CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2019 |
Dec. 31, 2018 |
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Class of Stock [Line Items] | ||
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 | ||
Class of Stock [Line Items] | ||
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) | 346,552,092 | 323,546,864 |
Common stock, shares outstanding (in shares) | 346,552,092 | 323,546,864 |
Class B | ||
Class of Stock [Line Items] | ||
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) | 82,521,716 | 93,501,142 |
Common stock, shares outstanding (in shares) | 82,521,716 | 93,501,142 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Revenue: | ||||
Revenue | $ 1,266,474 | $ 882,108 | $ 3,400,071 | $ 2,365,649 |
Cost of revenue: | ||||
Total cost of revenue | 766,437 | 529,448 | 2,037,435 | 1,442,003 |
Gross profit | 500,037 | 352,660 | 1,362,636 | 923,646 |
Operating expenses: | ||||
Product development | 168,771 | 135,773 | 497,322 | 355,668 |
Sales and marketing | 149,467 | 116,337 | 439,601 | 291,846 |
General and administrative | 115,980 | 85,527 | 318,086 | 243,800 |
Transaction, loan and advance losses | 32,722 | 23,596 | 94,827 | 63,603 |
Amortization of acquired customer assets | 1,003 | 1,294 | 3,591 | 2,235 |
Total operating expenses | 467,943 | 362,527 | 1,353,427 | 957,152 |
Operating income (loss) | 32,094 | (9,867) | 9,209 | (33,506) |
Interest expense, net | 5,632 | 7,224 | 15,456 | 12,806 |
Other expense (income), net | (5,541) | (37,800) | 6,988 | (37,908) |
Income (loss) before income tax | 32,003 | 20,709 | (13,235) | (8,404) |
Provision for income taxes | 2,606 | 1,066 | 2,259 | 1,845 |
Net income (loss) | $ 29,397 | $ 19,643 | $ (15,494) | $ (10,249) |
Net income (loss) per share: | ||||
Basic (in USD per share) | $ 0.07 | $ 0.05 | $ (0.04) | $ (0.03) |
Diluted (in USD per share) | $ 0.06 | $ 0.04 | $ (0.04) | $ (0.03) |
Weighted-average shares used to compute net income (loss) per share | ||||
Basic (in shares) | 427,124 | 409,690 | 423,239 | 402,980 |
Diluted (in shares) | 466,099 | 474,915 | 423,239 | 402,980 |
Technology assets | ||||
Cost of revenue: | ||||
Amortization of acquired technology | $ 1,934 | $ 2,277 | $ 5,029 | $ 5,714 |
Transaction-based revenue | ||||
Revenue: | ||||
Revenue | 816,622 | 655,384 | 2,248,894 | 1,803,649 |
Cost of revenue: | ||||
Cost of revenue | 519,312 | 414,456 | 1,418,730 | 1,137,716 |
Subscription and services-based revenue | ||||
Revenue: | ||||
Revenue | 239,895 | 141,752 | 645,588 | 330,637 |
Revenue | 279,801 | 166,203 | 750,041 | 397,589 |
Cost of revenue: | ||||
Cost of revenue | 63,352 | 47,078 | 183,994 | 117,230 |
Hardware revenue | ||||
Revenue: | ||||
Revenue | 21,766 | 17,558 | 62,238 | 50,337 |
Cost of revenue: | ||||
Cost of revenue | 35,672 | 23,229 | 95,881 | 68,467 |
Bitcoin revenue | ||||
Revenue: | ||||
Revenue | 148,285 | 42,963 | 338,898 | 114,074 |
Cost of revenue: | ||||
Cost of revenue | $ 146,167 | $ 42,408 | $ 333,801 | $ 112,876 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 29,397 | $ 19,643 | $ (15,494) | $ (10,249) |
Net foreign currency translation adjustments | (2,812) | (946) | (2,285) | (3,341) |
Net unrealized gain (loss) on revaluation of intercompany loans | 0 | (296) | 75 | (89) |
Net unrealized gain (loss) on marketable debt securities, net of tax | 1,351 | (647) | 5,876 | (1,597) |
Total comprehensive income (loss) | $ 27,936 | $ 17,754 | $ (11,828) | $ (15,276) |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
9 Months Ended |
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Sep. 30, 2019 | |
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 empower businesses, sellers and individuals to participate in the economy. Square enables sellers to accept card payments and also provides reporting and analytics, and next-day settlement. 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. Cash App is an easy way to send, spend, and store money. In July 2019, the Company entered into a definitive agreement to sell the Caviar business, a food ordering service, which closed on October 31, 2019. Square was founded in 2009 and is headquartered in San Francisco, with offices in the United States, Canada, Japan, Australia, Ireland, and the UK. Basis of Presentation The accompanying interim condensed consolidated financial statements of the Company are unaudited. These interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) and the applicable rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The December 31, 2018 condensed consolidated balance sheet was derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly the Company's consolidated financial position, results of operations, comprehensive income (loss), and cash flows for the interim periods. All intercompany transactions and balances have been eliminated in consolidation. The interim results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019, or for any other future annual or interim period. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and related notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2018. 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, operating and financing lease right-of-use assets and related liabilities, and share-based compensation. Concentration of Credit Risk For the three and nine months ended September 30, 2019 and 2018, the Company had no customer that accounted for greater than 10% of total net revenue. The Company had three third-party payment processors that represented approximately 46%, 34%, and 9% of settlements receivable as of September 30, 2019. The same three parties represented approximately 45%, 33%, and 9% of settlements receivable as of December 31, 2018. 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. Assets Held for Sale The Company classifies an asset group (‘asset’) as held for sale in the period that (i) it has approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable and transfer of the asset is expected to qualify for recognition as a completed sale within one year (subject to certain events or circumstances), (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially and subsequently measures a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in general and administrative expenses in the period in which the held for sale criteria are met. Conversely, gains are generally not recognized on the sale of a long-lived asset until the date of sale. Upon designation as an asset held for sale, the Company stops recording depreciation or amortization expense on the asset. The Company assesses the fair value of assets held for sale less any costs to sell at each reporting period until the asset is no longer classified as held for sale. New Accounting Policies The Company adopted Accounting Standards Codification (ASC) 842, Leases on January 1, 2019, and elected the optional transition method to apply the transition provisions from the effective date of adoption, which requires the Company to report the cumulative effect of the adoption of the standard on the date of adoption with no changes to the prior period balances. Pursuant to the practical expedients, the Company has elected not to reassess: (i) whether expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, or, (iii) initial direct costs for any existing leases. The Company recognized $112.0 million of operating right-of-use lease assets and $135.6 million of operating lease liabilities on its consolidated balance sheet upon adoption of this standard. Additionally, the Company derecognized $149 million related to the build-to-suit asset and liability upon adoption of this standard because the Company is no longer deemed to be the owner of the related asset under construction under the new standard. Refer to Note 19 for further detail. Except for the adoption of ASC 842, there have been no material changes to the Company’s accounting policies during the nine months ended September 30, 2019, as compared to the accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Recent Accounting Pronouncements Recently issued accounting pronouncements not yet adopted In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13,Financial Instruments - Credit Losses, which requires the measurement and recognition of expected credit losses for financial assets held. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available for sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. 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’s preliminary conclusion is that the new guidance will not have a material impact on the balances reported on its consolidated financial statements. The Company has also determined that allowances for credit losses associated with its available for sale debt securities would be immaterial. Upon adoption of this guidance, the Company will expand its disclosures to discuss how it develops its expected credit loss estimates, the methodology applied to estimate the allowance for credit losses, and the factors that influence the Company's estimates. For available for sale debt securities with unrealized losses where the Company concludes that an allowance for credit losses is not necessary, the Company will expand its disclosures of the associated fair value of such securities as well as the basis for conclusions that an allowance for credit losses was not necessary. 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 which it performs as of December 31. 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 does not expect the adoption of this guidance to have a material impact on the consolidated financial statements and related disclosures.
