Document and Entity Information - shares |
9 Months Ended | |
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Sep. 30, 2018 |
Oct. 31, 2018 |
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Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | ZEN | |
Entity Registrant Name | Zendesk, Inc. | |
Entity Central Index Key | 0001463172 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Emerging Growth Company | false | |
Smaller Reporting Company | false | |
Entity Common Stock, Shares Outstanding | 107,041,554 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
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Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 2,862 | $ 1,252 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||||||
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Sep. 30, 2018 |
Sep. 30, 2017 |
[1] | Sep. 30, 2018 |
Sep. 30, 2017 |
[1] | |||||||||
Income Statement [Abstract] | ||||||||||||||
Revenue | $ 154,828 | $ 112,265 | $ 426,501 | $ 308,249 | ||||||||||
Cost of revenue | [2] | 46,992 | 33,693 | 130,207 | 92,463 | |||||||||
Gross profit | 107,836 | 78,572 | 296,294 | 215,786 | ||||||||||
Operating expenses: | ||||||||||||||
Research and development | [2] | 40,410 | 29,358 | 115,118 | 84,512 | |||||||||
Sales and marketing | [2] | 74,270 | 54,383 | 208,778 | 151,064 | |||||||||
General and administrative | [2] | 27,357 | 21,398 | 73,809 | 59,503 | |||||||||
Total operating expenses | [2] | 142,037 | 105,139 | 397,705 | 295,079 | |||||||||
Operating loss | (34,201) | (26,567) | (101,411) | (79,293) | ||||||||||
Other income (expense), net: | ||||||||||||||
Interest income | 4,561 | 923 | 9,906 | 2,463 | ||||||||||
Interest expense | (6,375) | 0 | (13,427) | 0 | ||||||||||
Other expense, net | (463) | (304) | (194) | (1,118) | ||||||||||
Total other income (expense), net | (2,277) | 619 | (3,715) | 1,345 | ||||||||||
Loss before benefit from income taxes | (36,478) | (25,948) | (105,126) | (77,948) | ||||||||||
Benefit from income taxes | (2,334) | [1] | (133) | (7,291) | (785) | |||||||||
Net loss | $ (34,144) | $ (25,815) | [3] | $ (97,835) | $ (77,163) | [3] | ||||||||
Net loss per share, basic and diluted (usd per share) | $ (0.32) | $ (0.26) | $ (0.93) | $ (0.78) | ||||||||||
Weighted-average shares used to compute net loss per share, basic and diluted (in shares) | 106,143 | 100,659 | 104,954 | 99,203 | ||||||||||
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||
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Sep. 30, 2018 |
Sep. 30, 2017 |
[2] | Sep. 30, 2018 |
Sep. 30, 2017 |
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Share-based compensation | $ 86,581 | $ 62,425 | [1] | |||||||
Cost of revenue | ||||||||||
Share-based compensation | $ 3,929 | $ 2,408 | 10,500 | 6,668 | [2] | |||||
Research and development | ||||||||||
Share-based compensation | 10,677 | 7,776 | 30,436 | 22,274 | [2] | |||||
Sales and marketing | ||||||||||
Share-based compensation | 10,261 | 6,573 | 27,447 | 17,981 | [2] | |||||
General and administrative | ||||||||||
Share-based compensation | $ 6,579 | $ 5,619 | $ 18,198 | $ 15,502 | [2] | |||||
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||||
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Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
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Statement of Comprehensive Income [Abstract] | ||||||||||||
Net loss | $ (34,144) | $ (25,815) | [1],[2] | $ (97,835) | $ (77,163) | [1],[2] | ||||||
Other comprehensive gain (loss), before tax: | ||||||||||||
Net unrealized gain (loss) on available-for-sale investments | (50) | 80 | [3] | (673) | 213 | [3] | ||||||
Foreign currency translation gain (loss) | 0 | 0 | [3] | (12) | 824 | [3] | ||||||
Net unrealized gain (loss) on derivative instruments | 418 | 344 | [3] | (3,456) | 3,692 | [3] | ||||||
Other comprehensive gain (loss), before tax | 368 | 424 | [3] | (4,141) | 4,729 | [3] | ||||||
Tax effect | (366) | (156) | [3] | 716 | (1,737) | [3] | ||||||
Other comprehensive gain (loss), net of tax | 2 | 268 | [3] | (3,425) | 2,992 | [3] | ||||||
Comprehensive loss | $ (34,142) | $ (25,547) | [3] | $ (101,260) | $ (74,171) | [3] | ||||||
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands |
9 Months Ended | ||||||
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Sep. 30, 2018 |
Sep. 30, 2017 |
[2] | |||||
Cash flows from operating activities | |||||||
Net loss | $ (97,835) | $ (77,163) | [1] | ||||
Adjustments to reconcile net loss to net cash provided by operating activities | |||||||
Depreciation and amortization | 27,193 | 24,263 | |||||
Share-based compensation | 86,581 | 62,425 | |||||
Amortization of deferred costs | 15,124 | 10,332 | |||||
Amortization of debt discount and issuance costs | 12,665 | 0 | |||||
Other | 2,865 | 381 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (26,721) | (15,039) | |||||
Prepaid expenses and other current assets | (10,167) | (5,116) | |||||
Deferred costs | (26,716) | (15,595) | |||||
Other assets and liabilities | (8,026) | (5,323) | |||||
Accounts payable | 20,607 | 7,237 | |||||
Accrued liabilities | 7,073 | 6,843 | |||||
