ZENDESK, INC., 10-Q filed on 11/1/2021
Quarterly Report
v3.21.2
Cover Page - shares
9 Months Ended
Sep. 30, 2021
Oct. 29, 2021
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2021  
Document Transition Report false  
Entity File Number 001-36456  
Entity Registrant Name ZENDESK, INC.  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 26-4411091  
Entity Address, Address Line One 989 Market Street  
Entity Address, City or Town San Francisco  
Entity Address, State or Province CA  
Entity Address, Postal Zip Code 94103  
City Area Code 415  
Local Phone Number 418-7506  
Title of 12(b) Security Common Stock, par value $0.01 per share  
Trading Symbol ZEN  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Smaller Reporting Company false  
Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   120,888,142
Amendment Flag false  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q3  
Entity Central Index Key 0001463172  
Current Fiscal Year End Date --12-31  
v3.21.2
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Sep. 30, 2021
Dec. 31, 2020
Current assets:    
Cash and cash equivalents $ 532,517 $ 405,430
Marketable securities 421,328 565,593
Accounts receivable, net of allowance for credit losses of $4,702 and $5,787 as of September 30, 2021 and December 31, 2020, respectively 187,460 199,243
Deferred costs 66,282 51,878
Prepaid expenses and other current assets 61,769 53,829
Total current assets 1,269,356 1,275,973
Marketable securities, noncurrent 591,153 428,678
Property and equipment, net 93,523 94,208
Deferred costs, noncurrent 67,448 52,731
Lease right-of-use assets 73,094 84,013
Goodwill and intangible assets, net 198,946 196,218
Other assets 27,720 25,458
Total assets 2,321,240 2,157,279
Current liabilities:    
Accounts payable 33,535 15,428
Accrued liabilities 45,401 38,921
Accrued compensation and related benefits 128,280 103,437
Deferred revenue 444,373 378,935
Lease liabilities 20,201 23,533
Current portion of convertible senior notes, net 137,861 132,388
Total current liabilities 809,651 692,642
Convertible senior notes, net 968,188 935,576
Deferred revenue, noncurrent 3,696 4,423
Lease liabilities, noncurrent 66,733 85,275
Other liabilities 4,696 7,532
Total liabilities 1,852,964 1,725,448
Commitments and contingencies (Note 9)
Stockholders’ equity:    
Preferred stock 0 0
Common stock 1,204 1,174
Additional paid-in capital 1,553,846 1,344,337
Accumulated other comprehensive (loss) income (8,385) 3,203
Accumulated deficit (1,078,389) (916,883)
Total stockholders’ equity 468,276 431,831
Total liabilities and stockholders’ equity $ 2,321,240 $ 2,157,279
v3.21.2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Thousands
Sep. 30, 2021
Dec. 31, 2020
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts $ 4,702 $ 5,787
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Income Statement [Abstract]        
Revenue $ 346,974 $ 261,926 $ 963,238 $ 746,066
Cost of revenue [1] 70,226 62,819 197,863 184,036
Gross profit 276,748 199,107 765,375 562,030
Operating expenses:        
Research and development [1] 92,112 64,842 248,721 184,266
Sales and marketing [1] 172,828 123,737 495,596 369,442
General and administrative [1] 50,716 38,854 139,667 109,427
Total operating expenses [1] 315,656 227,433 883,984 663,135
Operating loss (38,908) (28,326) (118,609) (101,105)
Other income (expense), net:        
Interest expense (14,762) (14,087) (43,768) (29,060)
Loss on early extinguishment of debt 0 0 0 (25,950)
Interest and other income (expense), net 2,386 3,683 8,430 12,750
Total other income (expense), net (12,376) (10,404) (35,338) (42,260)
Loss before provision for income taxes (51,284) (38,730) (153,947) (143,365)
Provision for income taxes 3,133 1,973 7,842 4,777
Net loss $ (54,417) $ (40,703) $ (161,789) $ (148,142)
Net loss per share, basic (in usd per share) $ (0.45) $ (0.35) $ (1.36) $ (1.29)
Net loss per share, diluted (in usd per share) $ (0.45) $ (0.35) $ (1.36) $ (1.29)
Weighted-average shares used to compute net loss per share, basic (in shares) 120,164 115,809 119,050 114,653
Weighted-average shares used to compute net loss per share, diluted (in shares) 120,164 115,809 119,050 114,653
[1] Includes share-based compensation expense as follows:
 
 Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Cost of revenue$5,343 $4,831 $15,047 $15,077 
Research and development17,189 13,921 49,886 39,076 
Sales and marketing24,915 19,335 72,648 53,467 
General and administrative12,086 8,176 31,020 24,437 
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Share-based compensation     $ 168,601 $ 132,057
Cost of revenue        
Share-based compensation $ 5,343 $ 4,831 15,047 15,077
Research and development        
Share-based compensation 17,189 13,921 49,886 39,076
Sales and marketing        
Share-based compensation 24,915 19,335 72,648 53,467
General and administrative        
Share-based compensation $ 12,086 $ 8,176 $ 31,020 $ 24,437
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Statement of Comprehensive Income [Abstract]        
Net loss $ (54,417) $ (40,703) $ (161,789) $ (148,142)
Other comprehensive (loss) income, before tax:        
Net unrealized (loss) gain on available-for-sale investments (863) (1,361) (3,664) 2,817
Net unrealized (loss) gain on derivative instruments (2,354) 388 (7,972) (848)
Other comprehensive (loss) income, before tax (3,217) (973) (11,636) 1,969
Tax effect 0 699 0 0
Other comprehensive (loss) income, net of tax (3,217) (274) (11,636) 1,969
Comprehensive loss $ (57,634) $ (40,977) $ (173,425) $ (146,173)
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
shares in Thousands, $ in Thousands
Total
Common Stock
Additional Paid-In Capital
Accumulated Other Comprehensive Income (Loss)
Accumulated Deficit
Balances at beginning of period (in shares) at Dec. 31, 2019   113,081      
Balances at beginning of period at Dec. 31, 2019 $ 457,984 $ 1,130 $ 1,155,044 $ 591 $ (698,781)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Issuance of common stock upon exercise of stock options (in shares)   911      
Issuance of common stock upon exercise of stock options 24,591 $ 9 24,582    
Issuance of common stock for settlement of RSUs and PRSUs (in shares)   2,118      
Issuance of common stock for settlement of RSUs and PRSUs (6,129) $ 21 (6,150)    
Issuance of common stock in connection with employee stock purchase plan (in shares)   353      
Issuance of common stock in connection with employee stock purchase plan 19,952 $ 4 19,948    
Share-based compensation 135,326   135,326    
Equity component of 2025 convertible senior notes 216,026   216,026    
Adjustments to Additional Paid in Capital, Purchase Of Capped Call Transactions (129,950)   (129,950)    
Equity component of partial repurchase of 2023 convertible senior notes (224,639)   (224,639)    
Proceeds from capped calls related to 2023 convertible senior notes 83,040   83,040    
Other comprehensive loss, net of tax 1,969     1,969  
Net loss (148,142)       (148,142)
Other 90   15   75
Balances at end of period (in shares) at Sep. 30, 2020   116,463      
Balances at end of period at Sep. 30, 2020 430,119 $ 1,164 1,273,242 2,560 (846,848)
Balances at beginning of period (in shares) at Jun. 30, 2020   115,186      
Balances at beginning of period at Jun. 30, 2020 410,310 $ 1,150 1,212,471 2,834 (806,145)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Issuance of common stock upon exercise of stock options (in shares)   577      
Issuance of common stock upon exercise of stock options 15,489 $ 6 15,483    
Issuance of common stock for settlement of RSUs and PRSUs (in shares)   700      
Issuance of common stock for settlement of RSUs and PRSUs (1,990) $ 8 (1,998)    
Share-based compensation 47,271   47,271    
Other comprehensive loss, net of tax (274)     (274)  
Net loss (40,703)       (40,703)
Other 15   15    
Balances at end of period (in shares) at Sep. 30, 2020   116,463      
Balances at end of period at Sep. 30, 2020 430,119 $ 1,164 1,273,242 2,560 (846,848)
Balances at beginning of period (in shares) at Dec. 31, 2020   117,489      
Balances at beginning of period at Dec. 31, 2020 $ 431,831 $ 1,174 1,344,337 3,203 (916,883)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Issuance of common stock upon exercise of stock options (in shares) 820 820      
Issuance of common stock upon exercise of stock options $ 18,889 $ 8 18,881    
Issuance of common stock for settlement of RSUs and PRSUs (in shares)   1,833      
Issuance of common stock for settlement of RSUs and PRSUs (8,940) $ 18 (8,958)    
Issuance of common stock in connection with employee stock purchase plan (in shares)   380      
Issuance of common stock in connection with employee stock purchase plan 27,655 $ 4 27,651    
Share-based compensation 171,935   171,935    
Other comprehensive loss, net of tax (11,636)     (11,636)  
Net loss (161,789)       (161,789)
Other 331     48 283
Balances at end of period (in shares) at Sep. 30, 2021   120,522      
Balances at end of period at Sep. 30, 2021 468,276 $ 1,204 1,553,846 (8,385) (1,078,389)
Balances at beginning of period (in shares) at Jun. 30, 2021   119,789      
Balances at beginning of period at Jun. 30, 2021 464,127 $ 1,197 1,492,117 (5,216) (1,023,971)
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Issuance of common stock upon exercise of stock options (in shares)   212      
Issuance of common stock upon exercise of stock options 3,754 $ 2 3,752    
Issuance of common stock for settlement of RSUs and PRSUs (in shares)   521      
Issuance of common stock for settlement of RSUs and PRSUs (2,637) $ 5 (2,642)    
Share-based compensation 60,619   60,619    
Other comprehensive loss, net of tax (3,217)     (3,217)  
Net loss (54,417)       (54,417)
Other 47     48 (1)
Balances at end of period (in shares) at Sep. 30, 2021   120,522      
Balances at end of period at Sep. 30, 2021 $ 468,276 $ 1,204 $ 1,553,846 $ (8,385) $ (1,078,389)
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Cash flows from operating activities    
Net loss $ (161,789) $ (148,142)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities    
Depreciation and amortization 27,953 32,602
Share-based compensation 168,601 132,057
Amortization of deferred costs 48,739 32,390
Amortization of debt discount and issuance costs 38,085 26,230
Loss on early extinguishment of debt 0 25,950
Repayment of convertible senior notes attributable to debt discount 0 (38,637)
Allowance for credit losses on accounts receivable 6,199 8,450
Other, net 1,241 (2,315)
Changes in operating assets and liabilities:    
Accounts receivable 3,733 (33,035)
Prepaid expenses and other current assets (9,385) (3,116)
Deferred costs (75,846) (47,292)
Lease right-of-use assets 12,876 15,472
Other assets and liabilities (3,888) (1,022)
Accounts payable 18,304 (26,208)
Accrued liabilities 1,349 1,569
Accrued compensation and related benefits 16,059 18,252
Deferred revenue 64,710 4,369
Lease liabilities (22,658) (17,503)
Net cash provided by (used in) operating activities 134,283 (19,929)
Cash flows from investing activities    
Purchases of property and equipment (11,030) (19,489)
Internal-use software development costs (10,837) (10,901)
Purchases of marketable securities (718,636) (701,367)
Proceeds from maturities of marketable securities 590,588 281,476
Proceeds from sales of marketable securities 101,995 105,506
Business combinations, net of cash acquired (7,811) 0
Purchases of strategic investments (1,000) (1,500)
Proceeds from sales of strategic investments 1,008 1,577
Net cash used in investing activities (55,723) (344,698)
Cash flows from financing activities    
Proceeds from issuance of convertible senior notes, net of issuance costs paid of $21,010 0 1,128,990
Purchase of capped calls related to 2025 convertible senior notes 0 (129,950)
Payments for 2023 convertible senior notes partial repurchase 0 (578,973)
Proceeds from capped calls related to 2023 convertible senior notes 0 83,040
Proceeds from exercises of employee stock options 18,889 24,591
Proceeds from employee stock purchase plan 37,136 28,913
Taxes paid related to net share settlement of share-based awards (8,940) (6,127)
Net cash provided by financing activities 47,085 550,484
Effect of exchange rate changes on cash, cash equivalents and restricted cash (33) 237
Net increase in cash, cash equivalents and restricted cash 125,612 186,094
Cash, cash equivalents and restricted cash at beginning of period 407,859 199,905
Cash, cash equivalents and restricted cash at end of period 533,471 385,999
Reconciliation of cash, cash equivalents and restricted cash to condensed consolidated balance sheets    
Cash and cash equivalents 532,517 383,318
Restricted cash included in prepaid expenses and other current assets 949 1,957
Restricted cash included in other assets 5 724
Total cash, cash equivalents and restricted cash 533,471 385,999
Supplemental cash flow data    
Cash paid for interest 3,967 1,174
Cash paid for taxes 7,940 3,093
Non-cash investing and financing activities    
Balance of property and equipment in accounts payable and accrued expenses 1,069 1,642
Property and equipment acquired through tenant improvement allowances 429 110
Internal-use software development costs    
Non-cash investing and financing activities    
Share-based compensation capitalized in internal-use software development costs and in deferred costs 1,317 2,536
Deferred costs    
Non-cash investing and financing activities    
Share-based compensation capitalized in internal-use software development costs and in deferred costs $ 2,013 $ 1,229
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical)
$ in Thousands
9 Months Ended
Sep. 30, 2020
USD ($)
Statement of Cash Flows [Abstract]  
Payments of debt issuance costs associated with convertible notes $ 21,010
v3.21.2
Overview and Basis of Presentation
9 Months Ended
Sep. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Overview and Basis of Presentation Overview and Basis of Presentation
Company and Background
Zendesk was founded in Denmark in 2007 and reincorporated in Delaware in April 2009.
We are a software development company that provides software as a service, or SaaS, solutions that are intended to help organizations and their customers build better experiences. Our customer experience solutions are built upon a modern architecture that enables us and our customers to rapidly innovate, adapt our technology in novel ways, and easily integrate with other products and applications. With our origins in customer service, we have evolved our offerings over time to product and platform solutions that work together to help organizations understand the broader customer journey, improve communications across all channels, and engage where and when it’s needed most.
References to Zendesk, the “Company,” “our,” or “we” in these notes refer to Zendesk, Inc. and its subsidiaries on a consolidated basis.
Basis of Presentation
These unaudited condensed consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles, or GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K, for the year ended December 31, 2020, filed with the SEC on February 12, 2021. There have been no changes to our significant accounting policies described in the Annual Report on Form 10-K that have had a material impact on our condensed consolidated financial statements and related notes.
The consolidated balance sheet as of December 31, 2020 included herein was derived from the audited financial statements as of that date. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly our financial position, results of operations, comprehensive loss, stockholders’ equity, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2021.
Use of Estimates
The preparation of our consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods.
Significant items subject to such estimates and assumptions include:
the estimate of variable consideration related to revenue recognition;
the estimate of credit losses for accounts receivable and marketable securities;
the fair value and useful lives of acquired intangible assets;
the capitalization and useful life of capitalized costs to obtain customer contracts;
the valuation of strategic investments;
the fair value and useful lives of property and equipment;
the capitalization and useful lives of internal-use software;
the lease term and incremental borrowing rate for lease liabilities;
the fair value of our convertible senior notes;
the fair value of asset retirement obligations;
the fair value and expense recognition for certain share-based awards;
the preparation of financial forecasts used in currency hedging;
the recognition and measurement of legal contingencies; and
the recognition of tax benefits and forecasts used to determine our effective tax rate.