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REVENUE |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE | REVENUE The following table presents the Company's revenue disaggregated by revenue source (in thousands):
The deferred revenue balances were as follows (in thousands):
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INVESTMENTS |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS | INVESTMENTS The Company's short-term and long-term investments as of September 30, 2019 are as follows (in thousands):
The Company's short-term and long-term investments as of December 31, 2018 are as follows (in thousands):
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 amortized cost of investments classified as cash equivalents approximated the fair value due to the short-term nature of the investments. The contractual maturities of the Company's short-term and long-term investments as of September 30, 2019 are as follows (in thousands):
The following table presents the assets underlying customer funds (in thousands):
The Company's investments within customer funds as of September 30, 2019 are as follows (in thousands):
The Company's investments within customer funds as of December 31, 2018 are as follows (in thousands):
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 amortized cost of investments classified as cash equivalents approximated the fair value due to the short-term nature of the investments. The contractual maturities of the Company's investments within customer funds as of September 30, 2019 are as follows (in thousands):
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CUSTOMER FUNDS |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CUSTOMER FUNDS | INVESTMENTS The Company's short-term and long-term investments as of September 30, 2019 are as follows (in thousands):
The Company's short-term and long-term investments as of December 31, 2018 are as follows (in thousands):
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 amortized cost of investments classified as cash equivalents approximated the fair value due to the short-term nature of the investments. The contractual maturities of the Company's short-term and long-term investments as of September 30, 2019 are as follows (in thousands):
The following table presents the assets underlying customer funds (in thousands):
The Company's investments within customer funds as of September 30, 2019 are as follows (in thousands):
The Company's investments within customer funds as of December 31, 2018 are as follows (in thousands):
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 amortized cost of investments classified as cash equivalents approximated the fair value due to the short-term nature of the investments. The contractual maturities of the Company's investments within customer funds as of September 30, 2019 are as follows (in thousands):
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FAIR VALUE OF FINANCIAL INSTRUMENTS |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 marketable 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):
The carrying amounts of certain financial instruments, including settlements receivable, accounts payable, customers payable, accrued expenses 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):
The estimated fair value and carrying value of loans held for sale is as follows (in thousands):
For the three and nine months ended September 30, 2019, the Company recorded a charge for the excess of amortized cost over fair value of the loans of $5.3 million and $18.4 million, respectively. For the three and nine months ended September 30, 2018, the Company recorded a charge for the excess of amortized cost over fair value of the loans of $3.3 million and $9.0 million, respectively. 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 three and nine months ended September 30, 2019 and 2018, the Company did not have any transfers in or out of Level 1, Level 2, or Level 3 assets or liabilities.
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PROPERTY AND EQUIPMENT, NET |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
Depreciation and amortization expense on property and equipment was $15.3 million and $45.6 million for the three and nine months ended September 30, 2019, respectively. Depreciation and amortization expense on property and equipment was $11.7 million and $29.2 million for the three and nine months ended September 30, 2018, respectively.
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ACQUISITIONS |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS | ACQUISITIONS Weebly, Inc. On May 31, 2018, the Company acquired 100% of the outstanding shares of Weebly, Inc., a technology company that offers customers website hosting and domain name registration solutions. The acquisition of Weebly enabled 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).
The Company had 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 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 $3.7 million and $4.7 million, respectively. There was no impact to the consolidated statements of operations as result of these adjustments. As of September 30, 2019, $19.4 million of cash and 363,266 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 spent an aggregate of $20.4 million, net of cash acquired, in connection with other immaterial acquisitions during the nine months ended September 30, 2019, which resulted in the recognition of additional intangible assets and goodwill. Pro forma financial information has not been presented for any of our acquisitions as the impact to our consolidated financial statements was not material.
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ASSETS AND LIABILITIES HELD FOR SALE |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
ASSETS AND LIABILITIES HELD FOR SALE | ASSETS AND LIABILITIES HELD FOR SALE On July 31, 2019, the Company entered into a definitive agreement with DoorDash, Inc. for the sale of the Company’s Caviar business, which offers food ordering and delivery services to customers. The transaction closed on October 31, 2019 and the Company received $410 million in gross proceeds comprised of $310 million in cash and $100 million of DoorDash, Inc.'s preferred stock.The Company agreed to indemnify DoorDash for potential losses and costs that may arise from certain legal and other matters. The Caviar business is a small component of the Company's overall business comprising less than 5% of the Company's consolidated total assets and revenues. The sale is in line with the Company's strategy of focusing investment on its larger and growing managed payments and Cash App businesses. Accordingly the sale of the Caviar business does not represent a strategic shift that will have a major effect on the Company's operations and financial results, and does not therefore qualify for reporting as a discontinued operation. The carrying values of the assets and liabilities to be held for sale were reported within other current assets and other current liabilities on the consolidated balance sheets. The following table summarizes the carrying values of the assets and liabilities classified as held for sale as of September 30, 2019 (in thousands):
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GOODWILL |
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Sep. 30, 2019 | |||||||||||||||||||||||||||||
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):
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. For the periods presented, the Company had recorded no impairment charges.
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ACQUIRED INTANGIBLE ASSETS |
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUIRED INTANGIBLE ASSETS | ACQUIRED INTANGIBLE ASSETS During the three and nine months ended September 30, 2019, 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):
All intangible assets are amortized over their estimated useful lives. The weighted average amortization periods for acquired technology, customer intangible assets, and acquired trade name are approximately 5 years, 12 years and 4 years, respectively. The changes to the carrying value of intangible assets were as follows (in thousands):
The total estimated future amortization expense of these intangible assets as of September 30, 2019 is as follows (in thousands):
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OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT) |
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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):
Accrued Expenses The following table presents the detail of accrued expenses (in thousands):
Other Current Liabilities The following table presents the detail of other current liabilities (in thousands):
(i) Square Capital payable represents unpaid amounts arising from the purchase of loans or loan repayments collected on behalf of third parties. (ii) 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):
(i) This balance represents the Company's investment in Class B common shares of Eventbrite, Inc. (Eventbrite). The investment is carried at fair value with changes in fair value being recorded on the consolidated statement of operations. During the three and nine months ended September 30, 2019, the Company recorded a gain of $2.5 million and a loss of $16.5 million, respectively, to other expense (income), net on the consolidated statements of operations arising from revaluation of this investment. Other Non-Current Liabilities The following table presents the detail of other non-current liabilities (in thousands):
(i) 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. (ii) The adoption of ASC 842 on January 1, 2019 resulted in the reclassification of deferred rent as an offset to right-of-use lease assets.
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OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (NON-CURRENT) |
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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):
Accrued Expenses The following table presents the detail of accrued expenses (in thousands):
Other Current Liabilities The following table presents the detail of other current liabilities (in thousands):
(i) Square Capital payable represents unpaid amounts arising from the purchase of loans or loan repayments collected on behalf of third parties. (ii) 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):
(i) This balance represents the Company's investment in Class B common shares of Eventbrite, Inc. (Eventbrite). The investment is carried at fair value with changes in fair value being recorded on the consolidated statement of operations. During the three and nine months ended September 30, 2019, the Company recorded a gain of $2.5 million and a loss of $16.5 million, respectively, to other expense (income), net on the consolidated statements of operations arising from revaluation of this investment. Other Non-Current Liabilities The following table presents the detail of other non-current liabilities (in thousands):
(i) 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. (ii) The adoption of ASC 842 on January 1, 2019 resulted in the reclassification of deferred rent as an offset to right-of-use lease assets.
