SQUARE, INC., 10-K filed on 2/27/2019
Annual Report
v3.10.0.1
Document and Entity Information - USD ($)
$ in Billions
12 Months Ended
Dec. 31, 2018
Feb. 22, 2019
Jun. 30, 2018
Class of Stock [Line Items]      
Entity Registrant Name Square, Inc.    
Entity Central Index Key 0001512673    
Entity Current Reporting Status Yes    
Entity Voluntary Filers No    
Current Fiscal Year End Date --12-31    
Entity Filer Category Large Accelerated Filer    
Entity Well-known Seasoned Issuer Yes    
Document Type 10-K    
Document Period End Date Dec. 31, 2018    
Document Fiscal Year Focus 2018    
Document Fiscal Period Focus FY    
Amendment Flag false    
Entity Emerging Growth Company false    
Entity Small Business false    
Entity Shell Company false    
Entity Public Float     $ 18.6
Class A      
Class of Stock [Line Items]      
Entity Common Stock, Shares Outstanding   327,326,001  
Class B      
Class of Stock [Line Items]      
Entity Common Stock, Shares Outstanding   92,368,406  
v3.10.0.1
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Current assets:    
Cash and cash equivalents $ 583,173 $ 696,474
Short-term investments 540,991 169,576
Restricted cash 33,838 28,805
Settlements receivable 364,946 620,523
Customer funds 334,017 103,042
Loans held for sale 89,974 73,420
Other current assets 164,966 86,454
Total current assets 2,111,905 1,778,294
Property and equipment, net 142,402 91,496
Goodwill 261,705 58,327
Acquired intangible assets, net 77,102 14,334
Long-term investments 464,680 203,667
Restricted cash 15,836 9,802
Build-to-suit lease asset 149,000 0
Other non-current assets 58,393 31,350
Total assets 3,281,023 2,187,270
Current liabilities:    
Customers payable 749,215 733,736
Settlements payable 54,137 114,788
Accrued transaction losses 33,682 26,893
Accrued expenses 82,354 52,280
Other current liabilities 99,153 45,130
Total current liabilities 1,018,541 972,827
Long-term debt (Note 12) 899,695 358,572
Build-to-suit lease liability 149,000 0
Other non-current liabilities 93,286 69,538
Total liabilities 2,160,522 1,400,937
Commitments and contingencies (Note 17)  
Stockholders’ equity:    
Preferred stock, $0.0000001 par value: 100,000,000 shares authorized at December 31, 2018 and December 31, 2017. None issued and outstanding at December 31, 2018 and December 31, 2017. 0 0
Additional paid-in capital 2,012,328 1,630,386
Accumulated other comprehensive loss (6,053) (1,318)
Accumulated deficit (885,774) (842,735)
Total stockholders’ equity 1,120,501 786,333
Total liabilities and stockholders’ equity 3,281,023 2,187,270
Class A    
Stockholders’ equity:    
Common stock 0 0
Class B    
Stockholders’ equity:    
Common stock $ 0 $ 0
v3.10.0.1
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Dec. 31, 2018
Dec. 31, 2017
Preferred stock, par value (in USD per share) $ 0.0000001 $ 0.0000001
Preferred stock, shares authorized (in shares) 100,000,000 100,000,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Class A    
Common stock, par value (in USD per share) $ 0.0000001 $ 0.0000001
Common stock, shares authorized (in shares) 1,000,000,000 1,000,000,000
Common stock, shares issued (in shares) 323,546,864 280,400,813
Common stock, shares outstanding (in shares) 323,546,864 280,400,813
Class B    
Common stock, par value (in USD per share) $ 0.0000001 $ 0.0000001
Common stock, shares authorized (in shares) 500,000,000 500,000,000
Common stock, shares issued (in shares) 93,501,142 114,793,262
Common stock, shares outstanding (in shares) 93,501,142 114,793,262
v3.10.0.1
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Revenue:      
Revenue $ 3,205,500    
Revenues 3,298,177 $ 2,214,253 $ 1,708,721
Cost of Revenue [Abstract]      
Cost of revenue 94,114 62,393 68,562
Total cost of revenue 1,994,477 1,374,947 1,132,683
Gross profit 1,303,700 839,306 576,038
Operating expenses:      
Product development 497,479 321,888 268,537
Sales and marketing 411,151 253,170 173,876
General and administrative 339,245 250,553 251,993
Transaction, loan and advance losses 88,077 67,018 51,235
Total operating expenses 1,340,314 893,512 746,491
Operating loss (36,614) (54,206) (170,453)
Interest expense, net 17,982 10,053 (533)
Other income, net (18,469) (1,595) (247)
Loss before income tax (36,127) (62,664) (169,673)
Provision for income taxes 2,326 149 1,917
Net loss $ (38,453) $ (62,813) $ (171,590)
Net loss per share:      
Basic (in USD per share) $ (0.09) $ (0.17) $ (0.50)
Diluted (in USD per share) $ (0.09) $ (0.17) $ (0.50)
Weighted-average shares used to compute net loss per share:      
Basic (in shares) 405,731 379,344 341,555
Diluted (in shares) 405,731 379,344 341,555
Transaction-based      
Revenue:      
Revenue $ 2,471,451 $ 1,920,174 $ 1,456,160
Subscription and services-based revenue      
Revenue:      
Revenue 499,010 185,485 79,507
Revenues 591,706 252,664 129,351
Cost of Revenue [Abstract]      
Cost of revenue 169,884 75,720 43,132
Hardware revenue      
Revenue:      
Revenue 68,503 41,415 44,307
Cost of Revenue [Abstract]      
Cost of revenue 94,114    
Bitcoin revenue      
Revenue:      
Revenue 166,517 0 0
Cost of Revenue [Abstract]      
Cost of revenue 164,827 0 0
Customers Other than Starbucks | Transaction-based      
Revenue:      
Revenue 2,471,451 1,920,174 1,456,160
Cost of Revenue [Abstract]      
Cost of revenue 1,558,562 1,230,290 943,200
Starbucks | Transaction-based      
Revenue:      
Revenue 0 0 78,903
Cost of Revenue [Abstract]      
Cost of revenue 0 0 69,761
Acquired technology      
Cost of Revenue [Abstract]      
Amortization of acquired technology 7,090 6,544 8,028
Acquired customers      
Operating expenses:      
Amortization of acquired customer assets $ 4,362 $ 883 $ 850
v3.10.0.1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Statement of Comprehensive Income [Abstract]      
Net loss $ (38,453) $ (62,813) $ (171,590)
Net foreign currency translation adjustments (4,496) 1,900 (716)
Net unrealized gain (loss) on revaluation of intercompany loans 303 385 (11)
Net unrealized loss on marketable debt securities (542) (1,614) (77)
Total comprehensive loss $ (43,188) $ (62,142) $ (172,394)
v3.10.0.1
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
$ in Thousands
Total
Convertible preferred stock
Class A and B common stock
Additional paid-in capital
Accumulated other comprehensive loss
Accumulated deficit
Beginning balance at Dec. 31, 2015 $ 508,048 $ 0 $ 0 $ 1,116,882 $ (1,185) $ (607,649)
Beginning balance (in shares) at Dec. 31, 2015   0 334,949,445      
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net loss (171,590)         (171,590)
Shares issued in connection with:            
Exercise of stock options and warrants (in shares)     24,413,821      
Exercise of stock options and warrants 82,438     82,438    
Purchases under employee stock purchase plan (in shares)     1,852,900      
Purchases under employee stock purchase plan 14,201     14,201    
Vesting of restricted stock units (in shares)     3,392,726      
Vesting of restricted stock units 0          
Vesting of early exercised stock options and other 2,313     2,313    
Cancellation of shares related to business combinations (in shares)     (228)      
Cancellation of shares related to business combinations 0          
Repurchase of common stock (in shares)     (61,288)      
Repurchase of common stock 0          
Change in other comprehensive loss (804)       (804)  
Share-based compensation 141,547     141,547    
Ending balance at Dec. 31, 2016 576,153 $ 0 $ 0 1,357,381 (1,989) (779,239)
Ending balance (in shares) at Dec. 31, 2016   0 364,547,376      
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net loss (62,813)         (62,813)
Shares issued in connection with:            
Exercise of stock options (in shares)     24,510,745      
Exercise of stock options 144,774     144,774    
Purchases under employee stock purchase plan (in shares)     1,670,045      
Purchases under employee stock purchase plan 17,859     17,859    
Vesting of restricted stock units (in shares)     5,964,153      
Vesting of restricted stock units 0          
Vesting of early exercised stock options and other 661     661    
Repurchase of common stock (in shares)     (24,209)      
Repurchase of common stock 0          
Change in other comprehensive loss 671       671  
Share-based compensation 159,509     159,509    
Tax withholding related to vesting of restricted stock units (in shares)     (1,474,035)      
Tax withholding related to vesting of restricted stock units (44,682)     (44,682)    
Conversion feature of convertible senior notes, due 2022, net of allocated debt issuance costs 83,901     83,901    
Purchase of bond hedges in conjunction with issuance of convertible senior notes, due 2022 (92,136)     (92,136)    
Sale of warrants in conjunction with issuance of convertible senior notes, due 2022 57,244     57,244    
Payment for termination of Starbucks warrant (54,808)     (54,808)    
Ending balance at Dec. 31, 2017 786,333 $ 0 $ 0 1,630,386 (1,318) (842,735)
Ending balance (in shares) at Dec. 31, 2017   0 395,194,075      
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net loss $ (38,453)         (38,453)
Shares issued in connection with:            
Exercise of stock options (in shares) 13,402,680   13,402,680      
Exercise of stock options $ 106,962     106,962    
Purchases under employee stock purchase plan (in shares)     826,356      
Purchases under employee stock purchase plan 26,888     26,888    
Vesting of restricted stock units (in shares)     8,046,640      
Vesting of early exercised stock options and other 177     177    
Issuance of common stock in connection with business combination (shares)     2,649,590      
Issuance of common stock in connection with business combination 140,107     140,107    
Replacement stock awards issued in connection with acquisition (in shares)     24,613      
Replacement stock awards issued in connection with acquisition 899     899    
Change in other comprehensive loss (4,735)       (4,735)  
Share-based compensation 226,182     226,182    
Tax withholding related to vesting of restricted stock units (in shares)     (3,013,394)      
Tax withholding related to vesting of restricted stock units (189,124)     (189,124)    
Conversion feature of convertible senior notes, due 2022, net of allocated debt issuance costs 154,019     154,019    
Purchase of bond hedges in conjunction with issuance of convertible senior notes, due 2022 (172,586)     (172,586)    
Sale of warrants in conjunction with issuance of convertible senior notes, due 2022 112,125     112,125    
Issuance of common stock in conjunction with the conversion of senior notes, due 2022 (in shares)     7,288,907      
Issuance of common stock in conjunction with the conversion of senior notes, due 2022 (20,962)     (20,962)    
Exercise of bond hedges in conjunction with the conversion of senior notes, due 2022 (in shares)     (6,901,567)      
Recovery of common stock in connection with indemnification settlement agreement (in shares)     (469,894)      
Recovery of common stock in connection with indemnification settlement agreement (2,745)     (2,745)    
Ending balance at Dec. 31, 2018 $ 1,120,501 $ 0 $ 0 $ 2,012,328 $ (6,053) $ (885,774)
Ending balance (in shares) at Dec. 31, 2018   0 417,048,006      
v3.10.0.1
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Cash flows from operating activities:      
Net loss $ (38,453) $ (62,813) $ (171,590)
Adjustments to reconcile net loss to net cash provided by operating activities:      
Depreciation and amortization 60,961 37,279 37,745
Non-cash interest and other expense 31,257 14,421 (49)
Loss on extinguishment of long-term debt 5,047 0 0
Share-based compensation 216,881 155,836 138,786
Replacement stock awards issued in connection with acquisition 899 0 0
Gain on revaluation of equity investment (20,342) 0 0
Recovery of common stock in connection with indemnification settlement agreement (2,745) 0 0
Transaction, loan and advance losses 88,077 67,018 51,235
Change in deferred income taxes (646) (1,385) 58
Changes in operating assets and liabilities:      
Settlements receivable 245,795 (305,831) (177,662)
Customer funds (131,004) (59,468) (34,128)
Purchase of loans held for sale (1,609,611) (1,184,630) (668,976)
Sales and principal payments of loans held for sale 1,579,834 1,145,314 627,627
Other current assets (77,405) (26,119) 16,116
Other non-current assets (6,641) (3,274) 631
Customers payable 15,597 301,778 206,574
Settlements payable (60,651) 63,637 38,046
Charge-offs to accrued transaction losses (58,192) (46,148) (47,931)
Accrued expenses 7,190 12,207 (409)
Other current liabilities 35,294 8,198 3,909
Other non-current liabilities 13,938 11,691 3,149
Net cash provided by operating activities 295,080 127,711 23,131
Cash flows from investing activities:      
Purchase of marketable debt securities (1,000,346) (544,910) (164,766)
Proceeds from maturities of marketable debt securities 197,454 168,224 43,200
Proceeds from sale of marketable debt securities 171,992 89,087 34,222
Purchase of marketable debt securities from customer funds (148,096) 0 0
Proceeds from sale of marketable debt securities from customer funds 48,334 0 0
Purchase of property and equipment (61,203) (26,097) (25,433)
Proceeds from sale of property and equipment 0 0 296
Purchase of equity investment 0 (25,000) 0
Purchase of intangible assets (1,584) 0 (400)
Business combinations, net of cash acquired (112,399) (1,915) (1,360)
Net cash used in investing activities: (905,848) (340,611) (114,241)
Cash flows from financing activities:      
Proceeds from issuance of convertible senior notes, net 855,663 428,250 0
Purchase of convertible senior note hedges (172,586) (92,136) 0
Proceeds from issuance of warrants 112,125 57,244 0
Principal payment on conversion of senior notes (219,384) 0 0
Payment of deferred purchase consideration (848) 0 0
Payment for termination of Starbucks warrant 0 (54,808) 0
Payments of offering costs related to initial public offering 0 0 (5,530)
Principal payments on capital lease obligation (3,941) (1,439) (168)
Proceeds from the exercise of stock options and purchases under the employee stock purchase plan, net 133,850 162,504 96,439
Payments for tax withholding related to vesting of restricted stock units (189,124) (44,682) 0
Net cash provided by financing activities 515,755 454,933 90,741
Effect of foreign exchange rate on cash and cash equivalents (7,221) 4,303 (438)
Net increase (decrease) in cash, cash equivalents and restricted cash (102,234) 246,336 (807)
Cash, cash equivalents and restricted cash, beginning of the year 735,081 488,745 489,552
Cash, cash equivalents and restricted cash, end of the year $ 632,847 $ 735,081 $ 488,745
v3.10.0.1
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Square, Inc. (together with its subsidiaries, Square or the Company) creates tools that help sellers start, run, and grow their businesses. Square enables sellers to accept card payments and also provides reporting and analytics, next-day settlement, and chargeback protection. Square’s point-of-sale software and other business services help sellers manage inventory, locations, and employees; access financing; engage buyers; build a website or online store; and grow sales. The Cash App is an easy way to send, spend, and store money, and Caviar is a food-ordering service. Square was founded in 2009 and is headquartered in San Francisco, with offices in the United States, Canada, Japan, Australia, Ireland, and the UK.

Reclassifications and Other Adjustments

During the year ended December 31, 2018, the Company has reclassified prior period balances within interest and other (income) expense, net, to disaggregate the amounts and separately present interest (income) expense, net and other (income) expense, net on its consolidated statements of operations to conform to the current period presentation. This classification change was made to provide clarity of the balances as the activity continues to grow, particularly as a result of the impact of revaluation of an equity investment in the current period. During the year ended December 31, 2018, the Company recorded a gain of $20.3 million to other income on the consolidated statements of operations arising from revaluation of this investment (Note 11). There was no impact to the net income (loss) on its consolidated statements of operations to any of the periods presented as result of this change.

Litigation Settlement

On June 8, 2016, a final, definitive settlement agreement (Settlement Agreement) was entered into by Robert E. Morley, REM Holdings 3, LLC, Jack Dorsey, Jim McKelvey, and the Company. The Settlement Agreement required an aggregate total payment of $50.0 million to plaintiffs, including meaningful contributions by Mr. Dorsey and Mr. McKelvey. The Company made a payment of $48.0 million to plaintiffs and met its obligations under the Settlement Agreement. This amount was classified within general and administrative expenses on the consolidated statements of operations for the year ended December 31, 2016. On June 17, 2016, the Court entered an Order dismissing the complaints in their entirety, with prejudice.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) and include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, as well as related disclosure of contingent assets and liabilities. Actual results could differ from the Company’s estimates. To the extent that there are material differences between these estimates and actual results, the Company’s financial condition or operating results will be materially affected. The Company bases its estimates on past experience and other assumptions that the Company believes are reasonable under the circumstances, and the Company evaluates these estimates on an ongoing basis.

Estimates, judgments, and assumptions in these consolidated financial statements include, but are not limited to, those related to revenue recognition, accrued transaction losses, valuation of the debt component of convertible senior notes, valuation of loans held for sale, goodwill, acquired intangible assets and deferred revenue, income and other taxes, build-to-suit lease asset and liability, and share-based compensation.

Revenue Recognition

On January 1, 2018, the Company adopted Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company's historic revenue recognition methodology under ASC 605, Revenue Recognition. Refer to Note 2 for the impact of this adoption.

Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

Transaction-based revenue

The Company charges its sellers a transaction fee for managed payments solutions that is generally calculated as a percentage of the total transaction amount processed. The Company selectively offers custom pricing for certain sellers. The Company collects the transaction amount from the seller's customer's bank, net of acquiring interchange and assessment fees, processing fees, and bank settlement fees paid to third-party payment processors and financial institutions. The Company retains its fees and remits the net amount to the sellers.

The Company acts as the merchant of record for its sellers and works directly with payment card networks and banks so that its sellers do not need to manage the complex systems, rules, and requirements of the payments industry. The Company satisfies its performance obligations and therefore recognizes the transaction fees as revenue upon authorization of a transaction by the seller's customer's bank.

Revenue is recognized net of refunds, which arise from reversals of transactions initiated by sellers.

The transaction fees collected from sellers are recognized as revenue on a gross basis as the Company is the principal in the delivery of the managed payments solutions to the sellers. The Company has concluded it is the principal because as the merchant of record, it controls the services before delivery to the seller, it is primarily responsible for the delivery of the services to its sellers, and it has discretion in setting prices charged to sellers. The Company also has the unilateral ability to accept or reject a transaction based on criteria established by the Company. As the merchant of record, Square is liable for the costs of processing the transactions for its sellers, and records such costs within cost of revenue.

Subscription and services-based revenue

Subscription and services-based revenue is primarily comprised of revenue the Company generates from Instant Deposit and Cash Card, Caviar, Square Capital, website hosting and domain name registration services, and various other software as a service (SaaS) products.

Instant Deposit is a functionality within the Cash App and the Company's managed payments solution that enables customers, including individuals and sellers, to instantly deposit funds into their bank accounts. The Company charges a per transaction fee which is recognized as revenue when customers instantly deposit funds to their bank account. The Company also offers Cash App customers the ability to use funds stored in the Cash App via a Visa debit card (Cash Card), for which the Company charges a per transaction fee that is recorded as revenue.

Caviar is a food ordering platform that facilitates food delivery services. The Company's performance obligations are the delivery of food orders from restaurants to customers and the provision of catered meals to corporate customers. For delivery of food orders, the Company charges fees to restaurants, as sellers, and also charges delivery and service fees to individuals. For provision of catered meals the Company charges corporate customers a fee. All fees are billed upon delivery of food orders or catered meals, when the Company considers that it has satisfied its performance obligations. Revenue is recognized upon delivery of the food orders or catered meals, net of refunds. Refunds are estimated based on historical experience.

Square Capital facilitates a loan that is offered through a partnership with an industrial bank that is either repaid through withholding a percentage of the collections of the seller's receivables processed by the Company or a specified monthly amount. The Company generally facilitates loans to its sellers pre-qualified through an analysis of the aggregated data of the seller’s business which includes, but is not limited to, the seller’s historical processing volumes, transaction count, chargebacks, growth, and length of time as a Square customer. The Company also facilitates loans to the customers of certain sellers as well as to the sellers of its partners who do not process payments through the Company. The loans are generally originated by a bank partner, from whom the Company purchases the loans obtaining all rights, title, and interest. The loans have no stated coupon rate but the seller is charged a one-time origination fee by the bank partner based upon their risk rating, which is derived primarily from processing activity. It is the Company’s intent to sell all of its rights, title, and interest of these loans to third-party investors for an upfront fee when the loans are sold. The Company records the net amounts paid to the bank as the cost of the loans purchased and subsequently records a gain on sale of the loans to the third-party investors as revenue upon transfer of title. The Company is retained by the third-party investors to service the loans and earns a servicing fee for facilitating the repayment of these receivables through its managed payments solutions. The Company records servicing revenue as servicing is delivered. For the loans which are not immediately sold to third-party investors, the Company recognizes a portion of the expected seller repayments over the cost of the loans as revenue in proportion to the loan principal reduction.

Following the acquisition of Weebly, the Company offers customers website hosting services for a fee that is generally billed at inception. The Company also acts as a reseller of domain names registration services for a registrar for a fee, which is also generally billed at inception. The Company considers that it satisfies its performance obligations over time and as such recognizes revenue ratably over the term of the relevant arrangements, which vary from one month to twenty four months for website hosting, and one year to ten years for domain name registration.

SaaS represents software products and solutions that provide customers with access to various technologies for a fee which is recognized as revenue ratably as the service is provided. The Company's contracts with customers are generally for a term of one month and renew automatically each month. The Company invoices its customers monthly. The Company considers that it satisfies its performance obligations over time each month as it provides the SaaS services to customers and hence recognizes revenue ratably over the month.

Hardware revenue

The Company generates revenue through the sale of hardware through e-commerce and through its retail distribution channels. The Company satisfies its performance obligation upon delivery of hardware to its customers who include end user customers, distributors, and retailers. The Company may at times offer concessions to customers and also allow for customer returns, which are accounted for as variable consideration. The Company estimates these amounts based on historical experience and reduces revenue recognized. The Company invoices end user customers upon delivery of the products to customers, and payments from such customers are due upon invoicing. Distributors and retailers have payment terms that range from 30 to 90 days after delivery.

The Company offers hardware installment sales to customers with terms ranging from three to twenty four months. The Company allocates a portion of the consideration received from these arrangements to a financing component when it determines that a significant financing component exists. The financing component is subsequently recognized as financing revenue separate from hardware revenue, within subscription and services-based revenue, over the terms of the arrangement with the customer. Pursuant to practical expedients afforded under ASC 606, the Company does not recognize a financing component for hardware installment sales that have a term of one year or less.

Bitcoin revenue

During the fourth quarter of 2017, the Company started offering its Cash App customers the ability to purchase bitcoin, a cryptocurrency denominated asset, from the Company. The Company satisfies its performance obligation and records revenue when bitcoin is transferred to the customer's account.

Arrangements with Multiple Performance Obligations

The Company's contracts with customers generally do not include multiple performance obligations with differing patterns of revenue recognition, except for domain name registration offered with website hosting services sold after May 31, 2018 following the acquisition of Weebly (Note 7). The Company offers its customers the option to buy website hosting bundled with domain name registration, and infrequently the Company has offered its hardware customers free managed payments solutions with the purchase of its hardware as part of a marketing promotion. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company determines standalone selling prices based on the prices charged to customers since the Company's products and services are normally sold on a stand alone basis.



Cost of Revenue

Transaction-based costs

Transaction-based costs consist primarily of interchange and assessment fees, processing fees and bank settlement fees paid to third-party payment processors and financial institutions.

Subscription and services-based costs

Subscription and services-based costs consist primarily of Caviar-related costs, which include processing fees, payments to third-party couriers for deliveries and the cost of equipment provided to sellers. Caviar-related costs for catered meals also includes food costs and personnel costs. These costs also include costs associated with Cash Card and Instant Deposit.

Hardware costs

Hardware costs consist of all product costs associated with contactless and chip readers, chip card readers, Square Stand, Square Register, Square Terminal and third-party peripherals. Product costs consist of third-party manufacturing costs.

Bitcoin costs

Bitcoin cost of revenue comprises of the amounts the Company pays to purchase bitcoin, which will fluctuate in line with the price of bitcoin in the market.


Advertising Costs

Advertising costs are expensed as incurred and included in sales and marketing expense on the consolidated statements of operations. Total advertising costs for the years ended December 31, 2018, 2017, and 2016 were $101.9 million, $81.9 million, and $58.3 million, respectively.

Share-based Compensation

Share-based compensation expense relates to stock options, restricted stock awards (RSAs), restricted stock units (RSUs), and purchases under the Company’s 2015 Employee Stock Purchase Plan (ESPP) which is measured based on the grant-date fair value. The fair value of RSAs and RSUs is determined by the closing price of the Company’s common stock on each grant date.The fair value of stock options and ESPP shares granted to employees is estimated on the date of grant using the Black-Scholes-Merton option valuation model. This share-based compensation expense valuation model requires the Company to make assumptions and judgments regarding the variables used in the calculation. These variables include the expected term (weighted average period of time that the options granted are expected to be outstanding), the expected volatility of the Company’s stock, expected risk-free interest rate and expected dividends. The Company uses the simplified calculation of expected term, as the Company does not have sufficient historical data to use any other method to estimate expected term. Expected volatility is based on a weighted average of the historical volatilities of the Company's common stock along with several entities with characteristics similar to those of the Company. The Company will continue to weight its own volatility more heavily as more of its own historical stock price information becomes available. Once its own historical data is equal to that of the expected term of option grants a peer group is no longer considered necessary. The expected risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. Share-based compensation expense is recorded on a straight-line basis over the requisite service period. For the year ended December 31, 2016 and prior, the Company recorded share-based compensation expense net of estimated forfeitures. On January 1, 2017, as a result of the Company's adoption of ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, the Company elected to account for forfeitures as they occur.

Income and Other Taxes

The Company reports income taxes under the asset and liability approach. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as net operating loss and tax credit carryforwards. Deferred tax amounts are determined by using the enacted tax rates expected to be in effect when the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance reduces the deferred tax assets to the amount that is more likely than not to be realized.

The Company uses financial projections to support its net deferred tax assets, which contain significant assumptions and estimates of future operations. If such assumptions were to differ significantly from actual future results of operations, it may have a material impact on the Company’s ability to realize its deferred tax assets. At the end of each period, the Company assesses the ability to realize the deferred tax assets. If it is more likely than not that the Company would not realize the deferred tax assets, then the Company would establish a valuation allowance for all or a portion of the deferred tax assets.

The Company recognizes the effect of uncertain income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that has a greater than 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to uncertain tax positions in the provision for income tax expense on the consolidated statements of operations.

Cash and Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments, including money market funds, with an original maturity of three months or less when purchased to be cash equivalents.

As of December 31, 2018 and 2017, restricted cash of $33.8 million and $28.8 million, respectively, is related to pledged cash deposited into savings accounts at the financial institutions that process the Company's sellers' payment transactions and as collateral pursuant to an agreement with the originating bank for the Company's loan product. The Company uses the restricted cash to secure letters of credit with the financial institution to provide collateral for cash flow timing differences in the processing of these payments. The Company has recorded this amount as a current asset on the consolidated balance sheets due to the short-term nature of these cash flow timing differences and that there is no minimum time frame during which the cash must remain restricted. Additionally, this balance includes certain amounts held as collateral pursuant to multi-year lease agreements, discussed in the paragraph below that we expect to become unrestricted within the next year.

As of December 31, 2018 and 2017, the remaining restricted cash of $15.8 million and $9.8 million, respectively, is primarily related to cash held as collateral pursuant to multi-year lease agreements (Note 17). The Company has recorded this amount as a non-current asset on the consolidated balance sheets as the terms of the related leases extend beyond one year.

Concentration of Credit Risk

For the years ended December 31, 2018, 2017 and 2016, the Company had no customer who accounted for greater than 10% of total net revenue.

