CASTLIGHT HEALTH, INC., 10-Q filed on 5/8/2020
Quarterly Report
v3.20.1
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2020
May 05, 2020
Document Information [Line Items]    
Document Type 10-Q  
Document Period End Date Mar. 31, 2020  
Entity Registrant Name CASTLIGHT HEALTH, INC.  
Entity Current Reporting Status Yes  
Entity Filer Category Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Amendment Flag false  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q1  
Entity Central Index Key 0001433714  
Current Fiscal Year End Date --12-31  
Class A common stock    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   35,032,053
Class B    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   114,484,826
v3.20.1
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 37,681 $ 43,017
Marketable securities 6,009 16,411
Accounts receivable and other, net 38,073 31,397
Prepaid expenses and other current assets 5,256 4,645
Total current assets 87,019 95,470
Property and equipment, net 6,823 4,856
Restricted cash, non-current 1,144 1,144
Deferred commissions 12,653 14,718
Deferred professional service costs 6,220 6,711
Intangible assets, net 11,104 12,178
Goodwill 41,485 91,785
Operating lease right-of-use assets, net 12,334 13,906
Other assets 1,900 2,016
Total assets 180,682 242,784
Current liabilities:    
Accounts payable 13,299 19,596
Accrued expenses and other current liabilities 10,445 10,454
Accrued compensation 4,305 8,770
Deferred revenue 13,730 10,173
Operating lease liabilities 5,430 5,914
Total current liabilities 47,209 54,907
Deferred revenue, non-current 588 572
Debt, non-current 930 1,395
Operating lease liabilities, non-current 10,618 11,823
Other liabilities, non-current 1,241 1,213
Total liabilities 60,586 69,910
Commitments and contingencies
Stockholders’ equity:    
Additional paid-in capital 631,445 627,899
Accumulated other comprehensive income 13 2
Accumulated deficit (511,377) (455,042)
Total stockholders’ equity 120,096 172,874
Total liabilities and stockholders’ equity 180,682 242,784
Class A common stock    
Stockholders’ equity:    
Class A common stock, $0.0001 par value; 200,000,000 shares authorized as of March 31, 2020 and December 31, 2019; 35,032,053 shares and 35,032,053 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively 4 4
Class B common stock    
Stockholders’ equity:    
Class A common stock, $0.0001 par value; 200,000,000 shares authorized as of March 31, 2020 and December 31, 2019; 35,032,053 shares and 35,032,053 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively $ 11 $ 11
v3.20.1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Mar. 31, 2020
Dec. 31, 2019
Class A common stock    
Par value (usd per share) $ 0.0001 $ 0.0001
Common stock authorized (in shares) 200,000,000 200,000,000
Common stock issued (in shares) 35,032,053 35,032,053
Common stock outstanding (in shares) 35,032,053 35,032,053
Class B    
Par value (usd per share) $ 0.0001 $ 0.0001
Common stock authorized (in shares) 800,000,000 800,000,000
Common stock issued (in shares) 114,485,591 113,177,162
Common stock outstanding (in shares) 114,485,591 113,177,162
v3.20.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Revenue:    
Total revenue, net $ 39,045 $ 35,490
Cost of revenue:    
Total cost of revenue 14,473 14,110
Gross profit 24,572 21,380
Operating expenses:    
Sales and marketing [1] 10,472 9,215
Research and development [1] 13,822 15,725
General and administrative [1] 6,576 7,293
Goodwill impairment 50,300 0
Total operating expenses 81,170 32,233
Operating loss (56,598) (10,853)
Other income, net 263 314
Net loss $ (56,335) $ (10,539)
Net loss per share, basic and diluted (in usd per share) $ (0.38) $ (0.07)
Weighted-average shares used to compute basic and diluted net loss per share (in shares) 148,872 143,000
Subscription    
Revenue:    
Total revenue, net $ 38,383 $ 33,806
Cost of revenue:    
Total cost of revenue [1] 10,232 8,166
Professional services and other    
Revenue:    
Total revenue, net 662 1,684
Cost of revenue:    
Total cost of revenue [1] $ 4,241 $ 5,944
[1] Includes stock-based compensation expense as follows:
 Three Months Ended March 31,
 20202019
Cost of revenue:
Cost of subscription$169  $219  
Cost of professional services and other116  265  
Sales and marketing672  627  
Research and development1,163  1,704  
General and administrative1,066  1,162  
v3.20.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Subscription    
