APX GROUP HOLDINGS, INC., 10-Q filed on 8/7/2019
Quarterly Report
v3.19.2
Document and Entity Information - shares
 6 Months Ended
Jun. 30, 2019
Aug. 06, 2019
Document And Entity Information [Abstract]    
Document Type 10-Q  
Entity Registrant Name APX Group Holdings, Inc.  
Entity Common Stock, Shares Outstanding   100
Amendment Flag false  
Document Period End Date Jun. 30, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q2  
Entity Central Index Key 0001584423  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Current Reporting Status No  
Entity Shell Company false  
v3.19.2
Condensed Consolidated Balance Sheets (unaudited) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Current Assets:    
Cash and cash equivalents $ 3,133 $ 12,773
Accounts and notes receivable, net 71,390 48,724
Inventories 139,350 50,552
Prepaid expenses and other current assets 16,988 11,449
Total current assets 230,861 123,498
Property, plant and equipment, net 61,600 73,401
Capitalized contract costs, net 1,170,687 1,115,775
Deferred financing costs, net 1,572 2,058
Intangible assets, net 217,778 255,085
Goodwill 836,289 834,855
Operating lease right-of-use assets 71,557 0
Long-term notes receivables and other assets, net 122,631 119,819
Total assets 2,712,975 2,524,491
Current Liabilities:    
Accounts payable 143,072 66,646
Accrued payroll and commissions 69,548 65,479
Accrued expenses and other current liabilities 138,049 136,715
Deferred revenue 220,105 186,953
Current portion of operating lease liabilities 12,058 0
Current portion of finance lease liabilities 6,984 7,743
Total current liabilities 589,816 463,536
Notes payable, net 2,948,549 2,961,947
Notes payable, net - related party 82,200 75,148
Revolving credit facility 134,000 0
Finance lease liabilities, net of current portion 3,397 5,571
Deferred revenue, net of current portion 383,266 323,585
Operating lease liabilities 69,975 0
Other long-term obligations 99,736 90,209
Deferred income tax liabilities 1,139 1,096
Total liabilities 4,312,078 3,921,092
Commitments and contingencies (See Note 11)
Stockholders’ deficit:    
Common stock, $0.01 par value, 100 shares authorized; 100 shares issued and outstanding 0 0
Additional paid-in capital 737,725 736,333
Accumulated deficit (2,309,065) (2,104,097)
Accumulated other comprehensive loss (27,763) (28,837)
Total stockholders’ deficit (1,599,103) (1,396,601)
Total liabilities and stockholders’ deficit $ 2,712,975 $ 2,524,491
v3.19.2
Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - $ / shares
Jun. 30, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Common stock, par value (in USD per share) $ 0.01 $ 0.01
Common stock, authorized (in shares) 100 100
Common stock, issued (in shares) 100 100
Common stock, outstanding (in shares) 100 100
v3.19.2
Condensed Consolidated Statements of Operations (unaudited) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Revenues:        
Recurring and other revenue $ 281,053 $ 254,967 $ 557,302 $ 501,564
Costs and expenses:        
Operating expenses (exclusive of depreciation and amortization shown separately below) 92,013 89,321 175,089 173,081
Selling expenses (exclusive of amortization of deferred commissions of $44,756, $40,167, $88,542 and $78,470, respectively, which are included in depreciation and amortization shown separately below) 57,926 65,659 101,517 124,902
General and administrative expenses 47,439 49,206 93,778 100,173
Depreciation and amortization 134,504 126,873 265,725 251,131
Restructuring expenses 0 4,141 0 4,141
Total costs and expenses 331,882 335,200 636,109 653,428
(Loss) income from operations (50,829) (80,233) (78,807) (151,864)
Other expenses (income):        
Interest expense 65,817 60,327 129,565 119,117
Interest income 0 0 (23) (31)
Other (income) expenses, net (198) 4,731 (2,444) (40,509)
(Loss) income before income tax expenses (116,448) (145,291) (205,905) (230,441)
Income tax benefit (552) (906) (853) (1,339)
Net (loss) income $ (115,896) $ (144,385) $ (205,052) $ (229,102)
v3.19.2
Condensed Consolidated Statements of Operations(unaudited) (Parenthetical) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Income Statement [Abstract]        
Amortization of deferred commissions $ 44,756 $ 40,167 $ 88,542 $ 78,470
v3.19.2
Condensed Consolidated Statements of Comprehensive Loss (unaudited) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Statement of Comprehensive Income [Abstract]        
Net (loss) income $ (115,896) $ (144,385) $ (205,052) $ (229,102)
Other comprehensive income (loss), net of tax effects:        
Foreign currency translation adjustment 504 (417) 1,074 (1,076)
Total other comprehensive income (loss) 504 (417) 1,074 (1,076)
Comprehensive (loss) income $ (115,392) $ (144,802) $ (203,978) $ (230,178)
v3.19.2
Condensed Consolidated Statements of Changes in Equity (Deficit) Statement - USD ($)
$ in Thousands
Total
Common Stock
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive loss
Stockholders' equity, beginning balance at Dec. 31, 2017   $ 0 $ 732,346 $ (1,358,571) $ (27,301)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Stock-based compensation     542    
Return of capital to Vivint Smart Home, Inc.     (2,049)    
Net Loss       (229,102)  
Foreign currency translation adjustment $ (1,076)       (1,076)
Stockholders' equity, ending balance at Jun. 30, 2018 (1,167,783) 0 730,839 (1,870,925) (27,697)
Stockholders' equity, beginning balance at Mar. 31, 2018   0 731,585 (1,726,540) (27,280)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Stock-based compensation     337    
Return of capital to Vivint Smart Home, Inc.     (1,083)    
Net Loss       (144,385)  
Foreign currency translation adjustment (417)       (417)
Stockholders' equity, ending balance at Jun. 30, 2018 (1,167,783) 0 730,839 (1,870,925) (27,697)
Stockholders' equity, beginning balance at Dec. 31, 2018 (1,396,601) 0 736,333 (2,104,097) (28,837)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Stock-based compensation     1,834    
Return of capital to Vivint Smart Home, Inc.     (442)    
Net Loss       (205,052)  
Foreign currency translation adjustment 1,074       1,074
Stockholders' equity, ending balance at Jun. 30, 2019 (1,599,103) 0 737,725 (2,309,065) (27,763)
Stockholders' equity, beginning balance at Mar. 31, 2019   0 737,072 (2,193,169) (28,267)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Stock-based compensation     977    
Return of capital to Vivint Smart Home, Inc.     (324)    
Net Loss       (115,896)  
Foreign currency translation adjustment 504       504
Stockholders' equity, ending balance at Jun. 30, 2019 $ (1,599,103) $ 0 $ 737,725 $ (2,309,065) $ (27,763)
v3.19.2
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Cash flows from operating activities:    
Net (loss) income $ (205,052) $ (229,102)
Adjustments to reconcile net loss to net cash used in operating activities:    
Amortization of capitalized contract costs 212,276 193,302
Amortization of customer relationships 37,255 42,134
Depreciation and amortization of property, plant and equipment and other intangible assets 16,194 15,695
Amortization of deferred financing costs and bond premiums and discounts 2,339 2,671
Gain on fair value changes of equity securities (2,254) (740)
Loss (gain) on sale or disposal of assets 441 (50,193)
Loss on early extinguishment of debt 806 0
Stock-based compensation 1,834 542
Provision for doubtful accounts 11,636 8,409
Changes in operating assets and liabilities:    
Accounts and notes receivable, net (29,845) (21,069)
Inventories (88,674) 11,641
Prepaid expenses and other current assets (5,534) (1,753)
Capitalized contract costs, net (264,554) (266,251)
Long-term notes receivables, other assets, net and right-of-use assets (1,938) (20,359)
Accounts payable 66,534 4,214
Accrued payroll and commissions, accrued expenses, other current and long-term liabilities, and current and long-term operating lease liabilities 26,279 65,525
Deferred revenue 91,719 114,345
Net cash used in operating activities (130,990) (130,989)
Cash flows from investing activities:    
Capital expenditures (4,653) (12,193)
Proceeds from the sale of intangible assets 0 53,693
Proceeds from the sale of capital assets 19 225
Acquisition of intangible assets (668) (1,022)
Proceeds from sales of equity securities 5,430 0
Net cash provided by investing activities 128 40,703
Cash flows from financing activities:    
Proceeds from notes payable 225,000 0
Repayment of notes payable (229,050) 0
Borrowings from revolving credit facility 160,000 179,000
Repayments on revolving credit facility (26,000) (79,000)
Repayments of finance lease obligations (4,263) (6,955)
Deferred financing costs (4,036) 0
Return of capital (441) (2,049)
Net cash provided by financing activities 121,210 90,996
Effect of exchange rate changes on cash 12 (62)
Net (decrease) increase in cash and cash equivalents (9,640) 648
Cash and cash equivalents:    
Beginning of period 12,773 3,872
End of period 3,133 4,520
Supplemental non-cash investing and financing activities:    
Finance lease additions 1,567 4,137
Intangible assets acquisitions included within accounts payable, accrued expenses and other current liabilities and other long-term obligations 2,186 513
Capital expenditures included within accounts payable $ 1,853 $ 2,482
v3.19.2
Basis of Presentation and Significant Accounting Policies
 6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
Basis of Presentation and Significant Accounting Policies
Basis of Presentation and Significant Accounting Policies
Unaudited Interim Financial Statements
The accompanying interim unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared by APX Group Holdings, Inc. and subsidiaries (the “Company”) without audit. The accompanying consolidated financial statements include the accounts of APX Group Holdings, Inc. and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The information as of December 31, 2018 included in the unaudited condensed consolidated balance sheets was derived from the Company’s audited consolidated financial statements. The unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q were prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments (all of which are considered of a normal recurring nature) considered necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods and dates presented. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.
These unaudited condensed consolidated financial statements and notes should be read in conjunction with the Company’s audited consolidated financial statements and related notes as set forth in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission (“SEC”) on March 8, 2019, which is available on the SEC’s website at www.sec.gov.
Basis of Presentation
The unaudited condensed consolidated financial statements of the Company are presented for APX Group Holdings, Inc. (“Holdings") and its wholly-owned subsidiaries. The Company has prepared the accompanying unaudited condensed consolidated financial statements pursuant to GAAP. Preparing financial statements requires the Company to make estimates and assumptions that affect the amounts that are reported in the consolidated financial statements and accompanying disclosures. Although these estimates are based on the Company’s best knowledge of current events and actions that the Company may undertake in the future, actual results may be different from the Company’s estimates. The results of operations presented herein are not necessarily indicative of the Company’s results for any future period.
Vivint Flex Pay
The Vivint Flex Pay plan (“Vivint Flex Pay”) became the Company's primary sales model beginning in March 2017. Under Vivint Flex Pay, customers pay separately for the products (including control panel, security peripheral equipment, smart home equipment, and related installation) (“Products”) and Vivint's smart home and security services (“Services”). The customer has the following three ways to pay for the Products: (1) qualified customers in the United States may finance the purchase of Products through third-party financing providers (“Consumer Financing Program”), (2) the Company offers to some customers not eligible for the Consumer Financing Program, but who qualify under the Company's underwriting criteria, the option to enter into a retail installment contract (“RIC”) directly with Vivint, or (3) customers may purchase the Products at the outset of the service contract by check, automatic clearing house payments (“ACH”), credit or debit card.
Although customers pay separately for Products and Services under the Vivint Flex Pay plan, the Company has determined that the sale of Products and Services are one single performance obligation. As a result, all forms of transactions under Vivint Flex Pay create deferred revenue for the gross amount of Products sold. Gross deferred revenues are reduced by imputed interest on the RICs and the present value of expected payments due to the third-party financing provider under the Consumer Financing Program.
Under the Consumer Financing Program, qualified customers are eligible for loans provided by third-party financing providers up to $4,000. The annual percentage rates on these loans range between 0% and 9.99%, and are either installment or revolving loans with a 42 or 60 month term. Loan terms are determined based on the customer's credit quality.
For certain third-party provider loans, the Company pays a monthly fee based on either the average daily outstanding balance of the loans or the number of outstanding loans, depending on the third-party financing provider. Additionally, the Company shares liability for credit losses depending on the credit quality of the customer. Because of the nature of these provisions, the Company records a derivative liability at its fair value when the third-party financing provider originates loans to customers, which reduces the amount of estimated revenue recognized on the provision of the services. The derivative liability is reduced as payments are made by the Company to the third-party financing provider. Subsequent changes to the fair value of the derivative liability are realized through other expenses (income), net in the Condensed Consolidated Statement of Operations. (See Note 8).
For separate third-party loans, the Company receives net proceeds (net of fees and expected losses) for which the Company has no further obligation to the third-party. The Company records these net proceeds to deferred revenue.
Retail Installment Contract Receivables
For subscribers that enter into a RIC to finance the purchase of Products and related installation, the Company records a receivable for the amount financed. The RIC receivables are recorded at their present value, net of the imputed interest discount. At the time of installation, the Company records a long-term note receivable within long-term notes receivables and other assets, net on the condensed consolidated balance sheets for the present value of the receivables that are expected to be collected beyond 12 months of the reporting date. The unbilled receivable amounts that are expected to be collected within 12 months of the reporting date are included as a short-term notes receivable within accounts and notes receivable, net on the condensed consolidated balance sheets. The billed amounts of notes receivables are included in accounts receivable within accounts and notes receivable, net on the condensed consolidated balance sheets.
The Company imputes the interest on the RIC receivable using a risk adjusted market interest rate and records it as an adjustment to deferred revenue and as an adjustment to the face amount of the related receivable. The imputed interest discount considers a number of factors, including collection experience, aging of the remaining RIC receivable portfolios, credit quality of the subscriber base and other qualitative considerations, including macro-economic factors. The imputed interest income is recognized over the term of the RIC contract as recurring and other revenue on the condensed consolidated statement of operations.
When the Company determines that there are RIC receivables that have become uncollectible, it records an adjustment to the imputed interest discount and reduces the related note receivable balance. Account balances are written-off if collection efforts are unsuccessful and future collection is unlikely based on the length of time from the day accounts become past due.
Accounts Receivable
Accounts receivable consists primarily of amounts due from subscribers for recurring monthly monitoring Services and the billed portion of RIC receivables. The accounts receivable are recorded at invoiced amounts and are non-interest bearing and are included within accounts and notes receivable, net on the condensed consolidated balance sheets. Accounts receivable totaled $31.8 million and $16.5 million at June 30, 2019 and December 31, 2018, respectively net of the allowance for doubtful accounts of $6.6 million and $5.6 million at June 30, 2019 and December 31, 2018, respectively. The Company estimates this allowance based on historical collection experience and subscriber attrition rates. When the Company determines that there are accounts receivable that are uncollectible, they are charged off against the allowance for doubtful accounts. The provision for doubtful accounts is included in general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations and totaled $5.7 million and $4.4 million for the three months ended June 30, 2019 and 2018, respectively, and $11.6 million and $8.4 million for the six months ended June 30, 2019 and 2018, respectively.
The changes in the Company’s allowance for accounts receivable were as follows (in thousands):
 
 
Six Months Ended June 30, 2019
 
Twelve Months Ended December 31, 2018
Beginning balance
$
5,594

 
$
5,356

Provision for doubtful accounts
11,636

 
19,405

Write-offs and adjustments
(10,593
)
 
(19,167
)
Balance at end of period
$
6,637

 
$
5,594


Revenue Recognition
The Company offers its customers smart home services combining Products, including a proprietary control panel, door and window sensors, door locks, security cameras and smoke alarms; installation; and a proprietary back-end cloud platform software and Services. These together create an integrated system that allows the Company’s customers to monitor, control and protect their home (“Smart Home Services”). The Company’s customers are buying this integrated system that provides them with these Smart Home Services. The number and type of Products purchased by a customer depends on their desired functionality. Because the Products and Services included in the customer’s contract are integrated and highly interdependent, and because they must work together to deliver the Smart Home Services, the Company has concluded that installed Products, related installation and Services contracted for by the customer are generally not distinct within the context of the contract and, therefore, constitute a single, combined performance obligation. Revenues for this single, combined performance obligation are recognized on a straight-line basis over the customer’s contract term. The Company has determined that certain contracts that do not require a long-term commitment for monitoring services by the customer contain a material right to renew the contract, because the customer does not have to purchase Products upon renewal. Proceeds allocated to the material right are recognized over the period of benefit, which is generally three years.
The majority of the Company’s subscription contracts are between three and five years in length and are non-cancelable. These contracts with customers generally convert into month-to-month agreements at the end of the initial term, and some customer contracts are month-to-month from inception. Payment for recurring monitoring and other Smart Home Services is generally due in advance on a monthly basis.
Sales of Products and other one-time fees such as service fees or installation fees are invoiced to the customer at the time of sale. Revenues for wireless internet service provided by Vivint Wireless Inc. (“Wireless Internet” or “Wireless”) and any Products or Services that are considered separate performance obligations are recognized when those Products or Services are delivered. Taxes collected from customers and remitted to governmental authorities are not included in revenue. Payments received or amounts billed in advance of revenue recognition are reported as deferred revenue.
Deferred Revenue
The Company's deferred revenues primarily consist of amounts for sales (including upfront proceeds) of Smart Home Services. Deferred revenues are recognized over the term of the related performance obligation, which is generally three to five years.
Capitalized Contract Costs
Capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts. These include commissions, other compensation and related costs incurred directly for the origination and installation of new or upgraded customer contracts, as well as the cost of Products installed in the customer home at the commencement or modification of the contract. These costs are deferred and amortized on a straight-line basis over the expected period of benefit that the Company has determined to be five years. Amortization of capitalized contract costs is included in “Depreciation and Amortization” on the consolidated statements of operations. These deferred costs are periodically reviewed for impairment. Contract costs not directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts are expensed as incurred. These costs include those associated with housing, marketing and recruiting, non-direct lead generation costs, certain portions of sales commissions and residuals, overhead and other costs considered not directly and specifically tied to the origination of a particular subscriber.
On the condensed consolidated statement of cash flows, capitalized contract costs are classified as operating activities and reported as “Capitalized contract costs – deferred contract costs” as these assets represent deferred costs associated with subscriber contracts.
Cash and Cash Equivalents
Cash and cash equivalents consists of highly liquid investments with remaining maturities when purchased of three months or less.
Inventories
Inventories, which are comprised of smart home and security system Products and parts, are stated at the lower of cost or net realizable value with cost determined under the first-in, first-out (“FIFO”) method. The Company adjusts the inventory balance based on anticipated obsolescence, usage and historical write-offs.
Property, Plant and Equipment and Long-lived Assets
Property, plant and equipment are stated at cost and depreciated on the straight-line method over the estimated useful lives of the assets or the lease term for assets under finance leases, whichever is shorter. Intangible assets with definite lives are amortized over the remaining estimated economic life of the underlying technology or relationships, which ranges from 2 to 10 years. Definite-lived intangible assets are amortized on the straight-line method over the estimated useful life of the asset or in a pattern in which the economic benefits of the intangible asset are consumed. Amortization expense associated with leased assets is included with depreciation expense. Routine repairs and maintenance are charged to expense as incurred.
The Company reviews long-lived assets, including property, plant and equipment, capitalized contract costs, and definite-lived intangibles for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company considers whether or not indicators of impairment exist on a regular basis and as part of each quarterly and annual financial statement close process. Factors the Company considers in determining whether or not indicators of impairment exist include market factors and patterns of customer attrition. If indicators of impairment are identified, the Company estimates the fair value of the assets. An impairment loss is recognized if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value.
The Company conducts an indefinite-lived intangible impairment analysis annually as of October 1, and as necessary if changes in facts and circumstances indicate that the fair value of the Company’s indefinite-lived intangibles may be less than the carrying amount. When indicators of impairment do not exist and certain accounting criteria are met, the Company is able to evaluate indefinite-lived intangible impairment using a qualitative approach. When necessary, the Company’s quantitative impairment test consists of two steps. The first step requires that the Company compare the estimated fair value of its indefinite-lived intangibles to the carrying value. If the fair value is greater than the carrying value, the intangibles are not considered to be impaired and no further testing is required. If the fair value is less than the carrying value, an impairment loss in an amount equal to the difference is recorded.
During the three and six months ended June 30, 2019 and 2018, no impairments to long-lived assets or intangibles were recorded.
The Company’s depreciation and amortization included in the consolidated statements of operations consisted of the following (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Amortization of capitalized contract costs
$
107,245

 
$
97,937

 
$
212,275

 
$
193,302

Amortization of definite-lived intangibles
20,194

 
22,732

 
40,466

 
45,452

Depreciation of property, plant and equipment
7,065

 
6,204

 
12,984

 
12,377

Total depreciation and amortization
$
134,504

 
$
126,873

 
$
265,725

 
$
251,131


Leases
Effective January 1, 2019 the Company accounts for leases under Topic 842 (see Recently Adopted Accounting Standards below). Under Topic 842, the Company determines if an arrangement is a lease at inception. Lease right-of-use (“ROU”) assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, the Company uses the implicit rate when available. When implicit rates are not available, the Company uses an incremental borrowing rate based on the information available at commencement date. The lease ROU asset also includes any lease payments made and is reduced by lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company does not record lease ROU assets and liabilities for leases with terms of 12 months or less.
Leases are classified as either operating or finance at lease inception. Operating lease assets and liabilities and finance lease liabilities are stated separately on the condensed consolidated balance sheets. Finance lease assets are included in property, plant and equipment, net on the condensed consolidated balance sheets.
The Company has lease agreements with lease and non-lease components. For facility type leases, the Company separates the lease and non-lease components. Generally, the Company accounts for the lease and non-lease components as a single lease component for all other class of leases.
Prior to the adoption of Topic 842, the Company's leases were classified as either operating or capital leases. Capital lease liabilities were stated separately on the condensed consolidated balance sheets and capital lease assets were included in property, plant and equipment, net on the condensed consolidated balance sheets. Operating leases were not recognized in the balance sheet. Capital lease balances are presented on the same lines as finance lease balances for comparative prior periods in the unaudited condensed consolidated financial statements. See Recently Adopted Accounting Standards below and note 12 "Leases" for additional information related to the impact of adopting Topic 842.
Long-term Investments
The Company’s long-term investments are composed of equity securities in certain companies. As of June 30, 2019 and December 31, 2018, the Company's equity investments totaled $0.5 million and $3.9 million, respectively.
Management determines the appropriate fair value measurement of its investments at the time of purchase and reevaluates the fair value measurement at each balance sheet date. Equity securities are classified as either short-term or long-term, based on the nature of each security and its availability for use in current operations. The Company’s equity securities are carried at fair value, with gains and losses reported in other income or loss within the statement of operations.
The Company's equity investments without readily determinable fair values totaled $0.5 million as of June 30, 2019 and December 31, 2018, respectively. The Company performs impairment analyses of its investments without readily determinable fair values when events occur or circumstances change that would, more likely than not, reduce the fair value of the investment below its carrying value. When indicators of impairment do not exist, the Company evaluates impairment using a qualitative approach. Additionally, increases or decreases in the carrying amount resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer are adjusted through the statement of operations as needed.
Deferred Financing Costs
Certain costs incurred in connection with obtaining debt financing are deferred and amortized utilizing the straight-line method, which approximates the effective-interest method, over the life of the related financing. Deferred financing costs associated with obtaining APX Group, Inc.’s (“APX”) revolving credit facility are amortized over the amended maturity dates discussed in Note 3. Deferred financing costs included in the accompanying unaudited condensed consolidated balance sheets within deferred financing costs, net at June 30, 2019 and December 31, 2018 were $1.6 million and $2.1 million, net of accumulated amortization of $10.1 million and $9.6 million, respectively. Deferred financing costs included in the accompanying unaudited condensed consolidated balance sheets within notes payable, net at June 30, 2019 and December 31, 2018 were $31.5 million and $32.4 million, net of accumulated amortization of $59.1 million and $54.6 million, respectively. Amortization expense on deferred financing costs recognized and included in interest expense in the accompanying unaudited condensed consolidated statements of operations, totaled $2.4 million and $2.7 million for the three months ended June 30, 2019 and 2018, respectively, and $4.9 million and $5.3 million for the six months ended June 30, 2019 and 2018, respectively (See Note 3).
Residual Income Plans
The Company has a program that allows certain third-party sales channel partners to receive additional compensation based on the performance of the underlying contracts they create (the “Channel Partner Plan”). The Company also has a residual sales compensation plan (the “Residual Plan”) under which the Company's sales personnel (each, a “Plan Participant”) receive compensation based on the performance of the underlying contracts they create.
For both the Channel Partner Plan and Residual Plan, the Company calculates the present value of the expected future residual payments and records a liability for this amount in the period the subscriber account is originated. These costs are recorded to capitalized contract costs. The Company monitors actual payments and customer attrition on a periodic basis and, when necessary, makes adjustments to the liability. The amount included in accrued payroll and commissions $5.4 million and $4.9 million at June 30, 2019 and December 31, 2018, respectively, and the amount included in other long-term obligations was $28.7 million and $17.6 million at June 30, 2019 and December 31, 2018, respectively.
Stock-Based Compensation
The Company measures compensation cost based on the grant-date fair value of the award and recognizes that cost over the requisite service period of the awards (See Note 10).
Advertising Expense
Advertising costs are expensed as incurred. Advertising costs were $17.3 million and $8.6 million for the three months ended June 30, 2019 and 2018, respectively, and $30.0 million and $21.7 million for the six months ended June 30, 2019 and 2018, respectively
Income Taxes
The Company accounts for income taxes based on the asset and liability method. Under the asset and liability method, deferred tax assets and deferred tax liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Valuation allowances are established when necessary to reduce deferred tax assets when it is determined that it is more likely than not that some portion, or all, of the deferred tax asset will not be realized.
The Company recognizes the effect of an uncertain income tax position on the income tax return at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. The Company’s policy for recording interest and penalties is to record such items as a component of the provision for income taxes.
Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. The Company records the effect of a tax rate or law change on the Company’s deferred tax assets and liabilities in the period of enactment. Future tax rate or law changes could have a material effect on the Company’s results of operations, financial condition, or cash flows.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist principally of receivables and cash. At times during the year, the Company maintains cash balances in excess of insured limits. The Company is not dependent on any single customer or geographic location. The loss of a customer would not adversely impact the Company’s operating results or financial position.
Concentrations of Supply Risk
As of June 30, 2019, approximately 85% of the Company’s installed panels were SkyControl panels and 15% were 2GIG Go!Control panels and 1% were other panels. During 2018 the Company transitioned to a new panel supplier. The loss of the Company's panel supplier could potentially impact its operating results or financial position.

Fair Value Measurement
Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities subject to on-going fair value measurement are categorized and disclosed into one of three categories depending on observable or unobservable inputs employed in the measurement. These two types of inputs have created the following fair value hierarchy:
Level 1: Quoted prices in active markets that are accessible at the measurement date for assets and liabilities.
Level 2: Observable prices that are based on inputs not quoted in active markets, but corroborated by market data.
Level 3: Unobservable inputs are used when little or no market data is available.

