CASTLIGHT HEALTH, INC., 10-Q filed on 5/3/2019
Quarterly Report
v3.19.1
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2019
Apr. 29, 2019
Document Information [Line Items]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Mar. 31, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q1  
Trading Symbol CSLT  
Entity Registrant Name CASTLIGHT HEALTH, INC.  
Entity Central Index Key 0001433714  
Current Fiscal Year End Date --12-31  
Entity Filer Category Accelerated Filer  
Entity Emerging Growth Company true  
Entity Ex Transition Period true  
Entity Small Business false  
Class A    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   35,117,853
Class B    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   108,842,540
v3.19.1
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Mar. 31, 2019
Dec. 31, 2018
Current assets:    
Cash and cash equivalents $ 66,338 $ 66,005
Marketable securities 0 11,327
Accounts receivable and other, net 34,699 26,816
Prepaid expenses and other current assets 4,351 3,680
Total current assets 105,388 107,828
Property and equipment, net 3,754 3,963
Restricted cash, non-current 1,325 1,325
Deferred commissions 19,067 20,142
Deferred professional service costs 9,672 10,133
Intangible assets, net 15,333 16,209
Goodwill 91,785 91,785
Operating lease right-of-use assets, net 15,989  
Other assets 2,209 2,129
Total assets 264,522 253,514
Current liabilities:    
Accounts payable 8,760 9,556
Accrued expenses and other current liabilities 13,025 15,454
Accrued compensation 5,005 5,975
Deferred revenue 23,774 20,193
Operating lease liabilities 5,928  
Total current liabilities 56,492 51,178
Deferred revenue, non-current 944 1,030
Debt, non-current 2,789 3,254
Operating lease liabilities, non-current 13,428  
Other liabilities, non-current 1,040 3,381
Total liabilities 74,693 58,843
Commitments and contingencies
Stockholders’ equity:    
Common stock 14 14
Additional paid-in capital 615,394 609,697
Accumulated other comprehensive loss 0 0
Accumulated deficit (425,579) (415,040)
Total stockholders’ equity 189,829 194,671
Total liabilities and stockholders’ equity $ 264,522 $ 253,514
v3.19.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Revenue:    
Total revenue, net $ 35,490 $ 36,479
Cost of revenue:    
Total cost of revenue 14,110 14,943
Gross profit 21,380 21,536
Operating expenses:    
Sales and marketing [1] 9,215 13,912
Research and development [1] 15,725 15,371
General and administrative [1] 7,293 6,825
Total operating expenses 32,233 36,108
Operating loss (10,853) (14,572)
Other income, net 314 128
Net loss $ (10,539) $ (14,444)
Net loss per share, basic and diluted (in usd per share) $ (0.07) $ (0.11)
Weighted-average shares used to compute basic and diluted net loss per share (in shares) 143,000 134,994
Subscription    
Revenue:    
Total revenue, net $ 33,806 $ 32,989
Cost of revenue:    
Total cost of revenue [1] 8,166 9,174
Professional services and other    
Revenue:    
Total revenue, net 1,684 3,490
Cost of revenue:    
Total cost of revenue [1] $ 5,944 $ 5,769
[1] Includes stock-based compensation expense as follows: Three Months Ended March 31, 2019 2018Cost of revenue: Cost of subscription$219 $242Cost of professional services and other265 301Sales and marketing627 1,138Research and development1,704 1,654General and administrative1,162 1,257
v3.19.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Subscription    
Stock-based compensation expense $ 219 $ 242
Professional services and other    
Stock-based compensation expense 265 301
Sales and marketing    
Stock-based compensation expense 627 1,138
Research and development    
Stock-based compensation expense 1,704 1,654
General and administrative    
Stock-based compensation expense $ 1,162 $ 1,257
v3.19.1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Statement of Comprehensive Income [Abstract]    
Net loss $ (10,539) $ (14,444)
Other comprehensive income:    
Net change in unrealized gain on available-for-sale marketable securities 0 2
Other comprehensive income 0 2
Comprehensive loss $ (10,539) $ (14,442)
v3.19.1
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
$ in Thousands
Total
Class A and B Common Stock
Additional Paid-In Capital
Accumulated Other Comprehensive Income (Loss)
Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2017   134,539,275      
Beginning balance at Dec. 31, 2017 $ 211,557 $ 13 $ 586,900 $ (22) $ (375,334)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Vesting of restricted stock units (in shares)   747,311      
Exercise of stock options, net (in shares)   309,242      
Exercise of stock options, net 490   490    
Stock-based compensation 4,633   4,633    
Comprehensive loss (14,442)     2 (14,444)
Ending balance (in shares) at Mar. 31, 2018   135,595,828      
Ending balance at Mar. 31, 2018 202,238 $ 13 592,023 (20) (389,778)
Beginning balance (in shares) at Dec. 31, 2018   141,927,205      
Beginning balance at Dec. 31, 2018 $ 194,671 $ 14 609,697 0 (415,040)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Vesting of restricted stock units (in shares)   967,712      
Exercise of stock options, net (in shares) 1,060,870 1,060,870      
Exercise of stock options, net $ 1,680   1,680    
Stock-based compensation 4,017   4,017    
Comprehensive loss (10,539)     0 (10,539)
Ending balance (in shares) at Mar. 31, 2019   143,955,787      
Ending balance at Mar. 31, 2019 $ 189,829 $ 14 $ 615,394 $ 0 $ (425,579)
v3.19.1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Operating activities:    
Net loss $ (10,539) $ (14,444)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 1,344 1,860
Stock-based compensation 3,977 4,592
Amortization and impairment of deferred commissions 2,491 2,853
Amortization and impairment of deferred professional service costs 969 946
Non-cash operating lease expense 1,282 0
Lease exit and related charges 0 916
Accretion and amortization of marketable securities (126) (131)
Changes in operating assets and liabilities:    
Accounts receivable and other, net (7,883) (11,196)
Deferred commissions (1,416) (1,171)
Deferred professional service costs (469) (742)
Prepaid expenses and other assets (751) 206
Accounts payable (849) 1,783
Operating lease liabilities (1,382) 0
Accrued expenses and other liabilities (1,304) (1,237)
Deferred revenue 3,495 3,183
Accrued compensation (970) (6,390)
Net cash used in operating activities (12,131) (18,972)
Investing activities:    
Purchase of property and equipment (204) (388)
Purchase of marketable securities 0 (10,025)
Maturities of marketable securities 11,453 15,750
Net cash provided by investing activities 11,249 5,337
Financing activities:    
Proceeds from exercise of stock options 1,680 490
Principal payments on long-term debt (465) 0
Net cash provided by financing activities 1,215 490
Net increase (decrease) in cash, cash equivalents and restricted cash 333 (13,145)
Cash, cash equivalents and restricted cash at beginning of period 67,330 62,644
Cash, cash equivalents and restricted cash at end of period 67,663 49,499
Reconciliation of cash, cash equivalents and restricted cash:    
Total cash, cash equivalents and restricted cash $ 67,330 $ 62,644
v3.19.1
Organization and Description of Business
3 Months Ended
Mar. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Description of Business
Organization and Description of Business
Castlight Health, Inc. (“Castlight” or “the Company”) offers a comprehensive software-as-a-service platform that simplifies health benefits navigation for millions of employees. The Castlight platform matches employees to the best resources their employers make available to them, whether they are healthy, actively seeking medical care, or managing a condition, and motivates them to take the best steps for their health. Castlight helps employers generate more value from their benefits investments by helping to improve outcomes, lower health care costs, and increase benefits satisfaction. The Company was incorporated in the State of Delaware in January 2008. The Company's principal executive offices are located in San Francisco, California.
v3.19.1
Accounting Standards and Significant Accounting Policies
3 Months Ended
Mar. 31, 2019
Accounting Policies [Abstract]  
Accounting Standards and Significant Accounting Policies
Accounting Standards and Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include Castlight and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. In the opinion of management, the information herein reflects all adjustments, consisting only of normal recurring adjustments except as otherwise noted, considered necessary for a fair statement of results of operations, financial position, stockholders’ equity and cash flows. The results for the interim periods presented are not necessarily indicative of the results expected for any future period. The following information should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018