As of the date of issuance of the financial statements, we are not aware of any material specific events or circumstances that would require us to update our estimates, judgments, or to revise the carrying values of our assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to our financial statements.
Concentrations of Risk
As of September 30, 2021 and December 31, 2020, no customers represented 10% or greater of our total accounts receivable balance. There were no customers that individually exceeded 10% of our revenue during the three and nine months ended September 30, 2021 or 2020.
Recently Issued Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board, or FASB, issued ASU 2020-06, regarding ASC Topic 470 “Debt” and ASC Topic 815 “Derivatives and Hedging,” which reduces the number of accounting models for convertible instruments, including amending the calculation of diluted earnings per share and the balance sheet presentation of those instruments, as well as the resulting recognition of interest expense, among other changes. The guidance is effective for annual reporting periods beginning after December 15, 2021, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements.
v3.21.2
Business Combinations
9 Months Ended
Sep. 30, 2021
Business Combination and Asset Acquisition [Abstract]  
Business Combinations Business Combinations
Cleverly, Lda.
In the third quarter of 2021, we completed the acquisition of Cleverly, Lda., or Cleverly, resulting in increases of $7 million and $1 million to goodwill and developed technology, respectively.
From the date of the acquisition, the financial results of Cleverly have been included in and are immaterial to our condensed consolidated financial statements. Pro forma revenue and results of operations have not been presented because the historical results are not material to our condensed consolidated financial statements in any period presented.
Pending Acquisition
On October 28, 2021, we entered into a definitive agreement to acquire Momentive Global Inc., or Momentive, an experience management company that offers SaaS feedback solutions. Under the terms of the agreement, each issued and outstanding share of Momentive common stock will be converted into the right to receive 0.225 shares of Zendesk common stock. The agreement also provides for Zendesk’s assumption of outstanding options and other unvested equity awards held by continuing Momentive employees.
The transaction, which is anticipated to close in the first half of calendar year 2022, is subject to approval by Zendesk and Momentive stockholders, the receipt of required regulatory approvals, and other customary closing conditions. A fee of up to $150 million may be payable by Zendesk or by Momentive upon termination of the transaction, as more fully described in the agreement.
v3.21.2
Financial Instruments
9 Months Ended
Sep. 30, 2021
Fair Value Disclosures [Abstract]  
Financial Instruments Financial Instruments
Investments
The following tables present information about our financial assets measured at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands):
Fair Value Measurement at
September 30, 2021
Level 1Level 2Total
Description   
Corporate bonds$— $413,386 $413,386 
U.S. Treasury securities— 401,614 401,614 
Money market funds279,370 — 279,370 
Asset-backed securities— 104,765 104,765 
Agency securities— 51,684 51,684 
Commercial paper— 33,687 33,687 
Certificates of deposit and time deposits— 7,345 7,345 
Total$279,370 $1,012,481 $1,291,851 
Included in cash and cash equivalents  $279,370 
Included in marketable securities  $1,012,481 
 Fair Value Measurement at
December 31, 2020
Level 1Level 2Total
Description   
U.S. Treasury securities$— $431,087 $431,087 
Corporate bonds— 366,638 366,638 
Money market funds162,156 — 162,156 
Asset-backed securities— 101,239 101,239 
Agency securities— 80,394 80,394 
Commercial paper— 36,954 36,954 
Certificates of deposit and time deposits— 10,657 10,657 
Total$162,156 $1,026,969 $1,189,125 
Included in cash and cash equivalents  $194,854 
Included in marketable securities  $994,271 
 
As of September 30, 2021 and December 31, 2020, there were no securities within Level 3 of the fair value hierarchy. There were no transfers between fair value measurement levels during the three and nine months ended September 30, 2021 or 2020.
As of September 30, 2021, gross unrealized gains and losses for marketable securities were $3 million and not material, respectively. The aggregate amortized cost basis for cash equivalents and marketable securities was $1,289 million and excludes accrued interest of $3 million. The aggregate fair value of securities with unrealized losses was $292 million.
As of December 31, 2020, gross unrealized gains and losses for marketable securities were $6 million and not material, respectively. The aggregate amortized cost basis for cash equivalents and marketable securities was $1,183 million and excludes accrued interest of $3 million. The aggregate fair value of securities with unrealized losses was $107 million.
Unrealized losses for securities that have been in an unrealized loss position for more than 12 months as of September 30, 2021 and December 31, 2020 were not material. We have not recorded an allowance for credit losses, as we believe any such losses would be immaterial based on the high-grade credit rating for each of our marketable securities as of the end of each period. We intend to hold our marketable securities to maturity and it is unlikely that they would be sold before their cost bases are recovered.
The following table classifies our marketable securities by contractual maturity (in thousands):
 
 September 30,
2021
December 31,
2020
Due in one year or less$421,328 $565,593 
Due after one year and within five years591,153 428,678 
Total$1,012,481 $994,271 
 
As of September 30, 2021 and December 31, 2020, the balance of strategic investments without readily determinable fair values was $12 million and $11 million, respectively. There have been no adjustments to the carrying values of strategic investments resulting from impairments or observable price changes. During the three months ended September 30, 2021, we sold a strategic investment and realized a gain of approximately $1 million, which was recorded in interest and other income (expense), net in our consolidated statements of operations.
For our other financial instruments, including accounts receivable, accounts payable, and other current liabilities, the carrying amounts approximate their fair values due to the relatively short maturity of these balances.
Derivative Instruments and Hedging
Our foreign currency exposures typically arise from expenditures associated with foreign operations and sales in foreign currencies of our products. To mitigate the effect of foreign currency fluctuations on our future cash flows and earnings, we enter into foreign currency forward contracts with certain financial institutions and designate those contracts as cash flow hedges. Our foreign currency forward contracts generally have maturities of 15 months or less.
We include time value related to our cash flow hedges for effectiveness testing purposes and the entire change in the unrecognized value of our hedge contracts is recorded in accumulated other comprehensive income (loss), or AOCI. As of September 30, 2021, the balance of AOCI included an unrecognized net loss of $6 million related to the changes in the fair value of foreign currency forward contracts designated as cash flow hedges. We expect to reclassify a net loss of $7 million into earnings over the next 12 months associated with our cash flow hedges.
The following tables present information about our derivative instruments on our consolidated balance sheets (in thousands):
 
 September 30, 2021
Asset DerivativesLiability Derivatives
Derivative InstrumentBalance Sheet LocationFair Value
(Level 2)
Balance Sheet LocationFair Value
(Level 2)
Foreign currency forward contractsOther current assets$5,268 Accrued liabilities$9,874 
Total$5,268  $9,874 
 December 31, 2020
Asset DerivativesLiability Derivatives
Derivative InstrumentBalance Sheet LocationFair Value
(Level 2)
Balance Sheet LocationFair Value
(Level 2)
Foreign currency forward contractsOther current assets$7,922 Accrued liabilities$5,768 
Total $7,922  $5,768 
 
Our foreign currency forward contracts had a total notional value of $452 million and $345 million as of September 30, 2021 and December 31, 2020, respectively. We have a master netting arrangement with each of our counterparties, which permit net settlement of multiple, separate derivative contracts with a single payment. We do not have collateral requirements with any of our counterparties. GAAP permits companies to present the fair value of derivative instruments on a net basis according to master netting arrangements. We have elected to present our derivative instruments on a gross basis in our consolidated financial statements. We do not enter into any derivative contracts for trading or speculative purposes. All derivatives have been designated as hedging instruments.
The following table presents information about our foreign currency forward contracts on our consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020 (in thousands):
 
Gain (Loss) Reclassified from AOCI into Earnings
Three Months Ended September 30,Nine Months Ended September 30,
Classification2021202020212020
Revenue$(1,126)$100 $(3,207)$1,222 
Cost of revenue(76)163 814 (701)
Research and development(92)174 911 (671)
Sales and marketing(180)366 1,893 (1,350)
General and administrative(53)108 654 (374)
 Total$(1,527)$911 $1,065 $(1,874)
The loss recognized in AOCI related to foreign currency forward contracts was $4 million for the three months ended September 30, 2021. The gain recognized in AOCI related to foreign currency forward contracts was $1 million for the three months ended September 30, 2020. The loss recognized in AOCI related to foreign currency forward contracts was $7 million and $3 million for the nine months ended September 30, 2021 and 2020, respectively.

The cash flow effects related to foreign currency forward contracts are included within operating activities on our consolidated statements of cash flows.
Convertible Senior Notes
As of September 30, 2021, the fair values of our 0.25% convertible senior notes due 2023 and our 0.625% convertible senior notes due 2025 were $283 million and $1,440 million, respectively. We estimate the fair value of our convertible senior notes based on their last traded prices or market observable inputs, resulting in a Level 2 classification in the fair value hierarchy. Based on the closing price of our common stock of $116.39 on the last trading day of the quarter, the if-converted values of the 2023 and 2025 convertible senior notes exceeded their remaining principal amounts by $126 million and $81 million, respectively, as of September 30, 2021.
v3.21.2
Costs to Obtain Customer Contracts
9 Months Ended
Sep. 30, 2021
Revenue from Contract with Customer [Abstract]  
Costs to Obtain Customer Contracts Costs to Obtain Customer ContractsThe balance of deferred costs to obtain customer contracts was $134 million and $105 million as of September 30, 2021 and December 31, 2020, respectively. Amortization expense for deferred costs was $18 million and $12 million for the three months ended September 30, 2021 and 2020, respectively, and $49 million and $32 million for the nine months ended September 30, 2021 and 2020, respectively. There were no impairment losses related to deferred costs for the periods presented.Deferred Revenue and Performance Obligations
The changes in the balances of deferred revenue are as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Balance, beginning of period$442,463 $316,113 $383,358 $323,962 
Billings352,580 273,464 1,027,949 749,755 
Subscription and services revenue(327,812)(249,052)(912,665)(707,715)
Other revenue*(19,162)(12,874)(50,573)(38,351)
Balance, end of period$448,069 $327,651 $448,069 $327,651 
*Other revenue primarily includes implementation and training services, Talk usage, and amounts from contract assets.

For the three months ended September 30, 2021 and 2020, the majority of revenue recognized was from the deferred revenue balances at the beginning of each period. For the nine months ended September 30, 2021 and 2020, less than half of revenue recognized was from the deferred revenue balances at the beginning of each period.