The Company had three third-party payment processors that represented approximately 45%, 33%, and 9% of settlements receivable as of December 31, 2018. The same three parties represented approximately 46%, 42%, and 8% of settlements receivable as of December 31, 2017. All other third-party processors were insignificant.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, marketable debt securities, settlements receivables, customer funds, and loans held for sale. The associated risk of concentration for cash and cash equivalents and restricted cash is mitigated by banking with creditworthy institutions. At certain times, amounts on deposit exceed federal deposit insurance limits. The associated risk of concentration for marketable debt securities is mitigated by holding a diversified portfolio of highly rated investments. Settlements receivable are amounts due from well-established payment processing companies and normally take one or two business days to settle which mitigates the associated risk of concentration. The associated risk of concentration for loans held for sale is partially mitigated by credit evaluations that are performed prior to facilitating the offering of loans and ongoing performance monitoring of the Company’s loan customers.

Investments

The Company's short-term and long-term investments include marketable debt securities such as government and agency securities, corporate bonds, commercial paper and municipal securities. The Company determines the appropriate classification of its investments in marketable debt securities at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified and accounted for its marketable debt securities as available-for-sale. Investments are reviewed periodically to identify possible other-than-temporary impairments. If any impairment is considered other-than-temporary, the Company writes down the investment to its fair value and record the corresponding charge through other income (expense), net on its consolidated statements of operations.

Customer funds

Customer funds held in deposit represent Cash App customers' stored balances that customers would later use to send money or make payments, or customers cash in transit. As of December 31, 2017, the Company held these stored balances as short term bank deposits. During the year ended December 31, 2018, the Company started investing a portion of these stored balances in short-term marketable debt securities (Note 4). The Company determines the appropriate classification of the investments in marketable debt securities within customer funds at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified and accounted for its marketable debt securities within customer funds as available-for-sale.

Fair Value of Financial Instruments

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value accounting establishes a three-level hierarchy priority for disclosure of assets and liabilities recorded at fair value. The ordering of priority reflects the degree to which objective prices in external active markets are available to measure fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs to the valuation methodology used for measurement are observable or unobservable.

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

Level 2 Inputs: Other than quoted prices included in Level 1 Inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

Loans Held for Sale

The Company classifies customer loans as held for sale upon purchase from an industrial bank partner, as there is an available market for such loans and it is the Company’s intent to sell all of its rights, title, and interest in these loans to third-party investors. Loans held for sale are recorded at the lower of amortized cost or fair value determined on an individual loan basis. To determine the fair value the Company utilizes industry-standard valuation modeling, such as discounted cash flow models, taking into account the estimated timing and amounts of periodic repayments. The Company recognizes a charge within transaction, loan and advance losses on the consolidated statement of operations whenever the amortized cost of a loan exceeds its fair value, with such charges being reversed for subsequent increases in fair value, but only to the extent that such reversals do not result in the amortized cost of a loan exceeding its fair value. A loan that is initially designated as held for sale may be reclassified to held for investment if and when the Company's intent for that loan changes. There have been no reclassifications made to date.

Settlements Receivable
    
Settlements receivable represents amounts due from third-party payment processors for customer transactions. Settlements receivable are typically received within one or two business days of the transaction date. No valuation allowances have been established, as funds are due from large, well-established financial institutions with no historical collections issue.

Inventory

Inventory is comprised of contactless and chip readers, chip card readers, Square Stand, Square Register, Square Terminal and third-party peripherals, as well as component parts that are used to manufacture these products. Inventory is stated at the lower of cost (generally on a first-in, first-out basis) or net realizable value. Inventory that is obsolete or in excess of forecasted usage is written down to its net realizable value based on the estimated selling prices in the ordinary course of business. The Company's inventory is held at the Company's warehouses as well as at third party contract manufacturer premises.

Deferred Revenue

Deferred revenue is primarily comprised of payments for website hosting and domain name registration received from customers at inception of the arrangements prior to the services being rendered. Deferred revenue also includes unearned revenue related to managed payments services offered in conjunction with hardware sales for which the cash payments from customers are received and due upon the sale of the hardware.


Cryptocurrency transactions

During the fourth quarter of 2017, the Company started offering its Cash App customers the ability to purchase bitcoin, a cryptocurrency denominated asset, from the Company. The Company purchases bitcoin from private broker dealers or from Cash App customers. Upon purchase, the Company records the cost of bitcoin within other current assets in its consolidated balance sheets. Upon sale, the Company records the total sale amount received from customers as bitcoin revenue and the associated cost as cost of revenue. The carrying value of bitcoin held by the Company was $0.2 million and $0.3 million as of December 31, 2018 and 2017, respectively. The Company assesses the carrying value of bitcoin held by the Company at each reporting date and records an impairment charge if the carrying value exceeds the fair value. Losses on bitcoin for the years ended December 31, 2018 and 2017, were insignificant.

Property and Equipment

Property and equipment are recorded at historical cost less accumulated depreciation, which is computed on a straight-line basis over the asset’s estimated useful life.
The estimated useful lives of property and equipment are described below:
Property and Equipment
 
Useful Life
Capitalized software
 
18 months
Computer and data center equipment
 
Two to three years
Furniture and fixtures
 
Seven years
Leasehold improvements
 
Lesser of ten years or remaining lease term


When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from their respective accounts, and any gain or loss on such sale or disposal is reflected in operating expenses.

Capitalized Software

The Company capitalizes certain cost incurred in developing internal-use software when capitalization requirements have been met. Costs prior to meeting the capitalization requirements are expensed as incurred. Capitalized costs are included in property and equipment, net, and amortized on a straight-lined basis over the estimated useful life of the software and included in product development costs on the consolidated statements of operations. The Company capitalized $24.0 million, $9.8 million and $7.9 million of internally developed software during the years ended December 31, 2018, 2017 and 2016, respectively, and recognized $10.6 million, $6.6 million and $7.1 million of amortization expense during the years ended December 31, 2018, 2017 and 2016, respectively.

Leases

The Company leases office space and equipment under non-cancellable capital and operating leases with various expiration dates. The Company records the total rent expense on a straight-line basis over the lease term.

When lease agreements provide allowances for leasehold improvements, the Company capitalizes the leasehold improvement assets and recognizes the related depreciation expense on a straight-line basis over the lesser of the lease term or the estimated useful life of the asset, and reduces rent expense on a straight-line basis over the term of the lease by the amount of the allowances provided. The Company classifies the cash payments for the leasehold improvements within investing activities while reimbursements from the landlords are classified within operating activities.

The Company records a liability for the estimated fair value for any asset retirement obligation (ARO) associated with its leases, with an offsetting asset. In the determination of the fair value of AROs, the Company uses various assumptions and judgments, including such factors as the existence of a legal obligation, estimated amounts and timing of settlements, and discount and inflation rates. The liability is subsequently accreted while the asset is depreciated. As of December 31, 2018, the Company had a liability for ARO, gross of accretion, of $3.6 million and an associated asset, net of depreciation, of $2.1 million.

Under ASC 840, Leases, the Company is deemed to be the owner, for accounting purposes, during the construction phase of a certain long-lived asset under a build-to-suit lease arrangement because of its involvement with the construction and its exposure to any potential cost overruns under the arrangement. In these cases, the Company recognizes a build-to-suit lease asset and a corresponding build-to-suit lease liability on the consolidated balance sheets. Refer to Note 17 for further details.


Business Combinations

The purchase price of an acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition dates. The excess of total consideration over the fair values of the assets acquired and the liabilities assumed is recorded as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments would be recorded on the consolidated statements of operations.

Long-Lived Assets, including Goodwill and Acquired Intangibles

The Company evaluates the recoverability of property and equipment and finite lived intangible assets for impairment whenever events or circumstances indicate that the carrying amounts of such assets may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset or an asset group to estimated undiscounted future net cash flows expected to be generated. If the carrying amount of the long–lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third–part independent appraisals, as considered necessary. For the periods presented, the Company had recorded no impairment charges.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. The Company performs a goodwill impairment test annually on December 31 and more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the reporting unit’s fair value. The Company has concluded that its business operations as a whole comprise one reporting unit. The Company has the option to first assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount and determine whether further action is needed. If, after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. For the periods presented, the Company had recorded no impairment charges.

Acquired intangibles consist of acquired technology and customer relationships associated with various acquisitions. Acquired technology is amortized over its estimated useful life on a straight-line basis within cost of revenue. Customer relationships acquired are amortized on a straight-line basis over their estimated useful lives within operating expenses. The Company evaluates the remaining estimated useful life of its intangible assets being amortized on an ongoing basis to determine whether events and circumstances warrant a revision to the remaining period of amortization.

Customers Payable

Customers payable represents the transaction amounts, less revenue earned by the Company, owed to sellers or Cash App customers. The payable amount comprises amounts owed to customers due to timing differences as the Company typically settles within one business day, amounts held by the Company in accordance with its risk management policies, and amounts held for customers who have not yet linked a bank account. This balance also includes the Company's liability for customer funds held on deposit in the Cash App.

Accrued Transaction Losses

The Company establishes a reserve for estimated transaction losses due to chargebacks, which represent a potential loss due to disputes between a seller and their customer or due to a fraudulent transaction. This also includes estimated transactions losses on Cash App activity related to peer-to-peer payments sent from a credit card, Cash for Business and Cash Card. The reserve is estimated based on available data as of the reporting date, including expectations of future chargebacks, and historical trends related to loss rates. Additions to the reserve are reflected in current operating results, while realized losses are offset against the reserve. These amounts are classified within transaction and advance losses on the consolidated statements of operations.

Recent Accounting Pronouncements

Recently issued accounting pronouncements not yet adopted

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected credit losses for financial assets held. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company intends to adopt this guidance effective January 1, 2020. The Company is currently evaluating the impact this guidance may have on the consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The new guidance eliminates the requirement to calculate the implied fair value of goodwill assuming a hypothetical purchase price allocation (i.e., Step 2 of the goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value, not to exceed the carrying amount of goodwill. This standard should be adopted when the Company performs its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted. The amendments should be applied on a prospective basis. The Company intends to adopt this guidance effective with its 2019 annual goodwill impairment test. The Company does not expect the adoption of this guidance to have a material impact on the consolidated financial statements and related disclosures.

In July 2018, the FASB issued ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement, which will remove, modify and add disclosure requirements for fair value measurements to improve the overall usefulness of such disclosures. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for any removed or modified disclosure requirements. Transition is on a prospective basis for the new and modified disclosures, and on a retrospective basis for disclosures that have been eliminated. The Company currently does not intend to early adopt any portion of this disclosure guidance. The Company is currently evaluating the impact this guidance may have on the consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which is intended to align the requirements for capitalization of implementation costs incurred in a cloud computing arrangement that is a service contract with the existing guidance for internal-use software. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The guidance provides flexibility in adoption, allowing for either retrospective adjustment or prospective adjustment for all implementation costs incurred after the date of adoption. The Company is currently evaluating whether to early adopt this guidance as well as the impact it may have on the consolidated financial statements and related disclosures.

Recently adopted accounting pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases, which will require, among other items, lessees to recognize a right of use asset and a related lease liability for most leases on the balance sheet. Qualitative and quantitative disclosures will be enhanced to better understand the amount, timing and uncertainty of cash flows arising from leases. The Company adopted this new guidance on January 1, 2019, using the modified retrospective approach. Based on the Company's current portfolio of leases, approximately $96.6 million of lease assets and approximately $123.4 million of lease liabilities is expected to be recognized on its consolidated balance sheet. The Company’s operating leases primarily comprise of office facilities, with the most significant leases relating to corporate headquarters in San Francisco and an office in New York. Additionally, the Company will derecognize $149 million related to the build-to-suit asset and liability upon adoption of this standard. The Company is in the process of finalizing changes to its systems and processes in conjunction with its review of lease agreements and will disclose the actual impact of adopting ASU 2016–02 in its interim report on Form 10–Q for the quarter ended March 31, 2019.

In March 2017, the FASB issued ASU No. 2017-08, Premium Amortization on Purchased Callable Debt Securities, which amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. The amendments in this guidance should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company adopted this new guidance on January 1, 2019, and it did not have a material impact on the consolidated financial statements and related disclosures.

In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This guidance allows companies to reclassify such tax effects from accumulated other comprehensive income to retained earnings. When the Tax Cuts and Jobs Act of 2017 was enacted in December 2017, there was a valuation allowance on the deferred tax assets included within the Company's accumulated other comprehensive income. No tax expense resulted from the change in the federal income tax rate.
v3.10.0.1
REVENUE
12 Months Ended
Dec. 31, 2018
Revenue from Contract with Customer [Abstract]  
REVENUE
REVENUE

Adoption of ASC 606, Revenue from Contracts with Customers

The Company recorded a net reduction to retained earnings of $4.6 million as of January 1, 2018, due to the cumulative impact of adopting ASC 606, primarily related to the effect on revenue and associated cost of revenue from hardware sold through the retail distribution channels and hardware installment sales. The impact to revenue for the year ended December 31, 2018 was an increase of $6.4 million as a result of applying ASC 606.

For the year ended December 31, 2018, the revenue recognized from contracts with customers was $3,205.5 million and revenue from other sources was $92.7 million. Impairment losses arising from contracts with customers were $3.7 million for the year ended December 31, 2018.

Practical Expedients

The Company does not recognize a financing component for hardware installment sales that have a term of one year or less.


The impact of adoption of ASC 606 on the Company's consolidated statement of operations was as follows (in thousands):

 
Year Ended December 31, 2018
 
As reported
 
Balances without adoption
of Topic 606
 
Effect of change
Impact on the Consolidated Statement of Operations:
 
 
 
 
 
Subscription and services-based revenue
$
591,706

 
$
591,220

 
$
486

Hardware revenue
68,503

 
62,572

 
5,931

Subscription and services-based costs
169,884

 
169,884

 

Hardware costs
$
94,114

 
$
88,625

 
$
5,489


The impact of adoption of ASC 606 on the Company's consolidated balance sheets was as follows (in thousands):

 
December 31, 2018
 
As reported
 
Balances without adoption
of Topic 606
 
Effect of change
Impact on the Consolidated Balance Sheets:
 
 
 
 
 
Other current assets
$
164,966

 
$
178,101

 
$
(13,135
)
Other current liabilities
99,153

 
108,334

 
(9,181
)
Other non-current assets
58,393

 
59,768

 
(1,375
)
Other non-current liabilities
$
93,286

 
$
94,717

 
$
(1,431
)


The following table presents the Company's revenue from contracts with customers (i.e. excluding revenue from other sources) disaggregated by revenue source (in thousands):

 
Year Ended December 31,
 
2018
 
2017
 
2016
Revenue from Contracts with Customers:
 
 
 
 
 
Transaction-based revenue
$
2,471,451

 
$
1,920,174

 
$
1,456,160

Starbucks transaction-based revenue

 

 
78,903

Subscription and services-based revenue
499,010

 
185,485

 
79,507

Hardware revenue
68,503

 
41,415

 
44,307

Bitcoin revenue
$
166,517

 
$

 
$



The deferred revenue balances were as follows (in thousands):
 
Year Ended December 31,
 
2018
 
2017
Deferred revenue, beginning of the period
$
5,893

 
$
5,407

Less: accumulative adjustment for adoption of ASC 606
(4,303
)
 

Deferred revenue, beginning of the period, as adjusted
1,590

 
5,407

Deferred revenue, end of the period
36,451

 
5,893

Deferred revenue arising from business combination
22,800

 

Revenue recognized in the period from amounts included in deferred revenue at the beginning of the period
$
1,590

 
$
5,257

v3.10.0.1
INVESTMENTS
12 Months Ended
Dec. 31, 2018
Investments, Debt and Equity Securities [Abstract]  
INVESTMENTS
INVESTMENTS

The Company's short-term and long-term investments as of December 31, 2018 are as follows (in thousands):

 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
Short-term securities:
 
 
 
 
 
 
 
U.S. agency securities
$
80,160

 
$
32

 
$
(70
)
 
$
80,122

Corporate bonds
109,807

 
80

 
(368
)
 
109,519

Municipal securities
27,839

 
52

 
(59
)
 
27,832

U.S. government securities
292,615

 
161

 
(509
)
 
292,267

Non-U.S. government securities
31,263

 
4

 
(16
)
 
31,251

Total
$
541,684

 
$
329

 
$
(1,022
)
 
$
540,991

 
 
 
 
 
 
 
 
Long-term securities:
 
 
 
 
 
 
 
U.S. agency securities
$
114,444

 
$
194

 
$
(78
)
 
$
114,560

Corporate bonds
159,783

 
419

 
(950
)
 
159,252

Municipal securities
28,453

 
167

 
(26
)
 
28,594

U.S. government securities
153,743

 
553

 
(172
)
 
154,124

Non-U.S. government securities
8,122

 
28

 

 
8,150

Total
$
464,545

 
$
1,361

 
$
(1,226
)
 
$
464,680


    
The Company's short-term and long-term investments as of December 31, 2017 are as follows (in thousands):

 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
Short-term securities:
 
 
 
 
 
 
 
U.S. agency securities
$
15,122

 
$

 
$
(39
)
 
$
15,083

Corporate bonds
57,855

 
22

 
(79
)
 
57,798

Commercial paper
17,428

 

 

 
17,428

Municipal securities
23,743

 
8

 
(51
)
 
23,700

U.S. government securities
55,729

 
1

 
(163
)
 
55,567

Total
$
169,877

 
$
31

 
$
(332
)
 
$
169,576

 
 
 
 
 
 
 
 
Long-term securities:
 
 
 
 
 
 
 
U.S. agency securities
$
20,288

 
$
2

 
$
(121
)
 
$
20,169

Corporate bonds
91,959

 
25

 
(571
)
 
91,413

Municipal securities
26,371

 
13

 
(160
)
 
26,224

U.S. government securities
66,362

 
19

 
(520
)
 
65,861

Total
$
204,980

 
$
59

 
$
(1,372
)
 
$
203,667



Investments classified as cash equivalents are excluded from the table since the amortized cost approximated the fair value due to the short term nature of these investments.


For the years ended December 31, 2018, 2017 and 2016, gains or losses realized on the sale of investments were not material. Investments are reviewed periodically to identify possible other-than-temporary impairments. As the Company has the ability and intent to hold these investments with unrealized losses for a reasonable period of time sufficient for the recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired for any of the periods presented.

The contractual maturities of the Company's short-term and long-term investments as of December 31, 2018 are as follows (in thousands):

 
Amortized Cost
 
Fair Value
Due in one year or less
$
541,684

 
$
540,991

Due in one to five years
464,545

 
464,680

Total
$
1,006,229

 
$
1,005,671

CUSTOMER FUNDS

The following table presents the assets underlying customer funds (in thousands):

 
December 31,
2018
 
December 31,
2017
Cash
$
158,697

 
$
103,042

Cash Equivalents:
 
 
 
Money market funds
18

 

U.S. agency securities
39,991

 

U.S. government securities
35,349

 

Short-term debt securities:
 
 
 
U.S. agency securities
27,291

 

U.S. government securities
72,671

 

Total
$
334,017

 
$
103,042



    

The Company's investments within customer funds as of December 31, 2018 are as follows (in thousands):

 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
Short-term debt securities:
 
 
 
 
 
 
 
U.S. agency securities
$
27,293

 
$
2

 
$
(4
)
 
$
27,291

U.S. government securities
72,662

 
12

 
(3
)
 
72,671

Total
$
99,955

 
$
14

 
$
(7
)
 
$
99,962


    
Investments within customer funds classified as cash equivalents are excluded from the table since the amortized cost approximated the fair value due to the short term nature of these investments.

For the periods presented, gains or losses realized on the sale of investments were not material. Investments are reviewed periodically to identify possible other-than-temporary impairments. As the Company has the ability and intent to hold these investments with unrealized losses for a reasonable period of time sufficient for the recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired for any of the periods presented.



The contractual maturities of the Company's investments within customer funds as of December 31, 2018 are as follows (in thousands):

 
Amortized Cost
 
Fair Value
Due in one year or less
$
99,955

 
$
99,962

Due in one to five years

 

Total
$
99,955

 
$
99,962

v3.10.0.1
CUSTOMER FUNDS
12 Months Ended
Dec. 31, 2018
Investments, Debt and Equity Securities [Abstract]  
CUSTOMER FUNDS
INVESTMENTS

The Company's short-term and long-term investments as of December 31, 2018 are as follows (in thousands):

 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
Short-term securities:
 
 
 
 
 
 
 
U.S. agency securities
$
80,160

 
$
32

 
$
(70
)
 
$
80,122

Corporate bonds
109,807

 
80

 
(368
)
 
109,519

Municipal securities
27,839

 
52

 
(59
)
 
27,832

U.S. government securities
292,615

 
161

 
(509
)
 
292,267

Non-U.S. government securities
31,263

 
4

 
(16
)
 
31,251

Total
$
541,684

 
$
329

 
$
(1,022
)
 
$
540,991

 
 
 
 
 
 
 
 
Long-term securities:
 
 
 
 
 
 
 
U.S. agency securities
$
114,444

 
$
194

 
$
(78
)
 
$
114,560

Corporate bonds
159,783

 
419

 
(950
)
 
159,252

Municipal securities
28,453

 
167

 
(26
)
 
28,594

U.S. government securities
153,743

 
553

 
(172
)
 
154,124

Non-U.S. government securities
8,122

 
28

 

 
8,150

Total
$
464,545

 
$
1,361

 
$
(1,226
)
 
$
464,680


    
The Company's short-term and long-term investments as of December 31, 2017 are as follows (in thousands):

 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
Short-term securities:
 
 
 
 
 
 
 
U.S. agency securities
$
15,122

 
$

 
$
(39
)
 
$
15,083

Corporate bonds
57,855

 
22

 
(79
)
 
57,798

Commercial paper
17,428

 

 

 
17,428

Municipal securities
23,743

 
8

 
(51
)
 
23,700

U.S. government securities
55,729

 
1

 
(163
)
 
55,567

Total
$
169,877

 
$
31

 
$
(332
)
 
$
169,576

 
 
 
 
 
 
 
 
Long-term securities:
 
 
 
 
 
 
 
U.S. agency securities
$
20,288

 
$
2

 
$
(121
)
 
$
20,169

Corporate bonds
91,959

 
25

 
(571
)
 
91,413

Municipal securities
26,371

 
13

 
(160
)
 
26,224

U.S. government securities
66,362

 
19

 
(520
)
 
65,861

Total
$
204,980

 
$
59

 
$
(1,372
)
 
$
203,667



Investments classified as cash equivalents are excluded from the table since the amortized cost approximated the fair value due to the short term nature of these investments.


For the years ended December 31, 2018, 2017 and 2016, gains or losses realized on the sale of investments were not material. Investments are reviewed periodically to identify possible other-than-temporary impairments. As the Company has the ability and intent to hold these investments with unrealized losses for a reasonable period of time sufficient for the recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired for any of the periods presented.

The contractual maturities of the Company's short-term and long-term investments as of December 31, 2018 are as follows (in thousands):

 
Amortized Cost
 
Fair Value
Due in one year or less
$
541,684

 
$
540,991

Due in one to five years
464,545

 
464,680

Total
$
1,006,229

 
$
1,005,671

CUSTOMER FUNDS

The following table presents the assets underlying customer funds (in thousands):

 
December 31,
2018
 
December 31,
2017
Cash
$
158,697

 
$
103,042

Cash Equivalents:
 
 
 
Money market funds
18

 

U.S. agency securities
39,991

 

U.S. government securities
35,349

 

Short-term debt securities:
 
 
 
U.S. agency securities
27,291

 

U.S. government securities
72,671

 

Total
$
334,017

 
$
103,042



    

The Company's investments within customer funds as of December 31, 2018 are as follows (in thousands):

 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
Short-term debt securities:
 
 
 
 
 
 
 
U.S. agency securities
$
27,293

 
$
2

 
$
(4
)
 
$
27,291

U.S. government securities
72,662

 
12

 
(3
)
 
72,671

Total
$
99,955

 
$
14

 
$
(7
)
 
$
99,962


    
Investments within customer funds classified as cash equivalents are excluded from the table since the amortized cost approximated the fair value due to the short term nature of these investments.

For the periods presented, gains or losses realized on the sale of investments were not material. Investments are reviewed periodically to identify possible other-than-temporary impairments. As the Company has the ability and intent to hold these investments with unrealized losses for a reasonable period of time sufficient for the recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired for any of the periods presented.



The contractual maturities of the Company's investments within customer funds as of December 31, 2018 are as follows (in thousands):

 
Amortized Cost
 
Fair Value
Due in one year or less
$
99,955

 
$
99,962

Due in one to five years

 

Total
$
99,955

 
$
99,962

v3.10.0.1
FAIR VALUE OF FINANCIAL INSTRUMENTS
12 Months Ended
Dec. 31, 2018
Fair Value Disclosures [Abstract]  
FAIR VALUE OF FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company measures its cash equivalents, customer funds, short-term and long-term marketable debt securities, and equity investments at fair value. The Company classifies these investments within Level 1 or Level 2 of the fair value hierarchy because the Company values these investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs.
The Company’s financial assets and liabilities that are measured at fair value on a recurring basis are classified as follows (in thousands):
 
December 31, 2018
 
December 31, 2017
 
Level 1
 
Level 2
 
Level 3
 
Level 1
 
Level 2
 
Level 3
Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
Money market funds
$
218,109

 
$

 
$

 
$
387,698

 
$

 
$

U.S. agency securities

 
46,423

 

 

 

 

Commercial paper

 

 

 

 
24,695

 

U.S. government securities
86,239

 

 

 

 

 

Non-U.S. government securities

 
23,981

 

 

 

 

Customer Funds:
 
 
 
 
 
 
 
 
 
 
 
Money market funds
18

 

 

 

 

 

U.S. agency securities

 
67,282

 

 

 

 

U.S. government securities
108,020

 

 

 

 

 

Short-term securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. agency securities

 
80,122

 

 

 
15,083

 

Corporate bonds

 
109,519

 

 

 
57,798

 

Commercial paper

 

 

 

 
17,428

 

Municipal securities

 
27,832

 

 

 
23,700

 

U.S. government securities
292,267

 

 

 
55,567

 

 

Non-U.S. government securities

 
31,251

 

 

 

 

Long-term securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. agency securities

 
114,560

 

 

 
20,169

 

Corporate bonds

 
159,252

 

 

 
91,413

 

Municipal securities

 
28,594

 

 

 
26,224

 

U.S. government securities
154,124

 

 

 
65,861

 

 

Non-U.S. government securities

 
8,150

 

 

 

 

Other:
 
 
 
 
 
 
 
 
 
 
 
Equity investment
45,342

 

 

 

 

 

Total
$
904,119

 
$
696,966

 
$

 
$
509,126

 
$
276,510

 
$



The carrying amounts of certain financial instruments, including settlements receivable, accounts payable, customers payable, and settlements payable, approximate their fair values due to their short-term nature.

The Company estimates the fair value of its convertible senior notes based on their last actively traded prices (Level 1) or market observable inputs (Level 2). The estimated fair value and carrying value of the convertible senior notes were as follows (in thousands):
 
December 31, 2018
 
December 31, 2017
 
Carrying Value
 
Fair Value (Level 2)
 
Carrying Value
 
Fair Value (Level 2)
2023 Notes
$
718,522

 
$
901,468

 
$

 
$

2022 Notes
181,173

 
515,693

 
358,572

 
719,356

Total
$
899,695

 
$
1,417,161

 
$
358,572

 
$
719,356


    

The estimated fair value and carrying value of loans held for sale is as follows (in thousands):


 
December 31, 2018
 
December 31, 2017
 
Carrying Value
 
Fair Value (Level 3)
 
Carrying Value
 
Fair Value (Level 3)
Loans held for sale
$
89,974

 
$
93,064

 
$
73,420

 
$
76,070

Total
$
89,974

 
$
93,064

 
$
73,420

 
$
76,070


    
For the years ended December 31, 2018 and 2017, the Company recorded a charge for the excess of amortized cost over fair value of the loans of $13.2 million and $8.0 million, respectively. No charges were recorded for the year ended December 31, 2016.
    
