ZENDESK, INC., 10-Q filed on 5/8/2017
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2017
Apr. 30, 2017
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Mar. 31, 2017 
 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q1 
 
Trading Symbol
ZEN 
 
Entity Registrant Name
Zendesk, Inc. 
 
Entity Central Index Key
0001463172 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
98,961,539 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Current assets:
 
 
Cash and cash equivalents
$ 109,258 
$ 93,677 
Marketable securities
138,440 
131,190 
Accounts receivable, net of allowance for doubtful accounts of $2,264 and $1,269 as of March 31, 2017 and December 31, 2016, respectively
39,105 
37,343 
Prepaid expenses and other current assets
17,982 
17,608 
Total current assets
304,785 
279,818 
Marketable securities, noncurrent
68,320 
75,168 
Property and equipment, net
60,842 
62,731 
Goodwill and intangible assets, net
52,699 
53,296 
Other assets
4,382 
4,272 
Total assets
491,028 
475,285 
Current liabilities:
 
 
Accounts payable
5,890 
4,555 
Accrued liabilities
18,448 
19,106 
Accrued compensation and related benefits
21,664 
20,281 
Deferred revenue
130,129 
123,276 
Total current liabilities
176,131 
167,218 
Deferred revenue, noncurrent
1,989 
1,257 
Other liabilities
7,511 
7,382 
Total liabilities
185,631 
175,857 
Commitments and contingencies (Note 5)
   
   
Stockholders’ equity:
 
 
Preferred stock
Common stock
991 
971 
Additional paid-in capital
655,792 
624,026 
Accumulated other comprehensive loss
(3,792)
(5,197)
Accumulated deficit
(346,942)
(319,720)
Treasury stock at cost (0.5 million shares as of March 31, 2017 and December 31, 2016)
(652)
(652)
Total stockholders’ equity
305,397 
299,428 
Total liabilities and stockholders’ equity
$ 491,028 
$ 475,285 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Share data in Millions, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Statement of Financial Position [Abstract]
 
 
Allowance for doubtful accounts
$ 2,264 
$ 1,269 
Treasury stock, shares (in shares)
0.5 
0.5 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Income Statement [Abstract]
 
 
Revenue
$ 93,007 
$ 68,459 
Cost of revenue
28,107 1
21,516 1
Gross profit
64,900 
46,943 
Operating expenses:
 
 
Research and development
26,456 1
21,597 1
Sales and marketing
47,301 1
36,172 1
General and administrative
18,317 1
15,861 1
Total operating expenses
92,074 1
73,630 1
Operating loss
(27,174)
(26,687)
Other income (expense), net
218 
(70)
Loss before provision for income taxes
(26,956)
(26,757)
Provision for income taxes
38 
414 
Net loss
$ (26,994)
$ (27,171)
Net loss per share, basic and diluted (usd per share)
$ (0.28)
$ (0.30)
Weighted-average shares used to compute net loss per share, basic and diluted (in shares)
97,475 
90,519 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Share-based compensation expense
$ 19,213 
$ 17,695 
Cost of revenue
 
 
Share-based compensation expense
2,104 
1,633 
Research and development
 
 
Share-based compensation expense
6,914 
6,627 
Sales and marketing
 
 
Share-based compensation expense
5,633 
5,439 
General and administrative
 
 
Share-based compensation expense
$ 4,562 
$ 3,996 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Statement of Comprehensive Income [Abstract]
 
 
Net loss
$ (26,994)
$ (27,171)
Other comprehensive gain, before tax:
 
 
Net change in unrealized gain on available-for-sale investments
119 
129 
Foreign currency translation gain
576 
733 
Net change in unrealized loss on derivative instruments
1,526 
2,610 
Other comprehensive gain, before tax
2,221 
3,472 
Tax effect
(816)
Other comprehensive gain, net of tax
1,405 
3,472 
Comprehensive loss
$ (25,589)
$ (23,699)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Cash flows from operating activities
 
 
Net loss
$ (26,994)
$ (27,171)
Adjustments to reconcile net loss to net cash provided by operating activities
 
 
Depreciation and amortization
7,923 
6,526 
Share-based compensation
19,213 
17,695 
Other
697 
403 
Changes in operating assets and liabilities:
 
 
Accounts receivable
(2,316)
1,898 
Prepaid expenses and other current assets
(513)
862 
Other assets and liabilities
(332)
(383)
Accounts payable
1,958 
(1,851)
Accrued liabilities
2,524 
2,307 
Accrued compensation and related benefits
(2,596)
(2,066)
Deferred revenue
7,585 
6,369 
Net cash provided by operating activities
7,149 
4,589 
Cash flows from investing activities
 
 
Purchases of property and equipment
(4,791)
(3,249)
Internal-use software development costs
(1,852)
(1,351)
Purchases of marketable securities
(40,758)
(20,795)
Proceeds from maturities of marketable securities
31,654 
10,051 
Proceeds from sale of marketable securities
8,602 
7,604 
Net cash used in investing activities
(7,145)
(7,740)
Cash flows from financing activities
 
 
Proceeds from exercise of employee stock options
11,689 
1,915 
Proceeds from employee stock purchase plan
3,844 
3,144 
Taxes paid related to net share settlement of equity awards
(154)
(189)
Net cash provided by financing activities
15,379 
4,870 
Effect of exchange rate changes on cash and cash equivalents
198 
(154)
Net increase in cash and cash equivalents
15,581 
1,565 
Cash and cash equivalents at beginning of period
93,677 
216,226 
Cash and cash equivalents at end of period
109,258 
217,791 
Supplemental cash flow data:
 
 
Cash paid for interest and income taxes
196 
168 
Non-cash investing and financing activities:
 