The aggregate balance of remaining performance obligations as of September 30, 2021 was $1,167 million. We expect to recognize $783 million of the balance as revenue in the next 12 months and the substantial majority of the remainder in the next 13-36 months. The aggregate balance of remaining performance obligations represents contracted revenue that has not yet been recognized, including contracted revenue from renewals, and does not include contract amounts which are cancellable by the customer and amounts associated with optional renewal periods.
v3.21.2
Property and Equipment
9 Months Ended
Sep. 30, 2021
Property, Plant and Equipment [Abstract]  
Property and Equipment Property and Equipment
Property and equipment, net consists of the following (in thousands): 
 September 30,
2021
December 31,
2020
Leasehold improvements$79,702 $91,205 
Capitalized internal-use software57,849 48,730 
Computer equipment and licensed software and patents37,871 30,725 
Furniture and fixtures14,644 13,759 
Construction in progress17,481 13,222 
Total207,547 197,641 
Less: accumulated depreciation and amortization(114,024)(103,433)
Property and equipment, net$93,523 $94,208 
 
Depreciation expense was $6 million and $7 million for the three months ended September 30, 2021 and 2020, respectively, and $17 million and $20 million for the nine months ended September 30, 2021 and 2020, respectively.
Amortization expense of capitalized internal-use software was $2 million for each of the three months ended September 30, 2021 and 2020, and $5 million for each of the nine months ended September 30, 2021 and 2020. The carrying values of capitalized internal-use software as of September 30, 2021 and December 31, 2020 were $39 million and $32 million, respectively, including $16 million and $13 million in construction in progress, respectively.
v3.21.2
Leases
9 Months Ended
Sep. 30, 2021
Leases [Abstract]  
Leases Leases
The following table presents information about leases on our consolidated balance sheets (in thousands):
September 30, 2021December 31, 2020
Assets
Lease right-of-use assets$73,094 $84,013 
Liabilities
Lease liabilities20,201 23,533 
Lease liabilities, noncurrent66,733 85,275 

As of September 30, 2021, the weighted average remaining lease term was 5.8 years and the weighted average discount rate was 4.6%.
The following table presents information about leases on our consolidated statements of operations (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Operating lease expense$5,455 $6,573 $16,583 $19,590 
Short-term lease expense130 128 386 451 
Variable lease expense1,297 1,412 3,759 4,614 
Sublease income(450)(422)(1,324)(1,281)

The following table presents supplemental cash flow information about our leases (in thousands):
Nine Months Ended September 30,
20212020
Cash paid for amounts included in the measurement of lease liabilities$20,460 $24,029 
Operating lease assets obtained in exchange for new lease liabilities4,452 14,960 

In the fourth quarter of 2020, we determined that we would no longer occupy the leased premises located at 1019 Market Street and 988 Market Street, San Francisco, California 94103 and recorded an aggregate impairment charge of $15 million related to lease right-of-use assets and leasehold improvements. In the second quarter of 2021, we executed a termination agreement for the leased premises located at 1019 Market Street, including a one-time payment of $7 million, which is not included in the supplemental cash flow table above.
v3.21.2
Goodwill and Acquired Intangible Assets
9 Months Ended
Sep. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Acquired Intangible Assets Goodwill and Acquired Intangible Assets
The changes in the carrying amount of goodwill for the nine months ended September 30, 2021 are as follows (in thousands):
Balance as of December 31, 2020
$169,662 
Goodwill acquired7,103 
Balance as of September 30, 2021
$176,765 
Acquired intangible assets subject to amortization consist of the following (in thousands):
 
 As of September 30, 2021
CostAccumulated
Amortization
NetWeighted Average Remaining Useful Life
   (In years)
Developed technology$28,000 $(12,528)$15,472 3.3
Customer relationships14,300 (7,591)6,709 3.4
 $42,300 $(20,119)$22,181  
 
 As of December 31, 2020
CostAccumulated
Amortization
NetWeighted Average Remaining Useful Life
   (In years)
Developed technology$30,200 $(12,445)$17,755 4.1
Customer relationships14,710 (6,076)8,634 4.0
Backlog3,200 (3,033)167 0.3
 $48,110 $(21,554)$26,556  
 
In the third quarter of 2021, we removed developed technology, customer relationships, and backlog intangible assets which had become fully amortized from our consolidated balance sheet. Amortization expense of acquired intangible assets was $2 million for each of the three months ended September 30, 2021 and 2020, and $5 million and $7 million for the nine months ended September 30, 2021 and 2020, respectively.
Estimated future amortization expense as of September 30, 2021 is as follows (in thousands):
Remainder of 2021$1,861 
20227,279 
20236,583 
20244,839 
2025972 
Thereafter647 
$22,181 
v3.21.2
Convertible Senior Notes
9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Convertible Senior Notes Convertible Senior Notes
2025 Convertible Senior Notes

In June 2020, we issued $1,150 million aggregate principal amount of 0.625% convertible senior notes due June 15, 2025 in a private offering, the “2025 Notes.” The 2025 Notes are senior unsecured obligations and bear interest at a fixed rate of 0.625% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, commencing on December 15, 2020. The total net proceeds from the offering, after deducting initial purchase discounts and estimated debt issuance costs, were approximately $1,129 million.

Each $1,000 principal amount of the 2025 Notes will initially be convertible into 9.1944 shares of our common stock, which is equivalent to an initial conversion price of approximately $108.76 per share, subject to adjustment upon the occurrence of specified events.

The 2025 Notes will be convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding March 15, 2025, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater
than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period in which, for each trading day of that period, the trading price per $1,000 principal amount of 2025 Notes for such trading day was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (3) if we call any or all of the 2025 Notes for redemption, at any time prior to the close of business on the second business day immediately prior to the redemption date as discussed further below, but only with respect to the 2025 Notes called (or deemed called) for redemption; or (4) upon the occurrence of specified corporate events (as set forth in the indenture).

On or after March 15, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2025 Notes, in minimum denominations of $1,000 or an integral multiple in excess thereof, at the option of the holders regardless of the foregoing circumstances. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.

If certain specified fundamental changes occur (as set forth in the indenture) prior to the maturity date, holders of the 2025 Notes may require us to repurchase for cash all or any portion of their notes at a repurchase price equal to 100% of the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if specific corporate events occur prior to the applicable maturity date or if we deliver a notice of redemption, we will increase the conversion rate for a holder who elects to convert their notes in connection with such a corporate event or converts its notes called (or deemed called) for redemption in connection with such notice of redemption in certain circumstances. It is our current intent and policy to settle conversions through combination settlement with a specified dollar amount of $1,000 per $1,000 principal amount of 2025 Notes.

During the three months ended September 30, 2021, the conditions allowing holders of the 2025 Notes to convert were not met. As the criteria for conversion were not met, the 2025 Notes are classified as a long-term liability as of September 30, 2021.

We may not redeem the 2025 Notes prior to June 20, 2023. We may redeem for cash all or any portion of the 2025 Notes, at our option, on or after June 20, 2023 and on or prior to the 41st scheduled trading day immediately preceding the maturity date, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2025 Notes.

In accounting for the transaction, the 2025 Notes were separated into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The fair value of the liability component was estimated by calculating the present value of expected cash flows using an interest rate that reflects our incremental borrowing rate, with an estimated adjustment for our credit standing on nonconvertible debt with similar maturity. The carrying amount of the equity component representing the conversion option was $220 million and was determined by deducting the fair value of the liability component from the par value of the 2025 Notes. The equity component was recorded in additional paid-in capital and is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount is amortized to interest expense over the contractual term of the 2025 Notes at an effective interest rate of 5.00%.

In accounting for the debt issuance costs of $21 million related to the 2025 Notes, we allocated the total amount incurred to the liability and equity components of the 2025 Notes based on their relative values. Issuance costs attributable to the liability component were $17 million and will be amortized to interest expense using the effective interest method over the contractual term of the 2025 Notes. Issuance costs attributable to the equity component were netted with the equity component in additional paid-in capital.
The net carrying amount of the liability component of the 2025 Notes is as follows (in thousands):
September 30,
2021
December 31,
2020
Principal$1,150,000 $1,150,000 
Unamortized Debt Discount(168,392)(198,857)
Unamortized issuance costs(13,420)(15,567)
Net carrying amount$968,188 $935,576 


The net carrying amount of the equity component of the 2025 Notes is as follows (in thousands):
September 30,
2021
December 31,
2020
Debt Discount for Conversion Option$220,061 $220,061 
Issuance costs(4,035)(4,035)
Net carrying amount$216,026 $216,026 



The interest expense related to the 2025 Notes is as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Contractual interest expense$1,797 $1,797 $5,391 $2,076 
Amortization of Debt Discount10,281 9,785 30,465 11,297 
Amortization of issuance costs735 660 2,147 761 
Total interest expense$12,813 $12,242 $38,003 $14,134 

The difference between the book and tax treatment of the debt discount and debt issuance costs of the 2025 Notes resulted in a difference between the carrying amount and tax basis of the 2025 Notes. This taxable temporary difference resulted in the recognition of a $51 million net deferred tax liability which was recorded as an adjustment to additional paid-in capital. The creation of the deferred tax liability represents a source of future taxable income which supports realization of deferred tax assets. As we continue to maintain a full valuation allowance against its deferred tax assets, this additional source of income resulted in the release of a portion of its valuation allowance. Consistent with the adoption of ASU 2019-12, the release of the valuation allowance of $51 million was recorded as an adjustment to additional paid-in capital.

2025 Capped Calls

In connection with the pricing of the 2025 Notes, we entered into privately negotiated capped call transactions with certain counterparties, the “2025 Capped Calls.” The 2025 Capped Calls each have an initial strike price of approximately $108.76 per share, subject to certain adjustments, which correspond to the initial conversion price of the 2025 Notes. The 2025 Capped Calls have initial cap prices of $164.17 per share, subject to certain adjustments. The 2025 Capped Calls cover, subject to anti-dilution adjustments, approximately 10.6 million shares of our common stock. Conditions that cause adjustments to the initial strike price of the 2025 Capped Calls are similar to the conditions that result in corresponding adjustments for the 2025 Notes. The 2025 Capped Calls are generally intended to reduce or offset the potential dilution to our common stock upon any conversion of the 2025 Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. For accounting purposes, the 2025 Capped Calls are separate transactions, and not part of the terms of the 2025 Notes. As these transactions meet certain accounting criteria, the 2025 Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $130 million incurred in connection with the 2025 Capped Calls was recorded as a reduction to additional paid-in capital.

2023 Convertible Senior Notes

In March 2018, we issued $575 million aggregate principal amount of 0.25% convertible senior notes due March 15, 2023 in a private offering, the “2023 Notes.” The 2023 Notes are unsecured obligations and bear interest at a fixed rate of 0.25% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, commencing on September
15, 2018. The total net proceeds from the offering, after deducting initial purchase discounts and estimated debt issuance costs, were approximately $561 million.

In connection with the offering of the 2025 Notes, we used $618 million of the net proceeds from the offering of the 2025 Notes to repurchase $426 million aggregate principal amount of the 2023 Notes in cash through individual privately negotiated transactions, the “2023 Notes Partial Repurchase.” Of the $618 million consideration, $393 million and $225 million were allocated to the debt and equity components on our consolidated balance sheets, respectively, utilizing an effective interest rate to determine the fair value of the liability component. The fair value of the liability component is estimated by calculating the present value of expected cash flows using an interest rate that reflects our incremental borrowing rate, with an estimated adjustment for our credit standing on nonconvertible debt with similar maturity. As of the repurchase date, the carrying value of the 2023 Notes subject to the 2023 Notes Partial Repurchase, net of unamortized debt discount and issuance costs, was $367 million. The 2023 Notes Partial Repurchase resulted in a $26 million loss on early debt extinguishment. Additionally, $39 million of the total consideration was related to repayment of the debt discount and reflected as a cash outflow from operating activities. As of September 30, 2021, $149 million of principal remains outstanding on the 2023 Notes.

Each $1,000 principal amount of the 2023 Notes will initially be convertible into 15.8554 shares of our common stock, the “Conversion Option,” which is equivalent to an initial conversion price of approximately $63.07 per share, subject to adjustment upon the occurrence of specified events.

The 2023 Notes will be convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding December 15, 2022, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2018 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period, the “Measurement Period,” in which the trading price per $1,000 principal amount of notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events (as set forth in the indenture). On or after December 15, 2022 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2023 Notes at any time, regardless of the foregoing circumstances. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. If certain specified fundamental changes occur (as set forth in the indenture governing the 2023 Notes) prior to the maturity date, holders of the 2023 Notes may require us to repurchase for cash all or any portion of their notes at a repurchase price equal to 100% of the principal amount of the 2023 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if specific corporate events occur prior to the applicable maturity date, we will increase the conversion rate for a holder who elects to convert their notes in connection with such a corporate event in certain circumstances. It is our current intent and policy to settle conversions through combination settlement with a specified dollar amount of $1,000 per $1,000 principal amount of 2023 Notes.