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INDEBTEDNESS |
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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 $0.1 million and $0.4 million in unused commitment fees during both the three and nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, 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. The Company's current policy is to settle 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. The circumstances required to allow the holders to convert their 2023 Notes were not met during the nine months ended September 30, 2019. 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 September 30, 2019. In 2018, certain holders of the 2022 Notes converted an aggregate principal amount of $228.3 million of their Notes. The Company settled the conversions through a combination of $219.4 million in cash and issuance of 7.3 million shares of the Company's Class A common stock. Conversions in the nine months ended September 30, 2019 were not material. The Company 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 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 as of December 31, 2018, 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):
The net carrying amount of the equity component of the 2023 Notes and 2022 Notes were as follows (in thousands):
The Company recognized interest expense on the Notes as follows (in thousands, except for percentages):
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 condensed consolidated balance sheets. In 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 in 2018. During the nine months ended September 30, 2019, the Company received an additional 0.3 million shares of the Company's Class A common stock.
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ACCRUED TRANSACTION LOSSES |
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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):
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INCOME TAXES |
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Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company recorded an income tax expense of $2.6 million and $2.3 million for the three and nine months ended September 30, 2019, respectively, compared to income tax expense of $1.1 million and $1.8 million for the three and nine months ended September 30, 2018, respectively. The income tax expense recorded for the three and nine months ended September 30, 2019 was primarily due to state and foreign income tax expense offset by a change in the valuation allowance on the Company's deferred tax assets. The Company’s effective tax rate was 8.1% and (17.1)% for the three and nine months ended September 30, 2019, respectively, compared to an effective tax rate of 5.1% and (22.0)% for the three and nine months ended September 30, 2018, respectively. The difference between the effective tax rate and the federal statutory tax rate for the three and nine months ended September 30, 2019 and September 30, 2018 primarily relates to tax losses in the U.S. and certain foreign jurisdictions for which no benefit can be taken. The Company’s effective tax rate may be subject to fluctuation during the year as new information is obtained, which may affect the assumptions used to estimate the annual effective tax rate, including factors such as the mix of forecasted pre-tax earnings in the various jurisdictions in which the Company operates, valuation allowances against deferred tax assets, the recognition and de-recognition of tax benefits related to uncertain tax positions, and changes in or the interpretation of tax laws in jurisdictions where the Company conducts business. As of September 30, 2019, the Company retains a full valuation allowance on its deferred tax assets in the U.S. and certain foreign jurisdictions. The realization of the Company’s deferred tax assets depends primarily on its ability to generate taxable income in future periods. 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 tax provision for the three and nine months ended September 30, 2019 and September 30, 2018, was calculated on a jurisdictional basis. The Company estimated the foreign income tax provision using the effective income tax rate expected to be applicable for the full year. |
STOCKHOLDERS' EQUITY |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Common Stock The Company has authorized the issuance of Class A common stock and Class B common stock. 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. 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. Class A common stock and Class B common stock are referred to as "common stock" throughout these Notes to the Condensed Consolidated Financial Statements, unless otherwise noted. As of September 30, 2019, 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 September 30, 2019, there were 346,552,092 shares of Class A common stock and 82,521,716 shares of Class B common stock outstanding. Options and awards granted following the Company's initial public offering are related to underlying Class A common stock. Warrants In conjunction with the 2023 Notes offering, the Company sold the 2023 warrants whereby the 2018 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. The Company received $112.1 million in cash proceeds from the sale of the 2023 warrants. See Note 13, Indebtedness, for more details on this transaction. In conjunction with the 2022 Notes offering, the Company sold warrants whereby the 2017 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 associated with the 2022 and 2023 Notes offering were exercised as of September 30, 2019. 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. Since November 17, 2015, no additional awards have been nor will be in the future granted under the 2009 Plan. Under the 2015 Plan, shares of the Company's Class A common stock are reserved for the issuance of incentive and nonstatutory stock options, 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 Company’s board of directors or a committee thereof. As of September 30, 2019, the total number of shares subject to stock options, RSAs and RSUs outstanding under the 2015 Plan was 21,822,262, and 82,968,841 shares were available for future issuance. As of September 30, 2019, the total number of shares subject to stock options, RSAs and RSUs outstanding under the 2009 Plan was 20,422,313. A summary of stock option activity for the nine months ended September 30, 2019 is as follows (in thousands, except share and per share data):
Restricted Stock Activity Activity related to RSAs and RSUs during the nine months ended September 30, 2019 is set forth below:
Share-Based Compensation The fair value of stock options and employee stock purchase plan rights are estimated on the date of grant using the Black-Scholes-Merton option valuation model. 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 granted was estimated using the following weighted-average assumptions:
The following table summarizes the effects of share-based compensation on the Company's condensed consolidated statements of operations (in thousands):
The Company recorded $5.1 million and $14.1 million of share-based compensation expense related to the Company's 2015 Employee Stock Purchase Plan during the three and nine months ended September 30, 2019, respectively, compared to $2.0 million and $6.3 million for the three and nine months ended September 30, 2018, which are included in the table above. The Company capitalized $2.4 million and $6.0 million of share-based compensation expense related to capitalized software costs during the three and nine months ended September 30, 2019, respectively, compared to $2.0 million and $6.3 million for the three and nine months ended September 30, 2018, respectively. As of September 30, 2019, there was $745.0 million of total unrecognized compensation cost related to outstanding awards that are expected to be recognized over a weighted-average period of 2.8 years.
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NET INCOME (LOSS) PER SHARE |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME (LOSS) PER SHARE | NET INCOME (LOSS) PER SHARE Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding adjusted for the dilutive effect of all potential shares of common stock. In periods when the Company reported a net loss, diluted net loss per share is the same as basic net loss per share because the effects of potentially dilutive items were anti-dilutive. The following table presents the calculation of basic and diluted net income (loss) per share (in thousands, except per share data):
Additionally, 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. The following potential common shares were excluded from the calculation of diluted net income (loss) per share because their effect would have been anti-dilutive for the periods presented (in thousands):
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RELATED PARTY TRANSACTIONS |
9 Months Ended |
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Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS In July 2019, the Company entered into a lease agreement to lease certain office space located in St. Louis, Missouri, from an affiliate of one of the Company’s co-founders and current member of its board and directors, Mr. Jim McKelvey, under an operating lease agreement as discussed in Note 19, Commitments and Contingencies. The lease commencement date is expected to be in April 2020. The term of the agreement is 15.5 years with total future minimum lease payments over the term of approximately $42.7 million. The Company has not yet recognized a right of use asset and lease obligation under this agreement as of September 30, 2019.