 
Vesting of early exercised stock options
115 
232 
Balance of property and equipment in accounts payable and accrued expenses
1,460 
2,345 
Share-based compensation capitalized in internal-use software development costs
$ 694 
$ 563 
Overview and Basis of Presentation
Overview and Basis of Presentation
Note 1. Overview and Basis of Presentation
Company and Background
Zendesk was founded in Denmark in 2007 and reincorporated in Delaware in April 2009.
We are a software development company that provides software as a service, or SaaS, products that are intended to help organizations and their customers build better relationships. With our origins in customer service, we have evolved our offerings over time to a family of products that work together to help organizations understand their customers, improve communications, and engage where and when it’s needed most. Our product family is built upon a modern architecture that enables us and our customers to rapidly innovate, adapt our technology in novel ways, and easily integrate with other products and applications.
References to Zendesk, the “Company”, “our”, or “we” in these notes refer to Zendesk, Inc. and its subsidiaries on a consolidated basis.
Basis of Presentation
These unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2016, filed on February 27, 2017. There have been no changes to our significant accounting policies described in the Annual Report on Form 10-K that have had a material impact on our condensed consolidated financial statements and related notes, except as described below.
In the first quarter of 2017, we changed our accounting policy for share-based compensation to recognize forfeitures as they occur, as permitted by Accounting Standards Update, or ASU, 2016-09. Refer to Recently Issued and Adopted Accounting Pronouncements below for a more detailed discussion.
The consolidated balance sheet as of December 31, 2016 included herein was derived from the audited financial statements as of that date. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, our comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2017.
Use of Estimates
The preparation of our consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods.
Significant items subject to such estimates and assumptions include the fair value of share-based awards, acquired intangible assets, goodwill and unrecognized tax benefits, the useful lives of acquired intangible assets and property and equipment, the capitalization and estimated useful life of capitalized internal-use software, and financial forecasts used in currency hedging.
These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ from those estimates.
Concentrations of Risk
As of March 31, 2017, no customers represented 10% or greater of our total accounts receivable balance. There were no customers that individually exceeded 10% of our revenue during the three months ended March 31, 2017 or 2016.
Recently Issued and Adopted Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board, or the FASB, issued new revenue guidance that provides principles for recognizing revenue to which an entity expects to be entitled for the transfer of promised goods or services to customers. As currently issued and amended, the new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, though early adoption is permitted for annual reporting periods beginning after December 15, 2016. The guidance may be applied retrospectively to each prior period presented (full retrospective method), or with the cumulative effect recognized as of the date of initial adoption (modified retrospective method).
We currently intend to adopt using the full retrospective approach, however our decision has not been finalized. We continue to assess the impact of the new guidance on our existing revenue arrangements. As a result of adoption, we also expect to capitalize a significant portion of our sales commissions and other incremental costs to acquire contracts, which we historically expensed as incurred, which will result in an increase in deferred costs recognized on our balance sheet. We have not yet concluded the useful life of our capitalized costs, which will affect the classification and magnitude of the deferred costs at each reporting period. We continue to quantify the effect of these changes on our consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, regarding ASC Topic 842 “Leases.” This new standard requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets and eliminates certain real estate-specific provisions. The new guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the effect of this standard on our consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, regarding ASC Topic 718 “Compensation - Stock Compensation. This amendment changes certain aspects of accounting for share-based awards to employees, including the recognition of income tax effects of awards when the awards vest or are settled, requirements on net share settlement to cover tax withholding, and accounting for forfeitures. We adopted the standard in the first quarter of 2017.
As required by the new standard, we now recognize excess tax effects from share-based awards as a component of provision for income taxes in our statement of operations when awards vest or are settled. Upon adoption, we recorded a deferred tax asset of $52.8 million to reflect, on a modified retrospective basis, the previously unrecognized excess tax benefits, however the deferred tax asset was fully offset by a valuation allowance, resulting in no impact to our consolidated financial statements. In our statement of cash flows, we no longer classify excess tax benefits as a reduction from operating cash flows. This change was made prospectively beginning with the quarter ended March 31, 2017.
We also elected to account for forfeitures as they occur, therefore share-based compensation expense for the three months ended March 31, 2017 has been calculated based on actual forfeitures in our consolidated statement of operations, rather than our previous approach which was net of estimated forfeitures. The cumulative-effect adjustment of this change on a modified retrospective basis was not material. Share-based compensation expense for the three months ended March 31, 2016 was recorded net of estimated forfeitures.
In October 2016, the FASB issued ASU 2016-16, “Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory,” which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The new guidance is effective for annual reporting periods beginning after December 15, 2017. Early adoption is permitted as of the beginning of an annual reporting period. The new standard must be adopted using a modified retrospective basis, with the cumulative effect recognized as of the date of adoption. We adopted the standard in the first quarter of 2017. Upon adoption, we recorded a deferred tax asset of $6.2 million to reflect the previously unrecognized tax benefits, however the deferred tax asset was fully offset by a valuation allowance, resulting in no impact to our consolidated financial statements.
Financial Instruments
Financial Instruments
Note 2. Financial Instruments
Investments
The following tables present information about our financial assets measured at fair value on a recurring basis as of March 31, 2017 and December 31, 2016 based on the three-tier fair value hierarchy (in thousands):
 
 
Fair Value Measurement at
March 31, 2017
Level 1
 
Level 2
 
Total
Description
 
 
 
 
 
Corporate bonds
$

 
$
131,527

 
$
131,527

U.S. treasury securities
 
 
30,564

 
30,564

Asset-backed securities

 
30,399

 
30,399

Agency securities
 
 
8,485

 
8,485

Commercial paper

 
5,785

 
5,785

Money market funds
3,825

 

 
3,825

Total
$
3,825

 
$
206,760

 
$
210,585

Included in cash and cash equivalents
 
 
 
 
$
3,825

Included in marketable securities
 
 
 
 
$
206,760

 
Fair Value Measurement at
December 31, 2016
Level 1
 
Level 2
 
Total
Description
 
 
 
 
 
Corporate bonds
$

 
$
124,930

 
$
124,930

Asset-backed securities
 
 
32,567

 
32,567

U.S. treasury securities
 
 
30,585

 
30,585

Commercial paper
 
 
9,787

 
9,787

Agency securities
 
 
8,489

 
8,489

Money market funds
3,545

 
$

 
$
3,545

Total
$
3,545

 
$
206,358

 
$
209,903

Included in cash and cash equivalents
 
 
 
 
$
3,545

Included in marketable securities
 
 
 
 
$
206,358


 
As of March 31, 2017 and December 31, 2016, there were no securities within Level 3 of the fair value hierarchy. There were no transfers between fair value measurement levels during the three months ended March 31, 2017. Gross unrealized gains and losses for cash equivalents and marketable securities as of March 31, 2017 and December 31, 2016 were not material. As of March 31, 2017 and December 31, 2016, there were no securities that were in an unrealized loss position for more than 12 months.
The following table classifies our marketable securities by contractual maturity as of March 31, 2017 and December 31, 2016 (in thousands):
 
 
March 31,
2017
 
December 31,
2016
Due in one year or less
$
138,440

 
$
131,190

Due after one year
68,320

 
75,168

Total
$
206,760

 
$
206,358


 
For certain other financial instruments, including accounts receivable, accounts payable and other current liabilities, the carrying amounts approximate their fair value due to the relatively short maturity of these balances.
Derivative Instruments and Hedging
Our foreign currency exposures typically arise from expenditures associated with foreign operations and sales in foreign currencies for subscriptions to our products. In September 2015, we implemented a hedging program to mitigate the effect of foreign currency fluctuations on our future cash flows and earnings. We enter into foreign currency forward contracts with certain financial institutions and designate those contracts as cash flow hedges. Our foreign currency forward contracts generally have maturities of 15 months or less. As of March 31, 2017, the balance of accumulated other comprehensive loss included an unrealized loss of $1.5 million related to the effective portion of changes in the fair value of foreign currency forward contracts designated as cash flow hedges. We expect to reclassify $1.5 million from accumulated other comprehensive loss into earnings over the next 12 months associated with our cash flow hedges.
The following tables present information about our derivative instruments on our consolidated balance sheets as of March 31, 2017 and December 31, 2016 (in thousands):
 
 
March 31, 2017
Asset Derivatives
 
Liability Derivatives
Derivative Instrument
Balance Sheet Location
 
Fair Value
(Level 2)
 
Balance Sheet Location
 
Fair Value
(Level 2)
Foreign currency forward contracts
Other current assets
 
$
729

 
Accrued liabilities
 
$
2,740

Total
 
 
$
729

 
 
 
$
2,740

 
December 31, 2016
Asset Derivatives
 
Liability Derivatives
Derivative Instrument
Balance Sheet Location
 
Fair Value
(Level 2)
 
