBLE PREFERRED STOCK WARRANTS | CONVERTIBLE PREFERRED STOCK WARRANTS The Convertible Preferred Stock Warrants outstanding prior to the IPO were as follows (in thousands, except for share and per share amounts):
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(2) Reflected in the consolidated balance sheets as convertible preferred stock warrant liability. Immediately prior to the closing of the Company’s IPO, all outstanding convertible preferred stock warrants automatically converted to common stock warrants, and then were reclassified as Class B common stock warrants. As a result of the automatic conversion of the convertible preferred stock warrants to Class B common stock warrants, the Company revalued the convertible preferred stock warrants as of the completion of the IPO and reclassified the outstanding preferred stock warrant liability balance to additional paid-in capital with no further remeasurements as the common stock warrants are now deemed permanent equity. During the three and nine months ended April 30, 2017, a total of 17,090 and 789,914 Class B common stock warrants, respectively, were exercised. As a result, during the three and nine months ended April 30, 2017, the Company issued a total of 17,090 and 775,554 shares of Class B common stock, respectively, as the contracts allow a net share settlement for Class B common stock. As of April 30, 2017, there were 34,180 Class B common stock warrants outstanding. |
CONVERTIBLE PREFERRED STOCK |
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Temporary Equity Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONVERTIBLE PREFERRED STOCK | CONVERTIBLE PREFERRED STOCK Series A Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C Convertible Preferred Stock, Series D Convertible Preferred Stock and Series E Convertible Preferred Stock (collectively the “Convertible Preferred Stock”) outstanding consisted of the following as of July 31, 2016 and as of immediately prior to the automatic conversion of the Convertible Preferred Stock into Class B common stock:
Immediately prior to the closing of the Company’s IPO, all shares of the Company’s then-outstanding Convertible Preferred Stock, as shown in the table above, automatically converted on a one-for-one basis into an aggregate of 76,319,511 shares of common stock, which were then reclassified into Class B common stock. |
STOCKHOLDERS’ EQUITY |
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Apr. 30, 2017 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | STOCKHOLDERS’ EQUITY Preferred Stock Immediately prior to the closing of the Company's IPO, the Company filed an Amended and Restated Certificate of Incorporation, which authorized the issuance of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by the Company's Board of Directors (the "Board"). As of April 30, 2017, there were 200,000,000 shares of preferred stock authorized with a par value of $0.000025 and no shares of preferred stock issued and outstanding. Common Stock In connection with the IPO, the Company established two classes of authorized common stock, Class A common stock and Class B common stock. All shares of common stock outstanding immediately prior to the IPO, including shares of common stock issued upon the conversion of the Convertible Preferred Stock, were converted into an equivalent number of shares of Class B common stock. As of April 30, 2017, the Company had 1,000,000,000 shares of Class A common stock authorized with a par value of $0.000025 per share and 200,000,000 shares of Class B common stock authorized with a par value of $0.000025 per share. As of April 30, 2017, 78,008,947 shares of Class A common stock were issued and outstanding and 73,106,394 shares of Class B common stock were issued and outstanding. Holders of Class A common stock are entitled to one vote for each share of Class A common stock held on all matters submitted to a vote of stockholders and holders of Class B common stock are entitled to ten votes for each share of Class B common stock held on all matters submitted to a vote of stockholders. Except with respect to voting, the rights of the holders of Class A and Class B common stock are identical. Shares of Class B common stock are voluntarily convertible into shares of Class A common stock at the option of the holder and generally automatically convert into shares of our Class A common stock upon a transfer. |