Other than described below, there have been no changes to our significant accounting policies described in our Annual Report that have had a material impact on our consolidated financial statements and related notes.
Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. These estimates include, but are not limited to the determination of:

Variable consideration included in the transaction price of the Company’s contracts with customers;
The standalone selling price of the performance obligations in the Company’s contracts with customers;
Assumptions used in the valuation of certain equity awards;
The amortization period for deferred commissions and deferred professional services costs; and
Assumptions used in the calculation of right-of-use (“ROU”) assets and lease liabilities for operating leases, including lease terms and the Company’s incremental borrowing rate.

Actual results could differ from those estimates, and such differences could be material to the Company’s consolidated financial position and results of operations.

Summary of Significant Accounting Policies

Leases

The Company determines if an arrangement is a lease and its classification at lease inception. Operating lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at the lease commencement date to compute the present value of lease payments when the implicit rate is not readily determinable. ROU assets are measured at lease inception based on the initial measurement of the lease liability, plus any prepaid lease amounts, less any lease incentives. The Company does not recognize ROU assets or lease liabilities for leases with a term of 12 months or less. Lease terms do not include options to extend or terminate the lease unless it is reasonably certain that the option will be exercised. Generally, lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company's lease agreements have both lease and non-lease components. The Company has elected to account for the non-lease components of its leases as part of their related lease components.

Concentrations of Risk and Significant Customers

No single direct customer accounted for more than 10% of total revenue or accounts receivable for the three months ended March 31, 2019. Castlight had one channel partner that represented approximately 24% of total revenue for three months ended March 31, 2019, and approximately 23% of accounts receivable as of March 31, 2019.

Recently Adopted Accounting Pronouncements

Effective January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases, and subsequent amendments ("ASC 842") using the modified retrospective method, and chose to apply the provisions at the beginning of the period of adoption. The guidance requires lessees to put all leases that have a term of more than one year on their balance sheets, whether operating or financing, while continuing to recognize the expenses on their income statements. The guidance states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-of-use ("ROU") asset for the right to use the underlying asset for the lease term. 