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COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Operating and Finance Leases The Company’s operating leases are primarily comprised of office facilities, with the most significant leases relating to corporate headquarters in San Francisco and an office in New York. The Company's leases have remaining lease terms of 1 year to 12 years, some of which include options to extend for 5 year terms, or include options to terminate the leases within 1 year. None of the options to extend the leases have been included in the measurement of the right of use asset or the associated lease liability. The Company elects to apply the short-term lease measurement and recognition exemption to its leases where applicable. Operating lease right-of-use assets and operating lease liabilities are recognized at the present value of the future lease payments at the lease commencement date for each lease. The interest rate used to determine the present value of the future lease payments is our incremental borrowing rate because the interest rate implicit in most of the Company's leases is not readily determinable. The Company's incremental borrowing rate is estimated to approximate the interest rate that the Company would pay to borrow on a collateralized basis with similar terms and payments as the lease, and in economic environments where the leased asset is located. Operating lease right-of-use assets also include any prepaid lease payments and lease incentives. Operating lease expense is recognized on a straight-line basis over the lease term. The Company's lease agreements generally contain lease and non-lease components. Non-lease components, which primarily include payments for maintenance and utilities, are combined with lease payments and accounted for as a single lease component. The Company includes the fixed non-lease components in the determination of the right-of-use assets and operating lease liabilities. 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 extend the lease term for two 5 year terms. The lease commencement date is expected to be in January 2020 with total lease payments over the term of approximately $276 million. Under the terms of this lease, the Company is required to make certain payments during the construction stage of the office space, which the Company will record as a prepaid lease asset. In July 2019, the Company entered into a lease arrangement for 226,258 square feet of office space in St Louis, Missouri, with an affiliate of one of the Company’s co-founders, Mr. Jim McKelvey, who is also a Company stockholder and a member of its board of directors, for a term of 15.5 years with options to extend the lease term for two 5 year terms. The Company also has an option to terminate the lease for up to 50% of the leased space any time between January 1, 2024 and December 31, 2026, as well as an option to terminate the lease for the entire property on January 1, 2034. Termination penalties specified in the lease agreement will apply if the Company exercises any of the options to terminate the lease. The lease commencement date is expected to be in April 2020 with total future minimum lease payments over the term of approximately $42.7 million. Additionally, the Company has finance leases for data center equipment, with remaining lease terms of approximately 2 years. The components of lease expense were as follows (in thousands):
For the periods presented, costs associated with short-term leases were not material. Other information related to leases was as follows:
Cash flows related to leases were as follows (in thousands):
Future minimum lease payments under non-cancelable operating leases (with initial lease terms in excess of one year) and future minimum finance lease payments as of September 30, 2019 are as follows (in thousands):
The current portion of the finance lease liability is included within other current liabilities while the non-current portion is included within other non-current liabilities on the condensed consolidated balance sheets. The associated finance lease assets are included in property and equipment, net on the condensed 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, 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 of $1.3 million for fiscal years 2014 and 2015 in the first quarter of 2018, as assessed by the Tax Collector, even though the Company strongly disagrees with the Tax Collector’s assessment of the Company’s primary business activity. Additionally, in connection with a tax audit for the fiscal years 2016 and 2017, the Company received a notice of tax audit deficiency with respect to San Francisco Gross Receipts Tax and Payroll Expense Tax for those years on October 16, 2019. The Company believes its position has merit and intends to vigorously pursue all available remedies. On September 6, 2019, the Company filed a lawsuit against the Tax Collector and the City and County of San Francisco in San Francisco County Superior Court for a refund of the liability for the fiscal years of 2014 and 2015. While the Company believes it has strong arguments, there is no assurance that courts will rule in the Company’s favor. 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 in aggregate could be material. Moreover, a San Francisco ballot measure approved on November 6, 2018 increased taxes on gross receipts beginning January 1, 2019, which further increases the Company’s tax exposure. Should the Company not prevail in its legal challenge against the application of San Francisco’s Gross Receipts Tax to its business, the Company estimates that it could become liable to pay additional taxes, interest, and penalties that range from approximately $0 to $56 million in the aggregate for the fiscal years 2016, 2017, and 2018 and for the nine months ended on September 30, 2019, over and above the taxes the Company has already paid under the information classification. Additional taxes, interest, and penalties for future periods could be material as well. The Company regularly assesses the likelihood of adverse outcomes resulting from tax disputes such as this and examinations for all open years to determine the necessity and adequacy of any tax reserves. Given the uncertainty of the possible outcome, the Company has not recorded reserves for the exposure related to the dispute with the Tax Collector on San Francisco’s Gross Receipts Tax. In connection with the sale of Caviar to DoorDash, we have agreed to indemnify DoorDash for certain liabilities, including certain litigation related to Caviar, such as the Woodle and Cole cases mentioned below, that DoorDash assumed upon the closing of the sale. 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. 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, including similar claims as those referenced above, alleging misclassification of couriers as independent contractors. 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.
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SEGMENT AND GEOGRAPHICAL INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT AND GEOGRAPHIC 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 sellers or customers. The following table sets forth revenue by geographic area (in thousands):
No individual country from the international markets contributed in excess of 10% of total revenue for the three and nine months ended September 30, 2019 and 2018. Long-Lived Assets The following table sets forth long-lived assets by geographic area (in thousands):
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SUPPLEMENTAL CASH FLOW INFORMATION |
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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):
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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying interim condensed consolidated financial statements of the Company are unaudited. These interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) and the applicable rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The December 31, 2018 condensed consolidated balance sheet was derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly the Company's consolidated financial position, results of operations, comprehensive income (loss), and cash flows for the interim periods. All intercompany transactions and balances have been eliminated in consolidation. The interim results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019, or for any other future annual or interim period. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and related notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.
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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, operating and financing lease right-of-use assets and related liabilities, and share-based compensation. |
Concentration of Credit Risk | Concentration of Credit Risk For the three and nine months ended September 30, 2019 and 2018, the Company had no customer that accounted for greater than 10% of total net revenue. The Company had three third-party payment processors that represented approximately 46%, 34%, and 9% of settlements receivable as of September 30, 2019. The same three parties represented approximately 45%, 33%, and 9% of settlements receivable as of December 31, 2018. 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. |
Assets Held for Sale | Assets Held for Sale The Company classifies an asset group (‘asset’) as held for sale in the period that (i) it has approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable and transfer of the asset is expected to qualify for recognition as a completed sale within one year (subject to certain events or circumstances), (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially and subsequently measures a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in general and administrative expenses in the period in which the held for sale criteria are met. Conversely, gains are generally not recognized on the sale of a long-lived asset until the date of sale. Upon designation as an asset held for sale, the Company stops recording depreciation or amortization expense on the asset. The Company assesses the fair value of assets held for sale less any costs to sell at each reporting period until the asset is no longer classified as held for sale. |
New Accounting Policies and Recent Accounting Pronouncements | New Accounting Policies The Company adopted Accounting Standards Codification (ASC) 842, Leases on January 1, 2019, and elected the optional transition method to apply the transition provisions from the effective date of adoption, which requires the Company to report the cumulative effect of the adoption of the standard on the date of adoption with no changes to the prior period balances. Pursuant to the practical expedients, the Company has elected not to reassess: (i) whether expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, or, (iii) initial direct costs for any existing leases. The Company recognized $112.0 million of operating right-of-use lease assets and $135.6 million of operating lease liabilities on its consolidated balance sheet upon adoption of this standard. Additionally, the Company derecognized $149 million related to the build-to-suit asset and liability upon adoption of this standard because the Company is no longer deemed to be the owner of the related asset under construction under the new standard. Refer to Note 19 for further detail. Except for the adoption of ASC 842, there have been no material changes to the Company’s accounting policies during the nine months ended September 30, 2019, as compared to the accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Recent Accounting Pronouncements Recently issued accounting pronouncements not yet adopted In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13,Financial Instruments - Credit Losses, which requires the measurement and recognition of expected credit losses for financial assets held. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available for sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. 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’s preliminary conclusion is that the new guidance will not have a material impact on the balances reported on its consolidated financial statements. The Company has also determined that allowances for credit losses associated with its available for sale debt securities would be immaterial. Upon adoption of this guidance, the Company will expand its disclosures to discuss how it develops its expected credit loss estimates, the methodology applied to estimate the allowance for credit losses, and the factors that influence the Company's estimates. For available for sale debt securities with unrealized losses where the Company concludes that an allowance for credit losses is not necessary, the Company will expand its disclosures of the associated fair value of such securities as well as the basis for conclusions that an allowance for credit losses was not necessary. 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 which it performs as of December 31. 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 does not expect the adoption of this guidance to have a material impact on the consolidated financial statements and related disclosures.