During the three months ended September 30, 2021, the conditions allowing holders of the 2023 Notes to convert were met. The 2023 Notes are therefore convertible during the three months ending December 31, 2021, and are classified as a current liability as of September 30, 2021. To date, we have received one request for conversion for an immaterial amount of 2023 Notes.

In accounting for the issuance of the 2023 Notes, the 2023 Notes were separated into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated conversion feature. The carrying amount of the equity component was determined by deducting the fair value of the liability component from the par value of the 2023 Notes. The equity component was recorded in additional paid-in capital and is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount is amortized to interest expense over the contractual term of the 2023 Notes at an effective interest rate of 5.26%.

In accounting for the debt issuance costs related to the 2023 Notes, we allocated the total amount incurred to the liability and equity components of the 2023 Notes based on their relative values. Issuance costs attributable to the liability component are amortized to interest expense using the effective interest method over the contractual term of the 2023 Notes. Issuance costs attributable to the equity component were netted with the equity component in additional paid-in capital.
The net carrying amount of the liability component of the 2023 Notes is as follows (in thousands):
September 30,
2021
December 31,
2020
Principal$149,194 $149,194 
Unamortized Debt Discount(10,362)(15,394)
Unamortized issuance costs(971)(1,412)
Net carrying amount$137,861 $132,388 

The net carrying amount of the equity component of the 2023 Notes is as follows (in thousands):
September 30,
2021
December 31,
2020
Debt Discount for Conversion Option$32,427 $32,427 
Issuance costs(765)(765)
Net carrying amount$31,662 $31,662 

The interest expense related to the 2023 Notes is as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Contractual interest expense$93 $93 $279 $770 
Amortization of Debt Discount1,699 1,614 5,032 13,097 
Amortization of issuance costs151 135 441 1,075 
Total interest expense$1,943 $1,842 $5,752 $14,942 

2023 Capped Calls

In connection with the pricing of the 2023 Notes, we entered into privately negotiated capped call transactions with certain counterparties, the “2023 Capped Calls.” The 2023 Capped Calls each have an initial strike price of approximately $63.07 per share, subject to certain adjustments, which correspond to the initial conversion price of the 2023 Notes. The 2023 Capped Calls have initial cap prices of $95.20 per share, subject to certain adjustments. The 2023 Capped Calls covered, subject to anti-dilution adjustments, approximately 9.1 million shares of our common stock. Conditions that cause adjustments to the initial strike price of the 2023 Capped Calls mirror conditions that result in corresponding adjustments for the 2023 Notes. The 2023 Capped Calls are generally intended to reduce or offset the potential dilution to our common stock upon any conversion of the 2023 Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. For accounting purposes, the 2023 Capped Calls are separate transactions, and not part of the terms of the 2023 Notes. As these transactions meet certain accounting criteria, the 2023 Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $64 million incurred in connection with the 2023 Capped Calls was recorded as a reduction to additional paid-in capital.

In June 2020, and in connection with the 2023 Notes Partial Repurchase, we terminated the 2023 Capped Calls corresponding to approximately 6.7 million shares for cash proceeds of $83 million. The proceeds were recorded as an increase to additional paid-in capital in the consolidated balance sheets. As of September 30, 2021, there remains outstanding 2023 Capped Calls giving the Company the option to purchase approximately 2.4 million shares (subject to adjustment).

The net impact to our stockholders equity, included in additional paid-in capital, of the above components of the 2023 Notes is as follows (in thousands):
At Issuance
Conversion Option$124,976 
Purchase of Capped Calls (63,940)
Issuance Costs(2,948)
Net deferred tax liability (13,784)
Total$44,304 
v3.21.2
Commitments and Contingencies
9 Months Ended
Sep. 30, 2021
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Commitments
Except as discussed below, there were no material changes in our commitments under contractual obligations as disclosed in our audited consolidated financial statements for the year ended December 31, 2020.

In April 2021, we renewed an agreement with a cloud services provider for which we have a total obligation of $64 million over a three-year period.
Litigation and Loss Contingencies
We accrue estimates for resolution of legal and other contingencies when losses are probable and estimable. These estimates are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel, and other information and events pertaining to a particular matter.

On October 24, 2019 and November 7, 2019, purported stockholders of the Company filed two putative class action complaints in the United States District Court for the Northern District of California, entitled Charles Reidinger v. Zendesk, Inc., et al., 3:19-cv-06968-CRB and Ho v. Zendesk, Inc., et al., No. 3:19-cv-07361-WHA, respectively, against the Company and certain of the Company’s executive officers. The complaints are nearly identical and allege violations of Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934, as amended, purportedly on behalf of all persons who purchased Zendesk, Inc. common stock between February 6, 2019 and October 1, 2019, inclusive. The claims are based upon allegations that the defendants misrepresented and/or omitted material information in certain of our prior public filings. To this point, no discovery has occurred in these cases. The court appointed a lead plaintiff and consolidated the various lawsuits into a single action (Case No. 3:19-cv-06968-CRB), and the lead plaintiff filed its amended complaint on April 14, 2020 asserting the same alleged violations of securities laws as the initial complaints. On June 29, 2020, Zendesk and the executive officer defendants moved to dismiss the amended complaint. On November 9, 2020, the court granted Zendesk's motion to dismiss and granted plaintiff leave to amend its complaint. On January 8, 2021, plaintiff filed its second amended complaint and on January 22, 2021, Zendesk and the executive officer defendants moved to dismiss the second amended complaint. On March 2, 2021, the court granted Zendesk's motion to dismiss the second amended complaint. On March 23, 2021, judgment was entered in favor of Zendesk and the executive officer defendants. On April 20, 2021, plaintiff filed a notice of appeal with the U.S. Court of Appeals for the Ninth Circuit. On July 29, 2021, plaintiff filed its opening brief in the appeal, and on October 13, 2021, the Company and the executive officer defendants filed their answering brief.

On June 2, 2020, a purported stockholder of the Company filed a derivative complaint in the United States District Court for the Northern District of California, entitled Anderson v. Svane, et al., 3:20-cv-03671, against certain of the Company’s executive officers and directors. The derivative complaint alleges breaches of fiduciary duty against all defendants, and an insider trading claim and violations of Section 10(b) of the Securities Exchange Act of 1934 against the officer defendants, purportedly on behalf of the Company itself. The claims are based on nearly identical allegations as the two putative class action complaints described above, namely that the defendants misrepresented and/or omitted material information in certain of our prior public filings. On July 27, 2020, the court ordered the derivative action related to the class action. The derivative action had been stayed pending resolution of the class action. On May 6, 2021, the court approved a joint stipulation to extend the stay of action pending the outcome of the appeal of the class action.

It is not possible for the Company to quantify the extent of potential liability to the individual defendants, if any. Management believes that the lawsuits lack merit and intends to vigorously defend the actions. We cannot predict the outcome of or estimate the possible loss or range of loss from the above described matter.

From time to time, we may be subject to other legal proceedings, claims, investigations, and government inquiries in the ordinary course of business. We have received, and may in the future continue to receive, claims from third parties asserting, among other things, infringement of their intellectual property rights, defamation, labor and employment rights, privacy, and contractual rights. In general, the resolution of a legal matter could prevent the Company from offering its service to others, could be material to the Company’s financial condition or cash flows, or both, or could otherwise adversely affect the Company’s operating results.

The outcomes of legal proceedings and other contingencies are inherently unpredictable and subject to significant uncertainties. As a result, the Company is not able to reasonably estimate the amount or range of possible losses in excess of any amounts accrued, including losses that could arise as a result of application of non-monetary remedies, with respect to the contingencies it faces. In management’s opinion, resolution of all current matters is not expected to have a material adverse impact on business, consolidated balance sheets, results of operations, comprehensive loss, or cash flows.
Indemnifications
In the ordinary course of business, we enter into contractual arrangements under which we agree to provide indemnification of varying scope and terms to customers, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties, and other liabilities relating to or arising from our products or our acts or omissions. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. Further, our obligations under these agreements may be limited in terms of time and/or amount, and in some instances, we may have recourse against third parties for certain payments. In addition, we have indemnification agreements with our directors and executive officers that require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations may vary. To date, we have not incurred any material costs, and we have not accrued any liabilities in our consolidated financial statements, as a result of these obligations.
Certain of our product offerings include service-level agreements warranting defined levels of uptime reliability and performance, which permit those customers to receive credits for future services in the event that we fail to meet those levels. To date, we have not accrued for any significant liabilities in our consolidated financial statements as a result of these service-level agreements.
v3.21.2
Common Stock and Stockholders' Equity
9 Months Ended
Sep. 30, 2021
Equity [Abstract]  
Common Stock and Stockholders' Equity Common Stock and Stockholders’ Equity
Common Stock
As of September 30, 2021 and December 31, 2020, there were 400 million shares of common stock authorized for issuance with a par value of $0.01 per share, and 120.5 million and 117.5 million shares were issued and outstanding as of September 30, 2021 and December 31, 2020, respectively.
Preferred Stock
As of September 30, 2021 and December 31, 2020, there were 10 million shares of preferred stock authorized for issuance with a par value of $0.01 per share and no shares of preferred stock were issued or outstanding.
Employee Equity Plans
Employee Stock Purchase Plan
Under the Employee Stock Purchase Plan, or ESPP, eligible employees are granted options to purchase shares of our common stock through payroll deductions. The ESPP provides for 18-month offering periods, which include three six-month purchase periods. At the end of each purchase period, employees are able to purchase shares at 85% of the lower of the fair market value of our common stock at the beginning of the offering period or the fair market value of our common stock at the end of the purchase period. In both May 2021 and 2020, 0.4 million shares of common stock were purchased under the ESPP. Pursuant to the terms of the ESPP, the number of shares reserved under the ESPP increased by 1.2 million shares on January 1, 2021. As of September 30, 2021, 5.6 million shares of common stock were available for issuance under the ESPP.
Stock Option and Grant Plans
Our board of directors adopted the 2009 Stock Option and Grant Plan, or the 2009 Plan, in July 2009. The 2009 Plan was terminated in connection with our initial public offering in May 2014, and accordingly, no shares are available for issuance under this plan. The 2009 Plan continues to govern outstanding awards granted thereunder.
Our 2014 Stock Option and Incentive Plan, or the 2014 Plan, serves as the successor to our 2009 Plan. Pursuant to the terms of the 2014 Plan, the number of shares reserved for issuance under the 2014 Plan increased by 5.9 million shares on January 1, 2021. As of September 30, 2021, we had 18.9 million shares of common stock available for future grants under the 2014 Plan.
A summary of restricted stock unit (“RSU”) activity for the nine months ended September 30, 2021 is as follows (in thousands, except per share information):
Restricted Stock Units
Number of SharesWeighted Average Grant Date Fair Value
Unvested — January 1, 20215,141 $75.93 
Granted1,835 147.67 
Vested(1,796)68.49 
Forfeited or canceled(742)86.86 
Unvested — September 30, 20214,438 $106.77 

The total fair value of RSUs vested during the nine months ended September 30, 2021 and 2020 was $249 million and $168 million, respectively. The fair value of RSUs vested represents market value on the vesting date.
A summary of stock option activity for the nine months ended September 30, 2021 is as follows (in thousands, except per share information):
 
 Stock Options
Number of
Shares
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
  (In years) 
Outstanding — January 1, 20214,235 $31.42 5.2$473,358 
Granted411 148.05 
Exercised(820)23.02 
Forfeited or canceled(118)97.88 
Outstanding — September 30, 20213,708 $44.09 5.0$280,266 
 
The aggregate intrinsic value for options outstanding represents the difference between the closing market price of our common stock on the last trading day of the reporting period and the exercise price of outstanding, in-the-money options.

The total intrinsic value of stock options exercised during the nine months ended September 30, 2021 and 2020 was $94 million and $54 million, respectively. The intrinsic value for options exercised represents the difference between the exercise price and the market value on the date of exercise. The weighted-average grant date fair value of stock options granted during the nine months ended September 30, 2021 and 2020 was $52.60 and $31.41, respectively.
As of September 30, 2021, we had a total of $477 million in future expense related to all equity awards to be recognized over a weighted average period of 2.7 years.
For the three and nine months ended September 30, 2021, we recorded $2 million of share-based compensation expense related to accelerated vesting of share-based awards associated with certain employee terminations.
Performance Restricted Stock Units
In 2018, performance-based restricted stock units, or PRSUs, representing 0.2 million shares of common stock were granted in connection with the acquisition of FutureSimple Inc. The PRSUs vested in four semi-annual tranches through March 2021 and were subject to service and performance conditions. No expense was recorded in the three months ended September 30, 2021. For the nine months ended September 30, 2021, we recorded $1 million of share-based compensation expense related to the PRSUs. For the three and nine months ended September 30, 2020, we recorded $3 million and $5 million of share-based compensation expense related to the PRSUs, respectively. For the three and nine months ended September 30, 2021, zero and 37 thousand PRSUs were vested, respectively. For the three and nine months ended September 30, 2020, 36 thousand and 62 thousand PRSUs were vested, respectively.
v3.21.2
Deferred Revenue and Performance Obligations
9 Months Ended
Sep. 30, 2021
Revenue from Contract with Customer [Abstract]  
Deferred Revenue and Performance Obligations Costs to Obtain Customer ContractsThe balance of deferred costs to obtain customer contracts was $134 million and $105 million as of September 30, 2021 and December 31, 2020, respectively. Amortization expense for deferred costs was $18 million and $12 million for the three months ended September 30, 2021 and 2020, respectively, and $49 million and $32 million for the nine months ended September 30, 2021 and 2020, respectively. There were no impairment losses related to deferred costs for the periods presented.Deferred Revenue and Performance Obligations
The changes in the balances of deferred revenue are as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Balance, beginning of period$442,463 $316,113 $383,358 $323,962 
Billings352,580 273,464 1,027,949 749,755 
Subscription and services revenue(327,812)(249,052)(912,665)(707,715)
Other revenue*(19,162)(12,874)(50,573)(38,351)
Balance, end of period$448,069 $327,651 $448,069 $327,651 
*Other revenue primarily includes implementation and training services, Talk usage, and amounts from contract assets.