Stock-based compensation expense $ 169 $ 219
Professional services and other    
Stock-based compensation expense 116 265
Sales and marketing    
Stock-based compensation expense 672 627
Research and development    
Stock-based compensation expense 1,163 1,704
General and administrative    
Stock-based compensation expense $ 1,066 $ 1,162
v3.20.1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Statement of Comprehensive Income [Abstract]    
Net loss $ (56,335) $ (10,539)
Other comprehensive income:    
Net change in unrealized gain on available-for-sale marketable securities 11 0
Other comprehensive income 11 0
Comprehensive loss $ (56,324) $ (10,539)
v3.20.1
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, 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      
Exercise of stock options, net 1,680   1,680    
Stock-based compensation 4,017   4,017    
Comprehensive loss (10,539)       (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)
Beginning balance (in shares) at Dec. 31, 2019   148,209,215      
Beginning balance at Dec. 31, 2019 $ 172,874 $ 15 627,899 2 (455,042)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Vesting of restricted stock units (in shares)   923,693      
Exercise of stock options, net (in shares) 142,729 142,729      
Exercise of stock options, net $ 155   155    
ESPP purchased shares (in shares)   242,007      
Issuance of common stock under the ESPP 186   186    
Stock-based compensation 3,205   3,205    
Comprehensive loss (56,324)     11 (56,335)
Ending balance (in shares) at Mar. 31, 2020   149,517,644      
Ending balance at Mar. 31, 2020 $ 120,096 $ 15 $ 631,445 $ 13 $ (511,377)
v3.20.1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Operating activities:    
Net loss $ (56,335) $ (10,539)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 1,535 1,344
Goodwill impairment 50,300 0
Stock-based compensation 3,186 3,977
Amortization and impairment of deferred commissions 2,383 2,491
Amortization and impairment of deferred professional service costs 925 969
Non-cash operating lease expense 1,400 1,282
Accretion and amortization of marketable securities 2 (126)
Changes in operating assets and liabilities:    
Accounts receivable and other, net (6,676) (7,883)
Deferred commissions (318) (1,416)
Deferred professional service costs (416) (469)
Prepaid expenses and other assets (494) (751)
Accounts payable (7,462) (849)
Operating lease liabilities (1,516) (1,382)
Accrued expenses and other liabilities 19 (1,304)
Deferred revenue 3,573 3,495
Accrued compensation (4,465) (970)
Net cash used in operating activities (14,359) (12,131)
Investing activities:    
Purchase of property and equipment (1,264) (204)
Purchase of marketable securities (1,989) 0
Maturities of marketable securities 12,400 11,453
Net cash provided by investing activities 9,147 11,249
Financing activities:    
Proceeds from exercise of stock options 155 1,680
Proceeds from ESPP offering 186 0
Principal payments on long-term debt (465) (465)
Net cash (used in) provided by financing activities (124) 1,215
Net (decrease) increase in cash, cash equivalents and restricted cash (5,336) 333
Cash, cash equivalents and restricted cash at beginning of period 44,342 67,330
Cash, cash equivalents and restricted cash at end of period 39,006 67,663
Reconciliation of cash, cash equivalents and restricted cash:    
Total cash, cash equivalents and restricted cash $ 39,006 $ 67,663
v3.20.1
Organization and Description of Business
3 Months Ended
Mar. 31, 2020
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”) provides health navigation solutions for large U.S. employers and health plans (“customers”) and their respective employees and members (“users”). Castlight’s offerings deliver a personalized and simplified user experience that helps connect individuals with the right provider or available benefit at the right time. Castlight’s navigation offerings have demonstrated measurable results, driving increased levels of user satisfaction and program utilization and lower healthcare costs for its customers and millions of users. The Company was incorporated in the State of Delaware in January 2008. The Company's principal executive offices are located in San Francisco, California.
v3.20.1
Accounting Standards and Significant Accounting Policies
3 Months Ended
Mar. 31, 2020
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, 2019. 