Balance Sheet Location
 
Fair Value
(Level 2)
Foreign currency forward contracts
Other current assets
 
$
868

 
Accrued liabilities
 
$
4,280

Total
 
 
$
868

 
 
 
$
4,280


 
Our foreign currency forward contracts had a total notional value of $81.3 million and $79.6 million as of March 31, 2017 and December 31, 2016, respectively. We have a master netting arrangement with each of our counterparties, which permits net settlement of multiple, separate derivative contracts with a single payment. We may also be required to exchange cash collateral with certain of our counterparties on a regular basis. ASC 815 permits companies to present the fair value of derivative instruments on a net basis according to master netting arrangements. We have elected to present our derivative instruments on a gross basis in our consolidated financial statements. As of March 31, 2017 and December 31, 2016, our balances of cash collateral posted with counterparties were none and $1.1 million, respectively.
The following table presents information about our derivative instruments on the statement of operations for the three months ended March 31, 2017 and 2016 (in thousands):
 
 
 
 
Three Months Ended March 31, 2017
 
Three Months Ended March 31, 2016
Hedging Instrument
Location of Loss Reclassified into Earnings
 
Gain Recognized in AOCI
 
Loss Reclassified from AOCI into Earnings
 
Gain Recognized in AOCI
 
Loss Reclassified from AOCI into Earnings
Foreign currency forward contracts
Revenue, cost of revenue, operating expenses
 
$
993

 
$
(533
)
 
$
2,348

 
$
(262
)
Total
 
 
$
993

 
$
(533
)
 
$
2,348

 
$
(262
)

All derivatives have been designated as hedging instruments. Amounts recognized in earnings related to excluded time value and hedge ineffectiveness for the three months ended March 31, 2017 and 2016 were not material.
Property and Equipment
Property and Equipment
Note 3. Property and Equipment
Property and equipment, net consists of the following (in thousands): 
 
March 31,
2017
 
December 31,
2016
Hosting equipment
$
36,410

 
$
35,018

Leasehold improvements
26,727

 
25,396

Capitalized internal-use software
26,553

 
25,773

Computer equipment and software
12,766

 
11,879

Furniture and fixtures
8,752

 
8,014

Construction in progress
7,168

 
7,993

Total
118,376

 
114,073

Less: accumulated depreciation and amortization
(57,534
)
 
(51,342
)
Property and equipment, net
$
60,842

 
$
62,731


 
Depreciation expense was $4.8 million and $3.7 million for the three months ended March 31, 2017 and 2016, respectively.
Amortization expense of capitalized internal-use software totaled $2.1 million and $1.7 million for the three months ended March 31, 2017 and 2016, respectively. The carrying value of capitalized internal-use software at March 31, 2017 and December 31, 2016 was $15.7 million and $15.4 million, respectively, including $6.7 million and $5.4 million in construction in progress, respectively.
Goodwill and Acquired Intangible Assets
Goodwill and Acquired Intangible Assets
Note 4. Goodwill and Acquired Intangible Assets
The changes in the carrying amount of goodwill for the three months ended March 31, 2017 are as follows (in thousands):
 
Balance as of December 31, 2016
$
45,347

Foreign currency translation adjustments
297

Balance as of March 31, 2017
$
45,644


 
Acquired intangible assets subject to amortization as of March 31, 2017 and December 31, 2016 consist of the following (in thousands):
 
 
As of March 31, 2017
Cost
 
Accumulated
Amortization
 
Foreign 
Currency Translation Adjustments
 
Net
 
Remaining Useful Life
 
 
 
 
 
 
 
 
(In years)
Developed technology
$
14,000

 
$
(7,433
)
 
$
(122
)
 
$
6,445

 
2.8
Customer relationships
1,800

 
(1,151
)
 
(39
)
 
610

 
2.1
 
$
15,800

 
$
(8,584
)
 
$
(161
)
 
$
7,055

 
 
 
 
As of December 31, 2016
Cost
 
Accumulated
Amortization
 
Foreign
Currency Translation Adjustments
 
Net
 
Remaining Useful Life
 
 
 
 
 
 
 
 
(In years)
Developed technology
$
14,000

 
$
(6,584
)
 
$
(169
)
 
$
7,247

 
2.9
Customer relationships
1,800

 
(1,044
)
 
(53
)
 
703

 
2.3
 
$
15,800

 
$
(7,628
)
 
$
(222
)
 
$
7,950

 
 

 
Amortization expense of acquired intangible assets for each of the three months ended March 31, 2017 and 2016 was $0.9 million.  
Estimated future amortization expense as of March 31, 2017 is as follows (in thousands):
 
Remainder of 2017
$
2,349

2018
2,128

2019
2,066

2020
512

 
$
7,055

Commitments and Contingencies
Commitments and Contingencies
Note 5. Commitments and Contingencies
Leases
We lease office space under noncancelable operating leases with various expiration dates. Certain of the office space lease agreements contain rent holidays or rent escalation provisions. Rent holiday and rent escalation provisions are considered in determining the straight-line expense to be recorded over the lease term. The lease term begins on the date of initial possession of the leased property for purposes of recognizing lease expense on a straight-line basis over the term of the lease. Rent expense was $2.7 million and $2.2 million for the three months ended March 31, 2017 and 2016, respectively.