As a result of the adoption of ASC 842 as of January 1, 2019, reporting periods beginning on and after January 1, 2019 are presented under ASC 842, while prior period amounts were not adjusted and continue to be reported in accordance with prior accounting guidance under ASC 840. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification. As a result of the adoption of the new lease accounting guidance, the Company recognized on January 1, 2019 an operating lease ROU asset of approximately $17.3 million and an operating lease liability of approximately $20.7 million. The difference between the operating lease ROU asset and lease liability resulted from the reclass of the deferred rent liability to the operating lease ROU asset. The standard did not materially impact the Company’s condensed consolidated statement of operations and had no impact on the cash flows. See Note 10 - Leases for more information on leases.

Recently Issued Accounting Pronouncements
    
The Company considers the applicability and impact of all ASUs issued by the FASB. The Company determined that the ASUs issued by the FASB in the first quarter of 2019 are either not applicable or are expected to have minimal impact on the Company's condensed consolidated financial results.
v3.19.1
Revenue, Deferred Revenue, Contract Balances and Performance Obligations
3 Months Ended
Mar. 31, 2019
Revenue from Contract with Customer [Abstract]  
Revenue, Deferred Revenue, Contract Balances and Performance Obligations
Revenue, Deferred Revenue, Contract Balances and Performance Obligations
    
The Company sells to customers based in the United States through direct sales and indirect channels. Indirect channel revenue represented approximately 26% and 10% of the Company’s total revenue for the three months ended March 31, 2019 and 2018, respectively.

Deferred revenue as of March 31, 2019 and December 31, 2018 was $24.7 million and $21.2 million, respectively. Contract assets as of March 31, 2019 and December 31, 2018 were $1.2 million and $1.0 million, respectively.

$11.2 million and $15.9 million of revenue was recognized during the three months ended March 31, 2019 and 2018, respectively, that was included in the Company’s deferred revenue balances at the beginning of the respective periods.

The Company recorded favorable cumulative catch-up adjustments to revenue arising from changes in estimates of transaction price of $1.4 million during the three months ended March 31, 2019. Cumulative catch-up adjustments arising from changes in estimates of transaction price were immaterial during the three months ended March 31, 2018.

The aggregate balance of remaining performance obligations from non-cancelable contracts with customers as of March 31, 2019 was $145.4 million. The Company expects to recognize approximately 70% of this balance over the next 12 months, with the remaining balance recognized thereafter. Remaining performance obligations are defined as deferred revenue and amounts yet to be billed for the non-cancelable portion of contracts.
v3.19.1
Deferred Costs
3 Months Ended
Mar. 31, 2019
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Deferred Costs
Deferred Costs

Changes in the balance of total deferred commissions and total deferred professional service costs during the three months ended March 31, 2019 are as follows (in thousands):
 
As of December 31, 2018
 
 
 
Expense recognized
 
As of March 31, 2019
 
 
Additions
 
Deferred commissions
$
20,142

 
$
1,416

 
$
(2,491
)
 
$
19,067

Deferred professional service costs
10,133

 
508

 
(969
)
 
9,672

Total deferred commissions and professional service costs
$
30,275

 
$
1,924

 
$
(3,460
)
 
$
28,739


    These costs are reviewed for impairment periodically, and no material impairment charges were recorded for the three months ended March 31, 2019 and 2018.
v3.19.1
Goodwill and Intangible Assets
3 Months Ended
Mar. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets
Goodwill and Intangible Assets

Goodwill

Currently, all of the Company’s goodwill relates to the acquisition of Jiff. The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. There were no changes to goodwill for the three months ended March 31, 2019.

Intangible assets, net
    
The following tables set forth the fair value components of identifiable acquired intangible assets (dollars in thousands):
 
March 31, 2019
 
Useful Life
 
Gross
 
Accumulated Amortization
 
Net
Customer relationships
10
 
$
10,900

 
$
(2,180
)
 
$
8,720

Developed technology
5
 
10,600

 
(4,240
)
 
6,360

Backlog
3
 
1,500

 
(1,314
)
 
186

Other acquired intangible assets
1
-
3
 
900

 
(833
)
 
67

Total identifiable intangible assets
 
 
 
 
$
23,900

 
$
(8,567
)
 
$
15,333



 
December 31, 2018

Useful Life
 
Gross

Accumulated Amortization

Net
Customer relationships
10
 
$
10,900


$
(1,908
)

$
8,992

Developed technology
5
 
10,600


(3,710
)

6,890

Backlog
3
 
1,500


(1,256
)

244

Other acquired intangible assets
1
-
3
 
900


(817
)

83

Total identifiable intangible assets



 
$
23,900


$
(7,691
)

$
16,209



Amortization expense from acquired intangible assets for the three months ended March 31, 2019 and 2018 was $0.9 million and $1.1 million, respectively. Amortization expense is included in cost of subscription, sales and marketing, and general and administrative expenses.

Estimated amortization expense for acquired intangible assets for the following five years and thereafter is as follows (in thousands):
Remainder of 2019
$
2,629

2020
3,242

2021
3,210

2022
1,620

2023
1,090

Thereafter
3,542

Total estimated amortization expense
$
15,333

v3.19.1
Marketable Securities
3 Months Ended
Mar. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
Marketable Securities
Marketable Securities

All of the Company’s cash equivalents and marketable securities are classified as “available-for-sale” securities. These securities are reported at fair value, with the related unrealized gains and losses included in accumulated other comprehensive income, a component of stockholders’ equity, except for money market mutual funds, where gains and losses are included in the results of operation.