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REVENUE (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of Revenue | The following table presents the Company's revenue disaggregated by revenue source (in thousands):
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Schedule of Deferred Revenue | The deferred revenue balances were as follows (in thousands):
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INVESTMENTS (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term and Long-term Investments | The Company's short-term and long-term investments as of September 30, 2019 are as follows (in thousands):
The Company's short-term and long-term investments as of December 31, 2018 are as follows (in thousands):
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Contractual Maturities of Short-Term and Long-Term Investments | The contractual maturities of the Company's short-term and long-term investments as of September 30, 2019 are as follows (in thousands):
The contractual maturities of the Company's investments within customer funds as of September 30, 2019 are as follows (in thousands):
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CUSTOMER FUNDS (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Underlying Customer Funds | The following table presents the assets underlying customer funds (in thousands):
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Investments within Customer Funds | The Company's investments within customer funds as of December 31, 2018 are as follows (in thousands):
The Company's investments within customer funds as of September 30, 2019 are as follows (in thousands):
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Contractual Maturities of Investments within Customer Funds | The contractual maturities of the Company's short-term and long-term investments as of September 30, 2019 are as follows (in thousands):
The contractual maturities of the Company's investments within customer funds as of September 30, 2019 are as follows (in thousands):
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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) |
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The Company’s financial assets and liabilities that are measured at fair value on a recurring basis are classified as follows (in thousands):
The estimated fair value and carrying value of loans held for sale is as follows (in thousands):
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PROPERTY AND EQUIPMENT, NET (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment | The following is a summary of property and equipment, less accumulated depreciation and amortization (in thousands):
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ACQUISITIONS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets Acquired and Liabilities Assumed | 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).
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ASSETS AND LIABILITIES HELD FOR SALE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Values of the Assets and Liabilities Held for Sale | The following table summarizes the carrying values of the assets and liabilities classified as held for sale as of September 30, 2019 (in thousands):
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GOODWILL (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||
Schedule of Change in Carrying Value of Goodwill | The change in carrying value of goodwill in the period was as follows (in thousands):
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ACQUIRED INTANGIBLE ASSETS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite Lived Intangible Assets | The changes to the carrying value of intangible assets were as follows (in thousands):
The following table presents the detail of acquired intangible assets as of the periods presented (in thousands):
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Schedule of Future Amortization Expense of Intangible Assets | The total estimated future amortization expense of these intangible assets as of September 30, 2019 is as follows (in thousands):
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OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT) (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Current Assets | The following table presents the detail of other current assets (in thousands):
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Schedule of Accrued Expenses | The following table presents the detail of accrued expenses (in thousands):
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Schedule of Other Current Liabilities | The following table presents the detail of other current liabilities (in thousands):
(i) Square Capital payable represents unpaid amounts arising from the purchase of loans or loan repayments collected on behalf of third parties. (ii) 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) (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Non-Current Assets | The following table presents the detail of other non-current assets (in thousands):
(i) This balance represents the Company's investment in Class B common shares of Eventbrite, Inc. (Eventbrite). The investment is carried at fair value with changes in fair value being recorded on the consolidated statement of operations. During the three and nine months ended September 30, 2019, the Company recorded a gain of $2.5 million and a loss of $16.5 million, respectively, to other expense (income), net on the consolidated statements of operations arising from revaluation of this investment. |
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Schedule of Other Non-Current Liabilities | The following table presents the detail of other non-current liabilities (in thousands):
(i) 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. (ii) The adoption of ASC 842 on January 1, 2019 resulted in the reclassification of deferred rent as an offset to right-of-use lease assets. |
INDEBTEDNESS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Carrying Amount of Convertible Notes | The net carrying amount of the Notes were as follows (in thousands):
The net carrying amount of the equity component of the 2023 Notes and 2022 Notes were as follows (in thousands):
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Interest Expense on Convertible Notes | The Company recognized interest expense on the Notes as follows (in thousands, except for percentages):
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ACCRUED TRANSACTION LOSSES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
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STOCKHOLDERS' EQUITY (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock Option Activity | A summary of stock option activity for the nine months ended September 30, 2019 is as follows (in thousands, except share and per share data):
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Schedule of Restricted Stock Awards and Restricted Stock Units Activity | Activity related to RSAs and RSUs during the nine months ended September 30, 2019 is set forth below:
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Schedule of Fair Value Assumptions for Options | The fair value of stock options granted was estimated using the following weighted-average assumptions:
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Summary of the Effect of Share-Based Compensation on the Condensed Consolidated Statements of Operations | The following table summarizes the effects of share-based compensation on the Company's condensed consolidated statements of operations (in thousands):
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NET INCOME (LOSS) PER SHARE (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted Net Loss Per Share | The following table presents the calculation of basic and diluted net income (loss) per share (in thousands, except per share data):
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Schedule of Antidilutive Securities Excluded from Calculation of Diluted Net Income (Loss) Per Share | The following potential common shares were excluded from the calculation of diluted net income (loss) per share because their effect would have been anti-dilutive for the periods presented (in thousands):
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COMMITMENTS AND CONTINGENCIES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Lease Expense Components and Other Information Related to Leases | The components of lease expense were as follows (in thousands):