Accrued compensation and related benefits | 2,487 | 1,503 | |||||
Deferred revenue | 50,552 | 30,174 | |||||
Net cash provided by operating activities | 55,682 | 24,922 | |||||
Cash flows from investing activities | |||||||
Purchases of property and equipment | (27,132) | (13,334) | |||||
Internal-use software development costs | (5,550) | (5,237) | |||||
Purchases of marketable securities | (591,426) | (135,279) | |||||
Proceeds from maturities of marketable securities | 131,819 | 88,960 | |||||
Proceeds from sales of marketable securities | 40,775 | 28,144 | |||||
Net cash used in investing activities | (530,877) | (53,216) | |||||
Cash flows from financing activities | |||||||
Proceeds from issuance of convertible senior notes, net of issuance costs paid of $13,561 | 561,439 | 0 | |||||
Purchase of capped call related to convertible senior notes | (63,940) | 0 | |||||
Proceeds from exercises of employee stock options | 13,254 | 18,550 | |||||
Proceeds from employee stock purchase plan | 15,999 | 10,980 | |||||
Other | (3,807) | (2,415) | |||||
Net cash provided by financing activities | 522,945 | 27,115 | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (55) | 288 | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 47,695 | (891) | |||||
Cash, cash equivalents and restricted cash at beginning of period | 110,888 | 95,062 | |||||
Cash, cash equivalents and restricted cash at end of period | 158,583 | 94,171 | |||||
Reconciliation of cash, cash equivalents and restricted cash to condensed consolidated balance sheets | |||||||
Total cash, cash equivalents and restricted cash | 110,888 | 95,062 | |||||
Supplemental cash flow data | |||||||
Cash paid for income taxes and interest | 3,468 | 1,532 | |||||
Non-cash investing and financing activities | |||||||
Balance of property and equipment in accounts payable and accrued expenses | 5,680 | 1,384 | |||||
Property and equipment acquired through tenant improvement allowances | 5,435 | 437 | |||||
Vesting of early exercised stock options | 0 | 317 | |||||
Outbound Solutions Inc | |||||||
Cash flows from investing activities | |||||||
Cash paid for the acquisitions, net of cash acquired | 0 | (16,470) | |||||
FutureSimple Inc. | |||||||
Cash flows from investing activities | |||||||
Cash paid for the acquisitions, net of cash acquired | (79,363) | 0 | |||||
Goodwill And Intangible Assets, Net | |||||||
Non-cash investing and financing activities | |||||||
Share-based compensation capitalized in internal-use software development costs | 1,986 | 1,984 | |||||
Other Assets | |||||||
Non-cash investing and financing activities | |||||||
Share-based compensation capitalized in internal-use software development costs | $ 602 | $ 380 | |||||
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (PARENTHETICAL) - USD ($) $ in Thousands |
9 Months Ended | ||||
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Sep. 30, 2018 |
Sep. 30, 2017 |
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Statement of Cash Flows [Abstract] | |||||
Payments of debt issuance costs | $ 13,561 | $ 0 | [1] | ||
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Overview and Basis of Presentation |
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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, products that are intended to help organizations and their customers build better relationships. With our origins in customer service, we have evolved our offerings over time to a family of products that work together to help organizations understand their customers, improve communications, and engage where and when it’s needed most. Our product family is built upon a modern architecture that enables us and our customers to rapidly innovate, adapt our technology in novel ways, and easily integrate with other products and applications. References to Zendesk, the “Company,” “our,” or “we” in these notes refer to Zendesk, Inc. and its subsidiaries on a consolidated basis. Basis of Presentation These unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K, as amended by Form 10-K/A, for the year ended December 31, 2017, filed with the SEC on November 5, 2018. There have been no changes to our significant accounting policies described in the Annual Report on Form 10-K that have had a material impact on our condensed consolidated financial statements and related notes, except as described below. Effective January 1, 2018, we adopted the requirements of Accounting Standards Update, or ASU, 2014-09, “Revenue from Contracts with Customers” regarding Accounting Standards Codification, or ASC, Topic 606 and ASU 2016-18, “Statement of Cash Flows - Restricted Cash,” as discussed below. All amounts and disclosures set forth in this Form 10-Q have been updated to comply with the new standards, as indicated by “as adjusted.” The unaudited consolidated balance sheet as of December 31, 2017 included herein was derived from the audited financial statements as of that date, giving effect to the adoption of ASC 606, as discussed below. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly our financial position, results of operations, comprehensive loss, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2018. Use of Estimates The preparation of our consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods. Significant items subject to such estimates and assumptions include the fair value of share-based awards, acquired intangible assets, and goodwill as well as unrecognized tax benefits, the useful lives of acquired intangible assets and property and equipment, the capitalization and estimated useful life of capitalized costs to obtain customer contracts and capitalized internal-use software, variable consideration related to revenue recognition, and financial forecasts used in currency hedging. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ from those estimates. Concentrations of Risk As of September 30, 2018, 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, 2018 or 2017. Recently Issued Accounting Pronouncements In February 2016, the Financial Accounting Standards Board, or FASB, issued ASU 2016-02, regarding ASC Topic 842 “Leases,” including subsequent amendments. This new guidance requires lessees to recognize most leases on their balance sheets as right-of-use assets with corresponding lease liabilities and eliminates certain real estate-specific provisions. The new guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We have completed our process to identify our population of lease arrangements and we are nearing the completion of applying the new guidance to each arrangement. We are also in the process of determining the incremental borrowing rate for each arrangement. We plan to adopt utilizing the modified retrospective method of transition. While the adoption remains in progress, we expect that adoption will result in the recognition of right-of-use assets and lease liabilities that were not previously recognized, which will increase total assets and liabilities on our consolidated balance sheet. In August 2017, the FASB issued ASU 2017-12, regarding ASC Topic 815 “Derivatives and Hedging.” This amendment simplifies various aspects of hedge accounting, including the measurement and presentation of hedge ineffectiveness and certain documentation and assessment requirements. The amendment also makes more hedging strategies eligible for hedge accounting. The guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the effect of this standard on our consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income,” which provides for the reclassification of the effect of remeasuring deferred tax balances related to items within accumulated other comprehensive income to retained earnings resulting from the Tax Cuts and Jobs Act, or Tax Act. The guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We do not expect the adoption of this standard to have a material effect on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, regarding ASC Topic 718 “Compensation - Stock Compensation,” which largely aligns the accounting for share-based compensation for non-employees with employees. The guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We do not expect the adoption of this standard to have a material effect on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-08, regarding ASC Topic 958 “Not-for-Profit Entities,” which clarified the guidance on how entities determine whether to account for a transfer of assets as an exchange transaction or a contribution. The guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We do not expect the adoption of this standard to have a material effect on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, regarding ASC Topic 820 “Fair Value Measurement,” which modifies the disclosure requirements for fair value measurements for certain types of investments. The guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. Early adoption is permitted. We do not expect the adoption of this standard to have a material effect on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, regarding ASC Topic 350-40 “Intangibles - Internal-Use Software,” which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the effect of this standard on our consolidated financial statements. Recently Adopted Accounting Pronouncements In May 2014, the FASB issued new revenue guidance under ASU 2014-09 that provides principles for recognizing revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for the promised goods or services provided to customers. ASC 606 and ASC 340-40 also require the deferral of incremental costs of obtaining contracts with customers and subsequent amortization of those costs over the period of anticipated benefit. Collectively, we refer to this guidance as “ASC 606.” We adopted ASC 606 on January 1, 2018, utilizing the full retrospective method of transition. The adoption resulted in changes to our accounting policies for revenue recognition and incremental costs to acquire contracts, as described below. We applied ASC 606 using the following practical expedients:
The effect of adopting ASC 606 on our 2017 and 2016 revenues was not material. The primary effect relates to the deferral of sales commissions and other incremental costs to acquire contracts, which we historically expensed as incurred. The impact of adoption is summarized in the tables below. Under ASC 606, all incremental costs to acquire contracts are capitalized and amortized on a straight-line basis over the anticipated period of benefit, which we have determined to be three years. In August 2016, the FASB issued ASU 2016-15, regarding ASC Topic 230 “Statement of Cash Flows.” This update addresses eight specific cash flow issues with the objective of reducing diversity in practice. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We adopted this standard in the first quarter of 2018. The adoption did not have an effect on our consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows - Restricted Cash,” which requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. We adopted this standard in the first quarter of 2018 on a retrospective basis, resulting in an immaterial change to our previously reported statement of cash flows for the nine months ended September 30, 2017, which is summarized in the table below. In January 2017, the FASB issued ASU 2017-01, “Business Combinations - Clarifying the Definition of a Business,” which clarifies the definition of a business when evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. We adopted this standard in the first quarter of 2018. The adoption did not have an effect on our consolidated financial statements. In March 2018, the FASB issued ASU 2018-05, which amends ASC Topic 740 “Income Taxes” to conform with SEC Staff Accounting Bulletin 118, issued in December 2017. The guidance was issued to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. The standard is effective upon issuance. We are nearing completion of our analysis of our deferred tax assets and liabilities and our historical foreign earnings as well as potential correlative adjustments. We will finalize our assessment in the fourth quarter of 2018. We adjusted our condensed consolidated financial statements from amounts previously reported due to the adoption of ASC 606 and ASU 2016-18. Select unaudited condensed consolidated balance sheet line items, which reflect the adoption of ASC 606 are as follows (in thousands):
Select unaudited condensed consolidated statement of operations line items, which reflect the adoption of ASC 606 are as follows (in thousands, except per share data):
Select unaudited condensed consolidated statement of cash flows line items, which reflect the adoption of ASC 606 and ASU 2016-18 are as follows (in thousands):
We have also updated our significant accounting policies in connection with the adoption of ASC 606: Revenue Recognition We generate substantially all of our revenue from subscription services, which are comprised of subscription fees from customer accounts on Zendesk Support and, to a lesser extent, Chat, Talk, Guide, Connect, and Base. In addition, we generate revenue by providing additional features to certain of our subscription plans for a fee that is incremental to the base subscription rate for such plans. Subscription service arrangements are generally non-cancelable and do not provide for refunds to customers in the event of cancellations or any other right of return. We record revenue net of sales or excise taxes. We also derive revenue from implementation, Talk usage, and training services, for which we recognize revenue upon completion. Revenues are recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. We determine revenue recognition through the following steps: •Identification of the contract, or contracts, with a customer •Identification of the performance obligations in the contract •Determination of the transaction price •Allocation of the transaction price to the performance obligations in the contract •Recognition of revenue when, or as, the performance obligations are satisfied Subscription revenue is recognized on a ratable basis over the contractual subscription term of the arrangement beginning on the date that our service is made available to the customer. Payments received in advance of services being rendered are recorded as deferred revenue. In limited circumstances, certain customers have arrangements that provide for a maximum number of users over the subscription term, with usage measured monthly. Incremental fees are incurred when the maximum number of users is exceeded. In determining the transaction price for these arrangements, we evaluate the expected usage pattern to estimate any incremental fees that we are entitled to throughout the subscription term and recognize revenue ratably over the subscription term. In making these assessments, we constrain our estimates based on factors that could lead to a probable reversal of revenue. Certain of our product offerings include service-level agreements warranting defined levels of uptime reliability and performance and permitting 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. Costs to Obtain Customer Contracts Sales commissions and related expenses are considered incremental and recoverable costs of acquiring customer contracts. These costs are capitalized and amortized on a straight-line basis over the anticipated period of benefit, which we have estimated to be three years. We