As of March 31, 2019 and December 31, 2018, respectively, marketable securities consisted of the following (in thousands):
 
As of March 31, 2019
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
U.S. treasury securities
$
3,138

 
$

 
$

 
$
3,138

U.S. agency obligations
16,706

 

 

 
16,706

Money market mutual funds
7,623

 

 

 
7,623

Included in cash and cash equivalents
$
27,467

 
$

 
$

 
$
27,467


 
As of December 31, 2018
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
U.S. treasury securities
$
7,980

 
$

 
$

 
$
7,980

U.S. agency obligations
18,158

 

 

 
18,158

Money market mutual funds
7,115

 

 

 
7,115

 
33,253

 

 

 
33,253

Included in cash and cash equivalents
21,926

 

 

 
21,926

Included in marketable securities
$
11,327

 
$

 
$

 
$
11,327

v3.19.1
Fair Value Measurements
3 Months Ended
Mar. 31, 2019
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Fair Value Measurements
The Company measures its financial assets and liabilities at fair value at each reporting period using a fair value hierarchy that requires that the Company maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:
Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2—Include other inputs that are directly or indirectly observable in the marketplace.
Level 3—Unobservable inputs that are supported by little or no market activity.
The fair value of marketable securities included in the Level 2 category is based on observable inputs, such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly. These values were obtained from a third-party pricing service and were evaluated using pricing models that vary by asset class and may incorporate available trade, bid and other market information and price quotes from well-established third party pricing vendors and broker-dealers.
There have been no changes in valuation techniques in the periods presented. There were no significant transfers between fair value measurement levels as of March 31, 2019 and December 31, 2018. As of March 31, 2019 and December 31, 2018, there were no securities within Level 3 of the fair value hierarchy.
The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis using the above input categories (in thousands):
 
As of March 31, 2019
 
Level 1
 
Level 2
 
Total
Cash equivalents:
 
 
 
 
 
U.S. agency obligations
$

 
$
16,706

 
$
16,706

U.S. treasury securities

 
3,138

 
3,138

Money market mutual funds
7,623

 

 
7,623

 
$
7,623

 
$
19,844

 
$
27,467

 
 
As of December 31, 2018
 
Level 1
 
Level 2
 
Total
Cash equivalents:
 
 
 
 
 
U.S. agency obligations
$

 
$
14,811

 
$
14,811

Money market mutual funds
7,115

 

 
7,115

Marketable securities:
 
 
 
 
 
U.S. treasury securities

 
7,980

 
7,980

U.S. agency obligations

 
3,347

 
3,347

 
$
7,115

 
$
26,138

 
$
33,253


Gross unrealized gains and losses for cash equivalents and marketable securities as of March 31, 2019 and December 31, 2018 were not material. The Company does not believe the unrealized losses represent other-than-temporary impairments based on the Company’s evaluation of available evidence as of March 31, 2019 and December 31, 2018.
There were no realized gains or losses during the three months ended March 31, 2019. Marketable securities on the balance sheets consist of securities with original or remaining maturities at the time of purchase of greater than three months, and the remainder of the securities is reflected in cash and cash equivalents. All of the Company’s securities as of March 31, 2019 and December 31, 2018 mature within one year.
v3.19.1
Property and Equipment
3 Months Ended
Mar. 31, 2019
Property, Plant and Equipment [Abstract]  
Property and Equipment
Property and Equipment
Property and equipment consisted of the following (in thousands):
 
As of
 
March 31, 2019
 
December 31, 2018
Leasehold improvements
$
3,102

 
$
3,102

Computer equipment
6,931

 
6,860

Software
1,097

 
1,097

Internal-use software
2,925

 
2,925

Furniture and equipment
1,072

 
1,018

Total
15,127

 
15,002

Accumulated depreciation
(11,373
)
 
(11,039
)
Property and equipment, net
$
3,754

 
$
3,963


Depreciation and amortization expense for the three months ended March 31, 2019 and 2018 was $0.5 million and $0.7 million, respectively. Depreciation and amortization are recorded on a straight-line basis.
v3.19.1
Debt
3 Months Ended
Mar. 31, 2019
Debt Disclosure [Abstract]  
Debt
Debt

Term Loan

In connection with the Company’s acquisition of Jiff, on April 3, 2017, the Company, Jiff and Silicon Valley Bank (the “Bank”) agreed to refinance the existing term loan facility owed by Jiff to the Bank (the “Loan Agreement”) for approximately $5.6 million (the “Term Loan”). The Term Loan requires interest-only payments for the period May 2017 through September 2018, followed by 36 monthly payments of principal and interest. Obligations under the Term Loan accrue interest at a floating per annum rate equal to the greater of (A) the prime rate as published in the money rates section of The Wall Street Journal (“Prime Rate”) minus 1% or (B) 0%. Interest on the Term Loan is payable monthly. The maturity date of the Term Loan is September 1, 2021.

In addition to principal and interest payments, the Company is also required to pay $0.5 million as final payment on the earlier of maturity, termination or prepayment of the Term Loan. The Company accrues for the final payment over the life of the Term Loan using the effective interest method.
    
The future maturities of the Term Loan by year as of March 31, 2019 are as follows (in thousands):
Remainder of 2019
$
1,394

2020
1,859

2021(1)
1,395

Total future maturities of debt
$
4,648

Less current maturities(2)
(1,859
)
Debt, non-current
$
2,789

(1) Excludes the $0.5 million required to be paid as final payment on the earlier of maturity, termination or prepayment of the Term Loan.
(2) Classified within accrued expenses and other current liabilities on the condensed consolidated balance sheet as of March 31, 2019.