If applicable, the Company will recognize transfers into and out of levels within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurs. During the years ended December 31, 2018, 2017 and 2016, the Company did not have any transfers in or out of Level 1, Level 2, or Level 3 assets or liabilities.
v3.10.0.1
PROPERTY AND EQUIPMENT, NET
12 Months Ended
Dec. 31, 2018
Property, Plant and Equipment [Abstract]  
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET
The following is a summary of property and equipment, less accumulated depreciation and amortization (in thousands):    
 
December 31,
2018
 
December 31,
2017
Leasehold improvements
$
107,611

 
$
77,073

Computer equipment
80,093

 
66,186

Capitalized software
58,908

 
35,063

Office furniture and equipment
20,699

 
14,490

Total
267,311

 
192,812

Less: Accumulated depreciation and amortization
(124,909
)
 
(101,316
)
Property and equipment, net
$
142,402

 
$
91,496


Depreciation and amortization expense on property and equipment was $46.8 million, $29.7 million, and $28.7 million, for the years ended December 31, 2018, 2017, and 2016, respectively.
v3.10.0.1
ACQUISITIONS
12 Months Ended
Dec. 31, 2018
Business Combinations [Abstract]  
ACQUISITIONS
ACQUISITIONS
Weebly, Inc.
On May 31, 2018, the Company acquired 100% of the outstanding shares of Weebly, a technology company that offers customers website hosting and domain name registration solutions. The acquisition of Weebly enables the Company to combine Weebly’s web presence tools with the Company's in-person and online offerings to create a cohesive solution for sellers to start or grow an omnichannel business. The acquisition expanded the Company’s customer base globally and added a new recurring revenue stream.

The purchase consideration was comprised of $132.4 million in cash and 2,418,271 shares of the Company’s Class A common stock with an aggregate fair value of $140.1 million based on the closing price of the Company’s Class A common stock on the acquisition date. As part of the acquisition, the Company paid an aggregate of $17.7 million in cash and shares to settle outstanding vested and unvested employee options, of which $2.6 million was accounted for as post-combination compensation expense and is excluded from the purchase consideration. Third-party acquisition-related costs were insignificant. The results of Weebly's operations have been included in the consolidated financial statements since the closing date.
The acquisition was accounted for as a business combination. This method requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date and that the difference between the fair value of the consideration paid for the acquired entity and the fair value of the net assets acquired be recorded as goodwill, which is not amortized but is tested at least annually for impairment.
The table below summarizes the consideration paid for Weebly and the preliminary assessment of the fair value of the assets acquired and liabilities assumed at the closing date (in thousands, except share data).
Consideration:
 
Cash
$
132,432

Stock (2,418,271 shares of Class A common stock)
140,107

 
$
272,539

Recognized amounts of identifiable assets acquired and liabilities assumed:
 
Current assets (inclusive of cash acquired of $25,758)
$
44,685

Intangible customer assets
42,700

Intangible technology assets
14,900

Intangible trade name
11,300

Intangible other assets
961

Total liabilities assumed (including deferred revenue of $22,800)
(37,592
)
Total identifiable net assets acquired
76,954

Goodwill
195,585

Total
$
272,539


The Company prepared an initial determination of the fair value of the assets acquired and liabilities assumed as of the acquisition date using preliminary information. Subsequently, the Company has recognized measurement period adjustments to the purchase consideration and the fair value of certain liabilities assumed as a result of further refinements in the Company’s estimates. These adjustments were prospectively applied. The effect of these adjustments on the preliminary purchase price allocation was an increase in goodwill and tax liabilities assumed of $6.1 million and $4.8 million, respectively. There was no impact to the consolidated statements of operations as result of these adjustments. The Company continues the process of completing the evaluation of contingencies and tax effects related to the acquisition. Accordingly, the preliminary values reflected in the table above are subject to change.
As of December 31, 2018, $19.9 million of cash and 372,578 shares of the total consideration were withheld as security for indemnification obligations related to general representations and warranties, in addition to certain potential tax exposures.
Goodwill from the Weebly acquisition is primarily attributable to the value of expected synergies created by incorporating Weebly solutions into the Company's technology platform and the value of the assembled workforce. None of the goodwill generated from the Weebly acquisition or the acquired intangible assets are expected to be deductible for tax purposes. Additionally the acquisition would have resulted in recognition of deferred tax assets arising mainly from the net of deferred tax assets from acquired net operating losses (NOLs) and research and development credits, and deferred tax liabilities associated with intangible assets and deferred revenue. However, the realization of such deferred tax assets depends primarily on the Company's post-acquisition ability to generate taxable income in future periods. Accordingly, a valuation allowance was recorded against the net acquired deferred tax asset in accounting for the acquisition.

The acquisition of Weebly did not have a material impact on the Company's reported revenue or net loss amounts for any period presented. Accordingly, pro forma financial information has not been presented.
Other acquisitions

The Company also spent an aggregate of $9.9 million, net of cash acquired, in connection with other immaterial acquisitions during the year ended December 31, 2018, which resulted in the recognition of additional intangible assets and goodwill. Pro forma financial information has not been presented for any of these acquisitions as the impact to our consolidated financial statements was not material.
v3.10.0.1
GOODWILL
12 Months Ended
Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL
GOODWILL

Goodwill is recorded when the consideration paid for an acquisition of a business exceeds the fair value of identifiable net tangible and intangible assets acquired.

The change in carrying value of goodwill in the period was as follows (in thousands):

Balance at December 31, 2016
$
57,173

Acquisitions completed during the year ended December 31, 2017
1,154

Balance at December 31, 2017
58,327

Acquisitions completed during the year ended December 31, 2018
203,378

Balance at December 31, 2018
$
261,705




The Company performed its annual goodwill impairment test as of December 31, 2018. The Company determined that the business operations as a whole is represented by a single reporting unit and through qualitative analysis concluded that it was more likely than not that the fair value of the reporting unit was greater than its carrying amount. As a result, the two-step goodwill impairment test was not required, and no impairments of goodwill were recognized during the year ended December 31, 2018.
v3.10.0.1
ACQUIRED INTANGIBLE ASSETS
12 Months Ended
Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
ACQUIRED INTANGIBLE ASSETS
ACQUIRED INTANGIBLE ASSETS

The Company entered into various transactions accounted for as business combinations during the year ended December 31, 2018, that involved the acquisition of intangible assets. Refer to Note 7 for further details. During the year ended December 31, 2017, the Company did not make any material acquisitions.

The following table presents the detail of acquired intangible assets as of the periods presented (in thousands):

 
Balance at December 31, 2018
Cost
 
Accumulated Amortization
 
Net
Patents
$
1,285

 
$
(664
)
 
$
621

Technology Assets
45,978

 
(28,420
)
 
17,558

Customer Assets
57,109

 
(8,068
)
 
49,041

Trade Name
11,300

 
(1,648
)
 
9,652

Other
961

 
(731
)
 
230

Total
$
116,633

 
$
(39,531
)
 
$
77,102


 
Balance at December 31, 2017
Cost
 
Accumulated Amortization
 
Net
Patents
$
1,285

 
$
(559
)
 
$
726

Technology Assets
29,158

 
(21,329
)
 
7,829

Customer Assets
10,319

 
(4,540
)
 
5,779

Total
$
40,762

 
$
(26,428
)
 
$
14,334



The weighted average amortization periods for acquired patents, acquired technology, customer intangible assets, and acquired trade name are approximately 13 years, 5 years, 11 years, and 4 years, respectively.


All intangible assets are amortized over their estimated useful lives. The changes to the carrying value of intangible assets were as follows (in thousands):

 
Year Ended December 31,
 
2018
 
2017
 
2016
Acquired intangible assets, net, beginning of the period
$
14,334

 
$
19,292

 
$
26,776

Acquisitions
75,871

 
2,657

 
1,529

Amortization expense
13,104

 
7,615

 
9,013

Acquired intangible assets, net, end of the period
$
77,102

 
$
14,334

 
$
19,292



The total estimated annual future amortization expense of these intangible assets as of December 31, 2018, is as follows (in thousands):
2019
$
13,744

2020
11,496

2021
10,299

2022
8,369

2023
6,839

Thereafter
26,355

Total
$
77,102

v3.10.0.1
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT)
12 Months Ended
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT)
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT)

Other Current Assets

The following table presents the detail of other current assets (in thousands):
    
 
December 31,
2018
 
December 31,
2017
Inventory, net
$
28,627

 
$
16,777

Processing costs receivable
46,102

 
21,083

Prepaid expenses
21,782

 
14,473

Accounts receivable, net
22,393

 
8,606

Deferred hardware costs (i)

 
7,931

Deferred magstripe reader costs (ii)
9,361

 
2,469

Prepaid compensation, current (iii)
4,995

 

Other
31,706

 
15,115

Total
$
164,966

 
$
86,454



(i) The deferred hardware costs represented costs associated with hardware sold through the retail distribution channels. The adoption of ASC 606 on January 1, 2018, has resulted in the recognition of such costs upon delivery of the hardware to the distribution channel.

(ii) The Company capitalizes the cost of its magstripe readers, including packaging and shipping costs, held on-hand by the Company as of each consolidated balance sheet date. Once the readers are shipped to a third-party distributor or an end-customer, they are recorded as marketing expense on the consolidated statements of operations.

(iii) Prepaid compensation relates to cash transferred by the Company to an escrow agent in connection with a business combination that will be paid to officers of the acquiree and recognized as compensation expense over time as they provide services to the Company.

Accrued Expenses
The following table presents the detail of accrued expenses (in thousands):
 
December 31,
2018
 
December 31,
2017
Accrued facilities expenses
$
13,040

 
$
568

Accrued payroll
9,612

 
9,103

Accrued professional fees
5,232

 
5,638

Accrued advertising and other marketing
12,201

 
6,723

Processing costs payable
12,683

 
10,145

Accrued non income tax liabilities
9,503

 
6,155

Accrued hardware costs
5,125

 
2,496

Other accrued liabilities
14,958

 
11,452

Total
$
82,354

 
$
52,280


Other Current Liabilities
The following table presents the detail of other current liabilities (in thousands):    
    
 
December 31,
2018
 
December 31,
2017
Accounts payable
$
36,416

 
$
16,763

Square Capital payable (iv)
6,092

 
7,671

Square Payroll payable (v)
7,534

 
2,850

Deferred revenue, current
31,474

 
5,893

Deferred rent, current
3,842

 
3,311

Accrued redemptions
1,305

 
1,036

Other
12,490

 
7,606

Total
$
99,153

 
$
45,130



(iv) Square Capital payable represents unpaid amounts arising from the purchase of loans or loan repayments collected on behalf of third parties.

(v) Square Payroll payable represents amounts received from Square Payroll product customers that will be utilized to settle the customers employee payroll and related obligations.
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (NON-CURRENT)

Other Non-Current Assets

The following table presents the detail of other non-current assets (in thousands):

 
December 31,
2018
 
December 31,
2017
Equity investment (i)
$
45,342

 
$
25,000

Prepaid compensation, non-current (ii)
5,915

 

Deposits
2,747

 
2,738

Other
4,389

 
3,612

Total
$
58,393

 
$
31,350



(i) In August, 2017, the Company invested $25.0 million for preferred shares of Eventbrite, Inc. (Eventbrite) which was carried at cost. In September, 2018, upon Eventbrite's initial public offering, the preferred shares held by the Company converted into Class B common shares of Eventbrite. The Company revalued this investment and will subsequently carry it at fair value, with changes in fair value being recorded within other income or expense on the consolidated statement of operations. During the year ended December 31, 2018, the Company recorded a gain of $20.3 million to other income on the consolidated statements of operations arising from revaluation of this investment.
    
(ii) Prepaid compensation relates to cash transferred by the Company to an escrow agent in connection with a business combination that will be paid to officers of the acquiree and recognized as compensation expense over time as they provide services to the Company.

Other Non-Current Liabilities
The following table presents the detail of other non-current liabilities (in thousands):
 
December 31,
2018
 
December 31,
2017
Statutory liabilities (iii)
$
54,748

 
$
40,768

Deferred rent, non-current
23,003

 
20,349

Deferred purchase consideration
3,900

 

Deferred revenue, non-current
4,977

 
432

Other
6,658

 
7,989

Total
$
93,286

 
$
69,538



(iii) Statutory liabilities represent loss contingencies that may arise from the Company's interpretation and application of certain guidelines and rules issued by various federal, state, local, and foreign regulatory authorities.
v3.10.0.1
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (NON-CURRENT)
12 Months Ended
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (NON-CURRENT)
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT)

Other Current Assets

The following table presents the detail of other current assets (in thousands):
    
 
December 31,
2018
 
December 31,
2017
Inventory, net
$
28,627

 
$
16,777

Processing costs receivable
46,102

 
21,083

Prepaid expenses
21,782

 
14,473

Accounts receivable, net
22,393

 
8,606

Deferred hardware costs (i)

 
7,931

Deferred magstripe reader costs (ii)
9,361

 
2,469

Prepaid compensation, current (iii)
4,995

 

Other
31,706

 
15,115

Total
$
164,966

 
$
86,454



(i) The deferred hardware costs represented costs associated with hardware sold through the retail distribution channels. The adoption of ASC 606 on January 1, 2018, has resulted in the recognition of such costs upon delivery of the hardware to the distribution channel.

(ii) The Company capitalizes the cost of its magstripe readers, including packaging and shipping costs, held on-hand by the Company as of each consolidated balance sheet date. Once the readers are shipped to a third-party distributor or an end-customer, they are recorded as marketing expense on the consolidated statements of operations.

(iii) Prepaid compensation relates to cash transferred by the Company to an escrow agent in connection with a business combination that will be paid to officers of the acquiree and recognized as compensation expense over time as they provide services to the Company.

Accrued Expenses
The following table presents the detail of accrued expenses (in thousands):
 
December 31,
2018
 
December 31,
2017
Accrued facilities expenses
$
13,040

 
$
568

Accrued payroll
9,612

 
9,103

Accrued professional fees
5,232

 
5,638

Accrued advertising and other marketing
12,201

 
6,723

Processing costs payable
12,683

 
10,145

Accrued non income tax liabilities
9,503

 
6,155

Accrued hardware costs
5,125

 
2,496

Other accrued liabilities
14,958

 
11,452

Total
$
82,354

 
$
52,280


Other Current Liabilities
The following table presents the detail of other current liabilities (in thousands):    
    
 
December 31,
2018
 
December 31,
2017
Accounts payable
$
36,416

 
$
16,763

Square Capital payable (iv)
6,092

 
7,671

Square Payroll payable (v)
7,534

 
2,850

Deferred revenue, current
31,474

 
5,893

Deferred rent, current
3,842

 
3,311

Accrued redemptions
1,305

 
1,036

Other
12,490

 
7,606

Total
$
99,153

 
$
45,130



(iv) Square Capital payable represents unpaid amounts arising from the purchase of loans or loan repayments collected on behalf of third parties.

(v) Square Payroll payable represents amounts received from Square Payroll product customers that will be utilized to settle the customers employee payroll and related obligations.
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (NON-CURRENT)

Other Non-Current Assets

The following table presents the detail of other non-current assets (in thousands):

 
December 31,
2018
 
December 31,
2017
Equity investment (i)
$
45,342

 
$
25,000

Prepaid compensation, non-current (ii)
5,915

 

Deposits
2,747

 
2,738

Other
4,389

 
3,612

Total
$
58,393

 
$
31,350



(i) In August, 2017, the Company invested $25.0 million for preferred shares of Eventbrite, Inc. (Eventbrite) which was carried at cost. In September, 2018, upon Eventbrite's initial public offering, the preferred shares held by the Company converted into Class B common shares of Eventbrite. The Company revalued this investment and will subsequently carry it at fair value, with changes in fair value being recorded within other income or expense on the consolidated statement of operations. During the year ended December 31, 2018, the Company recorded a gain of $20.3 million to other income on the consolidated statements of operations arising from revaluation of this investment.
    
(ii) Prepaid compensation relates to cash transferred by the Company to an escrow agent in connection with a business combination that will be paid to officers of the acquiree and recognized as compensation expense over time as they provide services to the Company.

Other Non-Current Liabilities
The following table presents the detail of other non-current liabilities (in thousands):
 
December 31,
2018
 
December 31,
2017
Statutory liabilities (iii)
$
54,748

 
$
40,768

Deferred rent, non-current
23,003

 
20,349

Deferred purchase consideration
3,900

 

Deferred revenue, non-current
4,977

 
432

Other
6,658

 
7,989

Total
$
93,286

 
$
69,538



(iii) Statutory liabilities represent loss contingencies that may arise from the Company's interpretation and application of certain guidelines and rules issued by various federal, state, local, and foreign regulatory authorities.
v3.10.0.1
INDEBTEDNESS
12 Months Ended
Dec. 31, 2018
Debt Disclosure [Abstract]  
INDEBTEDNESS
INDEBTEDNESS

Revolving Credit Facility

In November 2015, the Company entered into a revolving credit agreement with certain lenders, which extinguished the prior revolving credit agreement and provided for a $375.0 million revolving secured credit facility maturing in November 2020. This revolving credit agreement is secured by certain tangible and intangible assets.

Loans under the credit facility bear interest, at the Company’s option of (i) a base rate based on the highest of the prime rate, the federal funds rate plus 0.50% and an adjusted LIBOR rate for a one-month interest period in each case plus a margin ranging from 0.00% to 1.00%, or (ii) an adjusted LIBOR rate plus a margin ranging from 1.00% to 2.00%. This margin is determined based on the Company’s total leverage ratio for the preceding four fiscal quarters. The Company is obligated to pay other customary fees for a credit facility of this size and type including an annual administrative agent fee of $0.1 million and an unused commitment fee of 0.15%. To date no funds have been drawn under the credit facility, with $375.0 million remaining available. The Company paid $0.6 million in unused commitment fees for both the years ended December 31, 2018 and 2017. As of December 31, 2018, the Company was in compliance with all financial covenants associated with this credit facility.


Convertible Senior Notes due in 2023

On May 25, 2018, the Company issued an aggregate principal amount of $862.5 million of convertible senior notes (2023 Notes). The 2023 Notes mature on May 15, 2023, unless earlier converted or repurchased, and bear interest at a rate of 0.50% payable semi-annually on May 15 and November 15 of each year. The 2023 Notes are convertible at an initial conversion rate of 12.8456 shares of the Company's Class A common stock per $1,000 principal amount of 2023 Notes, which is equivalent to an initial conversion price of approximately $77.85 per share of Class A common stock. Holders may convert their 2023 Notes at any time prior to the close of business on the business day immediately preceding February 15, 2023 only under the following circumstances: (1) during any calendar quarter commencing after September 30, 2018 (and only during such calendar quarter), if the last reported sale price of the Company’s Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the measurement period) in which the trading price (as defined in the indenture governing the 2023 Notes) per $1,000 principal amount of 2023 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s Class A common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events, including certain distributions, the occurrence of a fundamental change (as defined in the indenture governing the 2023 Notes) or a transaction resulting in the Company’s Class A common stock converting into other securities or property or assets. On or after February 15, 2023, up until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder may convert all or any portion of its 2023 Notes regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its Class A common stock, or a combination of cash and shares of its Class A common stock, at the Company’s election. Effective October 2018, the Company revised its prior stated policy of settling conversions through combination settlement with a specified dollar amount of $1,000 per $1,000 principal amount of 2023 Notes, and currently expects to settle future conversions entirely in shares of the Company's Class A common stock. The Company will reevaluate this policy from time to time as conversion notices are received from holders of the 2023 Notes.

In accounting for the issuance of the 2023 Notes, the Company separated the 2023 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was $155.3 million and was determined by deducting the fair value of the liability component from the par value of the 2023 Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount ("debt discount") is amortized to interest expense over the term of the 2023 Notes at an effective interest rate of 4.69% over the contractual terms of the 2023 Notes.

Debt issuance costs related to the 2023 Notes comprised of discounts and commissions payable to the initial purchasers of $6.0 million and third party offering costs of $0.8 million. The Company allocated the total amount incurred to the liability and equity components of the 2023 Notes based on their relative values. Issuance costs attributable to the liability component were $5.6 million and will be amortized to interest expense using the effective interest method over the contractual term. Issuance costs attributable to the equity component were netted with the equity component in stockholders’ equity.


Convertible Senior Notes due in 2022

On March 6, 2017, the Company issued an aggregate principal amount of $440.0 million of convertible senior notes (2022 Notes). The 2022 Notes mature on March 1, 2022, unless earlier converted or repurchased, and bear interest at a rate of 0.375% payable semi-annually on March 1 and September 1 of each year. The 2022 Notes are convertible at an initial conversion rate of 43.5749 shares of the Company's Class A common stock per $1,000 principal amount of 2022 Notes, which is equivalent to an initial conversion price of approximately $22.95 per share of Class A common stock. Holders may convert their 2022 Notes at any time prior to the close of business on the business day immediately preceding December 1, 2021 only under the following circumstances: (1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the Company’s Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the measurement period) in which the trading price (as defined in the indenture governing the 2022 Notes) per $1,000 principal amount of 2022 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s Class A common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events, including certain distributions, the occurrence of a fundamental change (as defined in the indenture governing the 2022 Notes) or a transaction resulting in the Company’s Class A common stock converting into other securities or property or assets.  On or after December 1, 2021, up until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder may convert all or any portion of its 2022 Notes regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its Class A common stock, or a combination of cash and shares of its Class A common stock, at the Company’s election. The circumstances required to allow the holders to convert their 2022 Notes were met starting January 1, 2018 and continued to be met through December 31, 2018. During the year ended December 31, 2018, certain holders of the 2022 Notes converted an aggregate principal amount of $228.3 million of their 2022 Notes. The Company settled certain of the 2022 Notes through a combination of cash of $219.4 million for the principal amount and the issuance of 6.9 million shares of the Company's Class A common stock. Effective October 2018, the Company revised its prior stated policy of settling conversions through combination settlement, and expects to settle future conversions in shares of the Company's Class A common stock. Subsequently, the Company settled $8.9 million principal of the 2022 Notes entirely in shares of the Company's Class A common stock. The Company will reevaluate its settlement policy from time to time as conversion notices are received from holders of the 2022 Notes.

In accounting for the issuance of the 2022 Notes, the Company separated the 2022 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was $86.2 million and was determined by deducting the fair value of the liability component from the par value of the 2022 Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The debt discount is amortized to interest expense over the term of the 2022 Notes at an effective interest rate of 5.34% over the contractual terms of the 2022 Notes.

Debt issuance costs related to the 2022 Notes comprised of discounts and commissions payable to the initial purchasers of $11.0 million and third party offering costs of $0.8 million. The Company allocated the total amount incurred to the liability and equity components of the 2022 Notes based on their relative values. Issuance costs attributable to the liability component were $9.4 million and will be amortized to interest expense using the effective interest method over the contractual term.  Issuance costs attributable to the equity component were netted with the equity component in stockholders’ equity.

The debt component associated with the 2022 Notes that were converted was accounted for as an extinguishment of debt, with the Company recording loss on extinguishment of $5.0 million, as the difference between the estimated fair value and the carrying value of such 2022 Notes. The equity component associated with the 2022 Notes that were converted was accounted for as a reacquisition of equity upon the conversion of such 2022 Notes. Accordingly, the excess of the fair value of the consideration issued to settle the conversion over the fair value of the debt component of $21.0 million was accounted for as a reduction to the additional paid in capital.

The net carrying amount of the Notes were as follows (in thousands):

 
Principal outstanding
 
Unamortized debt discount
 
Unamortized debt issuance costs
 
Net carrying value
December 31, 2018
 
 
 
 
 
 
 
2023 Notes
$
862,500

 
$
(138,924
)
 
$
(5,054
)
 
$
718,522

2022 Notes
211,728

 
(27,569
)
 
(2,986
)
 
181,173

Total
1,074,228

 
(166,493
)
 
(8,040
)
 
899,695

 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
2022 Notes
$
440,000

 
$
(73,384
)
 
$
(8,044
)
 
$
358,572

    
 
The net carrying amount of the equity component of the Notes were as follows (in thousands):

 
Amount allocated to conversion option
 
Less: allocated issuance costs
 
Equity component, net
December 31, 2018
 
 
 
 
 
2023 Notes
$
155,250

 
$
(1,231
)
 
$
154,019

2022 Notes
41,481

 
(1,108
)
 
40,373

Total
196,731

 
(2,339
)
 
194,392

 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
2022 Notes
$
86,203

 
$
(2,302
)
 
$
83,901




The Company recognized interest expense on the Notes as follows (in thousands, except for percentages):

 
Year Ended December 31,
 
2018
 
2017
Contractual interest expense
$
4,023

 
$
1,351

Amortization of debt discount and issuance costs
32,855

 
14,223

Total
$
36,878

 
$
15,574



The effective interest rate of the liability component is 4.69% and 5.34% for the 2023 Notes and 2022 Notes, respectively.


Convertible Note Hedge and Warrant Transactions

In connection with the offering of the 2023 Notes, the Company entered into convertible note hedge transactions (2023 convertible note hedges) with certain financial institution counterparties (2018 Counterparties) whereby the Company has the option to purchase a total of approximately 11.1 million shares of its Class A common stock at a price of approximately $77.85 per share. The total cost of the 2023 convertible note hedge transactions was $172.6 million. In addition, the Company sold warrants (2023 warrants) to the 2018 Counterparties whereby the 2018 Counterparties have the option to purchase a total of 11.1 million shares of the Company’s Class A common stock at a price of approximately $109.26 per share. The Company received $112.1 million in cash proceeds from the sale of the 2023 warrants. Taken together, the purchase of the 2023 convertible note hedges and sale of the 2023 warrants are intended to reduce dilution from the conversion of the 2023 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted 2023 Notes, as the case may be, and to effectively increase the overall conversion price from approximately $77.85 per share to approximately $109.26 per share. As these instruments are considered indexed to the Company's own stock and are considered equity classified, the 2023 convertible note hedges and 2023 warrants are recorded in stockholders’ equity, are not accounted for as derivatives and are not remeasured each reporting period. The net costs incurred in connection with the 2023 convertible note hedge and 2023 warrant transactions were recorded as a reduction to additional paid-in capital on the condensed consolidated balance sheets.