This hierarchy requires the Company to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. The Company recognizes transfers between levels of the hierarchy based on the fair values of the respective financial measurements at the end of the reporting period in which the transfer occurred. There were no transfers between levels of the fair value hierarchy during the six months ended June 30, 2019 and 2018.
The carrying amounts of the Company’s accounts receivable, accounts payable and accrued and other liabilities approximate their fair values due to their short maturities.
Goodwill
The Company conducts a goodwill impairment analysis annually in the fourth fiscal quarter, as of October 1, and as necessary if changes in facts and circumstances indicate that the fair value of the Company’s reporting units may be less than their carrying amounts. When indicators of impairment do not exist and certain accounting criteria are met, the Company is able to evaluate goodwill impairment using a qualitative approach. When necessary, the Company’s quantitative goodwill impairment test consists of two steps. The first step requires that the Company compare the estimated fair value of its reporting units to the carrying value of the reporting unit’s net assets, including goodwill. If the fair value of the reporting unit is greater than the carrying value of its net assets, goodwill is not considered to be impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value of its net assets, the Company would be required to complete the second step of the test by analyzing the fair value of its goodwill. If the carrying value of the goodwill exceeds its fair value, an impairment charge is recorded. The Company’s reporting units are determined based on its current reporting structure, which as of December 31, 2018 and June 30, 2019 consisted of two reporting units. As of June 30, 2019, there were no changes in facts and circumstances since the most recent annual impairment analysis to indicate impairment existed.
Foreign Currency Translation and Other Comprehensive Income
The functional currency of Vivint Canada, Inc. is the Canadian dollar. Accordingly, Vivint Canada, Inc. assets and liabilities are translated from their respective functional currencies into U.S. dollars at period-end rates and Vivint Canada, Inc. revenue and expenses are translated at the weighted-average exchange rates for the period. Adjustments resulting from this translation process are classified as other comprehensive income (loss) and shown as a separate component of equity.
When intercompany foreign currency transactions between entities included in the consolidated financial statements are of a long term investment nature (i.e., those for which settlement is not planned or anticipated in the foreseeable future) foreign currency translation adjustments resulting from those transactions are included in stockholders’ deficit as accumulated other comprehensive loss or income. When intercompany transactions are deemed to be of a short term nature, translation adjustments are required to be included in the condensed consolidated statement of operations. The Company has determined that settlement of Vivint Canada, Inc. intercompany balances is anticipated and therefore such balances are deemed to be of a short term nature. Translation activity included in the statement of operations in other (income) expenses, net related to intercompany balances was as follows: (in thousands)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Translation (gain) loss
$
(1,155
)
 
$
1,592

 
$
(2,855
)
 
$
3,633


Letters of Credit
As of June 30, 2019 and December 31, 2018, the Company had $13.9 million and $13.8 million, respectively, of letters of credit issued in the ordinary course of business, all of which are undrawn.
Restructuring and Asset Impairment Charges
Restructuring and asset impairment charges represent expenses incurred in relation to activities to exit or disposal of portions of the Company's business that do not qualify as discontinued operations. Liabilities associated with restructuring are measured at their fair value when the liability is incurred. Expenses for related termination benefits are recognized at the date the Company notifies the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the future service period. Liabilities related to termination of a contract are measured and recognized at fair value when the contract does not have any future economic benefit to the entity and the fair value of the liability is determined based on the present value of the remaining obligation. The Company expenses all other costs related to an exit or disposal activity as incurred (See Note 15).
Recent Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, “Financial Instruments—Credit Losses (Topic 326)” which modifies the measurement of expected credit losses of certain financial instruments. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019 and must be applied using a modified-retrospective approach, with early adoption permitted. The Company is evaluating the adoption of ASU 2016-13 and plans to provide additional information about its expected impact at a future date.
Recently Adopted Accounting Standards
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” to increase transparency and comparability among organizations as it relates to lease assets and lease liabilities. The update requires that lease assets and lease liabilities be recognized on the balance sheet, and that key information about leasing arrangements be disclosed. Prior to this update, GAAP did not require operating leases to be recognized as lease assets and lease liabilities on the balance sheet.
The Company adopted ASU 2016-02 as of January 1, 2019, utilizing the modified retrospective approach and using certain practical expedients. The adoption of the standard resulted in recording ROU assets of $75.5 million and lease liabilities of $85.9 million as of January 1, 2019. The ROU assets are lower than the lease liabilities as existing deferred rent and lease incentive liabilities were recorded against the ROU assets at adoption in accordance with the standard. The standard did not materially affect the Company's condensed consolidated statements of operations or its condensed consolidated statements of cash flows. The standard also resulted in a reassessment that a sale would have occurred at January 1, 2019 for the Company's build-to-suit building. As a result, the Company classifies the leasing arrangement as an operating lease. The recognition of the sale-leaseback transaction resulted in an immaterial amount recorded to opening equity. See Note 6 for additional information on the sale-leaseback transaction. See Note 12 "Leases" for additional information related to the impact of adopting this standard.
v3.19.2
Revenue and Capitalized Contract Costs
 6 Months Ended
Jun. 30, 2019
Revenue from Contract with Customer [Abstract]  
Revenue and Capitalized Contract Costs
Revenue and Capitalized Contract Costs
Customers are typically invoiced for Smart Home Services in advance or at the time the Company delivers the related Smart Home Services. The majority of customers pay at the time of invoice via credit card, debit card or ACH. Deferred revenue relates to the advance consideration received from customers, which precedes the Company’s satisfaction of the associated performance obligation. The Company’s deferred revenues primarily result from customer payments received in advance for recurring monthly monitoring and other Smart Home Services, or other one-time fees, because these performance obligations are satisfied over time.     
During the six months ended June 30, 2019 and 2018, the Company recognized revenues of $135.1 million and $92.1 million, respectively, that were included in the deferred revenue balance as of December 31, 2018 and 2017, respectively.
Transaction Price Allocated to the Remaining Performance Obligations
As of June 30, 2019, approximately $2.4 billion of revenue is expected to be recognized from remaining performance obligations for subscription contracts. The Company expects to recognize approximately 61% of the revenue related to these remaining performance obligations over the next 24 months, with the remaining balance recognized over an additional 36 months.
Timing of Revenue Recognition
The Company considers Products, related installation, and its proprietary back-end cloud platform software and services an integrated system that allows the Company’s customers to monitor, control and protect their homes. These Smart Home Services are accounted for as a single performance obligation that is recognized over the customer’s contract term, which is generally three to five years.
Capitalized Contract Costs
Capitalized contract costs generally include commissions, other compensation and related costs paid directly for the generation and installation of new or modified customer contracts, as well as the cost of Products installed in the customer home at the commencement or modification of the contract. The Company defers and amortizes these costs for new or modified subscriber contracts on a straight-line basis over the expected period of benefit of five years.
v3.19.2
Long-Term Debt
 6 Months Ended
Jun. 30, 2019
Debt Disclosure [Abstract]  
Long-Term Debt
Long-Term Debt
The Company’s debt at June 30, 2019 and December 31, 2018 consisted of the following (in thousands): 
 
June 30, 2019
 
Outstanding
Principal
 
Unamortized
Premium (Discount)
 
Unamortized Deferred Financing Costs (1)
 
Net Carrying
Amount
Senior Secured Revolving Credit Facilities
$
134,000

 
$
—

 
$
—

 
$
134,000

8.750% Senior Notes due 2020
454,299

 
1,125

 
(2,659
)
 
452,765

8.875% Senior Secured Notes Due 2022
270,000

 
(1,889
)
 
(527
)
 
267,584

7.875% Senior Secured Notes Due 2022
900,000

 
17,865

 
(11,165
)
 
906,700

7.625% Senior Notes Due 2023
400,000

 
—

 
(3,502
)
 
396,498

8.500% Senior Secured Notes Due 2024
225,000

 
—

 
(4,881
)
 
220,119

Senior Secured Term Loan - noncurrent
795,825

 
—

 
(8,742
)
 
787,083

Total Long-Term Debt
3,179,124

 
17,101

 
(31,476
)
 
3,164,749

Senior Secured Term Loan - current
8,100

 
—

 
—

 
8,100

Total Debt
$
3,187,224

 
$
17,101

 
$
(31,476
)
 
$
3,172,849

 
December 31, 2018
 
Outstanding
Principal
 
Unamortized
Premium (Discount)
 
Unamortized Deferred Financing Costs (1)
 
Net Carrying
Amount
8.75% Senior Notes due 2020
$
679,299

 
$
2,230

 
$
(5,380
)
 
$
676,149

8.875% Senior Secured Notes due 2022
270,000

 
(2,122
)
 
(602
)
 
267,276

7.875% Senior Secured Notes due 2022
900,000

 
20,178

 
(12,799
)
 
907,379

7.625% Senior Notes Due 2023
400,000

 
—

 
(3,922
)
 
396,078

Senior Secured Term Loan - noncurrent
799,875

 
—

 
(9,662
)
 
790,213

Total Long-Term Debt
3,049,174

 
20,286

 
(32,365
)
 
3,037,095

Senior Secured Term Loan - current
8,100

 
—

 
—

 
8,100

Total Debt
$
3,057,274

 
$
20,286

 
$
(32,365
)
 
$
3,045,195

 
 
(1)
Unamortized deferred financing costs related to the revolving credit facilities included in deferred financing costs, net on the condensed consolidated balance sheets at June 30, 2019 and December 31, 2018 were $1.6 million and $2.1 million, respectively.

Notes Payable
2020 Notes
As of June 30, 2019, APX had $454.3 million outstanding aggregate principal amount of 8.75% senior notes due 2020 (the “2020 notes”) with a maturity date of December 1, 2020.
2022 Private Placement Notes
As of June 30, 2019, APX had $270.0 million outstanding aggregate principal amount of 8.875% senior secured notes due 2022 (the “2022 private placement notes”). The 2022 private placement notes will mature on December 1, 2022, unless on September 1, 2020 (the 91st day prior to the maturity of the 2020 notes) more than an aggregate principal amount of $190.0 million of such 2020 notes remain outstanding or have not been refinanced as permitted under the note purchase agreement for the 2022 private placement notes, in which case the 2022 private placement notes will mature on September 1, 2020. The 2022 private placement notes are secured, on a pari passu basis, by the collateral securing obligations under the 2022 private placement notes, the 2022 notes (as defined below), the 2024 notes (as defined below) and the revolving credit facilities and the Term Loan (as defined below), in all cases, subject to certain exceptions and permitted liens.
2022 Notes    
As of June 30, 2019, APX had $900.0 million outstanding aggregate principal amount of 7.875% senior secured notes due 2022 (the “2022 notes”). The 2022 notes will mature on December 1, 2022, or on such earlier date when any outstanding pari passu lien indebtedness matures as a result of the operation of any “Springing Maturity” provision set forth in the agreements governing such pari passu lien indebtedness. The 2022 notes are secured, on a pari passu basis, by the collateral securing obligations under the 2022 private placement notes, the 2024 notes (as defined below), the revolving credit facilities and the Term Loan, in all cases, subject to certain exceptions and permitted liens.
2023 Notes
As of June 30, 2019, APX had $400.0 million outstanding aggregate principal amount of the 7.625% senior notes due 2023 (the “2023 notes”) with a maturity date of September 1, 2023.
2024 Notes    
In May 2019, APX issued $225.0 million outstanding aggregate principal amount of 8.50% senior secured notes due 2024 (the “2024 notes” and, together with the 2020 notes, the 2022 notes, the 2022 private placement notes and the 2023 notes the “Notes”). The net proceeds from the 2024 notes offering were used to redeem $225.0 million aggregate principal amount of our 2020 notes, and to pay the related accrued interest and to pay all fees and expenses related thereto. The 2024 notes will mature on November 1, 2024, or on such earlier date as may result from the operation of certain springing maturity provisions set forth in the indenture governing the 2024 notes. The 2024 notes are secured, on a pari passu basis, by the collateral securing obligations under the 2022 private placement notes, the 2022 notes, the revolving credit facilities and the Term Loan, in all cases, subject to certain exceptions and permitted liens.
Interest accrues at the rate of 8.75% per annum for the 2020 notes, 8.875% per annum for the 2022 private placement notes, 7.875% per annum for the 2022 notes, 7.625% per annum for the 2023 notes and 8.50% per annum for the 2024 notes. Interest on the 2020 notes, 2022 private placement notes and 2022 notes is payable semiannually in arrears on June 1 and December 1 of each year. Interest on the 2023 notes is payable semiannually in arrears on March 1 and September 1 of each year. Interest on the 2024 notes is payable semiannually in arrears on May 1 and November 1 each year. APX may redeem the Notes at the prices and on the terms specified in the applicable indenture, or the note purchase agreement.
Term Loan
In September 2018, APX entered into a credit agreement (the “September 2018 issuance”) for total term loans of $810.0 million (the “Term Loan”). The Company is required to make quarterly amortization payments under the Term Loan in an amount equal to 0.25% of the aggregate principal amount of Term Loan outstanding on the closing date thereof. The remaining principal amount outstanding under the Term Loan will be due and payable in full on March 31, 2024, or earlier if certain springing maturity conditions apply. The net proceeds from the Term Loan were used in-part to redeem in full the entire $269.5 million outstanding aggregate principal amount of the 2019 notes and pay the related accrued interest and redemption premium, to repurchase approximately $250.7 million aggregate principal amount of the outstanding 2020 notes, to repay the outstanding borrowings under the revolving credit facility and to pay fees and expenses related to the Term Loan and the transactions described above.

Borrowings under the Term Loan bear interest at a rate per annum equal to an applicable margin plus, at the Company's option, either (1) the base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate of Bank of America, N.A. and (c) the LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for an interest period of one month, plus 1.00% or (2) the LIBOR rate determined by reference to the London interbank offered rate for dollars for the interest period relevant to such borrowing. The applicable margin for base rate-based borrowings is 4.0% per annum and the applicable margin for LIBOR rate-based borrowings is 5.0% per annum. APX may prepay the Term Loan at the prices and on the terms specified in the credit agreement covering the Term Loan.
Debt Modifications and Extinguishments
The Company performs analyses on a creditor-by-creditor basis for debt modifications and extinguishments to determine if repurchased debt was substantially different than debt issued to determine the appropriate accounting treatment of associated issuance costs. As a result of these analyses, the following amounts of other expense and loss on extinguishment and deferred financing costs were recorded (in thousands):
 
Original premium extinguished
 
Previously deferred financing costs extinguished
 
Total other expense and loss on extinguishment
 
New deferred financing costs
Three and six months ended June 30, 2019
 
 
 
 
 
 
 
May 2019 issuance
$
(588
)
 
$
1,395

 
$
807

 
$
4,956


Deferred financing costs are amortized to interest expense over the life of the issued debt.    The Company had no debt issuances or related modification or extinguishment costs during the three and six months ended June 30, 2018.
The following table presents deferred financing activity for the six months ended June 30, 2019 and year ended December 31, 2018 (in thousands):
 
Unamortized Deferred Financing Costs
 
Balance December 31, 2018
 
Additions
 
Early Extinguishment
 
Amortized
 
Balance June 30, 2019
Revolving Credit Facility
$
2,058

 
$
—

 
$
—

 
$
(486
)
 
$
1,572

2020 Notes
5,380

 
—

 
(1,395
)
 
(1,326
)
 
2,659

2022 Private Placement Notes
602

 
—

 
—

 
(75
)
 
527

2022 Notes
12,799

 
—

 
—

 
(1,634
)
 
11,165

2023 Notes
3,922

 
—

 
—

 
(420
)
 
3,502

2024 Notes
—

 
4,956

 
—

 
(75
)
 
4,881

Term Loan
9,662

 


 
—

 
(920
)
 
8,742

Total Deferred Financing Costs
$
34,423

 
$
4,956

 
$
(1,395
)
 
$
(4,936
)
 
$
33,048


 
Unamortized Deferred Financing Costs
 
Balance December 31, 2017
 
Additions
 
Early Extinguishment
 
Amortized
 
Balance December 31, 2018
Revolving Credit Facility
$
3,099

 
$
—

 
$
—

 
$
(1,041
)
 
$
2,058

2019 Notes
2,877

 
—

 
(1,877
)
 
(1,000
)
 
—

2020 Notes
11,209

 
—

 
(2,330
)
 
(3,499
)
 
5,380

2022 Private Placement Notes
752

 
—

 
—

 
(150
)
 
602

2022 Notes
16,067

 
—

 
—

 
(3,268
)
 
12,799

2023 Notes
4,762

 
—

 
—

 
(840
)
 
3,922

Term Loan
—

 
10,275

 
—

 
(613
)
 
9,662

Total Deferred Financing Costs
$
38,766

 
$
10,275

 
$
(4,207
)
 
$
(10,411
)
 
$
34,423



Revolving Credit Facility
On November 16, 2012, APX entered into a $200.0 million senior secured revolving credit facility, with a five year maturity. On March 6, 2015, APX amended and restated the credit agreement governing the revolving credit facility to provide for, among other things, (1) an increase in the aggregate commitments previously available to APX thereunder from $200.0 million to $289.4 million (“Revolving Commitments”) and (2) the extension of the maturity date with respect to certain of the previously available commitments. On August 10, 2017, APX further amended and restated the credit agreement governing the revolving credit facility to provide for, among other things, (1) an increase in the aggregate commitments previously available to the Company from $289.4 million to $324.3 million and (2) the extension of the maturity date with respect to certain of the previously available commitments.
Borrowings under the amended and restated revolving credit facility bear interest at a rate per annum equal to an applicable margin plus, at APX’s option, either (1) the base rate determined by reference to the highest of (a) the Federal Funds rate plus 0.50%, (b) the prime rate of Bank of America, N.A. and (c) the LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for an interest period of one month, plus 1.00% or (2) the LIBOR rate determined by reference to the London interbank offered rate for dollars for the interest period relevant to such borrowing. The applicable margin for base rate-based borrowings (1)(a) under the Series A Revolving Commitments of approximately $267.0 million is and, when in effect, the Series D Revolving Commitments of approximately $15.4 million was 2.0% per annum and (b) under the Series B Revolving Commitments of approximately $21.2 million was 3.0% and (2)(a) the applicable margin for LIBOR rate-based borrowings (a) under the Series A Revolving Commitments is, and, when in effect, the Series D Revolving Commitments is currently 3.0% per annum and (b) under the Series B Revolving Commitments is currently 4.0%. The applicable margin for borrowings under the revolving credit facility is subject to one step-down of 25 basis points based on APX meeting a consolidated first lien net leverage ratio test at the end of each fiscal quarter. Outstanding borrowings under the amended and restated revolving credit facility are allocated on a pro-rata basis between each Series based on the total Revolving Commitments.
In addition to paying interest on outstanding principal under the revolving credit facility, APX is required to pay a quarterly commitment fee (which will be subject to one interest rate step-down of 12.5 basis points, based on APX meeting a consolidated first lien net leverage ratio test) to the lenders under the revolving credit facility in respect of the unutilized commitments thereunder. APX also pays customary letter of credit and agency fees.
APX is not required to make any scheduled amortization payments under the revolving credit facility. The Series D Revolving Commitments of $15.4 million expired effective April 1, 2019 and the principal amount outstanding under the revolving credit facility will be due and payable in full with respect to the extended commitments under the Series A Revolving Credit Facility and Series B Revolving Credit Facility on March 31, 2021.
As of June 30, 2019 there was $134.0 million of outstanding borrowings under the revolving credit facility. As of December 31, 2018, there were no outstanding borrowings under the revolving credit facility. As of June 30, 2019 the Company had $140.3 million of availability under the revolving credit facility (after giving effect to $13.9 million of letters of credit outstanding and $134.0 million of borrowings).

Guarantees
All of the obligations under the credit agreement governing the revolving credit facility, the credit agreement governing the Term Loan and the debt agreements governing the Notes are guaranteed by APX Group Holdings, Inc. and each of APX Group, Inc.'s existing and future material wholly-owned U.S. restricted subsidiaries. However, such subsidiaries shall only be required to guarantee the obligations under the debt agreements governing the Notes for so long as such entities guarantee the obligations under the revolving credit facility, the credit agreement governing the Term Loan or the Company's other indebtedness.
v3.19.2
Retail Installment Contract Receivables
 6 Months Ended
Jun. 30, 2019
Receivables [Abstract]  
Retail Installment Contract Receivables
Retail Installment Contract Receivables
Certain subscribers have the option to purchase Products under a RIC, payable over either 42 or 60 months. Short-term RIC receivables are recorded in accounts and notes receivable, net and long-term RIC receivables are recorded in long-term notes receivables and other assets, net in the condensed consolidated unaudited balance sheets.
The following table summarizes the RIC receivables (in thousands):
 
June 30, 2019
 
December 31, 2018
RIC receivables, gross
$
186,077

 
$
175,250

Deferred interest
(31,652
)
 
(34,163
)
RIC receivables, net of deferred interest
$
154,425

 
$
141,087

 
 
 
 
Classified on the condensed consolidated unaudited balance sheets as:
 
 
 
Accounts and notes receivable, net
$
39,620

 
$
32,185

Long-term notes receivables and other assets, net
114,805

 
108,902

RIC receivables, net
$
154,425

 
$
141,087


The changes in the Company’s deferred interest for the RIC receivables were as follows (in thousands):
 
Six months ended June 30, 2019
 
Twelve months ended December 31, 2018
Deferred interest, beginning of period
$
34,163

 
$
36,048

Write-offs, net of recoveries
(12,500
)
 
(26,360
)
Change in deferred interest on short-term and long-term RIC receivables
9,989

 
24,475

Deferred interest, end of period
$
31,652

 
$
34,163


The amount of RIC imputed interest income recognized in recurring and other revenue was $3.1 million and $3.5 million during the three months ended June 30, 2019 and 2018, respectively, and $6.6 million and $6.8 million during the six months ended June 30, 2019 and 2018, respectively.
v3.19.2
Balance Sheet Components
 6 Months Ended
Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Balance Sheet Components
Balance Sheet Components
The following table presents material balance sheet component balances (in thousands):

 
June 30, 2019
 
December 31, 2018
Prepaid expenses and other current assets
 
 
 
Prepaid expenses
$
14,112

 
$
7,183

Deposits
1,793

 
904

Other
1,083

 
3,362

Total prepaid expenses and other current assets
$
16,988

 
$
11,449

Capitalized contract costs
 
 
 
Capitalized contract costs
$
2,632,597

 
$
2,361,795

Accumulated amortization
(1,461,910
)
 
(1,246,020
)
Capitalized contract costs, net
$
1,170,687

 
$
1,115,775

Long-term notes receivables and other assets
 
 
 
RIC receivables, gross
$
146,457

 
$
143,065

RIC deferred interest
(31,652
)
 
(34,164
)
Security deposits
6,985

 
6,586

Investments
541

 
3,865

Other
300

 
467

Total long-term notes receivables and other assets, net
$
122,631

 
$
119,819

Accrued payroll and commissions
 
 
 
Accrued commissions
$
42,611

 
$
28,726

Accrued payroll
26,937

 
36,753

Total accrued payroll and commissions
$
69,548

 
$
65,479

Accrued expenses and other current liabilities
 
 
 
Accrued interest payable
$
25,764

 
$
28,885

Current portion of derivative liability
70,468

 
67,710

Service warranty accrual
8,835

 
8,813

Current portion of notes payable
8,100

 
8,100

Loss contingencies
1,831

 
3,131

Other
23,051

 
20,076

Total accrued expenses and other current liabilities
$
138,049

 
$
136,715
v3.19.2
Property Plant and Equipment
 6 Months Ended
Jun. 30, 2019
Property, Plant and Equipment [Abstract]  
Property Plant and Equipment
Property Plant and Equipment
Property, plant and equipment consisted of the following (in thousands):
 
 
June 30, 2019
 
December 31, 2018
 
Estimated Useful
Lives
Vehicles
$
44,620

 
$
45,050

 
3 - 5 years
Computer equipment and software
58,489

 
53,891

 
3 - 5 years
Leasehold improvements
27,977

 
26,401

 
2 - 15 years
Office furniture, fixtures and equipment
20,416

 
19,532

 
7 years
Build-to-suit lease building
—

 
8,247

 
10.5 years
Construction in process
3,076

 
2,975

 
 
Property, plant and equipment, gross
154,578

 
156,096

 
 
Accumulated depreciation and amortization
(92,978
)
 
(82,695
)
 
 
Property, plant and equipment, net
$
61,600

 
$
73,401

 
 


Property, plant and equipment, net includes approximately $21.6 million and $26.2 million of assets under finance or capital lease obligations at June 30, 2019 and December 31, 2018, respectively, net of accumulated amortization of $23.7 million and $22.2 million, respectively. Depreciation and amortization expense on all property, plant and equipment was $7.1 million and $6.2 million for the three months ended June 30, 2019 and 2018, respectively and $13.0 million and $12.4 million during the six months ended June 30, 2019 and 2018, respectively. Amortization expense relates to assets under finance or capital leases and is included in depreciation and amortization expense.