Revolving Line of Credit    

The Loan Agreement also provides for an up to $25 million revolving credit facility (the “Revolving Line”). As of March 31, 2019, no borrowings have been made under the Revolving Line. The Revolving Line expired on April 3, 2019, its termination date.

In relation to the Loan Agreement, the Company is subject to certain financial and reporting covenants. As of March 31, 2019, none of the financial covenants, which require the Company to maintain a certain minimum liquidity ratio, are applicable. The Company was in compliance with all reporting covenants in the Loan Agreement related to the outstanding principal balance as of March 31, 2019.
v3.19.1
Leases
3 Months Ended
Mar. 31, 2019
Leases [Abstract]  
Leases
Leases
    
The Company’s principal commitments primarily consist of obligations under leases for office space and co-location facilities for data center capacity. The leases expire at various dates through 2025 and, in some cases, include renewal options. The exercise of the option is at the sole discretion of the Company. The Company subleases certain office facilities to third parties. These leases are classified as operating leases. The Company does not have any short-term or finance leases. Information about these operating leases is disclosed in the following table (dollars in thousands):
 
Three Months Ended March 31, 2019
Lease cost:
 
Operating lease cost
$
1,649

Variable lease cost (1)
151

Sublease income
(616
)
Total lease cost
$
1,184

 
 
Other information:
 
Operating cash flows used in the measurement of operating lease liabilities
$
1,749

Weighted-average remaining lease term - operating leases (in years)
3.5

Weighted-average discount rate - operating leases
7.45
%
(1) Includes variable payments such as common area maintenance, property taxes and insurance.

Maturities of Lease Liabilities

As of March 31, 2019, the future minimum lease payments under non-cancellable operating leases are as follows (in thousands):
Remainder of 2019
$
5,336

2020
6,524

2021
5,355

2022
3,050

2023
677

2024 and later
1,111

Total lease payments
22,053

Less: Interest
(2,697
)
Present value of lease liabilities
$
19,356

Less: current portion
(5,928
)
Operating lease liabilities, non-current
$
13,428

v3.19.1
Contingencies
3 Months Ended
Mar. 31, 2019
Commitments and Contingencies Disclosure [Abstract]  
Contingencies
Contingencies
Legal Matters

From time to time, the Company may become subject to other legal proceedings, claims or litigation arising in the ordinary course of business. In addition, the Company may receive letters alleging infringement of patents or other intellectual property rights. If an unfavorable outcome were to occur in litigation, the impact could be material to the Company’s business, financial condition, cash flow or results of operations, depending on the specific circumstances of the outcome. The Company accrues for loss contingencies when it is both probable that it will incur the loss and when it can reasonably estimate the amount of the loss or range of loss.
v3.19.1
Stock Compensation
3 Months Ended
Mar. 31, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Compensation
Stock Compensation
Restricted Stock Units

A summary of restricted stock unit activity for the three months ended March 31, 2019 is as follows:
 
Number of
Shares
Outstanding
 
Weighted-
Average
Grant Date Fair Value
Balance as of December 31, 2018
9,528,602

 
$
3.54

Restricted Stock Units granted
1,189,450

 
$
3.40

Restricted Stock Units vested
(967,712
)
 
$
3.89

Restricted Stock Units forfeited and canceled (1)
(655,982
)
 
$
3.54

Balance as of March 31, 2019
9,094,358

 
$
3.48

(1) Includes PSUs that were granted in the prior year, which were canceled because performance targets were not achieved.
As of March 31, 2019, there was a total of $29.1 million in unrecognized compensation cost related to restricted stock units and performance stock units, which is expected to be recognized over a weighted-average period of approximately 2.7 years.
Stock Options
A summary of stock option activity for the three months ended March 31, 2019 is as follows: 
 
Options
Outstanding
 
Weighted-
Average
Exercise
Price
 
Aggregate
Intrinsic
Value (in thousands)
Balance as of December 31, 2018
6,265,223

 
$
2.65

 
$
3,499

Stock option grants
200,000

 
$
3.22

 
 
Stock options exercised
(1,060,870
)
 
$
1.58

 
 
Stock options forfeited and canceled
(21,987
)
 
$
3.04

 
 
Balance as of March 31, 2019
5,382,366

 
$
2.88

 
$
8,811


The total grant-date fair value of stock options granted during the three months ended March 31, 2019 and 2018 was $0.4 million and $0.3 million, respectively.
The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-valuation model with the following assumptions and fair value per share:
 
Three Months Ended March 31, 2019
 
2019
 
2018
Volatility
57%
 
57%
Expected life (in years)
6.06
 
6.06
Risk-free interest rate
2.57%
 
2.72
%
-
2.74%
Dividend yield
—%
 
—%

As of March 31, 2019, the Company had $1.2 million in unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted-average period of approximately 2.5 years.
v3.19.1
Stockholders' Equity
3 Months Ended
Mar. 31, 2019
Equity [Abstract]  
Stockholders’ Equity
Stockholders’ Equity
Common Stock
As of March 31, 2019, the Company had 36,137,783 shares of Class A common stock and 107,818,004 shares of Class B common stock outstanding.
v3.19.1
Income Taxes
3 Months Ended
Mar. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
    