In April 2017, we entered into an operating lease agreement for approximately 58,000 square feet of office space in Dublin, Ireland. The lease is expected to commence on October 3, 2017 and has a noncancelable term of 12 years. The total anticipated amount of rent to be paid over the noncancelable term of the lease is approximately $37.0 million. In addition to monthly rent obligations, we are responsible for certain operating costs and taxes associated with the leased premises.
Litigation and Loss Contingencies
We accrue estimates for resolution of legal and other contingencies when losses are probable and estimable. From time to time, we may become a party to litigation and subject to claims that arise in the ordinary course of business, including intellectual property claims, labor and employment claims, threatened claims, breach of contract claims, tax, and other matters. We currently have no material pending litigation.
We are not currently aware of any litigation matters or loss contingencies that would be expected to have a material adverse effect on our business, consolidated balance sheets, results of operations, comprehensive loss, or cash flows.
Indemnifications
In the ordinary course of business, we enter into contractual arrangements under which we agree to provide indemnification of varying scope and terms to customers, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties, and other liabilities relating to or arising from our products or our acts or omissions. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. Further, our obligations under these agreements may be limited in terms of time and/or amount, and in some instances, we may have recourse against third parties for certain payments. In addition, we have indemnification agreements with our directors and executive officers that require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations may vary. To date, we have not incurred any material costs, and we have not accrued any liabilities in our consolidated financial statements, as a result of these obligations.
Certain of our product offerings include service-level agreements warranting defined levels of uptime reliability and performance, which permit those customers to receive credits for future services in the event that we fail to meet those levels. To date, we have not accrued for any significant liabilities in our condensed consolidated financial statements as a result of these service-level agreements.
Common Stock and Stockholders' Equity
Common Stock and Stockholders' Equity
Note 6. Common Stock and Stockholders’ Equity
Common Stock
As of March 31, 2017 and December 31, 2016, there were 400 million shares authorized for issuance with a par value of $0.01 per share. There were 99.2 million and 97.2 million shares of common stock issued and 98.7 million and 96.7 million shares outstanding as of March 31, 2017 and December 31, 2016, respectively. Included within the number of shares issued and outstanding were approximately 41 thousand and 0.1 million shares of common stock subject to repurchase, as of March 31, 2017 and December 31, 2016, respectively.
Preferred Stock
As of each of March 31, 2017 and December 31, 2016, 10.0 million shares of preferred stock were authorized for issuance with a par value of $0.01 per share and no shares of preferred stock were issued or outstanding.
Employee Equity Plans
Employee Stock Purchase Plan
Under our Employee Stock Purchase Plan, or ESPP, eligible employees are granted options to purchase shares of our common stock through payroll deductions. The ESPP provides for 18-month offering periods, which include three six-month purchase periods. At the end of each purchase period, employees are able to purchase shares at 85% of the lower of the fair market value of our common stock at the beginning of an offering period or the fair market value of our common stock at the end of the purchase period. No shares of common stock were purchased under the ESPP during the three months ended March 31, 2017. Pursuant to the terms of the ESPP, the number of shares reserved under the ESPP increased by 1.0 million shares on January 1, 2017. As of March 31, 2017, 4.2 million shares of common stock were available for issuance under the ESPP.
Stock Option and Grant Plans
Our board of directors adopted the 2009 Stock Option and Grant Plan, or the 2009 Plan, in July 2009. The 2009 Plan was terminated in connection with our IPO in May 2014, and accordingly, no shares are available for issuance under this plan. The 2009 Plan continues to govern outstanding awards granted thereunder.
Our 2014 Stock Option and Incentive Plan, or the 2014 Plan, serves as the successor to our 2009 Plan. Pursuant to the terms of the 2014 Plan, the number of shares reserved for issuance under the 2014 Plan increased by 4.8 million shares on January 1, 2017. As of March 31, 2017, we had 10.3 million shares of common stock available for future grants under the 2014 Plan.
On May 6, 2016, the compensation committee of our board of directors granted equity awards representing 1.2 million shares. These awards were granted outside of the 2014 Plan pursuant to an exemption provided for “employment inducement awards” within the meaning of Section 303A.08 of the New York Stock Exchange Listed Company Manual and accordingly did not require approval from our stockholders.
A summary of our stock option and RSU activity for the three months ended March 31, 2017 is as follows (in thousands, except per share information):
 
 
 
 
Options Outstanding
 
RSUs Outstanding
Shares
Available
for Grant
 
Number of
Shares
 
Weighted
Average
Exercise Price
 
Weighted
Average
Remaining
Contractual
Term
 
Aggregate
Intrinsic
Value
 
Outstanding
RSUs
 
Weighted
Average
Grant Date
Fair Value
 
 
 
 
 
 
(In years)
 
 
 
 
 
 
Outstanding — January 1, 2017
6,039

 
8,479

 
$
14.52

 
7.49
 
$
66,449

 
6,936

 
$
20.81

Increase in authorized shares
4,833

 
 
 
 
 
 
 
 
 
 
 
 
Stock options granted
(170
)
 
170

 
24.51

 
 
 
 
 
 
 
 
RSUs granted
(892
)
 
 
 
 
 
 
 
 
 
892

 
24.64

Stock options exercised
 
 
(1,114
)
 
10.49

 
 
 
 
 
 
 
 
RSUs vested
 
 
 
 
 
 
 
 
 
 
(930
)
 
17.34

Stock options forfeited or
   canceled
156

 
(156
)
 
23.33

 
 
 
 
 
 
 
 
RSUs forfeited or canceled
381

 
 
 
 
 
 
 
 
 
(381
)
 
22.29

Outstanding — March 31, 2017
10,347

 
7,379

 
$
15.17

 
7.39
 
$
95,123

 
6,517

 
$
21.74


 
The aggregate intrinsic value for options outstanding represents the difference between the closing stock price of our common stock and the exercise price of outstanding, in-the-money options. Our closing stock price as reported on the New York Stock Exchange as of March 31, 2017 was $28.04.
As of March 31, 2017, we had a total of $168.5 million in future share-based compensation expense related to all equity awards to be recognized over a weighted average period of 2.6 years.
Early Exercise of Stock Options and Purchase of Unvested Stock Awards
Common stock purchased pursuant to an early exercise of stock options or unvested stock awards is not deemed to be outstanding for financial reporting purposes until those shares vest. As of March 31, 2017 and December 31, 2016, there were approximately 41 thousand and 0.1 million shares, outstanding as a result of early exercise of stock options and purchase of unvested stock awards by our employees and directors that were classified as accrued liabilities for an aggregated amount of $0.3 million and $0.4 million, respectively.
Net Loss Per Share
Net Loss Per Share
Note 7. Net Loss Per Share
Basic net loss per share is computed by dividing 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 share-based awards, to the extent dilutive. Basic and diluted net loss per share were the same for each period presented as the inclusion of all potential common stock outstanding would have been anti-dilutive.
The following table presents the calculation of basic and diluted net loss per share for the periods presented (in thousands, except per share data): 
 
Three Months Ended
March 31,
2017
 
2016
Net loss
$
(26,994
)
 
$
(27,171
)
Weighted-average shares used to compute basic and diluted net loss per share
97,475


90,519

Net loss per share, basic and diluted
$
(0.28
)
 
$
(0.30
)

 
The anti-dilutive securities excluded from the shares used to calculate diluted net loss per share are as follows (in thousands): 
 
As of March 31,
2017
 
2016
Shares subject to outstanding common stock options and employee stock
   purchase plan
7,647

 
10,500

Restricted stock units
6,517

 
6,967

 
14,164

 
17,467

Income Taxes
Income Taxes
Note 8. Income Taxes
Our effective tax rates for the three months ended March 31, 2017 and 2016 were less than 2%. The effective tax rates differ from the statutory rate primarily as a result of not recognizing a deferred tax asset for U.S. losses due to having a full valuation allowance against U.S. deferred tax assets.
Geographic Information
Geographic Information
Note 9. Geographic Information
Our chief operating decision maker reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating our financial performance. Accordingly, we have determined that we operate in a single reporting segment.
Revenue
The following table presents our revenue by geographic area, as determined based on the billing address of our customers (in thousands):
 
 
Three Months Ended
March 31,
2017
 
2016
United States
$
50,224

 
$
37,567

EMEA
26,042

 
18,831

Other
16,741

 
12,061

Total
$
93,007

 
$
68,459


 
Long-Lived Assets
The following table presents our long-lived assets by geographic area (in thousands):
 
 
As of
March 31, 2017
 
As of
December 31, 2016
United States
$
24,964

 
$
26,372

EMEA:
 
 
 
Republic of Ireland
5,317

 
5,703

Other EMEA
6,375

 
6,834

Total EMEA
11,692

 
12,537

APAC
8,449

 
8,357

Total
$
45,105

 
$
47,266


 
The carrying values of capitalized internal-use software and intangible assets are excluded from the balance of long-lived assets presented in the table above.
Subsequent Event
Subsequent Events
Subsequent Event