In connection with the offering of the 2022 Notes, the Company entered into convertible note hedge transactions (2022 convertible note hedges) with certain financial institution counterparties (2017 Counterparties) whereby the Company has the option to purchase a total of approximately 19.2 million shares of its Class A common stock at a price of approximately $22.95 per share. The total cost of the 2022 convertible note hedge transactions was $92.1 million. In addition, the Company sold warrants (2022 warrants) to the 2017 Counterparties whereby the 2017 Counterparties have the option to purchase a total of 19.2 million shares of the Company’s Class A common stock at a price of approximately $31.18 per share. The Company received $57.2 million in cash proceeds from the sale of the 2022 warrants. Taken together, the purchase of the 2022 convertible note hedges and sale of the 2022 warrants are intended to reduce dilution from the conversion of the 2022 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted 2022 Notes, as the case may be, and to effectively increase the overall conversion price from approximately $22.95 per share to approximately $31.18 per share. As these instruments are considered indexed to the Company's own stock and are considered equity classified, the 2022 convertible note hedges and 2022 warrants are recorded in stockholders’ equity, are not accounted for as derivatives and are not remeasured each reporting period. The net costs incurred in connection with the 2022 convertible note hedge and 2022 warrant transactions were recorded as a reduction to additional paid-in capital on the consolidated balance sheets. During the year ended December 31, 2018, the Company exercised a pro-rata portion of the 2022 convertible note hedges to offset the shares of the Company's Class A common stock issued to settle the conversion of the 2022 Notes discussed above. The 2022 convertible note hedges were net share settled, and the Company received 6.9 million shares of the Company's Class A common stock from the 2017 Counterparties.
v3.10.0.1
ACCRUED TRANSACTION LOSSES
12 Months Ended
Dec. 31, 2018
Product Warranties Disclosures [Abstract]  
ACCRUED TRANSACTION LOSSES
ACCRUED TRANSACTION LOSSES
The Company is exposed to transaction losses due to chargebacks as a result of fraud or uncollectibility.
The following table summarizes the activities of the Company’s reserve for transaction losses (in thousands):
    
 
Year Ended December 31,
 
2018
 
2017
Accrued transaction losses, beginning of the year
$
26,893

 
$
20,064

Provision for transaction losses
64,981

 
52,977

Charge-offs to accrued transaction losses
(58,192
)
 
(46,148
)
Accrued transaction losses, end of the year
$
33,682

 
$
26,893

v3.10.0.1
INCOME TAXES
12 Months Ended
Dec. 31, 2018
Income Tax Disclosure [Abstract]  
INCOME TAXES
INCOME TAXES
The domestic and foreign components of loss before income taxes are as follows (in thousands):
 
Year Ended December 31,
2018
 
2017
 
2016
Domestic
$
44,538

 
$
(10,900
)
 
$
(145,499
)
Foreign
(80,665
)
 
(51,764
)
 
(24,174
)
Loss before income taxes
$
(36,127
)
 
$
(62,664
)
 
$
(169,673
)

        
The components of the provision for income taxes are as follows (in thousands):
 
Year Ended December 31,
2018
 
2017
 
2016
Current:
 
 
 
 
 
Federal
$
(4
)
 
$
(1,192
)
 
$
63

State
752

 
739

 
527

Foreign
2,224

 
1,987

 
1,269

Total current provision for income taxes
2,972

 
1,534

 
1,859

Deferred:
 
 
 
 
 
Federal
(404
)
 
(1,169
)
 
173

State
35

 
57

 
18

Foreign
(277
)
 
(273
)
 
(133
)
Total deferred provision for income taxes
(646
)
 
(1,385
)
 
58

Total provision for income taxes
$
2,326

 
$
149

 
$
1,917


The following is a reconciliation of the statutory federal income tax rate to the Company's effective tax rate:
 
Balance at December 31,
2018
 
2017
 
2016
Tax at federal statutory rate
21.0
 %
 
34.0
 %
 
34.0
 %
State taxes, net of federal benefit
(1.1
)
 
(0.4
)
 
(0.1
)
Foreign rate differential
(14.7
)
 
(14.9
)
 
(2.4
)
Non-deductible meals (i)
(3.4
)
 
(0.3
)
 
(0.1
)
Other non-deductible expenses
(1.7
)
 
(0.7
)
 
(0.8
)
Credits
164.8

 
41.5

 
8.5

Other items
2.3

 
(1.2
)
 
0.2

Change in valuation allowance
(718.5
)
 
(119.5
)
 
(37.4
)
Impact of U.S. tax reform

 
(209.1
)
 

Share-based compensation (ii)
549.0

 
243.5

 
(2.4
)
Change in uncertain tax positions
(4.1
)
 
(2.4
)
 
(0.6
)
Termination of warrant

 
29.3

 

Total
(6.4
)%
 
(0.2
)%
 
(1.1
)%

(i) This item was previously included in other non-deductible expenses in 2016 and 2017.
(ii) Starting in 2017, excess tax benefits from share-based award activity are reflected in the provision for income taxes.
The tax effects of temporary differences and related deferred tax assets and liabilities are as follows (in thousands):
 
Balance at December 31,
2018
 
2017
 
2016
Deferred tax assets:
 
 
 
 
 
Capitalized costs
$
30,131

 
$
35,608

 
$
61,897

Accrued expenses
31,494

 
23,553

 
29,421

Net operating loss carryforwards
485,562

 
244,197

 
65,507

Tax credit carryforwards
133,275

 
60,567

 
38,927

Property, equipment and intangible assets

 
7,390

 
5,721

Share-based compensation
38,265

 
35,728

 
52,091

Deferred Interest
8,290

 

 

Other
105

 
2,519

 
1,640

Total deferred tax assets
727,122

 
409,562

 
255,204

Valuation allowance
(719,040
)
 
(409,043
)
 
(254,898
)
Total deferred tax assets, net of valuation allowance
8,082

 
519

 
306

Deferred tax liabilities:
 
 
 
 
 
Property, equipment and intangible assets
(7,361
)
 

 

Indefinite-lived intangibles
(275
)
 
(644
)
 
(476
)
Total deferred tax liabilities
(7,636
)
 
(644
)
 
(476
)
Net deferred tax assets (liabilities)
$
446

 
$
(125
)
 
$
(170
)

        
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act ("2017 Tax Act"). The 2017 Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) in part eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain unrepatriated earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax ("AMT") and changing how existing AMT credits can be realized; (6) creating the base erosion anti-abuse tax ("BEAT"), a new minimum tax; (7) creating a new limitation on deductible interest expense; and (8) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017.
In connection with the Company's analysis of the impact of the 2017 Tax Act, it recorded no tax benefit or expense for the year ended December 31, 2018 and recorded a benefit of $1.3 million for the year ended December 31, 2017. The net benefit for 2017 consisted of the release of the valuation allowance on the Company's AMT credit carryforward, which will be refunded in tax years 2018-2021. In addition, the 2017 Tax Act reduces the corporate tax rate to 21%, effective January 1, 2018. Consequently, the Company recorded no change to its U.S. federal and state deferred tax assets for the year ended December 31, 2018 and recorded a $63.6 million decrease, with an offset to the valuation allowance, for the year ended December 31, 2017. The Company has also completed its analysis of the deemed repatriation transition tax and has concluded that it will not owe any transition tax. Additionally, on December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118") to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Act. The Company has recognized the tax impacts related to refundable AMT credits and revaluation of deferred tax assets, offset by the valuation allowance, and included these amounts in its consolidated financial statements for the year ended December 31, 2017. During the third quarter of 2018, the Company finalized its federal and state income tax returns, making no material adjustments to provisional amounts previously recorded.
Realization of deferred tax assets is dependent upon the generation of future taxable income, the timing and amount of which are uncertain. Due to the history of losses generated in the U.S. and certain foreign jurisdictions, the Company believes that it is more likely than not that its deferred tax assets in these jurisdictions will not be realized as of December 31, 2018. Accordingly, the Company retained a full valuation allowance on its deferred tax assets in these jurisdictions. The amount of deferred tax assets considered realizable in future periods may change as management continues to reassess the underlying factors it uses in estimating future taxable income.

The valuation allowance increased by approximately $310.0 million, $154.1 million, and $59.8 million during the years ended December 31, 2018, 2017, and 2016, respectively.

As of December 31, 2018, the Company had $1,709.8 million of federal, $1,903.8 million of state, and $215.1 million of foreign net operating loss carryforwards, which will begin to expire in 2031 for federal and 2021 for state tax purposes. The foreign net operating loss carryforwards do not expire.
As of December 31, 2018, the Company had $107.3 million of federal, $65.6 million of state, and $2.7 million of Canadian research credit carryforwards. The federal credit carryforward will begin to expire in 2029, the state credit carryforward has no expiration date, and the Canadian credit carryforward will begin to expire in 2036.
The Company has federal AMT credit carryforwards of $1.3 million that will be refunded over the 2018-2021 tax years under the 2017 Tax Act. The Company has California Enterprise Zone credit carryforwards of $2.8 million, which will begin to expire in 2023.
Utilization of the net operating loss carryforwards and credits may be subject to annual limitations due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitations may result in the expiration of net operating losses and credits before they are able to be utilized. The Company does not expect any previous ownership changes, as defined under Section 382 and 383 of the Internal Revenue Code, to result in a limitation that will reduce the total amount of net operating loss carryforwards and credits that can be utilized.
As of December 31, 2018, the unrecognized tax benefit was $198.5 million, of which $5.7 million would impact the annual effective tax rate if recognized and the remainder of which would result in a corresponding adjustment to the valuation allowance.
A reconciliation of the beginning and ending amount of unrecognized tax benefit is presented below (in thousands):

 
Year Ended December 31,
2018
 
2017
 
2016
Balance at the beginning of the year
$
70,799

 
$
92,134

 
$
90,372

Gross increases and decreases related to prior period tax positions
513

 

 
5,190

Gross increases and decreases related to current period tax positions
119,261

 
4,193

 
(3,428
)
Reductions related to lapse of statute of limitations
(142
)
 
(91
)
 

Gross increases and decreases related to U.S. tax reform

 
(25,437
)
 

Gross increases and decreases related to acquisition
8,109

 

 

Balance at the end of the year
$
198,540

 
$
70,799

 
$
92,134



The Company recognizes interest and penalties related to income tax matters as a component of income tax expense. As of December 31, 2018, there were no significant accrued interest and penalties related to uncertain tax positions. It is reasonably possible that over the next 12-month period the Company may experience a decrease in its unrecognized tax benefits as a result of tax examinations or lapses of statute of limitations. The estimated decrease in unrecognized tax benefits may range up to $13 million.
The Company is subject to taxation in the United States and various state and foreign jurisdictions. The Company is currently under examination in California for tax years 2013 and 2014. The Company’s various tax years starting with 2009 to 2017 remain open in various taxing jurisdictions.
As of December 31, 2018, the Company has not provided deferred U.S. income taxes or foreign withholding taxes on temporary differences resulting from earnings for certain non-U.S. subsidiaries, which are permanently reinvested outside the U.S. Cumulative undistributed earnings for these non-U.S. subsidiaries as of December 31, 2018 are $4.2 million.
v3.10.0.1
STOCKHOLDER'S EQUITY
12 Months Ended
Dec. 31, 2018
Equity [Abstract]  
STOCKHOLDER'S EQUITY
STOCKHOLDERS' EQUITY

Convertible Preferred Stock

As of December 31, 2018, the Company is authorized to issue 100,000,000 shares of preferred stock, with a $0.0000001 par value. No shares of preferred stock are outstanding as of December 31, 2018.

Common Stock

The Company has authorized the issuance of Class A common stock and Class B common stock. Holders of the Company's Class A common stock and Class B common stock are entitled to dividends when, as and if, declared by the Company's board of directors, subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends. As of December 31, 2018, the Company did not declare any dividends. Holders of shares of Class A common stock are entitled to one vote per share, while holders of shares of Class B common stock are entitled to ten votes per share. Shares of the Company's Class B common stock are convertible into an equivalent number of shares of its Class A common stock and generally convert into shares of its Class A common stock upon transfer. Class A common stock and Class B common stock are referred to as common stock throughout these Notes to the Consolidated Financial Statements, unless otherwise noted. The holders of Class A common stock and Class B common stock have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares.

As of December 31, 2018, the Company was authorized to issue 1,000,000,000 shares of Class A common stock and 500,000,000 shares of Class B common stock, each with a par value of $0.0000001 per share. As of December 31, 2018, there were 323,546,864 shares of Class A common stock and 93,501,142 shares of Class B common stock outstanding. Options and awards granted following the Company's November 2015 initial public offering are related to underlying Class A common stock. Additionally, holders of Class B common stock are able to convert such shares into Class A common stock.

Warrants

On February 24, 2017, the Company and Starbucks entered into a Warrant Cancellation and Payment Agreement pursuant to which the Company paid Starbucks cash consideration of approximately $54.8 million in return for the termination of the Warrant to Purchase Stock dated August 7, 2012, as amended, that provided Starbucks with the right to purchase an aggregate of approximately 9.5 million shares of the Company’s common stock.

In conjunction with the 2022 Notes offering, the Company sold warrants whereby the Counterparties have the option to purchase a total of approximately 19.2 million shares of the Company’s Class A common stock at a price of $31.18 per share. None of the warrants were exercised as of December 31, 2018.

In conjunction with the 2023 Notes offering, the Company sold the 2023 warrants whereby the counterparties have the option to purchase a total of approximately 11.1 million shares of the Company’s Class A common stock at a price of $109.26 per share. None of the warrants were exercised as of December 31, 2018.

Release of Caviar Shares Held Back

In 2014, in conjunction with the Company's acquisition of Caviar, Inc. (Caviar), 1,291,979 shares of the purchase consideration issuable were withheld for indemnification purposes. In April 2018, the Company reached an agreement with the former owners of Caviar whereby 822,085 of the shares held back were released to the former owners and 469,894 shares were forfeited back to the Company as indemnification against liabilities related to Caviar preacquisition matters. Upon reaching the agreement, the Company recorded an indemnification asset of $2.7 million and a corresponding credit to expense to compensate for the costs previously incurred in connection with Caviar preacquisition claims. The remaining value of the forfeited shares was treated as an equity repurchase.

Conversion of 2022 Notes and Exercise of the 2022 Convertible Note Hedges

In connection with the conversion of certain of the 2022 Notes, the Company issued 7.3 million shares of Class A common stock. The Company also exercised a pro-rata portion of the 2022 convertible note hedges and received 6.9 million shares of Class A common stock from the counterparties to offset the shares issued.

Stock Plans

The Company maintains two share-based employee compensation plans: the 2009 Stock Plan (2009 Plan) and the 2015 Equity Incentive Plan (2015 Plan). The 2015 Plan serves as the successor to the 2009 Plan. The 2015 Plan became effective as of November 17, 2015. Outstanding awards under the 2009 Plan continue to be subject to the terms and conditions of the 2009 Plan. Effective November 17, 2015, no additional awards will be granted under the 2009 Plan.

Under the 2015 Plan, shares of shares of the Company's Class A common stock are reserved for the issuance of incentive and nonstatutory stock options (ISOs and NSOs, respectively), restricted stock awards (RSAs), restricted stock units (RSUs), performance shares, and stock bonuses to qualified employees, directors, and consultants. The awards must be granted at a price per share not less than the fair market value at the date of grant. Initially, 30,000,000 shares were reserved under the 2015 Plan and any shares subject to options or other similar awards granted under the 2009 Plan that expire, are forfeited, are repurchased by the Company or otherwise terminate unexercised will become available under the 2015 Plan. The number of shares available for issuance under the 2015 Plan will be increased on the first day of each fiscal year, in an amount equal to the least of (i) 40,000,000 shares, (ii) 5% of the outstanding shares on the last day of the immediately preceding fiscal year, or (iii) such number of shares determined by the administrator. As of December 31, 2018, the total number of shares subject to stock options, RSAs and RSUs outstanding under the 2015 Plan was 22,666,464 shares, and 64,851,998 shares were available for future issuance. 
Under the 2009 Plan, shares of common stock are reserved for the issuance of ISOs or NSOs to eligible participants. The options may be granted at a price per share not less than the fair market value at the date of grant. Options granted generally vest over a four-year term from the date of grant, at a rate of 25% after one year, then monthly on a straight-line basis thereafter. Generally, options granted are exercisable for up to 10 years from the date of grant. The Plan allows for early exercise of employee stock options whereby the option holder is allowed to exercise prior to vesting. Any unvested shares are subject to repurchase by the Company at their original exercise prices. As of December 31, 2018, the total number of options and RSUs outstanding under the 2009 Plan was 28,421,145 shares.     
A summary of stock option activity for the year ended December 31, 2018 is as follows (in thousands, except share and per share data):
    
 
Number of options outstanding
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Term
(in years)
 
Aggregate
Intrinsic
Value
Balance at December 31, 2017
47,270,091

 
$
8.67

 
6.52
 
$
1,229,103

Granted
783,625

 
44.75

 
 
 
 
Exercised
(13,402,680
)
 
7.98

 
 
 
 
Forfeited and canceled
(1,498,155
)
 
14.75

 
 
 
 
Balance at December 31, 2018
33,152,881

 
$
9.52

 
5.45
 
$
1,543,793

Options vested and expected to vest at
 
 
 
 
 
 
 
December 31, 2018
33,152,881

 
$
9.52

 
5.45
 
$
1,543,793

Options exercisable at
 
 
 
 
 
 
 
December 31, 2018
31,066,578

 
$
8.63

 
5.27
 
$
1,474,339


Aggregate intrinsic value represents the difference between the Company’s estimated fair value of its common stock and the exercise price of outstanding, “in-the-money” options. Aggregate intrinsic value for stock options exercised through December 31, 2018, 2017, and 2016 was $720.1 million, $464.1 million, and $202.6 million, respectively.
The total weighted average grant-date fair value of options granted was $16.25, $5.97 and $5.80 per share for the years ended December 31, 2018, 2017 and 2016, respectively.

Restricted Stock Activity

The Company issues RSAs and RSUs under the 2015 Plan, which typically vest over a term of four years.

Activity related to RSAs and RSUs during the year ended December 31, 2018 is set forth below:
 
Number of
shares
 
Weighted
Average Grant
Date Fair Value
Unvested at December 31, 2017
21,317,525

 
$
17.84

Granted
7,147,541

 
54.43

Vested
(7,786,561
)
 
19.62

Forfeited
(2,743,777
)
 
19.88

Unvested at December 31, 2018
17,934,728

 
$
31.34



Employee Stock Purchase Plan

On November 17, 2015, the Company’s 2015 Employee Stock Purchase Plan (ESPP) became effective. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The ESPP provides for 12-month offering periods. The offering periods are scheduled to start on the first trading day on or after May 15 and November 15 of each year, except for the first offering period, which commenced on November 19, 2015 and ended on November 15, 2016. Each offering period includes two purchase periods, which begin on the first trading day on or after November 15 and May 15, and ending on the last trading day on or before May 15 and November 15, respectively.  Employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or the last trading day of the purchase period. The number of shares available for sale under the ESPP will be increased annually on the first day of each fiscal year, equal to the least of (i) 8,400,000 shares, (ii) 1% of the outstanding shares of the Company’s common stock as of the last day of the immediately preceding fiscal year, or (iii) such other amount as determined by the administrator.

As of December 31, 2018, 4,349,301 shares had been purchased under the ESPP and 10,797,606 shares were available for future issuance under the ESPP. The Company recorded $9.0 million and $6.0 million of share-based compensation expense related to the ESPP during the year ended December 31, 2018 and 2017, respectively.

Share-Based Compensation

The fair value of stock options was estimated using the following weighted-average assumptions:
    
 
Year Ended December 31,
 
2018
 
2017
 
2016
Dividend yield
%
 
%
 
%
Risk-free interest rate
2.92
%
 
1.88
%
 
1.54
%
Expected volatility
30.87
%
 
32.22
%
 
42.74
%
Expected term (years)
6.19

 
6.02

 
6.08


The following table summarizes the effects of share-based compensation on the Company's consolidated statements of operations (in thousands):
 
Year Ended December 31,
 
2018
 
2017
 
2016
Cost of revenue
$
97

 
$
77

 
$

Product development
144,601

 
98,310

 
91,404

Sales and marketing
22,797

 
17,568

 
14,122

General and administrative
49,386

 
39,881

 
33,260

Total
$
216,881

 
$
155,836

 
$
138,786


    
The Company capitalized $9.3 million, $3.7 million, and $2.8 million of share-based compensation expense related to capitalized software during the year ended December 31, 2018, 2017 and 2016, respectively.
    
As of December 31, 2018, there was $564.5 million of total unrecognized compensation cost related to outstanding stock options and restricted stock awards that are expected to be recognized over a weighted average period of 2.76 years.
v3.10.0.1
NET LOSS PER SHARE
12 Months Ended
Dec. 31, 2018
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 loss per share is the same as basic loss per share for all years presented because the effects of potentially dilutive items were anti-dilutive given the Company’s net loss.
The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):
 
 
Year Ended December 31,
 
2018
 
2017
 
2016
Net loss
$
(38,453
)
 
$
(62,813
)
 
$
(171,590
)
Basic shares:
 
 
 
 
 
Weighted-average common shares outstanding
406,313

 
380,921

 
344,393

Weighted-average unvested shares
(582
)
 
(1,577
)
 
(2,838
)
Weighted-average shares used to compute basic net loss per share
405,731

 
379,344

 
341,555

Diluted shares:
 
 
 
 
 
Weighted-average shares used to compute diluted net loss per share
405,731

 
379,344

 
341,555

 
 
 
 
 
 
Loss per share:
 
 
 
 
 
Basic
$
(0.09
)
 
$
(0.17
)
 
$
(0.50
)
Diluted
$
(0.09
)
 
$
(0.17
)
 
$
(0.50
)



Since the Company intends to settle future conversions of its outstanding 2022 Notes and 2023 Notes entirely in shares of its Class A common stock, the Company will consider the number of shares expected to be issued in calculating any potential dilutive effect of the conversions, if applicable. In the periods that the Company has reported a net loss, the diluted loss per share is the same as basic loss per share for those periods.

The following potential common shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented (in thousands):

 
Year Ended December 31,
 
2018
 
2017
 
2016
Stock options and restricted stock units
60,589

 
68,588

 
88,705

Common stock warrants
25,798

 
19,173

 
9,457

Convertible senior notes
23,820

 

 

Unvested shares
582

 
1,300

 
1,892

Employee stock purchase plan
140

 
157

 
216

Total anti-dilutive securities
110,929

 
89,218

 
100,270

v3.10.0.1
COMMITMENTS AND CONTINGENCIES
12 Months Ended
Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES
Operating and Capital Leases
The Company has entered into various non-cancelable operating leases for certain offices with contractual lease periods expiring between 2019 and 2031. The Company recognized total rental expenses under operating leases of $23.3 million, $12.9 million, and $11.3 million during the years ended December 31, 2018, 2017, and 2016, respectively.
Future minimum lease payments under non-cancelable operating leases (with initial lease terms in excess of one year) and future minimum capital lease payments as of December 31, 2018 are as follows (in thousands):
 
Capital
 
Operating
Year:
 
 
 
2019
$
5,029

 
$
28,405

2020
2,446

 
38,131

2021

 
52,319

2022

 
53,430

2023

 
47,222

Thereafter

 
209,959

Total
$
7,475

 
$
429,466

Less amount representing interest

 
 
Present value of capital lease obligations
7,475

 
 
Less current portion of capital lease obligation
(5,029
)
 
 
Non-current portion of capital lease obligation
$
2,446

 
 


Build-to-Suit Lease Arrangement

In December 2018, the Company entered into a lease arrangement for 355,762 square feet of office space in Oakland, California for a term of 12 years with options to renew for two five year terms. The lease commencement date is expected to be in November 2019 with total lease payments over the term of approximately $272 million.

Due to the Company’s involvement with the construction of the property and its exposure to any potential cost overruns, the Company is deemed to be the owner of the property for accounting purposes during the construction phase. Accordingly, as of December 31, 2018, the Company recorded a non-cash build-to-suit lease asset under construction of $149 million, and a corresponding build-to-suit lease liability on the consolidated balance sheets.

Litigation
The Company is currently a party to, and may in the future be involved in, various litigation matters (including intellectual property litigation), legal claims, and government investigations.

The Treasurer & Tax Collector of the City and County of San Francisco (Tax Collector) has issued a decision for fiscal years 2014 and 2015, that the Tax Collector believes the Company’s primary business activity is financial services rather than information services, and accordingly, the Company would be liable for the Gross Receipts Tax and Payroll Expense Tax under the rules for financial services business activities. The Company paid the liability for fiscal years 2014 and 2015 in the first quarter of 2018, as assessed by the Tax Collector. The Company intends to vigorously defend its position, which it believes has merit. Should the Company not prevail, the Company could be obligated to pay additional taxes together with any associated penalties and interest for subsequent years that together, in aggregate, could be material. The Company is currently unable to estimate the range of possible loss given the uncertainties associated with this matter, including uncertainties about the Tax Collector’s rationale for its position and about the amounts that may ultimately be subject to such taxes.

On May 14, 2018, Joshua Woodle, on behalf of a class of couriers who have delivered with Caviar in California, filed a lawsuit in San Francisco County Superior Court against the Company doing business as Caviar, which alleges that Caviar misclassified Mr. Woodle and other similarly situated couriers as independent contractors and, in doing so, violated various provisions of the California Labor Code and California Business and Professions Code. Plaintiffs seek damages and injunctive relief. The Court compelled arbitration of Mr. Woodle’s arbitrable claims on November 5, 2018. On August 24, 2018, Mervyn Cole, on behalf of the State of California and similarly situated couriers who have delivered with Caviar in California filed a lawsuit in Los Angeles County Superior Court against the Company doing business as Caviar. The complaint alleges that Caviar misclassified Mr. Cole and other similarly situated couriers as independent contractors and, in doing so, violated certain provisions of the California Labor Code. The action is being brought as a representative action under the Private Attorneys General Act (“PAGA”). Plaintiffs seek civil penalties and injunctive relief. Caviar filed a Motion to Compel Arbitration on December 12, 2018. Given the early stage of these proceedings, it is not yet possible to reliably determine any potential liability that could result from these matters.

In addition, from time to time, the Company is involved in various other litigation matters and disputes arising in the ordinary course of business. The Company cannot at this time fairly estimate a reasonable range of exposure, if any, of the potential liability with respect to these other matters. While the Company does not believe, at this time, that any ultimate liability resulting from any of these other matters will have a material adverse effect on the Company's results of operations, financial position, or liquidity, the Company cannot give any assurance regarding the ultimate outcome of these other matters, and their resolution could be material to the Company's operating results for any particular period.
v3.10.0.1
SEGMENT AND GEOGRAPHICAL INFORMATION
12 Months Ended
Dec. 31, 2018
Segment Reporting [Abstract]  
SEGMENT AND GEOGRAPHICAL INFORMATION
SEGMENT AND GEOGRAPHICAL INFORMATION
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (CODM) for purposes of allocating resources and evaluating financial performance. The Company’s CODM is the chief executive officer who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. As such, the Company’s operations constitute a single operating segment and one reportable segment.
Revenue
Revenue by geography is based on the billing addresses of the merchants. The following table sets forth revenue by geographic area (in thousands):

 
Year Ended December 31,
 
2018
 
2017
 
2016
Revenue
 
 
 
 
 
United States
$
3,138,859

 
$
2,120,088

 
$
1,643,852

International
159,318

 
94,165

 
64,869

Total net revenue
$
3,298,177

 
$
2,214,253

 
$
1,708,721



No individual country from the international markets contributed in excess of 10% of total revenue for the years ended December 31, 2018, 2017, and 2016.

Long-Lived Assets
The following table sets forth long-lived assets by geographic area (in thousands):
 
December 31,
 
2018
 
2017
Long-lived assets
 
 
 
United States
$
471,970

 
$
158,820

International
9,239

 
5,337

Total long-lived assets
$
481,209

 
$
164,157

v3.10.0.1
SUPPLEMENTAL CASH FLOW INFORMATION
12 Months Ended
Dec. 31, 2018
Supplemental Cash Flow Elements [Abstract]  
SUPPLEMENTAL CASH FLOW INFORMATION
SUPPLEMENTAL CASH FLOW INFORMATION

The supplemental disclosures of cash flow information consist of the following (in thousands):

 
Year Ended December 31,
 
2018
 
2017
 
2016
Supplemental Cash Flow Data:
 
 
 
 
 
Cash paid for interest
$
4,125

 
$
1,374

 
$
570

Cash paid for income taxes
1,622

 
1,254

 
395

Supplemental disclosures of non-cash investing and financing activities:
 
 
 
 
 
Change in purchases of property and equipment in accounts payable and accrued expenses
15,067

 
143

 
2,554

Unpaid business acquisition purchase price
3,995

 
2,115

 
240

Fair value of shares issued related to business combination
140,107

 

 

Recovery of common stock in connection with indemnification settlement agreement
2,745

 

 

Fair value of common stock issued to settle the conversion of senior notes, due 2022
(571,408
)
 

 

Fair value of shares received to settle senior note hedges, due 2022
$
544,276

 
$

 
$

v3.10.0.1
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
12 Months Ended
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Reclassifications and Other Adjustments
Reclassifications and Other Adjustments

During the year ended December 31, 2018, the Company has reclassified prior period balances within interest and other (income) expense, net, to disaggregate the amounts and separately present interest (income) expense, net and other (income) expense, net on its consolidated statements of operations to conform to the current period presentation. This classification change was made to provide clarity of the balances as the activity continues to grow, particularly as a result of the impact of revaluation of an equity investment in the current period. During the year ended December 31, 2018, the Company recorded a gain of $20.3 million to other income on the consolidated statements of operations arising from revaluation of this investment (Note 11). There was no impact to the net income (loss) on its consolidated statements of operations to any of the periods presented as result of this change.
Basis of Presentation
Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) and include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, as well as related disclosure of contingent assets and liabilities. Actual results could differ from the Company’s estimates. To the extent that there are material differences between these estimates and actual results, the Company’s financial condition or operating results will be materially affected. The Company bases its estimates on past experience and other assumptions that the Company believes are reasonable under the circumstances, and the Company evaluates these estimates on an ongoing basis.

Estimates, judgments, and assumptions in these consolidated financial statements include, but are not limited to, those related to revenue recognition, accrued transaction losses, valuation of the debt component of convertible senior notes, valuation of loans held for sale, goodwill, acquired intangible assets and deferred revenue, income and other taxes, build-to-suit lease asset and liability, and share-based compensation.

Revenue Recognition and Cost of Revenue
Revenue Recognition

On January 1, 2018, the Company adopted Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company's historic revenue recognition methodology under ASC 605, Revenue Recognition. Refer to Note 2 for the impact of this adoption.

Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

Transaction-based revenue

The Company charges its sellers a transaction fee for managed payments solutions that is generally calculated as a percentage of the total transaction amount processed. The Company selectively offers custom pricing for certain sellers. The Company collects the transaction amount from the seller's customer's bank, net of acquiring interchange and assessment fees, processing fees, and bank settlement fees paid to third-party payment processors and financial institutions. The Company retains its fees and remits the net amount to the sellers.