Other than as described below, there have been no changes to the Company's significant accounting policies described in the Company's Annual Report that have had a material impact on the Company's 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; and
Assumptions used in the calculation of goodwill impairment, including the forecast of future cash flows and discount 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.

Marketable Securities

The Company's marketable securities consist of U.S. agency obligations and U.S. treasury securities, with maturities at the time of purchase of greater than three months. Marketable securities with remaining maturities in excess of one year are classified as non-current. The Company classifies its marketable securities as available-for-sale at the time of purchase based on its intent and are recorded at their estimated fair value. Unrealized gains for available-for-sale securities are recorded in other comprehensive income/loss. Unrealized losses for available-for-sale securities are recorded in other comprehensive income/loss, unless the losses relate to deterioration in credit risk or if it is likely securities will be sold before the recovery of their cost basis. In these cases, the unrealized losses are reported in other income, net in the consolidated statement of operations.
Realized gains and losses are determined based on the specific identification method and are reported in other income, net in the consolidated statements of operations.

Concentrations of Risk and Significant Customers

The Company had one customer, Anthem Inc. ("Anthem"), that accounted for 44% of total revenue during the three months ended March 31, 2020 and 28% of accounts receivable as of March 31, 2020. Additionally, the Company had two customers that each accounted for approximately 11% of accounts receivable as of March 31, 2020.

Recently Adopted Accounting Pronouncements

Effective January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses, and subsequent amendments (“ASC 326”). The standard changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The adoption of this standard did not have a material impact on the Company’s financial statements. The Company will continue to actively monitor the impact of the current coronavirus (“COVID-19”) pandemic on expected credit losses.

Effective January 1, 2020, the Company adopted ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (“ASU 2018-15”), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The adoption of this standard did not have a material impact on the Company’s financial position or results of operations.

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 during the three months ended March 31, 2020 are either not applicable or are expected to have minimal impact on the Company's condensed consolidated financial results.
v3.20.1
Revenue, Deferred Revenue, Contract Balances and Performance Obligations
3 Months Ended
Mar. 31, 2020
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. Starting January 1, 2020, the effective date of the Anthem enterprise license agreement, the Company began treating Anthem as a direct health plan customer rather than a channel partner. As a result, substantially all of the Company's revenues are generated through direct sales.

Deferred revenue as of March 31, 2020 and December 31, 2019 was $14.3 million and $10.7 million, respectively. Contract assets as of March 31, 2020 and December 31, 2019 were $2.7 million and $0.4 million, respectively. The increase in contract assets is primarily due to the Anthem enterprise license agreement.

Revenue of $6.5 million and $11.2 million was recognized during the three months ended March 31, 2020 and 2019, 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 of $1.7 million and $1.4 million during the three months ended March 31, 2020 and 2019, respectively, arising from changes in estimates of transaction price.

The aggregate balance of remaining performance obligations from non-cancelable contracts with customers as of March 31, 2020 was $229.2 million. The Company expects to recognize approximately 50% 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.
v3.20.1
Deferred Costs
3 Months Ended
Mar. 31, 2020
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, 2020 are as follows (in thousands):

As of December 31, 2019Expense recognizedAs of March 31, 2020
Additions
Deferred commissions$14,718  $318  $(2,383) $12,653  
Deferred professional service costs  6,711  434  (925) 6,220  
Total deferred commissions and professional service costs
$21,429  $752  $(3,308) $18,873  

 These costs are reviewed for impairment quarterly. Impairment charges were $1.1 million for the three months ended March 31, 2020. Impairment charges for the three months ended March 31, 2019 were immaterial.
v3.20.1
Goodwill and Intangible Assets
3 Months Ended
Mar. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Goodwill and Intangible Assets
Impairment

The Company determined that the significant decline in the U.S. economy as a result of the COVID-19 pandemic, together with the decline in the Company’s stock price, constituted a triggering event, which required the Company to perform interim impairment analyses related to its long-lived assets and goodwill during the first quarter of 2020. The impairment analysis for long-lived assets indicated that the assets were recoverable; therefore, no impairment was recorded. After assessing long-lived assets, the Company performed a goodwill impairment analysis and determined that the fair value of its only reporting unit exceeded its carrying value by approximately $50.3 million. The fair value was determined using the income approach. The Company believes that the income approach is the most reliable indication of fair value since it incorporates future estimated revenues and expenses for the reporting unit that the market approach may not directly incorporate. In addition to future estimated revenue and expenses, the determination of fair value included assumptions related to a discount rate.

The Company will continue to monitor its goodwill on a quarterly basis for indicators of impairment, including but not limited to, further declines in the stock price. Accordingly, there may be future impairments.