On April 27, 2017, we completed the acquisition of Outbound Solutions, Inc., which provides software that allows companies to deliver intelligent, behavior-based messages across multiple channels, for cash consideration. The acquisition will be accounted for as a business combination. We are in the process of evaluating the impact of the business combination on our consolidated financial statements.
Overview and Basis of Presentation (Policies)
Basis of Presentation
These unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2016, filed on February 27, 2017. There have been no changes to our significant accounting policies described in the Annual Report on Form 10-K that have had a material impact on our condensed consolidated financial statements and related notes, except as described below.
In the first quarter of 2017, we changed our accounting policy for share-based compensation to recognize forfeitures as they occur, as permitted by Accounting Standards Update, or ASU, 2016-09. Refer to Recently Issued and Adopted Accounting Pronouncements below for a more detailed discussion.
The consolidated balance sheet as of December 31, 2016 included herein was derived from the audited financial statements as of that date. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, our comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2017.
Use of Estimates
The preparation of our consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods.
Significant items subject to such estimates and assumptions include the fair value of share-based awards, acquired intangible assets, goodwill and unrecognized tax benefits, the useful lives of acquired intangible assets and property and equipment, the capitalization and estimated useful life of capitalized internal-use software, and financial forecasts used in currency hedging.
These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ from those estimates.
Recently Issued and Adopted Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board, or the FASB, issued new revenue guidance that provides principles for recognizing revenue to which an entity expects to be entitled for the transfer of promised goods or services to customers. As currently issued and amended, the new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, though early adoption is permitted for annual reporting periods beginning after December 15, 2016. The guidance may be applied retrospectively to each prior period presented (full retrospective method), or with the cumulative effect recognized as of the date of initial adoption (modified retrospective method).
We currently intend to adopt using the full retrospective approach, however our decision has not been finalized. We continue to assess the impact of the new guidance on our existing revenue arrangements. As a result of adoption, we also expect to capitalize a significant portion of our sales commissions and other incremental costs to acquire contracts, which we historically expensed as incurred, which will result in an increase in deferred costs recognized on our balance sheet. We have not yet concluded the useful life of our capitalized costs, which will affect the classification and magnitude of the deferred costs at each reporting period. We continue to quantify the effect of these changes on our consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, regarding ASC Topic 842 “Leases.” This new standard requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets and eliminates certain real estate-specific provisions. The new guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the effect of this standard on our consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, regarding ASC Topic 718 “Compensation - Stock Compensation. This amendment changes certain aspects of accounting for share-based awards to employees, including the recognition of income tax effects of awards when the awards vest or are settled, requirements on net share settlement to cover tax withholding, and accounting for forfeitures. We adopted the standard in the first quarter of 2017.
As required by the new standard, we now recognize excess tax effects from share-based awards as a component of provision for income taxes in our statement of operations when awards vest or are settled. Upon adoption, we recorded a deferred tax asset of $52.8 million to reflect, on a modified retrospective basis, the previously unrecognized excess tax benefits, however the deferred tax asset was fully offset by a valuation allowance, resulting in no impact to our consolidated financial statements. In our statement of cash flows, we no longer classify excess tax benefits as a reduction from operating cash flows. This change was made prospectively beginning with the quarter ended March 31, 2017.
We also elected to account for forfeitures as they occur, therefore share-based compensation expense for the three months ended March 31, 2017 has been calculated based on actual forfeitures in our consolidated statement of operations, rather than our previous approach which was net of estimated forfeitures. The cumulative-effect adjustment of this change on a modified retrospective basis was not material. Share-based compensation expense for the three months ended March 31, 2016 was recorded net of estimated forfeitures.
In October 2016, the FASB issued ASU 2016-16, “Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory,” which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The new guidance is effective for annual reporting periods beginning after December 15, 2017. Early adoption is permitted as of the beginning of an annual reporting period. The new standard must be adopted using a modified retrospective basis, with the cumulative effect recognized as of the date of adoption. We adopted the standard in the first quarter of 2017. Upon adoption, we recorded a deferred tax asset of $6.2 million to reflect the previously unrecognized tax benefits, however the deferred tax asset was fully offset by a valuation allowance, resulting in no impact to our consolidated financial statements.
Financial Instruments (Tables)
The following tables present information about our financial assets measured at fair value on a recurring basis as of March 31, 2017 and December 31, 2016 based on the three-tier fair value hierarchy (in thousands):
 
 
Fair Value Measurement at
March 31, 2017
Level 1
 
Level 2
 
Total
Description
 
 
 
 
 
Corporate bonds
$

 
$
131,527

 
$
131,527

U.S. treasury securities
 
 
30,564

 
30,564

Asset-backed securities

 
30,399

 
30,399

Agency securities
 
 
8,485

 
8,485

Commercial paper

 
5,785

 
5,785

Money market funds
3,825

 

 
3,825

Total
$
3,825

 
$
206,760

 
$
210,585

Included in cash and cash equivalents
 
 
 
 
$
3,825

Included in marketable securities
 
 
 
 
$
206,760

 
Fair Value Measurement at
December 31, 2016
Level 1
 
Level 2
 
Total
Description
 
 
 
 
 
Corporate bonds
$

 
$
124,930

 
$
124,930

Asset-backed securities
 
 
32,567

 
32,567

U.S. treasury securities
 
 
30,585

 
30,585

Commercial paper
 
 
9,787

 
9,787

Agency securities
 
 
8,489

 
8,489

Money market funds
3,545

 
$

 
$
3,545

Total
$
3,545

 
$
206,358

 
$
209,903

Included in cash and cash equivalents
 
 
 
 
$
3,545

Included in marketable securities
 
 
 
 
$
206,358

The following table classifies our marketable securities by contractual maturity as of March 31, 2017 and December 31, 2016 (in thousands):
 
 
March 31,
2017
 
December 31,
2016
Due in one year or less
$
138,440

 
$
131,190

Due after one year
68,320

 
75,168

Total
$
206,760

 
$
206,358

The following tables present information about our derivative instruments on our consolidated balance sheets as of March 31, 2017 and December 31, 2016 (in thousands):
 
 
March 31, 2017
Asset Derivatives
 
Liability Derivatives
Derivative Instrument
Balance Sheet Location
 
Fair Value
(Level 2)
 
Balance Sheet Location
 
Fair Value
(Level 2)
Foreign currency forward contracts
Other current assets
 
$
729

 
Accrued liabilities
 
$
2,740

Total
 
 
$
729

 
 
 
$
2,740

 
December 31, 2016
Asset Derivatives
 
Liability Derivatives
Derivative Instrument
Balance Sheet Location
 
Fair Value
(Level 2)
 
Balance Sheet Location
 
Fair Value
(Level 2)
Foreign currency forward contracts
Other current assets
 
$
868

 
Accrued liabilities
 
$
4,280

Total
 
 
$
868

 
 
 
$
4,280

The following table presents information about our derivative instruments on the statement of operations for the three months ended March 31, 2017 and 2016 (in thousands):
 
 
 
 
Three Months Ended March 31, 2017
 
Three Months Ended March 31, 2016
Hedging Instrument
Location of Loss Reclassified into Earnings
 
Gain Recognized in AOCI
 
Loss Reclassified from AOCI into Earnings
 
Gain Recognized in AOCI
 
Loss Reclassified from AOCI into Earnings
Foreign currency forward contracts
Revenue, cost of revenue, operating expenses
 