As a result of implementing ASU 2016-02, effective January 1, 2019 the Company's build-to-suit leasing arrangement was considered a sale-leaseback and is classified as an operating lease. This resulted in a reduction to property, plant and equipment, net of $6.1 million and a reduction of $6.6 million related the financing lease obligation within accrued expenses and other current liabilities and other long-term obligations. See Note 12 "Leases" for additional information related to the impact of adopting ASU 2016-02.
v3.19.2
Goodwill and Intangible Assets
 6 Months Ended
Jun. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets
Goodwill and Intangible Assets
Goodwill
As of June 30, 2019 and December 31, 2018, the Company had a goodwill balance of $836.3 million and $834.9 million, respectively. The change in the carrying amount of goodwill during the six months ended June 30, 2019 was the result of foreign currency translation adjustments as well as a $0.4 million addition associated with the acquisition of CrowdStorage (defined below).
Intangible assets, net
The following table presents intangible asset balances (in thousands):
 
 
June 30, 2019
 
December 31, 2018
 
 
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Estimated
Useful Lives
Definite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer contracts
$
966,909

 
$
(757,039
)
 
$
209,870

 
$
964,100

 
$
(717,648
)
 
$
246,452

 
10 years
2GIG 2.0 technology
17,000

 
(15,913
)
 
1,087

 
17,000

 
(15,292
)
 
1,708

 
8 years
Other technology
4,725

 
(2,133
)
 
2,592

 
2,917

 
(1,667
)
 
1,250

 
5 - 7 years
Space Monkey technology
7,100

 
(6,283
)
 
817

 
7,100

 
(5,756
)
 
1,344

 
6 years
Patents
12,526

 
(9,737
)
 
2,789

 
12,123

 
(8,415
)
 
3,708

 
5 years
Total definite-lived intangible assets:
$
1,008,260

 
$
(791,105
)
 
$
217,155

 
$
1,003,240

 
$
(748,778
)
 
$
254,462

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
IP addresses
564

 
—

 
564

 
564

 
—

 
564

 
 
Domain names
59

 
—

 
59

 
59

 
—

 
59

 
 
Total Indefinite-lived intangible assets
623

 
—

 
623

 
623

 
—

 
623

 
 
Total intangible assets, net
$
1,008,883

 
$
(791,105
)
 
$
217,778

 
$
1,003,863

 
$
(748,778
)
 
$
255,085

 
 

During the year ended December 31, 2016, Vivint Wireless entered into leasing agreements with Nextlink Wireless, LLC (“Nextlink”) for designated radio frequency spectrum in 40 mid-sized metropolitan markets. The lease term was for seven years, with an option to become the licensor of record with the Federal Communications Commission (“FCC”) with respect to the applicable spectrum licenses at the end of this term for a nominal fee. The Company acquired $31.3 million of spectrum licenses, measured using the present value of the lease payments, and recorded an intangible asset and a corresponding liability within other long-term obligations. While licenses are issued for only a fixed time, such licenses are subject to renewal by the FCC.
In January 2018, Vivint Wireless and Verizon consummated the transactions contemplated by a termination agreement to which the parties agreed, among other things, to terminate the spectrum leases between Vivint Wireless and Nextlink, a subsidiary of Verizon, in exchange for a cash payment by Verizon to Vivint Wireless. The calculation of the gain recorded included cash proceeds of $55.0 million, extinguishment of the spectrum license liability of $27.9 million, offset by the write-off of the spectrum license asset in the amount of $31.3 million and regulatory costs associated with the sale of $1.2 million for a total net gain on sale of $50.4 million which is included in other income, net in the condensed consolidated statement of operations.
In May 2019, the Company acquired majority ownership interest in CrowdStorage, Inc. (“CrowdStorage”), a distributed cloud storage solution company. The Company determined that CrowdStorage was a variable interest entity and the Company was the primary beneficiary, because CrowdStorage was dependent on the Company for ongoing financial support. As part of this acquisition, the Company recognized a definite-lived intangible asset of $1.8 million, included within the other technology asset class in the above table. The financial position and results of operations of CrowdStorage are consolidated by the Company and the non-controlling interest associated with the minority interest holders was immaterial as of, and for, the three and six months ended June 30, 2019.
Amortization expense related to intangible assets was approximately $20.2 million and $22.7 million for the three months ended June 30, 2019 and 2018, respectively, and $40.5 million and $45.5 million for the six months ended June 30, 2019 and 2018, respectively.
As of June 30, 2019, the remaining weighted-average amortization period for definite-lived intangible assets was 3.4 years. Estimated future amortization expense of intangible assets, excluding approximately $0.3 million in patents currently in process, is as follows as of June 30, 2019 (in thousands):
 
 
 
2019 - Remaining Period
$
39,926

2020
69,207

2021
58,850

2022
48,868

2023
51

Thereafter
3

Total estimated amortization expense
$
216,905
v3.19.2
Financial Instruments
 6 Months Ended
Jun. 30, 2019
Fair Value Disclosures [Abstract]  
Financial Instruments
Financial Instruments
Cash, Cash Equivalents and Equity Securities
Cash equivalents and equity securities with readily available determinable fair values (“Corporate Securities”) are classified as level 1 assets, as they have readily available market prices in an active market.
The following tables set forth the Company’s cash and cash equivalents and Corporate Securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or long-term notes receivables and other assets, net as of June 30, 2019 and December 31, 2018 (in thousands):
 
June 30, 2019
 
Adjusted Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
 
Cash and Cash Equivalents
 
Long-Term Notes Receivables and Other Assets, net
Cash
$
3,041

 
$
—

 
$
—

 
$
3,041

 
$
3,041

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
Level 1:
 
 
 
 
 
 
 
 
 
 
 
Money market funds
92

 
—

 
—

 
92

 
92

 
—

 
 
 
 
 
 
 
 
 
 
 
 
Total
$
3,133

 
$
—

 
$
—

 
$
3,133

 
$
3,133

 
$
—

 
December 31, 2018
 
Adjusted Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
 
Cash and Cash Equivalents
 
Long-Term Notes Receivables and Other Assets, net
Cash
$
6,681

 
$
—

 
$
—

 
$
6,681

 
$
6,681

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
Level 1:
 
 
 
 
 
 
 
 
 
 
 
Money market funds
6,092

 
—

 
—

 
6,092

 
6,092

 
—

Corporate securities
3,485

 
—

 
(304
)
 
3,181

 
—

 
3,181

Subtotal
9,577

 
—

 
(304
)
 
9,273

 
6,092

 
3,181

 
 
 
 
 
 
 
 
 
 
 
 
Total
$
16,258

 
$
—

 
$
(304
)
 
$
15,954

 
$
12,773

 
$
3,181



The Company sold its Corporate Securities in June 2019 and realized a gain of $2.3 million. During the three and six months ended June 30, 2018, the Company recorded unrealized gains of $0.4 million and $0.7 million, respectively, associated with the change in fair value of the Corporate Securities.
The carrying amounts of the Company’s accounts and notes receivable, accounts payable and accrued and other liabilities approximate their fair values.
Long-Term Debt
Components of long-term debt including the associated interest rates and related fair values are as follows (in thousands, except interest rates):
 
 
June 30, 2019
 
December 31, 2018
 
Stated Interest Rate
Issuance
 
Face Value
 
Estimated Fair Value
 
Face Value
 
Estimated Fair Value
 
2020 Notes
 
$
454,299

 
$
431,675

 
$
679,299

 
$
643,568

 
8.750
%
2022 Private Placement Notes
 
270,000

 
258,876

 
270,000

 
257,073

 
8.875
%
2022 Notes
 
900,000

 
862,920

 
900,000

 
855,000

 
7.875
%
2023 Notes
 
400,000

 
326,320

 
400,000

 
326,000

 
7.625
%
2024 Notes
 
225,000

 
215,033

 
—

 
—

 
8.500
%
Term Loan
 
803,925

 
805,950

 
807,975

 
807,975

 
N/A
Total
 
$
3,053,224

 
$
2,900,774

 
$
3,057,274

 
$
2,889,616

 
 

The Notes are fixed-rate debt considered Level 2 fair value measurements as the values were determined using observable market inputs, such as current interest rates, prices observable from less active markets, as well as prices observable from comparable securities. The Term Loan is floating-rate debt and approximates the carrying value as interest accrues at floating rates based on market rates.
Derivative Financial Instruments
Under the Consumer Financing Program, the Company pays a monthly fee to third-party financing providers based on the either the average daily outstanding balance of the loans or the number of outstanding loans depending on third-party financing provider. The Company also shares the liability for credit losses, depending on the credit quality of the customer. Because of the nature of certain provisions under the Consumer Financing Program, the Company records a derivative liability that is not designated as a hedging instrument and is adjusted to fair value, measured using the present value of the estimated future payments. Changes to the fair value are recorded through other income, net in the Consolidated Statement of Operations. The following represent the contractual obligations with the third-party financing providers under the Consumer Financing Program that are components of the derivative:
•
The Company pays either a monthly fee based on the average daily outstanding balance of the loans, or the number of outstanding loans, depending on the third-party financing provider
•The Company shares the liability for credit losses depending on the credit quality of the customer
•The Company pays transactional fees associated with customer payment processing
The derivative is classified as a Level 3 instrument. The derivative positions are valued using a discounted cash flow model, with inputs consisting of available market data, such as market yield discount rates, as well as unobservable internally derived assumptions, such as collateral prepayment rates, collateral default rates and loss severity rates. These derivatives are priced quarterly using a credit valuation adjustment methodology. In summary, the fair value represents an estimate of the present value of the cash flows the Company will be obligated to pay to the third-party financing provider for each component of the derivative.
The following table summarizes the fair value and the notional amount of the Company’s outstanding derivative instrument as of June 30, 2019 and December 31, 2018 (in thousands):
 
June 30, 2019
 
December 31, 2018
Consumer Financing Program Contractual Obligations:
 
 
 
Fair value
$
136,254

 
$
117,620

Notional amount
465,864

 
368,708

 
 
 
 
Classified on the condensed consolidated unaudited balance sheets as:
 
 
 
Accrued expenses and other current liabilities
70,468

 
67,710

Other long-term obligations
65,786

 
49,910

Total Consumer Financing Program Contractual Obligation
$
136,254

 
$
117,620

Changes in Level 3 Fair Value Measurements
The following table summarizes the change in the fair value of the Level 3 outstanding derivative liability instrument for the six months ended June 30, 2019 and the twelve months ended December 31, 2018 (in thousands):
 
Six months ended June 30, 2019
 
Twelve months ended December 31, 2018
Balance, beginning of period
$
117,620

 
$
46,496

Additions
47,115

 
93,095

Settlements
(29,908
)
 
(34,587
)
Losses included in earnings
1,427

 
12,616

Balance, end of period
$
136,254

 
$
117,620
v3.19.2
Income Taxes
 6 Months Ended
Jun. 30, 2019
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
In order to determine the quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter during which they occur and can be a source of variability in the effective tax rates from quarter to quarter.
The Company’s effective income tax benefit rate for the six months ended June 30, 2019 and 2018 was approximately 0.41% and 0.58%, respectively. Income tax expense for the six months ended June 30, 2019 was affected by year to date projected loss in Canada and estimated minimum state taxes in the US. Both the 2019 and 2018 effective tax rates differ from the statutory rate primarily due to the combination of not benefiting from expected pre-tax US losses, a result of changes to the valuation allowance, and recognizing current state income tax expense for minimum state taxes.
Significant judgment is required in determining the Company’s provision for income taxes, recording valuation allowances against deferred tax assets, and evaluating the Company’s uncertain tax positions. In evaluating the ability to realize its deferred tax assets, in full or in part, the Company considers all available positive and negative evidence, including past operating results, forecasted future earnings, and prudent and feasible tax planning strategies. Due to historical net losses incurred and the uncertainty of realizing the deferred tax assets, for all the periods presented, the Company has maintained a domestic valuation allowance against the deferred tax assets that remain after offset by domestic deferred tax liabilities, and the company currently anticipates recording a valuation allowance against net foreign deferred tax assets by the end of the current year.
v3.19.2
Stock-Based Compensation and Equity
 6 Months Ended
Jun. 30, 2019
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation and Equity
Stock-Based Compensation and Equity
313 Incentive Units
The Company’s indirect parent, 313 Acquisition LLC (“313”), which is majority owned by Blackstone, has authorized the award of profits interests, representing the right to share a portion of the value appreciation on the initial capital contributions to 313 (“Incentive Units”). As of June 30, 2019, 85,366,126 Incentive Units had been awarded, and were outstanding, to current and former members of senior management and a board member, of which 42,169,456 were outstanding to the Company’s Chief Executive Officer and President. In June 2018, the Incentive Units and SARs (defined below) vesting terms were modified (“Modification”). Prior to the Modification, the Incentive Units were subject to time-based and performance-based vesting conditions, with (1) one-third subject to ratable time-based vesting over a five year period from the applicable vesting reference date and (2) two-thirds subject to the achievement of certain investment return thresholds by The Blackstone Group, L.P. and its affiliates (“Blackstone”). Pursuant to the Modification the Incentive Units are subject to time-based and performance-based vesting conditions, with (1) one-third subject to ratable time-based vesting over a five year period from the applicable vesting reference date, (2) one-third subject to the achievement of certain investment return thresholds by Blackstone and (3) one-third subject to ratable time-based vesting over a five year period from June 2018 for those granted prior to the modification or the applicable vesting reference date for those granted on or following the Modification. The Company has not recorded any expense related to the performance-based portion of the awards, as the achievement of the vesting condition is not yet deemed probable. The fair value of stock-based awards is measured at the grant date, or the Modification date, and is recognized as expense over the employee’s requisite service period. The grant date fair value was primarily determined using a Monte Carlo simulation valuation approach with the following assumptions: expected volatility varies from 55% to 125%; expected exercise term between 3.96 and 6.00 years; and risk-free rates between 0.62% and 2.61%.

Vivint Stock Appreciation Rights
The Company’s subsidiary, Vivint Group, Inc. (“Vivint Group”), has awarded Stock Appreciation Rights (“SARs”) to various levels of key employees and board members, pursuant to an omnibus incentive plan. The purpose of the SARs is to attract and retain personnel and provide an opportunity to acquire an equity interest of Vivint Group and/or its direct or indirect parents. Prior to the Modification in June 2018, the SARs were subject to time-based and performance-based vesting conditions, with (1) one-third subject to ratable time-based vesting over a five year period from the applicable vesting reference date and (2) two-thirds subject to the achievement of certain investment return thresholds by Blackstone. Pursuant to the Modification the Incentive Units are subject to time-based and performance-based vesting conditions, with (1) one-third subject to ratable time-based vesting over a five year period from the applicable vesting reference date, (2) one-third subject to the achievement of certain investment return thresholds by Blackstone and (3) one-third subject to ratable time-based vesting over a five year period from June 2018 for those granted prior to the Modification or the applicable vesting reference date for those granted on or following the Modification. The Company has not recorded any expense related to the performance-based portion of the awards, as the achievement of the vesting condition is not yet deemed probable. In connection with this plan, 46,429,415 SARs were outstanding as of June 30, 2019. In addition, 53,621,891 SARs have been set aside for funding incentive compensation pools pursuant to long-term sales and installation employee incentive plans established by the Company.
The fair value of the Vivint Group awards is measured at the grant date, or the Modification date, and is recognized as expense over the employee’s requisite service period. The fair value is determined using a Black-Scholes option valuation model with the following assumptions: expected volatility varies from 55% to 125%, expected dividends of 0%; expected exercise term between 6.00 and 6.47 years; and risk-free rates between 0.61% and 2.61%. Due to the lack of historical exercise data, the Company used the simplified method in determining the estimated exercise term, for all Vivint Group awards.
Restricted Stock Units
In March 2019 and June 2018, the Company’s subsidiary, Vivint Group, awarded 236,111 and 360,000 Restricted Stock Units (“RSUs”), respectively, to certain board members, pursuant to an omnibus incentive plan. The purpose of the RSUs is to compensate board members for their board service and align their interests of those of the Company's shareholders. The RSUs are subject to a three year time-based ratable vesting period.
Stock-based compensation expense in connection with all stock-based awards is presented as follows (in thousands):
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Operating expenses
$
52

 
$
26

 
$
95

 
$
44

Selling expenses
82

 
81

 
169

 
126

General and administrative expenses
843

 
231

 
1,570

 
372

Total stock-based compensation
$
977

 
$
338

 
$
1,834

 
$
542


The increases in total stock-based compensation for the three and six months ended June 30, 2019 was primarily due to the Modification in June 2018.
v3.19.2
Commitments and Contingencies
 6 Months Ended
Jun. 30, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies
Indemnification
Subject to certain limitations, the Company is obligated to indemnify its current and former directors, officers and employees with respect to certain litigation matters and investigations that arise in connection with their service to the Company. These obligations arise under the terms of its certificate of incorporation, its bylaws, applicable contracts, and Delaware and California law. The obligation to indemnify generally means that the Company is required to pay or reimburse these individuals’ reasonable legal expenses and possibly damages and other liabilities incurred in connection with these matters.
Legal
The Company is named from time to time as a party to lawsuits arising in the ordinary course of business related to its sales, marketing, and the provision of its services and equipment claims. Actions filed against the Company include commercial, intellectual property, customer, and labor and employment related claims, including complaints of alleged wrongful termination and potential class action lawsuits regarding alleged violations of federal and state wage and hour and other laws. In general, litigation can be expensive and disruptive to normal business operations. Moreover, the results of legal proceedings are difficult to predict and the costs incurred in litigation can be substantial. The Company believes the amounts provided in its financial statements are adequate in light of the probable and estimated liabilities. Factors that the Company considers in the determination of the likelihood of a loss and the estimate of the range of that loss in respect of legal matters include the merits of a particular matter, the nature of the matter, the length of time the matter has been pending, the procedural posture of the matter, how the Company intends to defend the matter, the likelihood of settling the matter and the anticipated range of a possible settlement. Because such matters are subject to many uncertainties, the ultimate outcomes are not predictable and there can be no assurances that the actual amounts required to satisfy alleged liabilities from the matters described above will not exceed the amounts reflected in the Company’s financial statements or that the matters will not have a material adverse effect on the Company’s results of operations, financial condition or cash flows.
The Company regularly reviews outstanding legal claims and actions to determine if reserves for expected negative outcomes of such claims and actions are necessary. The Company had reserves for all such matters of approximately $1.8 million and $3.1 million as of June 30, 2019 and December 31, 2018, respectively. In conjunction with one of the settlements, the Company is obligated to pay certain future royalties, based on sales of future Products.
Operating Leases
The Company leases office and warehouse space and an aircraft under operating leases with related and unrelated parties expiring in various years through 2028. The leases require the Company to pay additional rent for increases in operating expenses and real estate taxes and contain renewal options. Total rent expense for all operating leases for the three and six months ended June 30, 2018 was $4.4 million and $8.8 million, respectively.
Capital Leases
The Company also enters into certain capital leases with expiration dates through July 2022. On an ongoing basis, the Company enters into vehicle lease agreements under a Fleet Lease Agreement. The lease agreements are typically 36 month leases for each vehicle and the average remaining life for the fleet is 8 months, as of June 30, 2019. As of December 31, 2018, the capital lease obligation balance was $13.3 million.
See Note 12 "Leases" for additional information related to the impact of adopting Topic 842.
v3.19.2
Leases (Notes)
 6 Months Ended
Jun. 30, 2019
Leases [Abstract]  
Leases
Leases
The Company has operating leases for corporate offices, warehouse facilities, research and development and other operating facilities, an aircraft, and other operating assets. The Company has finance leases for vehicles, office equipment and other warehouse equipment. The leases have remaining terms of 1 year to 9 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 year.
The components of lease expense were as follows (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2019
Operating lease cost
$
4,341

 
$
8,589

 
 
 
 
Finance lease cost:
 
 
 
Amortization of right-of-use assets
$
1,357

 
$
2,732

Interest on lease liabilities
240

 
394

Total finance lease cost
$
1,597

 
$
3,126

Supplemental cash flow information related to leases was as follows (in thousands):
 
Six Months Ended June 30,
 
2019
Cash paid for amounts included in the measurement of lease liabilities:
 
Operating cash flows from operating leases
$
(8,742
)
Operating cash flows from finance leases
(394
)
Financing cash flows from finance leases
(4,263
)
 
 
Right-of-use assets obtained in exchange for lease obligations:
 
Operating leases
$
1,690

Finance leases
1,295


Supplemental balance sheet information related to leases was as follows (in thousands, except lease term and discount rate):
 
June 30, 2019
Operating Leases
 
Operating lease right-of-use assets
$
71,557

 
 
Current operating lease liabilities
$
12,058

Operating lease liabilities
69,975

Total operating lease liabilities
$
82,033

 
 
Finance Leases
 
Property, plant and equipment, gross
$
45,315

Accumulated depreciation
(23,697
)
Property, plant and equipment, net
$
21,618

 
 
Current finance lease liabilities
$
6,984

Finance lease liabilities
3,397

Total finance lease liabilities
$
10,381

 
 
Weighted Average Remaining Lease Term
 
Operating leases
6 years

Finance leases
1.4 years

Weighted Average Discount Rate
 
Operating leases
7
%
Finance leases
4
%

Maturities of lease liabilities were as follows (in thousands):
 
Operating Leases
 
Finance Leases
Year Ending December 31,
 
 
 
2019 (excluding the six months ended June 30, 2019)
$
9,010

 
$
4,218

2020
16,955

 
5,517

2021
16,069

 
719

2022
14,728

 
261

2023
14,622

 
1

Thereafter
32,422

 
—

Total lease payments
103,806

 
10,716

Less imputed interest
(21,773
)
 
(335
)
Total
$
82,033

 
$
10,381
Leases
Leases
The Company has operating leases for corporate offices, warehouse facilities, research and development and other operating facilities, an aircraft, and other operating assets. The Company has finance leases for vehicles, office equipment and other warehouse equipment. The leases have remaining terms of 1 year to 9 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 year.
The components of lease expense were as follows (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2019
Operating lease cost
$
4,341

 
$
8,589

 
 
 
 
Finance lease cost:
 
 
 
Amortization of right-of-use assets
$
1,357

 
$
2,732

Interest on lease liabilities
240

 
394

Total finance lease cost
$
1,597

 
$
3,126

Supplemental cash flow information related to leases was as follows (in thousands):
 
Six Months Ended June 30,
 
2019
Cash paid for amounts included in the measurement of lease liabilities:
 
Operating cash flows from operating leases
$
(8,742
)
Operating cash flows from finance leases
(394
)
Financing cash flows from finance leases
(4,263
)
 
 
Right-of-use assets obtained in exchange for lease obligations:
 
Operating leases
$
1,690

Finance leases
1,295


Supplemental balance sheet information related to leases was as follows (in thousands, except lease term and discount rate):
 
June 30, 2019
Operating Leases
 
Operating lease right-of-use assets
$
71,557

 
 
Current operating lease liabilities
$
12,058

Operating lease liabilities
69,975

Total operating lease liabilities
$
82,033

 
 
Finance Leases
 
Property, plant and equipment, gross
$
45,315

Accumulated depreciation
(23,697
)
Property, plant and equipment, net
$
21,618

 
 
Current finance lease liabilities
$
6,984

Finance lease liabilities
3,397

Total finance lease liabilities
$
10,381

 
 
Weighted Average Remaining Lease Term
 
Operating leases
6 years

Finance leases
1.4 years

Weighted Average Discount Rate
 
Operating leases
7
%
Finance leases
4
%

Maturities of lease liabilities were as follows (in thousands):
 
Operating Leases
 
Finance Leases
Year Ending December 31,
 
 
 
2019 (excluding the six months ended June 30, 2019)
$
9,010

 
$
4,218

2020
16,955

 
5,517

2021
16,069

 
719

2022
14,728

 
261

2023
14,622

 
1

Thereafter
32,422

 
—

Total lease payments
103,806

 
10,716

Less imputed interest
(21,773
)
 
(335
)
Total
$
82,033

 
$
10,381
v3.19.2
Related Party Transactions
 6 Months Ended
Jun. 30, 2019
Related Party Transactions [Abstract]  
Related Party Transactions
Related Party Transactions
Transactions with Vivint Solar
The Company is a party to a number of agreements with its sister company, Vivint Solar, Inc. (“Solar”). Some of those agreements related to Solar’s use of certain of the Company’s information technology and infrastructure services; however, Solar stopped using such services in July 2017. In August 2017, the Company entered into a sales dealer agreement with Solar, pursuant to which each company will act as a non-exclusive dealer for the other party to market, promote and sell each other’s products. The agreement has an initial term of two years and replaces substantially all of the activities being undertaken under the parties’ former marketing and customer relations agreement. The Company and Solar also agreed to extend the term of the non-solicitation provisions under an existing non-competition agreement to match the term of the sales dealer agreement. Net expenses charged to Solar in connection with these agreements was $4.2 million and $3.7 million during the three months ended June 30, 2019 and 2018, respectively, and $6.6 million and $4.7 million during the six months ended June 30, 2019 and 2018, respectively. The balance due from Solar in connection with these agreements and other expenses paid on Solar’s behalf was immaterial at June 30, 2019 and December 31, 2018, respectively, and is included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets.
Other Related-party Transactions
Prepaid expenses and other current assets at June 30, 2019 and December 31, 2018 included a receivable for $0.3 million and $1.8 million, respectively, from certain members of management in regards to their personal use of the corporate jet.
The Company incurred additional expenses of $0.3 million and $0.6 million during the three months ended June 30, 2019 and 2018, respectively, and $0.7 million and $1.2 million during the six months ended June 30, 2019 and 2018, respectively for other related-party transactions including contributions to the charitable organization Vivint Gives Back, legal fees, and other services. Accrued expenses and other current liabilities included on the Company's balance sheets at June 30, 2019 and December 31, 2018 associated with these related-party transactions was immaterial.
On November 16, 2012, the Company was acquired by an investor group comprised of certain investment funds affiliated with Blackstone Capital Partners VI L.P., and certain co-investors and management investors through certain mergers and related reorganization transactions (collectively, the “Merger”). In connection with the Merger, the Company engaged Blackstone Management Partners L.L.C. (“BMP”) to provide monitoring, advisory and consulting services on an ongoing basis. In consideration for these services, the Company agreed to pay an annual monitoring fee equal to the greater of (i) a minimum base fee of $2.7 million, subject to adjustments if the Company engages in a business combination or disposition that is deemed significant and (ii) the amount of the monitoring fee paid in respect of the immediately preceding fiscal year, without regard to any post-fiscal year “true-up” adjustments as determined by the agreement. The Company incurred expenses for such services of approximately $1.0 million and $1.0 million during the three months ended June 30, 2019 and 2018, respectively, and $2.0 million and $2.1 million during the six months ended June 30, 2019 and 2018, respectively. Accrued expenses and other current liabilities at June 30, 2019 and December 31, 2018, included a liability to BMP in regards to the monitoring fee for $2.0 million and $4.8 million, respectively.
Under the support and services agreement, the Company also engaged BMP to arrange for Blackstone’s portfolio operations group to provide support services customarily provided by Blackstone’s portfolio operations group to Blackstone’s private equity portfolio companies of a type and amount determined by such portfolio services group to be warranted and appropriate. BMP will invoice the Company for such services based on the time spent by the relevant personnel providing such services during the applicable period but in no event shall the Company be obligated to pay more than $1.5 million during any calendar year. During the three and six months ended June 30, 2019 and 2018 the Company incurred no costs associated with such services.

An affiliate of Blackstone participated as one of the arrangers in the Term Loan in September 2018 and as one of the intial purchasers in connection with the offering of the 2024 Notes in May 2019 and received approximately $1.2 million of total fees associated with these transactions.
    
In September 2018, GSO Capital Partners, an affiliate of Blackstone, participated as a lender in the Term Loan. As of June 30, 2019 and December 31, 2018, GSO Capital Partners held $82.2 million and $75.1 million, respectively, of outstanding aggregate principal of the Term Loan.

In September 2018, Vivint Smart Home, Inc. contributed $4.7 million to the Company as a capital contribution.     

From time to time, the Company does business with a number of other companies affiliated with Blackstone.

Transactions involving related parties cannot be presumed to be carried out at an arm’s-length basis.
v3.19.2
Employee Benefit Plan
 6 Months Ended
Jun. 30, 2019
Postemployment Benefits [Abstract]  
Employee Benefit Plan
Employee Benefit Plan
The Company offers eligible employees the opportunity to contribute a percentage of their earned income into company-sponsored 401(k) plans.
Since January 2018, participants in the 401(k) plans have been eligible for the Company's matching program. Under this matching program, the Company matches an employee’s contributions to the 401(k) savings plan dollar-for-dollar up to 1% of such employee’s eligible earnings and $0.50 for every $1.00 for the next 5% of such employee’s eligible earnings. The maximum match available under the 401(k) plan is 3.5% of the employee’s eligible earnings. For employees who have been employed by the Company for less than two years, matching contributions vest on the second anniversary of their date of hire. The Company's matching contributions to employees who have been employed by the Company for two years or more are fully vested.
Matching contributions that were made to the plans totaled $1.5 million and $1.4 million during the three months ended June 30, 2019 and 2018, respectively and $3.4 million and $3.0 million during the six months ended June 30, 2019 and 2018, respectively.
v3.19.2
Restructuring and Asset Impairment Charges
 6 Months Ended
Jun. 30, 2019
Restructuring and Related Activities [Abstract]  
Restructuring and Asset Impairment Charges
Restructuring and Asset Impairment Charges
In July 2018, the Company announced a number of cost reduction initiatives that are expected to reduce certain of the Company’s General and Administrative, Customer Service, and Sales Support fixed costs. The Company completed the majority of these cost reduction initiatives in the second and third quarters of 2018, with the remainder by the end of 2018. In addition to resulting in meaningful cost reductions, the Company’s initiatives are expected to streamline operations, focus engineering and innovation and provide a better focus on driving customer satisfaction.
As part of these initiatives, the Company and Best Buy agreed in principle to end the co-branded Best Buy Smart Home by Vivint arrangement, which resulted in the elimination of in-store sales positions. In addition, the Company eliminated other general and administrative positions.
The following table presents accrued restructuring activity for the six months ended June 30, 2019 and the twelve months ended December 31, 2018 (in thousands):

 
Contract
termination
costs
 
Employee severance
and termination
benefits
 
Total
Accrued restructuring balance as of December 31, 2017
$
558

 
$
—

 
$
558

Restructuring expenses
—

 
4,683

 
4,683

Cash payments
(91
)
 
(4,341
)
 
(4,432
)
Accrued restructuring balance as of December 31, 2018
467

 
342

 
809

Cash payments
(46
)
 
(313
)
 
(359
)
Accrued restructuring balance as of June 30, 2019
$
421

 
$
29

 
$
450


Contract termination costs represent ongoing contractual commitments related to the 2015 restructuring of the Company's Wireless Internet Business. Additional charges may be incurred in the future for facility-related or other restructuring activities as the Company continues to align resources to meet the needs of the business.
v3.19.2
Segment Reporting and Business Concentrations
 6 Months Ended
Jun. 30, 2019
Segment Reporting [Abstract]  
Segment Reporting and Business Concentrations
Segment Reporting and Business Concentrations
For the three and six months ended June 30, 2019 and 2018, the Company conducted business through one operating segment, Vivint. The Company primarily operated in two geographic regions: United States and Canada. Revenues disaggregated by geographic region were as follows (in thousands):

 
  
United States
 
Canada
 
Total
Revenue from external customers
  
 
 
 
 
 
Three months ended June 30, 2019
  
$
263,007

 
$
18,046

 
$
281,053

Three months ended June 30, 2018
  
237,513

 
17,454

 
254,967

Six months ended June 30, 2019
 
521,443

 
35,859

 
557,302

Six months ended June 30, 2018
 
466,055

 
35,509

 
501,564
v3.19.2
Guarantor and Non-Guarantor Supplemental Financial Information
 6 Months Ended
Jun. 30, 2019
Guarantor And Non Guarantor Supplemental Financial Information [Abstract]  
Guarantor and Non-Guarantor Supplemental Financial Information
Guarantor and Non-Guarantor Supplemental Financial Information
The Notes were issued by APX and are fully and unconditionally guaranteed, jointly and severally by Holdings and each of APX’s existing and future material wholly-owned U.S. restricted subsidiaries. APX’s existing and future foreign subsidiaries are not expected to guarantee the Notes.
Presented below is the condensed consolidating financial information of APX, subsidiaries of APX that are guarantors (the “Guarantor Subsidiaries”), and APX’s subsidiaries that are not guarantors (the “Non-Guarantor Subsidiaries”) as of June 30, 2019 and December 31, 2018 and for the three and six months ended June 30, 2019 and 2018. The unaudited condensed consolidating financial information reflects the investments of APX in the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries using the equity method of accounting.