For the three months ended September 30, 2021 and 2020, the majority of revenue recognized was from the deferred revenue balances at the beginning of each period. For the nine months ended September 30, 2021 and 2020, less than half of revenue recognized was from the deferred revenue balances at the beginning of each period.

The aggregate balance of remaining performance obligations as of September 30, 2021 was $1,167 million. We expect to recognize $783 million of the balance as revenue in the next 12 months and the substantial majority of the remainder in the next 13-36 months. The aggregate balance of remaining performance obligations represents contracted revenue that has not yet been recognized, including contracted revenue from renewals, and does not include contract amounts which are cancellable by the customer and amounts associated with optional renewal periods.
v3.21.2
Net Loss Per Share
9 Months Ended
Sep. 30, 2021
Earnings Per Share [Abstract]  
Net Loss Per Share Net Loss Per Share
Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including those related to outstanding share-based awards and our convertible senior notes, to the extent dilutive. Basic and diluted net loss per share were the same for each period presented as the inclusion of all potential common stock outstanding would have been anti-dilutive.
The following table presents the calculation of basic and diluted net loss per share for the periods presented (in thousands, except per share data):
 Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Net loss$(54,417)$(40,703)$(161,789)$(148,142)
Weighted-average shares used to compute basic and diluted net loss per share120,164 115,809 119,050 114,653 
Net loss per share, basic and diluted$(0.45)$(0.35)$(1.36)$(1.29)
 
The anti-dilutive securities excluded from the shares used to calculate diluted net loss per share are as follows (in thousands):
 As of September 30,
20212020
Shares subject to outstanding common stock options and employee stock purchase plan3,894 4,607 
Restricted stock units4,438 5,171 
Shares related to convertible senior notes2,883 770 
 11,215 10,548 

The shares related to convertible senior notes in the table above are calculated based on the average market price of our common stock for the three months ended September 30, 2021 and 2020, respectively.
We expect to settle the principal amount of both the 2023 Notes and 2025 Notes in cash and therefore use the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread has a dilutive impact on diluted net income per share when the average market price of our common stock for a given reporting period exceeds the initial conversion prices of $63.07 and $108.76 per share for the 2023 Notes and 2025 Notes, respectively. Based on the initial conversion price, potential dilution related to the 2023 Notes and 2025 Notes is approximately 2.4 million and 10.6 million shares, respectively.
v3.21.2
Income Taxes
9 Months Ended
Sep. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income TaxesWe reported income tax expense of $3 million and $2 million for the three months ended September 30, 2021 and 2020, respectively. We reported income tax expense of $8 million and $5 million for the nine months ended September 30, 2021 and 2020, respectively. The effective tax rate for each period differs from the statutory rate primarily as a result of not recognizing a deferred tax asset for U.S. losses due to having a full valuation allowance against U.S. deferred tax assets.
v3.21.2
Geographic Information
9 Months Ended
Sep. 30, 2021
Segment Reporting [Abstract]  
Geographic Information Geographic Information
Our chief operating decision maker reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating our financial performance. Accordingly, we have determined that we operate in a single reporting segment.
Revenue
The following table presents our revenue by geographic area, as determined based on the billing address of our customers (in thousands):
 
 Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
United States$174,264 $136,491 $489,476 $391,025 
EMEA102,889 73,798 282,323 210,487 
APAC35,730 28,954 98,700 81,105 
Other34,091 22,683 92,739 63,449 
Total$346,974 $261,926 $963,238 $746,066 
Long-Lived Assets
The following table presents our long-lived assets by geographic area (in thousands):
 
As of
September 30, 2021
As of
December 31, 2020
United States$61,317 $76,383 
EMEA:
Republic of Ireland35,123 38,010 
Other EMEA6,837 5,784 
Total EMEA41,960 43,794 
APAC:
Singapore14,786 19,560 
Other APAC6,643 6,466 
Total APAC21,429 26,026 
Other3,361 344 
Total$128,067 $146,547 
 
The table above includes property and equipment and lease right-of-use assets and excludes capitalized internal-use software and intangible assets.
v3.21.2
Overview and Basis of Presentation (Policies)
9 Months Ended
Sep. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation
These unaudited condensed consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles, or GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K, for the year ended December 31, 2020, filed with the SEC on February 12, 2021. There have been no changes to our significant accounting policies described in the Annual Report on Form 10-K that have had a material impact on our condensed consolidated financial statements and related notes.
The consolidated balance sheet as of December 31, 2020 included herein was derived from the audited financial statements as of that date. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly our financial position, results of operations, comprehensive loss, stockholders’ equity, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2021.
Use of Estimates
The preparation of our consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods.
Significant items subject to such estimates and assumptions include:
the estimate of variable consideration related to revenue recognition;
the estimate of credit losses for accounts receivable and marketable securities;
the fair value and useful lives of acquired intangible assets;
the capitalization and useful life of capitalized costs to obtain customer contracts;
the valuation of strategic investments;
the fair value and useful lives of property and equipment;
the capitalization and useful lives of internal-use software;
the lease term and incremental borrowing rate for lease liabilities;
the fair value of our convertible senior notes;
the fair value of asset retirement obligations;
the fair value and expense recognition for certain share-based awards;
the preparation of financial forecasts used in currency hedging;
the recognition and measurement of legal contingencies; and
the recognition of tax benefits and forecasts used to determine our effective tax rate.

As of the date of issuance of the financial statements, we are not aware of any material specific events or circumstances that would require us to update our estimates, judgments, or to revise the carrying values of our assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to our financial statements.
Concentrations of Risk As of September 30, 2021 and December 31, 2020, no customers represented 10% or greater of our total accounts receivable balance. There were no customers that individually exceeded 10% of our revenue during the three and nine months ended September 30, 2021 or 2020.
Recently Issued Accounting Pronouncements In August 2020, the Financial Accounting Standards Board, or FASB, issued ASU 2020-06, regarding ASC Topic 470 “Debt” and ASC Topic 815 “Derivatives and Hedging,” which reduces the number of accounting models for convertible instruments, including amending the calculation of diluted earnings per share and the balance sheet presentation of those instruments, as well as the resulting recognition of interest expense, among other changes. The guidance is effective for annual reporting periods beginning after December 15, 2021, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements.
v3.21.2
Financial Instruments (Tables)
9 Months Ended
Sep. 30, 2021
Fair Value Disclosures [Abstract]  
Schedule of Assets Measured at Fair Value on Recurring Basis The following tables present information about our financial assets measured at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands):
Fair Value Measurement at
September 30, 2021
Level 1Level 2Total
Description   
Corporate bonds$— $413,386 $413,386 
U.S. Treasury securities— 401,614 401,614 
Money market funds279,370 — 279,370 
Asset-backed securities— 104,765 104,765 
Agency securities— 51,684 51,684 
Commercial paper— 33,687 33,687 
Certificates of deposit and time deposits— 7,345 7,345 
Total$279,370 $1,012,481 $1,291,851 
Included in cash and cash equivalents  $279,370 
Included in marketable securities  $1,012,481 
 Fair Value Measurement at
December 31, 2020
Level 1Level 2Total
Description   
U.S. Treasury securities$— $431,087 $431,087 
Corporate bonds— 366,638 366,638 
Money market funds162,156 — 162,156 
Asset-backed securities— 101,239 101,239 
Agency securities— 80,394 80,394 
Commercial paper— 36,954 36,954 
Certificates of deposit and time deposits— 10,657 10,657 
Total$162,156 $1,026,969 $1,189,125 
Included in cash and cash equivalents  $194,854 
Included in marketable securities  $994,271 
Schedule of Marketable Securities Classified by Contractual Maturity
The following table classifies our marketable securities by contractual maturity (in thousands):
 
 September 30,
2021
December 31,
2020
Due in one year or less$421,328 $565,593 
Due after one year and within five years591,153 428,678 
Total$1,012,481 $994,271 
Schedule of Derivative Instruments on Consolidated Balance Sheets
The following tables present information about our derivative instruments on our consolidated balance sheets (in thousands):
 
 September 30, 2021
Asset DerivativesLiability Derivatives
Derivative InstrumentBalance Sheet LocationFair Value
(Level 2)
Balance Sheet LocationFair Value
(Level 2)
Foreign currency forward contractsOther current assets$5,268 Accrued liabilities$9,874 
Total$5,268  $9,874 
 December 31, 2020
Asset DerivativesLiability Derivatives
Derivative InstrumentBalance Sheet LocationFair Value
(Level 2)
Balance Sheet LocationFair Value
(Level 2)
Foreign currency forward contractsOther current assets$7,922 Accrued liabilities$5,768 
Total $7,922  $5,768 
Schedule of Derivative Instruments on Statement of Operations
The following table presents information about our foreign currency forward contracts on our consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020 (in thousands):
 
Gain (Loss) Reclassified from AOCI into Earnings
Three Months Ended September 30,Nine Months Ended September 30,
Classification2021202020212020
Revenue$(1,126)$100 $(3,207)$1,222 
Cost of revenue(76)163 814 (701)
Research and development(92)174 911 (671)
Sales and marketing(180)366 1,893 (1,350)
General and administrative(53)108 654 (374)
 Total$(1,527)$911 $1,065 $(1,874)
v3.21.2
Property and Equipment (Tables)
9 Months Ended
Sep. 30, 2021
Property, Plant and Equipment [Abstract]  
Schedule of Property and Equipment, Net
Property and equipment, net consists of the following (in thousands): 
 September 30,
2021
December 31,
2020
Leasehold improvements$79,702 $91,205 
Capitalized internal-use software57,849 48,730 
Computer equipment and licensed software and patents37,871 30,725 
Furniture and fixtures14,644 13,759 
Construction in progress17,481 13,222 
Total207,547 197,641 
Less: accumulated depreciation and amortization(114,024)(103,433)
Property and equipment, net$93,523 $94,208 
v3.21.2
Leases (Tables)
9 Months Ended
Sep. 30, 2021
Leases [Abstract]  
Schedule of Lease Impact on Balance Sheet
The following table presents information about leases on our consolidated balance sheets (in thousands):
September 30, 2021December 31, 2020
Assets
Lease right-of-use assets$73,094 $84,013 
Liabilities
Lease liabilities20,201 23,533 
Lease liabilities, noncurrent66,733 85,275 
Schedule of Lease Cost and Supplemental Cash Flow Information
The following table presents information about leases on our consolidated statements of operations (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Operating lease expense$5,455 $6,573 $16,583 $19,590 
Short-term lease expense130 128 386 451 
Variable lease expense1,297 1,412 3,759 4,614 
Sublease income(450)(422)(1,324)(1,281)

The following table presents supplemental cash flow information about our leases (in thousands):
Nine Months Ended September 30,
20212020
Cash paid for amounts included in the measurement of lease liabilities$20,460 $24,029 
Operating lease assets obtained in exchange for new lease liabilities4,452 14,960 
v3.21.2
Goodwill and Acquired Intangible Assets (Tables)
9 Months Ended
Sep. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Carrying Amount of Goodwill
The changes in the carrying amount of goodwill for the nine months ended September 30, 2021 are as follows (in thousands):
Balance as of December 31, 2020
$169,662 
Goodwill acquired7,103 
Balance as of September 30, 2021
$176,765 
Summary of Intangible Assets Acquired
Acquired intangible assets subject to amortization consist of the following (in thousands):
 
 As of September 30, 2021
CostAccumulated
Amortization
NetWeighted Average Remaining Useful Life
   (In years)
Developed technology$28,000 $(12,528)$15,472 3.3
Customer relationships14,300 (7,591)6,709 3.4
 $42,300 $(20,119)$22,181  
 