For the periods presented, costs associated with short-term leases were not material. Other information related to leases was as follows:
Cash flows related to leases were as follows (in thousands):
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Future Minimum Lease Payments under Non-Cancelable Operating Leases | Future minimum lease payments under non-cancelable operating leases (with initial lease terms in excess of one year) and future minimum finance lease payments as of September 30, 2019 are as follows (in thousands):
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Future Minimum Finance Lease Payments | Future minimum lease payments under non-cancelable operating leases (with initial lease terms in excess of one year) and future minimum finance lease payments as of September 30, 2019 are as follows (in thousands):
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SEGMENT AND GEOGRAPHICAL INFORMATION (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue by Geographic Area | Revenue by geography is based on the billing addresses of the sellers or customers. The following table sets forth revenue by geographic area (in thousands):
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Long-lived Assets by Geographic Area | The following table sets forth long-lived assets by geographic area (in thousands):
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SUPPLEMENTAL CASH FLOW INFORMATION (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow, Supplemental Disclosures | The supplemental disclosures of cash flow information consist of the following (in thousands):
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REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Transaction-based revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | $ 816,622 | $ 655,384 | $ 2,248,894 | $ 1,803,649 |
Subscription and services-based revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 239,895 | 141,752 | 645,588 | 330,637 |
Revenues from other sources | 39,906 | 24,451 | 104,453 | 66,952 |
Hardware revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 21,766 | 17,558 | 62,238 | 50,337 |
Bitcoin revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | $ 148,285 | $ 42,963 | $ 338,898 | $ 114,074 |
REVENUE - Deferred Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Jun. 30, 2019 |
Dec. 31, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Deferred revenue | $ 45,263 | $ 33,614 | $ 45,263 | $ 33,614 | $ 44,812 | $ 36,451 | $ 27,155 | $ 1,590 |
Deferred revenue arising from business combination | 0 | 22,800 | 0 | 22,800 | ||||
Revenue recognized in the period from amounts included in deferred revenue at the beginning of the period | $ 12,656 | $ 10,165 | $ 28,280 | $ 1,539 | ||||
Balances without adoption of ASC 606 | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Deferred revenue | 44,812 | 36,451 | 27,155 | 5,893 | ||||
Accounting Standards Update 2014-09 | Effect of change | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Deferred revenue | $ 0 | $ 0 | $ 0 | $ (4,303) |
INVESTMENTS - Contractual Maturities of Short-Term and Long-Term Investments (Details) $ in Thousands |
Sep. 30, 2019
USD ($)
|
---|---|
Amortized Cost | |
Due in one year or less | $ 557,380 |
Due in one to five years | 564,889 |
Amortized Cost | 1,122,269 |
Fair Value | |
Due in one year or less | 557,656 |
Due in one to five years | 564,508 |
Fair Value | $ 1,122,164 |
CUSTOMER FUNDS - Assets Underlying Customer Funds (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Securities, Available-for-sale [Line Items] | ||
Customer funds | $ 660,599 | $ 334,017 |
U.S. agency securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Customer funds | 1,654 | 27,291 |
U.S. government securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Customer funds | 222,172 | 72,671 |
Cash | ||
Debt Securities, Available-for-sale [Line Items] | ||
Customer funds | 407,719 | 158,697 |
Cash Equivalents | Money market funds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Customer funds | 388 | 18 |
Cash Equivalents | U.S. agency securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Customer funds | 21,667 | 39,991 |
Cash Equivalents | U.S. government securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Customer funds | $ 6,999 | $ 35,349 |
CUSTOMER FUNDS - Investments within Customer Funds (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 1,122,269 | |
Fair Value | 1,122,164 | |
Customer funds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 223,850 | $ 99,955 |
Gross Unrealized Gains | 39 | 14 |
Gross Unrealized Losses | (63) | (7) |
Fair Value | 223,826 | 99,962 |
Customer funds | U.S. agency securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 1,657 | 27,293 |
Gross Unrealized Gains | 0 | 2 |
Gross Unrealized Losses | (3) | (4) |
Fair Value | 1,654 | 27,291 |
Customer funds | U.S. government securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 222,193 | 72,662 |
Gross Unrealized Gains | 39 | 12 |
Gross Unrealized Losses | (60) | (3) |
Fair Value | $ 222,172 | $ 72,671 |
CUSTOMER FUNDS - Contractual Maturities of Investments within Customer Funds (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Amortized Cost | ||
Due in one year or less | $ 557,380 | |
Amortized Cost | 1,122,269 | |
Fair Value | ||
Due in one year or less | 557,656 | |
Fair Value | 1,122,164 | |
Customer funds | ||
Amortized Cost | ||
Due in one year or less | 223,850 | |
Amortized Cost | 223,850 | $ 99,955 |
Fair Value | ||
Due in one year or less | 223,826 | |
Fair Value | $ 223,826 | $ 99,962 |
FAIR VALUE OF FINANCIAL INSTRUMENTS - Fair Value of Loans Held for Sale (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
|
Carrying Value | Level 3 | Fair Value, Measurements, Recurring | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Loans held for sale | $ 120,776 | $ 120,776 | $ 89,974 | ||
Fair Value (Level 3) | Level 3 | Fair Value, Measurements, Recurring | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Loans held for sale | 126,218 | 126,218 | $ 93,064 | ||
Loans Receivable Held-For-Sale | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Excess amortized cost over fair value of loans | $ 5,300 | $ 3,300 | $ 18,400 | $ 9,000 |
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
|
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 300,384 | $ 300,384 | $ 267,311 | ||
Less: Accumulated depreciation and amortization | (166,350) | (166,350) | (124,909) | ||
Property and equipment, net | 134,034 | 134,034 | 142,402 | ||
Depreciation and amortization expense | 15,300 | $ 11,700 | 45,600 | $ 29,200 | |
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 108,980 | 108,980 | 107,611 | ||
Computer equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 91,464 | 91,464 | 80,093 | ||
Capitalized software | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 76,656 | 76,656 | 58,908 | ||
Office furniture and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 23,284 | $ 23,284 | $ 20,699 |
ACQUISITIONS - Narrative (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
May 31, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Business Acquisition [Line Items] | |||
Payments to acquire businesses, net of cash acquired | $ 20,372 | $ 112,399 | |
Weebly, Inc. | |||
Business Acquisition [Line Items] | |||
Percent of outstanding shares acquired | 100.00% | ||
Cash consideration | $ 132,432 | ||
Equity consideration (in shares) | 2,418,271 | ||
Equity consideration fair value | $ 140,107 | ||
Payment to settle outstanding vested and unvested employee options | 17,700 | ||
Post-combination compensation expense | $ 2,600 | ||
Goodwill adjustment to purchase price allocation | 3,700 | ||
Tax liabilities adjustment to purchase price allocation | 4,700 | ||
Cash withheld for indemnification | $ 19,400 | ||
Shares withheld for indemnification (in shares) | 363,266 | ||
Series of Individually Immaterial Business Acquisitions | |||
Business Acquisition [Line Items] | |||
Payments to acquire businesses, net of cash acquired | $ 20,400 |
ASSETS AND LIABILITIES HELD FOR SALE - Carrying Values of Assets and Liabilities Held for Sale (Details) - Caviar Business - Disposal Group, Held-for-sale, Not Discontinued Operations $ in Thousands |
Sep. 30, 2019
USD ($)
|
---|---|
Assets held for sale | |