Supplemental Condensed Consolidating Balance Sheet
June 30, 2019
(in thousands)
(unaudited)

 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets
$
—

 
$
2,713

 
$
408,215

 
$
135,703

 
$
(315,770
)
 
$
230,861

Property, plant and equipment, net
—

 
—

 
61,215

 
385

 
—

 
61,600

Capitalized contract costs, net
—

 
—

 
1,101,598

 
69,089

 
—

 
1,170,687

Deferred financing costs, net
—

 
1,572

 
—

 
—

 
—

 
1,572

Investment in subsidiaries
—

 
1,595,121

 
—

 
—

 
(1,595,121
)
 
—

Intercompany receivable
—

 
—

 
6,303

 
—

 
(6,303
)
 
—

Intangible assets, net
—

 
—

 
201,538

 
16,240

 
—

 
217,778

Goodwill
—

 
—

 
810,129

 
26,160

 
—

 
836,289

Operating lease right-of-use assets
—

 
—

 
71,345

 
212

 
—

 
71,557

Long-term notes receivables and other assets
—

 
106

 
101,695

 
20,936

 
(106
)
 
122,631

Total Assets
$
—

 
$
1,599,512

 
$
2,762,038

 
$
268,725

 
$
(1,917,300
)
 
$
2,712,975

Liabilities and Stockholders’ (Deficit) Equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
$
—

 
$
33,866

 
$
662,048

 
$
209,672

 
$
(315,770
)
 
$
589,816

Intercompany payable
—

 
—

 
—

 
6,303

 
(6,303
)
 
—

Notes payable and revolving credit facility, net of current portion
—

 
3,164,749

 
—

 
—

 
—

 
3,164,749

Finance lease obligations, net of current portion
—

 
—

 
3,397

 
—

 
—

 
3,397

Deferred revenue, net of current portion
—

 
—

 
363,958

 
19,308

 
—

 
383,266

Operating lease liabilities
—

 
—

 
69,894

 
81

 
—

 
69,975

Other long-term obligations
—

 
—

 
98,859

 
877

 
—

 
99,736

Accumulated losses of investee, net
1,599,103

 
 
 
 
 
 
 
(1,599,103
)
 
—

Deferred income tax liability
—

 
—

 
106

 
1,139

 
(106
)
 
1,139

Total (deficit) equity
(1,599,103
)
 
(1,599,103
)
 
1,563,776

 
31,345

 
3,982

 
(1,599,103
)
Total liabilities and stockholders’ (deficit) equity
$
—

 
$
1,599,512

 
$
2,762,038

 
$
268,725

 
$
(1,917,300
)
 
$
2,712,975









Supplemental Condensed Consolidating Balance Sheet
December 31, 2018
(in thousands)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets
$
—

 
$
12,951

 
$
269,770

 
$
103,451

 
$
(262,674
)
 
$
123,498

Property, plant and equipment, net
—

 
—

 
72,937

 
464

 
—

 
73,401

Capitalized contract costs, net
—

 
—

 
1,047,532

 
68,243

 
—

 
1,115,775

Deferred financing costs, net
—

 
2,058

 
—

 
—

 
—

 
2,058

Investment in subsidiaries
—

 
1,662,367

 
—

 
—

 
(1,662,367
)
 
—

Intercompany receivable
—

 
—

 
6,303

 
—

 
(6,303
)
 
—

Intangible assets, net
—

 
—

 
236,677

 
18,408

 
—

 
255,085

Goodwill
—

 
—

 
809,678

 
25,177

 
—

 
834,855

Long-term notes receivables and other assets
—

 
106

 
102,695

 
17,124

 
(106
)
 
119,819

Total Assets
$
—

 
$
1,677,482

 
$
2,545,592

 
$
232,867

 
$
(1,931,450
)
 
$
2,524,491

Liabilities and Stockholders’ (Deficit) Equity
 
 
 
 
 
 
 
 
 
 
 
       Current liabilities
$
—

 
$
36,988

 
$
507,063

 
$
182,159

 
$
(262,674
)
 
$
463,536

Intercompany payable
—

 
—

 
—

 
6,303

 
(6,303
)
 
—

Notes payable and revolving credit facility, net of current portion
—

 
3,037,095

 
—

 
—

 
—

 
3,037,095

Capital lease obligations, net of current portion
—

 
—

 
5,570

 
1

 
—

 
5,571

Deferred revenue, net of current portion
—

 
—

 
306,653

 
16,932

 
—

 
323,585

Accumulated Losses of Investee, net
1,396,601

 


 


 


 
(1,396,601
)
 
—

Other long-term obligations
—

 
—

 
90,209

 
—

 
—

 
90,209

Deferred income tax liability
—

 
—

 
106

 
1,096

 
(106
)
 
1,096

Total (deficit) equity
(1,396,601
)
 
(1,396,601
)
 
1,635,991

 
26,376

 
(265,766
)
 
(1,396,601
)
Total liabilities and stockholders’ (deficit) equity
$
—

 
$
1,677,482

 
$
2,545,592

 
$
232,867

 
$
(1,931,450
)
 
$
2,524,491






Supplemental Condensed Consolidating Statements of Operations and Comprehensive Loss
For the Three Months Ended June 30, 2019
(in thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
—

 
$
—

 
$
268,055

 
$
13,590

 
$
(592
)
 
$
281,053

Costs and expenses
—

 
—

 
319,266

 
13,208

 
(592
)
 
331,882

(Loss) income from operations
—

 
—

 
(51,211
)
 
382

 
—

 
(50,829
)
Loss from subsidiaries
(115,896
)
 
(49,954
)
 
—

 
—

 
165,850

 
—

Other expense (income), net
—

 
65,942

 
807

 
(1,130
)
 
—

 
65,619

(Loss) income before income tax expenses
(115,896
)
 
(115,896
)
 
(52,018
)
 
1,512

 
165,850

 
(116,448
)
Income tax benefit
—

 
—

 
(288
)
 
(264
)
 
—

 
(552
)
Net (loss) income
(115,896
)
 
(115,896
)
 
(51,730
)
 
1,776

 
165,850

 
(115,896
)
Other comprehensive loss, net of tax effects:
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
(115,896
)
 
(115,896
)
 
(51,730
)
 
1,776

 
165,850

 
(115,896
)
Other comprehensive income from subsidiaries
504

 
504

 
—

 
—

 
(1,008
)
 
—

Foreign currency translation adjustment
—

 
—

 
—

 
504

 
—

 
504

Total other comprehensive income
504


504

 
—

 
504

 
(1,008
)
 
504

Comprehensive (loss) income
$
(115,392
)
 
$
(115,392
)
 
$
(51,730
)
 
$
2,280

 
$
164,842

 
$
(115,392
)



Supplemental Condensed Consolidating Statements of Operations and Comprehensive Loss
For the Three Months Ended June 30, 2018
(in thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
—

 
$
—

 
$
244,000

 
$
11,613

 
$
(646
)
 
$
254,967

Costs and expenses
—

 
—

 
321,835

 
14,011

 
(646
)
 
335,200

Loss from operations
—

 
—

 
(77,835
)
 
(2,398
)
 
—

 
(80,233
)
Loss from subsidiaries
(144,385
)
 
(84,923
)
 
—

 
—

 
229,308

 
—

Other expense, net
—

 
59,462

 
4,006

 
1,590

 
—

 
65,058

Loss before income tax expenses
(144,385
)
 
(144,385
)
 
(81,841
)
 
(3,988
)
 
229,308

 
(145,291
)
Income tax benefit
—

 
—

 
(70
)
 
(836
)
 
—

 
(906
)
Net loss
(144,385
)
 
(144,385
)
 
(81,771
)
 
(3,152
)
 
229,308

 
(144,385
)
Other comprehensive loss, net of tax effects:

 

 

 

 

 

Net loss
(144,385
)
 
(144,385
)
 
(81,771
)
 
(3,152
)
 
229,308

 
(144,385
)
Other comprehensive loss from subsidiaries
(417
)
 
(417
)
 
—

 
—

 
834

 
—

Foreign currency translation adjustment
—

 
—

 
—

 
(417
)
 
—

 
(417
)
Total other comprehensive loss
(417
)
 
(417
)
 
—

 
(417
)
 
834

 
(417
)
Comprehensive loss
$
(144,802
)
 
$
(144,802
)
 
$
(81,771
)
 
$
(3,569
)
 
$
230,142

 
$
(144,802
)

Supplemental Condensed Consolidating Statements of Operations and Comprehensive Loss
For the Six Months Ended June 30, 2019
(in thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
—

 
$
—

 
$
531,594

 
$
26,502

 
$
(794
)
 
$
557,302

Costs and expenses
—

 
—

 
610,775

 
26,128

 
(794
)
 
636,109

(Loss) income from operations
—

 
—

 
(79,181
)
 
374

 
—

 
(78,807
)
Loss from subsidiaries
(205,052
)
 
(75,935
)
 
—

 
—

 
280,987

 
—

Other expense (income), net
—

 
129,117

 
755

 
(2,774
)
 
—

 
127,098

(Loss) income before income tax expenses
(205,052
)
 
(205,052
)
 
(79,936
)
 
3,148

 
280,987

 
(205,905
)
Income tax benefit
—

 
—

 
(106
)
 
(747
)
 
—

 
(853
)
Net (loss) income
(205,052
)
 
(205,052
)
 
(79,830
)
 
3,895

 
280,987

 
(205,052
)
Other comprehensive loss, net of tax effects:
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
(205,052
)
 
(205,052
)
 
(79,830
)
 
3,895

 
280,987

 
(205,052
)
Other comprehensive income from subsidiaries
1,074

 
1,074

 
—

 
—

 
(2,148
)
 
—

Foreign currency translation adjustment
—

 
—

 
—

 
1,074

 
—

 
1,074

Total other comprehensive income
1,074


1,074

 
—

 
1,074

 
(2,148
)
 
1,074

Comprehensive (loss) income
$
(203,978
)
 
$
(203,978
)
 
$
(79,830
)
 
$
4,969

 
$
278,839

 
$
(203,978
)
Supplemental Condensed Consolidating Statements of Operations and Comprehensive Loss
For the Six Months Ended June 30, 2018
(in thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
—

 
$
—

 
$
477,788

 
$
25,078

 
$
(1,302
)
 
$
501,564

Costs and expenses
—

 
—

 
627,056

 
27,674

 
(1,302
)
 
653,428

Loss from operations
—

 
—

 
(149,268
)
 
(2,596
)
 
—

 
(151,864
)
Loss from subsidiaries
(229,102
)
 
(111,243
)
 
—

 
—

 
340,345

 
—

Other expense (income), net
—

 
117,859

 
(42,964
)
 
3,682

 
—

 
78,577

Loss before income tax expenses
(229,102
)
 
(229,102
)
 
(106,304
)
 
(6,278
)
 
340,345

 
(230,441
)
Income tax expense (benefit)
—

 
—

 
102

 
(1,441
)
 
—

 
(1,339
)
Net loss
(229,102
)
 
(229,102
)
 
(106,406
)
 
(4,837
)
 
340,345

 
(229,102
)
Other comprehensive loss, net of tax effects:
 
 
 
 
 
 
 
 
 
 
 
Net loss
(229,102
)
 
(229,102
)
 
(106,406
)
 
(4,837
)
 
340,345

 
(229,102
)
Other comprehensive loss from subsidiaries
(1,076
)
 
(1,076
)
 
—

 
—

 
2,152

 
—

Foreign currency translation adjustment
—

 
—

 
—

 
(1,076
)
 
—

 
(1,076
)
Total other comprehensive income
—


—

 
—

 
(1,076
)
 
—

 
(1,076
)
Comprehensive loss
$
(229,102
)
 
$
(229,102
)
 
$
(106,406
)
 
$
(5,913
)
 
$
340,345

 
$
(230,178
)





























Supplemental Condensed Consolidating Statements of Cash Flows
For the Six Months Ended June 30, 2019
(in thousands)
(unaudited)

 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Net cash used in operating activities
$
—

 
$
—

 
$
(130,577
)
 
$
(413
)
 
$
—

 
$
(130,990
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(4,653
)
 
—

 
—

 
(4,653
)
Proceeds from sale of capital assets
—

 
—

 
19

 
—

 
—

 
19

Proceeds from sales of equity securities
—

 
—

 
5,430

 
—

 
—

 
5,430

Investment in subsidiary
(441
)
 
(135,039
)
 
—

 
—

 
135,480

 
—

Acquisition of intangible assets
—

 
—

 
(668
)
 
—

 
—

 
(668
)
Net cash (used in) provided by investing activities
(441
)
 
(135,039
)
 
128

 
—

 
135,480

 
128

Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
Proceeds from notes payable
—

 
225,000

 
—

 
—

 
—

 
225,000

Repayment on notes payable
—

 
(229,050
)
 
—

 
—

 
—

 
(229,050
)
Borrowings from revolving credit facility
—

 
160,000

 
—

 
—

 
—

 
160,000

Repayments on revolving credit facility
—

 
(26,000
)
 
—

 
—

 
—

 
(26,000
)
Proceeds from capital contribution
—

 
—

 
134,598

 
—

 
(134,598
)
 
—

Repayments of finance lease obligations
—

 
—

 
(4,119
)
 
(144
)
 
—

 
(4,263
)
Deferred financing costs
—

 
(4,036
)
 
—

 
—

 
—

 
(4,036
)
Return of capital
441

 
441

 
(441
)
 
—

 
(882
)
 
(441
)
Net cash provided by (used in) financing activities
441

 
126,355

 
130,038

 
(144
)
 
(135,480
)
 
121,210

Effect of exchange rate changes on cash
—

 
—

 
—

 
12

 
—

 
12

Net decrease in cash and cash equivalents
—

 
(8,684
)
 
(411
)
 
(545
)
 
—

 
(9,640
)
Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
Beginning of period
—

 
11,130

 
682

 
961

 
—

 
12,773

End of period
$
—

 
$
2,446

 
$
271

 
$
416

 
$
—

 
$
3,133


Supplemental Condensed Consolidating Statements of Cash Flows
For the Six Months Ended June 30, 2018
(in thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Net cash used in operating activities
$
—

 
$
—

 
$
(130,919
)
 
$
(70
)
 
$
—

 
$
(130,989
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(12,193
)
 
—

 
—

 
(12,193
)
Investment in subsidiary
2,049

 
(98,251
)
 
—

 
—

 
96,202

 
—

Acquisition of intangible assets
—

 
—

 
(1,022
)
 
—

 
—

 
(1,022
)
Proceeds from sale of intangibles
—

 
—

 
53,693

 
—

 
—

 
53,693

Proceeds from sale of capital assets
—

 
—

 
225

 
—

 
—

 
225

Net cash provided by (used in) investing activities
2,049

 
(98,251
)
 
40,703

 
—

 
96,202

 
40,703

Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
Borrowings from revolving credit facility
—

 
179,000

 
—

 
—

 
—

 
179,000

Repayments on revolving credit facility
—

 
(79,000
)
 
—

 
—

 
—

 
(79,000
)
Proceeds from capital contributions
—

 
—

 
100,300

 
—

 
(100,300
)
 
—

Repayments of capital lease obligations
—

 
—

 
(6,768
)
 
(187
)
 
—

 
(6,955
)
Return of capital
(2,049
)
 
(2,049
)
 
(2,049
)
 
—

 
4,098

 
(2,049
)
Net cash (used in) provided by financing activities
(2,049
)
 
97,951

 
91,483

 
(187
)
 
(96,202
)
 
90,996

Effect of exchange rate changes on cash
—

 
—

 
—

 
(62
)
 
—

 
(62
)
Net (decrease) increase in cash and cash equivalents
—

 
(300
)
 
1,267

 
(319
)
 
—

 
648

Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
Beginning of period
—

 
3,661

 
(572
)
 
783

 
—

 
3,872

End of period
$
—

 
$
3,361

 
$
695

 
$
464

 
$
—

 
$
4,520
v3.19.2
Subsequent Events
 6 Months Ended
Jun. 30, 2019
Subsequent Events [Abstract]  
Subsequent Events
Subsequent Events
On July 31, 2019, in an effort to deliver additional cost savings and cash-flow improvements, the Company completed a spin-off of its wireless internet business. In connection with the spin-off, the equity interests of Vivint Wireless, Inc. were distributed to the shareholders of Vivint Smart Home, Inc. pro rata based on their respective holdings.
v3.19.2
Basis of Presentation and Significant Accounting Policies (Policies)
 6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation
The unaudited condensed consolidated financial statements of the Company are presented for APX Group Holdings, Inc. (“Holdings") and its wholly-owned subsidiaries. The Company has prepared the accompanying unaudited condensed consolidated financial statements pursuant to GAAP. Preparing financial statements requires the Company to make estimates and assumptions that affect the amounts that are reported in the consolidated financial statements and accompanying disclosures. Although these estimates are based on the Company’s best knowledge of current events and actions that the Company may undertake in the future, actual results may be different from the Company’s estimates. The results of operations presented herein are not necessarily indicative of the Company’s results for any future period.
Vivint Flex Pay
Vivint Flex Pay
The Vivint Flex Pay plan (“Vivint Flex Pay”) became the Company's primary sales model beginning in March 2017. Under Vivint Flex Pay, customers pay separately for the products (including control panel, security peripheral equipment, smart home equipment, and related installation) (“Products”) and Vivint's smart home and security services (“Services”). The customer has the following three ways to pay for the Products: (1) qualified customers in the United States may finance the purchase of Products through third-party financing providers (“Consumer Financing Program”), (2) the Company offers to some customers not eligible for the Consumer Financing Program, but who qualify under the Company's underwriting criteria, the option to enter into a retail installment contract (“RIC”) directly with Vivint, or (3) customers may purchase the Products at the outset of the service contract by check, automatic clearing house payments (“ACH”), credit or debit card.
Although customers pay separately for Products and Services under the Vivint Flex Pay plan, the Company has determined that the sale of Products and Services are one single performance obligation. As a result, all forms of transactions under Vivint Flex Pay create deferred revenue for the gross amount of Products sold. Gross deferred revenues are reduced by imputed interest on the RICs and the present value of expected payments due to the third-party financing provider under the Consumer Financing Program.
Under the Consumer Financing Program, qualified customers are eligible for loans provided by third-party financing providers up to $4,000. The annual percentage rates on these loans range between 0% and 9.99%, and are either installment or revolving loans with a 42 or 60 month term. Loan terms are determined based on the customer's credit quality.
For certain third-party provider loans, the Company pays a monthly fee based on either the average daily outstanding balance of the loans or the number of outstanding loans, depending on the third-party financing provider. Additionally, the Company shares liability for credit losses depending on the credit quality of the customer. Because of the nature of these provisions, the Company records a derivative liability at its fair value when the third-party financing provider originates loans to customers, which reduces the amount of estimated revenue recognized on the provision of the services. The derivative liability is reduced as payments are made by the Company to the third-party financing provider. Subsequent changes to the fair value of the derivative liability are realized through other expenses (income), net in the Condensed Consolidated Statement of Operations. (See Note 8).
For separate third-party loans, the Company receives net proceeds (net of fees and expected losses) for which the Company has no further obligation to the third-party. The Company records these net proceeds to deferred revenue.
Retail Installment Contract Receivables
Retail Installment Contract Receivables
For subscribers that enter into a RIC to finance the purchase of Products and related installation, the Company records a receivable for the amount financed. The RIC receivables are recorded at their present value, net of the imputed interest discount. At the time of installation, the Company records a long-term note receivable within long-term notes receivables and other assets, net on the condensed consolidated balance sheets for the present value of the receivables that are expected to be collected beyond 12 months of the reporting date. The unbilled receivable amounts that are expected to be collected within 12 months of the reporting date are included as a short-term notes receivable within accounts and notes receivable, net on the condensed consolidated balance sheets. The billed amounts of notes receivables are included in accounts receivable within accounts and notes receivable, net on the condensed consolidated balance sheets.
The Company imputes the interest on the RIC receivable using a risk adjusted market interest rate and records it as an adjustment to deferred revenue and as an adjustment to the face amount of the related receivable. The imputed interest discount considers a number of factors, including collection experience, aging of the remaining RIC receivable portfolios, credit quality of the subscriber base and other qualitative considerations, including macro-economic factors. The imputed interest income is recognized over the term of the RIC contract as recurring and other revenue on the condensed consolidated statement of operations.
When the Company determines that there are RIC receivables that have become uncollectible, it records an adjustment to the imputed interest discount and reduces the related note receivable balance. Account balances are written-off if collection efforts are unsuccessful and future collection is unlikely based on the length of time from the day accounts become past due.
Accounts Receivable
Accounts Receivable
Accounts receivable consists primarily of amounts due from subscribers for recurring monthly monitoring Services and the billed portion of RIC receivables. The accounts receivable are recorded at invoiced amounts and are non-interest bearing and are included within accounts and notes receivable, net on the condensed consolidated balance sheets. Accounts receivable totaled $31.8 million and $16.5 million at June 30, 2019 and December 31, 2018, respectively net of the allowance for doubtful accounts of $6.6 million and $5.6 million at June 30, 2019 and December 31, 2018, respectively. The Company estimates this allowance based on historical collection experience and subscriber attrition rates. When the Company determines that there are accounts receivable that are uncollectible, they are charged off against the allowance for doubtful accounts. The provision for doubtful accounts is included in general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations and totaled $5.7 million and $4.4 million for the three months ended June 30, 2019 and 2018, respectively
Revenue Recognition
Revenue Recognition
The Company offers its customers smart home services combining Products, including a proprietary control panel, door and window sensors, door locks, security cameras and smoke alarms; installation; and a proprietary back-end cloud platform software and Services. These together create an integrated system that allows the Company’s customers to monitor, control and protect their home (“Smart Home Services”). The Company’s customers are buying this integrated system that provides them with these Smart Home Services. The number and type of Products purchased by a customer depends on their desired functionality. Because the Products and Services included in the customer’s contract are integrated and highly interdependent, and because they must work together to deliver the Smart Home Services, the Company has concluded that installed Products, related installation and Services contracted for by the customer are generally not distinct within the context of the contract and, therefore, constitute a single, combined performance obligation. Revenues for this single, combined performance obligation are recognized on a straight-line basis over the customer’s contract term. The Company has determined that certain contracts that do not require a long-term commitment for monitoring services by the customer contain a material right to renew the contract, because the customer does not have to purchase Products upon renewal. Proceeds allocated to the material right are recognized over the period of benefit, which is generally three years.
The majority of the Company’s subscription contracts are between three and five years in length and are non-cancelable. These contracts with customers generally convert into month-to-month agreements at the end of the initial term, and some customer contracts are month-to-month from inception. Payment for recurring monitoring and other Smart Home Services is generally due in advance on a monthly basis.
Sales of Products and other one-time fees such as service fees or installation fees are invoiced to the customer at the time of sale. Revenues for wireless internet service provided by Vivint Wireless Inc. (“Wireless Internet” or “Wireless”) and any Products or Services that are considered separate performance obligations are recognized when those Products or Services are delivered. Taxes collected from customers and remitted to governmental authorities are not included in revenue. Payments received or amounts billed in advance of revenue recognition are reported as deferred revenue.
Deferred Revenue
Deferred Revenue
The Company's deferred revenues primarily consist of amounts for sales (including upfront proceeds) of Smart Home Services. Deferred revenues are recognized over the term of the related performance obligation, which is generally three to five years.
Capitalized Contract Costs
Capitalized Contract Costs
Capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts. These include commissions, other compensation and related costs incurred directly for the origination and installation of new or upgraded customer contracts, as well as the cost of Products installed in the customer home at the commencement or modification of the contract. These costs are deferred and amortized on a straight-line basis over the expected period of benefit that the Company has determined to be five years. Amortization of capitalized contract costs is included in “Depreciation and Amortization” on the consolidated statements of operations. These deferred costs are periodically reviewed for impairment. Contract costs not directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts are expensed as incurred. These costs include those associated with housing, marketing and recruiting, non-direct lead generation costs, certain portions of sales commissions and residuals, overhead and other costs considered not directly and specifically tied to the origination of a particular subscriber.
On the condensed consolidated statement of cash flows, capitalized contract costs are classified as operating activities and reported as “Capitalized contract costs – deferred contract costs” as these assets represent deferred costs associated with subscriber contracts.
Cash and Cash Equivalents
Cash and Cash Equivalents
Cash and cash equivalents consists of highly liquid investments with remaining maturities when purchased of three months or less.
Inventories
Inventories
Inventories, which are comprised of smart home and security system Products and parts, are stated at the lower of cost or net realizable value with cost determined under the first-in, first-out (“FIFO”) method. The Company adjusts the inventory balance based on anticipated obsolescence, usage and historical write-offs.
Property, Plant and Equipment and Long-lived Assets
Property, Plant and Equipment and Long-lived Assets
Property, plant and equipment are stated at cost and depreciated on the straight-line method over the estimated useful lives of the assets or the lease term for assets under finance leases, whichever is shorter. Intangible assets with definite lives are amortized over the remaining estimated economic life of the underlying technology or relationships, which ranges from 2 to 10 years. Definite-lived intangible assets are amortized on the straight-line method over the estimated useful life of the asset or in a pattern in which the economic benefits of the intangible asset are consumed. Amortization expense associated with leased assets is included with depreciation expense. Routine repairs and maintenance are charged to expense as incurred.
The Company reviews long-lived assets, including property, plant and equipment, capitalized contract costs, and definite-lived intangibles for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company considers whether or not indicators of impairment exist on a regular basis and as part of each quarterly and annual financial statement close process. Factors the Company considers in determining whether or not indicators of impairment exist include market factors and patterns of customer attrition. If indicators of impairment are identified, the Company estimates the fair value of the assets. An impairment loss is recognized if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value.
The Company conducts an indefinite-lived intangible impairment analysis annually as of October 1, and as necessary if changes in facts and circumstances indicate that the fair value of the Company’s indefinite-lived intangibles may be less than the carrying amount. When indicators of impairment do not exist and certain accounting criteria are met, the Company is able to evaluate indefinite-lived intangible impairment using a qualitative approach. When necessary, the Company’s quantitative impairment test consists of two steps. The first step requires that the Company compare the estimated fair value of its indefinite-lived intangibles to the carrying value. If the fair value is greater than the carrying value, the intangibles are not considered to be impaired and no further testing is required. If the fair value is less than the carrying value, an impairment loss in an amount equal to the difference is recorded.
Leases
Leases
Effective January 1, 2019 the Company accounts for leases under Topic 842 (see Recently Adopted Accounting Standards below). Under Topic 842, the Company determines if an arrangement is a lease at inception. Lease right-of-use (“ROU”) assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, the Company uses the implicit rate when available. When implicit rates are not available, the Company uses an incremental borrowing rate based on the information available at commencement date. The lease ROU asset also includes any lease payments made and is reduced by lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company does not record lease ROU assets and liabilities for leases with terms of 12 months or less.
Leases are classified as either operating or finance at lease inception. Operating lease assets and liabilities and finance lease liabilities are stated separately on the condensed consolidated balance sheets. Finance lease assets are included in property, plant and equipment, net on the condensed consolidated balance sheets.
The Company has lease agreements with lease and non-lease components. For facility type leases, the Company separates the lease and non-lease components. Generally, the Company accounts for the lease and non-lease components as a single lease component for all other class of leases.
Long-term Investments
Long-term Investments
The Company’s long-term investments are composed of equity securities in certain companies. As of June 30, 2019 and December 31, 2018, the Company's equity investments totaled $0.5 million and $3.9 million, respectively.
Management determines the appropriate fair value measurement of its investments at the time of purchase and reevaluates the fair value measurement at each balance sheet date. Equity securities are classified as either short-term or long-term, based on the nature of each security and its availability for use in current operations. The Company’s equity securities are carried at fair value, with gains and losses reported in other income or loss within the statement of operations.
The Company's equity investments without readily determinable fair values totaled $0.5 million as of June 30, 2019 and December 31, 2018, respectively. The Company performs impairment analyses of its investments without readily determinable fair values when events occur or circumstances change that would, more likely than not, reduce the fair value of the investment below its carrying value. When indicators of impairment do not exist, the Company evaluates impairment using a qualitative approach. Additionally, increases or decreases in the carrying amount resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer are adjusted through the statement of operations as needed.
Deferred Financing Costs
Deferred Financing Costs
Certain costs incurred in connection with obtaining debt financing are deferred and amortized utilizing the straight-line method, which approximates the effective-interest method, over the life of the related financing. Deferred financing costs associated with obtaining APX Group, Inc.’s (“APX”) revolving credit facility are amortized over the amended maturity dates discussed in Note 3.
Residual Income Plans
Residual Income Plans
The Company has a program that allows certain third-party sales channel partners to receive additional compensation based on the performance of the underlying contracts they create (the “Channel Partner Plan”). The Company also has a residual sales compensation plan (the “Residual Plan”) under which the Company's sales personnel (each, a “Plan Participant”) receive compensation based on the performance of the underlying contracts they create.
For both the Channel Partner Plan and Residual Plan, the Company calculates the present value of the expected future residual payments and records a liability for this amount in the period the subscriber account is originated. These costs are recorded to capitalized contract costs. The Company monitors actual payments and customer attrition on a periodic basis and, when necessary, makes adjustments to the liability.
Stock-Based Compensation
Stock-Based Compensation
The Company measures compensation cost based on the grant-date fair value of the award and recognizes that cost over the requisite service period of the awards (See Note 10).
Advertising Expense
Advertising Expense
Advertising costs are expensed as incurred.
Income Taxes
Income Taxes
The Company accounts for income taxes based on the asset and liability method. Under the asset and liability method, deferred tax assets and deferred tax liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Valuation allowances are established when necessary to reduce deferred tax assets when it is determined that it is more likely than not that some portion, or all, of the deferred tax asset will not be realized.
The Company recognizes the effect of an uncertain income tax position on the income tax return at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. The Company’s policy for recording interest and penalties is to record such items as a component of the provision for income taxes.
Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. The Company records the effect of a tax rate or law change on the Company’s deferred tax assets and liabilities in the period of enactment. Future tax rate or law changes could have a material effect on the Company’s results of operations, financial condition, or cash flows.
Concentrations of Credit Risk
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist principally of receivables and cash. At times during the year, the Company maintains cash balances in excess of insured limits. The Company is not dependent on any single customer or geographic location. The loss of a customer would not adversely impact the Company’s operating results or financial position.
Concentrations of Supply Risk
Concentrations of Supply Risk
As of June 30, 2019, approximately 85% of the Company’s installed panels were SkyControl panels and 15% were 2GIG Go!Control panels and 1% were other panels. During 2018 the Company transitioned to a new panel supplier. The loss of the Company's panel supplier could potentially impact its operating results or financial position.
Fair Value Measurement
Fair Value Measurement
Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities subject to on-going fair value measurement are categorized and disclosed into one of three categories depending on observable or unobservable inputs employed in the measurement. These two types of inputs have created the following fair value hierarchy:
Level 1: Quoted prices in active markets that are accessible at the measurement date for assets and liabilities.
Level 2: Observable prices that are based on inputs not quoted in active markets, but corroborated by market data.
Level 3: Unobservable inputs are used when little or no market data is available.