 As of December 31, 2020
CostAccumulated
Amortization
NetWeighted Average Remaining Useful Life
   (In years)
Developed technology$30,200 $(12,445)$17,755 4.1
Customer relationships14,710 (6,076)8,634 4.0
Backlog3,200 (3,033)167 0.3
 $48,110 $(21,554)$26,556  
Summary of Estimated Future Amortization Expense
Estimated future amortization expense as of September 30, 2021 is as follows (in thousands):
Remainder of 2021$1,861 
20227,279 
20236,583 
20244,839 
2025972 
Thereafter647 
$22,181 
v3.21.2
Convertible Senior Notes (Tables)
9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Schedule of Net Carrying Amount of Liability and Equity Component of Convertible Notes
The net carrying amount of the liability component of the 2025 Notes is as follows (in thousands):
September 30,
2021
December 31,
2020
Principal$1,150,000 $1,150,000 
Unamortized Debt Discount(168,392)(198,857)
Unamortized issuance costs(13,420)(15,567)
Net carrying amount$968,188 $935,576 


The net carrying amount of the equity component of the 2025 Notes is as follows (in thousands):
September 30,
2021
December 31,
2020
Debt Discount for Conversion Option$220,061 $220,061 
Issuance costs(4,035)(4,035)
Net carrying amount$216,026 $216,026 
The net carrying amount of the liability component of the 2023 Notes is as follows (in thousands):
September 30,
2021
December 31,
2020
Principal$149,194 $149,194 
Unamortized Debt Discount(10,362)(15,394)
Unamortized issuance costs(971)(1,412)
Net carrying amount$137,861 $132,388 

The net carrying amount of the equity component of the 2023 Notes is as follows (in thousands):
September 30,
2021
December 31,
2020
Debt Discount for Conversion Option$32,427 $32,427 
Issuance costs(765)(765)
Net carrying amount$31,662 $31,662 
The net impact to our stockholders equity, included in additional paid-in capital, of the above components of the 2023 Notes is as follows (in thousands):
At Issuance
Conversion Option$124,976 
Purchase of Capped Calls (63,940)
Issuance Costs(2,948)
Net deferred tax liability (13,784)
Total$44,304 
Schedule of Interest Expense The interest expense related to the 2025 Notes is as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Contractual interest expense$1,797 $1,797 $5,391 $2,076 
Amortization of Debt Discount10,281 9,785 30,465 11,297 
Amortization of issuance costs735 660 2,147 761 
Total interest expense$12,813 $12,242 $38,003 $14,134 
The interest expense related to the 2023 Notes is as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Contractual interest expense$93 $93 $279 $770 
Amortization of Debt Discount1,699 1,614 5,032 13,097 
Amortization of issuance costs151 135 441 1,075 
Total interest expense$1,943 $1,842 $5,752 $14,942 
v3.21.2
Common Stock and Stockholders' Equity (Tables)
9 Months Ended
Sep. 30, 2021
Equity [Abstract]  
Summary of Stock Option and RSU Award Activity A summary of restricted stock unit (“RSU”) activity for the nine months ended September 30, 2021 is as follows (in thousands, except per share information):
Restricted Stock Units
Number of SharesWeighted Average Grant Date Fair Value
Unvested — January 1, 20215,141 $75.93 
Granted1,835 147.67 
Vested(1,796)68.49 
Forfeited or canceled(742)86.86 
Unvested — September 30, 20214,438 $106.77 
A summary of stock option activity for the nine months ended September 30, 2021 is as follows (in thousands, except per share information):
 
 Stock Options
Number of
Shares
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
  (In years) 
Outstanding — January 1, 20214,235 $31.42 5.2$473,358 
Granted411 148.05 
Exercised(820)23.02 
Forfeited or canceled(118)97.88 
Outstanding — September 30, 20213,708 $44.09 5.0$280,266 
v3.21.2
Deferred Revenue and Performance Obligations (Tables)
9 Months Ended
Sep. 30, 2021
Revenue from Contract with Customer [Abstract]  
Schedule of Changes in Balance of Deferred Revenue
The changes in the balances of deferred revenue are as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Balance, beginning of period$442,463 $316,113 $383,358 $323,962 
Billings352,580 273,464 1,027,949 749,755 
Subscription and services revenue(327,812)(249,052)(912,665)(707,715)
Other revenue*(19,162)(12,874)(50,573)(38,351)
Balance, end of period$448,069 $327,651 $448,069 $327,651 
*Other revenue primarily includes implementation and training services, Talk usage, and amounts from contract assets.
v3.21.2
Net Loss Per Share (Tables)
9 Months Ended
Sep. 30, 2021
Earnings Per Share [Abstract]  
Schedule of Computation of Basic and Diluted Net Loss per Share
The following table presents the calculation of basic and diluted net loss per share for the periods presented (in thousands, except per share data):
 Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Net loss$(54,417)$(40,703)$(161,789)$(148,142)
Weighted-average shares used to compute basic and diluted net loss per share120,164 115,809 119,050 114,653 
Net loss per share, basic and diluted$(0.45)$(0.35)$(1.36)$(1.29)
Schedule of Anti-Dilutive Securities Excluded from the Diluted per Share Calculation
The anti-dilutive securities excluded from the shares used to calculate diluted net loss per share are as follows (in thousands):
 As of September 30,
20212020
Shares subject to outstanding common stock options and employee stock purchase plan3,894 4,607 
Restricted stock units4,438 5,171 
Shares related to convertible senior notes2,883 770 
 11,215 10,548 
v3.21.2
Geographic Information (Tables)
9 Months Ended
Sep. 30, 2021
Segment Reporting [Abstract]  
Schedule of Revenue by Geographic Areas
The following table presents our revenue by geographic area, as determined based on the billing address of our customers (in thousands):
 
 Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
United States$174,264 $136,491 $489,476 $391,025 
EMEA102,889 73,798 282,323 210,487 
APAC35,730 28,954 98,700 81,105 
Other34,091 22,683 92,739 63,449 
Total$346,974 $261,926 $963,238 $746,066 
Schedule of Long-Lived Assets by Geographic Areas
The following table presents our long-lived assets by geographic area (in thousands):
 