The Company acts as the merchant of record for its sellers and works directly with payment card networks and banks so that its sellers do not need to manage the complex systems, rules, and requirements of the payments industry. The Company satisfies its performance obligations and therefore recognizes the transaction fees as revenue upon authorization of a transaction by the seller's customer's bank.

Revenue is recognized net of refunds, which arise from reversals of transactions initiated by sellers.

The transaction fees collected from sellers are recognized as revenue on a gross basis as the Company is the principal in the delivery of the managed payments solutions to the sellers. The Company has concluded it is the principal because as the merchant of record, it controls the services before delivery to the seller, it is primarily responsible for the delivery of the services to its sellers, and it has discretion in setting prices charged to sellers. The Company also has the unilateral ability to accept or reject a transaction based on criteria established by the Company. As the merchant of record, Square is liable for the costs of processing the transactions for its sellers, and records such costs within cost of revenue.

Subscription and services-based revenue

Subscription and services-based revenue is primarily comprised of revenue the Company generates from Instant Deposit and Cash Card, Caviar, Square Capital, website hosting and domain name registration services, and various other software as a service (SaaS) products.

Instant Deposit is a functionality within the Cash App and the Company's managed payments solution that enables customers, including individuals and sellers, to instantly deposit funds into their bank accounts. The Company charges a per transaction fee which is recognized as revenue when customers instantly deposit funds to their bank account. The Company also offers Cash App customers the ability to use funds stored in the Cash App via a Visa debit card (Cash Card), for which the Company charges a per transaction fee that is recorded as revenue.

Caviar is a food ordering platform that facilitates food delivery services. The Company's performance obligations are the delivery of food orders from restaurants to customers and the provision of catered meals to corporate customers. For delivery of food orders, the Company charges fees to restaurants, as sellers, and also charges delivery and service fees to individuals. For provision of catered meals the Company charges corporate customers a fee. All fees are billed upon delivery of food orders or catered meals, when the Company considers that it has satisfied its performance obligations. Revenue is recognized upon delivery of the food orders or catered meals, net of refunds. Refunds are estimated based on historical experience.

Square Capital facilitates a loan that is offered through a partnership with an industrial bank that is either repaid through withholding a percentage of the collections of the seller's receivables processed by the Company or a specified monthly amount. The Company generally facilitates loans to its sellers pre-qualified through an analysis of the aggregated data of the seller’s business which includes, but is not limited to, the seller’s historical processing volumes, transaction count, chargebacks, growth, and length of time as a Square customer. The Company also facilitates loans to the customers of certain sellers as well as to the sellers of its partners who do not process payments through the Company. The loans are generally originated by a bank partner, from whom the Company purchases the loans obtaining all rights, title, and interest. The loans have no stated coupon rate but the seller is charged a one-time origination fee by the bank partner based upon their risk rating, which is derived primarily from processing activity. It is the Company’s intent to sell all of its rights, title, and interest of these loans to third-party investors for an upfront fee when the loans are sold. The Company records the net amounts paid to the bank as the cost of the loans purchased and subsequently records a gain on sale of the loans to the third-party investors as revenue upon transfer of title. The Company is retained by the third-party investors to service the loans and earns a servicing fee for facilitating the repayment of these receivables through its managed payments solutions. The Company records servicing revenue as servicing is delivered. For the loans which are not immediately sold to third-party investors, the Company recognizes a portion of the expected seller repayments over the cost of the loans as revenue in proportion to the loan principal reduction.

Following the acquisition of Weebly, the Company offers customers website hosting services for a fee that is generally billed at inception. The Company also acts as a reseller of domain names registration services for a registrar for a fee, which is also generally billed at inception. The Company considers that it satisfies its performance obligations over time and as such recognizes revenue ratably over the term of the relevant arrangements, which vary from one month to twenty four months for website hosting, and one year to ten years for domain name registration.

SaaS represents software products and solutions that provide customers with access to various technologies for a fee which is recognized as revenue ratably as the service is provided. The Company's contracts with customers are generally for a term of one month and renew automatically each month. The Company invoices its customers monthly. The Company considers that it satisfies its performance obligations over time each month as it provides the SaaS services to customers and hence recognizes revenue ratably over the month.

Hardware revenue

The Company generates revenue through the sale of hardware through e-commerce and through its retail distribution channels. The Company satisfies its performance obligation upon delivery of hardware to its customers who include end user customers, distributors, and retailers. The Company may at times offer concessions to customers and also allow for customer returns, which are accounted for as variable consideration. The Company estimates these amounts based on historical experience and reduces revenue recognized. The Company invoices end user customers upon delivery of the products to customers, and payments from such customers are due upon invoicing. Distributors and retailers have payment terms that range from 30 to 90 days after delivery.

The Company offers hardware installment sales to customers with terms ranging from three to twenty four months. The Company allocates a portion of the consideration received from these arrangements to a financing component when it determines that a significant financing component exists. The financing component is subsequently recognized as financing revenue separate from hardware revenue, within subscription and services-based revenue, over the terms of the arrangement with the customer. Pursuant to practical expedients afforded under ASC 606, the Company does not recognize a financing component for hardware installment sales that have a term of one year or less.

Bitcoin revenue

During the fourth quarter of 2017, the Company started offering its Cash App customers the ability to purchase bitcoin, a cryptocurrency denominated asset, from the Company. The Company satisfies its performance obligation and records revenue when bitcoin is transferred to the customer's account.

Arrangements with Multiple Performance Obligations

The Company's contracts with customers generally do not include multiple performance obligations with differing patterns of revenue recognition, except for domain name registration offered with website hosting services sold after May 31, 2018 following the acquisition of Weebly (Note 7). The Company offers its customers the option to buy website hosting bundled with domain name registration, and infrequently the Company has offered its hardware customers free managed payments solutions with the purchase of its hardware as part of a marketing promotion. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company determines standalone selling prices based on the prices charged to customers since the Company's products and services are normally sold on a stand alone basis.



Cost of Revenue

Transaction-based costs

Transaction-based costs consist primarily of interchange and assessment fees, processing fees and bank settlement fees paid to third-party payment processors and financial institutions.

Subscription and services-based costs

Subscription and services-based costs consist primarily of Caviar-related costs, which include processing fees, payments to third-party couriers for deliveries and the cost of equipment provided to sellers. Caviar-related costs for catered meals also includes food costs and personnel costs. These costs also include costs associated with Cash Card and Instant Deposit.

Hardware costs

Hardware costs consist of all product costs associated with contactless and chip readers, chip card readers, Square Stand, Square Register, Square Terminal and third-party peripherals. Product costs consist of third-party manufacturing costs.

Bitcoin costs

Bitcoin cost of revenue comprises of the amounts the Company pays to purchase bitcoin, which will fluctuate in line with the price of bitcoin in the market.
Advertising Costs
Advertising Costs

Advertising costs are expensed as incurred and included in sales and marketing expense on the consolidated statements of operations.
Share-based Compensation
Share-based Compensation

Share-based compensation expense relates to stock options, restricted stock awards (RSAs), restricted stock units (RSUs), and purchases under the Company’s 2015 Employee Stock Purchase Plan (ESPP) which is measured based on the grant-date fair value. The fair value of RSAs and RSUs is determined by the closing price of the Company’s common stock on each grant date.The fair value of stock options and ESPP shares granted to employees is estimated on the date of grant using the Black-Scholes-Merton option valuation model. This share-based compensation expense valuation model requires the Company to make assumptions and judgments regarding the variables used in the calculation. These variables include the expected term (weighted average period of time that the options granted are expected to be outstanding), the expected volatility of the Company’s stock, expected risk-free interest rate and expected dividends. The Company uses the simplified calculation of expected term, as the Company does not have sufficient historical data to use any other method to estimate expected term. Expected volatility is based on a weighted average of the historical volatilities of the Company's common stock along with several entities with characteristics similar to those of the Company. The Company will continue to weight its own volatility more heavily as more of its own historical stock price information becomes available. Once its own historical data is equal to that of the expected term of option grants a peer group is no longer considered necessary. The expected risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. Share-based compensation expense is recorded on a straight-line basis over the requisite service period. For the year ended December 31, 2016 and prior, the Company recorded share-based compensation expense net of estimated forfeitures. On January 1, 2017, as a result of the Company's adoption of ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, the Company elected to account for forfeitures as they occur.

Income and Other Taxes
Income and Other Taxes

The Company reports income taxes under the asset and liability approach. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as net operating loss and tax credit carryforwards. Deferred tax amounts are determined by using the enacted tax rates expected to be in effect when the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance reduces the deferred tax assets to the amount that is more likely than not to be realized.

The Company uses financial projections to support its net deferred tax assets, which contain significant assumptions and estimates of future operations. If such assumptions were to differ significantly from actual future results of operations, it may have a material impact on the Company’s ability to realize its deferred tax assets. At the end of each period, the Company assesses the ability to realize the deferred tax assets. If it is more likely than not that the Company would not realize the deferred tax assets, then the Company would establish a valuation allowance for all or a portion of the deferred tax assets.

The Company recognizes the effect of uncertain income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that has a greater than 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to uncertain tax positions in the provision for income tax expense on the consolidated statements of operations.
Cash and Cash Equivalents and Restricted Cash
Cash and Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments, including money market funds, with an original maturity of three months or less when purchased to be cash equivalents.

As of December 31, 2018 and 2017, restricted cash of $33.8 million and $28.8 million, respectively, is related to pledged cash deposited into savings accounts at the financial institutions that process the Company's sellers' payment transactions and as collateral pursuant to an agreement with the originating bank for the Company's loan product. The Company uses the restricted cash to secure letters of credit with the financial institution to provide collateral for cash flow timing differences in the processing of these payments. The Company has recorded this amount as a current asset on the consolidated balance sheets due to the short-term nature of these cash flow timing differences and that there is no minimum time frame during which the cash must remain restricted. Additionally, this balance includes certain amounts held as collateral pursuant to multi-year lease agreements, discussed in the paragraph below that we expect to become unrestricted within the next year.

As of December 31, 2018 and 2017, the remaining restricted cash of $15.8 million and $9.8 million, respectively, is primarily related to cash held as collateral pursuant to multi-year lease agreements (Note 17).
Concentration of Credit Risk
Concentration of Credit Risk

For the years ended December 31, 2018, 2017 and 2016, the Company had no customer who accounted for greater than 10% of total net revenue.

The Company had three third-party payment processors that represented approximately 45%, 33%, and 9% of settlements receivable as of December 31, 2018. The same three parties represented approximately 46%, 42%, and 8% of settlements receivable as of December 31, 2017. All other third-party processors were insignificant.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, marketable debt securities, settlements receivables, customer funds, and loans held for sale. The associated risk of concentration for cash and cash equivalents and restricted cash is mitigated by banking with creditworthy institutions. At certain times, amounts on deposit exceed federal deposit insurance limits. The associated risk of concentration for marketable debt securities is mitigated by holding a diversified portfolio of highly rated investments. Settlements receivable are amounts due from well-established payment processing companies and normally take one or two business days to settle which mitigates the associated risk of concentration. The associated risk of concentration for loans held for sale is partially mitigated by credit evaluations that are performed prior to facilitating the offering of loans and ongoing performance monitoring of the Company’s loan customers.

Investments
Investments

The Company's short-term and long-term investments include marketable debt securities such as government and agency securities, corporate bonds, commercial paper and municipal securities. The Company determines the appropriate classification of its investments in marketable debt securities at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified and accounted for its marketable debt securities as available-for-sale. Investments are reviewed periodically to identify possible other-than-temporary impairments. If any impairment is considered other-than-temporary, the Company writes down the investment to its fair value and record the corresponding charge through other income (expense), net on its consolidated statements of operations.
Customer Funds
Customer funds

Customer funds held in deposit represent Cash App customers' stored balances that customers would later use to send money or make payments, or customers cash in transit. As of December 31, 2017, the Company held these stored balances as short term bank deposits. During the year ended December 31, 2018, the Company started investing a portion of these stored balances in short-term marketable debt securities (Note 4). The Company determines the appropriate classification of the investments in marketable debt securities within customer funds at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified and accounted for its marketable debt securities within customer funds as available-for-sale.
Fair Value of Financial Instruments
Fair Value of Financial Instruments

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value accounting establishes a three-level hierarchy priority for disclosure of assets and liabilities recorded at fair value. The ordering of priority reflects the degree to which objective prices in external active markets are available to measure fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs to the valuation methodology used for measurement are observable or unobservable.

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

Level 2 Inputs: Other than quoted prices included in Level 1 Inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
Loans Held for Sale
Loans Held for Sale

The Company classifies customer loans as held for sale upon purchase from an industrial bank partner, as there is an available market for such loans and it is the Company’s intent to sell all of its rights, title, and interest in these loans to third-party investors. Loans held for sale are recorded at the lower of amortized cost or fair value determined on an individual loan basis. To determine the fair value the Company utilizes industry-standard valuation modeling, such as discounted cash flow models, taking into account the estimated timing and amounts of periodic repayments. The Company recognizes a charge within transaction, loan and advance losses on the consolidated statement of operations whenever the amortized cost of a loan exceeds its fair value, with such charges being reversed for subsequent increases in fair value, but only to the extent that such reversals do not result in the amortized cost of a loan exceeding its fair value. A loan that is initially designated as held for sale may be reclassified to held for investment if and when the Company's intent for that loan changes. There have been no reclassifications made to date.
Settlement Receivable
Settlements Receivable
    
Settlements receivable represents amounts due from third-party payment processors for customer transactions. Settlements receivable are typically received within one or two business days of the transaction date. No valuation allowances have been established, as funds are due from large, well-established financial institutions with no historical collections issue.
Inventory
Inventory

Inventory is comprised of contactless and chip readers, chip card readers, Square Stand, Square Register, Square Terminal and third-party peripherals, as well as component parts that are used to manufacture these products. Inventory is stated at the lower of cost (generally on a first-in, first-out basis) or net realizable value. Inventory that is obsolete or in excess of forecasted usage is written down to its net realizable value based on the estimated selling prices in the ordinary course of business. The Company's inventory is held at the Company's warehouses as well as at third party contract manufacturer premises.

Deferred Revenue
Deferred Revenue

Deferred revenue is primarily comprised of payments for website hosting and domain name registration received from customers at inception of the arrangements prior to the services being rendered. Deferred revenue also includes unearned revenue related to managed payments services offered in conjunction with hardware sales for which the cash payments from customers are received and due upon the sale of the hardware.
Cryptocurrency transactions
Cryptocurrency transactions

During the fourth quarter of 2017, the Company started offering its Cash App customers the ability to purchase bitcoin, a cryptocurrency denominated asset, from the Company. The Company purchases bitcoin from private broker dealers or from Cash App customers. Upon purchase, the Company records the cost of bitcoin within other current assets in its consolidated balance sheets. Upon sale, the Company records the total sale amount received from customers as bitcoin revenue and the associated cost as cost of revenue. The carrying value of bitcoin held by the Company was $0.2 million and $0.3 million as of December 31, 2018 and 2017, respectively. The Company assesses the carrying value of bitcoin held by the Company at each reporting date and records an impairment charge if the carrying value exceeds the fair value. Losses on bitcoin for the years ended December 31, 2018 and 2017, were insignificant.
Property and Equipment
Property and Equipment

Property and equipment are recorded at historical cost less accumulated depreciation, which is computed on a straight-line basis over the asset’s estimated useful life.
The estimated useful lives of property and equipment are described below:
Property and Equipment
 
Useful Life
Capitalized software
 
18 months
Computer and data center equipment
 
Two to three years
Furniture and fixtures
 
Seven years
Leasehold improvements
 
Lesser of ten years or remaining lease term


When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from their respective accounts, and any gain or loss on such sale or disposal is reflected in operating expenses.
Capitalized Software
Capitalized Software

The Company capitalizes certain cost incurred in developing internal-use software when capitalization requirements have been met. Costs prior to meeting the capitalization requirements are expensed as incurred. Capitalized costs are included in property and equipment, net, and amortized on a straight-lined basis over the estimated useful life of the software and included in product development costs on the consolidated statements of operations.
Leases
Leases

The Company leases office space and equipment under non-cancellable capital and operating leases with various expiration dates. The Company records the total rent expense on a straight-line basis over the lease term.

When lease agreements provide allowances for leasehold improvements, the Company capitalizes the leasehold improvement assets and recognizes the related depreciation expense on a straight-line basis over the lesser of the lease term or the estimated useful life of the asset, and reduces rent expense on a straight-line basis over the term of the lease by the amount of the allowances provided. The Company classifies the cash payments for the leasehold improvements within investing activities while reimbursements from the landlords are classified within operating activities.

The Company records a liability for the estimated fair value for any asset retirement obligation (ARO) associated with its leases, with an offsetting asset. In the determination of the fair value of AROs, the Company uses various assumptions and judgments, including such factors as the existence of a legal obligation, estimated amounts and timing of settlements, and discount and inflation rates. The liability is subsequently accreted while the asset is depreciated. As of December 31, 2018, the Company had a liability for ARO, gross of accretion, of $3.6 million and an associated asset, net of depreciation, of $2.1 million.

Under ASC 840, Leases, the Company is deemed to be the owner, for accounting purposes, during the construction phase of a certain long-lived asset under a build-to-suit lease arrangement because of its involvement with the construction and its exposure to any potential cost overruns under the arrangement. In these cases, the Company recognizes a build-to-suit lease asset and a corresponding build-to-suit lease liability on the consolidated balance sheets. Refer to Note 17 for further details.
Asset Retirement Obligations
The Company records a liability for the estimated fair value for any asset retirement obligation (ARO) associated with its leases, with an offsetting asset. In the determination of the fair value of AROs, the Company uses various assumptions and judgments, including such factors as the existence of a legal obligation, estimated amounts and timing of settlements, and discount and inflation rates. The liability is subsequently accreted while the asset is depreciated.
Business Combinations
Business Combinations

The purchase price of an acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition dates. The excess of total consideration over the fair values of the assets acquired and the liabilities assumed is recorded as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments would be recorded on the consolidated statements of operations.
Long-lived Assets, including Goodwill and Acquired Intangibles
Long-Lived Assets, including Goodwill and Acquired Intangibles

The Company evaluates the recoverability of property and equipment and finite lived intangible assets for impairment whenever events or circumstances indicate that the carrying amounts of such assets may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset or an asset group to estimated undiscounted future net cash flows expected to be generated. If the carrying amount of the long–lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third–part independent appraisals, as considered necessary. For the periods presented, the Company had recorded no impairment charges.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. The Company performs a goodwill impairment test annually on December 31 and more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the reporting unit’s fair value. The Company has concluded that its business operations as a whole comprise one reporting unit. The Company has the option to first assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount and determine whether further action is needed. If, after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. For the periods presented, the Company had recorded no impairment charges.

Acquired intangibles consist of acquired technology and customer relationships associated with various acquisitions. Acquired technology is amortized over its estimated useful life on a straight-line basis within cost of revenue. Customer relationships acquired are amortized on a straight-line basis over their estimated useful lives within operating expenses. The Company evaluates the remaining estimated useful life of its intangible assets being amortized on an ongoing basis to determine whether events and circumstances warrant a revision to the remaining period of amortization.
Customers Payable
Customers Payable

Customers payable represents the transaction amounts, less revenue earned by the Company, owed to sellers or Cash App customers. The payable amount comprises amounts owed to customers due to timing differences as the Company typically settles within one business day, amounts held by the Company in accordance with its risk management policies, and amounts held for customers who have not yet linked a bank account. This balance also includes the Company's liability for customer funds held on deposit in the Cash App.
Accrued Transaction Losses
Accrued Transaction Losses

The Company establishes a reserve for estimated transaction losses due to chargebacks, which represent a potential loss due to disputes between a seller and their customer or due to a fraudulent transaction. This also includes estimated transactions losses on Cash App activity related to peer-to-peer payments sent from a credit card, Cash for Business and Cash Card. The reserve is estimated based on available data as of the reporting date, including expectations of future chargebacks, and historical trends related to loss rates. Additions to the reserve are reflected in current operating results, while realized losses are offset against the reserve. These amounts are classified within transaction and advance losses on the consolidated statements of operations.
Recent Accounting Pronouncements
Recent Accounting Pronouncements

Recently issued accounting pronouncements not yet adopted

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected credit losses for financial assets held. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company intends to adopt this guidance effective January 1, 2020. The Company is currently evaluating the impact this guidance may have on the consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The new guidance eliminates the requirement to calculate the implied fair value of goodwill assuming a hypothetical purchase price allocation (i.e., Step 2 of the goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value, not to exceed the carrying amount of goodwill. This standard should be adopted when the Company performs its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted. The amendments should be applied on a prospective basis. The Company intends to adopt this guidance effective with its 2019 annual goodwill impairment test. The Company does not expect the adoption of this guidance to have a material impact on the consolidated financial statements and related disclosures.

In July 2018, the FASB issued ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement, which will remove, modify and add disclosure requirements for fair value measurements to improve the overall usefulness of such disclosures. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for any removed or modified disclosure requirements. Transition is on a prospective basis for the new and modified disclosures, and on a retrospective basis for disclosures that have been eliminated. The Company currently does not intend to early adopt any portion of this disclosure guidance. The Company is currently evaluating the impact this guidance may have on the consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which is intended to align the requirements for capitalization of implementation costs incurred in a cloud computing arrangement that is a service contract with the existing guidance for internal-use software. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The guidance provides flexibility in adoption, allowing for either retrospective adjustment or prospective adjustment for all implementation costs incurred after the date of adoption. The Company is currently evaluating whether to early adopt this guidance as well as the impact it may have on the consolidated financial statements and related disclosures.

Recently adopted accounting pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases, which will require, among other items, lessees to recognize a right of use asset and a related lease liability for most leases on the balance sheet. Qualitative and quantitative disclosures will be enhanced to better understand the amount, timing and uncertainty of cash flows arising from leases. The Company adopted this new guidance on January 1, 2019, using the modified retrospective approach. Based on the Company's current portfolio of leases, approximately $96.6 million of lease assets and approximately $123.4 million of lease liabilities is expected to be recognized on its consolidated balance sheet. The Company’s operating leases primarily comprise of office facilities, with the most significant leases relating to corporate headquarters in San Francisco and an office in New York. Additionally, the Company will derecognize $149 million related to the build-to-suit asset and liability upon adoption of this standard. The Company is in the process of finalizing changes to its systems and processes in conjunction with its review of lease agreements and will disclose the actual impact of adopting ASU 2016–02 in its interim report on Form 10–Q for the quarter ended March 31, 2019.

In March 2017, the FASB issued ASU No. 2017-08, Premium Amortization on Purchased Callable Debt Securities, which amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. The amendments in this guidance should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company adopted this new guidance on January 1, 2019, and it did not have a material impact on the consolidated financial statements and related disclosures.

In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This guidance allows companies to reclassify such tax effects from accumulated other comprehensive income to retained earnings. When the Tax Cuts and Jobs Act of 2017 was enacted in December 2017, there was a valuation allowance on the deferred tax assets included within the Company's accumulated other comprehensive income. No tax expense resulted from the change in the federal income tax rate.

v3.10.0.1
REVENUE (Tables)
12 Months Ended
Dec. 31, 2018
Revenue from Contract with Customer [Abstract]  
Schedule of Impact of Adoption of ASC 606
The impact of adoption of ASC 606 on the Company's consolidated statement of operations was as follows (in thousands):

 
Year Ended December 31, 2018
 
As reported
 
Balances without adoption
of Topic 606
 
Effect of change
Impact on the Consolidated Statement of Operations:
 
 
 
 
 
Subscription and services-based revenue
$
591,706

 
$
591,220

 
$
486

Hardware revenue
68,503

 
62,572

 
5,931

Subscription and services-based costs
169,884

 
169,884

 

Hardware costs
$
94,114

 
$
88,625

 
$
5,489


The impact of adoption of ASC 606 on the Company's consolidated balance sheets was as follows (in thousands):

 
December 31, 2018
 
As reported
 
Balances without adoption
of Topic 606
 
Effect of change
Impact on the Consolidated Balance Sheets:
 
 
 
 
 
Other current assets
$
164,966

 
$
178,101

 
$
(13,135
)
Other current liabilities
99,153

 
108,334

 
(9,181
)
Other non-current assets
58,393

 
59,768

 
(1,375
)
Other non-current liabilities
$
93,286

 
$
94,717

 
$
(1,431
)
Schedule of Disaggregation of Revenue
The following table presents the Company's revenue from contracts with customers (i.e. excluding revenue from other sources) disaggregated by revenue source (in thousands):

 
Year Ended December 31,
 
2018
 
2017
 
2016
Revenue from Contracts with Customers:
 
 
 
 
 
Transaction-based revenue
$
2,471,451

 
$
1,920,174

 
$
1,456,160

Starbucks transaction-based revenue

 

 
78,903

Subscription and services-based revenue
499,010

 
185,485

 
79,507

Hardware revenue
68,503

 
41,415

 
44,307

Bitcoin revenue
$
166,517

 
$

 
$

Schedule of Deferred Revenue
The deferred revenue balances were as follows (in thousands):
 
Year Ended December 31,
 
2018
 
2017
Deferred revenue, beginning of the period
$
5,893

 
$
5,407

Less: accumulative adjustment for adoption of ASC 606
(4,303
)
 

Deferred revenue, beginning of the period, as adjusted
1,590

 
5,407

Deferred revenue, end of the period
36,451

 
5,893

Deferred revenue arising from business combination
22,800

 

Revenue recognized in the period from amounts included in deferred revenue at the beginning of the period
$
1,590

 
$
5,257

v3.10.0.1
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
12 Months Ended
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Estimated Useful Lives of Property and Equipment
The estimated useful lives of property and equipment are described below:
Property and Equipment
 
Useful Life
Capitalized software
 
18 months
Computer and data center equipment
 
Two to three years
Furniture and fixtures
 
Seven years
Leasehold improvements
 
Lesser of ten years or remaining lease term
The following is a summary of property and equipment, less accumulated depreciation and amortization (in thousands):    
 
December 31,
2018
 
December 31,
2017
Leasehold improvements
$
107,611

 
$
77,073

Computer equipment
80,093

 
66,186

Capitalized software
58,908

 
35,063

Office furniture and equipment
20,699

 
14,490

Total
267,311

 
192,812

Less: Accumulated depreciation and amortization
(124,909
)
 
(101,316
)
Property and equipment, net
$
142,402

 
$
91,496

v3.10.0.1
INVESTMENTS (Tables)
12 Months Ended
Dec. 31, 2018
Investments, Debt and Equity Securities [Abstract]  
Short-term and Long-term Investments
The Company's short-term and long-term investments as of December 31, 2018 are as follows (in thousands):

 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
Short-term securities:
 
 
 
 
 
 
 
U.S. agency securities
$
80,160

 
$
32

 
$
(70
)
 
$
80,122

Corporate bonds
109,807

 
80

 
(368
)
 
109,519

Municipal securities
27,839

 
52

 
(59
)
 
27,832

U.S. government securities
292,615

 
161

 
(509
)
 
292,267

Non-U.S. government securities
31,263

 
4

 
(16
)
 
31,251

Total
$
541,684

 
$
329

 
$
(1,022
)
 
$
540,991

 
 
 
 
 
 
 
 
Long-term securities:
 
 
 
 
 
 
 
U.S. agency securities
$
114,444

 
$
194

 
$
(78
)
 
$
114,560

Corporate bonds
159,783

 
419

 
(950
)
 
159,252

Municipal securities
28,453

 
167

 
(26
)
 
28,594

U.S. government securities
153,743

 
553

 
(172
)
 
154,124

Non-U.S. government securities
8,122

 
28

 

 
8,150

Total
$
464,545

 
$
1,361

 
$
(1,226
)
 
$
464,680


    
The Company's short-term and long-term investments as of December 31, 2017 are as follows (in thousands):

 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
Short-term securities:
 
 
 
 
 
 
 
U.S. agency securities
$
15,122

 
$

 
$
(39
)
 
$
15,083

Corporate bonds
57,855

 
22

 
(79
)
 
57,798

Commercial paper
17,428

 

 

 
17,428

Municipal securities
23,743

 
8

 
(51
)
 
23,700

U.S. government securities
55,729

 
1

 
(163
)
 
55,567

Total
$
169,877

 
$
31

 
$
(332
)
 
$
169,576

 
 
 
 
 
 
 
 
Long-term securities:
 
 
 
 
 
 
 
U.S. agency securities
$
20,288

 
$
2

 
$
(121
)
 
$
20,169

Corporate bonds
91,959

 
25

 
(571
)
 