This hierarchy requires the Company to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. The Company recognizes transfers between levels of the hierarchy based on the fair values of the respective financial measurements at the end of the reporting period in which the transfer occurred. There were no transfers between levels of the fair value hierarchy during the six months ended June 30, 2019 and 2018.
The carrying amounts of the Company’s accounts receivable, accounts payable and accrued and other liabilities approximate their fair values due to their short maturities.
Goodwill
Goodwill
The Company conducts a goodwill impairment analysis annually in the fourth fiscal quarter, as of October 1, and as necessary if changes in facts and circumstances indicate that the fair value of the Company’s reporting units may be less than their carrying amounts. When indicators of impairment do not exist and certain accounting criteria are met, the Company is able to evaluate goodwill impairment using a qualitative approach. When necessary, the Company’s quantitative goodwill impairment test consists of two steps. The first step requires that the Company compare the estimated fair value of its reporting units to the carrying value of the reporting unit’s net assets, including goodwill. If the fair value of the reporting unit is greater than the carrying value of its net assets, goodwill is not considered to be impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value of its net assets, the Company would be required to complete the second step of the test by analyzing the fair value of its goodwill. If the carrying value of the goodwill exceeds its fair value, an impairment charge is recorded. The Company’s reporting units are determined based on its current reporting structure, which as of December 31, 2018 and June 30, 2019 consisted of two reporting units. As of June 30, 2019, there were no changes in facts and circumstances since the most recent annual impairment analysis to indicate impairment existed.
Foreign Currency Translation and Other Comprehensive Income
Foreign Currency Translation and Other Comprehensive Income
The functional currency of Vivint Canada, Inc. is the Canadian dollar. Accordingly, Vivint Canada, Inc. assets and liabilities are translated from their respective functional currencies into U.S. dollars at period-end rates and Vivint Canada, Inc. revenue and expenses are translated at the weighted-average exchange rates for the period. Adjustments resulting from this translation process are classified as other comprehensive income (loss) and shown as a separate component of equity.
When intercompany foreign currency transactions between entities included in the consolidated financial statements are of a long term investment nature (i.e., those for which settlement is not planned or anticipated in the foreseeable future) foreign currency translation adjustments resulting from those transactions are included in stockholders’ deficit as accumulated other comprehensive loss or income. When intercompany transactions are deemed to be of a short term nature, translation adjustments are required to be included in the condensed consolidated statement of operations. The Company has determined that settlement of Vivint Canada, Inc. intercompany balances is anticipated and therefore such balances are deemed to be of a short term nature.
Letters of Credit
Letters of Credit
As of June 30, 2019 and December 31, 2018, the Company had $13.9 million and $13.8 million, respectively, of letters of credit issued in the ordinary course of business, all of which are undrawn.
Restructuring and Asset Impairment Charges
Restructuring and Asset Impairment Charges
Restructuring and asset impairment charges represent expenses incurred in relation to activities to exit or disposal of portions of the Company's business that do not qualify as discontinued operations. Liabilities associated with restructuring are measured at their fair value when the liability is incurred. Expenses for related termination benefits are recognized at the date the Company notifies the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the future service period. Liabilities related to termination of a contract are measured and recognized at fair value when the contract does not have any future economic benefit to the entity and the fair value of the liability is determined based on the present value of the remaining obligation. The Company expenses all other costs related to an exit or disposal activity as incurred (See Note 15).
Recent Accounting Pronouncements and Recently Adopted Accounting Standards
Recent Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, “Financial Instruments—Credit Losses (Topic 326)” which modifies the measurement of expected credit losses of certain financial instruments. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019 and must be applied using a modified-retrospective approach, with early adoption permitted. The Company is evaluating the adoption of ASU 2016-13 and plans to provide additional information about its expected impact at a future date.
Recently Adopted Accounting Standards
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” to increase transparency and comparability among organizations as it relates to lease assets and lease liabilities. The update requires that lease assets and lease liabilities be recognized on the balance sheet, and that key information about leasing arrangements be disclosed. Prior to this update, GAAP did not require operating leases to be recognized as lease assets and lease liabilities on the balance sheet.
The Company adopted ASU 2016-02 as of January 1, 2019, utilizing the modified retrospective approach and using certain practical expedients. The adoption of the standard resulted in recording ROU assets of $75.5 million and lease liabilities of $85.9 million as of January 1, 2019. The ROU assets are lower than the lease liabilities as existing deferred rent and lease incentive liabilities were recorded against the ROU assets at adoption in accordance with the standard. The standard did not materially affect the Company's condensed consolidated statements of operations or its condensed consolidated statements of cash flows. The standard also resulted in a reassessment that a sale would have occurred at January 1, 2019 for the Company's build-to-suit building. As a result, the Company classifies the leasing arrangement as an operating lease. The recognition of the sale-leaseback transaction resulted in an immaterial amount recorded to opening equity. See Note 6 for additional information on the sale-leaseback transaction. See Note 12 "Leases" for additional information related to the impact of adopting this standard.
v3.19.2
Basis of Presentation and Significant Accounting Policies (Tables)
 6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
Changes in Company's Allowance for Accounts Receivable
The changes in the Company’s allowance for accounts receivable were as follows (in thousands):
 
 
Six Months Ended June 30, 2019
 
Twelve Months Ended December 31, 2018
Beginning balance
$
5,594

 
$
5,356

Provision for doubtful accounts
11,636

 
19,405

Write-offs and adjustments
(10,593
)
 
(19,167
)
Balance at end of period
$
6,637

 
$
5,594

The following table summarizes the RIC receivables (in thousands):
 
June 30, 2019
 
December 31, 2018
RIC receivables, gross
$
186,077

 
$
175,250

Deferred interest
(31,652
)
 
(34,163
)
RIC receivables, net of deferred interest
$
154,425

 
$
141,087

 
 
 
 
Classified on the condensed consolidated unaudited balance sheets as:
 
 
 
Accounts and notes receivable, net
$
39,620

 
$
32,185

Long-term notes receivables and other assets, net
114,805

 
108,902

RIC receivables, net
$
154,425

 
$
141,087
Schedule Of Depreciation And Amortization Expense
The Company’s depreciation and amortization included in the consolidated statements of operations consisted of the following (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Amortization of capitalized contract costs
$
107,245

 
$
97,937

 
$
212,275

 
$
193,302

Amortization of definite-lived intangibles
20,194

 
22,732

 
40,466

 
45,452

Depreciation of property, plant and equipment
7,065

 
6,204

 
12,984

 
12,377

Total depreciation and amortization
$
134,504

 
$
126,873

 
$
265,725

 
$
251,131
Schedule Of Foreign Translation Activity
Translation activity included in the statement of operations in other (income) expenses, net related to intercompany balances was as follows: (in thousands)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Translation (gain) loss
$
(1,155
)
 
$
1,592

 
$
(2,855
)
 
$
3,633
v3.19.2
Long-Term Debt (Tables)
 6 Months Ended
Jun. 30, 2019
Debt Disclosure [Abstract]  
Summary of Debt
The Company’s debt at June 30, 2019 and December 31, 2018 consisted of the following (in thousands): 
 
June 30, 2019
 
Outstanding
Principal
 
Unamortized
Premium (Discount)
 
Unamortized Deferred Financing Costs (1)
 
Net Carrying
Amount
Senior Secured Revolving Credit Facilities
$
134,000

 
$
—

 
$
—

 
$
134,000

8.750% Senior Notes due 2020
454,299

 
1,125

 
(2,659
)
 
452,765

8.875% Senior Secured Notes Due 2022
270,000

 
(1,889
)
 
(527
)
 
267,584

7.875% Senior Secured Notes Due 2022
900,000

 
17,865

 
(11,165
)
 
906,700

7.625% Senior Notes Due 2023
400,000

 
—

 
(3,502
)
 
396,498

8.500% Senior Secured Notes Due 2024
225,000

 
—

 
(4,881
)
 
220,119

Senior Secured Term Loan - noncurrent
795,825

 
—

 
(8,742
)
 
787,083

Total Long-Term Debt
3,179,124

 
17,101

 
(31,476
)
 
3,164,749

Senior Secured Term Loan - current
8,100

 
—

 
—

 
8,100

Total Debt
$
3,187,224

 
$
17,101

 
$
(31,476
)
 
$
3,172,849

 
December 31, 2018
 
Outstanding
Principal
 
Unamortized
Premium (Discount)
 
Unamortized Deferred Financing Costs (1)
 
Net Carrying
Amount
8.75% Senior Notes due 2020
$
679,299

 
$
2,230

 
$
(5,380
)
 
$
676,149

8.875% Senior Secured Notes due 2022
270,000

 
(2,122
)
 
(602
)
 
267,276

7.875% Senior Secured Notes due 2022
900,000

 
20,178

 
(12,799
)
 
907,379

7.625% Senior Notes Due 2023
400,000

 
—

 
(3,922
)
 
396,078

Senior Secured Term Loan - noncurrent
799,875

 
—

 
(9,662
)
 
790,213

Total Long-Term Debt
3,049,174

 
20,286

 
(32,365
)
 
3,037,095

Senior Secured Term Loan - current
8,100

 
—

 
—

 
8,100

Total Debt
$
3,057,274

 
$
20,286

 
$
(32,365
)
 
$
3,045,195

 
 
(1)
Unamortized deferred financing costs related to the revolving credit facilities included in deferred financing costs, net on the condensed consolidated balance sheets at June 30, 2019 and December 31, 2018 were $1.6 million and $2.1 million, respectively.
Schedule of Deferred Financing Activity
As a result of these analyses, the following amounts of other expense and loss on extinguishment and deferred financing costs were recorded (in thousands):
 
Original premium extinguished
 
Previously deferred financing costs extinguished
 
Total other expense and loss on extinguishment
 
New deferred financing costs
Three and six months ended June 30, 2019
 
 
 
 
 
 
 
May 2019 issuance
$
(588
)
 
$
1,395

 
$
807

 
$
4,956


Deferred financing costs are amortized to interest expense over the life of the issued debt.    The Company had no debt issuances or related modification or extinguishment costs during the three and six months ended June 30, 2018.
The following table presents deferred financing activity for the six months ended June 30, 2019 and year ended December 31, 2018 (in thousands):
 
Unamortized Deferred Financing Costs
 
Balance December 31, 2018
 
Additions
 
Early Extinguishment
 
Amortized
 
Balance June 30, 2019
Revolving Credit Facility
$
2,058

 
$
—

 
$
—

 
$
(486
)
 
$
1,572

2020 Notes
5,380

 
—

 
(1,395
)
 
(1,326
)
 
2,659

2022 Private Placement Notes
602

 
—

 
—

 
(75
)
 
527

2022 Notes
12,799

 
—

 
—

 
(1,634
)
 
11,165

2023 Notes
3,922

 
—

 
—

 
(420
)
 
3,502

2024 Notes
—

 
4,956

 
—

 
(75
)
 
4,881

Term Loan
9,662

 


 
—

 
(920
)
 
8,742

Total Deferred Financing Costs
$
34,423

 
$
4,956

 
$
(1,395
)
 
$
(4,936
)
 
$
33,048


 
Unamortized Deferred Financing Costs
 
Balance December 31, 2017
 
Additions
 
Early Extinguishment
 
Amortized
 
Balance December 31, 2018
Revolving Credit Facility
$
3,099

 
$
—

 
$
—

 
$
(1,041
)
 
$
2,058

2019 Notes
2,877

 
—

 
(1,877
)
 
(1,000
)
 
—

2020 Notes
11,209

 
—

 
(2,330
)
 
(3,499
)
 
5,380

2022 Private Placement Notes
752

 
—

 
—

 
(150
)
 
602

2022 Notes
16,067

 
—

 
—

 
(3,268
)
 
12,799

2023 Notes
4,762

 
—

 
—

 
(840
)
 
3,922

Term Loan
—

 
10,275

 
—

 
(613
)
 
9,662

Total Deferred Financing Costs
$
38,766

 
$
10,275

 
$
(4,207
)
 
$
(10,411
)
 
$
34,423
v3.19.2
Retail Installment Contract Receivables (Tables)
 6 Months Ended
Jun. 30, 2019
Receivables [Abstract]  
Schedule of Installment Receivables
The changes in the Company’s allowance for accounts receivable were as follows (in thousands):
 
 
Six Months Ended June 30, 2019
 
Twelve Months Ended December 31, 2018
Beginning balance
$
5,594

 
$
5,356

Provision for doubtful accounts
11,636

 
19,405

Write-offs and adjustments
(10,593
)
 
(19,167
)
Balance at end of period
$
6,637

 
$
5,594

The following table summarizes the RIC receivables (in thousands):
 
June 30, 2019
 
December 31, 2018
RIC receivables, gross
$
186,077

 
$
175,250

Deferred interest
(31,652
)
 
(34,163
)
RIC receivables, net of deferred interest
$
154,425

 
$
141,087

 
 
 
 
Classified on the condensed consolidated unaudited balance sheets as:
 
 
 
Accounts and notes receivable, net
$
39,620

 
$
32,185

Long-term notes receivables and other assets, net
114,805

 
108,902

RIC receivables, net
$
154,425

 
$
141,087
Allowance for Credit Losses on Financing Receivables
The changes in the Company’s deferred interest for the RIC receivables were as follows (in thousands):
 
Six months ended June 30, 2019
 
Twelve months ended December 31, 2018
Deferred interest, beginning of period
$
34,163

 
$
36,048

Write-offs, net of recoveries
(12,500
)
 
(26,360
)
Change in deferred interest on short-term and long-term RIC receivables
9,989

 
24,475

Deferred interest, end of period
$
31,652

 
$
34,163
v3.19.2
Balance Sheet Components (Tables)
 6 Months Ended
Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Schedule of Company's Balance Sheet Components
The following table presents material balance sheet component balances (in thousands):

 
June 30, 2019
 
December 31, 2018
Prepaid expenses and other current assets
 
 
 
Prepaid expenses
$
14,112

 
$
7,183

Deposits
1,793

 
904

Other
1,083

 
3,362

Total prepaid expenses and other current assets
$
16,988

 
$
11,449

Capitalized contract costs
 
 
 
Capitalized contract costs
$
2,632,597

 
$
2,361,795

Accumulated amortization
(1,461,910
)
 
(1,246,020
)
Capitalized contract costs, net
$
1,170,687

 
$
1,115,775

Long-term notes receivables and other assets
 
 
 
RIC receivables, gross
$
146,457

 
$
143,065

RIC deferred interest
(31,652
)
 
(34,164
)
Security deposits
6,985

 
6,586

Investments
541

 
3,865

Other
300

 
467

Total long-term notes receivables and other assets, net
$
122,631

 
$
119,819

Accrued payroll and commissions
 
 
 
Accrued commissions
$
42,611

 
$
28,726

Accrued payroll
26,937

 
36,753

Total accrued payroll and commissions
$
69,548

 
$
65,479

Accrued expenses and other current liabilities
 
 
 
Accrued interest payable
$
25,764

 
$
28,885

Current portion of derivative liability
70,468

 
67,710

Service warranty accrual
8,835

 
8,813

Current portion of notes payable
8,100

 
8,100

Loss contingencies
1,831

 
3,131

Other
23,051

 
20,076

Total accrued expenses and other current liabilities
$
138,049

 
$
136,715
v3.19.2
Property and Equipment (Tables)
 6 Months Ended
Jun. 30, 2019
Property, Plant and Equipment [Abstract]  
Components of Property Plant and Equipment
Property, plant and equipment consisted of the following (in thousands):
 
 
June 30, 2019
 
December 31, 2018
 
Estimated Useful
Lives
Vehicles
$
44,620

 
$
45,050

 
3 - 5 years
Computer equipment and software
58,489

 
53,891

 
3 - 5 years
Leasehold improvements
27,977

 
26,401

 
2 - 15 years
Office furniture, fixtures and equipment
20,416

 
19,532

 
7 years
Build-to-suit lease building
—

 
8,247

 
10.5 years
Construction in process
3,076

 
2,975

 
 
Property, plant and equipment, gross
154,578

 
156,096

 
 
Accumulated depreciation and amortization
(92,978
)
 
(82,695
)
 
 
Property, plant and equipment, net
$
61,600

 
$
73,401

 
 
v3.19.2
Goodwill and Intangible Assets (Tables)
 6 Months Ended
Jun. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Indefinite-Lived Intangible Assets
The following table presents intangible asset balances (in thousands):
 
 
June 30, 2019
 
December 31, 2018
 
 
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Estimated
Useful Lives
Definite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer contracts
$
966,909

 
$
(757,039
)
 
$
209,870

 
$
964,100

 
$
(717,648
)
 
$
246,452

 
10 years
2GIG 2.0 technology
17,000

 
(15,913
)
 
1,087

 
17,000

 
(15,292
)
 
1,708

 
8 years
Other technology
4,725

 
(2,133
)
 
2,592

 
2,917

 
(1,667
)
 
1,250

 
5 - 7 years
Space Monkey technology
7,100

 
(6,283
)
 
817

 
7,100

 
(5,756
)
 
1,344

 
6 years
Patents
12,526

 
(9,737
)
 
2,789

 
12,123

 
(8,415
)
 
3,708

 
5 years
Total definite-lived intangible assets:
$
1,008,260

 
$
(791,105
)
 
$
217,155

 
$
1,003,240

 
$
(748,778
)
 
$
254,462

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
IP addresses
564

 
—

 
564

 
564

 
—

 
564

 
 
Domain names
59

 
—

 
59

 
59

 
—

 
59

 
 
Total Indefinite-lived intangible assets
623

 
—

 
623

 
623

 
—

 
623

 
 
Total intangible assets, net
$
1,008,883

 
$
(791,105
)
 
$
217,778

 
$
1,003,863

 
$
(748,778
)
 
$
255,085

 
 
Schedule of Definite-Lived Intangible Assets
The following table presents intangible asset balances (in thousands):
 
 
June 30, 2019
 
December 31, 2018
 
 
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Estimated
Useful Lives
Definite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer contracts
$
966,909

 
$
(757,039
)
 
$
209,870

 
$
964,100

 
$
(717,648
)
 
$
246,452

 
10 years
2GIG 2.0 technology
17,000

 
(15,913
)
 
1,087

 
17,000

 
(15,292
)
 
1,708

 
8 years
Other technology
4,725

 
(2,133
)
 
2,592

 
2,917

 
(1,667
)
 
1,250

 
5 - 7 years
Space Monkey technology
7,100

 
(6,283
)
 
817

 
7,100

 
(5,756
)
 
1,344

 
6 years
Patents
12,526

 
(9,737
)
 
2,789

 
12,123

 
(8,415
)
 
3,708

 
5 years
Total definite-lived intangible assets:
$
1,008,260

 
$
(791,105
)
 
$
217,155

 
$
1,003,240

 
$
(748,778
)
 
$
254,462

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
IP addresses
564

 
—

 
564

 
564

 
—

 
564

 
 
Domain names
59

 
—

 
59

 
59

 
—

 
59

 
 
Total Indefinite-lived intangible assets
623

 
—

 
623

 
623

 
—

 
623

 
 
Total intangible assets, net
$
1,008,883

 
$
(791,105
)
 
$
217,778

 
$
1,003,863

 
$
(748,778
)
 
$
255,085

 
 
Schedule of Estimated Future Amortization Expense of Intangible Assets Excluding Patents Currently in Process
Estimated future amortization expense of intangible assets, excluding approximately $0.3 million in patents currently in process, is as follows as of June 30, 2019 (in thousands):
 
 
 
2019 - Remaining Period
$
39,926

2020
69,207

2021
58,850

2022
48,868

2023
51

Thereafter
3

Total estimated amortization expense
$
216,905
v3.19.2
Financial Instruments (Tables)
 6 Months Ended
Jun. 30, 2019
Fair Value Disclosures [Abstract]  
Fair Value, by Balance Sheet Grouping
The following tables set forth the Company’s cash and cash equivalents and Corporate Securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or long-term notes receivables and other assets, net as of June 30, 2019 and December 31, 2018 (in thousands):
 
June 30, 2019
 
Adjusted Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
 
Cash and Cash Equivalents
 
Long-Term Notes Receivables and Other Assets, net
Cash
$
3,041

 
$
—

 
$
—

 
$
3,041

 
$
3,041

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
Level 1:
 
 
 
 
 
 
 
 
 
 
 
Money market funds
92

 
—

 
—

 
92

 
92

 
—

 
 
 
 
 
 
 
 
 
 
 
 
Total
$
3,133

 
$
—

 
$
—

 
$
3,133

 
$
3,133

 
$
—

 
December 31, 2018
 
Adjusted Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
 
Cash and Cash Equivalents
 
Long-Term Notes Receivables and Other Assets, net
Cash
$
6,681

 
$
—

 
$
—

 
$
6,681

 
$
6,681

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
Level 1:
 
 
 
 
 
 
 
 
 
 
 
Money market funds
6,092

 
—

 
—

 
6,092

 
6,092

 
—

Corporate securities
3,485

 
—

 
(304
)
 
3,181

 
—

 
3,181

Subtotal
9,577

 
—

 
(304
)
 
9,273

 
6,092

 
3,181

 
 
 
 
 
 
 
 
 
 
 
 
Total
$
16,258

 
$
—

 
$
(304
)
 
$
15,954

 
$
12,773

 
$
3,181
Schedule of Long-term Debt Instruments
Components of long-term debt including the associated interest rates and related fair values are as follows (in thousands, except interest rates):
 
 
June 30, 2019
 
December 31, 2018
 
Stated Interest Rate
Issuance
 
Face Value
 
Estimated Fair Value
 
Face Value
 
Estimated Fair Value
 
2020 Notes
 
$
454,299

 
$
431,675

 
$
679,299

 
$
643,568

 
8.750
%
2022 Private Placement Notes
 
270,000

 
258,876

 
270,000

 
257,073

 
8.875
%
2022 Notes
 
900,000

 
862,920

 
900,000

 
855,000

 
7.875
%
2023 Notes
 
400,000

 
326,320

 
400,000

 
326,000

 
7.625
%
2024 Notes
 
225,000

 
215,033

 
—

 
—

 
8.500
%
Term Loan
 
803,925

 
805,950

 
807,975

 
807,975

 
N/A
Total
 
$
3,053,224

 
$
2,900,774

 
$
3,057,274

 
$
2,889,616

 
 
Schedule of Derivative Liabilities at Fair Value
The following table summarizes the fair value and the notional amount of the Company’s outstanding derivative instrument as of June 30, 2019 and December 31, 2018 (in thousands):
 
June 30, 2019
 
December 31, 2018
Consumer Financing Program Contractual Obligations:
 
 
 
Fair value
$
136,254

 
$
117,620

Notional amount
465,864

 
368,708

 
 
 
 
Classified on the condensed consolidated unaudited balance sheets as:
 
 
 
Accrued expenses and other current liabilities
70,468

 
67,710

Other long-term obligations
65,786

 
49,910

Total Consumer Financing Program Contractual Obligation
$
136,254

 
$
117,620
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation
The following table summarizes the change in the fair value of the Level 3 outstanding derivative liability instrument for the six months ended June 30, 2019 and the twelve months ended December 31, 2018 (in thousands):
 
Six months ended June 30, 2019
 
Twelve months ended December 31, 2018
Balance, beginning of period
$
117,620

 
$
46,496

Additions
47,115

 
93,095

Settlements
(29,908
)
 
(34,587
)
Losses included in earnings
1,427

 
12,616

Balance, end of period
$
136,254

 
$
117,620
v3.19.2
Stock-Based Compensation and Equity (Tables)
 6 Months Ended
Jun. 30, 2019
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation Expense
Stock-based compensation expense in connection with all stock-based awards is presented as follows (in thousands):
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Operating expenses
$
52