EQUITY AWARD PLANS |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY AWARD PLANS | EQUITY AWARD PLANS Stock Plans—In June 2010, the Company adopted the 2010 Stock Plan (“2010 Plan”), and in December 2011, the Company adopted the 2011 Stock Plan (“2011 Plan”). In December 2015, the Board adopted the 2016 Equity Incentive Plan (“2016 Plan” and together with the 2010 Plan and 2011 Plan, the “Stock Plans”), which was amended in September 2016. The Company’s stockholders approved the 2016 Plan in March 2016 and it became effective in connection with the Company’s IPO. As a result, upon the IPO, the Company ceased granting additional stock awards under the 2010 Plan and 2011 Plan and the 2010 Plan and 2011 Plan terminated. Any outstanding stock awards under the 2010 Plan and 2011 Plan will remain outstanding, subject to the terms of the applicable plan and award agreements, until such shares are issued under those stock awards, by exercise of stock options or settlement of RSUs, or until those stock awards become vested or expired by their terms. Under the 2016 Plan, the Company may grant incentive stock options (“ISO”), non-statutory stock options (“NSO”), restricted stock (“RS”), restricted stock units (“RSU”) and stock appreciation rights (“SAR”) to employees, directors and consultants. The Company has initially reserved 22,400,000 shares of the Company’s Class A common stock for issuance under the 2016 Plan. The number of shares of Class A common stock available for issuance under the 2016 Plan will also include an annual increase on the first day of each fiscal year beginning in fiscal year 2018, equal to the lesser of: 18,000,000 shares, 5% of the outstanding shares of classes of common stock as of the last day of the Company’s immediately preceding fiscal year, or such other amount as may be determined by the Board. In addition, up to a maximum of 38,667,284 shares of Class B common stock returned to the 2010 Plan and 2011 Plan as the result of expiration or termination of awards after the IPO will also become available for issuance under the 2016 Plan. As of April 30, 2017, the Company had reserved a total of 81,873,371 shares for the issuance of equity awards under the Stock Plans, of which 15,177,347 shares were still available for grant. Restricted Stock Units Performance RSUs. The Company grants RSUs that contain both service and performance conditions to its executives and employees. Vesting of the Performance RSUs is subject to continuous service with the Company and satisfaction of certain liquidity events of the Company, including the expiration of a lock-up period established in connection with the IPO, or both certain liquidity events and specified performance targets (collectively, the “Performance RSUs”). While the Company recognizes cumulative stock-based compensation expense for the portion of the awards for which the service condition has been satisfied when it is probable that the performance conditions will be met, vesting and settlement of the Performance RSUs are subject to the performance conditions actually being met. During the three months ended October 31, 2016, the Company began to recognize Performance RSUs with liquidity event performance conditions as the satisfaction of the performance conditions for vesting became probable. The Company’s summary of Performance RSUs activity under the Stock Plans is as follows:
Offer to Exchange Stock Options for RSUs (the “Tender Offer”). In July 2016, the Company approved a tender offer stock option exchange program under which outstanding employee stock options with exercise prices of $8.41 or greater per share could be exchanged for a specified number of Performance RSUs based on a predetermined exchange ratio granted with a new vesting period. As a result of the Tender Offer, on August 16, 2016, stock options to purchase 1,361,317 common shares were cancelled and, in exchange, the Company granted 911,489 Performance RSUs to eligible employees. The Tender Offer resulted in a total incremental stock-based compensation expense of approximately $3.4 million. Employee Stock Purchase Plan—In December 2015, the Board adopted the 2016 Employee Stock Purchase Plan, which was subsequently amended in January 2016 and September 2016 and approved by the Company’s stockholders in March 2016 (the “2016 ESPP”). The 2016 ESPP became effective in connection with the Company’s IPO. A total of 3,800,000 shares of Class A common stock were initially reserved for issuance under the 2016 ESPP. The number of shares of Class A common stock available for sale under the 2016 ESPP will also include an annual increase on the first day of each fiscal year beginning in fiscal 2018, equal to the lesser of: 3,800,000 shares, 1% of the outstanding shares of classes of common stock as of the last day of the Company’s immediately preceding fiscal year, or such other amount as may be determined by the Board. The 2016 ESPP allows eligible employees to purchase shares of the Company’s Class A common stock at a discount through payroll deductions of up to 15% of eligible compensation, subject to caps of $25,000 in any calendar year and 1,000 shares on any purchase date. The 2016 ESPP provides for 12-month offering periods generally beginning March and September of each year, and each offering period consists of two six-month purchase periods. The initial offering period began in September 2016 and will end in September 2017. On each purchase date, participating employees will purchase Class A common stock at a price per share equal to 85% of the lesser of the fair market value of the Company’s Class A common stock on (i) the first trading day of the applicable offering period and (2) the last trading day of each purchase period in the applicable offering period. If the stock price of the Company's Class A common stock on any purchase date in an offering period is lower than the stock price on the enrollment date of that offering period, the offering period will immediately reset after the purchase of shares on such purchase date and automatically roll into a new offering period. For the first offering period, which began on September 30, 2016, the fair market value of the common stock used for the first offering period was $16, the IPO price of the Company’s Class A common stock, and on April 5, 2017, 1,246,054 shares of common stock were purchased for an aggregate amount of $16.9 million. The Company uses the Black-Scholes option-pricing model to determine the fair value of shares purchased under the 2016 ESPP with the following weighted-average assumptions on the date of grant (on October 11, 2016 and April 5, 2017):