Intangible assets | $ 7,582 |
Goodwill | 4,186 |
Property and equipment, net | 1,098 |
Operating lease right-of-use assets | 791 |
Total assets held for sale, included within other assets | 13,657 |
Liabilities held for sale | |
Operating lease liabilities, current | 754 |
Net assets held for sale | $ 12,903 |
GOODWILL (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | $ 261,705,000 | |||
Acquisitions | 10,832,000 | |||
Transfer to assets held for sale | (4,186,000) | |||
Other adjustments | (2,377,000) | |||
Goodwill, ending balance | $ 265,974,000 | 265,974,000 | ||
Goodwill, impairment charges | $ 0 | $ 0 | $ 0 | $ 0 |
ACQUIRED INTANGIBLE ASSETS - Schedule of Acquired Intangible Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Jun. 30, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|---|---|
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Cost | $ 115,274 | $ 116,633 | ||||
Accumulated Amortization | (42,481) | (39,531) | ||||
Net | 72,793 | $ 84,216 | 77,102 | $ 81,130 | $ 85,514 | $ 14,334 |
Technology assets | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Cost | 54,630 | 45,978 | ||||
Accumulated Amortization | (30,682) | (28,420) | ||||
Net | 23,948 | 17,558 | ||||
Customer assets | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Cost | 44,045 | 57,109 | ||||
Accumulated Amortization | (6,089) | (8,068) | ||||
Net | 37,956 | 49,041 | ||||
Trade name | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Cost | 11,300 | 11,300 | ||||
Accumulated Amortization | (3,767) | (1,648) | ||||
Net | 7,533 | 9,652 | ||||
Other | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Cost | 5,299 | 2,246 | ||||
Accumulated Amortization | (1,943) | (1,395) | ||||
Net | $ 3,356 | $ 851 |
ACQUIRED INTANGIBLE ASSETS - Narrative (Details) |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Technology assets | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Amortization period | 5 years |
Customer assets | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Amortization period | 12 years |
Trade name | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Amortization period | 4 years |
ACQUIRED INTANGIBLE ASSETS - Change in Carrying Value of Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Finite-lived Intangible Assets [Roll Forward] | ||||
Acquired intangible assets, net, beginning of the period | $ 84,216 | $ 85,514 | $ 77,102 | $ 14,334 |
Acquisitions | 0 | 0 | 14,559 | 75,871 |
Amortization expense | (3,841) | (4,384) | (11,286) | (9,075) |
Transfer to assets held for sale | (7,582) | 0 | (7,582) | 0 |
Acquired intangible assets, net, end of the period | $ 72,793 | $ 81,130 | $ 72,793 | $ 81,130 |
ACQUIRED INTANGIBLE ASSETS - Future Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Jun. 30, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||
2019 (remaining 3 months) | $ 3,714 | |||||
2020 | 12,800 | |||||
2021 | 11,829 | |||||
2022 | 10,134 | |||||
2023 | 8,917 | |||||
Thereafter | 25,399 | |||||
Net | $ 72,793 | $ 84,216 | $ 77,102 | $ 81,130 | $ 85,514 | $ 14,334 |
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT) - Other Current Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Inventory, net | $ 44,690 | $ 28,627 |
Processing costs receivable | 63,652 | 46,102 |
Prepaid expenses | 17,341 | 21,782 |
Accounts receivable, net | 37,564 | 22,393 |
Assets held for sale | 13,657 | 0 |
Other | 38,902 | 46,062 |
Total | $ 215,806 | $ 164,966 |
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT) - Accrued Expenses (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued facilities expenses | $ 21,302 | $ 13,040 |
Accrued payroll | 21,313 | 9,612 |
Accrued advertising and other marketing | 20,070 | 12,201 |
Processing costs payable | 13,199 | 12,683 |
Accrued non income tax liabilities | 8,383 | 9,503 |
Other accrued liabilities | 39,738 | 25,315 |
Total | $ 124,005 | $ 82,354 |
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT) - Other Current Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts payable | $ 37,156 | $ 36,416 |
Deferred revenue, current | 39,025 | 31,474 |
Square Capital payable | 5,851 | 6,092 |
Square Payroll payable | 13,304 | 7,534 |
Other | 12,731 | 17,637 |
Total | $ 108,067 | $ 99,153 |
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (NON-CURRENT) - Other Non-Current Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Marketable equity investment | $ 28,875 | $ 28,875 | $ 45,342 | |
Non-current lease prepayments | 34,199 | 34,199 | 0 | |
Other | 18,252 | 18,252 | 13,051 | |
Total | 81,326 | 81,326 | $ 58,393 | |
Gain (loss) on equity investment | $ 2,500 | $ (16,467) | $ 36,908 |
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (NON-CURRENT) - Other Non-Current Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Statutory liabilities | $ 51,623 | $ 54,748 |
Deferred rent, non-current | 0 | 23,003 |
Deferred revenue, non-current | 6,238 | 4,977 |
Other | 12,622 | 10,558 |
Total | $ 70,483 | $ 93,286 |
INDEBTEDNESS - Revolving Credit Facility Narrative (Details) - Revolving Credit Facility - Line of Credit - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Nov. 30, 2015 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 375,000,000.0 | ||||
Administrative agent fee | $ 100,000 | ||||
Unused commitment fee percentage | 0.15% | ||||
Amounts drawn to date | $ 0 | $ 0 | |||
Remaining borrowing capacity | 375,000,000.0 | 375,000,000.0 | |||
Unused commitment fees | $ 100,000 | $ 400,000 | $ 100,000 | $ 400,000 | |
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% |
INDEBTEDNESS - Net Carrying Amount of Convertible Notes (Details) - Convertible Debt - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
May 25, 2018 |
Mar. 06, 2017 |
---|---|---|---|---|
Debt Instrument [Line Items] | ||||
Principal outstanding | $ 1,074,226 | $ 1,074,228 | ||
Unamortized debt discount | (139,332) | (166,493) | ||
Unamortized debt issuance costs | (6,025) | (8,040) | ||
Net carrying value | 928,869 | 899,695 | ||
2023 Notes | ||||
Debt Instrument [Line Items] | ||||
Principal outstanding | 862,500 | 862,500 | ||
Unamortized debt discount | (117,932) | (138,924) | ||
Unamortized debt issuance costs | (3,647) | (5,054) | $ (5,600) | |
Net carrying value | 740,921 | 718,522 | ||
2022 Notes | ||||
Debt Instrument [Line Items] | ||||
Principal outstanding | 211,726 | 211,728 | ||
Unamortized debt discount | (21,400) | (27,569) | ||
Unamortized debt issuance costs | (2,378) | (2,986) | $ (9,400) | |
Net carrying value | $ 187,948 | $ 181,173 |
INDEBTEDNESS - Carrying Amount of Equity Component of Convertible Notes (Details) - Convertible Debt - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
May 25, 2018 |
Mar. 06, 2017 |
---|---|---|---|---|
Debt Instrument [Line Items] | ||||
Amount allocated to conversion option | $ 196,731 | $ 196,731 | ||
Less: allocated issuance costs | (2,339) | (2,339) | ||
Equity component, net | 194,392 | 194,392 | ||
2023 Notes | ||||
Debt Instrument [Line Items] | ||||
Amount allocated to conversion option | 155,250 | 155,250 | ||
Less: allocated issuance costs | (1,231) | (1,231) | ||
Equity component, net | 154,019 | 154,019 | $ 155,300 | |
2022 Notes | ||||
Debt Instrument [Line Items] | ||||
Amount allocated to conversion option | 41,481 | 41,481 | ||
Less: allocated issuance costs | (1,108) | (1,108) | ||
Equity component, net | $ 40,373 | $ 40,373 | $ 86,200 |
INDEBTEDNESS - Interest Expense on Convertible Notes (Details) - Convertible Debt - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
May 25, 2018 |
Mar. 06, 2017 |
|
Debt Instrument [Line Items] | ||||||
Contractual interest expense | $ 1,277 | $ 1,469 | $ 3,831 | $ 2,732 | ||
Amortization of debt discount and issuance costs | 9,843 | 11,627 | 29,176 | 22,850 | ||
Total | $ 11,120 | $ 13,096 | $ 33,007 | $ 25,582 | ||
2023 Notes | ||||||
Debt Instrument [Line Items] | ||||||
Effective interest rate of the liability component | 4.69% | 4.69% | 4.69% | |||
2022 Notes | ||||||
Debt Instrument [Line Items] | ||||||
Effective interest rate of the liability component | 5.34% | 5.34% | 5.34% |
ACCRUED TRANSACTION LOSSES (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Loss Contingency Accrual | ||||
Accrued transaction losses, beginning of the period | $ 33,682 | |||
Provision for transaction losses | 94,827 | $ 63,603 | ||
Accrued transaction losses, end of the period | $ 37,419 | 37,419 | ||
Transaction Losses | ||||
Loss Contingency Accrual | ||||