 
$
26

 
$
95

 
$
44

Selling expenses
82

 
81

 
169

 
126

General and administrative expenses
843

 
231

 
1,570

 
372

Total stock-based compensation
$
977

 
$
338

 
$
1,834

 
$
542
v3.19.2
Leases (Tables)
 6 Months Ended
Jun. 30, 2019
Leases [Abstract]  
Schedule of Lease Expense
The components of lease expense were as follows (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2019
Operating lease cost
$
4,341

 
$
8,589

 
 
 
 
Finance lease cost:
 
 
 
Amortization of right-of-use assets
$
1,357

 
$
2,732

Interest on lease liabilities
240

 
394

Total finance lease cost
$
1,597

 
$
3,126

Supplemental cash flow information related to leases was as follows (in thousands):
 
Six Months Ended June 30,
 
2019
Cash paid for amounts included in the measurement of lease liabilities:
 
Operating cash flows from operating leases
$
(8,742
)
Operating cash flows from finance leases
(394
)
Financing cash flows from finance leases
(4,263
)
 
 
Right-of-use assets obtained in exchange for lease obligations:
 
Operating leases
$
1,690

Finance leases
1,295
Schedule Of Supplemental Balance Sheet Information Related To Leases
Supplemental balance sheet information related to leases was as follows (in thousands, except lease term and discount rate):
 
June 30, 2019
Operating Leases
 
Operating lease right-of-use assets
$
71,557

 
 
Current operating lease liabilities
$
12,058

Operating lease liabilities
69,975

Total operating lease liabilities
$
82,033

 
 
Finance Leases
 
Property, plant and equipment, gross
$
45,315

Accumulated depreciation
(23,697
)
Property, plant and equipment, net
$
21,618

 
 
Current finance lease liabilities
$
6,984

Finance lease liabilities
3,397

Total finance lease liabilities
$
10,381

 
 
Weighted Average Remaining Lease Term
 
Operating leases
6 years

Finance leases
1.4 years

Weighted Average Discount Rate
 
Operating leases
7
%
Finance leases
4
%
Schedule Of Maturities Of Financing Leases Liabilities
Maturities of lease liabilities were as follows (in thousands):
 
Operating Leases
 
Finance Leases
Year Ending December 31,
 
 
 
2019 (excluding the six months ended June 30, 2019)
$
9,010

 
$
4,218

2020
16,955

 
5,517

2021
16,069

 
719

2022
14,728

 
261

2023
14,622

 
1

Thereafter
32,422

 
—

Total lease payments
103,806

 
10,716

Less imputed interest
(21,773
)
 
(335
)
Total
$
82,033

 
$
10,381
Schedule Of Maturities Of Operating Leases Liabilities
Maturities of lease liabilities were as follows (in thousands):
 
Operating Leases
 
Finance Leases
Year Ending December 31,
 
 
 
2019 (excluding the six months ended June 30, 2019)
$
9,010

 
$
4,218

2020
16,955

 
5,517

2021
16,069

 
719

2022
14,728

 
261

2023
14,622

 
1

Thereafter
32,422

 
—

Total lease payments
103,806

 
10,716

Less imputed interest
(21,773
)
 
(335
)
Total
$
82,033

 
$
10,381
v3.19.2
Restructuring and Asset Impairment Charges (Tables)
 6 Months Ended
Jun. 30, 2019
Restructuring and Related Activities [Abstract]  
Summary of Restructuring Activity
The following table presents accrued restructuring activity for the six months ended June 30, 2019 and the twelve months ended December 31, 2018 (in thousands):

 
Contract
termination
costs
 
Employee severance
and termination
benefits
 
Total
Accrued restructuring balance as of December 31, 2017
$
558

 
$
—

 
$
558

Restructuring expenses
—

 
4,683

 
4,683

Cash payments
(91
)
 
(4,341
)
 
(4,432
)
Accrued restructuring balance as of December 31, 2018
467

 
342

 
809

Cash payments
(46
)
 
(313
)
 
(359
)
Accrued restructuring balance as of June 30, 2019
$
421

 
$
29

 
$
450
v3.19.2
Segment Reporting and Business Concentrations (Tables)
 6 Months Ended
Jun. 30, 2019
Segment Reporting [Abstract]  
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas
Revenues disaggregated by geographic region were as follows (in thousands):

 
  
United States
 
Canada
 
Total
Revenue from external customers
  
 
 
 
 
 
Three months ended June 30, 2019
  
$
263,007

 
$
18,046

 
$
281,053

Three months ended June 30, 2018
  
237,513

 
17,454

 
254,967

Six months ended June 30, 2019
 
521,443

 
35,859

 
557,302

Six months ended June 30, 2018
 
466,055

 
35,509

 
501,564
v3.19.2
Guarantor and Non-Guarantor Supplemental Financial Information (Tables)
 6 Months Ended
Jun. 30, 2019
Guarantor And Non Guarantor Supplemental Financial Information [Abstract]  
Supplemental Condensed Consolidating Balance Sheet
Supplemental Condensed Consolidating Balance Sheet
June 30, 2019
(in thousands)
(unaudited)

 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets
$
—

 
$
2,713

 
$
408,215

 
$
135,703

 
$
(315,770
)
 
$
230,861

Property, plant and equipment, net
—

 
—

 
61,215

 
385

 
—

 
61,600

Capitalized contract costs, net
—

 
—

 
1,101,598

 
69,089

 
—

 
1,170,687

Deferred financing costs, net
—

 
1,572

 
—

 
—

 
—

 
1,572

Investment in subsidiaries
—

 
1,595,121

 
—

 
—

 
(1,595,121
)
 
—

Intercompany receivable
—

 
—

 
6,303

 
—

 
(6,303
)
 
—

Intangible assets, net
—

 
—

 
201,538

 
16,240

 
—

 
217,778

Goodwill
—

 
—

 
810,129

 
26,160

 
—

 
836,289

Operating lease right-of-use assets
—

 
—

 
71,345

 
212

 
—

 
71,557

Long-term notes receivables and other assets
—

 
106

 
101,695

 
20,936

 
(106
)
 
122,631

Total Assets
$
—

 
$
1,599,512

 
$
2,762,038

 
$
268,725

 
$
(1,917,300
)
 
$
2,712,975

Liabilities and Stockholders’ (Deficit) Equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
$
—

 
$
33,866

 
$
662,048

 
$
209,672

 
$
(315,770
)
 
$
589,816

Intercompany payable
—

 
—

 
—

 
6,303

 
(6,303
)
 
—

Notes payable and revolving credit facility, net of current portion
—

 
3,164,749

 
—

 
—

 
—

 
3,164,749

Finance lease obligations, net of current portion
—

 
—

 
3,397

 
—

 
—

 
3,397

Deferred revenue, net of current portion
—

 
—

 
363,958

 
19,308

 
—

 
383,266

Operating lease liabilities
—

 
—

 
69,894

 
81

 
—

 
69,975

Other long-term obligations
—

 
—

 
98,859

 
877

 
—

 
99,736

Accumulated losses of investee, net
1,599,103

 
 
 
 
 
 
 
(1,599,103
)
 
—

Deferred income tax liability
—

 
—

 
106

 
1,139

 
(106
)
 
1,139

Total (deficit) equity
(1,599,103
)
 
(1,599,103
)
 
1,563,776

 
31,345

 
3,982

 
(1,599,103
)
Total liabilities and stockholders’ (deficit) equity
$
—

 
$
1,599,512

 
$
2,762,038

 
$
268,725

 
$
(1,917,300
)
 
$
2,712,975









Supplemental Condensed Consolidating Balance Sheet
December 31, 2018
(in thousands)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets
$
—

 
$
12,951

 
$
269,770

 
$
103,451

 
$
(262,674
)
 
$
123,498

Property, plant and equipment, net
—

 
—

 
72,937

 
464

 
—

 
73,401

Capitalized contract costs, net
—

 
—

 
1,047,532

 
68,243

 
—

 
1,115,775

Deferred financing costs, net
—

 
2,058

 
—

 
—

 
—

 
2,058

Investment in subsidiaries
—

 
1,662,367

 
—

 
—

 
(1,662,367
)
 
—

Intercompany receivable
—

 
—

 
6,303

 
—

 
(6,303
)
 
—

Intangible assets, net
—

 
—

 
236,677

 
18,408

 
—

 
255,085

Goodwill
—

 
—

 
809,678

 
25,177

 
—

 
834,855

Long-term notes receivables and other assets
—

 
106

 
102,695

 
17,124

 
(106
)
 
119,819

Total Assets
$
—

 
$
1,677,482

 
$
2,545,592

 
$
232,867

 
$
(1,931,450
)
 
$
2,524,491

Liabilities and Stockholders’ (Deficit) Equity
 
 
 
 
 
 
 
 
 
 
 
       Current liabilities
$
—

 
$
36,988

 
$
507,063

 
$
182,159

 
$
(262,674
)
 
$
463,536

Intercompany payable
—

 
—

 
—

 
6,303

 
(6,303
)
 
—

Notes payable and revolving credit facility, net of current portion
—

 
3,037,095

 
—

 
—

 
—

 
3,037,095

Capital lease obligations, net of current portion
—

 
—

 
5,570

 
1

 
—

 
5,571

Deferred revenue, net of current portion
—

 
—

 
306,653

 
16,932

 
—

 
323,585

Accumulated Losses of Investee, net
1,396,601

 


 


 


 
(1,396,601
)
 
—

Other long-term obligations
—

 
—

 
90,209

 
—

 
—

 
90,209

Deferred income tax liability
—

 
—

 
106

 
1,096

 
(106
)
 
1,096

Total (deficit) equity
(1,396,601
)
 
(1,396,601
)
 
1,635,991

 
26,376

 
(265,766
)
 
(1,396,601
)
Total liabilities and stockholders’ (deficit) equity
$
—

 
$
1,677,482

 
$
2,545,592

 
$
232,867

 
$
(1,931,450
)
 
$
2,524,491
Supplemental Condensed Consolidating Statements of Operations and Comprehensive Loss
Supplemental Condensed Consolidating Statements of Operations and Comprehensive Loss
For the Three Months Ended June 30, 2019
(in thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
—

 
$
—

 
$
268,055

 
$
13,590

 
$
(592
)
 
$
281,053

Costs and expenses
—

 
—

 
319,266

 
13,208

 
(592
)
 
331,882

(Loss) income from operations
—

 
—

 
(51,211
)
 
382

 
—

 
(50,829
)
Loss from subsidiaries
(115,896
)
 
(49,954
)
 
—

 
—

 
165,850

 
—

Other expense (income), net
—

 
65,942

 
807

 
(1,130
)
 
—

 
65,619

(Loss) income before income tax expenses
(115,896
)
 
(115,896
)
 
(52,018
)
 
1,512

 
165,850

 
(116,448
)
Income tax benefit
—

 
—

 
(288
)
 
(264
)
 
—

 
(552
)
Net (loss) income
(115,896
)
 
(115,896
)
 
(51,730
)
 
1,776

 
165,850

 
(115,896
)
Other comprehensive loss, net of tax effects:
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
(115,896
)
 
(115,896
)
 
(51,730
)
 
1,776

 
165,850

 
(115,896
)
Other comprehensive income from subsidiaries
504

 
504

 
—

 
—

 
(1,008
)
 
—

Foreign currency translation adjustment
—

 
—

 
—

 
504

 
—

 
504

Total other comprehensive income
504


504

 
—

 
504

 
(1,008
)
 
504

Comprehensive (loss) income
$
(115,392
)
 
$
(115,392
)
 
$
(51,730
)
 
$
2,280

 
$
164,842

 
$
(115,392
)



Supplemental Condensed Consolidating Statements of Operations and Comprehensive Loss
For the Three Months Ended June 30, 2018
(in thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
—

 
$
—

 
$
244,000

 
$
11,613

 
$
(646
)
 
$
254,967

Costs and expenses
—

 
—

 
321,835

 
14,011

 
(646
)
 
335,200

Loss from operations
—

 
—

 
(77,835
)
 
(2,398
)
 
—

 
(80,233
)
Loss from subsidiaries
(144,385
)
 
(84,923
)
 
—

 
—

 
229,308

 
—

Other expense, net
—

 
59,462

 
4,006

 
1,590

 
—

 
65,058

Loss before income tax expenses
(144,385
)
 
(144,385
)
 
(81,841
)
 
(3,988
)
 
229,308

 
(145,291
)
Income tax benefit
—

 
—

 
(70
)
 
(836
)
 
—

 
(906
)
Net loss
(144,385
)
 
(144,385
)
 
(81,771
)
 
(3,152
)
 
229,308

 
(144,385
)
Other comprehensive loss, net of tax effects:

 

 

 

 

 

Net loss
(144,385
)
 
(144,385
)
 
(81,771
)
 
(3,152
)
 
229,308

 
(144,385
)
Other comprehensive loss from subsidiaries
(417
)
 
(417
)
 
—

 
—

 
834

 
—

Foreign currency translation adjustment
—

 
—

 
—

 
(417
)
 
—

 
(417
)
Total other comprehensive loss
(417
)
 
(417
)
 
—

 
(417
)
 
834

 
(417
)
Comprehensive loss
$
(144,802
)
 
$
(144,802
)
 
$
(81,771
)
 
$
(3,569
)
 
$
230,142

 
$
(144,802
)

Supplemental Condensed Consolidating Statements of Operations and Comprehensive Loss
For the Six Months Ended June 30, 2019
(in thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
—

 
$
—

 
$
531,594

 
$
26,502

 
$
(794
)
 
$
557,302

Costs and expenses
—

 
—

 
610,775

 
26,128

 
(794
)
 
636,109

(Loss) income from operations
—

 
—

 
(79,181
)
 
374

 
—

 
(78,807
)
Loss from subsidiaries
(205,052
)
 
(75,935
)
 
—

 
—

 
280,987

 
—

Other expense (income), net
—

 
129,117

 
755

 
(2,774
)
 
—

 
127,098

(Loss) income before income tax expenses
(205,052
)
 
(205,052
)
 
(79,936
)
 
3,148

 
280,987

 
(205,905
)
Income tax benefit
—

 
—

 
(106
)
 
(747
)
 
—

 
(853
)
Net (loss) income
(205,052
)
 
(205,052
)
 
(79,830
)
 
3,895

 
280,987

 
(205,052
)
Other comprehensive loss, net of tax effects:
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
(205,052
)
 
(205,052
)
 
(79,830
)
 
3,895

 
280,987

 
(205,052
)
Other comprehensive income from subsidiaries
1,074

 
1,074

 
—

 
—

 
(2,148
)
 
—

Foreign currency translation adjustment
—

 
—

 
—

 
1,074

 
—

 
1,074

Total other comprehensive income
1,074


1,074

 
—

 
1,074

 
(2,148
)
 
1,074

Comprehensive (loss) income
$
(203,978
)
 
$
(203,978
)
 
$
(79,830
)
 
$
4,969

 
$
278,839

 
$
(203,978
)
Supplemental Condensed Consolidating Statements of Operations and Comprehensive Loss
For the Six Months Ended June 30, 2018
(in thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
—

 
$
—

 
$
477,788

 
$
25,078

 
$
(1,302
)
 
$
501,564

Costs and expenses
—

 
—

 
627,056

 
27,674

 
(1,302
)
 
653,428

Loss from operations
—

 
—

 
(149,268
)
 
(2,596
)
 
—

 
(151,864
)
Loss from subsidiaries
(229,102
)
 
(111,243
)
 
—

 
—

 
340,345

 
—

Other expense (income), net
—

 
117,859

 
(42,964
)
 
3,682

 
—

 
78,577

Loss before income tax expenses
(229,102
)
 
(229,102
)
 
(106,304
)
 
(6,278
)
 
340,345

 
(230,441
)
Income tax expense (benefit)
—

 
—

 
102

 
(1,441
)
 
—

 
(1,339
)
Net loss
(229,102
)
 
(229,102
)
 
(106,406
)
 
(4,837
)
 
340,345

 
(229,102
)
Other comprehensive loss, net of tax effects:
 
 
 
 
 
 
 
 
 
 
 
Net loss
(229,102
)
 
(229,102
)
 
(106,406
)
 
(4,837
)
 
340,345

 
(229,102
)
Other comprehensive loss from subsidiaries
(1,076
)
 
(1,076
)
 
—

 
—

 
2,152

 
—

Foreign currency translation adjustment
—

 
—

 
—

 
(1,076
)
 
—

 
(1,076
)
Total other comprehensive income
—


—

 
—

 
(1,076
)
 
—

 
(1,076
)
Comprehensive loss
$
(229,102
)
 
$
(229,102
)
 
$
(106,406
)
 
$
(5,913
)
 
$
340,345

 
$
(230,178
)
Supplemental Condensed Consolidating Statements of Cash Flows
Supplemental Condensed Consolidating Statements of Cash Flows
For the Six Months Ended June 30, 2019
(in thousands)
(unaudited)

 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Net cash used in operating activities
$
—

 
$
—

 
$
(130,577
)
 
$
(413
)
 
$
—

 
$
(130,990
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(4,653
)
 
—

 
—

 
(4,653
)
Proceeds from sale of capital assets
—

 
—

 
19

 
—

 
—

 
19

Proceeds from sales of equity securities
—

 
—

 
5,430

 
—

 
—

 
5,430

Investment in subsidiary
(441
)
 
(135,039
)
 
—

 
—

 
135,480

 
—

Acquisition of intangible assets
—

 
—

 
(668
)
 
—

 
—

 
(668
)
Net cash (used in) provided by investing activities
(441
)
 
(135,039
)
 
128

 
—

 
135,480

 
128

Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
Proceeds from notes payable
—

 
225,000

 
—

 
—

 
—

 
225,000

Repayment on notes payable
—

 
(229,050
)
 
—

 
—

 
—

 
(229,050
)
Borrowings from revolving credit facility
—

 
160,000

 
—

 
—

 
—

 
160,000

Repayments on revolving credit facility
—

 
(26,000
)
 
—

 
—

 
—

 
(26,000
)
Proceeds from capital contribution
—

 
—

 
134,598

 
—

 
(134,598
)
 
—

Repayments of finance lease obligations
—

 
—

 
(4,119
)
 
(144
)
 
—

 
(4,263
)
Deferred financing costs
—

 
(4,036
)
 
—

 
—

 
—

 
(4,036
)
Return of capital
441

 
441

 
(441
)
 
—

 
(882
)
 
(441
)
Net cash provided by (used in) financing activities
441

 
126,355

 
130,038

 
(144
)
 
(135,480
)
 
121,210

Effect of exchange rate changes on cash
—

 
—

 
—

 
12

 
—

 
12

Net decrease in cash and cash equivalents
—

 
(8,684
)
 
(411
)
 
(545
)
 
—

 
(9,640
)
Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
Beginning of period
—

 
11,130

 
682

 
961

 
—

 
12,773

End of period
$
—

 
$
2,446

 
$
271

 
$
416

 
$
—

 
$
3,133


Supplemental Condensed Consolidating Statements of Cash Flows
For the Six Months Ended June 30, 2018
(in thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Net cash used in operating activities
$
—

 
$
—

 
$
(130,919
)
 
$
(70
)
 
$
—

 
$
(130,989
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(12,193
)
 
—

 
—

 
(12,193
)
Investment in subsidiary
2,049

 
(98,251
)
 
—

 
—

 
96,202

 
—

Acquisition of intangible assets
—

 
—

 
(1,022
)
 
—

 
—

 
(1,022
)
Proceeds from sale of intangibles
—

 
—

 
53,693

 
—

 
—

 
53,693

Proceeds from sale of capital assets
—

 
—

 
225

 
—

 
—

 
225

Net cash provided by (used in) investing activities
2,049

 
(98,251
)
 
40,703

 
—

 
96,202

 
40,703

Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
Borrowings from revolving credit facility
—

 
179,000

 
—

 
—

 
—

 
179,000

Repayments on revolving credit facility
—

 
(79,000
)
 
—

 
—

 
—

 
(79,000
)
Proceeds from capital contributions
—

 
—

 
100,300

 
—

 
(100,300
)
 
—

Repayments of capital lease obligations
—

 
—

 
(6,768
)
 
(187
)
 
—

 
(6,955
)
Return of capital
(2,049
)
 
(2,049
)
 
(2,049
)
 
—

 
4,098

 
(2,049
)
Net cash (used in) provided by financing activities
(2,049
)
 
97,951

 
91,483

 
(187
)
 
(96,202
)
 
90,996

Effect of exchange rate changes on cash
—

 
—

 
—

 
(62
)
 
—

 
(62
)
Net (decrease) increase in cash and cash equivalents
—

 
(300
)
 
1,267

 
(319
)
 
—

 
648

Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
Beginning of period
—

 
3,661

 
(572
)
 