Stock-Based Compensation —Total stock-based compensation expense recognized for stock awards in the consolidated statements of operations is as follows (in thousands):
Total stock-based compensation expense recognized for stock awards in the consolidated statements of operations by type of awards is as follows (in thousands):
As of April 30, 2017, unrecognized stock-based compensation expense related to the outstanding stock awards was approximately $292.6 million and is expected to be recognized over a weighted-average period of approximately 2.2 years. |
INCOME TAXES |
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Apr. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES During the nine months ended April 30, 2017, the income tax provision of $3.2 million primarily consisted of foreign taxes on the Company's international operations and U.S. state income taxes, offset by the partial release of $1.5 million of the U.S. valuation allowance in connection with the PernixData Acquisition and tax benefit related to the early adoption of ASU 2016-09. The net deferred tax liability recorded in connection with the PernixData Acquisition provided an additional source of taxable income to support the realizability of the pre-existing deferred tax assets and as a result, the Company released a portion of the U.S. valuation allowance. During the three months ended April 30, 2017, the income tax provision of $2.6 million primarily consisted of foreign taxes on our international operations and state income taxes in the U.S. During the three and nine months ended April 30, 2016, the income tax provision of $0.0 million and $1.2 million, respectively, primarily consisted of foreign taxes on our international operations and state income taxes in the U.S., and was offset by a tax benefit related to the settlement of an uncertain tax position. |
NET LOSS PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET LOSS PER SHARE | NET LOSS PER SHARE The computation of basic and diluted net loss per share is as follows (in thousands, except share and per share data):
The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive are as follows:
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SEGMENT INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION The Company’s chief operating decision maker is a group which is comprised of its Chief Executive Officer, Chief Financial Officer and President. This group reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. Accordingly, the Company has a single reportable segment. The following table sets forth revenue by geographic area based on bill-to location (in thousands):
As of July 31, 2016 and April 30, 2017, $30.0 million and $59.3 million, respectively, of the Company’s long-lived assets, net were located in the U.S. |
RELATED PARTY TRANSACTIONS |
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Apr. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | RELATED PARTY TRANSACTIONS The Company enters into various transactions with its related parties in the normal course of business. During the three months ended April 30, 2016 and 2017, the Company’s purchases of goods or services from related parties totaled $0.0 million and $0.2 million, respectively. During the nine months ended April 30, 2016 and 2017, the Company’s purchases of goods or services from related parties totaled $0.7 million and $0.9 million, respectively. Amounts payable to related parties as of July 31, 2016 and April 30, 2017 were immaterial. Revenue from related parties for the nine months ended April 30, 2016 and 2017 were $0.5 million and $0.2 million, respectively, and for the three months ended April 30, 2016 and 2017 were $0.2 million and $0.1 million, respectively. Amounts receivable from related parties as of July 31, 2016 and April 30, 2017 were immaterial. In connection with the PernixData Acquisition (see Note 3), entities affiliated with Lightspeed Venture Partners, which owned approximately 36.7% of the Company’s outstanding Convertible Preferred Stock as of July 31, 2016, owned approximately 26.4% of the outstanding capital stock of PernixData immediately prior to the completion of the PernixData Acquisition. These entities received 625,478 shares of the Company’s common stock in the PernixData Acquisition, as well as the right to receive up to approximately $2.7 million in cash in the event the contingent consideration becomes payable. Two members of the Board are affiliated with Lightspeed Venture Partners. |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |
Principles of Consolidation and Significant Accounting Policies | Principles of Consolidation and Significant Accounting Policies—The condensed consolidated financial statements, which include the accounts of Nutanix, Inc. and its wholly-owned subsidiaries including the acquisitions of Calm and PernixData, have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in our final prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended, with the Securities and Exchange Commission (“SEC”) on September 28, 2016. |
Use of Estimates | Use of Estimates—The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Such management estimates include, but are not limited to, the best estimate of selling prices for products and related support; determination of fair value of common stock and convertible preferred stock, fair value of stock options and convertible preferred stock warrant liability; accounting for income taxes, including the valuation reserve on deferred tax assets and uncertain tax positions; warranty liability; commissions expense; fair value of assets and liabilities acquired in business combinations; and contingencies and litigation. Management evaluates these estimates and assumptions on an ongoing basis using historical experience and other factors and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could materially differ from those estimates and assumptions. |
Concentration Risk | Concentration Risk: Concentration of Revenue and Accounts Receivable—The Company sells its products primarily through Partners, including distributors and resellers, and occasionally directly to end-customers. |
Business Combination | Business Combinations—The Company accounts for its acquisitions using the acquisition method. Goodwill is measured at the acquisition date as the excess of the purchase price over the fair value of the assets acquired and liabilities assumed. Significant estimates and assumptions are made by management to value such assets and liabilities. Although the Company believes that those estimates and assumptions are reasonable and appropriate, they are inherently uncertain and subject to refinement. Additional information related to the acquisition date fair value of acquired assets and assumed liabilities obtained during the measurement period, not to exceed one year, may result in changes to the recorded values of such assets and liabilities, resulting in an offsetting adjustment to the goodwill associated with the business acquired. Uncertain tax positions and tax-related valuation allowances are initially established in connection with a business combination as of the acquisition date. The Company continues to collect information and reevaluate these estimates and assumptions quarterly. The Company will record any adjustments to its preliminary estimates to goodwill provided that the Company is within the one year measurement period. Any contingent consideration payable is recognized at fair value at the acquisition date. Liability-classified contingent consideration is remeasured each reporting period with changes in fair value recognized in earnings until the contingent consideration is settled. Acquisition related costs incurred in connection with a business combination, other than those associated with the issuance of debt or equity securities, are expensed as incurred. |
Goodwill and Intangible Asset Assessment | Goodwill, Intangible Assets and Impairment Assessment—Goodwill represents the excess of the purchase price over the fair value of the assets acquired and liabilities assumed, if any, in a business combination, and is allocated to the Company's single reporting unit. The Company evaluates goodwill for impairment on an annual basis as of May 1st or more frequently if it believes impairment indicators exist. Goodwill is tested for impairment by comparing the reporting unit's carrying value, including goodwill, to the fair value of the reporting unit. The Company operates under one reporting unit and for its annual goodwill impairment test, it determines the fair value of its reporting unit based on its enterprise value. The Company may elect to utilize a qualitative assessment to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying value. If, after assessing the qualitative factors, the Company determines that it is more likely than not that the fair value of its reporting unit is less than its carrying value, the two-step impairment analysis will be performed. In the first step, to identify a potential impairment, the Company compares the fair value of its reporting unit with its carrying amount. If the carrying value of the reporting unit exceeds its fair value, the second step would need to be performed. In the second step, the Company compares the implied fair value of the reporting unit with its carrying amount. Any excess of the reporting unit carrying value over the respective implied fair value is recognized as an impairment loss. |