91,413

Municipal securities
26,371

 
13

 
(160
)
 
26,224

U.S. government securities
66,362

 
19

 
(520
)
 
65,861

Total
$
204,980

 
$
59

 
$
(1,372
)
 
$
203,667

The Company's investments within customer funds as of December 31, 2018 are as follows (in thousands):

 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
Short-term debt securities:
 
 
 
 
 
 
 
U.S. agency securities
$
27,293

 
$
2

 
$
(4
)
 
$
27,291

U.S. government securities
72,662

 
12

 
(3
)
 
72,671

Total
$
99,955

 
$
14

 
$
(7
)
 
$
99,962

Investments Classified by Contractual Maturity Date
The contractual maturities of the Company's short-term and long-term investments as of December 31, 2018 are as follows (in thousands):

 
Amortized Cost
 
Fair Value
Due in one year or less
$
541,684

 
$
540,991

Due in one to five years
464,545

 
464,680

Total
$
1,006,229

 
$
1,005,671

The contractual maturities of the Company's investments within customer funds as of December 31, 2018 are as follows (in thousands):

 
Amortized Cost
 
Fair Value
Due in one year or less
$
99,955

 
$
99,962

Due in one to five years

 

Total
$
99,955

 
$
99,962



v3.10.0.1
CUSTOMER FUNDS (Tables)
12 Months Ended
Dec. 31, 2018
Investments, Debt and Equity Securities [Abstract]  
Assets Underlying Customer Funds
The following table presents the assets underlying customer funds (in thousands):

 
December 31,
2018
 
December 31,
2017
Cash
$
158,697

 
$
103,042

Cash Equivalents:
 
 
 
Money market funds
18

 

U.S. agency securities
39,991

 

U.S. government securities
35,349

 

Short-term debt securities:
 
 
 
U.S. agency securities
27,291

 

U.S. government securities
72,671

 

Total
$
334,017

 
$
103,042

Investments within Customer Funds
The Company's short-term and long-term investments as of December 31, 2018 are as follows (in thousands):

 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
Short-term securities:
 
 
 
 
 
 
 
U.S. agency securities
$
80,160

 
$
32

 
$
(70
)
 
$
80,122

Corporate bonds
109,807

 
80

 
(368
)
 
109,519

Municipal securities
27,839

 
52

 
(59
)
 
27,832

U.S. government securities
292,615

 
161

 
(509
)
 
292,267

Non-U.S. government securities
31,263

 
4

 
(16
)
 
31,251

Total
$
541,684

 
$
329

 
$
(1,022
)
 
$
540,991

 
 
 
 
 
 
 
 
Long-term securities:
 
 
 
 
 
 
 
U.S. agency securities
$
114,444

 
$
194

 
$
(78
)
 
$
114,560

Corporate bonds
159,783

 
419

 
(950
)
 
159,252

Municipal securities
28,453

 
167

 
(26
)
 
28,594

U.S. government securities
153,743

 
553

 
(172
)
 
154,124

Non-U.S. government securities
8,122

 
28

 

 
8,150

Total
$
464,545

 
$
1,361

 
$
(1,226
)
 
$
464,680


    
The Company's short-term and long-term investments as of December 31, 2017 are as follows (in thousands):

 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
Short-term securities:
 
 
 
 
 
 
 
U.S. agency securities
$
15,122

 
$

 
$
(39
)
 
$
15,083

Corporate bonds
57,855

 
22

 
(79
)
 
57,798

Commercial paper
17,428

 

 

 
17,428

Municipal securities
23,743

 
8

 
(51
)
 
23,700

U.S. government securities
55,729

 
1

 
(163
)
 
55,567

Total
$
169,877

 
$
31

 
$
(332
)
 
$
169,576

 
 
 
 
 
 
 
 
Long-term securities:
 
 
 
 
 
 
 
U.S. agency securities
$
20,288

 
$
2

 
$
(121
)
 
$
20,169

Corporate bonds
91,959

 
25

 
(571
)
 
91,413

Municipal securities
26,371

 
13

 
(160
)
 
26,224

U.S. government securities
66,362

 
19

 
(520
)
 
65,861

Total
$
204,980

 
$
59

 
$
(1,372
)
 
$
203,667

The Company's investments within customer funds as of December 31, 2018 are as follows (in thousands):

 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
Short-term debt securities:
 
 
 
 
 
 
 
U.S. agency securities
$
27,293

 
$
2

 
$
(4
)
 
$
27,291

U.S. government securities
72,662

 
12

 
(3
)
 
72,671

Total
$
99,955

 
$
14

 
$
(7
)
 
$
99,962

Investments within Customer Funds Classified by Contractual Maturity Date
The contractual maturities of the Company's short-term and long-term investments as of December 31, 2018 are as follows (in thousands):

 
Amortized Cost
 
Fair Value
Due in one year or less
$
541,684

 
$
540,991

Due in one to five years
464,545

 
464,680

Total
$
1,006,229

 
$
1,005,671

The contractual maturities of the Company's investments within customer funds as of December 31, 2018 are as follows (in thousands):

 
Amortized Cost
 
Fair Value
Due in one year or less
$
99,955

 
$
99,962

Due in one to five years

 

Total
$
99,955

 
$
99,962



v3.10.0.1
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)
12 Months Ended
Dec. 31, 2018
Fair Value Disclosures [Abstract]  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
The estimated fair value and carrying value of the convertible senior notes were as follows (in thousands):
 
December 31, 2018
 
December 31, 2017
 
Carrying Value
 
Fair Value (Level 2)
 
Carrying Value
 
Fair Value (Level 2)
2023 Notes
$
718,522

 
$
901,468

 
$

 
$

2022 Notes
181,173

 
515,693

 
358,572

 
719,356

Total
$
899,695

 
$
1,417,161

 
$
358,572

 
$
719,356


    

The estimated fair value and carrying value of loans held for sale is as follows (in thousands):


 
December 31, 2018
 
December 31, 2017
 
Carrying Value
 
Fair Value (Level 3)
 
Carrying Value
 
Fair Value (Level 3)
Loans held for sale
$
89,974

 
$
93,064

 
$
73,420

 
$
76,070

Total
$
89,974

 
$
93,064

 
$
73,420

 
$
76,070

The Company’s financial assets and liabilities that are measured at fair value on a recurring basis are classified as follows (in thousands):
 
December 31, 2018
 
December 31, 2017
 
Level 1
 
Level 2
 
Level 3
 
Level 1
 
Level 2
 
Level 3
Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
Money market funds
$
218,109

 
$

 
$

 
$
387,698

 
$

 
$

U.S. agency securities

 
46,423

 

 

 

 

Commercial paper

 

 

 

 
24,695

 

U.S. government securities
86,239

 

 

 

 

 

Non-U.S. government securities

 
23,981

 

 

 

 

Customer Funds:
 
 
 
 
 
 
 
 
 
 
 
Money market funds
18

 

 

 

 

 

U.S. agency securities

 
67,282

 

 

 

 

U.S. government securities
108,020

 

 

 

 

 

Short-term securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. agency securities

 
80,122

 

 

 
15,083

 

Corporate bonds

 
109,519

 

 

 
57,798

 

Commercial paper

 

 

 

 
17,428

 

Municipal securities

 
27,832

 

 

 
23,700

 

U.S. government securities
292,267

 

 

 
55,567

 

 

Non-U.S. government securities

 
31,251

 

 

 

 

Long-term securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. agency securities

 
114,560

 

 

 
20,169

 

Corporate bonds

 
159,252

 

 

 
91,413

 

Municipal securities

 
28,594

 

 

 
26,224

 

U.S. government securities
154,124

 

 

 
65,861

 

 

Non-U.S. government securities

 
8,150

 

 

 

 

Other:
 
 
 
 
 
 
 
 
 
 
 
Equity investment
45,342

 

 

 

 

 

Total
$
904,119

 
$
696,966

 
$

 
$
509,126

 
$
276,510

 
$

v3.10.0.1
PROPERTY AND EQUIPMENT, NET (Tables)
12 Months Ended
Dec. 31, 2018
Property, Plant and Equipment [Abstract]  
Summary of Property, Equipment and Internally-Developed Software
The estimated useful lives of property and equipment are described below:
Property and Equipment
 
Useful Life
Capitalized software
 
18 months
Computer and data center equipment
 
Two to three years
Furniture and fixtures
 
Seven years
Leasehold improvements
 
Lesser of ten years or remaining lease term
The following is a summary of property and equipment, less accumulated depreciation and amortization (in thousands):    
 
December 31,
2018
 
December 31,
2017
Leasehold improvements
$
107,611

 
$
77,073

Computer equipment
80,093

 
66,186

Capitalized software
58,908

 
35,063

Office furniture and equipment
20,699

 
14,490

Total
267,311

 
192,812

Less: Accumulated depreciation and amortization
(124,909
)
 
(101,316
)
Property and equipment, net
$
142,402

 
$
91,496

v3.10.0.1
ACQUISITIONS (Tables)
12 Months Ended
Dec. 31, 2018
Business Combinations [Abstract]  
Schedule of Business Acquisitions
The table below summarizes the consideration paid for Weebly and the preliminary assessment of the fair value of the assets acquired and liabilities assumed at the closing date (in thousands, except share data).
Consideration:
 
Cash
$
132,432

Stock (2,418,271 shares of Class A common stock)
140,107

 
$
272,539

Recognized amounts of identifiable assets acquired and liabilities assumed:
 
Current assets (inclusive of cash acquired of $25,758)
$
44,685

Intangible customer assets
42,700

Intangible technology assets
14,900

Intangible trade name
11,300

Intangible other assets
961

Total liabilities assumed (including deferred revenue of $22,800)
(37,592
)
Total identifiable net assets acquired
76,954

Goodwill
195,585

Total
$
272,539

v3.10.0.1
GOODWILL (Tables)
12 Months Ended
Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Goodwill
The change in carrying value of goodwill in the period was as follows (in thousands):

Balance at December 31, 2016
$
57,173

Acquisitions completed during the year ended December 31, 2017
1,154

Balance at December 31, 2017
58,327

Acquisitions completed during the year ended December 31, 2018
203,378

Balance at December 31, 2018
$
261,705

v3.10.0.1
ACQUIRED INTANGIBLE ASSETS (Tables)
12 Months Ended
Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Finite Lived Intangible Assets
All intangible assets are amortized over their estimated useful lives. The changes to the carrying value of intangible assets were as follows (in thousands):

 
Year Ended December 31,
 
2018
 
2017
 
2016
Acquired intangible assets, net, beginning of the period
$
14,334

 
$
19,292

 
$
26,776

Acquisitions
75,871

 
2,657

 
1,529

Amortization expense
13,104

 
7,615

 
9,013

Acquired intangible assets, net, end of the period
$
77,102

 
$
14,334

 
$
19,292

The following table presents the detail of acquired intangible assets as of the periods presented (in thousands):

 
Balance at December 31, 2018
Cost
 
Accumulated Amortization
 
Net
Patents
$
1,285

 
$
(664
)
 
$
621

Technology Assets
45,978

 
(28,420
)
 
17,558

Customer Assets
57,109

 
(8,068
)
 
49,041

Trade Name
11,300

 
(1,648
)
 
9,652

Other
961

 
(731
)
 
230

Total
$
116,633

 
$
(39,531
)
 
$
77,102


 
Balance at December 31, 2017
Cost
 
Accumulated Amortization
 
Net
Patents
$
1,285

 
$
(559
)
 
$
726

Technology Assets
29,158

 
(21,329
)
 
7,829

Customer Assets
10,319

 
(4,540
)
 
5,779

Total
$
40,762

 
$
(26,428
)
 
$
14,334

Schedule of Annual Future Amortization Expense of Intangible Assets
The total estimated annual future amortization expense of these intangible assets as of December 31, 2018, is as follows (in thousands):
2019
$
13,744

2020
11,496

2021
10,299

2022
8,369

2023
6,839

Thereafter
26,355

Total
$
77,102

v3.10.0.1
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT) (Tables)
12 Months Ended
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Other Current Assets
The following table presents the detail of other current assets (in thousands):
    
 
December 31,
2018
 
December 31,
2017
Inventory, net
$
28,627

 
$
16,777

Processing costs receivable
46,102

 
21,083

Prepaid expenses
21,782

 
14,473

Accounts receivable, net
22,393

 
8,606

Deferred hardware costs (i)

 
7,931

Deferred magstripe reader costs (ii)
9,361

 
2,469

Prepaid compensation, current (iii)
4,995

 

Other
31,706

 
15,115

Total
$
164,966

 
$
86,454



(i) The deferred hardware costs represented costs associated with hardware sold through the retail distribution channels. The adoption of ASC 606 on January 1, 2018, has resulted in the recognition of such costs upon delivery of the hardware to the distribution channel.

(ii) The Company capitalizes the cost of its magstripe readers, including packaging and shipping costs, held on-hand by the Company as of each consolidated balance sheet date. Once the readers are shipped to a third-party distributor or an end-customer, they are recorded as marketing expense on the consolidated statements of operations.

(iii) Prepaid compensation relates to cash transferred by the Company to an escrow agent in connection with a business combination that will be paid to officers of the acquiree and recognized as compensation expense over time as they provide services to the Company.

Accrued Expenses
The following table presents the detail of accrued expenses (in thousands):
 
December 31,
2018
 
December 31,
2017
Accrued facilities expenses
$
13,040

 
$
568

Accrued payroll
9,612

 
9,103

Accrued professional fees
5,232

 
5,638

Accrued advertising and other marketing
12,201

 
6,723

Processing costs payable
12,683

 
10,145

Accrued non income tax liabilities
9,503

 
6,155

Accrued hardware costs
5,125

 
2,496

Other accrued liabilities
14,958

 
11,452

Total
$
82,354

 
$
52,280


Other Current Liabilities
The following table presents the detail of other current liabilities (in thousands):    
    
 
December 31,
2018
 
December 31,
2017
Accounts payable
$
36,416

 
$
16,763

Square Capital payable (iv)
6,092

 
7,671

Square Payroll payable (v)
7,534

 
2,850

Deferred revenue, current
31,474

 
5,893

Deferred rent, current
3,842

 
3,311

Accrued redemptions
1,305

 
1,036

Other
12,490

 
7,606

Total
$
99,153

 
$
45,130



(iv) Square Capital payable represents unpaid amounts arising from the purchase of loans or loan repayments collected on behalf of third parties.

(v) Square Payroll payable represents amounts received from Square Payroll product customers that will be utilized to settle the customers employee payroll and related obligations.
v3.10.0.1
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (NON-CURRENT) (Tables)
12 Months Ended
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Other Non-Current Assets
The following table presents the detail of other non-current assets (in thousands):

 
December 31,
2018
 
December 31,
2017
Equity investment (i)
$
45,342

 
$
25,000

Prepaid compensation, non-current (ii)
5,915

 

Deposits
2,747

 
2,738

Other
4,389

 
3,612

Total
$
58,393

 
$
31,350



(i) In August, 2017, the Company invested $25.0 million for preferred shares of Eventbrite, Inc. (Eventbrite) which was carried at cost. In September, 2018, upon Eventbrite's initial public offering, the preferred shares held by the Company converted into Class B common shares of Eventbrite. The Company revalued this investment and will subsequently carry it at fair value, with changes in fair value being recorded within other income or expense on the consolidated statement of operations. During the year ended December 31, 2018, the Company recorded a gain of $20.3 million to other income on the consolidated statements of operations arising from revaluation of this investment.
    
(ii) Prepaid compensation relates to cash transferred by the Company to an escrow agent in connection with a business combination that will be paid to officers of the acquiree and recognized as compensation expense over time as they provide services to the Company.

Other Non-Current Liabilities
The following table presents the detail of other non-current liabilities (in thousands):
 
December 31,
2018
 
December 31,
2017
Statutory liabilities (iii)
$
54,748

 
$
40,768

Deferred rent, non-current
23,003

 
20,349

Deferred purchase consideration
3,900

 

Deferred revenue, non-current
4,977

 
432

Other
6,658

 
7,989

Total
$
93,286

 
$
69,538



(iii) Statutory liabilities represent loss contingencies that may arise from the Company's interpretation and application of certain guidelines and rules issued by various federal, state, local, and foreign regulatory authorities.
v3.10.0.1
INDEBTEDNESS (Tables)
12 Months Ended
Dec. 31, 2018
Debt Disclosure [Abstract]  
Convertible Notes
The net carrying amount of the Notes were as follows (in thousands):

 
Principal outstanding
 
Unamortized debt discount
 
Unamortized debt issuance costs
 
Net carrying value
December 31, 2018
 
 
 
 
 
 
 
2023 Notes
$
862,500

 
$
(138,924
)
 
$
(5,054
)
 
$
718,522

2022 Notes
211,728

 
(27,569
)
 
(2,986
)
 
181,173

Total
1,074,228

 
(166,493
)
 
(8,040
)
 
899,695

 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
2022 Notes
$
440,000

 
$
(73,384
)
 
$
(8,044
)
 
$
358,572

    
 
The net carrying amount of the equity component of the Notes were as follows (in thousands):

 
Amount allocated to conversion option
 
Less: allocated issuance costs
 
Equity component, net
December 31, 2018
 
 
 
 
 
2023 Notes
$
155,250

 
$
(1,231
)
 
$
154,019

2022 Notes
41,481

 
(1,108
)
 
40,373

Total
196,731

 
(2,339
)
 
194,392

 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
2022 Notes
$
86,203

 
$
(2,302
)
 
$
83,901

Interest Expense on Convertible Notes
The Company recognized interest expense on the Notes as follows (in thousands, except for percentages):

 
Year Ended December 31,
 
2018
 
2017
Contractual interest expense
$
4,023

 
$
1,351

Amortization of debt discount and issuance costs
32,855

 
14,223

Total
$
36,878

 
$
15,574

v3.10.0.1
ACCRUED TRANSACTION LOSSES (Tables)
12 Months Ended
Dec. 31, 2018
Product Warranties Disclosures [Abstract]  
Schedule of Reserve for Transaction Losses
The following table summarizes the activities of the Company’s reserve for transaction losses (in thousands):
    
 
Year Ended December 31,
 
2018
 
2017
Accrued transaction losses, beginning of the year
$
26,893

 
$
20,064

Provision for transaction losses
64,981

 
52,977

Charge-offs to accrued transaction losses
(58,192
)
 
(46,148
)
Accrued transaction losses, end of the year
$
33,682

 
$
26,893



v3.10.0.1
INCOME TAXES (Tables)
12 Months Ended
Dec. 31, 2018
Income Tax Disclosure [Abstract]  
Domestic and Foreign Components of Loss Before Income Taxes
The domestic and foreign components of loss before income taxes are as follows (in thousands):
 
Year Ended December 31,
2018
 
2017
 
2016
Domestic
$
44,538

 
$
(10,900
)
 
$
(145,499
)
Foreign
(80,665
)
 
(51,764
)
 
(24,174
)
Loss before income taxes
$
(36,127
)
 
$
(62,664
)
 
$
(169,673
)
Components of Provision for Income Taxes
The components of the provision for income taxes are as follows (in thousands):
 
Year Ended December 31,
2018
 
2017
 
2016
Current:
 
 
 
 
 
Federal
$
(4
)
 
$
(1,192
)
 
$
63

State
752

 
739

 
527

Foreign
2,224

 
1,987

 
1,269

Total current provision for income taxes
2,972

 
1,534

 
1,859

Deferred:
 
 
 
 
 
Federal
(404
)
 
(1,169
)
 
173

State
35

 
57

 
18

Foreign
(277
)
 
(273
)
 
(133
)
Total deferred provision for income taxes
(646
)
 
(1,385
)
 
58

Total provision for income taxes
$
2,326

 
$
149

 
$
1,917

Reconciliation of Statutory Federal Income Tax Rate to Company's Effective Tax Rate
The following is a reconciliation of the statutory federal income tax rate to the Company's effective tax rate:
 
Balance at December 31,
2018
 
2017
 
2016
Tax at federal statutory rate
21.0
 %
 
34.0
 %
 
34.0
 %
State taxes, net of federal benefit
(1.1
)
 
(0.4
)
 
(0.1
)
Foreign rate differential
(14.7
)
 
(14.9
)
 
(2.4
)
Non-deductible meals (i)
(3.4
)
 
(0.3
)
 
(0.1
)
Other non-deductible expenses
(1.7
)
 
(0.7
)
 
(0.8
)
Credits
164.8

 
41.5

 
8.5

Other items
2.3

 
(1.2
)
 
0.2

Change in valuation allowance
(718.5
)
 
(119.5
)
 
(37.4
)
Impact of U.S. tax reform

 
(209.1
)
 

Share-based compensation (ii)
549.0

 
243.5

 
(2.4
)
Change in uncertain tax positions
(4.1
)
 
(2.4
)
 
(0.6
)
Termination of warrant

 
29.3

 

Total
(6.4
)%
 
(0.2
)%
 
(1.1
)%

(i) This item was previously included in other non-deductible expenses in 2016 and 2017.
(ii) Starting in 2017, excess tax benefits from share-based award activity are reflected in the provision for income taxes.
Tax Effects of Temporary Differences and Related Deferred Tax Assets and Liabilities
The tax effects of temporary differences and related deferred tax assets and liabilities are as follows (in thousands):
 
Balance at December 31,
2018
 
2017
 
2016
Deferred tax assets:
 
 
 
 
 
Capitalized costs
$
30,131

 
$
35,608

 
$
61,897

Accrued expenses
31,494

 
23,553

 
29,421

Net operating loss carryforwards
485,562

 
244,197

 
65,507

Tax credit carryforwards
133,275

 
60,567

 
38,927

Property, equipment and intangible assets

 
7,390

 
5,721

Share-based compensation
38,265

 
35,728

 
52,091

Deferred Interest
8,290

 

 

Other
105

 
2,519

 
1,640

Total deferred tax assets
727,122

 
409,562

 
255,204

Valuation allowance
(719,040
)
 
(409,043
)
 
(254,898
)
Total deferred tax assets, net of valuation allowance
8,082

 
519

 
306

Deferred tax liabilities:
 
 
 
 
 
Property, equipment and intangible assets
(7,361
)
 

 

Indefinite-lived intangibles
(275
)
 
(644
)
 
(476
)
Total deferred tax liabilities
(7,636
)
 
(644
)
 
(476
)
Net deferred tax assets (liabilities)
$
446

 
$
(125
)
 
$
(170
)
Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefit
A reconciliation of the beginning and ending amount of unrecognized tax benefit is presented below (in thousands):

 
Year Ended December 31,
2018
 
2017
 
2016
Balance at the beginning of the year
$
70,799

 
$
92,134

 
$
90,372

Gross increases and decreases related to prior period tax positions
513

 

 
5,190

Gross increases and decreases related to current period tax positions
119,261

 
4,193

 
(3,428
)
Reductions related to lapse of statute of limitations
(142
)
 
(91
)
 

Gross increases and decreases related to U.S. tax reform

 
(25,437
)
 

Gross increases and decreases related to acquisition
8,109

 

 

Balance at the end of the year
$
198,540

 
$
70,799

 
$
92,134

v3.10.0.1
STOCKHOLDER'S EQUITY (Tables)
12 Months Ended
Dec. 31, 2018
Equity [Abstract]  
Summary of Stock Option Activity
A summary of stock option activity for the year ended December 31, 2018 is as follows (in thousands, except share and per share data):
    
 
Number of options outstanding
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Term
(in years)
 
Aggregate
Intrinsic
Value
Balance at December 31, 2017
47,270,091

 
$
8.67

 
6.52
 
$
1,229,103

Granted
783,625

 
44.75

 
 
 
 
Exercised
(13,402,680
)
 
7.98

 
 
 
 
Forfeited and canceled
(1,498,155
)
 
14.75

 
 
 
 
Balance at December 31, 2018
33,152,881

 
$
9.52

 
5.45
 
$
1,543,793

Options vested and expected to vest at
 
 
 
 
 
 
 
December 31, 2018
33,152,881

 
$
9.52

 
5.45
 
$
1,543,793

Options exercisable at
 
 
 
 
 
 
 
December 31, 2018
31,066,578

 
$
8.63

 
5.27
 
$
1,474,339

Summary of RSU Activity
Activity related to RSAs and RSUs during the year ended December 31, 2018 is set forth below:
 
Number of
shares
 
Weighted
Average Grant
Date Fair Value
Unvested at December 31, 2017
21,317,525

 
$
17.84

Granted
7,147,541

 
54.43

Vested
(7,786,561
)
 
19.62

Forfeited
(2,743,777
)
 
19.88

Unvested at December 31, 2018
17,934,728

 
$
31.34

Schedule of Fair Value Assumptions for Options
The fair value of stock options was estimated using the following weighted-average assumptions:
    
 
Year Ended December 31,
 
2018
 
2017
 
2016
Dividend yield
%
 
%
 
%
Risk-free interest rate
2.92
%
 
1.88
%
 
1.54
%
Expected volatility
30.87
%
 
32.22
%
 
42.74
%
Expected term (years)
6.19

 
6.02

 
6.08

Summary of the Effect of Share-Based Compensation on the Consolidated Statements of Operations
The following table summarizes the effects of share-based compensation on the Company's consolidated statements of operations (in thousands):
 
Year Ended December 31,
 
2018
 
2017
 
2016
Cost of revenue
$
97

 
$
77

 
$

Product development
144,601

 
98,310

 
91,404

Sales and marketing
22,797

 
17,568

 
14,122

General and administrative
49,386

 
39,881

 
33,260

Total
$
216,881

 
$
155,836

 
$
138,786

v3.10.0.1
NET LOSS PER SHARE (Tables)
12 Months Ended
Dec. 31, 2018
Earnings Per Share [Abstract]  
Schedule of Basic and Diluted Net Loss Per Share
The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):
 
 
Year Ended December 31,
 
2018
 
2017
 
2016
Net loss
$
(38,453
)
 
$
(62,813
)
 
$
(171,590
)
Basic shares:
 
 
 
 
 
Weighted-average common shares outstanding
406,313

 
380,921

 
344,393

Weighted-average unvested shares
(582
)
 
(1,577
)
 
(2,838
)
Weighted-average shares used to compute basic net loss per share
405,731

 
379,344

 
341,555

Diluted shares:
 
 
 
 
 
Weighted-average shares used to compute diluted net loss per share
405,731

 
379,344

 
341,555

 
 
 
 
 
 
Loss per share:
 
 
 
 
 
Basic
$
(0.09
)
 
$
(0.17
)
 
$
(0.50
)
Diluted
$
(0.09
)
 
$
(0.17
)
 
$
(0.50
)
Schedule of Antidilutive Securities Excluded from Calculation of Diluted Net Loss Per Share
The following potential common shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented (in thousands):

 
Year Ended December 31,
 
2018
 
2017
 
2016
Stock options and restricted stock units
60,589

 
68,588

 
88,705

Common stock warrants
25,798

 
19,173

 
9,457

Convertible senior notes
23,820

 

 

Unvested shares
582

 
1,300

 
1,892

Employee stock purchase plan
140

 
157

 
216

Total anti-dilutive securities
110,929

 
89,218

 
100,270

v3.10.0.1
COMMITMENTS AND CONTINGENCIES (Tables)
12 Months Ended
Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]  
Future Minimum Lease Payments Under Operating and Capital Leases
Future minimum lease payments under non-cancelable operating leases (with initial lease terms in excess of one year) and future minimum capital lease payments as of December 31, 2018 are as follows (in thousands):
 
Capital
 
Operating
Year:
 
 
 
2019
$
5,029

 
$
28,405

2020
2,446

 
38,131

2021

 
52,319

2022

 
53,430

2023

 
47,222

Thereafter

 
209,959

Total
$
7,475

 
$
429,466

Less amount representing interest

 
 
Present value of capital lease obligations
7,475

 
 
Less current portion of capital lease obligation
(5,029
)
 
 
Non-current portion of capital lease obligation
$
2,446

 
 
v3.10.0.1
SEGMENT AND GEOGRAPHICAL INFORMATION (Tables)
12 Months Ended
Dec. 31, 2018
Segment Reporting [Abstract]  
Revenue by Geographic Area
Revenue by geography is based on the billing addresses of the merchants. The following table sets forth revenue by geographic area (in thousands):

 
Year Ended December 31,
 
2018
 
2017
 
2016
Revenue
 
 
 
 
 