783

 
—

 
3,872

End of period
$
—

 
$
3,361

 
$
695

 
$
464

 
$
—

 
$
4,520
v3.19.2
Basis of Presentation and Significant Accounting Policies - Additional Information (Detail)
 3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2019
USD ($)
payment
Jun. 30, 2018
USD ($)
Jun. 30, 2019
USD ($)
segment
payment
Jun. 30, 2018
USD ($)
Dec. 31, 2018
USD ($)
unit
Dec. 31, 2017
USD ($)
Basis Of Presentation And Significant Accounting Policies [Line Items]            
Accounts receivable, net $ 31,800,000   $ 31,800,000   $ 16,500,000  
Allowance for doubtful accounts 6,637,000   6,637,000   5,594,000 $ 5,356,000
Provision for doubtful accounts 5,700,000 $ 4,400,000 $ 11,636,000 $ 8,409,000 19,405,000  
Capitalized contract costs, expected period of benefit     5 years      
Equity method investments 500,000   $ 500,000   3,900,000  
Amortization expenses included in interest expense     2,339,000 2,671,000    
Sales commission included in accrued expenses and other liabilities 5,400,000   5,400,000   4,900,000  
Other long-term obligations 28,700,000   28,700,000   $ 17,600,000  
Advertising expenses incurred 17,300,000 8,600,000 $ 30,000,000 21,700,000    
Uncertain income tax position, percentage     50.00%      
Number of reporting units     2   2  
Translation (gain) loss (1,155,000) 1,592,000 $ (2,855,000) 3,633,000    
Issued and unused letters of credit 13,900,000   $ 13,900,000   $ 13,800,000  
Vivint Sky Control Panels            
Basis Of Presentation And Significant Accounting Policies [Line Items]            
Percentage of installed panels     85.00%      
2GIG Sale            
Basis Of Presentation And Significant Accounting Policies [Line Items]            
Percentage of installed panels     15.00%      
Other Panels            
Basis Of Presentation And Significant Accounting Policies [Line Items]            
Percentage of installed panels     1.00%      
Interest Expense            
Basis Of Presentation And Significant Accounting Policies [Line Items]            
Amortization expenses included in interest expense 2,400,000 $ 2,700,000 $ 4,900,000 $ 5,300,000    
Minimum            
Basis Of Presentation And Significant Accounting Policies [Line Items]            
Estimated useful life of intangible assets     2 years      
Maximum            
Basis Of Presentation And Significant Accounting Policies [Line Items]            
Estimated useful life of intangible assets     10 years      
Notes Payable            
Basis Of Presentation And Significant Accounting Policies [Line Items]            
Deferred financing costs 31,500,000   $ 31,500,000   32,400,000  
Deferred financing cost, accumulated amortization $ 59,100,000   $ 59,100,000   54,600,000  
Vivint Flex Pay            
Basis Of Presentation And Significant Accounting Policies [Line Items]            
Number of payment options | payment 3   3      
Installment loans available to qualified customers, maximum amount provided by third party $ 4,000   $ 4,000      
Vivint Flex Pay | Minimum            
Basis Of Presentation And Significant Accounting Policies [Line Items]            
Installment loans available to qualified customers, annual percentage rate 0.00%   0.00%      
Installment loans available to qualified customers, term     42 months      
Vivint Flex Pay | Maximum            
Basis Of Presentation And Significant Accounting Policies [Line Items]            
Installment loans available to qualified customers, annual percentage rate 9.99%   9.99%      
Installment loans available to qualified customers, term     60 months      
Subscriber Contracts | Minimum            
Basis Of Presentation And Significant Accounting Policies [Line Items]            
Contract with customer, term     3 years      
Subscriber Contracts | Maximum            
Basis Of Presentation And Significant Accounting Policies [Line Items]            
Contract with customer, term     5 years      
Revolving Credit Facility            
Basis Of Presentation And Significant Accounting Policies [Line Items]            
Issued and unused letters of credit $ 140,300,000   $ 140,300,000      
Line of Credit | Revolving Credit Facility            
Basis Of Presentation And Significant Accounting Policies [Line Items]            
Deferred financing costs 1,600,000   1,600,000   2,100,000  
Deferred financing cost, accumulated amortization 10,100,000   10,100,000   9,600,000  
Fair Value, Inputs, Level 3            
Basis Of Presentation And Significant Accounting Policies [Line Items]            
Equity method investments $ 500,000   $ 500,000   $ 700,000  
v3.19.2
Basis of Presentation and Significant Accounting Policies - Accounts Receivable (Detail) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Accounts Receivable, Allowance for Credit Loss [Roll Forward]          
Beginning balance     $ 5,594 $ 5,356 $ 5,356
Provision for doubtful accounts $ 5,700 $ 4,400 11,636 $ 8,409 19,405
Write-offs and adjustments     (10,593)   (19,167)
Balance at end of period $ 6,637   $ 6,637   $ 5,594
v3.19.2
Basis of Presentation and Significant Accounting Policies - Depreciation and Amortization (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Property, Plant and Equipment [Line Items]        
Total depreciation and amortization $ 134,504 $ 126,873 $ 265,725 $ 251,131
Depreciation of property, plant and equipment        
Property, Plant and Equipment [Line Items]        
Total depreciation and amortization 7,065 6,204 12,984 12,377
Amortization of capitalized contract costs        
Property, Plant and Equipment [Line Items]        
Total depreciation and amortization 107,245 97,937 212,275 193,302
Amortization of definite-lived intangibles        
Property, Plant and Equipment [Line Items]        
Total depreciation and amortization $ 20,194 $ 22,732 $ 40,466 $ 45,452
v3.19.2
Basis of Presentation and Significant Accounting Policies - Recently Adopted Accounting Standards (Details) - ASU 2016-02 adoption
$ in Millions
Jan. 01, 2019
USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]  
Right-of-use lease asset $ 75.5
Operating and finance lease liability $ 85.9
v3.19.2
Revenue and Capitalized Contract Costs - Narrative (Details) - USD ($)
$ in Millions
 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]    
Revenue recognized $ 135.1 $ 92.1
Revenue expected to be recognized from remaining performance obligations for subscription contracts $ 2,400.0  
Capitalized contract cost, amortization period 5 years  
Minimum | Subscriber Contracts    
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]    
Contract with customer, term 3 years  
Maximum | Subscriber Contracts    
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]    
Contract with customer, term 5 years  
v3.19.2
Revenue and Capitalized Contract Costs - Remaining Performance Obligations (Details)
Jun. 30, 2019
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01  
Revenue from Contract with Customer [Abstract]  
Performance obligations expected to be satisfied, percentage 61.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation, expected period of satisfaction 24 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation, expected period of satisfaction 36 months
v3.19.2
Long-Term Debt - Summary of Debt (Detail) - USD ($)
Jun. 30, 2019
May 31, 2019
Dec. 31, 2018
Debt Instrument [Line Items]      
Outstanding Principal, noncurrent debt $ 3,179,124,000   $ 3,049,174,000
Outstanding Principal, total debt 3,187,224,000   3,057,274,000
Unamortized Premium (Discount) 17,101,000   20,286,000
Unamortized Deferred Financing Costs (31,476,000)   (32,365,000)
Net Carrying Amount, noncurrent 3,164,749,000   3,037,095,000
Net Carrying Amount 3,172,849,000   3,045,195,000
Senior Notes | Senior Secured Revolving Credit Facilities      
Debt Instrument [Line Items]      
Outstanding Principal, noncurrent debt 134,000,000    
Unamortized Premium (Discount) 0    
Unamortized Deferred Financing Costs 0    
Net Carrying Amount, noncurrent $ 134,000,000    
Senior Notes | 8.750% Senior Notes due 2020      
Debt Instrument [Line Items]      
Debt instrument interest rate, percentage 8.75%    
Outstanding Principal, noncurrent debt $ 454,299,000   679,299,000
Unamortized Premium (Discount) 1,125,000   2,230,000
Unamortized Deferred Financing Costs (2,659,000)   (5,380,000)
Net Carrying Amount, noncurrent $ 452,765,000   676,149,000
Senior Notes | 8.875% Senior Secured Notes Due 2022      
Debt Instrument [Line Items]      
Debt instrument interest rate, percentage 8.875%    
Outstanding Principal, noncurrent debt $ 270,000,000   270,000,000
Unamortized Premium (Discount) (1,889,000)   (2,122,000)
Unamortized Deferred Financing Costs (527,000)   (602,000)
Net Carrying Amount, noncurrent $ 267,584,000   267,276,000
Senior Notes | 7.875% Senior Secured Notes Due 2022      
Debt Instrument [Line Items]      
Debt instrument interest rate, percentage 7.875%    
Outstanding Principal, noncurrent debt $ 900,000,000   900,000,000
Unamortized Premium (Discount) 17,865,000   20,178,000
Unamortized Deferred Financing Costs (11,165,000)   (12,799,000)
Net Carrying Amount, noncurrent $ 906,700,000   907,379,000
Senior Notes | 7.625% Senior Notes Due 2023      
Debt Instrument [Line Items]      
Debt instrument interest rate, percentage 7.625%    
Outstanding Principal, noncurrent debt $ 400,000,000   400,000,000
Unamortized Premium (Discount) 0   0
Unamortized Deferred Financing Costs (3,502,000)   (3,922,000)
Net Carrying Amount, noncurrent $ 396,498,000   396,078,000
Senior Notes | 8.500% Senior Secured Notes Due 2024      
Debt Instrument [Line Items]      
Debt instrument interest rate, percentage 8.50% 8.50%  
Outstanding Principal, noncurrent debt $ 225,000,000    
Unamortized Premium (Discount) 0    
Unamortized Deferred Financing Costs (4,881,000)    
Net Carrying Amount, noncurrent 220,119,000    
Term Loan | Term Loan      
Debt Instrument [Line Items]      
Outstanding Principal, noncurrent debt 795,825,000   799,875,000
Outstanding Principal, current maturities 8,100,000   8,100,000
Unamortized Premium (Discount) 0   0
Unamortized Deferred Financing Costs (8,742,000)   (9,662,000)
Net Carrying Amount, noncurrent 787,083,000   790,213,000
Revolving Credit Facility      
Debt Instrument [Line Items]      
Net Carrying Amount 134,000,000   0
Deferred financing costs, net $ 1,600,000   $ 2,100,000
v3.19.2
Long-Term Debt - Additional Information (Detail) - USD ($)
 1 Months Ended 6 Months Ended
Sep. 01, 2020
Nov. 16, 2012
Sep. 30, 2018
Jun. 30, 2019
May 31, 2019
Apr. 01, 2019
Dec. 31, 2018
Aug. 10, 2017
Aug. 09, 2017
Mar. 06, 2015
Mar. 05, 2015
Debt Instrument [Line Items]                      
Outstanding borrowings       $ 3,172,849,000     $ 3,045,195,000        
Issued and unused letters of credit       $ 13,900,000     13,800,000        
Revolving Credit Facility                      
Debt Instrument [Line Items]                      
Credit facility, aggregate principal amount   $ 200,000,000           $ 324,300,000 $ 289,400,000 $ 289,400,000.0 $ 200,000,000
Debt maturity term   5 years                  
Step down, percentage       0.25%              
Commitment fee, percentage       0.125%              
Outstanding borrowings       $ 134,000,000     $ 0        
Issued and unused letters of credit       $ 140,300,000              
Revolving Credit Facility | Federal Funds Rate                      
Debt Instrument [Line Items]                      
Basis spread on variable interest rate percentage       0.50%              
Revolving Credit Facility | LIBOR                      
Debt Instrument [Line Items]                      
Basis spread on variable interest rate percentage       1.00%              
Series A Revolving Commitments | Revolving Credit Facility                      
Debt Instrument [Line Items]                      
Credit facility, aggregate principal amount       $ 267,000,000              
Series A Revolving Commitments | Revolving Credit Facility | LIBOR                      
Debt Instrument [Line Items]                      
Basis spread on variable interest rate percentage       3.00%              
Series A Revolving Commitments | Revolving Credit Facility | Base Rate-based Borrowings                      
Debt Instrument [Line Items]                      
Basis spread on variable interest rate percentage       2.00%              
Series D Revolving Commitments | Revolving Credit Facility                      
Debt Instrument [Line Items]                      
Credit facility, aggregate principal amount           $ 15,400,000          
Series B Revolving Commitments | Revolving Credit Facility                      
Debt Instrument [Line Items]                      
Credit facility, aggregate principal amount       $ 21,200,000              
Series B Revolving Commitments | Revolving Credit Facility | LIBOR                      
Debt Instrument [Line Items]                      
Basis spread on variable interest rate percentage       4.00%              
Series B Revolving Commitments | Revolving Credit Facility | Base Rate-based Borrowings                      
Debt Instrument [Line Items]                      
Basis spread on variable interest rate percentage       3.00%              
Senior Notes | 2020 Notes                      
Debt Instrument [Line Items]                      
Face amount       $ 454,299,000              
Debt instrument interest rate, percentage       8.75%              
Repurchase amount     $ 250,700,000   $ 225,000,000            
Senior Notes | 8.875% Senior Secured Notes Due 2022                      
Debt Instrument [Line Items]                      
Face amount       $ 270,000,000              
Debt instrument interest rate, percentage       8.875%              
Senior Notes | 7.875% Senior Secured Notes Due 2022                      
Debt Instrument [Line Items]                      
Face amount       $ 900,000,000              
Debt instrument interest rate, percentage       7.875%              
Senior Notes | 7.625% Senior Notes Due 2023                      
Debt Instrument [Line Items]                      
Face amount       $ 400,000,000              
Debt instrument interest rate, percentage       7.625%              
Senior Notes | 8.500% Senior Secured Notes Due 2024                      
Debt Instrument [Line Items]                      
Face amount         $ 225,000,000            
Debt instrument interest rate, percentage       8.50% 8.50%            
Senior Notes | Six Point Three Seven Five Percentage Senior Notes Due 2019                      
Debt Instrument [Line Items]                      
Repurchase amount     $ 269,500,000                
Term Loan | Federal Funds Rate                      
Debt Instrument [Line Items]                      
Basis spread on variable interest rate percentage     0.50%                
Term Loan | LIBOR | LIBOR Referenced To US Dollar Deposits                      
Debt Instrument [Line Items]                      
Basis spread on variable interest rate percentage     1.00%                
Term Loan | LIBOR | LIBOR Referenced To LIBOR For Dollars In Period Of Borrowing                      
Debt Instrument [Line Items]                      
Basis spread on variable interest rate percentage     5.00%                
Term Loan | Base Rate-based Borrowings | LIBOR Referenced To LIBOR For Dollars In Period Of Borrowing                      
Debt Instrument [Line Items]                      
Basis spread on variable interest rate percentage     4.00%                
Term Loan | Term Loan                      
Debt Instrument [Line Items]                      
Credit facility, aggregate principal amount     $ 810,000,000                
Quarterly amortization payments, percent of principal amount outstanding     0.25%                
Letter of Credit                      
Debt Instrument [Line Items]                      
Outstanding borrowings       $ 13,900,000              
Subsequent Event | Senior Notes | 8.875% Senior Secured Notes Due 2022                      
Debt Instrument [Line Items]                      
Face amount $ 190,000,000                    
Days prior to maturity 91 days                    
v3.19.2
Long-Term Debt - Debt Modification and Extinguishments (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2019
Jun. 30, 2019
Dec. 31, 2018
Debt Instrument [Line Items]      
Previously deferred financing costs extinguished   $ 1,395 $ 4,207
May 2019 issuance | Senior Notes      
Debt Instrument [Line Items]      
Original premium extinguished $ (588) (588)  
Previously deferred financing costs extinguished 1,395 1,395  
Total other expense and loss on extinguishment 807 807  
New deferred financing costs $ 4,956 $ 4,956  
v3.19.2
Long-Term Debt - Deferred Financing Activity (Details) - USD ($)
$ in Thousands
 6 Months Ended 12 Months Ended
Jun. 30, 2019
Dec. 31, 2018
Deferred Financing Activity [Roll Forward]    
Beginning balance $ 34,423 $ 38,766
Additions 4,956 10,275
Early Extinguishment (1,395) (4,207)
Amortized (4,936) (10,411)
Ending balance 33,048 34,423
Senior Notes | 2019 Notes    
Deferred Financing Activity [Roll Forward]    
Beginning balance 0 2,877
Additions   0
Early Extinguishment   (1,877)
Amortized   (1,000)
Ending balance   0
Senior Notes | 2020 Notes    
Deferred Financing Activity [Roll Forward]    
Beginning balance 5,380 11,209
Additions 0 0
Early Extinguishment (1,395) (2,330)
Amortized (1,326) (3,499)
Ending balance 2,659 5,380
Senior Notes | 2022 Private Placement Notes    
Deferred Financing Activity [Roll Forward]    
Beginning balance 602 752
Additions 0 0
Early Extinguishment 0 0
Amortized (75) (150)
Ending balance 527 602
Senior Notes | 2022 Notes    
Deferred Financing Activity [Roll Forward]    
Beginning balance 12,799 16,067
Additions 0 0
Early Extinguishment 0 0
Amortized (1,634) (3,268)
Ending balance 11,165 12,799
Senior Notes | 2023 Notes    
Deferred Financing Activity [Roll Forward]    
Beginning balance 3,922 4,762
Additions 0 0
Early Extinguishment 0 0
Amortized (420) (840)
Ending balance 3,502 3,922
Senior Notes | 2024 Notes    
Deferred Financing Activity [Roll Forward]    
Beginning balance 0  
Additions 4,956  
Early Extinguishment 0  
Amortized (75)  
Ending balance 4,881 0
Term Loan | Term Loan    
Deferred Financing Activity [Roll Forward]    
Beginning balance 9,662 0
Additions 10,275
Early Extinguishment 0 0
Amortized (920) (613)
Ending balance 8,742 9,662
Revolving Credit Facility | Line of Credit    
Deferred Financing Activity [Roll Forward]    
Beginning balance 2,058 3,099
Additions 0 0
Early Extinguishment 0 0
Amortized (486) (1,041)
Ending balance $ 1,572 $ 2,058
v3.19.2
Retail Installment Contract Receivables - Installment Receivables (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]          
Deferred interest $ (31,652)   $ (31,652)   $ (34,164)
Retail Installment Contracts          
Accounts, Notes, Loans and Financing Receivable [Line Items]          
RIC receivables, gross 186,077   186,077   175,250
Deferred interest (31,652)   (31,652)   (34,163)
RIC receivables, net of deferred interest 154,425   154,425   141,087
Classified on the condensed consolidated unaudited balance sheets as:          
Accounts and notes receivable, net 39,620   39,620   32,185
Long-term notes receivables and other assets, net 114,805   114,805   108,902
RIC receivables, net 154,425   154,425   $ 141,087
Interest income $ (3,100) $ (3,500) $ (6,600) $ (6,800)  
Minimum | Vivint Flex Pay          
Accounts, Notes, Loans and Financing Receivable [Line Items]          
Installment loans available to qualified customers, term     42 months    
Maximum | Vivint Flex Pay          
Accounts, Notes, Loans and Financing Receivable [Line Items]          
Installment loans available to qualified customers, term     60 months    
v3.19.2
Retail Installment Contract Receivables - Allowance for Credit Losses (Details) - USD ($)
$ in Thousands
 6 Months Ended 12 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Financing Receivable, Allowance for Credit Loss [Roll Forward]      
Deferred revenue $ 91,719 $ 114,345  
Retail Installment Contracts      
Financing Receivable, Allowance for Credit Loss [Roll Forward]      
Deferred interest, beginning of period 34,163 $ 36,048 $ 36,048
Write-offs, net of recoveries (12,500)   (26,360)
Deferred revenue 9,989   24,475
Deferred interest, end of period $ 31,652   $ 34,163
v3.19.2
Balance Sheet Components (Detail) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Prepaid expenses and other current assets    
Prepaid expenses $ 14,112 $ 7,183
Deposits 1,793 904
Other 1,083 3,362
Total prepaid expenses and other current assets 16,988 11,449
Capitalized contract costs    
Capitalized contract costs 2,632,597 2,361,795
Accumulated amortization (1,461,910) (1,246,020)
Capitalized contract costs, net 1,170,687 1,115,775
Long-term notes receivables and other assets    
RIC receivables, gross 146,457 143,065
RIC deferred interest (31,652) (34,164)
Security deposits 6,985 6,586
Investments 541 3,865
Other 300 467
Total long-term notes receivables and other assets, net 122,631 119,819
Accrued payroll and commissions    
Accrued commissions 42,611 28,726
Accrued payroll 26,937 36,753
Total accrued payroll and commissions 69,548 65,479
Accrued expenses and other current liabilities    
Accrued interest payable 25,764 28,885
Current portion of derivative liability 70,468 67,710
Service warranty accrual 8,835 8,813
Current portion of notes payable 8,100 8,100
Loss contingencies 1,831 3,131
Other 23,051 20,076
Total accrued expenses and other current liabilities $ 138,049 $ 136,715
v3.19.2
Property Plant and Equipment - Components of Property Plant and Equipment (Detail) - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2019
Dec. 31, 2018
Property, Plant and Equipment [Line Items]    
Property plant and equipment, gross $ 154,578 $ 156,096
Accumulated depreciation and amortization (92,978) (82,695)
Property, plant and equipment, net 61,600 73,401
Vehicles    
Property, Plant and Equipment [Line Items]    
Property plant and equipment, gross $ 44,620 45,050
Vehicles | Minimum    
Property, Plant and Equipment [Line Items]    
Estimated Useful Lives 3 years  
Vehicles | Maximum    
Property, Plant and Equipment [Line Items]    
Estimated Useful Lives 5 years  
Computer equipment and software    
Property, Plant and Equipment [Line Items]    
Property plant and equipment, gross $ 58,489 53,891
Computer equipment and software | Minimum    
Property, Plant and Equipment [Line Items]    
Estimated Useful Lives 3 years  
Computer equipment and software | Maximum    
Property, Plant and Equipment [Line Items]    
Estimated Useful Lives 5 years  
Leasehold improvements    
Property, Plant and Equipment [Line Items]    
Property plant and equipment, gross $ 27,977 26,401
Leasehold improvements | Minimum    
Property, Plant and Equipment [Line Items]    
Estimated Useful Lives 2 years  
Leasehold improvements | Maximum    
Property, Plant and Equipment [Line Items]    
Estimated Useful Lives 15 years  
Office furniture, fixtures and equipment    
Property, Plant and Equipment [Line Items]    
Property plant and equipment, gross $ 20,416 19,532
Estimated Useful Lives 7 years  
Build-to-suit lease building    
Property, Plant and Equipment [Line Items]    
Property plant and equipment, gross $ 0 8,247
Estimated Useful Lives 10 years 6 months  
Construction in process    
Property, Plant and Equipment [Line Items]    
Property plant and equipment, gross $ 3,076 $ 2,975
v3.19.2
Property Plant and Equipment - Additional Information (Detail) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Jan. 01, 2019
Dec. 31, 2018
Property, Plant and Equipment [Line Items]            
Property, plant and equipment, net $ 61,600   $ 61,600     $ 73,401
Accumulated depreciation 92,978   92,978     82,695
Depreciation and amortization expense 7,100 $ 6,200 13,000 $ 12,400    
Reduction in finance lease obligations (10,381)   (10,381)      
Assets Under Finance Lease Obligations            
Property, Plant and Equipment [Line Items]            
Property, plant and equipment, net 21,600   21,600     26,200
Accumulated depreciation $ 23,700   $ 23,700     $ 22,200
ASU 2016-02 adoption            
Property, Plant and Equipment [Line Items]            
Property, plant and equipment, net         $ (6,100)  
Accrued expenses and other current liabilities | ASU 2016-02 adoption            
Property, Plant and Equipment [Line Items]            
Reduction in finance lease obligations         $ 6,600  
v3.19.2
Goodwill and Intangible Assets - Additional Information (Detail)
$ in Thousands
 1 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended
May 31, 2019
USD ($)
Jan. 31, 2018
USD ($)
Jun. 30, 2019
USD ($)
Jun. 30, 2018
USD ($)
Jun. 30, 2019
USD ($)
Jun. 30, 2018
USD ($)
Dec. 31, 2016
USD ($)
market
Dec. 31, 2018
USD ($)
Finite-Lived Intangible Assets [Line Items]                
Goodwill     $ 836,289   $ 836,289     $ 834,855
Proceeds from the sale of intangible assets         0 $ 53,693    
Amortization expense related to intangible assets     20,200 $ 22,700 $ 40,500 $ 45,500    
Finite-lived intangible assets, remaining amortization period         3 years 4 months 30 days      
Patents currently in process     $ 300   $ 300      
Spectrum Licenses                
Finite-Lived Intangible Assets [Line Items]                
Number of mid-sized metropolitan markets | market             40  
Lease agreements term             7 years  
Intangible assets acquired             $ 31,300  
Spectrum Leases | Verizon | Spectrum Licenses                
Finite-Lived Intangible Assets [Line Items]                
Proceeds from the sale of intangible assets   $ 55,000            
Extinguishment of liability   (27,900)            
Indefinite-lived intangible assets, written off   31,300            
Regulatory costs   1,200            
Gain on sale   $ 50,400            
Crowd Storage, Inc.                
Finite-Lived Intangible Assets [Line Items]                
Goodwill addition associated with the acquisition of CrowdStorage         $ 400      
Technology asset class | Crowd Storage, Inc.                
Finite-Lived Intangible Assets [Line Items]                
Definite-lived intangible assets acquired $ 1,800              
v3.19.2
Goodwill and Intangible Assets - Intangible Assets (Detail) - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2019
Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]    
Definite-lived intangible assets, gross carrying amount $ 1,008,260 $ 1,003,240
Accumulated Amortization (791,105) (748,778)
Definite-lived intangible assets, net carrying amount 217,155 254,462
Indefinite-lived intangible assets: 623 623
Total intangible assets, gross carrying amount 1,008,883 1,003,863
Total intangible assets, net carrying amount 217,778 255,085
Customer contracts    
Finite-Lived Intangible Assets [Line Items]    
Definite-lived intangible assets, gross carrying amount 966,909 964,100
Accumulated Amortization (757,039) (717,648)
Definite-lived intangible assets, net carrying amount $ 209,870 246,452
Estimated Useful Lives 10 years  
2GIG 2.0 technology    
Finite-Lived Intangible Assets [Line Items]    
Definite-lived intangible assets, gross carrying amount $ 17,000 17,000
Accumulated Amortization (15,913) (15,292)
Definite-lived intangible assets, net carrying amount $ 1,087 1,708
Estimated Useful Lives 8 years  
Other technology    
Finite-Lived Intangible Assets [Line Items]    
Definite-lived intangible assets, gross carrying amount $ 4,725 2,917
Accumulated Amortization (2,133) (1,667)
Definite-lived intangible assets, net carrying amount 2,592 1,250
Space Monkey technology    
Finite-Lived Intangible Assets [Line Items]    
Definite-lived intangible assets, gross carrying amount 7,100 7,100
Accumulated Amortization (6,283) (5,756)
Definite-lived intangible assets, net carrying amount $ 817 1,344
Estimated Useful Lives 6 years  
Patents    
Finite-Lived Intangible Assets [Line Items]    
Definite-lived intangible assets, gross carrying amount $ 12,526 12,123
Accumulated Amortization (9,737) (8,415)
Definite-lived intangible assets, net carrying amount $ 2,789 3,708
Estimated Useful Lives 5 years  
Minimum    
Finite-Lived Intangible Assets [Line Items]    
Estimated Useful Lives 2 years  
Minimum | Other technology    
Finite-Lived Intangible Assets [Line Items]    
Estimated Useful Lives 5 years  
Maximum    
Finite-Lived Intangible Assets [Line Items]    
Estimated Useful Lives 10 years  
Maximum | Other technology    
Finite-Lived Intangible Assets [Line Items]    
Estimated Useful Lives 7 years  
IP addresses    
Finite-Lived Intangible Assets [Line Items]    
Indefinite-lived intangible assets: $ 564 564
Domain names    
Finite-Lived Intangible Assets [Line Items]    
Indefinite-lived intangible assets: $ 59 $ 59
v3.19.2
Goodwill and Intangible Assets - Future Amortization Expense (Detail)
$ in Thousands
Jun. 30, 2019
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]  
2019 - Remaining Period $ 39,926
2020 69,207
2021 58,850
2022 48,868
2023 51
Thereafter 3
Total estimated amortization expense $ 216,905
v3.19.2
Financial Instruments - Valuation Approach Applied to Each Class of Security (Detail) - USD ($)
$ in Thousands
 1 Months Ended 3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2018
Dec. 31, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]        
Cash $ 3,041     $ 6,681
Adjusted Cost 3,133     16,258
Unrealized Gains 0     0
Unrealized Losses 0     (304)
Fair Value 3,133     15,954
Cash and Cash Equivalents 3,133     12,773
Long-Term Notes Receivables and Other Assets, net 0     3,181
Unrealized gain (loss) during period 2,300 $ 400 $ 700  
Level 1        
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]        
Adjusted Cost       9,577
Unrealized Gains       0
Unrealized Losses       (304)
Fair Value       9,273
Cash and Cash Equivalents       6,092
Long-Term Notes Receivables and Other Assets, net       3,181
Money market funds | Level 1        
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]        
Adjusted Cost 92     6,092
Unrealized Gains 0     0
Unrealized Losses 0     0
Fair Value 92     6,092
Cash and Cash Equivalents 92     6,092
Long-Term Notes Receivables and Other Assets, net $ 0     0
Corporate securities | Level 1        
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]        
Adjusted Cost       3,485
Unrealized Gains       0
Unrealized Losses       (304)
Fair Value       3,181
Cash and Cash Equivalents       0
Long-Term Notes Receivables and Other Assets, net       $ 3,181
v3.19.2
Financial Instruments - Debt Fair Value and Carrying Value (Detail) - USD ($)
$ in Thousands
Jun. 30, 2019
May 31, 2019
Dec. 31, 2018
Debt Instrument [Line Items]      
Face Value $ 3,172,849   $ 3,045,195
Level 2      
Debt Instrument [Line Items]      
Face Value 3,053,224   3,057,274
Estimated Fair Value $ 2,900,774   2,889,616
Senior Notes | 2020 Notes      
Debt Instrument [Line Items]      
Stated Interest Rate 8.75%    
Senior Notes | 2020 Notes | Level 2      
Debt Instrument [Line Items]      
Face Value $ 454,299   679,299
Estimated Fair Value $ 431,675   643,568
Senior Notes | 2022 Private Placement Notes      
Debt Instrument [Line Items]      
Stated Interest Rate 8.875%    
Senior Notes | 2022 Private Placement Notes | Level 2      
Debt Instrument [Line Items]      
Face Value $ 270,000   270,000
Estimated Fair Value $ 258,876   257,073
Senior Notes | 2022 Notes      
Debt Instrument [Line Items]      
Stated Interest Rate 7.875%    
Senior Notes | 2022 Notes | Level 2      
Debt Instrument [Line Items]      
Face Value $ 900,000   900,000
Estimated Fair Value $ 862,920   855,000
Senior Notes | 2023 Notes      
Debt Instrument [Line Items]      
Stated Interest Rate 7.625%    
Senior Notes | 2023 Notes | Level 2      
Debt Instrument [Line Items]      
Face Value $ 400,000   400,000
Estimated Fair Value $ 326,320   326,000
Senior Notes | 2024 Notes      
Debt Instrument [Line Items]      
Stated Interest Rate 8.50% 8.50%  
Senior Notes | 2024 Notes | Level 2      
Debt Instrument [Line Items]      
Face Value $ 225,000   0
Estimated Fair Value 215,033   0
Term Loan | Level 2      
Debt Instrument [Line Items]      
Face Value 803,925   807,975
Estimated Fair Value $ 805,950   $ 807,975
v3.19.2