Goodwill

The Company’s goodwill relates entirely to the acquisition of Jiff in 2017. As of March 31, 2020, the gross amount of goodwill was $91.8 million and accumulated goodwill impairment was $50.3 million, all of which was recorded in the first quarter of 2020. The goodwill impairment did not involve any cash expenditures.

Intangible assets, net

Identified intangible assets are recorded at their estimated fair values at the date of acquisition and are amortized over their respective estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are used. Backlog and Other acquired intangible assets were fully amortized and written off during the three months ended March 31, 2020.

The following tables set forth the fair value components of identifiable acquired intangible assets (dollars in thousands):
As of March 31, 2020
Useful LifeGrossAccumulated AmortizationNet
Customer relationships6$10,900  $(4,036) $6,864  
Developed technology510,600  (6,360) 4,240  
Total identifiable intangible assets$21,500  $(10,396) $11,104  
As of December 31, 2019
Useful LifeGrossAccumulated AmortizationNet
Customer relationships6$10,900  $(3,509) $7,391  
Developed technology510,600  (5,830) 4,770  
Backlog2.51,500  (1,500) —  
Other acquired intangible assets1-3900  (883) 17  
Total identifiable intangible assets$23,900  $(11,722) $12,178  

Amortization expense from acquired intangible assets for the three months ended March 31, 2020 and 2019 was $1.1 million and $0.9 million and is included in cost of subscription, sales and marketing, and general and administrative expenses.

Future estimated amortization expense for acquired intangible assets is as follows (in thousands):
Remainder of 2020$3,174  
20214,232  
20222,642  
20231,056  
Total amortization expense$11,104  
v3.20.1
Marketable Securities
3 Months Ended
Mar. 31, 2020
Investments, Debt and Equity Securities [Abstract]  
Marketable Securities Marketable Securities
Marketable securities consisted of the following (in thousands):

As of March 31, 2020
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
U.S. treasury securities $2,002  $ $—  $2,005  
U.S. agency obligations11,644  10  —  11,654  
Money market mutual funds12,337  —  —  12,337  
25,983  13  —  25,996  
Included in cash and cash equivalents19,983   —  19,987  
Included in marketable securities$6,000  $ $—  $6,009  

As of December 31, 2019
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
U.S. treasury securities$13,602  $ $—  $13,603  
U.S. agency obligations6,400   —  6,401  
Money market mutual funds8,736  —  —  8,736  
28,738   —  28,740  
Included in cash and cash equivalents12,329  —  —  12,329  
Included in marketable securities$16,409  $ $—  $16,411  
v3.20.1
Fair Value Measurements
3 Months Ended
Mar. 31, 2020
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, 2020 and December 31, 2019. As of March 31, 2020 and December 31, 2019, 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, 2020
Level 1Level 2Total
Cash equivalents:
U.S. agency obligations$—  $7,650  $7,650  
Money market mutual funds12,337  —  12,337  
Marketable securities:
U.S. treasury securities—  2,005  2,005  
U.S. agency obligations—  4,004  4,004  
$12,337  $13,659  $25,996  

As of December 31, 2019
Level 1Level 2Total
Cash equivalents:
Money market mutual funds$8,736  $—  $8,736  
U.S. treasury securities—  3,593  3,593  
Marketable securities:
U.S. agency obligations—  6,401  6,401  
U.S. treasury securities—  10,010  10,010  
$8,736  $20,004  $28,740  
Gross unrealized gains for cash equivalents and marketable securities as of March 31, 2020 and December 31, 2019 were not material.
There were no realized gains or losses during the three months ended March 31, 2020. All of the Company’s securities as of March 31, 2020 and December 31, 2019 mature within one year.
v3.20.1
Property and Equipment
3 Months Ended
Mar. 31, 2020
Property, Plant and Equipment [Abstract]  
Property and Equipment Property and Equipment
Property and equipment consisted of the following (in thousands):
As of
 March 31, 2020December 31, 2019
Leasehold improvements$4,734  $2,834  
Computer equipment8,114  8,126  
Software1,110  1,110  
Internal-use software3,878  2,925  
Furniture and equipment1,668  1,048  
Construction in progress128  1,164  
Total19,632  17,207  
Less: accumulated depreciation(12,809) (12,351) 
Property and equipment, net$6,823  $4,856  
Depreciation and amortization expense for the three months ended March 31, 2020 and 2019 was $0.5 million and $0.5 million, respectively. Depreciation and amortization are recorded on a straight-line basis.
v3.20.1
Debt
3 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
Debt Debt
Term Loan

The Company has a term loan facility (the “Loan Agreement”) with Silicon Valley Bank (the “Bank”) that provided for a term loan of approximately $5.6 million (the “Term Loan”). 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, 2020 are as follows (in thousands):

Remainder of 2020$1,394  
2021(1)
1,395  
Total future maturities of debt2,789  
Less current maturities(2)
(1,859) 
Debt, non-current$930  
(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, 2020.