United States
$
3,138,859

 
$
2,120,088

 
$
1,643,852

International
159,318

 
94,165

 
64,869

Total net revenue
$
3,298,177

 
$
2,214,253

 
$
1,708,721

Long-Lived Assets by Geographic Area
The following table sets forth long-lived assets by geographic area (in thousands):
 
December 31,
 
2018
 
2017
Long-lived assets
 
 
 
United States
$
471,970

 
$
158,820

International
9,239

 
5,337

Total long-lived assets
$
481,209

 
$
164,157

v3.10.0.1
SUPPLEMENTAL CASH FLOW INFORMATION (Tables)
12 Months Ended
Dec. 31, 2018
Supplemental Cash Flow Elements [Abstract]  
Supplemental Disclosures of Cash Flow Information
The supplemental disclosures of cash flow information consist of the following (in thousands):

 
Year Ended December 31,
 
2018
 
2017
 
2016
Supplemental Cash Flow Data:
 
 
 
 
 
Cash paid for interest
$
4,125

 
$
1,374

 
$
570

Cash paid for income taxes
1,622

 
1,254

 
395

Supplemental disclosures of non-cash investing and financing activities:
 
 
 
 
 
Change in purchases of property and equipment in accounts payable and accrued expenses
15,067

 
143

 
2,554

Unpaid business acquisition purchase price
3,995

 
2,115

 
240

Fair value of shares issued related to business combination
140,107

 

 

Recovery of common stock in connection with indemnification settlement agreement
2,745

 

 

Fair value of common stock issued to settle the conversion of senior notes, due 2022
(571,408
)
 

 