$
993

 
$
(533
)
 
$
2,348

 
$
(262
)
Total
 
 
$
993

 
$
(533
)
 
$
2,348

 
$
(262
)

Property and Equipment (Tables)
Components of Property and Equipment
Property and equipment, net consists of the following (in thousands): 
 
March 31,
2017
 
December 31,
2016
Hosting equipment
$
36,410

 
$
35,018

Leasehold improvements
26,727

 
25,396

Capitalized internal-use software
26,553

 
25,773

Computer equipment and software
12,766

 
11,879

Furniture and fixtures
8,752

 
8,014

Construction in progress
7,168

 
7,993

Total
118,376

 
114,073

Less: accumulated depreciation and amortization
(57,534
)
 
(51,342
)
Property and equipment, net
$
60,842

 
$
62,731

Goodwill and Acquired Intangible Assets (Tables)
The changes in the carrying amount of goodwill for the three months ended March 31, 2017 are as follows (in thousands):
 
Balance as of December 31, 2016
$
45,347

Foreign currency translation adjustments
297

Balance as of March 31, 2017
$
45,644

Acquired intangible assets subject to amortization as of March 31, 2017 and December 31, 2016 consist of the following (in thousands):
 
 
As of March 31, 2017
Cost
 
Accumulated
Amortization
 
Foreign 
Currency Translation Adjustments
 
Net
 
Remaining Useful Life
 
 
 
 
 
 
 
 
(In years)
Developed technology
$
14,000

 
$
(7,433
)
 
$
(122
)
 
$
6,445

 
2.8
Customer relationships
1,800

 
(1,151
)
 
(39
)
 
610

 
2.1
 
$
15,800

 
$
(8,584
)
 
$
(161
)
 
$
7,055

 
 
 
 
As of December 31, 2016
Cost
 
Accumulated
Amortization
 
Foreign
Currency Translation Adjustments
 
Net
 
Remaining Useful Life
 
 
 
 
 
 
 
 
(In years)
Developed technology
$
14,000

 
$
(6,584
)
 
$
(169
)
 
$
7,247

 
2.9
Customer relationships
1,800

 
(1,044
)
 
(53
)
 
703

 
2.3
 
$
15,800

 
$
(7,628
)
 
$
(222
)
 
$
7,950

 
 
Estimated future amortization expense as of March 31, 2017 is as follows (in thousands):
 
Remainder of 2017
$
2,349

2018
2,128

2019
2,066

2020
512

 
$
7,055

Common Stock and Stockholders' Equity (Tables)
Summary of Stock Option and RSU Award Activity
A summary of our stock option and RSU activity for the three months ended March 31, 2017 is as follows (in thousands, except per share information):
 
 
 
 
Options Outstanding
 
RSUs Outstanding
Shares
Available
for Grant
 
Number of
Shares
 
Weighted
Average
Exercise Price
 
Weighted
Average
Remaining
Contractual
Term
 
Aggregate
Intrinsic
Value
 
Outstanding
RSUs
 
Weighted
Average
Grant Date
Fair Value
 
 
 
 
 
 
(In years)
 
 
 
 
 
 
Outstanding — January 1, 2017
6,039

 
8,479

 
$
14.52

 
7.49
 
$
66,449

 
6,936

 
$
20.81

Increase in authorized shares
4,833

 
 
 
 
 
 
 
 
 
 
 
 
Stock options granted
(170
)
 
170

 
24.51

 
 
 
 
 
 
 
 
RSUs granted
(892
)
 
 
 
 
 
 
 
 
 
892

 
24.64

Stock options exercised
 
 
(1,114
)
 
10.49

 
 
 
 
 
 
 
 
RSUs vested
 
 
 
 
 
 
 
 
 
 
(930
)
 
17.34

Stock options forfeited or
   canceled
156

 
(156
)
 
23.33

 
 
 
 
 
 
 
 
RSUs forfeited or canceled
381

 
 
 
 
 
 
 
 
 
(381
)
 
22.29

Outstanding — March 31, 2017
10,347

 
7,379

 
$
15.17

 
7.39
 
$
95,123

 
6,517

 
$
21.74

Net Loss Per Share (Tables)
The following table presents the calculation of basic and diluted net loss per share for the periods presented (in thousands, except per share data): 
 
Three Months Ended
March 31,
2017
 
2016
Net loss
$
(26,994
)
 
$
(27,171
)
Weighted-average shares used to compute basic and diluted net loss per share
97,475


90,519

Net loss per share, basic and diluted
$
(0.28
)
 
$
(0.30
)
The anti-dilutive securities excluded from the shares used to calculate diluted net loss per share are as follows (in thousands): 
 
As of March 31,
2017
 
2016
Shares subject to outstanding common stock options and employee stock
   purchase plan
7,647

 
10,500

Restricted stock units
6,517

 
6,967

 
14,164

 
17,467

Geographic Information (Tables)
The following table presents our revenue by geographic area, as determined based on the billing address of our customers (in thousands):
 
 
Three Months Ended
March 31,
2017
 
2016
United States
$
50,224

 
$
37,567

EMEA
26,042

 
18,831

Other
16,741

 
12,061

Total
$
93,007

 
$
68,459

The following table presents our long-lived assets by geographic area (in thousands):
 
 
As of
March 31, 2017
 
As of
December 31, 2016
United States
$
24,964

 
$
26,372

EMEA:
 
 
 
Republic of Ireland
5,317

 
5,703

Other EMEA
6,375

 
6,834

Total EMEA
11,692

 
12,537

APAC
8,449

 
8,357

Total
$
45,105

 
$
47,266

Overview and Basis of Presentation - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Subsidiary, Sale of Stock [Line Items]
 
 
Year founded
2007 
 
Reincorporated date
Apr. 30, 2009 
 
Deferred tax asset related to stock compensation
$ 52.8 
 
Accounting Standards Update 2016-16 |
Adjustments for New Accounting Principle, Early Adoption
 
 
Subsidiary, Sale of Stock [Line Items]
 
 
Deferred tax asset related to intra-entity transfers of assets
$ 6.2 
 
Customer Concentration Risk |
Accounts Receivable
 
 
Subsidiary, Sale of Stock [Line Items]
 
 
Percentage of total revenue or receivables, floor
10.00% 
 
Customer Concentration Risk |
Sales Revenue, Net
 
 
Subsidiary, Sale of Stock [Line Items]
 
 
Percentage of total revenue or receivables, floor
10.00% 
10.00% 
Financial Instruments - Financial Assets Measured at Fair Value on Recurring Basis (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Included in marketable securities
$ 206,760 
$ 206,358 
Fair Value Measurements, Recurring
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
210,585 
209,903 
Included in cash and cash equivalents
3,825 
3,545 
Included in marketable securities
206,760 
206,358 
Fair Value Measurements, Recurring |
Corporate bonds
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
131,527 
124,930 
Fair Value Measurements, Recurring |
U.S. treasury securities
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
30,564 
30,585 
Fair Value Measurements, Recurring |
Asset-backed securities
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
30,399 
32,567 
Fair Value Measurements, Recurring |
Agency securities
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
8,485 
8,489 
Fair Value Measurements, Recurring |
Commercial paper
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
5,785 
9,787 
Fair Value Measurements, Recurring |
Money market funds
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
3,825 
3,545 
Fair Value Measurements, Recurring |
Level 1
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
3,825 
3,545 
Fair Value Measurements, Recurring |
Level 1 |
Corporate bonds
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
Fair Value Measurements, Recurring |
Level 1 |
Asset-backed securities
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
 