determined the period of benefit by taking into consideration the length of our customer contracts, our technology lifecycle, and other factors. Amortization expense is recorded in sales and marketing expense within our consolidated statement of operations. Deferred Revenue We invoice customers for subscriptions to our products in monthly, quarterly, or annual installments. Deferred revenue consists primarily of customer billings made in advance of performance obligations being satisfied and revenue being recognized, and includes an immaterial amount of billings for subscriptions with customer cancellation rights. The term between invoicing and when payment is due is not significant and we do not provide financing arrangements to customers. Deferred revenue associated with performance obligations that are anticipated to be satisfied, and thus revenue recognized, during the succeeding 12-month period is recorded as current deferred revenue and the remaining portion is recorded as noncurrent deferred revenue. Deferred revenue associated with implementation, Talk usage, and training services was immaterial as of December 31, 2017 and September 30, 2018. We invoice customers based on billing schedules established in our contracts. Accounts receivable are recorded when the right to consideration becomes unconditional. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded at the invoiced amount, net of allowance for doubtful accounts. The allowance is based upon historical loss patterns, the age of each past due invoice, and an evaluation of the potential risk of loss associated with delinquent accounts. Accounts receivable deemed uncollectable are charged against the allowance for doubtful accounts when identified. The balance of accounts receivable also includes contract assets, which are recorded when revenue is recognized in advance of invoicing. |
Business Combinations |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations | Business Combinations FutureSimple Inc. On September 10, 2018, we completed the acquisition of FutureSimple Inc., or FutureSimple, the developer of Base, a sales force automation software product. We acquired FutureSimple for purchase consideration of $81.0 million in cash. We incurred transaction costs of $1.6 million in connection with the acquisition, which were included within general and administrative expenses. The fair value of assets acquired and liabilities assumed was based on a preliminary valuation, and our estimates and assumptions are subject to change within the measurement period. The primary areas that remain preliminary relate to the fair values of certain assets and liabilities acquired and residual goodwill. The total purchase consideration was allocated to the assets acquired and liabilities assumed as set forth below (in thousands). The excess of the purchase price over the net assets acquired was recorded as goodwill. Goodwill generated from the acquisition is primarily attributable to assembled workforce and expected growth from the expansion of the scope of and market opportunity for our products. Goodwill is not deductible for income tax purposes. Goodwill will not be amortized but instead will be tested for impairment at least annually and more frequently if certain indicators of impairment are present.
The developed technology, customer relationships, and backlog intangible assets were assigned useful lives of 6.5, 5.0, and 2.0 years, respectively. In connection with the acquisition, we granted cash and share-based retention awards to certain employees of FutureSimple. The cash awards vest over a required service period and the share-based awards vest upon fulfillment of certain service and performance conditions. Each retention award will be recorded as expense based on the fulfillment of such service and performance conditions, as applicable, and is not included in the total purchase consideration. From the date of the acquisition, the results of operations of FutureSimple have been included in and are immaterial to our consolidated financial statements. Pro forma revenue and results of operations have not been presented because the historical results of FutureSimple are not material to our consolidated financial statements in any period presented. Outbound Solutions, Inc. On April 27, 2017, we completed the acquisition of Outbound Solutions, Inc., or Outbound, a provider of software that enables companies to deliver intelligent, behavior-based messages across multiple channels. We acquired Outbound for purchase consideration of $16.6 million in cash. The total purchase consideration was allocated to the assets acquired and liabilities assumed as set forth below (in thousands). The excess of the purchase price over the net assets acquired was recorded as goodwill. Goodwill generated from the acquisition is primarily attributable to expected growth from the expansion of the scope of and market opportunity for our products. Goodwill is not deductible for income tax purposes. Goodwill will not be amortized but instead will be tested for impairment at least annually and more frequently if certain indicators of impairment are present.