As of
September 30, 2021
As of
December 31, 2020
United States$61,317 $76,383 
EMEA:
Republic of Ireland35,123 38,010 
Other EMEA6,837 5,784 
Total EMEA41,960 43,794 
APAC:
Singapore14,786 19,560 
Other APAC6,643 6,466 
Total APAC21,429 26,026 
Other3,361 344 
Total$128,067 $146,547 
v3.21.2
Business Combinations - Narrative (Details) - USD ($)
$ in Thousands
Oct. 28, 2021
Sep. 30, 2021
Dec. 31, 2020
Business Acquisition [Line Items]      
Increase in goodwill   $ 176,765 $ 169,662
Cleverly Lda.      
Business Acquisition [Line Items]      
Increase in goodwill   7,000  
Cleverly Lda. | Developed technology      
Business Acquisition [Line Items]      
Increase in developed technology   $ 1,000  
Milky Way | Subsequent Event      
Business Acquisition [Line Items]      
Entity shares issued per acquiree share (in shares) 0.225    
Fee payable upon termination of transaction $ 150,000    
v3.21.2
Financial Instruments - Financial Assets Measured at Fair Value on Recurring Basis (Details) - USD ($)
$ in Thousands
Sep. 30, 2021
Dec. 31, 2020
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Included in marketable securities $ 1,012,481 $ 994,271
Fair value measurements, recurring    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 1,291,851 1,189,125
Included in cash and cash equivalents 279,370 194,854
Included in marketable securities 1,012,481 994,271
Fair value measurements, recurring | Corporate bonds    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 413,386 366,638
Fair value measurements, recurring | U.S. Treasury securities    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 401,614 431,087
Fair value measurements, recurring | Money market funds    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 279,370 162,156
Fair value measurements, recurring | Asset-backed securities    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 104,765 101,239
Fair value measurements, recurring | Agency securities    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 51,684 80,394
Fair value measurements, recurring | Commercial paper    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 33,687 36,954
Fair value measurements, recurring | Certificates of deposit and time deposits    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 7,345 10,657
Fair value measurements, recurring | Level 1    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 279,370 162,156
Fair value measurements, recurring | Level 1 | Corporate bonds    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 0 0
Fair value measurements, recurring | Level 1 | U.S. Treasury securities    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 0 0
Fair value measurements, recurring | Level 1 | Money market funds    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 279,370 162,156
Fair value measurements, recurring | Level 1 | Asset-backed securities    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 0 0
Fair value measurements, recurring | Level 1 | Agency securities    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 0 0
Fair value measurements, recurring | Level 1 | Commercial paper    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 0 0
Fair value measurements, recurring | Level 1 | Certificates of deposit and time deposits    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 0 0
Fair value measurements, recurring | Level 2    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 1,012,481 1,026,969
Fair value measurements, recurring | Level 2 | Corporate bonds    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 413,386 366,638
Fair value measurements, recurring | Level 2 | U.S. Treasury securities    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 401,614 431,087
Fair value measurements, recurring | Level 2 | Money market funds    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 0 0
Fair value measurements, recurring | Level 2 | Asset-backed securities    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 104,765 101,239
Fair value measurements, recurring | Level 2 | Agency securities    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 51,684 80,394
Fair value measurements, recurring | Level 2 | Commercial paper    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets 33,687 36,954
Fair value measurements, recurring | Level 2 | Certificates of deposit and time deposits    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Total fair value of financial assets $ 7,345 $ 10,657
v3.21.2
Financial Instruments - Narrative (Details) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Dec. 31, 2020
Jun. 30, 2021
Jun. 30, 2020
Dec. 31, 2019
Mar. 31, 2018
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]                  
Gross unrealized gains     $ 3,000,000   $ 6,000,000        
Gross unrealized losses     0   0        
Amortized cost of cash equivalents and marketable securities $ 1,289,000,000   1,289,000,000   1,183,000,000        
Accrued interest 3,000,000   3,000,000   3,000,000        
Aggregate fair value of securities with unrealized losses 292,000,000   292,000,000   107,000,000        
Allowance for credit losses 0   0   0        
Balance of strategic investment 12,000,000   12,000,000   11,000,000        
Adjustments to carrying value of strategic investments     0            
Realized gain from sale of strategic investment 1,000,000                
Unrecognized loss related to effective portion of changes in fair value of foreign currency forward contracts $ 468,276,000 $ 430,119,000 $ 468,276,000 $ 430,119,000 431,831,000 $ 464,127,000 $ 410,310,000 $ 457,984,000  
Closing price of common stock (in usd per share) $ 116.39   $ 116.39            
Level 3                  
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]                  
Fair value of financial assets $ 0   $ 0   0        
Convertible debt | Convertible senior notes due 2023                  
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]                  
Interest rate 0.25%   0.25%           0.25%
Aggregate principal amount $ 126,000,000   $ 126,000,000           $ 575,000,000
Convertible debt | Convertible senior notes due 2025                  
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]                  
Interest rate 0.625%   0.625%       0.625%    
Aggregate principal amount $ 81,000,000   $ 81,000,000       $ 1,150,000,000    
Convertible debt | Level 2 | Convertible senior notes due 2023                  
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]                  
Fair value 1,440,000,000   1,440,000,000            
Convertible debt | Level 2 | Convertible senior notes due 2025                  
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]                  
Fair value 283,000,000   $ 283,000,000            
Foreign currency forward contracts                  
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]                  
Derivative, maximum maturity     15 months            
Reclassification of net gain into earnings over next 12 months (7,000,000)   $ (7,000,000)            
Notional value 452,000,000   452,000,000   $ 345,000,000        
Loss recognized in AOCI (4,000,000) $ 1,000,000 (7,000,000) $ (3,000,000)          
Foreign currency forward contracts | AOCI, Derivative Qualifying as Hedge, Excluded Component, Parent                  
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]                  
Unrecognized loss related to effective portion of changes in fair value of foreign currency forward contracts $ (6,000,000)   $ (6,000,000)            
v3.21.2
Financial Instruments - Marketable Securities by Contractual Maturity (Details) - USD ($)
$ in Thousands
Sep. 30, 2021
Dec. 31, 2020
Fair Value Disclosures [Abstract]    
Due in one year or less $ 421,328 $ 565,593
Due after one year and within five years 591,153 428,678
Total $ 1,012,481 $ 994,271
v3.21.2
Financial Instruments - Schedule of Derivative Instruments on Consolidated Balance Sheets (Details) - Designated as hedging instrument - Level 2 - USD ($)
$ in Thousands
Sep. 30, 2021
Dec. 31, 2020
Derivatives Fair Value [Line Items]    
Asset Derivatives $ 5,268 $ 7,922
Liability Derivatives 9,874 5,768
Foreign currency forward contracts | Other current assets    
Derivatives Fair Value [Line Items]    
Asset Derivatives 5,268 7,922
Foreign currency forward contracts | Accrued liabilities    
Derivatives Fair Value [Line Items]    
Liability Derivatives $ 9,874 $ 5,768
v3.21.2
Financial Instruments - Schedule of Derivative Instruments on Statement of Operations (Details) - Foreign currency forward contracts - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Derivative Instruments Gain Loss [Line Items]        
Gain (Loss) Reclassified from AOCI into Earnings $ (1,527) $ 911 $ 1,065 $ (1,874)
Revenue        
Derivative Instruments Gain Loss [Line Items]        
Gain (Loss) Reclassified from AOCI into Earnings (1,126) 100 (3,207) 1,222
Cost of revenue        
Derivative Instruments Gain Loss [Line Items]        
Gain (Loss) Reclassified from AOCI into Earnings (76) 163 814 (701)
Research and development        
Derivative Instruments Gain Loss [Line Items]        
Gain (Loss) Reclassified from AOCI into Earnings (92) 174 911 (671)
Sales and marketing        
Derivative Instruments Gain Loss [Line Items]        
Gain (Loss) Reclassified from AOCI into Earnings (180) 366 1,893 (1,350)
General and administrative        
Derivative Instruments Gain Loss [Line Items]        
Gain (Loss) Reclassified from AOCI into Earnings $ (53) $ 108 $ 654 $ (374)
v3.21.2
Costs to Obtain Customer Contracts (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Dec. 31, 2020
Revenue from Contract with Customer [Abstract]          
Deferred costs to obtain customer contracts $ 134,000,000   $ 134,000,000   $ 105,000,000
Amortization of deferred costs 18,000,000 $ 12,000,000 48,739,000 $ 32,390,000  
Impairment related to deferred costs $ 0 $ 0 $ 0 $ 0  
v3.21.2
Property and Equipment - Components of Property and Equipment (Details) - USD ($)
$ in Thousands
Sep. 30, 2021
Dec. 31, 2020
Property, Plant and Equipment [Line Items]    
Total $ 207,547 $ 197,641
Less: accumulated depreciation and amortization (114,024) (103,433)
Property and equipment, net 93,523 94,208
Leasehold improvements    
Property, Plant and Equipment [Line Items]    
Total 79,702 91,205
Capitalized internal-use software    
Property, Plant and Equipment [Line Items]    
Total 57,849 48,730
Computer equipment and licensed software and patents    
Property, Plant and Equipment [Line Items]    
Total 37,871 30,725
Furniture and fixtures    
Property, Plant and Equipment [Line Items]    
Total 14,644 13,759
Construction in progress    
Property, Plant and Equipment [Line Items]    
Total $ 17,481 $ 13,222
v3.21.2
Property and Equipment - Narrative (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Dec. 31, 2020
Property, Plant and Equipment [Abstract]          
Depreciation expense $ 6 $ 7 $ 17 $ 20  
Amortization expense of capitalized internal-use software 2 $ 2 5 $ 5  
Carrying value of capitalized internal-use software 39   39   $ 32
Capitalized internal-use software included in construction in progress $ 16   $ 16   $ 13
v3.21.2
Leases - Schedule of Lease Impact on Balance Sheet (Details) - USD ($)
$ in Thousands
Sep. 30, 2021
Dec. 31, 2020
Assets    
Lease right-of-use assets $ 73,094 $ 84,013
Liabilities    
Lease liabilities 20,201 23,533
Lease liabilities, noncurrent $ 66,733 $ 85,275
v3.21.2
Leases - Narrative (Details) - USD ($)
$ in Millions
3 Months Ended
Jun. 30, 2021
Dec. 31, 2020
Sep. 30, 2021
Lessee, Lease, Description [Line Items]      
Weighted average remaining lease term     5 years 9 months 18 days
Weighted average discount rate     4.60%
Termination payment $ 7    
General and administrative      
Lessee, Lease, Description [Line Items]      
Aggregate impairment charge   $ 15  
v3.21.2
Leases - Schedule of Lease Cost (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Leases [Abstract]        
Operating lease expense $ 5,455 $ 6,573 $ 16,583 $ 19,590
Short-term lease expense 130 128 386 451
Variable lease expense 1,297 1,412 3,759 4,614
Sublease income $ (450) $ (422) $ (1,324) $ (1,281)
v3.21.2
Leases - Schedule of Supplemental Cash Flow Information (Details) - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Leases [Abstract]    
Cash paid for amounts included in the measurement of lease liabilities $ 20,460 $ 24,029
Operating lease assets obtained in exchange for new lease liabilities $ 4,452 $ 14,960
v3.21.2
Goodwill and Acquired Intangible Assets - Schedule of Carrying Amount of Goodwill (Details)
$ in Thousands
9 Months Ended
Sep. 30, 2021
USD ($)
Goodwill [Roll Forward]  
Balance as of December 31, 2020 $ 169,662
Goodwill acquired 7,103
Balance as of September 30, 2021 $ 176,765
v3.21.2
Goodwill and Acquired Intangible Assets - Acquired Intangible Assets Subject to Amortization (Details) - USD ($)
$ in Thousands
9 Months Ended 12 Months Ended
Sep. 30, 2021
Dec. 31, 2020
Finite Lived Intangible Assets [Line Items]    
Cost $ 42,300 $ 48,110
Accumulated Amortization (20,119) (21,554)
Net 22,181 26,556
Developed technology    
Finite Lived Intangible Assets [Line Items]    
Cost 28,000 30,200
Accumulated Amortization (12,528) (12,445)
Net $ 15,472 $ 17,755
Weighted Average Remaining Useful Life 3 years 3 months 18 days 4 years 1 month 6 days
Customer relationships    
Finite Lived Intangible Assets [Line Items]    
Cost $ 14,300 $ 14,710
Accumulated Amortization (7,591) (6,076)
Net $ 6,709 $ 8,634
Weighted Average Remaining Useful Life 3 years 4 months 24 days 4 years
Backlog    
Finite Lived Intangible Assets [Line Items]    
Cost   $ 3,200
Accumulated Amortization   (3,033)
Net   $ 167
Weighted Average Remaining Useful Life   3 months 18 days
v3.21.2
Goodwill and Acquired Intangible Assets - Narrative (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]        
Amortization expense $ 2 $ 2 $ 5 $ 7
v3.21.2
Goodwill and Acquired Intangible Assets - Estimated Future Amortization Expense (Details) - USD ($)
$ in Thousands
Sep. 30, 2021
Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]    
Remainder of 2021 $ 1,861  
2022 7,279  
2023 6,583  
2024 4,839  
2025 972  
Thereafter 647  
Net $ 22,181 $ 26,556
v3.21.2
Convertible Senior Notes - Narrative (Details)
$ / shares in Units, shares in Millions
1 Months Ended 3 Months Ended 9 Months Ended
Mar. 31, 2018
USD ($)
$ / shares
shares
Jun. 30, 2020
USD ($)
day
$ / shares
shares
Mar. 31, 2018
USD ($)
day
$ / shares
shares
Sep. 30, 2021
USD ($)
shares
Sep. 30, 2020
USD ($)
Sep. 30, 2021
USD ($)
shares
Sep. 30, 2020
USD ($)
Jun. 30, 2021
USD ($)
Dec. 31, 2020
USD ($)
Dec. 31, 2019
USD ($)
Debt Instrument [Line Items]                    
Release of valuation allowance   $ 410,310,000   $ 468,276,000 $ 430,119,000 $ 468,276,000 $ 430,119,000 $ 464,127,000 $ 431,831,000 $ 457,984,000
Net proceeds used from offering to repurchase principal           0 1,128,990,000      
Loss on early extinguishment of debt       0 0 0 25,950,000      
Cost incurred related to capped calls             216,026,000      
Additional Paid-In Capital                    
Debt Instrument [Line Items]                    
Release of valuation allowance   1,212,471,000   1,553,846,000 $ 1,273,242,000 1,553,846,000 1,273,242,000 $ 1,492,117,000 1,344,337,000 $ 1,155,044,000
Cost incurred related to capped calls             $ 216,026,000      
Cumulative effect, period of adoption, adjustment | Additional Paid-In Capital                    
Debt Instrument [Line Items]                    
Release of valuation allowance                 51,000,000  
Convertible debt | Convertible senior notes due 2025                    
Debt Instrument [Line Items]                    
Aggregate principal amount   $ 1,150,000,000   $ 81,000,000   $ 81,000,000        
Interest rate   0.625%   0.625%   0.625%        
Proceeds from issuance of convertible senior notes, net of issuance costs   $ 1,129,000,000                
Initial conversion rate of common stock   0.0091944                
Conversion price (in usd per share) | $ / shares   $ 108.76                
Limitation on sale of common stock, sale price threshold, number of trading days | day   20                
Limitation on sale of common stock, sale price threshold, trading period | day   30                
Threshold percentage of stock price trigger   130.00%                
Number of consecutive business days   5 days                
Percentage of closing sale price in excess of convertible notes   98.00%                
Redemption price percentage   100.00%                
Conversion Option   $ 220,000,000   $ 220,061,000   $ 220,061,000     220,061,000  
Effective interest rate       5.00%   5.00%        
Debt issuance costs, gross   21,000,000                
Issuance costs attributable to the liability component   17,000,000   $ 13,420,000   $ 13,420,000     15,567,000  
Net deferred tax liability related to cap call   $ 51,000,000                
Capped calls, initial cap price (in usd per share) | $ / shares   $ 164.17                
Number of shares covered by cap call (in shares) | shares   10.6                
Net proceeds used from offering to repurchase principal   $ 618,000,000                
Payments to repurchase convertible debt   426,000,000                
Proceeds from convertible debt allocated to debt component   393,000,000                