Fair Value Measurements, Recurring |
Level 1 |
Commercial paper
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
 
Fair Value Measurements, Recurring |
Level 1 |
Money market funds
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
3,825 
3,545 
Fair Value Measurements, Recurring |
Level 2
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
206,760 
206,358 
Fair Value Measurements, Recurring |
Level 2 |
Corporate bonds
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
131,527 
124,930 
Fair Value Measurements, Recurring |
Level 2 |
U.S. treasury securities
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
30,564 
30,585 
Fair Value Measurements, Recurring |
Level 2 |
Asset-backed securities
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
30,399 
32,567 
Fair Value Measurements, Recurring |
Level 2 |
Agency securities
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
8,485 
8,489 
Fair Value Measurements, Recurring |
Level 2 |
Commercial paper
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
5,785 
9,787 
Fair Value Measurements, Recurring |
Level 2 |
Money market funds
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
$ 0 
$ 0 
Financial Instruments - Additional Information (Details) (USD $)
3 Months Ended
Mar. 31, 2017
Dec. 31, 2016
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Securities that were in an unrealized loss position for more than 12 months.
$ 0 
$ 0 
Cash collateral posted
1,100,000 
Foreign currency forward contracts
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Derivative, maturity
15 months 
 
Unrealized loss in accumulated other comprehensive loss
1,500,000 
 
Reclassification from accumulated other comprehensive income into earnings over next 12 month
1,500,000 
 
Notional value
81,300,000.0 
79,600,000.0 
Level 3
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Securities within Level 3 of the fair value hierarchy
$ 0 
$ 0 
Financial Instruments - Marketable Securities by Contractual Maturity (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Fair Value Disclosures [Abstract]
 
 
Due in one year or less
$ 138,440 
$ 131,190 
Due after one year
68,320 
75,168 
Total
$ 206,760 
$ 206,358 
Financial Instruments - Schedule of Derivative Instruments on Consolidated Balance Sheets (Details) (Designated as Hedging Instrument, Level 2, USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Derivatives Fair Value [Line Items]
 
 
Asset Derivatives, Fair Value
$ 729 
$ 868 
Liability Derivatives, Fair Value
2,740 
4,280 
Foreign currency forward contracts |
Other current assets
 
 
Derivatives Fair Value [Line Items]
 
 
Asset Derivatives, Fair Value
729 
868 
Foreign currency forward contracts |
Accrued liabilities
 
 
Derivatives Fair Value [Line Items]
 
 
Liability Derivatives, Fair Value
$ 2,740 
$ 4,280 
Financial Instruments - Schedule of Derivative Instruments on Statement of Operations (Details) (Designated as Hedging Instrument, USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Derivative Instruments Gain Loss [Line Items]
 
 
Gain Recognized in AOCI
$ 993 
$ 2,348 
Loss Reclassified from AOCI into Earnings
(533)
(262)
Revenue, cost of revenue, operating expenses |
Foreign currency forward contracts
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
Gain Recognized in AOCI
993 
2,348 
Loss Reclassified from AOCI into Earnings
$ (533)
 
Property and Equipment - Components of Property and Equipment (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Property Plant And Equipment [Line Items]
 
 
Property and equipment, gross
$ 118,376 
$ 114,073 
Less: accumulated depreciation and amortization
(57,534)
(51,342)
Property and equipment, net
60,842 
62,731 
Hosting equipment
 
 
Property Plant And Equipment [Line Items]
 
 
Property and equipment, gross
36,410 
35,018 
Leasehold improvements
 
 
Property Plant And Equipment [Line Items]
 
 
Property and equipment, gross
26,727 
25,396 
Capitalized internal-use software
 
 
Property Plant And Equipment [Line Items]
 
 
Property and equipment, gross
26,553 
25,773 
Computer equipment and software
 
 
Property Plant And Equipment [Line Items]
 
 
Property and equipment, gross
12,766 
11,879 
Furniture and fixtures
 
 
Property Plant And Equipment [Line Items]
 
 
Property and equipment, gross
8,752 
8,014 
Construction in progress
 
 
Property Plant And Equipment [Line Items]
 
 
Property and equipment, gross
$ 7,168 
$ 7,993 
Property and Equipment - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Dec. 31, 2016
Property, Plant and Equipment [Abstract]
 
 
 
Depreciation expense
$ 4.8 
$ 3.7 
 
Amortization expense of capitalized internal-use software
2.1 
1.7 
 
Carrying value of capitalized internal-use software
15.7 
 
15.4 
Capitalized internal-use software included in construction in progress
$ 6.7 
 
$ 5.4 
Goodwill and Acquired Intangible Assets - Changes in Carrying Amount of Goodwill (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Goodwill [Roll Forward]
 
Balance as of December 31, 2016
$ 45,347 
Foreign currency translation adjustments
297 
Balance as of March 31, 2017
$ 45,644 
Goodwill and Acquired Intangible Assets - Acquired Intangible Assets Subject to Amortization (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Mar. 31, 2017
Dec. 31, 2016
Finite Lived Intangible Assets [Line Items]
 
 
Cost
$ 15,800 
$ 15,800 
Accumulated Amortization
(8,584)
(7,628)
Foreign Currency Translation Adjustments
(161)
(222)
Net
7,055 
7,950 
Developed technology
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Cost
14,000 
14,000 
Accumulated Amortization
(7,433)
(6,584)
Foreign Currency Translation Adjustments
(122)
(169)
Net
6,445 
7,247 
Remaining Useful Life
2 years 9 months 18 days 
2 years 10 months 24 days 
Customer relationships
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Cost
1,800 
1,800 
Accumulated Amortization
(1,151)
(1,044)
Foreign Currency Translation Adjustments
(39)
(53)
Net
$ 610 
$ 703 
Remaining Useful Life
2 years 1 month 6 days 
2 years 3 months 2 days 
Goodwill and Acquired Intangible Assets - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
Amortization expense
$ 0.9 
$ 0.9 
Goodwill and Acquired Intangible Assets - Estimated Future Amortization Expense (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
Remainder of 2017
$ 2,349 
 
2018
2,128 
 
2019
2,066 
 
2020
512 
 
Net
$ 7,055 
$ 7,950 
Commitments and Contingencies - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 1 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Apr. 30, 2017
Subsequent Event
sqft
Other Commitments [Line Items]
 
 
 
Rent expense
$ 2.7 
$ 2.2 
 
Square feet of office space
 
 
58,000 
Term of lease
 
 
12 years 
Total amount of rent to be paid
 
 
$ 37.0 
Common Stock and Stockholders' Equity - Additional Information (Details) (USD $)
In Millions, except Share data, unless otherwise specified
0 Months Ended 3 Months Ended 3 Months Ended 0 Months Ended 0 Months Ended 3 Months Ended
May 6, 2016
Mar. 31, 2017
Dec. 31, 2016
Mar. 31, 2017
Employee Stock Purchase Plan Awards [Member]
Mar. 31, 2017
2009 Stock Option and Grant Plan
Jan. 1, 2017
2014 Plan
Employee Stock Option
Mar. 31, 2017
2014 Plan
Employee Stock Option
Jan. 1, 2017
Employee Stock Purchase Plan
Mar. 31, 2017
Employee Stock Purchase Plan
Class Of Stock [Line Items]
 