Financial Instruments - Derivative Fair Value (Details) - Level 2 - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Derivatives, Fair Value [Line Items]    
Fair value $ 136,254 $ 117,620
Notional amount 465,864 368,708
Accrued expenses and other current liabilities    
Derivatives, Fair Value [Line Items]    
Fair value 70,468 67,710
Other long-term obligations    
Derivatives, Fair Value [Line Items]    
Fair value $ 65,786 $ 49,910
v3.19.2
Financial Instruments - Level 3 (Details) - Fair Value, Inputs, Level 3 - USD ($)
$ in Thousands
 6 Months Ended 12 Months Ended
Jun. 30, 2019
Dec. 31, 2018
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]    
Balance, beginning of period $ 117,620 $ 46,496
Additions 47,115 93,095
Settlements (29,908) (34,587)
Losses included in earnings 1,427 12,616
Balance, end of period $ 136,254 $ 117,620
v3.19.2
Income Taxes (Detail)
 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Income Tax Disclosure [Abstract]    
Effective income tax rate, percentage 0.41% 0.58%
v3.19.2
Stock-Based Compensation and Equity - Additional Information (Detail) - shares
 1 Months Ended 6 Months Ended 13 Months Ended
May 31, 2018
Mar. 31, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2019
Incentive Units | Minimum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Expected volatility, percentage       55.00%  
Expected exercise term       3 years 11 months 16 days  
Risk-free rate, percentage       0.62%  
Incentive Units | Maximum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Expected volatility, percentage       125.00%  
Expected exercise term       6 years  
Risk-free rate, percentage       2.61%  
Incentive Units Time Based Awards          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Vesting period 5 years        
Award vesting rights, percentage 66.67%        
Incentive Units Time Based Awards | Tranche One          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Vesting period 5 years        
Award vesting rights, percentage         33.33%
Incentive Units Time Based Awards | Tranche Three          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Award vesting rights, percentage         33.33%
Incentive Units Time Based Awards | Senior Management and Board Member          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Incentive units issued as share-based compensation awards (in shares)       85,366,126  
Incentive Units Time Based Awards | Chief Executive Officer and President          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Incentive units issued as share-based compensation awards, outstanding (in shares)       42,169,456 42,169,456
Incentive Units Performance Based Awards          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Award vesting rights, percentage 33.33%        
Incentive Units Performance Based Awards | Tranche One          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Award vesting rights, percentage         33.33%
Incentive Units Performance Based Awards | Tranche Three          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Vesting period         5 years
Stock Appreciation Rights (SARs)          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Shares reserved for issuance (in shares)       53,621,891 53,621,891
Stock Appreciation Rights (SARs) | Tranche Three          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Vesting period         5 years
Stock Appreciation Rights Time Based Awards | Tranche One          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Award vesting rights, percentage         33.33%
Stock Appreciation Rights Time Based Awards | Tranche Three          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Award vesting rights, percentage         33.33%
Stock Appreciation Rights Performance Based Awards | Tranche One          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Award vesting rights, percentage         33.33%
Restricted Stock Units (RSUs)          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Incentive units issued as share-based compensation awards (in shares)   236,111 360,000    
Vesting period       3 years  
Vivint | Stock Appreciation Rights (SARs)          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Incentive units issued as share-based compensation awards, outstanding (in shares)       46,429,415 46,429,415
Expected dividends, percentage       0.00%  
Vivint | Stock Appreciation Rights (SARs) | Minimum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Expected volatility, percentage       55.00%  
Expected exercise term       6 years  
Risk-free rate, percentage       0.61%  
Vivint | Stock Appreciation Rights (SARs) | Maximum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Expected volatility, percentage       125.00%  
Expected exercise term       6 years 5 months 20 days  
Risk-free rate, percentage       2.61%  
Vivint | Stock Appreciation Rights Time Based Awards          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Vesting period       5 years  
Award vesting rights, percentage 66.67%        
Vivint | Stock Appreciation Rights Performance Based Awards          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Award vesting rights, percentage 33.33%        
v3.19.2
Stock-Based Compensation and Equity - Stock-Based Compensation Expense (Detail) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Total stock-based compensation $ 977 $ 338 $ 1,834 $ 542
Operating expenses        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Total stock-based compensation 52 26 95 44
Selling expenses        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Total stock-based compensation 82 81 169 126
General and administrative expenses        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Total stock-based compensation $ 843 $ 231 $ 1,570 $ 372
v3.19.2
Commitments and Contingencies (Detail) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Commitments And Contingencies [Line Items]        
Loss contingency accrual   $ 1.8   $ 3.1
Operating leases, rent expense $ 4.4   $ 8.8  
Capital lease obligation       $ 13.3
Vehicles        
Commitments And Contingencies [Line Items]        
Lease agreements term   36 months    
Average remaining life for fleet   8 months    
v3.19.2
Leases - Components of Lease Expense (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2019
Lessee, Lease, Description [Line Items]    
Operating and finance leases, renewal term   10 years
Operating and finance leases, options to terminate lease, term   1 year
Operating lease cost $ 4,341 $ 8,589
Finance lease cost:    
Amortization of right-of-use assets 1,357 2,732
Interest on lease liabilities 240 394
Total finance lease cost $ 1,597 $ 3,126
Minimum    
Lessee, Lease, Description [Line Items]    
Operating and finance leases, remaining lease term   1 year
Maximum    
Lessee, Lease, Description [Line Items]    
Operating and finance leases, remaining lease term   9 years
v3.19.2
Leases - Supplemental Cash Flow Information (Details) - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Cash paid for amounts included in the measurement of lease liabilities:    
Operating cash flows from operating leases $ (8,742)  
Operating cash flows from finance leases (394)  
Financing cash flows from finance leases (4,263) $ (6,955)
Right-of-use assets obtained in exchange for lease obligations:    
Operating leases 1,690  
Finance leases $ 1,295  
v3.19.2
Leases - Supplemental Balance Sheet Information (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Operating Leases    
Operating lease right-of-use assets $ 71,557 $ 0
Current operating lease liabilities 12,058 0
Operating lease liabilities 69,975 0
Total operating lease liabilities 82,033  
Finance Leases    
Property, plant and equipment, gross 45,315  
Accumulated depreciation (23,697)  
Property, plant and equipment, net 21,618  
Current finance lease liabilities 6,984 7,743
Finance lease liabilities 3,397 $ 5,571
Total finance lease liabilities $ 10,381  
Weighted Average Remaining Lease Term    
Operating leases, weighted average remaining lease term 6 years  
Finance leases, weighted average remaining lease term 1 year 4 months 25 days  
Weighted Average Discount Rate    
Operating leases, weighted average discount rate, percentage 7.00%  
Finance leases, weighted average discount rate, percentage 4.00%  
v3.19.2
Leases - Maturities of Lease Liabilities (Details)
$ in Thousands
Jun. 30, 2019
USD ($)
Operating Leases  
2019 (excluding the six months ended June 30, 2019) $ 9,010
2020 16,955
2021 16,069
2022 14,728
2023 14,622
Thereafter 32,422
Total lease payments 103,806
Less imputed interest (21,773)
Total 82,033
Finance Leases  
2019 (excluding the six months ended June 30, 2019) 4,218
2020 5,517
2021 719
2022 261
2023 1
Thereafter 0
Total lease payments 10,716
Less imputed interest (335)
Total $ 10,381
v3.19.2
Related Party Transactions (Detail) - USD ($)
 1 Months Ended 3 Months Ended 6 Months Ended
Sep. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Related Party Transaction [Line Items]            
Prepaid expenses and other current assets   $ 16,988,000   $ 16,988,000   $ 11,449,000
Additional expenses incurred for other related-party transactions   300,000 $ 600,000 700,000 $ 1,200,000  
Blackstone monitoring fee, a related party   2,000,000   2,000,000   4,800,000
Outstanding borrowings   3,172,849,000   3,172,849,000   3,045,195,000
Proceeds from capital contribution       0 0  
Affiliated Entity | Minimum            
Related Party Transaction [Line Items]            
Annual monitoring base fee, minimum       2,700,000    
Personal Use Of Corporate Jet            
Related Party Transaction [Line Items]            
Prepaid expenses and other current assets   300,000   300,000   1,800,000
Solar | Affiliated Entity            
Related Party Transaction [Line Items]            
Sublease and other administrative expenses   4,200,000 3,700,000 6,600,000 4,700,000  
Blackstone Management Partners L.L.C. | Affiliated Entity            
Related Party Transaction [Line Items]            
Expenses incurred for services   1,000,000 1,000,000 2,000,000 2,100,000  
Blackstone Management Partners L.L.C. | Blackstone Management Partners LLC Support and Services Agreement | Affiliated Entity            
Related Party Transaction [Line Items]            
Maximum advisory fee obligation   1,500,000.0   1,500,000.0    
Expenses related to support and services agreement   0 $ 0 0 $ 0  
Blackstone Advisory Partners L.P. | Affiliated Entity            
Related Party Transaction [Line Items]            
Deferred financing costs $ 1,200,000          
Blackstone Advisory Partners L.P. | Term Loan | Affiliated Entity            
Related Party Transaction [Line Items]            
Outstanding borrowings   $ 82,200,000   $ 82,200,000   $ 75,100,000
Vivint Smart Home, Inc. | Affiliated Entity            
Related Party Transaction [Line Items]            
Proceeds from capital contribution $ 4,700,000          
v3.19.2
Employee Benefit Plan (Detail) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Postemployment Benefits [Abstract]        
Employer matching contribution, percent of employees' gross pay     1.00%  
Employer matching contribution, amount for every employees' dollar contributed     $ 0.50  
Employer matching contribution, percent of employees' gross pay for 50% matching for every dollar contributed     5.00%  
Maximum annual contributions per employee, percent     3.50%  
Award vesting service period     2 years  
Matching contributions to the plan $ 1,500,000 $ 1,400,000 $ 3,400,000 $ 3,000,000
v3.19.2
Restructuring and Asset Impairment Charges (Detail) - USD ($)
$ in Thousands
 6 Months Ended 12 Months Ended
Jun. 30, 2019
Dec. 31, 2018
Restructuring Reserve [Roll Forward]    
Accrued restructuring, beginning balance $ 809 $ 558
Restructuring expenses   4,683
Cash payments (359) (4,432)
Accrued restructuring, ending balance 450 809
Contract termination costs    
Restructuring Reserve [Roll Forward]    
Accrued restructuring, beginning balance 467 558
Restructuring expenses   0
Cash payments (46) (91)
Accrued restructuring, ending balance 421 467
Employee severance and termination benefits    
Restructuring Reserve [Roll Forward]    
Accrued restructuring, beginning balance 342 0
Restructuring expenses   4,683
Cash payments (313) (4,341)
Accrued restructuring, ending balance $ 29 $ 342
v3.19.2
Segment Reporting and Business Concentrations (Details)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2019
USD ($)
segment
Jun. 30, 2018
USD ($)
segment
Jun. 30, 2019
USD ($)
segment
region
Jun. 30, 2018
USD ($)
segment
Revenues from External Customers and Long-Lived Assets [Line Items]        
Number of operating segments | segment 1 1 1 1
Number of geographic regions | region     2  
Revenue from external customers $ 281,053 $ 254,967 $ 557,302 $ 501,564
United States        
Revenues from External Customers and Long-Lived Assets [Line Items]        
Revenue from external customers 263,007 237,513 521,443 466,055
Canada        
Revenues from External Customers and Long-Lived Assets [Line Items]        
Revenue from external customers $ 18,046 $ 17,454 $ 35,859 $ 35,509
v3.19.2
Guarantor and Non-Guarantor Supplemental Financial Information - Balance Sheet (Detail) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Jun. 30, 2018
ASSETS      
Current assets $ 230,861 $ 123,498  
Property, plant and equipment, net 61,600 73,401  
Capitalized contract costs, net 1,170,687 1,115,775  
Deferred financing costs, net 1,572 2,058  
Investment in subsidiaries 0 0  
Intercompany receivable 0 0  
Intangible assets, net 217,778 255,085  
Goodwill 836,289 834,855  
Operating lease right-of-use assets 71,557 0  
Long-term notes receivables and other assets 122,631 119,819  
Total assets 2,712,975 2,524,491  
LIABILITIES AND STOCKHOLDERS’ DEFICIT      
Current liabilities 589,816 463,536  
Intercompany payable 0 0  
Notes payable and revolving credit facility, net of current portion 3,164,749 3,037,095  
Finance lease liabilities 3,397 5,571  
Deferred revenue, net of current portion 383,266 323,585  
Operating lease liabilities 69,975 0  
Other long-term obligations 99,736 90,209  
Accumulated losses of investee, net 0 0  
Deferred income tax liability 1,139 1,096  
Total stockholders’ deficit (1,599,103) (1,396,601) $ (1,167,783)
Total liabilities and stockholders’ deficit 2,712,975 2,524,491  
Eliminations      
ASSETS      
Current assets (315,770) (262,674)  
Property, plant and equipment, net 0 0  
Capitalized contract costs, net 0 0  
Deferred financing costs, net 0 0  
Investment in subsidiaries (1,595,121) (1,662,367)  
Intercompany receivable (6,303) (6,303)  
Intangible assets, net 0 0  
Goodwill 0 0  
Operating lease right-of-use assets 0    
Long-term notes receivables and other assets (106) (106)  
Total assets (1,917,300) (1,931,450)  
LIABILITIES AND STOCKHOLDERS’ DEFICIT      
Current liabilities (315,770) (262,674)  
Intercompany payable (6,303) (6,303)  
Notes payable and revolving credit facility, net of current portion 0 0  
Finance lease liabilities 0 0  
Deferred revenue, net of current portion 0 0  
Operating lease liabilities 0    
Other long-term obligations 0 0  
Accumulated losses of investee, net (1,599,103) (1,396,601)  
Deferred income tax liability (106) (106)  
Total stockholders’ deficit 3,982 (265,766)  
Total liabilities and stockholders’ deficit (1,917,300) (1,931,450)  
Parent | Reportable Legal Entities      
ASSETS      
Current assets 0 0  
Property, plant and equipment, net 0 0  
Capitalized contract costs, net 0 0  
Deferred financing costs, net 0 0  
Investment in subsidiaries 0 0  
Intercompany receivable 0 0  
Intangible assets, net 0 0  
Goodwill 0 0  
Operating lease right-of-use assets 0    
Long-term notes receivables and other assets 0 0  
Total assets 0 0  
LIABILITIES AND STOCKHOLDERS’ DEFICIT      
Current liabilities 0 0  
Intercompany payable 0 0  
Notes payable and revolving credit facility, net of current portion 0 0  
Finance lease liabilities 0 0  
Deferred revenue, net of current portion 0 0  
Operating lease liabilities 0    
Other long-term obligations 0 0  
Accumulated losses of investee, net 1,599,103 1,396,601  
Deferred income tax liability 0 0  
Total stockholders’ deficit (1,599,103) (1,396,601)  
Total liabilities and stockholders’ deficit 0 0  
Guarantor Subsidiaries | Reportable Legal Entities      
ASSETS      
Current assets 408,215 269,770  
Property, plant and equipment, net 61,215 72,937  
Capitalized contract costs, net 1,101,598 1,047,532  
Deferred financing costs, net 0 0  
Investment in subsidiaries 0 0  
Intercompany receivable 6,303 6,303  
Intangible assets, net 201,538 236,677  
Goodwill 810,129 809,678  
Operating lease right-of-use assets 71,345    
Long-term notes receivables and other assets 101,695 102,695  
Total assets 2,762,038 2,545,592  
LIABILITIES AND STOCKHOLDERS’ DEFICIT      
Current liabilities 662,048 507,063  
Intercompany payable 0 0  
Notes payable and revolving credit facility, net of current portion 0 0  
Finance lease liabilities 3,397 5,570  
Deferred revenue, net of current portion 363,958 306,653  
Operating lease liabilities 69,894    
Other long-term obligations 98,859 90,209  
Deferred income tax liability 106 106  
Total stockholders’ deficit 1,563,776 1,635,991  
Total liabilities and stockholders’ deficit 2,762,038 2,545,592  
Non-Guarantor Subsidiaries | Reportable Legal Entities      
ASSETS      
Current assets 135,703 103,451  
Property, plant and equipment, net 385 464  
Capitalized contract costs, net 69,089 68,243  
Deferred financing costs, net 0 0  
Investment in subsidiaries 0 0  
Intercompany receivable 0 0  
Intangible assets, net 16,240 18,408  
Goodwill 26,160 25,177  
Operating lease right-of-use assets 212    
Long-term notes receivables and other assets 20,936 17,124  
Total assets 268,725 232,867  
LIABILITIES AND STOCKHOLDERS’ DEFICIT      
Current liabilities 209,672 182,159  
Intercompany payable 6,303 6,303  
Notes payable and revolving credit facility, net of current portion 0 0  
Finance lease liabilities 0 1  
Deferred revenue, net of current portion 19,308 16,932  
Operating lease liabilities 81    
Other long-term obligations 877 0  
Deferred income tax liability 1,139 1,096  
Total stockholders’ deficit 31,345 26,376  
Total liabilities and stockholders’ deficit 268,725 232,867  
APX Group, Inc. | Reportable Legal Entities      
ASSETS      
Current assets 2,713 12,951  
Property, plant and equipment, net 0 0  
Capitalized contract costs, net 0 0  
Deferred financing costs, net 1,572 2,058  
Investment in subsidiaries 1,595,121 1,662,367  
Intercompany receivable 0 0  
Intangible assets, net 0 0  
Goodwill 0 0  
Operating lease right-of-use assets 0    
Long-term notes receivables and other assets 106 106  
Total assets 1,599,512 1,677,482  
LIABILITIES AND STOCKHOLDERS’ DEFICIT      
Current liabilities 33,866 36,988  
Intercompany payable 0 0  
Notes payable and revolving credit facility, net of current portion 3,164,749 3,037,095  
Finance lease liabilities 0 0  
Deferred revenue, net of current portion 0 0  
Operating lease liabilities 0    
Other long-term obligations 0 0  
Deferred income tax liability 0 0  
Total stockholders’ deficit (1,599,103) (1,396,601)  
Total liabilities and stockholders’ deficit $ 1,599,512 $ 1,677,482  
v3.19.2
Guarantor and Non-Guarantor Supplemental Financial Information - Statements of Operations and Comprehensive (Loss) Income (Detail) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Condensed Income Statements, Captions [Line Items]        
Revenue from external customers $ 281,053 $ 254,967 $ 557,302 $ 501,564
Costs and expenses 331,882 335,200 636,109 653,428
(Loss) income from operations (50,829) (80,233) (78,807) (151,864)
Loss from subsidiaries 0 0 0 0
Other expense (income), net 65,619 65,058 127,098 78,577
(Loss) income before income tax expenses (116,448) (145,291) (205,905) (230,441)
Income tax expense (benefit) (552) (906) (853) (1,339)
Net (loss) income (115,896) (144,385) (205,052) (229,102)
Other comprehensive loss, net of tax effects:        
Net (loss) income (115,896) (144,385) (205,052) (229,102)
Other comprehensive loss from subsidiaries 0 0    
Other comprehensive income from subsidiaries     0 0
Foreign currency translation adjustment 504 (417) 1,074 (1,076)
Total other comprehensive income (loss) 504 (417) 1,074 (1,076)
Comprehensive (loss) income (115,392) (144,802) (203,978) (230,178)
Eliminations        
Condensed Income Statements, Captions [Line Items]        
Revenue from external customers (592) (646) (794) (1,302)
Costs and expenses (592) (646) (794) (1,302)
(Loss) income from operations 0 0 0 0
Loss from subsidiaries 165,850 229,308 280,987 340,345
Other expense (income), net 0 0 0 0
(Loss) income before income tax expenses 165,850 229,308 280,987 340,345
Income tax expense (benefit) 0 0 0 0
Net (loss) income 165,850 229,308 280,987 340,345
Other comprehensive loss, net of tax effects:        
Net (loss) income 165,850 229,308 280,987 340,345
Other comprehensive loss from subsidiaries (1,008) 834    
Other comprehensive income from subsidiaries     (2,148) 2,152
Foreign currency translation adjustment 0 0 0 0
Total other comprehensive income (loss) (1,008) 834 (2,148) 0
Comprehensive (loss) income 164,842 230,142 278,839 340,345
Parent | Reportable Legal Entities        
Condensed Income Statements, Captions [Line Items]        
Revenue from external customers 0 0 0 0
Costs and expenses 0 0 0 0
(Loss) income from operations 0 0 0 0
Loss from subsidiaries (115,896) (144,385) (205,052) (229,102)
Other expense (income), net 0 0 0 0
(Loss) income before income tax expenses (115,896) (144,385) (205,052) (229,102)
Income tax expense (benefit) 0 0 0 0
Net (loss) income (115,896) (144,385) (205,052) (229,102)
Other comprehensive loss, net of tax effects:        
Net (loss) income (115,896) (144,385) (205,052) (229,102)
Other comprehensive loss from subsidiaries 504 (417)    
Other comprehensive income from subsidiaries     1,074 (1,076)
Foreign currency translation adjustment 0 0 0 0
Total other comprehensive income (loss) 504 (417) 1,074 0
Comprehensive (loss) income (115,392) (144,802) (203,978) (229,102)
Guarantor Subsidiaries | Reportable Legal Entities        
Condensed Income Statements, Captions [Line Items]        
Revenue from external customers 268,055 244,000 531,594 477,788
Costs and expenses 319,266 321,835 610,775 627,056
(Loss) income from operations (51,211) (77,835) (79,181) (149,268)
Loss from subsidiaries 0 0 0 0
Other expense (income), net 807 4,006 755 (42,964)
(Loss) income before income tax expenses (52,018) (81,841) (79,936) (106,304)
Income tax expense (benefit) (288) (70) (106) 102
Net (loss) income (51,730) (81,771) (79,830) (106,406)
Other comprehensive loss, net of tax effects:        
Net (loss) income (51,730) (81,771) (79,830) (106,406)
Other comprehensive loss from subsidiaries 0 0    
Other comprehensive income from subsidiaries     0 0
Foreign currency translation adjustment 0 0 0 0
Total other comprehensive income (loss) 0 0 0 0
Comprehensive (loss) income (51,730) (81,771) (79,830) (106,406)
Non-Guarantor Subsidiaries | Reportable Legal Entities        
Condensed Income Statements, Captions [Line Items]        
Revenue from external customers 13,590 11,613 26,502 25,078
Costs and expenses 13,208 14,011 26,128 27,674
(Loss) income from operations 382 (2,398) 374 (2,596)
Loss from subsidiaries 0 0 0 0
Other expense (income), net (1,130) 1,590 (2,774) 3,682
(Loss) income before income tax expenses 1,512 (3,988) 3,148 (6,278)
Income tax expense (benefit) (264) (836) (747) (1,441)
Net (loss) income 1,776 (3,152) 3,895 (4,837)
Other comprehensive loss, net of tax effects:        
Net (loss) income 1,776 (3,152) 3,895 (4,837)
Other comprehensive loss from subsidiaries 0 0    
Other comprehensive income from subsidiaries     0 0
Foreign currency translation adjustment 504 (417) 1,074 (1,076)
Total other comprehensive income (loss) 504 (417) 1,074 (1,076)
Comprehensive (loss) income 2,280 (3,569) 4,969 (5,913)
APX Group, Inc. | Reportable Legal Entities        
Condensed Income Statements, Captions [Line Items]        
Revenue from external customers 0 0 0 0
Costs and expenses 0 0 0 0
(Loss) income from operations 0 0 0 0
Loss from subsidiaries (49,954) (84,923) (75,935) (111,243)
Other expense (income), net 65,942 59,462 129,117 117,859
(Loss) income before income tax expenses (115,896) (144,385) (205,052) (229,102)
Income tax expense (benefit) 0 0 0 0
Net (loss) income (115,896) (144,385) (205,052) (229,102)
Other comprehensive loss, net of tax effects:        
Net (loss) income (115,896) (144,385) (205,052) (229,102)
Other comprehensive loss from subsidiaries 504 (417)    
Other comprehensive income from subsidiaries     1,074 (1,076)
Foreign currency translation adjustment 0 0 0 0
Total other comprehensive income (loss) 504 (417) 1,074 0
Comprehensive (loss) income $ (115,392) $ (144,802) $ (203,978) $ (229,102)
v3.19.2
Guarantor and Non-Guarantor Supplemental Financial Information - Cash Flows (Detail) - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Cash flows from operating activities:    
Net cash used in operating activities $ (130,990) $ (130,989)
Cash flows from investing activities:    
Capital expenditures (4,653) (12,193)
Proceeds from the sale of capital assets 19 225
Proceeds from sales of equity securities 5,430 0
Investment in subsidiary 0 0
Acquisition of intangible assets (668) (1,022)
Proceeds from the sale of intangible assets 0 53,693
Net cash provided by investing activities 128 40,703
Cash flows from financing activities:    
Proceeds from notes payable 225,000 0
Repayment of notes payable (229,050) 0
Borrowings from revolving credit facility 160,000 179,000
Repayments on revolving credit facility (26,000) (79,000)
Proceeds from capital contribution 0 0
Repayments of finance lease obligations (4,263) (6,955)
Deferred financing costs (4,036) 0
Return of capital (441) (2,049)
Net cash provided by financing activities 121,210 90,996
Effect of exchange rate changes on cash 12 (62)
Net (decrease) increase in cash and cash equivalents (9,640) 648
Cash and cash equivalents:    
Beginning of period 12,773 3,872
End of period 3,133 4,520
Reportable Legal Entities    
Cash flows from investing activities:    
Proceeds from sales of equity securities 0  
Eliminations    
Cash flows from operating activities:    
Net cash used in operating activities 0 0
Cash flows from investing activities:    
Capital expenditures 0 0
Proceeds from the sale of capital assets 0 0
Proceeds from sales of equity securities 0  
Investment in subsidiary 135,480 96,202
Acquisition of intangible assets 0 0
Proceeds from the sale of intangible assets   0
Net cash provided by investing activities 135,480 96,202
Cash flows from financing activities:    
Proceeds from notes payable 0  
Repayment of notes payable 0  
Borrowings from revolving credit facility 0 0
Repayments on revolving credit facility 0 0
Proceeds from capital contribution (134,598) (100,300)
Repayments of finance lease obligations 0 0
Deferred financing costs 0  
Return of capital (882) 4,098
Net cash provided by financing activities (135,480) (96,202)
Effect of exchange rate changes on cash 0 0
Net (decrease) increase in cash and cash equivalents 0 0
Cash and cash equivalents:    
Beginning of period 0 0
End of period 0 0
Parent | Reportable Legal Entities    
Cash flows from operating activities:    
Net cash used in operating activities 0 0
Cash flows from investing activities:    
Capital expenditures 0 0
Proceeds from the sale of capital assets 0 0
Proceeds from sales of equity securities 0  
Investment in subsidiary (441) 2,049
Acquisition of intangible assets 0 0
Proceeds from the sale of intangible assets   0
Net cash provided by investing activities (441) 2,049
Cash flows from financing activities:    
Proceeds from notes payable 0  
Repayment of notes payable 0  
Borrowings from revolving credit facility 0 0
Repayments on revolving credit facility 0 0
Proceeds from capital contribution 0 0
Repayments of finance lease obligations 0 0
Deferred financing costs 0  
Return of capital 441 (2,049)
Net cash provided by financing activities 441 (2,049)
Effect of exchange rate changes on cash 0 0
Net (decrease) increase in cash and cash equivalents 0 0
Cash and cash equivalents:    
Beginning of period 0 0
End of period 0 0
Guarantor Subsidiaries | Reportable Legal Entities    
Cash flows from operating activities:    
Net cash used in operating activities (130,577) (130,919)
Cash flows from investing activities:    
Capital expenditures (4,653) (12,193)
Proceeds from the sale of capital assets 19 225
Proceeds from sales of equity securities 5,430  
Investment in subsidiary 0 0
Acquisition of intangible assets (668) (1,022)
Proceeds from the sale of intangible assets   53,693
Net cash provided by investing activities 128 40,703
Cash flows from financing activities:    
Proceeds from notes payable 0  
Repayment of notes payable 0  
Borrowings from revolving credit facility 0 0
Repayments on revolving credit facility 0 0
Proceeds from capital contribution 134,598 100,300
Repayments of finance lease obligations (4,119) (6,768)
Deferred financing costs 0  
Return of capital (441) (2,049)
Net cash provided by financing activities 130,038 91,483
Effect of exchange rate changes on cash 0 0
Net (decrease) increase in cash and cash equivalents (411) 1,267
Cash and cash equivalents:    
Beginning of period 682 (572)
End of period 271 695
Non-Guarantor Subsidiaries | Reportable Legal Entities    
Cash flows from operating activities:    
Net cash used in operating activities (413) (70)
Cash flows from investing activities:    
Capital expenditures 0 0
Proceeds from the sale of capital assets 0 0
Proceeds from sales of equity securities 0  
Investment in subsidiary 0 0
Acquisition of intangible assets 0 0
Proceeds from the sale of intangible assets   0
Net cash provided by investing activities 0 0
Cash flows from financing activities:    
Proceeds from notes payable 0  
Repayment of notes payable 0  
Borrowings from revolving credit facility 0 0
Repayments on revolving credit facility 0 0
Proceeds from capital contribution 0 0
Repayments of finance lease obligations (144) (187)
Deferred financing costs 0  
Return of capital 0 0
Net cash provided by financing activities (144) (187)
Effect of exchange rate changes on cash 12 (62)
Net (decrease) increase in cash and cash equivalents (545) (319)
Cash and cash equivalents:    
Beginning of period 961 783
End of period 416 464
APX Group, Inc. | Reportable Legal Entities    
Cash flows from operating activities:    
Net cash used in operating activities 0 0
Cash flows from investing activities:    
Capital expenditures 0 0
Proceeds from the sale of capital assets 0 0
Investment in subsidiary (135,039) (98,251)
Acquisition of intangible assets 0 0
Proceeds from the sale of intangible assets   0
Net cash provided by investing activities (135,039) (98,251)
Cash flows from financing activities:    
Proceeds from notes payable 225,000  
Repayment of notes payable (229,050)  
Borrowings from revolving credit facility 160,000 179,000
Repayments on revolving credit facility (26,000) (79,000)
Proceeds from capital contribution 0 0
Repayments of finance lease obligations 0 0
Deferred financing costs (4,036)  
Return of capital 441 (2,049)
Net cash provided by financing activities 126,355 97,951
Effect of exchange rate changes on cash 0 0
Net (decrease) increase in cash and cash equivalents (8,684) (300)
Cash and cash equivalents:    
Beginning of period 11,130 3,661
End of period $ 2,446 $ 3,361
v3.19.2
Label Element Value
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member]  
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption $ (282,572,000)
Accounting Standards Update 2016-01 [Member] | Retained Earnings [Member]  
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption (680,000)
Accounting Standards Update 2016-01 [Member] | AOCI Attributable to Parent [Member]  
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption 680,000
Accounting Standards Update 2016-02 [Member] | Retained Earnings [Member]  
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption $ 84,000