Per the Loan Agreement the Company is subject to certain reporting covenants and the debt obligations are secured by a security interest in the assets of the Company, excluding intellectual property and certain other exceptions. The Company was in compliance with all reporting covenants in the Loan Agreement related to the outstanding principal balance as of March 31, 2020.

On May 5, 2020, the Company entered into the Third Amended and Restated Loan and Security Agreement (the "Amended Loan Agreement") with the Bank. The Amended Loan Agreement amended and restated its existing Loan Agreement. Under the Amended Loan Agreement, the Bank agreed to extend a $25.0 million revolving credit facility to the Company (the “Revolving Line”). Borrowings under the Revolving Line accrue interest at a floating per annum rate equal to the Prime Rate plus 1%, and such interest is payable monthly. The Company may request borrowings under the Revolving Line
prior to May 4, 2023, on which date the Revolving Line terminates. In relation to the Revolving Line, the Company is subject to certain financial and reporting covenants.

On April 22, 2020, the Company entered into a Paycheck Protection Program Loan (the “PPP Note”) sponsored by the Small Business Administration (the “SBA”) through the Bank, providing for $10.0 million in proceeds. The PPP Note was issued pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Note was scheduled to mature on April 22, 2022, carried an interest rate of 1% per annum, and was subject to the terms and conditions applicable to all loans made pursuant to the Paycheck Protection Program as administered by the SBA under the CARES Act, including the debt forgiveness provisions contained therein. Following additional guidance issued by the SBA on April 23, 2020 that cast doubt on the ability of public companies to qualify for loans under the Paycheck Protection Program, the Company repaid the PPP Note on April 29, 2020.
v3.20.1
Contingencies
3 Months Ended
Mar. 31, 2020
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.
v3.20.1
Stock Compensation
3 Months Ended
Mar. 31, 2020
Share-based Payment Arrangement [Abstract]  
Stock Compensation Stock Compensation
Restricted Stock Units (“RSUs”) Activity

A summary of unvested restricted stock unit activity for the three months ended March 31, 2020 is as follows:

Number of
Shares
Weighted-
Average
Grant Date Fair Value
Balance as of December 31, 201911,615,884  $2.44  
Granted3,534,142  $1.21  
Vested(923,693) $2.94  
Forfeited and canceled
(1,679,626) $2.94  
Balance as of March 31, 202012,546,707  $1.99  

As of March 31, 2020, there was a total of $22.2 million in unrecognized compensation cost related to restricted stock units, which is expected to be recognized over a weighted-average period of approximately 2.8 years.

The Company granted approximately 0.9 million performance stock units ("PSUs") during the third quarter of 2019. The number of shares that will eventually vest depends on achievement of certain performance targets, as determined by the compensation committee of the Company's board of directors. Once the performance is determined, the PSUs, if any, will vest, subject to recipients' continued service, on the later of (i) the attainment of the performance targets and (ii) a year after the grant date. The compensation expense associated with the PSUs is recognized using the accelerated method. For the three months ended March 31, 2020, the Company recognized compensation expense of approximately $0.2 million related to these performance awards.

Stock Option Activity

A summary of stock option activity for the three months ended March 31, 2020 is as follows: 
Options
Outstanding
Weighted-
Average
Exercise
Price
Aggregate
Intrinsic
Value (in thousands)
Balance as of December 31, 20197,207,733  $1.94  $412  
Granted749,111  $1.17  
Exercised(142,729) $1.08  
Forfeited and canceled(344,855) $2.02  
Balance as of March 31, 20207,469,260  $1.87  $—  

The total grant-date fair value of stock options granted during the three months ended March 31, 2020 and 2019 was $0.6 million and $0.4 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:

 Three Months Ended March 31,
 20202019
Volatility73%57%
Expected life (in years)
6.11 - 6.12
6.06
Risk-free interest rate
0.84% - 1.47%
2.57%
Dividend yield—%—%