The effective tax rate for each of the three month periods ended March 31, 2019  and 2018 was zero percent, primarily as a result of the estimated tax loss for the year and the change in valuation allowance. At March 31, 2019, all unrecognized tax benefits are subject to a full valuation allowance and, if recognized, will not affect the effective tax rate.
v3.19.1
Net Loss per Share
3 Months Ended
Mar. 31, 2019
Earnings Per Share [Abstract]  
Net Loss per Share
Net Loss per Share
Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including Preferred Stock and outstanding stock options and warrants, to the extent dilutive. Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive.
Net loss is allocated based on the contractual participation rights of the Class A and Class B common stock as if the earnings for the year have been distributed. As the liquidation and dividend rights are identical, the net loss is allocated on a proportionate basis.
    
The following table presents the calculation of basic and diluted net loss per share for the Company’s common stock (in thousands, except per share data):
 
Three Months Ended March 31,
 
2019
 
2018
 
Class A
 
Class B
 
Class A
 
Class B
Net loss
$
(2,741
)
 
$
(7,798
)
 
$
(5,646
)
 
$
(8,798
)
Weighted-average shares used to compute basic and diluted net loss per share
37,189

 
105,811

 
52,764

 
82,230

Basic and diluted net loss per share
$
(0.07
)
 
$
(0.07
)
 
$
(0.11
)
 
$
(0.11
)

The following securities were excluded from the calculation of diluted net loss per share for common stock because their effect would have been anti-dilutive for the periods presented (in thousands):
 
Three Months Ended March 31,
 
2019
 
2018
Stock options and restricted stock units
14,477

 
20,601

Warrants
115

 
115

Total
14,592

 
20,716

v3.19.1
Accounting Standards and Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2019
Accounting Policies [Abstract]  
Basis of Presentation and Principles of Consolidation
Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include Castlight and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. In the opinion of management, the information herein reflects all adjustments, consisting only of normal recurring adjustments except as otherwise noted, considered necessary for a fair statement of results of operations, financial position, stockholders’ equity and cash flows. The results for the interim periods presented are not necessarily indicative of the results expected for any future period. The following information should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018

Other than described below, there have been no changes to our significant accounting policies described in our Annual Report that have had a material impact on our consolidated financial statements and related notes.
Use of Estimates
Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. These estimates include, but are not limited to the determination of:

Variable consideration included in the transaction price of the Company’s contracts with customers;
The standalone selling price of the performance obligations in the Company’s contracts with customers;
Assumptions used in the valuation of certain equity awards;
The amortization period for deferred commissions and deferred professional services costs; and
Assumptions used in the calculation of right-of-use (“ROU”) assets and lease liabilities for operating leases, including lease terms and the Company’s incremental borrowing rate.

Actual results could differ from those estimates, and such differences could be material to the Company’s consolidated financial position and results of operations.

Leases
Leases

The Company determines if an arrangement is a lease and its classification at lease inception. Operating lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at the lease commencement date to compute the present value of lease payments when the implicit rate is not readily determinable. ROU assets are measured at lease inception based on the initial measurement of the lease liability, plus any prepaid lease amounts, less any lease incentives. The Company does not recognize ROU assets or lease liabilities for leases with a term of 12 months or less. Lease terms do not include options to extend or terminate the lease unless it is reasonably certain that the option will be exercised. Generally, lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company's lease agreements have both lease and non-lease components. The Company has elected to account for the non-lease components of its leases as part of their related lease components.
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements
Recently Adopted Accounting Pronouncements

Effective January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases, and subsequent amendments ("ASC 842") using the modified retrospective method, and chose to apply the provisions at the beginning of the period of adoption. The guidance requires lessees to put all leases that have a term of more than one year on their balance sheets, whether operating or financing, while continuing to recognize the expenses on their income statements. The guidance states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-of-use ("ROU") asset for the right to use the underlying asset for the lease term. 

As a result of the adoption of ASC 842 as of January 1, 2019, reporting periods beginning on and after January 1, 2019 are presented under ASC 842, while prior period amounts were not adjusted and continue to be reported in accordance with prior accounting guidance under ASC 840. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification. As a result of the adoption of the new lease accounting guidance, the Company recognized on January 1, 2019 an operating lease ROU asset of approximately $17.3 million and an operating lease liability of approximately $20.7 million. The difference between the operating lease ROU asset and lease liability resulted from the reclass of the deferred rent liability to the operating lease ROU asset. The standard did not materially impact the Company’s condensed consolidated statement of operations and had no impact on the cash flows. See Note 10 - Leases for more information on leases.