The developed technology and customer relationships intangible assets were assigned useful lives of 6.5 and 3.5 years, respectively. From the date of the acquisition, the results of operations of Outbound have been included in and are immaterial to our consolidated financial statements. Pro forma revenue and results of operations have not been presented because the historical results of Outbound are not material to our consolidated financial statements in any period presented. |
Financial Instruments |
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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):
As of September 30, 2018 and December 31, 2017, 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, 2018. Gross unrealized gains and losses for cash equivalents and marketable securities as of September 30, 2018 and December 31, 2017 were not material. Unrealized losses for securities that have been in an unrealized loss position for more than 12 months as of September 30, 2018 and December 31, 2017 were not material. The following table classifies our marketable securities by contractual maturity (in thousands):
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. As of September 30, 2018, the balance of accumulated other comprehensive loss included an unrecognized net loss of $2.5 million related to the effective portion of changes in the fair value of foreign currency forward contracts designated as cash flow hedges. We expect to reclassify a net loss of $2.7 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):
Our foreign currency forward contracts had a total notional value of $179.9 million and $139.7 million as of September 30, 2018 and December 31, 2017, respectively. We have master netting arrangements with each of our counterparties, which permit net settlement of multiple, separate derivative contracts with a single payment. We may also be required to exchange cash collateral with certain of our counterparties on a regular basis. ASC 815 permits companies to present the fair value of derivative instruments on a net basis according to master netting arrangements. We have elected to present our derivative instruments on a gross basis in our consolidated financial statements. As of September 30, 2018 and December 31, 2017, there was no cash collateral posted with counterparties. The following table presents information about our derivative instruments on our condensed consolidated statements of operations (in thousands):
All derivatives have been designated as hedging instruments. Amounts recognized in earnings related to excluded time value and hedge ineffectiveness for the three and nine months ended September 30, 2018 and 2017 were not material. Convertible Senior Notes As of September 30, 2018, the fair value of our convertible senior notes was $726.3 million. The fair value was determined based on the quoted price of the convertible senior notes in an inactive market on the last trading day of the reporting period and has been classified as Level 2 in the fair value hierarchy. |
Costs to Obtain Customer Contracts |
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Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Costs to Obtain Customer Contracts | Costs to Obtain Customer Contracts The balances of deferred costs to obtain customer contracts were $43.4 million and $31.2 million as of September 30, 2018 and December 31, 2017, respectively. Amortization expense for these deferred costs was $5.6 million and $3.7 million for the three months ended September 30, 2018 and 2017, respectively, and $15.1 million and $10.3 million for the nine months ended September 30, 2018 and 2017, respectively. There were no impairment losses related to these deferred costs for the periods presented. Deferred Revenue and Performance Obligations During the three months ended September 30, 2018 and 2017, $102.5 million and $69.0 million of revenue was recognized that was included in the deferred revenue balances at the beginning of each period, respectively. During the nine months ended September 30, 2018 and 2017, $159.3 million and $111.7 million of revenue was recognized that was included in the deferred revenue balances at the beginning of each period, respectively. The aggregate balance of unsatisfied performance obligations as of September 30, 2018 was $359.6 million. We expect to recognize $290.4 million of the balance as revenue in the next 12 months and the remainder thereafter. The aggregate balance of unsatisfied performance obligations represents contracted revenue that has not yet been recognized and does not include contract amounts which are cancelable by the customer and amounts associated with optional renewal periods. |
Property and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and Equipment Property and equipment, net consists of the following (in thousands):
Depreciation expense was $5.8 million and $5.3 million for the three months ended September 30, 2018 and 2017, respectively, and $18.6 million and $15.1 million for the nine months ended September 30, 2018 and 2017, respectively. Amortization expense of capitalized internal-use software was $1.5 million and $1.8 million for the three months ended September 30, 2018 and 2017, respectively, and $4.4 million and $6.0 million for the nine months ended September 30, 2018 and 2017, respectively. We recorded impairment losses of none and $2.0 million to construction in progress during the three and nine months ended September 30, 2018, which were included within research and development expenses on our consolidated statements of operations. The carrying value of capitalized internal-use software at September 30, 2018 and December 31, 2017 was $19.0 million and $17.7 million, respectively, including $8.7 million in construction in progress for both periods. |
Goodwill and Acquired Intangible Assets |
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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, 2018 are as follows (in thousands):
Acquired intangible assets subject to amortization consist of the following (in thousands):
During the second quarter of 2018, we removed developed technology and customer relationships intangible assets from our consolidated balance sheet, which had become fully amortized. Amortization expense of acquired intangible assets was $1.2 million and $1.0 million for the three months ended September 30, 2018 and 2017, respectively, and $2.5 million and $3.0 million for the nine months ended September 30, 2018 and 2017, respectively. Estimated future amortization expense as of September 30, 2018 is as follows (in thousands):