Fair value of shares received to settle senior note hedges, due 2022
$
544,276

 
$

 
$

v3.10.0.1
REVENUE - Narrative (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Jan. 01, 2018
Dec. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]      
Retained earnings (accumulated deficit) $ (885,774)   $ (842,735)
Hardware revenue 3,205,500    
Revenue, other 92,700    
Impairment losses arising from contracts with customers 3,700    
Effect of change | ASU 2014-09      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]      
Retained earnings (accumulated deficit)   $ (4,600)  
Hardware revenue $ 6,400    
v3.10.0.1
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details)
$ in Thousands
12 Months Ended
Jan. 01, 2019
USD ($)
Jun. 08, 2016
USD ($)
Dec. 31, 2018
USD ($)
customer
third_party_processor
Dec. 31, 2017
USD ($)
customer
third_party_processor
Dec. 31, 2016
USD ($)
customer
Concentration Risk [Line Items]          
Gain from revaluation of investment     $ 20,342 $ 0 $ 0
Settlement agreement amount   $ 50,000      
Payment for settlement agreement   $ 48,000      
Advertising costs     101,900 81,900 58,300
Pledged cash     33,838 28,805  
Collateral     15,836 9,802  
Carrying value of bitcoin held by the Company     200 300  
Capitalized internally developed software during the period     24,000 9,800 7,900
Amortization expense related to capitalized internally developed software     10,600 6,600 $ 7,100
Asset retirement obligation     3,600    
Asset retirement obligation, associated asset net of depreciation     $ 142,402 $ 91,496  
Measurement period for business combinations     1 year    
Settlement period for customers payable     1 day    
Leasehold Improvements Under Asset Retirement Obligation          
Concentration Risk [Line Items]          
Asset retirement obligation, associated asset net of depreciation     $ 2,100    
Customer Concentration Risk | Net Revenue          
Concentration Risk [Line Items]          
Number of customers | customer     0 0 0
Credit Concentration Risk | Settlements Receivable          
Concentration Risk [Line Items]          
Number of third party processors | third_party_processor     3 3  
Third Party Processor One | Credit Concentration Risk | Settlements Receivable          
Concentration Risk [Line Items]          
Concentration risk, percentage     45.00% 46.00%  
Third Party Processor Two | Credit Concentration Risk | Settlements Receivable          
Concentration Risk [Line Items]          
Concentration risk, percentage     33.00% 42.00%  
Third Party Processor Three | Credit Concentration Risk | Settlements Receivable          
Concentration Risk [Line Items]          
Concentration risk, percentage     9.00% 8.00%  
Scenario, Forecast | Accounting Standards Update 2016-02          
Concentration Risk [Line Items]          
Lease assets $ 96,600        
Lease liabilities 123,400        
Derecognition of build-to-suit lease asset 149,000        
Derecognition of build-to-suit lease liability $ 149,000        
Subscription and services-based revenue          
Concentration Risk [Line Items]          
Description of timing     The Company considers that it satisfies its performance obligations over time and as such recognizes revenue ratably over the term of the relevant arrangements, which vary from one month to twenty four months for website hosting, and one year to ten years for domain name registration.    
Hardware revenue          
Concentration Risk [Line Items]          
Description of timing     The Company offers hardware installment sales to customers with terms ranging from three to twenty four months.    
v3.10.0.1
REVENUE - Adoption of ASC 606 on the Condensed Consolidated Statement of Operation (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]      
Subscription and services-based revenue $ 3,298,177 $ 2,214,253 $ 1,708,721
Hardware revenue 3,205,500    
Cost of revenue 94,114 62,393 68,562
ASU 2014-09 | Effect of change      
New Accounting Pronouncements or Change in Accounting Principle [Line Items]      
Hardware revenue 6,400    
Subscription and services-based revenue      
New Accounting Pronouncements or Change in Accounting Principle [Line Items]      
Subscription and services-based revenue 591,706 252,664 129,351
Hardware revenue 499,010 185,485 79,507
Cost of revenue 169,884 75,720 43,132
Subscription and services-based revenue | Balances without adoption of ASC 606      
New Accounting Pronouncements or Change in Accounting Principle [Line Items]      
Subscription and services-based revenue 591,220    
Cost of revenue 169,884    
Subscription and services-based revenue | ASU 2014-09 | Effect of change      
New Accounting Pronouncements or Change in Accounting Principle [Line Items]      
Subscription and services-based revenue 486    
Cost of revenue 0    
Hardware revenue      
New Accounting Pronouncements or Change in Accounting Principle [Line Items]      
Hardware revenue 68,503 $ 41,415 $ 44,307
Cost of revenue 94,114    
Hardware revenue | Balances without adoption of ASC 606      
New Accounting Pronouncements or Change in Accounting Principle [Line Items]      
Hardware revenue 62,572    
Cost of revenue 88,625    
Hardware revenue | ASU 2014-09 | Effect of change      
New Accounting Pronouncements or Change in Accounting Principle [Line Items]      
Hardware revenue 5,931    
Cost of revenue $ 5,489    
v3.10.0.1
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Estimated Useful Lives of Property and Equipment (Details)
12 Months Ended
Dec. 31, 2018
Capitalized software  
Property, Plant and Equipment [Line Items]  
Useful Life 18 months
Furniture and fixtures  
Property, Plant and Equipment [Line Items]  
Useful Life 7 years
Minimum | Computer and data center equipment  
Property, Plant and Equipment [Line Items]  
Useful Life 2 years
Maximum | Computer and data center equipment  
Property, Plant and Equipment [Line Items]  
Useful Life 3 years
Maximum | Leasehold improvements  
Property, Plant and Equipment [Line Items]  
Useful Life 10 years
v3.10.0.1
REVENUE - Adoption of ASC 606 on the Condensed Consolidated Balance Sheets (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]    
Other current assets $ 164,966 $ 86,454
Other current liabilities 99,153 45,130
Other non-current assets 58,393 31,350
Other non-current liabilities 93,286 $ 69,538
Balances without adoption of ASC 606    
New Accounting Pronouncements or Change in Accounting Principle [Line Items]    
Other current assets 178,101  
Other current liabilities 108,334  
Other non-current assets 59,768  
Other non-current liabilities 94,717  
ASU 2014-09 | Effect of change    
New Accounting Pronouncements or Change in Accounting Principle [Line Items]    
Other current assets (13,135)  
Other current liabilities (9,181)  
Other non-current assets (1,375)  
Other non-current liabilities $ (1,431)  
v3.10.0.1
REVENUE - Revenue from Contracts with Customers (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Disaggregation of Revenue [Line Items]      
Revenue from Contracts with Customers: $ 3,205,500    
Transaction-based revenue      
Disaggregation of Revenue [Line Items]      
Revenue from Contracts with Customers: 2,471,451 $ 1,920,174 $ 1,456,160
Subscription and services-based revenue      
Disaggregation of Revenue [Line Items]      
Revenue from Contracts with Customers: 499,010 185,485 79,507
Hardware revenue      
Disaggregation of Revenue [Line Items]      
Revenue from Contracts with Customers: 68,503 41,415 44,307
Bitcoin revenue      
Disaggregation of Revenue [Line Items]      
Revenue from Contracts with Customers: 166,517 0 0
Starbucks | Transaction-based revenue      
Disaggregation of Revenue [Line Items]      
Revenue from Contracts with Customers: $ 0 $ 0 $ 78,903
v3.10.0.1
REVENUE - Deferred Revenue (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Movement in Deferred Revenue [Roll Forward]    
Deferred revenue, beginning of the period $ 1,590 $ 5,407
Deferred revenue, end of the period 36,451 1,590
Deferred revenue arising from business combination 22,800 0
Revenue recognized in the period from amounts included in deferred revenue at the beginning of the period 1,590 5,257
Balances without adoption of ASC 606    
Movement in Deferred Revenue [Roll Forward]    
Deferred revenue, beginning of the period 5,893 5,407
Deferred revenue, end of the period   5,893
ASU 2014-09 | Effect of change    
Movement in Deferred Revenue [Roll Forward]    
Deferred revenue, beginning of the period $ (4,303) 0
Deferred revenue, end of the period   $ (4,303)
v3.10.0.1
INVESTMENTS Investments - Short-term and Long-term Investments (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost $ 1,006,229  
Fair Value 1,005,671  
Short-term Securities    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 541,684 $ 169,877
Gross Unrealized Gains 329 31
Gross Unrealized Losses (1,022) (332)
Fair Value 540,991 169,576
Short-term Securities | U.S. agency securities    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 80,160 15,122
Gross Unrealized Gains 32 0
Gross Unrealized Losses (70) (39)
Fair Value 80,122 15,083
Short-term Securities | Corporate bonds    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 109,807 57,855
Gross Unrealized Gains 80 22
Gross Unrealized Losses (368) (79)
Fair Value 109,519 57,798
Short-term Securities | Commercial paper    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost   17,428
Gross Unrealized Gains   0
Gross Unrealized Losses   0
Fair Value   17,428
Short-term Securities | Municipal securities    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 27,839 23,743
Gross Unrealized Gains 52 8
Gross Unrealized Losses (59) (51)
Fair Value 27,832 23,700
Short-term Securities | U.S. government securities    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 292,615 55,729
Gross Unrealized Gains 161 1
Gross Unrealized Losses (509) (163)
Fair Value 292,267 55,567
Short-term Securities | Non-U.S. government securities    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 31,263  
Gross Unrealized Gains 4  
Gross Unrealized Losses (16)  
Fair Value 31,251  
Long-term Securities    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 464,545 204,980
Gross Unrealized Gains 1,361 59
Gross Unrealized Losses (1,226) (1,372)
Fair Value 464,680 203,667
Long-term Securities | U.S. agency securities    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 114,444 20,288
Gross Unrealized Gains 194 2
Gross Unrealized Losses (78) (121)
Fair Value 114,560 20,169
Long-term Securities | Corporate bonds    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 159,783 91,959
Gross Unrealized Gains 419 25
Gross Unrealized Losses (950) (571)
Fair Value 159,252 91,413
Long-term Securities | Municipal securities    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 28,453 26,371
Gross Unrealized Gains 167 13
Gross Unrealized Losses (26) (160)
Fair Value 28,594 26,224
Long-term Securities | U.S. government securities    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 153,743 66,362
Gross Unrealized Gains 553 19
Gross Unrealized Losses (172) (520)
Fair Value 154,124 $ 65,861
Long-term Securities | Non-U.S. government securities    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 8,122  
Gross Unrealized Gains 28  
Gross Unrealized Losses 0  
Fair Value $ 8,150  
v3.10.0.1
INVESTMENTS Investments - Maturity of Available for Sale Securities (Details)
$ in Thousands
Dec. 31, 2018
USD ($)
Amortized Cost  
Due in one year or less $ 541,684
Due in one to five years 464,545
Total 1,006,229
Fair Value  
Due in one year or less 540,991
Due in one to five years 464,680
Total $ 1,005,671
v3.10.0.1
CUSTOMER FUNDS - Assets Underlying Customer Funds (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Debt Securities, Available-for-sale [Line Items]    
Customer funds $ 334,017 $ 103,042
U.S. agency securities    
Debt Securities, Available-for-sale [Line Items]    
Customer funds 27,291 0
U.S. government securities    
Debt Securities, Available-for-sale [Line Items]    
Customer funds 72,671 0
Cash Equivalents: | U.S. agency securities    
Debt Securities, Available-for-sale [Line Items]    
Customer funds 39,991 0
Cash Equivalents: | U.S. government securities    
Debt Securities, Available-for-sale [Line Items]    
Customer funds 35,349 0
Cash    
Debt Securities, Available-for-sale [Line Items]    
Customer funds 158,697 103,042
Cash | Money market funds    
Debt Securities, Available-for-sale [Line Items]    
Customer funds $ 18 $ 0
v3.10.0.1
CUSTOMER FUNDS - Investments within Customer Funds (Details)
$ in Thousands
Dec. 31, 2018
USD ($)
Debt Securities, Available-for-sale [Line Items]  
Total $ 1,006,229
Fair Value 1,005,671
Customer funds  
Debt Securities, Available-for-sale [Line Items]  
Total 99,955
Gross Unrealized Gains 14
Gross Unrealized Losses (7)
Fair Value 99,962
Customer funds | U.S. agency securities  
Debt Securities, Available-for-sale [Line Items]  
Total 27,293
Gross Unrealized Gains 2
Gross Unrealized Losses (4)
Fair Value 27,291
Customer funds | U.S. government securities  
Debt Securities, Available-for-sale [Line Items]  
Total 72,662
Gross Unrealized Gains 12
Gross Unrealized Losses (3)
Fair Value $ 72,671
v3.10.0.1
CUSTOMER FUNDS - Maturity of Available for Sale Securities within Customer Funds (Details)
$ in Thousands
Dec. 31, 2018
USD ($)
Amortized Cost  
Due in one year or less $ 541,684
Due in one to five years 464,545
Total 1,006,229
Fair Value  
Due in one year or less 540,991
Due in one to five years 464,680
Total 1,005,671
Customer funds  
Amortized Cost  
Due in one year or less 99,955
Due in one to five years 0
Total 99,955
Fair Value  
Due in one year or less 99,962
Due in one to five years 0
Total $ 99,962
v3.10.0.1
FAIR VALUE OF FINANCIAL INSTRUMENTS Fair Value of Financial Instruments - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Customer funds $ 334,017 $ 103,042
Short-term investments 540,991 169,576
Long-term investments 464,680 203,667
Equity investment 45,342 25,000
Fair Value, Measurements, Recurring | Level 1    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Equity investment 45,342 0
Total 904,119 509,126
Fair Value, Measurements, Recurring | Level 2    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Equity investment 0 0
Total 696,966 276,510
Fair Value, Measurements, Recurring | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Equity investment 0 0
Total 0 0
Money market funds | Fair Value, Measurements, Recurring | Level 1    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Customer funds 18 0
Money market funds | Fair Value, Measurements, Recurring | Level 2    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Customer funds 0 0
Money market funds | Fair Value, Measurements, Recurring | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Customer funds 0 0
U.S. agency securities    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Customer funds 27,291 0
U.S. agency securities | Fair Value, Measurements, Recurring | Level 1    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Customer funds 0 0
Short-term investments 0 0
Long-term investments 0 0
U.S. agency securities | Fair Value, Measurements, Recurring | Level 2    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Customer funds 67,282 0
Short-term investments 80,122 15,083
Long-term investments 114,560 20,169
U.S. agency securities | Fair Value, Measurements, Recurring | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Customer funds 0 0
Short-term investments 0 0
Long-term investments 0 0
Corporate bonds | Fair Value, Measurements, Recurring | Level 1    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Short-term investments 0 0
Long-term investments 0 0
Corporate bonds | Fair Value, Measurements, Recurring | Level 2    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Short-term investments 109,519 57,798
Long-term investments 159,252 91,413
Corporate bonds | Fair Value, Measurements, Recurring | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Short-term investments 0 0
Long-term investments 0 0
Commercial paper | Fair Value, Measurements, Recurring | Level 1    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Short-term investments 0 0
Commercial paper | Fair Value, Measurements, Recurring | Level 2    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Short-term investments 0 17,428
Commercial paper | Fair Value, Measurements, Recurring | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Short-term investments 0 0
Municipal securities | Fair Value, Measurements, Recurring | Level 1    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Short-term investments 0 0
Long-term investments 0 0
Municipal securities | Fair Value, Measurements, Recurring | Level 2    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Short-term investments 27,832 23,700
Long-term investments 28,594 26,224
Municipal securities | Fair Value, Measurements, Recurring | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Short-term investments 0 0
Long-term investments 0 0
U.S. government securities    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Customer funds 72,671 0
U.S. government securities | Fair Value, Measurements, Recurring | Level 1    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash and cash equivalents 86,239 0
Customer funds 108,020 0
Short-term investments 292,267 55,567
Long-term investments 154,124 65,861
U.S. government securities | Fair Value, Measurements, Recurring | Level 2    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash and cash equivalents 0 0
Customer funds 0 0
Short-term investments 0 0
Long-term investments 0 0
U.S. government securities | Fair Value, Measurements, Recurring | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash and cash equivalents 0 0
Customer funds 0 0
Short-term investments 0 0
Long-term investments 0 0
Non-U.S. government securities | Fair Value, Measurements, Recurring | Level 1    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash and cash equivalents 0 0
Short-term investments 0 0
Long-term investments 0 0
Non-U.S. government securities | Fair Value, Measurements, Recurring | Level 2    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash and cash equivalents 23,981 0
Short-term investments 31,251 0
Long-term investments 8,150 0
Non-U.S. government securities | Fair Value, Measurements, Recurring | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash and cash equivalents 0 0
Short-term investments 0 0
Long-term investments 0 0
Money market funds | Fair Value, Measurements, Recurring | Level 1    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash and cash equivalents 218,109 387,698
Money market funds | Fair Value, Measurements, Recurring | Level 2    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash and cash equivalents 0 0
Money market funds | Fair Value, Measurements, Recurring | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash and cash equivalents 0 0
U.S. agency securities | Fair Value, Measurements, Recurring | Level 1    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash and cash equivalents 0 0
U.S. agency securities | Fair Value, Measurements, Recurring | Level 2    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash and cash equivalents 46,423 0
U.S. agency securities | Fair Value, Measurements, Recurring | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash and cash equivalents 0 0
Commercial paper | Fair Value, Measurements, Recurring | Level 1    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash and cash equivalents 0 0
Commercial paper | Fair Value, Measurements, Recurring | Level 2    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash and cash equivalents 0 24,695
Commercial paper | Fair Value, Measurements, Recurring | Level 3    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash and cash equivalents $ 0 $ 0
v3.10.0.1
FAIR VALUE OF FINANCIAL INSTRUMENTS Fair Value of Financial Instruments - Fair Value of Convertible Senior Notes (Details) - Fair Value, Measurements, Recurring - Level 2 - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Carrying Value    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total $ 899,695 $ 358,572
Fair Value    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total 1,417,161 719,356
2023 Notes | Carrying Value    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total 718,522 0
2023 Notes | Fair Value    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total 901,468 0
2022 Notes | Carrying Value    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total 181,173 358,572
2022 Notes | Fair Value    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total $ 515,693 $ 719,356
v3.10.0.1
FAIR VALUE OF FINANCIAL INSTRUMENTS Fair Value of Financial Instruments - Summary of Loans Disclosed at Fair Value (Details) - USD ($)
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Carrying Value | Fair Value, Measurements, Recurring | Level 3      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Loans held for sale $ 89,974,000 $ 73,420,000  
Fair Value | Fair Value, Measurements, Recurring | Level 3      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Loans held for sale 93,064,000 76,070,000  
Loans held for sale      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Excess amortized cost over fair value of loans charge $ 13,200,000 $ 8,000,000 $ 0
v3.10.0.1
PROPERTY AND EQUIPMENT, NET Property and Equipment, Net - Summary of Property, Equipment and Internally-Developed Software (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Property, Plant and Equipment [Line Items]    
Property and equipment, gross $ 267,311 $ 192,812
Less: Accumulated depreciation and amortization (124,909) (101,316)
Property and equipment, net 142,402 91,496
Leasehold improvements    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross 107,611 77,073
Computer equipment    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross 80,093 66,186
Capitalized software    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross 58,908 35,063
Office furniture and equipment    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross $ 20,699 $ 14,490
v3.10.0.1
PROPERTY AND EQUIPMENT, NET Property and Equipment, Net - Narrative (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Property, Plant and Equipment [Abstract]      
Depreciation and amortization expense on property and equipment $ 46.8 $ 29.7 $ 28.7
v3.10.0.1
ACQUISITIONS Acquisitions - Narrative (Details) - USD ($)
$ in Thousands
12 Months Ended
May 31, 2018
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Business Acquisition [Line Items]        
Consideration, net of cash acquired   $ 112,399 $ 1,915 $ 1,360
Weebly, Inc        
Business Acquisition [Line Items]        
Percent acquired of outstanding shares 100.00%      
Cash $ 132,432      
Consideration (in shares) 2,418,271      
Stock (2,418,271 shares of Class A common stock) $ 140,107      
Amount paid to pay outstanding and unvested options 17,700      
Post combination compensation expense $ 2,600      
Purchase price adjustment to goodwill   6,100    
Purchase price adjustment to liabilities assumed   4,800    
Cash withheld as security for indemnification obligations   $ 19,900    
Shares of the total share consideration remaining withheld for indemnification purposes (in shares)   372,578    
Series of Individually Immaterial Business Acquisitions        
Business Acquisition [Line Items]        
Consideration, net of cash acquired   $ 9,900    
v3.10.0.1
ACQUISITIONS Acquisitions - Assets Acquired and Liabilities Assumed (Details) - USD ($)
$ in Thousands
May 31, 2018
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Business Acquisition [Line Items]        
Goodwill   $ 261,705 $ 58,327 $ 57,173
Weebly, Inc        
Business Acquisition [Line Items]        
Cash $ 132,432      
Stock (2,418,271 shares of Class A common stock) $ 140,107      
Consideration (in shares) 2,418,271      
Consideration $ 272,539      
Current assets (inclusive of cash acquired of $25,758) 44,685      
Cash acquired 25,758      
Total liabilities assumed (including deferred revenue of $22,800) (37,592)      
Deferred revenue 22,800      
Total identifiable net assets acquired 76,954      
Goodwill 195,585      
Total 272,539      
Customer Assets | Weebly, Inc        
Business Acquisition [Line Items]        
Intangible assets 42,700      
Technology Assets | Weebly, Inc        
Business Acquisition [Line Items]        
Intangible assets 14,900      
Trade Name | Weebly, Inc        
Business Acquisition [Line Items]        
Intangible assets 11,300      
Other | Weebly, Inc        
Business Acquisition [Line Items]        
Intangible assets $ 961      
v3.10.0.1
GOODWILL (Details)
12 Months Ended
Dec. 31, 2018
USD ($)
reporting_unit
Dec. 31, 2017
USD ($)
Goodwill [Roll Forward]    
Beginning balance $ 58,327,000 $ 57,173,000
Acquisitions completed during the year 203,378,000 1,154,000
Ending balance $ 261,705,000 $ 58,327,000
Number of reporting units | reporting_unit 1  
Impairment of goodwill $ 0  
v3.10.0.1
ACQUIRED INTANGIBLE ASSETS Acquired Intangible Assets - Schedule of Acquired Intangible Assets (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Acquired Finite-Lived Intangible Assets [Line Items]        
Cost $ 116,633 $ 40,762    
Accumulated Amortization (39,531) (26,428)    
Net 77,102 14,334 $ 19,292 $ 26,776
Patents        
Acquired Finite-Lived Intangible Assets [Line Items]        
Cost 1,285 1,285    
Accumulated Amortization (664) (559)    
Net 621 726    
Technology Assets        
Acquired Finite-Lived Intangible Assets [Line Items]        
Cost 45,978 29,158    
Accumulated Amortization (28,420) (21,329)    
Net 17,558 7,829    
Customer Assets        
Acquired Finite-Lived Intangible Assets [Line Items]        
Cost 57,109 10,319    
Accumulated Amortization (8,068) (4,540)    
Net 49,041 $ 5,779    
Trade Name        
Acquired Finite-Lived Intangible Assets [Line Items]        
Cost 11,300      
Accumulated Amortization (1,648)      
Net 9,652      
Other        
Acquired Finite-Lived Intangible Assets [Line Items]        
Cost 961      
Accumulated Amortization (731)      
Net $ 230      
v3.10.0.1
ACQUIRED INTANGIBLE ASSETS Acquired Intangible Assets - Narrative (Details) - Weighted Average
12 Months Ended
Dec. 31, 2018
Patents  
Acquired Finite-Lived Intangible Assets [Line Items]  
Weighted average amortization periods 13 years
Technology Assets  
Acquired Finite-Lived Intangible Assets [Line Items]  
Weighted average amortization periods 5 years
Customer Assets  
Acquired Finite-Lived Intangible Assets [Line Items]  
Weighted average amortization periods 11 years
Trade Name  
Acquired Finite-Lived Intangible Assets [Line Items]  
Weighted average amortization periods 4 years
v3.10.0.1
Acquired Intangible Assets - Change in Carrying Value of Acquired Assets (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]      
Beginning balance $ 14,334 $ 19,292 $ 26,776
Acquisitions 75,871 2,657 1,529
Amortization expense 13,104 7,615 9,013
Ending balance $ 77,102 $ 14,334 $ 19,292
v3.10.0.1
ACQUIRED INTANGIBLE ASSETS Acquired Intangible Assets - Future Amortization of Intangible Assets (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]        
2019 $ 13,744      
2020 11,496      
2021 10,299      
2022 8,369      
2023 6,839      
Thereafter 26,355      
Net $ 77,102 $ 14,334 $ 19,292 $ 26,776
v3.10.0.1
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT) Other Consolidate Balance Sheet Components (Current) - Other Current Assets (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Inventory, net $ 28,627 $ 16,777
Processing costs receivable 46,102 21,083
Prepaid expenses 21,782 14,473
Accounts receivable, net 22,393 8,606
Deferred hardware costs 0 7,931
Deferred magstripe reader costs 9,361 2,469
Prepaid compensation, current 4,995 0
Other 31,706 15,115
Total $ 164,966 $ 86,454
v3.10.0.1
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT) Other Consolidated Balance Sheet Components (Current) - Accrued Expenses (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Accrued facilities expenses $ 13,040 $ 568
Accrued payroll 9,612 9,103
Accrued professional fees 5,232 5,638
Accrued advertising and other marketing 12,201 6,723
Processing costs payable 12,683 10,145
Accrued non income tax liabilities 9,503 6,155
Accrued hardware costs 5,125 2,496
Other accrued liabilities 14,958 11,452
Total $ 82,354 $ 52,280
v3.10.0.1
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT) Other Consolidated Balance Sheet Components (Current) - Other Current Liabilities (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Accounts payable $ 36,416 $ 16,763
Square Capital payable 6,092 7,671
Square Payroll payable 7,534 2,850
Deferred revenue, current 31,474 5,893
Deferred rent, current 3,842 3,311
Accrued redemptions 1,305 1,036
Other 12,490 7,606
Total $ 99,153 $ 45,130
v3.10.0.1
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (NON-CURRENT) Other Consolidated Balance Sheet Components (Non-Current) - Other Non-Current Assets (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Aug. 31, 2017
Other Non-Current Assets [Line Items]        
Equity investment $ 45,342 $ 25,000    
Prepaid compensation, non-current 5,915 0    
Deposits 2,747 2,738    
Other 4,389 3,612    
Total 58,393 31,350    
Gain from revaluation of investment $ 20,342 $ 0 $ 0  
Eventbrite        
Other Non-Current Assets [Line Items]        
Equity investment       $ 25,000
v3.10.0.1
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (NON-CURRENT) Other Consolidated Balance Sheet Components (Non-Current) - Other Non-Current Liabilities (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Statutory liabilities $ 54,748 $ 40,768
Deferred rent, non-current 23,003 20,349
Deferred purchase consideration 3,900 0
Deferred revenue, non-current 4,977 432
Other 6,658 7,989
Total $ 93,286 $ 69,538
v3.10.0.1
INDEBTEDNESS Indebtedness - Revolving Credit Facility, Narrative (Details) - Revolving Secured Credit Facility - Revolving Secured Credit Facility - USD ($)
1 Months Ended 12 Months Ended
Nov. 30, 2015
Dec. 31, 2018
Dec. 31, 2017
Debt Instrument [Line Items]      
Maximum borrowing capacity $ 375,000,000    
Annual administrative agent fee $ 100,000    
Unused commitment fee, percent 0.15%    
Remaining borrowing capacity   $ 375,000,000  
Unused commitment fees   $ 600,000 $ 600,000
Federal Funds Rate      
Debt Instrument [Line Items]      
Basis spread on variable rate 0.50%    
One-Month LIBOR | Minimum      
Debt Instrument [Line Items]      
Basis spread on variable rate 0.00%    
One-Month LIBOR | Maximum      
Debt Instrument [Line Items]      
Basis spread on variable rate 1.00%    
LIBOR | Minimum      
Debt Instrument [Line Items]      
Basis spread on variable rate 1.00%    
LIBOR | Maximum      
Debt Instrument [Line Items]      
Basis spread on variable rate 2.00%    
v3.10.0.1
INDEBTEDNESS Indebtedness - Convertible Senior Notes, Narrative (Details)
$ / shares in Units, shares in Millions
12 Months Ended
May 25, 2018
USD ($)
day
Mar. 06, 2017
USD ($)
day
$ / shares
Dec. 31, 2018
USD ($)
day
$ / shares
shares
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
Sep. 30, 2018
Debt Instrument [Line Items]            
Aggregate principal amount $ 862,500,000          
Interest rate 0.50%          
Conversion price (in USD per share) | $ / shares     $ 77.85      
Threshold trading days | day     20      
Threshold consecutive trading days | day     30      
Principal payment on conversion of senior notes     $ 219,384,000 $ 0 $ 0  
Fair value of common stock issued to settle the conversion of senior notes, due 2022     571,408,000 0 0  
Loss on extinguishment of long-term debt     $ 5,047,000 0 $ 0  
Convertible Debt            
Debt Instrument [Line Items]            
Aggregate principal amount   $ 440,000,000.0        
Interest rate   0.375% 0.375%      
Conversion rate   0.0435749        
Conversion price (in USD per share) | $ / shares   $ 22.95 $ 77.85      
Carrying amount of equity component   $ 86,200,000 $ 194,392,000      
Discounts and commissions payable   11,000,000        
Third party offering costs   800,000        
Issuance costs attributable to the liability component   $ 9,400,000 8,040,000      
Debt Instrument, Conversion Term One | Convertible Debt            
Debt Instrument [Line Items]            
Threshold trading days | day   20        
Threshold consecutive trading days | day   30        
Threshold percentage of stock price trigger   130.00%        
Debt Instrument, Conversion Term Two | Convertible Debt            
Debt Instrument [Line Items]            
Threshold trading days | day   5        
Threshold consecutive trading days | day   5        
Threshold percentage of stock price trigger   98.00%        
2023 Notes | Convertible Debt            
Debt Instrument [Line Items]            
Conversion rate 0.0128456          
Conversion amount $ 1,000          
Carrying amount of equity component 155,300,000   $ 154,019,000      
Effective interest rate of the liability component     4.69%     4.69%
Discounts and commissions payable 6,000,000          
Third party offering costs 800,000          
Issuance costs attributable to the liability component $ 5,600,000   $ 5,054,000      
2023 Notes | Debt Instrument, Conversion Term One | Convertible Debt            
Debt Instrument [Line Items]            
Threshold percentage of stock price trigger 130.00%          
2023 Notes | Debt Instrument, Conversion Term Two | Convertible Debt            
Debt Instrument [Line Items]            
Threshold trading days | day 5          
Threshold consecutive trading days | day 5          
Threshold percentage of stock price trigger 98.00%          
2022 Notes | Convertible Debt            
Debt Instrument [Line Items]            
Carrying amount of equity component     $ 40,373,000 83,901,000    
Effective interest rate of the liability component     5.34%      
Issuance costs attributable to the liability component     $ 2,986,000 $ 8,044,000    
Converted principal amount     $ 228,300,000      
Shares issued in connection with conversion (in shares) | shares     6.9      
Fair value of common stock issued to settle the conversion of senior notes, due 2022     $ 8,900,000      
Loss on extinguishment of long-term debt     5,000,000      
Reduction to additional paid-in-capital     $ 21,000,000      
v3.10.0.1
INDEBTEDNESS Indebtedness - Components of Convertible Notes (Details) - Convertible Debt - USD ($)
$ in Thousands
Dec. 31, 2018
May 25, 2018
Dec. 31, 2017
Mar. 06, 2017
Debt Instrument [Line Items]        
Principal outstanding $ 1,074,228      
Unamortized debt discount (166,493)      
Unamortized debt issuance costs (8,040)     $ (9,400)
Net carrying amount 899,695      
2023 Notes        
Debt Instrument [Line Items]        
Principal outstanding 862,500      
Unamortized debt discount (138,924)      
Unamortized debt issuance costs (5,054) $ (5,600)    
Net carrying amount 718,522      
2022 Notes        
Debt Instrument [Line Items]        
Principal outstanding 211,728   $ 440,000  
Unamortized debt discount (27,569)   (73,384)  
Unamortized debt issuance costs (2,986)   (8,044)  
Net carrying amount $ 181,173   $ 358,572  
v3.10.0.1
INDEBTEDNESS Indebtedness - Carrying Amount of Equity Component of Convertible Notes (Details) - Convertible Debt - USD ($)
$ in Thousands
Dec. 31, 2018
May 25, 2018
Dec. 31, 2017
Mar. 06, 2017
Debt Instrument [Line Items]        
Amount allocated to the conversion option $ 196,731      
Less: allocated debt issuance costs (2,339)      
Equity component, net 194,392     $ 86,200
2023 Notes        
Debt Instrument [Line Items]        
Amount allocated to the conversion option 155,250      
Less: allocated debt issuance costs (1,231)      
Equity component, net 154,019 $ 155,300    
2022 Notes        
Debt Instrument [Line Items]        
Amount allocated to the conversion option 41,481   $ 86,203  
Less: allocated debt issuance costs (1,108)   (2,302)  
Equity component, net $ 40,373   $ 83,901  
v3.10.0.1
INDEBTEDNESS Indebtedness - Interest Expense (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
May 25, 2018
Mar. 06, 2017
Debt Instrument [Line Items]        
Interest rate     0.50%  
Convertible Debt        
Debt Instrument [Line Items]        
Contractual interest expense $ 4,023 $ 1,351    
Amortization of debt discount and issuance costs 32,855 14,223    
Total $ 36,878 $ 15,574    
Interest rate 0.375%     0.375%
v3.10.0.1
INDEBTEDNESS Indebtedness - Convertible Bond Hedge and Warrant Transactions (Details) - USD ($)
$ / shares in Units, $ in Thousands, shares in Millions
12 Months Ended
Mar. 06, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Debt Instrument [Line Items]        
Proceeds from issuance of warrants   $ 112,125 $ 57,244 $ 0
Conversion price of convertible debt (in USD per share)   $ 77.85    
Convertible Debt        
Debt Instrument [Line Items]        
Conversion price of convertible debt (in USD per share) $ 22.95 77.85    
Conversion price of convertible debt after effect of warrants and note hedge (in USD per share) $ 31.18 $ 109.26    
Common Stock Warrants        
Debt Instrument [Line Items]        
Warrants to purchase aggregate shares of capital stock (in shares) 19.2 11.1    
Warrants, weighted average exercise price (in USD per share) $ 31.18 $ 109.26    
Proceeds from issuance of warrants $ 57,200 $ 112,100    
Shares received upon exercise of convertible notes (in shares)   6.9    
Options        
Debt Instrument [Line Items]        
Warrants to purchase aggregate shares of capital stock (in shares)   11.1    
Convertible note hedge, option to purchase common stock, price (in USD per share) $ 22.95 $ 77.85    
Cost of convertible note hedge $ 92,100 $ 172,600    
v3.10.0.1
ACCRUED TRANSACTION LOSSES Accrued Transaction Losses - Summary of Reserve for Transaction Losses (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Loss Contingency Accrual [Roll Forward]      
Accrued transaction losses, beginning of the year $ 26,893    
Provision for transaction losses 88,077 $ 67,018 $ 51,235
Accrued transaction losses, end of the year 33,682 26,893  
Transaction Losses      
Loss Contingency Accrual [Roll Forward]      
Accrued transaction losses, beginning of the year 26,893 20,064  
Provision for transaction losses 64,981 52,977  
Charge-offs to accrued transaction losses (58,192) (46,148)  
Accrued transaction losses, end of the year $ 33,682 $ 26,893 $ 20,064
v3.10.0.1
INCOME TAXES Income Taxes - Domestic and Foreign Components of Loss Before Income Taxes (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Income Tax Disclosure [Abstract]      
Domestic $ 44,538 $ (10,900) $ (145,499)
Foreign (80,665) (51,764) (24,174)
Loss before income tax $ (36,127) $ (62,664) $ (169,673)
v3.10.0.1
INCOME TAXES Income Taxes - Components of Provision for Income Taxes (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Current:      
Federal $ (4) $ (1,192) $ 63
State 752 739 527
Foreign 2,224 1,987 1,269
Total current provision for income taxes 2,972 1,534 1,859
Deferred:      
Federal (404) (1,169) 173
State 35 57 18
Foreign (277) (273) (133)
Total deferred provision for income taxes (646) (1,385) 58
Total provision for income taxes $ 2,326 $ 149 $ 1,917
v3.10.0.1
INCOME TAXES Income Taxes - Reconciliation of Statutory Federal Income Tax Rate to Company's Effective Tax Rate (Details)
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Income Tax Disclosure [Abstract]      
Tax at federal statutory rate 21.00% 34.00% 34.00%
State taxes, net of federal benefit (1.10%) (0.40%) (0.10%)
Foreign rate differential (14.70%) (14.90%) (2.40%)
Non-deductible meals (3.40%) (0.30%) (0.10%)
Other non-deductible expenses (1.70%) (0.70%) (0.80%)
Credits 164.80% 41.50% 8.50%
Other items 2.30% (1.20%) 0.20%
Change in valuation allowance (718.50%) (119.50%) (37.40%)
Impact of U.S. tax reform 0.00% (209.10%) 0.00%
Share-based compensation 549.00% 243.50% (2.40%)
Change in uncertain tax positions (4.10%) (2.40%) (0.60%)
Termination of warrant 0.00% 29.30% 0.00%
Total (6.40%) (0.20%) (1.10%)
v3.10.0.1
INCOME TAXES Income Taxes - Tax Effects of Temporary Differences and Related Deferred Tax Assets and Liabilities (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Deferred tax assets:      
Capitalized costs $ 30,131 $ 35,608 $ 61,897
Accrued expenses 31,494 23,553 29,421
Net operating loss carryforwards 485,562 244,197 65,507
Tax credit carryforwards 133,275 60,567 38,927
Property, equipment and intangible assets 0 7,390 5,721
Share-based compensation 38,265 35,728 52,091
Deferred Interest 8,290 0 0
Other 105 2,519 1,640
Total deferred tax assets 727,122 409,562 255,204
Valuation allowance (719,040) (409,043) (254,898)
Total deferred tax assets, net of valuation allowance 8,082 519 306
Deferred tax liabilities:      
Property, equipment and intangible assets (7,361) 0 0
Indefinite-lived intangibles (275) (644) (476)
Total deferred tax liabilities (7,636) (644) (476)
Net deferred tax asset $ 446    
Net deferred tax liabilities   $ (125) $ (170)
v3.10.0.1
INCOME TAXES Income Taxes - Narrative (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2014
Operating Loss Carryforwards [Line Items]        
Discrete net tax benefit due to Tax Act   $ 1,300    
Decrease in U.S. Federal and state DTAs due to Tax Act   63,600    
Decrease in valuation allowance due to Tax Act $ 63,600      
Increase in valuation allowance 310,000 154,100 $ 59,800  
Unrecognized tax benefits 198,540 $ 70,799 $ 92,134 $ 90,372
Unrecognized tax benefit that would impact annual effective tax rate 5,700      
Significant accrued interest and penalties related to uncertain tax positions 0      
Undistributed earnings of non-U.S. subsidiaries 4,200      
Federal        
Operating Loss Carryforwards [Line Items]        
Net operating loss carryforwards 1,709,800      
Federal | Research Tax Credit Carryforward        
Operating Loss Carryforwards [Line Items]        
Tax credit carryforward 107,300      
Federal | AMT Credit Carryforward        
Operating Loss Carryforwards [Line Items]        
Tax credit carryforward 1,300      
State        
Operating Loss Carryforwards [Line Items]        
Net operating loss carryforwards 1,903,800      
State | Research Tax Credit Carryforward        
Operating Loss Carryforwards [Line Items]        
Tax credit carryforward 65,600      
State | California Enterprise Zone Credit Carryforward        
Operating Loss Carryforwards [Line Items]        
Tax credit carryforward 2,800      
Foreign        
Operating Loss Carryforwards [Line Items]        
Net operating loss carryforwards 215,100      
Foreign | Research Tax Credit Carryforward        
Operating Loss Carryforwards [Line Items]        
Tax credit carryforward 2,700      
Maximum | Tax examinations or lapse of applicable statute of limitations        
Operating Loss Carryforwards [Line Items]        
Reasonably possible decrease in unrecognized tax benefits $ 13,000      
v3.10.0.1
INCOME TAXES Income Taxes - Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefit (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]      
Balance at the beginning of the year $ 70,799 $ 92,134  
Gross increases and decreases related to prior period tax positions 513 0 $ 5,190
Gross increases related to current period tax positions 119,261 4,193  
Gross decreases related to current period tax positions     (3,428)
Reductions related to lapse of statute of limitations (142) (91) 0
Gross increases and decreases related to U.S. tax reform 0 (25,437) 0
Gross increases and decreases related to acquisition 8,109 0 0
Balance at the end of the year $ 198,540 $ 70,799 $ 92,134
v3.10.0.1
STOCKHOLDER'S EQUITY Stockholder's Equity - Common Stock and Warrants Narrative (Details)
$ / shares in Units, $ in Thousands
12 Months Ended
Feb. 24, 2017
USD ($)
shares
Dec. 31, 2018
USD ($)
vote
$ / shares
shares
Dec. 31, 2017
USD ($)
$ / shares
shares
Dec. 31, 2016
USD ($)
May 25, 2018
$ / shares
shares
Apr. 30, 2018
shares
Mar. 06, 2017
$ / shares
shares
Dec. 31, 2014
USD ($)
shares
Class of Stock [Line Items]                
Preferred stock, shares authorized (in shares)   100,000,000 100,000,000          
Preferred stock, par value (in USD per share) | $ / shares   $ 0.0000001 $ 0.0000001          
Preferred stock, shares outstanding (in shares)   0 0          
Warrants to purchase shares of common, canceled (in shares) 9,500,000              
Consideration paid for termination of warrants | $ $ 54,800 $ 0 $ 54,808 $ 0        
Common Stock Warrants                
Class of Stock [Line Items]                
Outstanding warrants to purchase aggregate shares of capital stock (in shares)   11,100,000         19,200,000  
Exercise price of warrants (in USD per share) | $ / shares   $ 109.26         $ 31.18  
Common Stock Warrant, 2022 Notes                
Class of Stock [Line Items]                
Outstanding warrants to purchase aggregate shares of capital stock (in shares)             19,200,000  
Exercise price of warrants (in USD per share) | $ / shares         $ 31.18      
Common Stock Warrant, 2023 Notes                
Class of Stock [Line Items]                
Outstanding warrants to purchase aggregate shares of capital stock (in shares)         11,100,000      
Exercise price of warrants (in USD per share) | $ / shares         $ 109.26      
Class A Common Stock                
Class of Stock [Line Items]                
Number of votes per share | vote   1            
Common stock, shares authorized (in shares)   1,000,000,000 1,000,000,000          
Common stock, par value (in USD per share) | $ / shares   $ 0.0000001 $ 0.0000001          
Common stock, shares outstanding (in shares)   323,546,864 280,400,813          
Class B Common Stock                
Class of Stock [Line Items]                
Number of votes per share | vote   10            
Common stock, shares authorized (in shares)   500,000,000 500,000,000          
Common stock, par value (in USD per share) | $ / shares   $ 0.0000001 $ 0.0000001          
Common stock, shares outstanding (in shares)   93,501,142 114,793,262          
Caviar, Inc.                
Class of Stock [Line Items]                
Shares withheld for indemnification (in shares)               1,291,979
Shares held back released to former owners (in shares)           822,085    
Shares forfeited back to the Company (in shares)           469,894    
Cash withheld as security for indemnification obligations | $               $ 2,700
Convertible Debt | 2022 Notes                
Class of Stock [Line Items]                
Shares received upon exercise of convertible notes (in shares)   6,900,000            
Class A and B common stock                
Class of Stock [Line Items]                
Shares issued in connection with conversion (in shares)   7,288,907            
v3.10.0.1
STOCKHOLDER'S EQUITY Stockholder's Equity - Share-Based Compensation Narrative (Details)
$ / shares in Units, $ in Thousands
12 Months Ended 37 Months Ended
Dec. 31, 2018
USD ($)
plan
payment_plan
$ / shares
shares
Dec. 31, 2017
USD ($)
$ / shares
Dec. 31, 2016
USD ($)
$ / shares
Dec. 31, 2018
USD ($)
shares
Nov. 17, 2015
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Number of share-based compensation plans | plan 2        
Aggregate intrinsic value for options exercised | $ $ 720,100 $ 464,100 $ 202,600    
Weighted average grant-date fair value of options granted (in USD per share) | $ / shares $ 16.25 $ 5.97 $ 5.80    
Share-based compensation expense | $ $ 216,881 $ 155,836 $ 138,786    
Share-based compensation expense related to capitalized software | $ 9,300 3,700 $ 2,800    
Unrecognized compensation cost related to outstanding stock options and restricted stock awards | $ $ 564,500     $ 564,500  
Unrecognized compensation cost related to outstanding stock options and restricted stock awards, recognition period 2 years 9 months 4 days        
RSUs          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Vesting term 4 years        
Employee Stock Purchase Plan          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Share-based compensation expense | $ $ 9,000 $ 6,000      
2015 Equity Incentive Plan          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Number of shares reserved (in shares)         30,000,000
Shares reserved for issuance, percent 5.00%        
Number of shares available for future issuance (in shares) 64,851,998     64,851,998  
2015 Equity Incentive Plan | Maximum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Annual increase of number of shares reserved (in shares) 40,000,000     40,000,000  
2015 Equity Incentive Plan | Options and RSUs          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Number of options and RSU outstanding (in shares) 22,666,464     22,666,464  
2009 Stock Option Plan | Options and RSUs          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Number of options and RSU outstanding (in shares) 28,421,145     28,421,145  
2009 Stock Option Plan | Options          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Vesting term 4 years        
Expiration period 10 years        
2009 Stock Option Plan | Options | Vesting Year One          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Annual vesting rate 25.00%        
2015 Employee Stock Purchase Plan | Employee Stock Purchase Plan          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Shares reserved for issuance, percent 1.00%        
Number of shares available for future issuance (in shares) 10,797,606     10,797,606  
Discount through payroll deductions as a percentage of eligible compensation 15.00%        
Offering period 12 months        
Number of purchase periods | payment_plan 2        
Purchase price of common stock as a percentage of fair market value 85.00%        
Shares purchased under the plan (in shares)       4,349,301  
2015 Employee Stock Purchase Plan | Employee Stock Purchase Plan | Minimum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Annual increase of number of shares reserved (in shares) 8,400,000     8,400,000  
v3.10.0.1
STOCKHOLDER'S EQUITY Stockholder's Equity - Summary of Stock Option Activity (Details) - USD ($)
$ / shares in Units, $ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Number of options outstanding    
Beginning balance (in shares) 47,270,091  
Granted (in shares) 783,625  
Exercised (in shares) (13,402,680)  
Forfeited and canceled (in shares) (1,498,155)  
Ending balance (in shares) 33,152,881 47,270,091
Weighted Average Exercise Price    
Beginning balance (in USD per share) $ 8.67  
Granted (in USD per share) 44.75  
Exercised (in USD per share) 7.98  
Forfeited and canceled (in USD per share) 14.75  
Ending balance (in USD per share) $ 9.52 $ 8.67
Options Vested and Expected to Vest    
Number of stock options outstanding (in shares) 33,152,881  
Weighted average exercise price (in USD per share) $ 9.52  
Weighted Average Remaining Contractual Term (in years) 5 years 5 months 13 days  
Aggregate Intrinsic Value $ 1,543,793  
Additional Disclosures    
Weighted Average Remaining Contractual Term (in years) 5 years 5 months 13 days 6 years 6 months 6 days
Aggregate Intrinsic Value $ 1,543,793 $ 1,229,103
Options exercisable, number of stock options outstanding (in shares) 31,066,578  
Options exercisable, weighted average exercise price (in USD per share) $ 8.63  
Options exercisable, weighted average remaining contractual term (in years) 5 years 3 months 9 days  
Options exercisable, aggregate intrinsic value $ 1,474,339  
v3.10.0.1
STOCKHOLDER'S EQUITY Stockholder's Equity - RSU Activity (Details) - RSUs
12 Months Ended
Dec. 31, 2018
$ / shares
shares
Number of shares  
Beginning balance (in shares) | shares 21,317,525
Granted (in shares) | shares 7,147,541
Vested (in shares) | shares (7,786,561)
Forfeited (in shares) | shares (2,743,777)
Ending balance (in shares) | shares 17,934,728
Weighted Average Grant Date Fair Value  
Beginning balance (in USD per share) | $ / shares $ 17.84
Granted (in USD per share) | $ / shares 54.43
Vested (in USD per share) | $ / shares 19.62
Forfeited (in USD per share) | $ / shares 19.88
Ending balance (in USD per share) | $ / shares $ 31.34
v3.10.0.1
STOCKHOLDER'S EQUITY Stockholder's Equity - Stock Options Fair Value Assumptions (Details) - Options
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Dividend yield 0.00% 0.00% 0.00%
Risk-free interest rate 2.92% 1.88% 1.54%
Expected volatility 30.87% 32.22% 42.74%
Expected term (years) 6 years 2 months 9 days 6 years 7 days 6 years 29 days
v3.10.0.1
STOCKHOLDER'S EQUITY Stockholder's Equity - Effects of Share-Based Compensation on Consolidated Statements of Operations (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]      
Share-based compensation expense $ 216,881 $ 155,836 $ 138,786
Cost of revenue      
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]      
Share-based compensation expense 97 77 0
Product development      
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]      
Share-based compensation expense 144,601 98,310 91,404
Sales and marketing      
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]      
Share-based compensation expense 22,797 17,568 14,122
General and administrative      
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]      
Share-based compensation expense $ 49,386 $ 39,881 $ 33,260
v3.10.0.1
NET LOSS PER SHARE - Calculation of Basic and Diluted Net Loss Per Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Earnings Per Share [Abstract]      
Net loss $ (38,453) $ (62,813) $ (171,590)
Basic shares:      
Weighted-average common shares outstanding (in shares) 406,313 380,921 344,393
Weighted-average unvested shares (in shares) (582) (1,577) (2,838)
Weighted-average shares used to compute basic net loss per share (in shares) 405,731 379,344 341,555
Diluted shares:      
Weighted-average shares used to compute diluted net loss per share (in shares) 405,731 379,344 341,555
Loss per share:      
Basic (in USD per share) $ (0.09) $ (0.17) $ (0.50)
Diluted (in USD per share) $ (0.09) $ (0.17) $ (0.50)
v3.10.0.1
NET LOSS PER SHARE - Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares
shares in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]      
Antidilutive securities excluded from computation of earnings per share (in shares) 110,929 89,218 100,270
Stock options and restricted stock units      
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]      
Antidilutive securities excluded from computation of earnings per share (in shares) 60,589 68,588 88,705
Convertible senior notes      
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]      
Antidilutive securities excluded from computation of earnings per share (in shares) 23,820 0 0
Unvested shares      
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]      
Antidilutive securities excluded from computation of earnings per share (in shares) 582 1,300 1,892
Employee stock purchase plan      
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]      
Antidilutive securities excluded from computation of earnings per share (in shares) 140 157 216
Common stock warrants | Warrants      
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]      
Antidilutive securities excluded from computation of earnings per share (in shares) 25,798 19,173 9,457
v3.10.0.1
COMMITMENTS AND CONTINGENCIES Commitments and Contingencies - Narrative (Details)
$ in Thousands
1 Months Ended 12 Months Ended
Dec. 31, 2018
USD ($)
ft²
Dec. 31, 2018
USD ($)
extension
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
Commitments and Contingencies Disclosure [Abstract]        
Rental expenses under operating leases   $ 23,300 $ 12,900 $ 11,300
Operating Leased Assets [Line Items]        
Total lease payments over term $ 429,466 429,466    
Build-to-suit lease asset $ 149,000 $ 149,000 $ 0  
Build-to-suit Lease        
Operating Leased Assets [Line Items]        
Leased area of office space | ft² 355,762      
Lease term 12 years 12 years    
Total lease payments over term $ 272,000 $ 272,000    
Number of extensions | extension   2    
Extension terms   5 years    
v3.10.0.1
COMMITMENTS AND CONTINGENCIES Commitments and Contingencies - Schedule of Future Minimum Lease Payments Under Operating and Capital Leases (Details)
$ in Thousands
Dec. 31, 2018
USD ($)
Capital  
2019 $ 5,029
2020 2,446
2021 0
2022 0
2023 0
Thereafter 0
Total 7,475
Less amount representing interest 0
Present value of capital lease obligations 7,475
Less current portion of capital lease obligation (5,029)
Non-current portion of capital lease obligation 2,446
Operating  
2019 28,405
2020 38,131
2021 52,319
2022 53,430
2023 47,222
Thereafter 209,959
Total $ 429,466
v3.10.0.1
SEGMENT AND GEOGRAPHICAL INFORMATION Segment and Geographical Information - Narrative (Details)
12 Months Ended
Dec. 31, 2018
segment
Segment Reporting [Abstract]  
Number of operating segments 1
Number of reportable segments 1
v3.10.0.1
SEGMENT AND GEOGRAPHICAL INFORMATION Segment and Geographical Information - Revenue by Geographic Area (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Revenues from External Customers and Long-Lived Assets [Line Items]      
Revenues $ 3,298,177 $ 2,214,253 $ 1,708,721
United States      
Revenues from External Customers and Long-Lived Assets [Line Items]      
Revenues 3,138,859 2,120,088 1,643,852
International      
Revenues from External Customers and Long-Lived Assets [Line Items]      
Revenues $ 159,318 $ 94,165 $ 64,869
v3.10.0.1
SEGMENT AND GEOGRAPHICAL INFORMATION Segment and Geographical Information - Long-Lived Assets by Geographic Area (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Revenues from External Customers and Long-Lived Assets [Line Items]    
Long-lived assets $ 481,209 $ 164,157
United States    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Long-lived assets 471,970 158,820
International    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Long-lived assets $ 9,239 $ 5,337
v3.10.0.1
SUPPLEMENTAL CASH FLOW INFORMATION Supplemental Cash Flow Information - Supplemental Disclosures of Cash Flow Information (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Supplemental Cash Flow Data:      
Cash paid for interest $ 4,125 $ 1,374 $ 570
Cash paid for income taxes 1,622 1,254 395
Supplemental disclosures of non-cash investing and financing activities:      
Change in purchases of property and equipment in accounts payable and accrued expenses 15,067 143 2,554
Unpaid business acquisition purchase price 3,995 2,115 240
Fair value of shares issued related to business combination 140,107 0 0
Recovery of common stock in connection with indemnification settlement agreement 2,745 0 0
Fair value of common stock issued to settle the conversion of senior notes, due 2022 (571,408) 0 0
Fair value of shares received to settle senior note hedges, due 2022 $ 544,276 $ 0 $ 0
v3.10.0.1
Label Element Value
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption $ 0
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption (4,586,000)
Additional Paid-in Capital [Member]  
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption 683,000
Retained Earnings [Member]  
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption (683,000)
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption $ (4,586,000)