Recently Issued Accounting Pronouncements
    
The Company considers the applicability and impact of all ASUs issued by the FASB. The Company determined that the ASUs issued by the FASB in the first quarter of 2019 are either not applicable or are expected to have minimal impact on the Company's condensed consolidated financial results.
v3.19.1
Deferred Costs (Tables)
3 Months Ended
Mar. 31, 2019
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Changes in Balance of Total Deferred Commissions and Total Deferred Professional Service Costs
Changes in the balance of total deferred commissions and total deferred professional service costs during the three months ended March 31, 2019 are as follows (in thousands):
 
As of December 31, 2018
 
 
 
Expense recognized
 
As of March 31, 2019
 
 
Additions
 
Deferred commissions
$
20,142

 
$
1,416

 
$
(2,491
)
 
$
19,067

Deferred professional service costs
10,133

 
508

 
(969
)
 
9,672

Total deferred commissions and professional service costs
$
30,275

 
$
1,924

 
$
(3,460
)
 
$
28,739


v3.19.1
Goodwill and Intangible Assets (Tables)
3 Months Ended
Mar. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Finite-Lived Intangible Assets
The following tables set forth the fair value components of identifiable acquired intangible assets (dollars in thousands):
 
March 31, 2019
 
Useful Life
 
Gross
 
Accumulated Amortization
 
Net
Customer relationships
10
 
$
10,900

 
$
(2,180
)
 
$
8,720

Developed technology
5
 
10,600

 
(4,240
)
 
6,360

Backlog
3
 
1,500

 
(1,314
)
 
186

Other acquired intangible assets
1
-
3
 
900

 
(833
)
 
67

Total identifiable intangible assets
 
 
 
 
$
23,900

 
$
(8,567
)
 
$
15,333



 
December 31, 2018

Useful Life
 
Gross

Accumulated Amortization

Net
Customer relationships
10
 
$
10,900


$
(1,908
)

$
8,992

Developed technology
5
 
10,600


(3,710
)

6,890

Backlog
3
 
1,500


(1,256
)

244

Other acquired intangible assets
1
-
3
 
900


(817
)

83

Total identifiable intangible assets



 
$
23,900


$
(7,691
)

$
16,209

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense
Estimated amortization expense for acquired intangible assets for the following five years and thereafter is as follows (in thousands):
Remainder of 2019
$
2,629

2020
3,242

2021
3,210

2022
1,620

2023
1,090

Thereafter
3,542

Total estimated amortization expense
$
15,333

v3.19.1
Marketable Securities (Tables)
3 Months Ended
Mar. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
Available-for-sale Securities
As of March 31, 2019 and December 31, 2018, respectively, marketable securities consisted of the following (in thousands):
 
As of March 31, 2019
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
U.S. treasury securities
$
3,138

 
$

 
$

 
$
3,138

U.S. agency obligations
16,706

 

 

 
16,706

Money market mutual funds
7,623

 

 

 
7,623

Included in cash and cash equivalents
$
27,467

 
$

 
$

 
$
27,467


 
As of December 31, 2018
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
U.S. treasury securities
$
7,980

 
$

 
$

 
$
7,980

U.S. agency obligations
18,158

 

 

 
18,158

Money market mutual funds
7,115

 

 

 
7,115

 
33,253

 

 

 
33,253

Included in cash and cash equivalents
21,926

 

 

 
21,926

Included in marketable securities
$
11,327

 
$

 
$

 
$
11,327

v3.19.1
Fair Value Measurements (Tables)
3 Months Ended
Mar. 31, 2019
Fair Value Disclosures [Abstract]  
Fair Value, Assets Measured on Recurring Basis
The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis using the above input categories (in thousands):
 
As of March 31, 2019
 
Level 1
 
Level 2
 
Total
Cash equivalents:
 
 
 
 
 
U.S. agency obligations
$

 
$
16,706

 
$
16,706

U.S. treasury securities

 
3,138

 
3,138

Money market mutual funds
7,623

 

 
7,623

 
$
7,623

 
$
19,844

 
$
27,467

 
 
As of December 31, 2018
 
Level 1
 
Level 2
 
Total
Cash equivalents:
 
 
 
 
 
U.S. agency obligations
$

 
$
14,811

 
$
14,811

Money market mutual funds
7,115

 

 
7,115

Marketable securities:
 
 
 
 
 
U.S. treasury securities

 
7,980

 
7,980

U.S. agency obligations

 
3,347

 
3,347

 
$
7,115

 
$
26,138

 
$
33,253

v3.19.1
Property and Equipment (Tables)
3 Months Ended
Mar. 31, 2019
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment
Property and equipment consisted of the following (in thousands):
 
As of
 
March 31, 2019
 
December 31, 2018
Leasehold improvements
$
3,102

 
$
3,102

Computer equipment
6,931

 
6,860

Software
1,097

 
1,097

Internal-use software
2,925

 
2,925

Furniture and equipment
1,072

 
1,018

Total
15,127

 
15,002

Accumulated depreciation
(11,373
)
 
(11,039
)
Property and equipment, net
$
3,754

 
$
3,963

v3.19.1
Debt (Tables)
3 Months Ended
Mar. 31, 2019
Debt Disclosure [Abstract]  
Schedule of Maturities of Long-term Debt
The future maturities of the Term Loan by year as of March 31, 2019 are as follows (in thousands):
Remainder of 2019
$
1,394

2020
1,859

2021(1)
1,395

Total future maturities of debt
$
4,648

Less current maturities(2)
(1,859
)
Debt, non-current
$
2,789

(1) Excludes the $0.5 million required to be paid as final payment on the earlier of maturity, termination or prepayment of the Term Loan.
(2) Classified within accrued expenses and other current liabilities on the condensed consolidated balance sheet as of March 31, 2019.
v3.19.1
Leases (Tables)
3 Months Ended
Mar. 31, 2019
Leases [Abstract]  
Information About Operating Leases
Information about these operating leases is disclosed in the following table (dollars in thousands):
 