Proceeds from convertible debt allocated to equity component   225,000,000                
Net carrying amount of liability component       968,188,000   968,188,000     935,576,000  
Repayment of debt discount   39,000,000                
Principal outstanding       1,150,000,000   1,150,000,000     1,150,000,000  
Cost incurred related to capped calls   $ (130,000,000)                
Convertible debt | Convertible senior notes due 2023                    
Debt Instrument [Line Items]                    
Aggregate principal amount $ 575,000,000   $ 575,000,000 $ 126,000,000   $ 126,000,000        
Interest rate 0.25%   0.25% 0.25%   0.25%        
Proceeds from issuance of convertible senior notes, net of issuance costs     $ 561,000,000              
Initial conversion rate of common stock     0.0158554              
Conversion price (in usd per share) | $ / shares $ 63.07   $ 63.07              
Limitation on sale of common stock, sale price threshold, number of trading days | day     20              
Limitation on sale of common stock, sale price threshold, trading period | day     30              
Threshold percentage of stock price trigger     130.00%              
Number of consecutive business days     5 days              
Percentage of closing sale price in excess of convertible notes     98.00%              
Redemption price percentage     100.00%              
Conversion Option $ 124,976,000   $ 124,976,000 $ 32,427,000   $ 32,427,000     32,427,000  
Effective interest rate       5.26%   5.26%        
Issuance costs attributable to the liability component       $ 971,000   $ 971,000     1,412,000  
Net deferred tax liability related to cap call $ 13,784,000   $ 13,784,000              
Capped calls, initial cap price (in usd per share) | $ / shares $ 95.20   $ 95.20              
Number of shares covered by cap call (in shares) | shares 9.1   9.1 2.4   2.4        
Net carrying amount of liability component $ 367,000,000   $ 367,000,000 $ 137,861,000   $ 137,861,000     132,388,000  
Loss on early extinguishment of debt     26,000,000              
Principal outstanding       $ 149,194,000   $ 149,194,000     $ 149,194,000  
Cost incurred related to capped calls $ 44,304,000   $ (64,000,000)              
Number of shares terminated (in shares) | shares   6.7                
Proceeds from shares terminated   $ 83,000,000                
v3.21.2
Convertible Senior Notes - Schedule of Net Carrying Amount of Liability and Equity Component of Convertible Notes (Details) - Convertible debt - USD ($)
$ in Thousands
Sep. 30, 2021
Dec. 31, 2020
Jun. 30, 2020
Mar. 31, 2018
Convertible senior notes due 2025        
Net Carrying Amount of Liability Component of Convertible Notes [Abstract]        
Principal $ 1,150,000 $ 1,150,000    
Unamortized Debt Discount (168,392) (198,857)    
Unamortized issuance costs (13,420) (15,567) $ (17,000)  
Net carrying amount 968,188 935,576    
Net Carrying Amount of Equity Component of Convertible Notes [Abstract]        
Debt Discount for Conversion Option 220,061 220,061 $ 220,000  
Issuance costs (4,035) (4,035)    
Net carrying amount 216,026 216,026    
Convertible senior notes due 2023        
Net Carrying Amount of Liability Component of Convertible Notes [Abstract]        
Principal 149,194 149,194    
Unamortized Debt Discount (10,362) (15,394)    
Unamortized issuance costs (971) (1,412)    
Net carrying amount 137,861 132,388   $ 367,000
Net Carrying Amount of Equity Component of Convertible Notes [Abstract]        
Debt Discount for Conversion Option 32,427 32,427   124,976
Issuance costs (765) (765)   $ (2,948)
Net carrying amount $ 31,662 $ 31,662    
v3.21.2
Convertible Senior Notes - Schedule of Interest Expense (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Debt Instrument [Line Items]        
Total interest expense $ 14,762 $ 14,087 $ 43,768 $ 29,060
Convertible debt | Convertible senior notes due 2025        
Debt Instrument [Line Items]        
Contractual interest expense 1,797 1,797 5,391 2,076
Amortization of Debt Discount 10,281 9,785 30,465 11,297
Amortization of issuance costs 735 660 2,147 761
Total interest expense 12,813 12,242 38,003 14,134
Convertible debt | Convertible senior notes due 2023        
Debt Instrument [Line Items]        
Contractual interest expense 93 93 279 770
Amortization of Debt Discount 1,699 1,614 5,032 13,097
Amortization of issuance costs 151 135 441 1,075
Total interest expense $ 1,943 $ 1,842 $ 5,752 $ 14,942
v3.21.2
Convertible Senior Notes - Summary of Impact to Stockholder's Equity (Details) - USD ($)
$ in Thousands
1 Months Ended 9 Months Ended
Mar. 31, 2018
Mar. 31, 2018
Sep. 30, 2020
Sep. 30, 2021
Dec. 31, 2020
Debt Instrument [Line Items]          
Net impact to stockholder's equity     $ 216,026    
Convertible debt | Convertible senior notes due 2023          
Debt Instrument [Line Items]          
Conversion Option $ 124,976 $ 124,976   $ 32,427 $ 32,427
Purchase of Capped Calls (63,940)        
Issuance Costs (2,948) (2,948)   $ (765) $ (765)
Net deferred tax liability (13,784) (13,784)      
Net impact to stockholder's equity $ 44,304 $ (64,000)      
v3.21.2
Commitments and Contingencies (Details)
$ in Millions
1 Months Ended
Apr. 30, 2021
USD ($)
Jun. 02, 2020
complaint
Nov. 07, 2019
complaint
Ho v. Zendesk And Reidinger v. Zendesk      
Other Commitments [Line Items]      
Putative class action complaints     2
Anderson v. Svane      
Other Commitments [Line Items]      
Putative class action complaints   2  
Cloud Infrastructure      
Other Commitments [Line Items]      
Total obligation | $ $ 64    
Obligation period 3 years    
v3.21.2
Common Stock and Stockholders' Equity - Narrative (Details)
$ / shares in Units, $ in Millions
1 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended
Jan. 01, 2021
shares
May 31, 2021
shares
May 31, 2020
shares
Sep. 30, 2021
USD ($)
$ / shares
shares
Jun. 30, 2021
semi-annualTranche
Sep. 30, 2020
USD ($)
shares
Sep. 30, 2021
USD ($)
offeringPeriod
$ / shares
shares
Sep. 30, 2020
USD ($)
$ / shares
shares
Dec. 31, 2018
shares
Dec. 31, 2020
$ / shares
shares
Class Of Stock [Line Items]                    
Common stock, shares authorized (in shares)       400,000,000     400,000,000     400,000,000
Common stock, par value (in usd per share) | $ / shares       $ 0.01     $ 0.01     $ 0.01
Common stock, shares issued (in shares)       120,500,000     120,500,000     117,500,000
Common stock, shares outstanding (in shares)       120,500,000     120,500,000     117,500,000
Preferred stock, shares authorized (in shares)       10,000,000     10,000,000     10,000,000
Preferred stock, par value (usd per share) | $ / shares       $ 0.01     $ 0.01     $ 0.01
Preferred stock, shares issued (in shares)       0     0     0
Preferred stock, shares outstanding (in shares)       0     0     0
Intrinsic value of options exercised (in usd per share) | $             $ 94 $ 54    
Weighted-average grant date fair value of stock options (in usd per share) | $ / shares             $ 52.60 $ 31.41    
Future period share-based compensation expense | $       $ 477     $ 477      
Future period share-based compensation expense, period to recognized             2 years 8 months 12 days      
Employee stock option                    
Class Of Stock [Line Items]                    
Offering period             18 months      
Number of offering periods | offeringPeriod             3      
Length of purchase period             6 months      
Restricted stock units                    
Class Of Stock [Line Items]                    
Intrinsic value of shares vested | $             $ 249 $ 168    
Shares granted (in shares)             1,835,000      
Number of shares vested (in shares)             1,796,000      
Employee stock                    
Class Of Stock [Line Items]                    
Share-based compensation expense, accelerated cost | $             $ 2      
Performance restricted stock units                    
Class Of Stock [Line Items]                    
Number of vesting periods | semi-annualTranche         4          
2009 Stock Option and Grant Plan                    
Class Of Stock [Line Items]                    
Shares of common stock available for issuance (in shares)       0     0      
2014 Plan | Employee stock option                    
Class Of Stock [Line Items]                    
Increase in authorized shares (in shares) 5,900,000                  
Shares of common stock available for issuance (in shares)       18,900,000     18,900,000      
PSU Retention Plan | Performance restricted stock units                    
Class Of Stock [Line Items]                    
Shares granted (in shares)                 200,000  
Share-based compensation expense | $       $ 0   $ 3 $ 1 $ 5    
Number of shares vested (in shares)       0   36,000 37,000 62,000    
Employee stock                    
Class Of Stock [Line Items]                    
Percentage of purchase price of shares lower of the fair market value of common stock employees are able to purchase shares             85.00%      
Number of shares repurchased under ESPP (in shares)   400,000 400,000              
Increase in authorized shares (in shares) 1,200,000                  
Shares of common stock available for issuance (in shares)       5,600,000     5,600,000      
v3.21.2
Common Stock and Stockholders' Equity - Summary of Stock Option and RSU Award Activity (Details)
$ / shares in Units, shares in Thousands, $ in Thousands
9 Months Ended 12 Months Ended
Sep. 30, 2021
USD ($)
$ / shares
shares
Dec. 31, 2020
USD ($)
$ / shares
shares
Number of Shares    
Balance at the beginning of the period (in shares) | shares 4,235  
Stock options granted (in shares) | shares 411  
Stock options exercised (in shares) | shares (820)  
Stock options forfeited or canceled (in shares) | shares (118)  
Balance at the end of the period (in shares) | shares 3,708 4,235
Weighted Average Exercise Price    
Balance at the beginning of the period (in usd per share) | $ / shares $ 31.42  
Stock options granted (in usd per share) | $ / shares 148.05  
Stock options exercised (in usd per share) | $ / shares 23.02  
Stock options forfeited or canceled (in usd per share) | $ / shares 97.88  
Balance at the end of the period (in usd per share) | $ / shares $ 44.09 $ 31.42
Weighted Average Remaining Contractual Term    
Weighted average remaining contractual term 5 years 5 years 2 months 12 days
Aggregate Intrinsic Value    
Aggregate intrinsic value, options | $ $ 280,266 $ 473,358
Restricted stock units    
Outstanding RSUs    
Balance at the beginning of the period (in shares) | shares 5,141  
RSUs granted (in shares) | shares 1,835  
RSUs vested (in shares) | shares (1,796)  
RSUs forfeited or canceled (in shares) | shares (742)  
Balance at the end of the period (in shares) | shares 4,438 5,141
Weighted Average Grant Date Fair Value    
Balance at the beginning of the period (in usd per share) | $ / shares $ 75.93  
Weighted average grant date fair value, RSUs granted (in usd per share) | $ / shares 147.67  
Weighted average grant date fair value, RSUs vested (in usd per share) | $ / shares 68.49  
Weighted average grant date fair value, RSUs forfeited or canceled (in usd per share) | $ / shares 86.86  
Balance at the end of the period (in usd per share) | $ / shares $ 106.77 $ 75.93
v3.21.2
Deferred Revenue and Performance Obligations - Schedule of Changes in Balance of Deferred Revenue (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Change in Balances of Deferred Revenue [Roll Forward]        
Balance, beginning of period $ 442,463 $ 316,113 $ 383,358 $ 323,962
Billings 352,580 273,464 1,027,949 749,755
Balance, end of period 448,069 327,651 448,069 327,651
Subscription and Services        
Change in Balances of Deferred Revenue [Roll Forward]        
Revenue recognized (327,812) (249,052) (912,665) (707,715)
Other Revenue        
Change in Balances of Deferred Revenue [Roll Forward]        
Revenue recognized $ (19,162) $ (12,874) $ (50,573) $ (38,351)
v3.21.2
Deferred Revenue and Performance Obligations - Performance Obligations (Details)
$ in Millions
Sep. 30, 2021
USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Performance obligations expected to be satisfied $ 1,167
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-10-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Performance obligations expected to be satisfied $ 783
Performance obligations expected to be satisfied, expected timing 12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | Minimum  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Performance obligations expected to be satisfied, expected timing 13 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | Maximum  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Performance obligations expected to be satisfied, expected timing 36 months
v3.21.2
Net Loss Per Share - Computation of Basic and Diluted Net Loss per Share of Common Stock (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Earnings Per Share [Abstract]        
Net loss $ (54,417) $ (40,703) $ (161,789) $ (148,142)
Weighted-average shares used to compute net loss per share, basic (in shares) 120,164 115,809 119,050 114,653
Weighted-average shares used to compute net loss per share, diluted (in shares) 120,164 115,809 119,050 114,653
Net loss per share, basic (in usd per share) $ (0.45) $ (0.35) $ (1.36) $ (1.29)
Net loss per share, diluted (in usd per share) $ (0.45) $ (0.35) $ (1.36) $ (1.29)
v3.21.2
Net Loss Per Share - Schedule of Anti-Dilutive Securities Excluded from the Diluted per Share Calculation (Details) - shares
shares in Thousands
9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive securities excluded from computation of earnings per share amount (in shares) 11,215 10,548
Shares subject to outstanding common stock options and employee stock purchase plan    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive securities excluded from computation of earnings per share amount (in shares) 3,894 4,607
Restricted stock units    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive securities excluded from computation of earnings per share amount (in shares) 4,438 5,171
Shares related to convertible senior notes    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive securities excluded from computation of earnings per share amount (in shares) 2,883 770
v3.21.2
Net Loss Per Share - Narrative (Details) - $ / shares
shares in Millions
9 Months Ended
Sep. 30, 2021
Jun. 30, 2020
Mar. 31, 2018
Convertible senior notes due 2023      
Debt Instrument [Line Items]      
Potential dilution based on initial conversion price (in shares) 2.4    
Convertible senior notes due 2025      
Debt Instrument [Line Items]      
Potential dilution based on initial conversion price (in shares) 10.6    
Convertible debt | Convertible senior notes due 2023      
Debt Instrument [Line Items]      
Conversion price (in usd per share)     $ 63.07
Convertible debt | Convertible senior notes due 2025      
Debt Instrument [Line Items]      
Conversion price (in usd per share)   $ 108.76  
v3.21.2
Income Taxes - Narrative (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Income Tax Disclosure [Abstract]        
Income tax expense $ 3,133 $ 1,973 $ 7,842 $ 4,777
v3.21.2
Geographic Information - Narrative (Details)
9 Months Ended
Sep. 30, 2021
segment
Segment Reporting [Abstract]  
Number of reportable segments 1
v3.21.2
Geographic Information - Schedule of Revenue by Geographic Areas (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Revenues From External Customers And Long Lived Assets [Line Items]        
Revenue $ 346,974 $ 261,926 $ 963,238 $ 746,066
United States        
Revenues From External Customers And Long Lived Assets [Line Items]        
Revenue 174,264 136,491 489,476 391,025
EMEA        
Revenues From External Customers And Long Lived Assets [Line Items]        
Revenue 102,889 73,798 282,323 210,487
APAC        
Revenues From External Customers And Long Lived Assets [Line Items]        
Revenue 35,730 28,954 98,700 81,105
Other        
Revenues From External Customers And Long Lived Assets [Line Items]        
Revenue $ 34,091 $ 22,683 $ 92,739 $ 63,449
v3.21.2
Geographic Information - Schedule of Long-Lived Assets by Geographic Areas (Details) - USD ($)
$ in Thousands
Sep. 30, 2021
Dec. 31, 2020
Revenues From External Customers And Long Lived Assets [Line Items]    
Long-lived assets $ 128,067 $ 146,547
United States    
Revenues From External Customers And Long Lived Assets [Line Items]    
Long-lived assets 61,317 76,383
EMEA    
Revenues From External Customers And Long Lived Assets [Line Items]    
Long-lived assets 41,960 43,794
Republic of Ireland    
Revenues From External Customers And Long Lived Assets [Line Items]    
Long-lived assets 35,123 38,010
Other EMEA    
Revenues From External Customers And Long Lived Assets [Line Items]    
Long-lived assets 6,837 5,784
APAC    
Revenues From External Customers And Long Lived Assets [Line Items]    
Long-lived assets 21,429 26,026
Singapore    
Revenues From External Customers And Long Lived Assets [Line Items]    
Long-lived assets 14,786 19,560
Other APAC    
Revenues From External Customers And Long Lived Assets [Line Items]    
Long-lived assets 6,643 6,466
Other    
Revenues From External Customers And Long Lived Assets [Line Items]    
Long-lived assets $ 3,361 $ 344