As of March 31, 2020, the Company had $3.9 million in unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted-average period of approximately 3.5 years. 
Employee Stock Purchase Plan
The Company used the following Black-Scholes assumptions in estimating the fair value of the shares under the 2014 Employee Stock Purchase Plan (the “ESPP”):

Three Months Ended March 31, 2020
Volatility71%
Expected life equals length of offering period (in years)0.5
Risk-free interest rate0.95%
Dividend yield—%

Stock-based compensation expense related to the ESPP was immaterial for the three months ended March 31, 2020. As of March 31, 2020, the unrecognized stock-based compensation expense related to the ESPP was also immaterial, and is expected to be recognized over the remaining term of the offering period.
v3.20.1
Income Taxes
3 Months Ended
Mar. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes The effective tax rate for the three months ended March 31, 2020 and 2019 was zero percent, primarily as a result of the estimated tax loss for the year and the change in valuation allowance. At March 31, 2020, all unrecognized tax benefits are subject to a full valuation allowance and, if recognized, will not affect the effective tax rate.
v3.20.1
Net Loss per Share
3 Months Ended
Mar. 31, 2020
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 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,
 20202019
Class AClass BClass AClass B
Net loss$(13,257) $(43,078) $(2,741) $(7,798) 
Weighted-average shares used to compute basic and diluted net loss per share
35,032  113,840  37,189  105,811  
Basic and diluted net loss per share
$(0.38) $(0.38) $(0.07) $(0.07) 

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,
 20202019
Stock options and restricted stock units
20,016  14,477  
Shares issuable under the ESPP297  —  
Warrants115  115  
Total20,428  14,592  
v3.20.1
Subsequent Event
3 Months Ended
Mar. 31, 2020
Subsequent Events [Abstract]  
Subsequent Event Subsequent EventOn May 4, 2020, the Company announced its intent to undertake a program to reduce its workforce as part of the Company’s efforts to respond to the COVID-19 pandemic and ensure longer-term financial stability for the Company in light of the ongoing economic challenges resulting from COVID-19 and its impact on the Company’s business (the “Program”). The Program involves the termination of approximately 60 employees, representing 13% of the Company’s headcount. Under the Program, the Company estimates that it will incur charges of approximately $1.8 million to $2.2 million, which will be related to employee severance and benefits costs, all of which are cash expenditures, the majority of which the Company expects to incur in the second quarter of 2020. In addition, as part of its cost reductions in light of the COVID-19 pandemic, the Company has implemented reductions in base salary for its employees, effective May 16, 2020, consisting of a 30% reduction for the Company’s Chief Executive Officer, 25% reduction for the Company’s Chief Financial Officer, 20% reduction for members of the Company’s executive leadership team, and tiered reductions of 10-15% for other employees with salaries above $100,000, which the Company anticipates will last at least six months, and will be re-evaluated at that time. Members of the Company’s board of directors have also voluntarily agreed to forego 50% of their cash compensation for the duration of the employee salary reductions.
v3.20.1
Accounting Standards and Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2020
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, 2019. 

Other than as described below, there have been no changes to the Company's significant accounting policies described in the Company's Annual Report that have had a material impact on the Company's 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; and
Assumptions used in the calculation of goodwill impairment, including the forecast of future cash flows and discount 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.

Marketable Securities

The Company's marketable securities consist of U.S. agency obligations and U.S. treasury securities, with maturities at the time of purchase of greater than three months. Marketable securities with remaining maturities in excess of one year are classified as non-current. The Company classifies its marketable securities as available-for-sale at the time of purchase based on its intent and are recorded at their estimated fair value. Unrealized gains for available-for-sale securities are recorded in other comprehensive income/loss. Unrealized losses for available-for-sale securities are recorded in other comprehensive income/loss, unless the losses relate to deterioration in credit risk or if it is likely securities will be sold before the recovery of their cost basis. In these cases, the unrealized losses are reported in other income, net in the consolidated statement of operations.
Realized gains and losses are determined based on the specific identification method and are reported in other income, net in the consolidated statements of operations.
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements Recently Adopted Accounting Pronouncements
Effective January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses, and subsequent amendments (“ASC 326”). The standard changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The adoption of this standard did not have a material impact on the Company’s financial statements. The Company will continue to actively monitor the impact of the current coronavirus (“COVID-19”) pandemic on expected credit losses.