Three Months Ended March 31, 2019
Lease cost:
 
Operating lease cost
$
1,649

Variable lease cost (1)
151

Sublease income
(616
)
Total lease cost
$
1,184

 
 
Other information:
 
Operating cash flows used in the measurement of operating lease liabilities
$
1,749

Weighted-average remaining lease term - operating leases (in years)
3.5

Weighted-average discount rate - operating leases
7.45
%
(1) Includes variable payments such as common area maintenance, property taxes and insurance.
Maturities of Lease Liabilities
As of March 31, 2019, the future minimum lease payments under non-cancellable operating leases are as follows (in thousands):
Remainder of 2019
$
5,336

2020
6,524

2021
5,355

2022
3,050

2023
677

2024 and later
1,111

Total lease payments
22,053

Less: Interest
(2,697
)
Present value of lease liabilities
$
19,356

Less: current portion
(5,928
)
Operating lease liabilities, non-current
$
13,428

v3.19.1
Stock Compensation (Tables)
3 Months Ended
Mar. 31, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Schedule of Other Share-based Compensation, Activity
A summary of restricted stock unit activity for the three months ended March 31, 2019 is as follows:
 
Number of
Shares
Outstanding
 
Weighted-
Average
Grant Date Fair Value
Balance as of December 31, 2018
9,528,602

 
$
3.54

Restricted Stock Units granted
1,189,450

 
$
3.40

Restricted Stock Units vested
(967,712
)
 
$
3.89

Restricted Stock Units forfeited and canceled (1)
(655,982
)
 
$
3.54

Balance as of March 31, 2019
9,094,358

 
$
3.48

(1) Includes PSUs that were granted in the prior year, which were canceled because performance targets were not achieved.
Schedule of Share-based Compensation, Stock Options, Activity
A summary of stock option activity for the three months ended March 31, 2019 is as follows: 
 
Options
Outstanding
 
Weighted-
Average
Exercise
Price
 
Aggregate
Intrinsic
Value (in thousands)
Balance as of December 31, 2018
6,265,223

 
$
2.65

 
$
3,499

Stock option grants
200,000

 
$
3.22

 
 
Stock options exercised
(1,060,870
)
 
$
1.58

 
 
Stock options forfeited and canceled
(21,987
)
 
$
3.04

 
 
Balance as of March 31, 2019
5,382,366

 
$
2.88

 
$
8,811

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions
The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-valuation model with the following assumptions and fair value per share:
 
Three Months Ended March 31, 2019
 
2019
 
2018
Volatility
57%
 
57%
Expected life (in years)
6.06
 
6.06
Risk-free interest rate
2.57%
 
2.72
%
-
2.74%
Dividend yield
—%
 
—%
v3.19.1
Net Loss per Share (Tables)
3 Months Ended
Mar. 31, 2019
Earnings Per Share [Abstract]  
Calculation of Basic and Diluted Earnings per Share
The following table presents the calculation of basic and diluted net loss per share for the Company’s common stock (in thousands, except per share data):
 
Three Months Ended March 31,
 
2019
 
2018
 
Class A
 
Class B
 
Class A
 
Class B
Net loss
$
(2,741
)
 
$
(7,798
)
 
$
(5,646
)
 
$
(8,798
)
Weighted-average shares used to compute basic and diluted net loss per share
37,189

 
105,811

 
52,764

 
82,230

Basic and diluted net loss per share
$
(0.07
)
 
$
(0.07
)
 
$
(0.11
)
 
$
(0.11
)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share
The following securities were excluded from the calculation of diluted net loss per share for common stock because their effect would have been anti-dilutive for the periods presented (in thousands):
 
Three Months Ended March 31,
 
2019
 
2018
Stock options and restricted stock units
14,477

 
20,601

Warrants
115

 
115

Total
14,592

 
20,716



v3.19.1
Accounting Standards and Significant Accounting Policies - Concentrations of Risk and Significant Customers (Details) - Largest Channel Partner - Customer Concentration Risk
3 Months Ended
Mar. 31, 2019
Total Revenue  
Concentration Risk [Line Items]  
Concentration risk, percentage 24.00%
Accounts Receivable  
Concentration Risk [Line Items]  
Concentration risk, percentage 23.00%
v3.19.1
Accounting Standards and Significant Accounting Policies - Recently Adopted Accounting Pronouncements (Details) - USD ($)
$ in Thousands
Mar. 31, 2019
Jan. 01, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]    
Operating lease ROU asset $ 15,989  
Operating lease liability $ 19,356  
Accounting Standards Update 2016-02    
New Accounting Pronouncements or Change in Accounting Principle [Line Items]    
Operating lease ROU asset   $ 17,300
Operating lease liability   $ 20,700
v3.19.1
Revenue, Deferred Revenue, Contract Balances and Performance Obligations - Narrative (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Dec. 31, 2018
Concentration Risk [Line Items]      
Deferred revenue $ 24.7   $ 21.2
Contract with customer, asset, net 1.2   $ 1.0
Contract with customer liability, revenue recognized 11.2 $ 15.9  
Contract with customer, liability, cumulative catch-up adjustment to revenue, change in estimate of transaction price $ 1.4 $ 0.0  
Indirect Channel | Customer Concentration Risk | Sales Revenue, Net      
Concentration Risk [Line Items]      
Concentration risk, percentage 26.00% 10.00%