Recently Issued and Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncement— In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Stock Compensation, which is intended to simplify several aspects of the accounting for share-based payment award transactions. ASU 2016-09 (i) requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled, (ii) requires classification of excess tax benefits as an operating activity in the statement of cash flows rather than a financing activity, (iii) eliminates the requirement to defer recognition of an excess tax benefit until the benefit is realized through a reduction to taxes payable, (iv) modifies statutory withholding tax requirements and (v) provides for a policy election to account for forfeitures as they occur. The Company early adopted ASU 2016-09 during the three months ended October 31, 2016. As a result of the adoption of ASU 2016-09, the Company recorded excess tax benefits prospectively in its provision for income taxes. Upon adoption, the Company recognized the previously unrecognized foreign excess tax benefits, which resulted in a cumulative effect adjustment of $0.1 million that reduced its accumulated deficit and increased its foreign deferred tax assets, using a modified retrospective transition method. The previously unrecognized U.S. excess tax benefits were recorded as a deferred tax asset, which was fully offset by a valuation allowance resulting in no impact to the accumulated deficit. Additionally, the Company elected to account for forfeitures as they occur using a modified retrospective transition method, which requires the Company to record cumulative-effect adjustment to accumulated deficit, and determined that the cumulative impact was immaterial. The Company presents its excess tax benefits as a component of operating cash flows rather than financing cash flows on a prospective basis. Recently Issued and Not Yet Adopted Accounting Pronouncements— In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The guidance is effective for annual periods beginning after December 15, 2017, with early adoption permitted, including adoption in any interim period for which financial statements have not yet been issued. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805) to clarify the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance is effective for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. Early adoption is permitted under certain circumstances. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. An impairment charge will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for the Company beginning August 1, 2020, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. As the Company evaluates goodwill for impairment on an annual basis as of May 1st, the Company plans to early adopt ASU 2017-04 in fiscal 2017 and the Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 will require the Company to present the change in the amounts described as restricted cash or restricted cash equivalents in the statement of cash flows. ASU 2016-18 is effective for the Company beginning August 1, 2018, with early adoption permitted. The Company does not believe that adoption of this ASU will have a material impact on its consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 will require the Company to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 is effective for the Company beginning August 1, 2018, with early adoption permitted. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for the Company beginning August 1, 2018. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case the Company would be required to apply the amendments prospectively as of the earliest date practicable. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases, which requires recognition of right-to-use lease assets and lease liabilities for all leases (with the exception of short-term leases) on the balance sheet of lessees. ASU 2016-02 is effective for the Company beginning August 1, 2019, including interim periods within those fiscal years, with early adoption permitted. This new standard requires a modified retrospective transition approach and provides certain optional transition relief. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The standard is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The FASB has issued several amendments to the standard, including clarifications on disclosure of prior-period performance obligations and remaining performance obligations. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The new standard will be effective for the Company beginning August 1, 2018, and adoption as of the original effective date of August 1, 2017 is permitted. The Company is currently evaluating early adoption of the standard, as well as the method of adoption. The Company's ability to early adopt is dependent on system readiness, and the completion of its analysis of information necessary to restate prior period financial statements if the full retrospective method is utilized. While the Company is continuing to assess all potential impacts of the standard, it currently believes the most significant impact relates to the timing of revenue recognition for certain software licenses sold with post contract support ("PCS") for which it does not have vendor-specific objective evidence of fair value ("VSOE") under current guidance. Under the new standard the requirement to have VSOE for undelivered elements is eliminated and the Company will recognize revenue for such software licenses upon transfer of control to its customers. |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of Concentration of Revenue and Accounts Receivable | For each significant Partner, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable, net are as follows:
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BUSINESS COMBINATIONS (Tables) |
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Schedule of Preliminary Purchase Price Allocation | As of the date of the PernixData Acquisition, the preliminary purchase price allocation was as follows (in thousands):
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Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination | The acquired identifiable intangible assets consist of (in thousands, except estimated useful life):
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Schedule of Pro Forma Combined Consolidated Financial Information | The unaudited pro forma combined consolidated financial information is as follows (in thousands, except per share data):
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FAIR VALUE MEASUREMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financial Assets and Liabilities Measured on Recurring Basis | The fair value of the Company’s financial assets and liabilities measured on a recurring basis is as follows (in thousands):
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Summary of Changes in Fair Value of Convertible Preferred Stock Warrant Liability | A summary of the changes in the fair value of the Company’s convertible preferred stock warrant liability is as follows (in thousands):
______________
A summary of the changes in the fair value of the Company’s contingent consideration is as follows (in thousands):
______________
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BALANCE SHEET COMPONENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Investments in Marketable Debt Securities, by Contractual Maturity Date | The following table summarizes the estimated fair value of the Company’s investments in marketable debt securities, by the contractual maturity date (in thousands):
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Schedule of Property, Plant and Equipment | Property and Equipment—Net—Property and equipment, net consists of the following (in thousands):
______________
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Schedule of Finite-Lived Intangible Assets | Intangible Assets—Net—Intangible assets, net consists of the following (in thousands):
Changes in the net book value of intangible assets are as follows (in thousands):
______________
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Schedule of Indefinite-Lived Intangible Assets | Intangible Assets—Net—Intangible assets, net consists of the following (in thousands):
Changes in the net book value of intangible assets are as follows (in thousands):
______________
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated future amortization expense of finite-lived intangible assets is as follows:
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Schedule of Accrued Liabilities | Accrued Compensation and Benefits—Accrued compensation and benefits consists of the following (in thousands):
Payroll taxes payable as of April 30, 2017 included $21.9 million related to required tax withholdings on RSU releases made at the end of the three months ended April 30, 2017. As the money to settle these withholding taxes had not been received from the Company's third-party transfer agent as of April 30, 2017, there was a corresponding receivable recognized and shown as part of prepaid expenses and other current assets as of April 30, 2017, and thus had no impact on the Company's total cash from operating activities. Accrued Expenses and Other Liabilities—Accrued expenses and other liabilities consists of the following (in thousands):
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COMMITMENTS AND CONTINGENCIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Payments Due Under Operating Leases | Future minimum payments due under operating leases as of April 30, 2017 are as follows:
|
CONVERTIBLE PREFERRED STOCK WARRANTS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Convertible Preferred Stock Warrants | The Convertible Preferred Stock Warrants outstanding prior to the IPO were as follows (in thousands, except for share and per share amounts):
______________
(2) Reflected in the consolidated balance sheets as convertible preferred stock warrant liability. |
CONVERTIBLE PREFERRED STOCK (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Temporary Equity Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Convertible Preferred Stock | Series A Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C Convertible Preferred Stock, Series D Convertible Preferred Stock and Series E Convertible Preferred Stock (collectively the “Convertible Preferred Stock”) outstanding consisted of the following as of July 31, 2016 and as of immediately prior to the automatic conversion of the Convertible Preferred Stock into Class B common stock:
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EQUITY AWARD PLANS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of RSUs Activity | The Company’s summary of Performance RSUs activity under the Stock Plans is as follows:
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Schedule of ESPP Valuation Assumptions | The Company uses the Black-Scholes option-pricing model to determine the fair value of shares purchased under the 2016 ESPP with the following weighted-average assumptions on the date of grant (on October 11, 2016 and April 5, 2017):
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Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | Total stock-based compensation expense recognized for stock awards in the consolidated statements of operations is as follows (in thousands):
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Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan | Total stock-based compensation expense recognized for stock awards in the consolidated statements of operations by type of awards is as follows (in thousands):
|
NET LOSS PER SHARE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted Net Loss Per Share | The computation of basic and diluted net loss per share is as follows (in thousands, except share and per share data):
|
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive are as follows:
|
SEGMENT INFORMATION (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue by Geographic Area | The following table sets forth revenue by geographic area based on bill-to location (in thousands):
|
BUSINESS COMBINATIONS - Calm Acquisition (Details) - USD ($) $ in Thousands |
Aug. 22, 2016 |
Apr. 30, 2017 |
Jul. 31, 2016 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 16,636 | $ 0 | |
Calm Acquisition | |||
Business Acquisition [Line Items] | |||
Consideration transferred | $ 7,700 | ||
Business acquisition equity issued (in shares) | 528,517 | ||
Cash payment to acquire business | $ 1,400 | ||
Goodwill | 4,800 | ||
Intangible assets | $ 4,000 | ||
Estimated life (in years) | 4 years 10 months | ||
Acquisition related costs | $ 600 |
BUSINESS COMBINATIONS - PernixData Acquisition, Acquired Intangible Assets (Details) - PernixData Acquisition - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 06, 2016 |
Apr. 30, 2017 |
|
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | $ 24,270 | |
Intangible assets | $ 24,270 | |
In-process R&D | ||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||
In-process R&D | 16,100 | |
Developed technology | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | $ 3,570 | |
Estimated Useful Life (in years) | 5 years | |
Customer relationships | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | $ 4,600 | |
Estimated Useful Life (in years) | 6 years |
BUSINESS COMBINATIONS - Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Thousands |
9 Months Ended | |
---|---|---|
Apr. 30, 2017 |
Apr. 30, 2016 |
|
Business Acquisition, Pro Forma Information [Abstract] | ||
Revenue | $ 541,579 | $ 312,493 |
Net loss | $ (367,764) | $ (141,281) |
Basic net loss per share (in dollars per share) | $ (3.03) | $ (3.12) |
Diluted net loss per share (in dollars per share) | $ (3.03) | $ (3.12) |
FAIR VALUE MEASUREMENTS - Level 3 Roll Forward (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Apr. 30, 2017 |
Apr. 30, 2016 |
|
Warrant | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Contingent consideration—beginning balance | $ 9,679 | $ 11,683 |
Change in fair value | 21,133 | (567) |
Reclassification of unexercised warrants to additional paid-in capital upon the IPO | (30,812) | 0 |
Contingent consideration—ending balance | 0 | $ 11,116 |
Commitments | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Contingent consideration—beginning balance | 0 | |
Assumed in the PernixData Acquisition | 2,371 | |
Change in fair value | 176 | |
Contingent consideration—ending balance | $ 2,547 |
BALANCE SHEET COMPONENTS - Short-Term Investments (Details) - USD ($) $ in Thousands |
Apr. 30, 2017 |
Jul. 31, 2016 |
---|---|---|
Available-for-sale Securities, Debt Maturities, Fair Value, Rolling Maturity [Abstract] | ||
Due within 1 year | $ 126,291 | |
Due after 1 year through 3 years | 23,280 | |
Total | $ 149,571 | $ 85,991 |
BALANCE SHEET COMPONENTS - Future Amortization Expense (Details) $ in Thousands |
Apr. 30, 2017
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2017 (remaining three months) | $ 607 |
2018 | 2,220 |
2019 | 2,201 |
2020 | 2,201 |
2021 | 2,201 |
Thereafter | 1,079 |
Total | $ 10,509 |
BALANCE SHEET COMPONENTS - Accrued Compensation Benefits (Details) - USD ($) $ in Thousands |
Apr. 30, 2017 |
Jul. 31, 2016 |
---|---|---|
Employee-related Liabilities, Current [Abstract] | ||
Accrued commissions | $ 12,979 | $ 14,203 |
Accrued vacation | 6,172 | 3,490 |
Contributions to ESPP withheld | 3,773 | 0 |
Accrued bonus | 4,709 | 3,592 |
Payroll taxes payable | 24,198 | 1,234 |
Other | 5,003 | 2,028 |
Total accrued compensation and benefits | 56,834 | $ 24,547 |