 
 
 
 
 
 
 
 
Common stock, shares authorized (in shares)
 
400,000,000 
400,000,000 
 
 
 
 
 
 
Common stock, par value (usd per share)
 
$ 0.01 
$ 0.01 
 
 
 
 
 
 
Common stock, shares issued (in shares)
 
99,200,000 
97,200,000 
 
 
 
 
 
 
Common stock, shares outstanding (in shares)
 
98,700,000 
96,700,000 
 
 
 
 
 
 
Common stock shares outstanding, subject to repurchase (in shares)
 
100,000 
 
 
 
 
 
 
Preferred stock, shares authorized (in shares)
 
10,000,000 
10,000,000 
 
 
 
 
 
 
Preferred stock, par value (usd per share)
 
$ 0.01 
$ 0.01 
 
 
 
 
 
 
Preferred stock, shares issued (in shares)
 
 
 
 
 
 
 
Preferred stock, shares outstanding (in shares)
 
 
 
 
 
 
 
Percentage of purchase price of shares lower of the fair market value of common stock employees are able to purchase shares
 
 
 
 
 
 
 
 
85.00% 
Common shares purchased (in shares)
 
 
 
 
 
 
 
 
Increase in authorized shares (in shares), shares
 
4,833,000 
 
 
 
4,800,000 
 
1,000,000 
 
Shares of common stock available for issuance (in shares)
 
10,347,000 
6,039,000 
 
 
10,300,000 
 
4,200,000 
Stock options granted (in shares)
1,200,000 
170,000 
 
 
 
 
 
 
 
Share price (usd per share)
 
$ 28.04 
 
 
 
 
 
 
 
Future period share-based compensation expense
 
$ 168.5 
 
 
 
 
 
 
 
Future period share-based compensation expense, period to recognized
 
2 years 7 months 6 days 
 
 
 
 
 
 
 
Shares outstanding as a result of early exercise of stock options and purchase of unvested stock awards (in shares)
 
41,000 
100,000 
 
 
 
 
 
 
Accrued liability for shares outstanding as a result of early exercise of stock options and purchase of unvested stock awards
 
$ 0.3 
$ 0.4 
 
 
 
 
 
 
Offering period
 
 
 
18 months 
 
 
 
 
 
Common Stock and Stockholders' Equity - Summary of Stock Option and RSU Award Activity (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
0 Months Ended 3 Months Ended 12 Months Ended
May 6, 2016
Mar. 31, 2017
Dec. 31, 2016
Shares Available for Grant
 
 
 
Outstanding — January 1, 2017
 
6,039,000 
 
Increase in authorized shares, shares
 
4,833,000 
 
Stock options granted, shares
 
(170,000)
 
RSUs granted, shares
 
(892,000)
 
Stock options forfeited or canceled, shares
 
156,000 
 
RSUs forfeited or canceled, shares
 
381,000 
 
Outstanding — March 31, 2017
 
10,347,000 
6,039,000 
Number of Shares
 
 
 
Balance at the beginning of the period, shares
 
8,479,000 
 
Stock options granted, shares
1,200,000 
170,000 
 
Stock options exercised, shares
 
(1,114,000)
 
Stock options forfeited or canceled, shares
 
(156,000)
 
Balance at the end of the period, shares
 
7,379,000 
8,479,000 
Weighted-Average Exercise Price
 
 
 
Balance at the beginning of the period (usd per share)
 
$ 14.52 
 
Stock options granted (usd per share)
 
$ 24.51 
 
Stock options exercised (usd per share)
 
$ 10.49 
 
Stock options forfeited or canceled (usd per share)
 
$ 23.33 
 
Balance at the end of the period (usd per share)
 
$ 15.17 
$ 14.52 
Weighted Average Remaining Contractual Term
 
 
 
Weighted Average Remaining Contractual Term
 
7 years 4 months 21 days 
7 years 5 months 27 days 
Aggregate Intrinsic Value
 
 
 
Aggregate intrinsic value, beginning
 
$ 66,449 
 
Aggregate intrinsic value, ending
 
$ 95,123 
$ 66,449 
RSUs Outstanding
 
 
 
Outstanding RSUs
 
 
 
Balance at the beginning of the period, shares
 
6,936,000 
 
RSUs granted, shares
 
892,000 
 
RSUs vested, shares
 
(930,000)
 
RSUs forfeited or canceled, shares
 
(381,000)
 
Balance at the end of the period, shares
 
6,517,000 
 
Weighted-Average Grant Date Fair Value
 
 
 
Balance at the beginning of the period (usd per share)
 
$ 20.81 
 
Weighted average grant date fair value, RSUs granted (usd per share)
 
$ 24.64 
 
Weighted average grant date fair value, RSUs vested (usd per share)
 
$ 17.34 
 
Weighted average grant date fair value, RSUs forfeited or canceled (usd per share)
 
$ 22.29 
 
Balance at the end of the period (usd per share)
 
$ 21.74 
 
Net Loss per Share - Computation of Basic and Diluted Net Loss per Share of Common Stock (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Earnings Per Share [Abstract]
 
 
Net loss
$ (26,994)
$ (27,171)
Weighted-average shares used to compute basic and diluted net loss per share
97,475 
90,519 
Net loss per share:
 
 
Basic and diluted (usd per share)
$ (0.28)
$ (0.30)
Net Loss per Share - Schedule of Anti-Dilutive Securities Excluded from the Diluted per Share Calculation (Details)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Antidilutive securities excluded from computation of earnings per share amount (in shares)
14,164 
17,467 
Shares subject to outstanding common stock options and employee stock purchase plan
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Antidilutive securities excluded from computation of earnings per share amount (in shares)
7,647 
10,500 
Restricted stock units
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Antidilutive securities excluded from computation of earnings per share amount (in shares)
6,517 
6,967 
Income Taxes - Additional Information (Details)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Income Tax Disclosure [Abstract]
 
 
Effective income tax rate, percent, less than
2.00% 
2.00% 
Geographic Information - Additional Information (Details)
3 Months Ended
Mar. 31, 2017
segments
Segment Reporting [Abstract]
 
Number of reportable segments
Geographic Information - Schedule of Revenue by Geographic Areas (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Revenue
$ 93,007 
$ 68,459 
United States
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Revenue
50,224 
37,567 
EMEA
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Revenue
26,042 
18,831 
Other
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Revenue
$ 16,741 
$ 12,061 
Geographic Information - Schedule of Long-Lived Assets by Geographic Areas (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2017
Dec. 31, 2016
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Long-lived assets
$ 45,105 
$ 47,266 
United States
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Long-lived assets
24,964 
26,372 
EMEA
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Long-lived assets
11,692 
12,537 
Republic of Ireland
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Long-lived assets
5,317 
5,703 
Other EMEA
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Long-lived assets
6,375 
6,834 
APAC
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Long-lived assets
$ 8,449 
$ 8,357