Effective January 1, 2020, the Company adopted ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (“ASU 2018-15”), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The adoption of this standard did not have a material impact on the Company’s financial position or results of operations.

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 during the three months ended March 31, 2020 are either not applicable or are expected to have minimal impact on the Company's condensed consolidated financial results.
v3.20.1
Deferred Costs (Tables)
3 Months Ended
Mar. 31, 2020
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, 2020 are as follows (in thousands):

As of December 31, 2019Expense recognizedAs of March 31, 2020
Additions
Deferred commissions$14,718  $318  $(2,383) $12,653  
Deferred professional service costs  6,711  434  (925) 6,220  
Total deferred commissions and professional service costs
$21,429  $752  $(3,308) $18,873  
v3.20.1
Goodwill and Intangible Assets (Tables)
3 Months Ended
Mar. 31, 2020
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):
As of March 31, 2020
Useful LifeGrossAccumulated AmortizationNet
Customer relationships6$10,900  $(4,036) $6,864  
Developed technology510,600  (6,360) 4,240  
Total identifiable intangible assets$21,500  $(10,396) $11,104  
As of December 31, 2019
Useful LifeGrossAccumulated AmortizationNet
Customer relationships6$10,900  $(3,509) $7,391  
Developed technology510,600  (5,830) 4,770  
Backlog2.51,500  (1,500) —  
Other acquired intangible assets1-3900  (883) 17  
Total identifiable intangible assets$23,900  $(11,722) $12,178  
Schedule of Amortization Expense for Acquired Intangible Assets
Future estimated amortization expense for acquired intangible assets is as follows (in thousands):
Remainder of 2020$3,174  
20214,232  
20222,642  
20231,056  
Total amortization expense$11,104  
v3.20.1
Marketable Securities (Tables)
3 Months Ended
Mar. 31, 2020
Investments, Debt and Equity Securities [Abstract]  
Available-for-sale Securities
Marketable securities consisted of the following (in thousands):

As of March 31, 2020
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
U.S. treasury securities $2,002  $ $—  $2,005  
U.S. agency obligations11,644  10  —  11,654  
Money market mutual funds12,337  —  —  12,337  
25,983  13  —  25,996  
Included in cash and cash equivalents19,983   —  19,987  
Included in marketable securities$6,000  $ $—  $6,009  

As of December 31, 2019
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
U.S. treasury securities$13,602  $ $—  $13,603  
U.S. agency obligations6,400   —  6,401  
Money market mutual funds8,736  —  —  8,736  
28,738   —  28,740  
Included in cash and cash equivalents12,329  —  —  12,329  
Included in marketable securities$16,409  $ $—  $16,411  
v3.20.1
Fair Value Measurements (Tables)
3 Months Ended
Mar. 31, 2020
Fair Value Disclosures [Abstract]  
Fair Value, Assets Measured on Recurring Basis
The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis using the above input categories (in thousands):
As of March 31, 2020
Level 1Level 2Total
Cash equivalents:
U.S. agency obligations$—  $7,650  $7,650  
Money market mutual funds12,337  —  12,337  
Marketable securities:
U.S. treasury securities—  2,005  2,005  
U.S. agency obligations—  4,004  4,004  
$12,337  $13,659  $25,996  

As of December 31, 2019
Level 1Level 2Total
Cash equivalents:
Money market mutual funds$8,736  $—  $8,736  
U.S. treasury securities—  3,593  3,593  
Marketable securities:
U.S. agency obligations—  6,401  6,401  
U.S. treasury securities—  10,010  10,010  
$8,736  $20,004  $28,740  
v3.20.1
Property and Equipment (Tables)
3 Months Ended
Mar. 31, 2020
Property, Plant and Equipment [Abstract]  
Property and Equipment
Property and equipment consisted of the following (in thousands):
As of
 March 31, 2020December 31, 2019
Leasehold improvements$4,734  $2,834  
Computer equipment8,114  8,126  
Software1,110  1,110  
Internal-use software3,878  2,925  
Furniture and equipment1,668  1,048  
Construction in progress128  1,164  
Total19,632  17,207  
Less: accumulated depreciation(12,809) (12,351) 
Property and equipment, net$6,823  $4,856  
v3.20.1
Debt (Tables)
3 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
Schedule of Maturities of Long-term Debt
The future maturities of the Term Loan by year as of March 31, 2020 are as follows (in thousands):