RSUs | ||
Employee-related Liabilities, Current [Abstract] | ||
Payroll taxes payable | $ 21,900 |
BALANCE SHEET COMPONENTS - Accrued Liabilities (Details) - USD ($) $ in Thousands |
Apr. 30, 2017 |
Jul. 31, 2016 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Accrued professional services | $ 4,181 | $ 3,585 |
Income taxes payable | 3,446 | 1,417 |
Other | 1,391 | 535 |
Total accrued expenses and other liabilities | $ 9,018 | $ 5,537 |
DEBT (Details) - USD ($) |
1 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2016 |
Apr. 30, 2017 |
Apr. 30, 2016 |
|
Debt Instrument [Line Items] | |||
Gain (loss) on extinguishment of debt | $ (3,300,000) | $ (3,320,000) | $ 0 |
Write off of unamortized debt issuance costs | 1,700,000 | ||
Loss related to guaranteed minimum return | $ 1,600,000 | ||
Senior Notes | Senior Notes Due April 15, 2019 | |||
Debt Instrument [Line Items] | |||
Debt instrument face amount | $ 75,000,000.0 |
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2017 |
Apr. 30, 2016 |
Apr. 30, 2017 |
Apr. 30, 2016 |
|
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||
2017 (remaining three months) | $ 3,073 | $ 3,073 | ||
2018 | 12,560 | 12,560 | ||
2019 | 11,832 | 11,832 | ||
2020 | 10,454 | 10,454 | ||
2021 | 7,597 | 7,597 | ||
Thereafter | 2,934 | 2,934 | ||
Total | 48,450 | 48,450 | ||
Operating leases, rent expense | 3,000 | $ 2,200 | 8,800 | $ 5,100 |
Non-contract Vendors | ||||
Loss Contingencies [Line Items] | ||||
Purchase obligation | 23,800 | 23,800 | ||
Contract Manufacturer | ||||
Loss Contingencies [Line Items] | ||||
Purchase obligation | $ 58,300 | $ 58,300 |
STOCKHOLDERS’ EQUITY (Details) |
Apr. 30, 2017
vote
class
$ / shares
shares
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Sep. 30, 2016
class
|
---|---|---|
Class of Stock [Line Items] | ||
Preferred stock, shares authorized (in shares) | 200,000,000 | |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.000025 | |
Preferred stock, shares issued (in shares) | 0 | |
Preferred stock, shares outstanding (in shares) | 0 | |
Common stock, number of classes of stock | class | 2 | 2 |
Common stock, par value (in dollars per share) | $ / shares | $ 0.000025 | |
Common Class A | ||
Class of Stock [Line Items] | ||
Common stock, shares authorized (in shares) | 1,000,000,000 | |
Common stock, shares issued (in shares) | 78,008,947 | |
Common stock number of votes per share | vote | 1 | |
Common Class B | ||
Class of Stock [Line Items] | ||
Common stock, shares authorized (in shares) | 200,000,000 | |
Common stock, shares issued (in shares) | 73,106,394 | |
Common stock number of votes per share | vote | 10 |
EQUITY AWARD PLANS - RSU (Details) - RSUs - $ / shares |
9 Months Ended | |
---|---|---|
Apr. 30, 2017 |
Jul. 31, 2016 |
|
Number of Shares | ||
Outstanding, beginning balance (in shares) | 12,265,369 | |
Granted (in shares) | 11,543,670 | |
Released (in shares) | (4,249,756) | |
Canceled/forfeited (in shares) | (617,159) | |
Outstanding, ending balance (in shares) | 18,942,124 | |
Grant Date Fair Value per Share | ||
Outstanding (in dollars per share) | $ 17.76 | $ 13.23 |
Granted (in dollars per share) | 21.91 | |
Released (in dollars per share) | 16.30 | |
Canceled/forfeited (in dollars per share) | $ 16.36 |
EQUITY AWARD PLANS - ESPP (Details) - Employee Stock Purchase Plan |
9 Months Ended |
---|---|
Apr. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (in years) | 9 months |
Risk-free interest rate | 0.60% |
Volatility | 51.00% |
Dividend yield | 0.00% |
INCOME TAXES (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2017 |
Apr. 30, 2016 |
Apr. 30, 2017 |
Apr. 30, 2016 |
|
Income Tax Disclosure [Abstract] | ||||
Provision for income taxes | $ 2,613 | $ 11 | $ 3,190 | $ 1,151 |
Valuation allowance release | $ 1,500 |
NET LOSS PER SHARE - Computation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2017 |
Apr. 30, 2016 |
Apr. 30, 2017 |
Apr. 30, 2016 |
|
Earnings Per Share [Abstract] | ||||
Net loss | $ (111,977) | $ (46,820) | $ (367,358) | $ (118,570) |
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted (in shares) | 144,054,432 | 44,441,954 | 119,851,586 | 43,643,451 |
Net loss per share attributable to common stockholders—basic and diluted (in dollars per share) | $ (0.78) | $ (1.05) | $ (3.07) | $ (2.72) |
SEGMENT INFORMATION (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Apr. 30, 2017 |
Apr. 30, 2016 |
Apr. 30, 2017 |
Apr. 30, 2016 |
Jul. 31, 2016 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Total revenue | $ 191,763 | $ 114,690 | $ 540,767 | $ 305,143 | |
U.S. | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Total revenue | 112,218 | 75,201 | 317,262 | 193,649 | |
Long-lived assets | 59,300 | 59,300 | $ 30,000 | ||
Europe, the Middle East and Africa | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Total revenue | 38,023 | 19,234 | 95,543 | 56,577 | |
Asia-Pacific | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Total revenue | 35,508 | 16,278 | 101,798 | 41,113 | |
Other Americas | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Total revenue | $ 6,014 | $ 3,977 | $ 26,164 | $ 13,804 |
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