Accrued transaction losses, beginning of the period | 39,630 | $ 29,207 | 33,682 | 26,893 |
Provision for transaction losses | 18,225 | 20,449 | 60,223 | 48,794 |
Charge-offs to accrued transaction losses | (20,436) | (14,324) | (56,486) | (40,355) |
Accrued transaction losses, end of the period | $ 37,419 | $ 35,332 | $ 37,419 | $ 35,332 |
INCOME TAXES (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 2,606 | $ 1,066 | $ 2,259 | $ 1,845 |
Effective tax rate | 8.10% | 5.10% | (17.10%) | (22.00%) |
STOCKHOLDERS' EQUITY - Restricted Stock Awards and Restricted Stock Units Activity (Details) - RSAs and RSUs |
9 Months Ended |
---|---|
Sep. 30, 2019
$ / shares
shares
| |
Number of shares | |
Beginning balance (in shares) | shares | 17,934,728 |
Granted (in shares) | shares | 5,735,224 |
Vested (in shares) | shares | (6,016,950) |
Forfeited (in shares) | shares | (1,727,904) |
Ending balance (in shares) | shares | 15,925,098 |
Weighted Average Grant Date Fair Value | |
Beginning balance (in USD per share) | $ / shares | $ 31.34 |
Granted (in USD per share) | $ / shares | 73.29 |
Vested (in USD per share) | $ / shares | 29.05 |
Forfeited (in USD per share) | $ / shares | 35.90 |
Ending balance (in USD per share) | $ / shares | $ 46.82 |
STOCKHOLDERS' EQUITY - Stock Option Fair Value Assumptions (Details) - Stock options |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Dividend yield | 0.00% | 0.00% |
Risk-free interest rate | 2.48% | 2.92% |
Expected volatility | 39.52% | 30.87% |
Expected term (years) | 6 years 18 days | 6 years 2 months 8 days |
STOCKHOLDERS' EQUITY - Effects of Share-Based Compensation on Statements of Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation expense | $ 77,426 | $ 58,913 | $ 217,980 | $ 157,856 |
Cost of revenue | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation expense | 38 | 18 | 88 | 79 |
Product development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation expense | 56,321 | 39,525 | 155,114 | 103,813 |
Sales and marketing | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation expense | 6,269 | 6,108 | 20,304 | 16,703 |
General and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation expense | $ 14,798 | $ 13,262 | $ 42,474 | $ 37,261 |
NET INCOME (LOSS) PER SHARE - Calculation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Earnings Per Share [Abstract] | ||||||||
Net income (loss) | $ 29,397 | $ (6,740) | $ (38,151) | $ 19,643 | $ (5,906) | $ (23,986) | $ (15,494) | $ (10,249) |
Basic shares: | ||||||||
Weighted-average common shares outstanding (in shares) | 427,906 | 410,095 | 423,957 | 403,577 | ||||
Weighted-average unvested shares (in shares) | (782) | (405) | (718) | (597) | ||||
Weighted-average shares used to compute basic net loss per share (in shares) | 427,124 | 409,690 | 423,239 | 402,980 | ||||
Diluted shares: | ||||||||
Stock options and restricted stock units | 28,549 | 47,175 | 0 | 0 | ||||
Convertible senior notes | 0 | 6,409 | 0 | 0 | ||||
Common stock warrants | 10,372 | 11,422 | 0 | 0 | ||||
Employee stock purchase plan | 54 | 219 | 0 | 0 | ||||
Weighted-average shares used to compute diluted income (loss) per share (in shares) | 466,099 | 474,915 | 423,239 | 402,980 | ||||
Net income (loss) per share: | ||||||||
Basic (in USD per share) | $ 0.07 | $ 0.05 | $ (0.04) | $ (0.03) | ||||
Diluted (in USD per share) | $ 0.06 | $ 0.04 | $ (0.04) | $ (0.03) |
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Jul. 31, 2019 |
---|---|---|
Related Party Transaction [Line Items] | ||
Lease executed but not yet commenced, term | 15 years 6 months | |
Lease executed but not yet commenced | $ 344,202 | $ 42,700 |
Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
Lease executed but not yet commenced, term | 15 years 6 months | |
Lease executed but not yet commenced | $ 42,700 |
COMMITMENTS AND CONTINGENCIES - Schedule of Lease Expense Components (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2019 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Fixed operating lease costs | $ 7,449 | $ 21,626 |
Variable operating lease costs | 1,646 | 3,871 |
Sublease income | (1,468) | (1,570) |
Finance lease costs | ||
Amortization of finance right-of-use assets | 1,284 | 3,861 |
Interest on finance lease liabilities | 0 | 0 |
Total lease costs | $ 8,911 | $ 27,788 |
COMMITMENTS AND CONTINGENCIES - Other Information Related to Leases (Details) |
Sep. 30, 2019 |
---|---|
Weighted Average Remaining Lease Term: | |
Operating leases | 4 years 6 months |
Finance leases | 27 days |
Weighted Average Discount Rate: | |
Operating leases | 4.00% |
Finance leases | 0.00% |
COMMITMENTS AND CONTINGENCIES - Cash Flows Related to Leases (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
| |
Cash flows from operating activities: | |
Payments for operating lease liabilities | $ 24,580 |
Cash flows from financing activities: | |
Principal payments on finance lease obligation | 3,860 |
Supplemental Cash Flow Data: | |
Right-of-use assets obtained in exchange for operating lease obligations | $ 31,013 |
COMMITMENTS AND CONTINGENCIES - Schedule of Future Minimum Lease Payments Under Non-Cancelable Operating Leases and Finance Leases (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Jul. 31, 2019 |
---|---|---|
Finance | ||
2019 (remaining 3 months) | $ 1,178 | |
2020 | 2,446 | |
2021 | 0 | |
2022 | 0 | |
2023 | 0 | |
Thereafter | 0 | |
Total | 3,624 | |
Less: amount representing interest | 0 | |
Less: leases executed but not yet commenced | 0 | |
Total | 3,624 | |
Operating | ||
2019 (remaining 3 months) | 5,942 | |
2020 | 40,388 | |
2021 | 59,459 | |
2022 | 61,005 | |
2023 | 54,842 | |
Thereafter | 270,872 | |
Total | 492,508 | |
Less: amount representing interest | 13,245 | |
Less: leases executed but not yet commenced | 344,202 | $ 42,700 |
Lessee, Finance Lease, Lease Incentive Payable And Transfer To Held-For-Sale | 0 | |
Less: lease incentives and transfer to held for sale | 2,825 | |
Total | $ 132,236 |
COMMITMENTS AND CONTINGENCIES - Litigation (Details) - USD ($) |
Sep. 06, 2019 |
Mar. 31, 2018 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Gross receipts tax and payroll expense tax paid | $ 1,300,000 | |
Minimum | ||
Income Tax Examination [Line Items] | ||
Estimate of possible liability for additional taxes, interest and penalties | $ 0 | |
Maximum | ||
Income Tax Examination [Line Items] | ||
Estimate of possible liability for additional taxes, interest and penalties | $ 56,000,000 |
SEGMENT AND GEOGRAPHICAL INFORMATION - Narrative (Details) |
9 Months Ended |
---|---|
Sep. 30, 2019
segment
| |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Number of reportable segments | 1 |
SEGMENT AND GEOGRAPHICAL INFORMATION - Revenue by Geographic Area (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | $ 1,266,474 | $ 882,108 | $ 3,400,071 | $ 2,365,649 |
United States | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 1,200,488 | 838,149 | 3,233,432 | 2,255,657 |
International | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | $ 65,986 | $ 43,959 | $ 166,639 | $ 109,992 |
SEGMENT AND GEOGRAPHICAL INFORMATION - Long-lived Assets by Geographic Area (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 581,471 | $ 481,209 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 570,273 | 471,970 |
International | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 11,198 | $ 9,239 |
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Supplemental Cash Flow Data: | ||
Cash paid for interest | $ 3,377 | $ 1,945 |
Cash paid for income taxes | 2,266 | 1,265 |
Right-of-use assets obtained in exchange for operating lease obligations | 31,013 | |
Supplemental disclosures of non-cash investing and financing activities: | ||
Change in purchases of property and equipment in accounts payable and accrued expenses | 11,402 | 11,004 |
Unpaid business combination purchase price | 8,411 | 3,995 |
Fair value of common stock issued related to business combination | 0 | (140,107) |
Recovery of common stock in connection with indemnification settlement agreement | 789 | 2,745 |
Fair value of common stock issued to settle the conversion of senior notes, due 2022 | 0 | (189,916) |
Fair value of shares received to settle senior note hedges, due 2022 | $ 0 | $ 189,916 |
Label | Element | Value |
---|---|---|
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (4,586,000) |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (4,586,000) |