Remainder of 2020$1,394  
2021(1)
1,395  
Total future maturities of debt2,789  
Less current maturities(2)
(1,859) 
Debt, non-current$930  
(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, 2020.
v3.20.1
Stock Compensation (Tables)
3 Months Ended
Mar. 31, 2020
Share-based Payment Arrangement [Abstract]  
Schedule of Other Share-based Compensation, Activity
A summary of unvested restricted stock unit activity for the three months ended March 31, 2020 is as follows:

Number of
Shares
Weighted-
Average
Grant Date Fair Value
Balance as of December 31, 201911,615,884  $2.44  
Granted3,534,142  $1.21  
Vested(923,693) $2.94  
Forfeited and canceled
(1,679,626) $2.94  
Balance as of March 31, 202012,546,707  $1.99  
Schedule of Share-based Compensation, Stock Options, Activity A summary of stock option activity for the three months ended March 31, 2020 is as follows: 
Options
Outstanding
Weighted-
Average
Exercise
Price
Aggregate
Intrinsic
Value (in thousands)
Balance as of December 31, 20197,207,733  $1.94  $412  
Granted749,111  $1.17  
Exercised(142,729) $1.08  
Forfeited and canceled(344,855) $2.02  
Balance as of March 31, 20207,469,260  $1.87  $—  
Schedule of Share-based Payment Award, 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:

 Three Months Ended March 31,
 20202019
Volatility73%57%
Expected life (in years)
6.11 - 6.12
6.06
Risk-free interest rate
0.84% - 1.47%
2.57%
Dividend yield—%—%
The Company used the following Black-Scholes assumptions in estimating the fair value of the shares under the 2014 Employee Stock Purchase Plan (the “ESPP”):

Three Months Ended March 31, 2020
Volatility71%
Expected life equals length of offering period (in years)0.5
Risk-free interest rate0.95%
Dividend yield—%
v3.20.1
Net Loss per Share (Tables)
3 Months Ended
Mar. 31, 2020
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,
 20202019
Class AClass BClass AClass B
Net loss$(13,257) $(43,078) $(2,741) $(7,798) 
Weighted-average shares used to compute basic and diluted net loss per share
35,032  113,840  37,189  105,811  
Basic and diluted net loss per share
$(0.38) $(0.38) $(0.07) $(0.07) 
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,
 20202019
Stock options and restricted stock units
20,016  14,477  
Shares issuable under the ESPP297  —  
Warrants115  115  
Total20,428  14,592  
v3.20.1
Accounting Standards and Significant Accounting Policies - Concentrations of Risk and Significant Customers (Details) - Customer Concentration Risk
3 Months Ended
Mar. 31, 2020
Anthem | Total Revenue  
Concentration Risk [Line Items]  
Concentration risk, percentage 44.00%
Anthem | Accounts Receivable  
Concentration Risk [Line Items]  
Concentration risk, percentage 28.00%
Two customers | Accounts Receivable  
Concentration Risk [Line Items]  
Concentration risk, percentage 11.00%
v3.20.1
Revenue, Deferred Revenue, Contract Balances and Performance Obligations - Narrative (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2019
Revenue from Contract with Customer [Abstract]      
Deferred revenue $ 14.3   $ 10.7
Contract with customer, asset, net 2.7   $ 0.4
Contract with customer liability, revenue recognized 6.5 $ 11.2  
Contract with customer, liability, cumulative catch-up adjustment to revenue, change in estimate of transaction price $ 1.7 $ 1.4  
v3.20.1
Revenue, Deferred Revenue, Contract Balances and Performance Obligations - Performance Obligations (Details)
$ in Millions
Mar. 31, 2020
USD ($)
Revenue from Contract with Customer [Abstract]  
Revenue, remaining performance obligation $ 229.2
Revenue, remaining performance obligation, percent 50.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Revenue, remaining performance obligation, expected timing of satisfaction, period 12 months
v3.20.1
Deferred Costs (Details)
$ in Thousands
3 Months Ended
Mar. 31, 2020
USD ($)
Deferred commissions  
As of beginning of period $ 14,718
Additions 318
Expense recognized (2,383)
As of end of period 12,653
Deferred professional service costs  
As of beginning of period 6,711
Additions 434
Expense recognized (925)
As of end of period 6,220
Total deferred commissions and professional service costs  
As of beginning of period 21,429
Additions 752
Expense recognized (3,308)
As of end of period 18,873
Impairment charges $ 1,100