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0.25% Convertible Senior Notes and Capped Call |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
0.25% Convertible Senior Notes and Capped Call | 0.25% Convertible Senior Notes and Capped Call In March 2018, we issued $500.0 million aggregate principal amount of 0.25% convertible senior notes due March 15, 2023 in a private offering and an additional $75.0 million aggregate principal amount of such notes pursuant to the exercise in full of the over-allotment options of the initial purchasers, collectively the “Notes.” The 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, are approximately $561.4 million. Each $1,000 principal amount of the 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 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 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 Notes) prior to the maturity date, holders of the 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 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 Notes. During the three and nine months ended September 30, 2018, the conditions allowing holders of the Notes to convert have not been met. The Notes are therefore not convertible during the three and nine months ended September 30, 2018 and are classified as long-term debt. In accounting for the transaction, the 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 carrying amount of the equity component representing the Conversion Option was $125.0 million and was determined by deducting the fair value of the liability component from the par value of the 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, the “Debt Discount,” is amortized to interest expense over the contractual term of the Notes at an effective interest rate of 5.26%. In accounting for the debt issuance costs of $13.6 million related to the Notes, we allocated the total amount incurred to the liability and equity components of the Notes based on their relative values. Issuance costs attributable to the liability component were $10.6 million and will be amortized to interest expense using the effective interest method over the contractual term of the 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 Notes is as follows (in thousands):
The net carrying amount of the equity component of the Notes is as follows (in thousands):
Interest expense related to the Notes is as follows (in thousands):
In connection with the pricing of the Notes, we entered into privately negotiated capped call transactions with certain counterparties, the “Capped Calls.” The 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 Notes. The Capped Calls have initial cap prices of $95.20 per share, subject to certain adjustments. The Capped Calls cover, 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 Capped Calls mirror conditions that result in corresponding adjustments for the Notes. The Capped Calls are generally intended to reduce or offset the potential dilution to our common stock upon any conversion of the Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. For accounting purposes, the Capped Calls are separate transactions, and not part of the terms of the Notes. As these transactions meet certain accounting criteria, the Capped Calls are recorded in stockholders' equity and are not accounted for as derivatives. The cost of $63.9 million incurred in connection with the Capped Calls was recorded as a reduction to additional paid-in capital. The difference between the Debt Discount and the total cost of the Capped Call, and the difference between the calculation of the book and tax allocation of debt issuance costs between the liability and equity components of the Notes, resulted in a difference between the carrying amount and tax basis of the Notes. This taxable temporary difference resulted in the recognition of a $13.8 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 a portion of the income tax benefit associated with our loss from operations. Therefore, applying the guidance in ASC 740 to interim reporting periods, we recorded a net income tax benefit of $2.5 million and $8.1 million in our consolidated statement of operations and income tax expense of $0.4 million and income tax benefit of $0.7 million in our consolidated statement of comprehensive loss for the three and nine months ended September 30, 2018, respectively. This represents applying an estimated effective tax rate resulting from the recognition of the deferred tax asset to the pre-tax loss for the quarter. The net impact to our stockholders' equity, included in additional paid-in capital, of the above components of the Notes is as follows (in thousands):
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Contractual Obligations We lease office space under noncancelable operating leases with various expiration dates. Certain of the office space lease agreements contain rent holidays or rent escalation provisions. Rent holiday and rent escalation provisions are considered in determining the straight-line expense to be recorded over the lease term. The lease term begins on the date of initial possession of the leased property for purposes of recognizing lease expense on a straight-line basis over the term of the lease. Rent expense was $5.2 million and $2.8 million for the three months ended September 30, 2018 and 2017, respectively, and $14.0 million and $8.3 million for the nine months ended September 30, 2018 and 2017, respectively. As of September 30, 2018, 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, 2017. In October 2018, we entered into an agreement with a cloud infrastructure provider, under which we now have a total five-year minimum commitment of $255.0 million to the provider. Litigation and Loss Contingencies We accrue estimates for resolution of legal and other contingencies when losses are probable and estimable. From time to time, we may become a party to litigation and subject to claims that arise in the ordinary course of business, including intellectual property claims, labor and employment claims, threatened claims, breach of contract claims, tax, and other matters. We currently have no material pending litigation. We are not currently aware of any litigation matters or loss contingencies that would be expected to have a material adverse effect on our business, consolidated balance sheets, results of operations, comprehensive loss, or cash flows. Indemnifications In the ordinary course of business, we enter into contractual arrangements under which we agree to provide indemnification of varying scope and terms to customers, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties, and other liabilities relating to or arising from our products or our acts or omissions. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. Further, our obligations under these agreements may be limited in terms of time and/or amount, and in some instances, we may have recourse against third parties for certain payments. In addition, we have indemnification agreements with our directors and executive officers that require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations may vary. To date, we have not incurred any material costs, and we have not accrued any liabilities in our consolidated financial statements, as a result of these obligations. Certain of our product offerings include service-level agreements warranting defined levels of uptime reliability and performance, which permit those customers to receive credits for future services in the event that we fail to meet those levels. To date, we have not accrued for any significant liabilities in our consolidated financial statements as a result of these service-level agreements. |
Common Stock and Stockholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock and Stockholders' Equity | Common Stock and Stockholders’ Equity Common Stock As of September 30, 2018 and December 31, 2017, there were 400 million shares of common stock authorized for issuance with a par value of $0.01 per share and 106.6 million and 103.1 million shares were issued and outstanding, respectively. Preferred Stock As of each of September 30, 2018 and December 31, 2017, 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 our Employee Stock Purchase Plan, or ESPP, eligible employees are granted options to purchase shares of our common stock through payroll deductions. The ESPP provides for 18-month offering periods, which include three six-month purchase periods. At the end of each purchase period, employees are able to purchase shares at 85% of the lower of the fair market value of our common stock at the beginning of an offering period or the fair market value of our common stock at the end of the purchase period. For the three and nine months ended September 30, 2018, none and 0.4 million shares of common stock were purchased under the ESPP, respectively. Pursuant to the terms of the ESPP, the number of shares reserved under the ESPP increased by 1.0 million shares on January 1, 2018. As of September 30, 2018, 4.2 million shares of common stock were available for issuance under the ESPP. Stock Option and Grant Plans Our board of directors adopted the 2009 Stock Option and Grant Plan, or the 2009 Plan, in July 2009. The 2009 Plan was terminated in connection with our 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 5.2 million shares on January 1, 2018. As of September 30, 2018, we had 8.6 million shares of common stock available for future grants under the 2014 Plan. On May 6, 2016, the compensation committee of our board of directors granted equity awards representing 1.2 million shares of common stock. These awards were granted outside of the 2014 Plan pursuant to an exemption provided for “employment inducement awards” within the meaning of Section 303A.08 of the New York Stock Exchange Listed Company Manual and accordingly did not require approval from our stockholders. A summary of our share-based award activity for the nine months ended September 30, 2018 is as follows (in thousands, except per share information):
The restricted stock units, or RSUs, forfeited or canceled and unavailable for grant relate to our employment inducement awards. 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. As of September 30, 2018, we had a total of $262.7 million in future expense related to our stock options and RSUs to be recognized over a weighted average period of 2.8 years. Performance Restricted Stock Units During the three months ended September 30, 2018, the compensation committee of our board of directors granted performance-based restricted stock units, or PRSUs, representing 0.2 million shares of common stock, the substantial majority of which were granted in connection with the acquisition of FutureSimple. The PRSUs vest in four semi-annual tranches through March 2021. The PRSUs include a service condition and a performance condition related to the attainment of semi-annual performance targets approved and communicated in advance of each performance period. During the three months ended September 30, 2018, expense recorded related to the PRSUs was immaterial. The total future expense related to the PRSUs will be based on the fair value of the underlying shares on the grant date for each performance tranche. |
Deferred Revenue and Performance Obligations |
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Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Deferred Revenue and Performance Obligations | Costs to Obtain Customer Contracts The balances of deferred costs to obtain customer contracts were $43.4 million and $31.2 million as of September 30, 2018 and December 31, 2017, respectively. Amortization expense for these deferred costs was $5.6 million and $3.7 million for the three months ended September 30, 2018 and 2017, respectively, and $15.1 million and $10.3 million for the nine months ended September 30, 2018 and 2017, respectively. There were no impairment losses related to these deferred costs for the periods presented. Deferred Revenue and Performance Obligations During the three months ended September 30, 2018 and 2017, $102.5 million and $69.0 million of revenue was recognized that was included in the deferred revenue balances at the beginning of each period, respectively. During the nine months ended September 30, 2018 and 2017, $159.3 million and $111.7 million of revenue was recognized that was included in the deferred revenue balances at the beginning of each period, respectively. The aggregate balance of unsatisfied performance obligations as of September 30, 2018 was $359.6 million. We expect to recognize $290.4 million of the balance as revenue in the next 12 months and the remainder thereafter. The aggregate balance of unsatisfied performance obligations represents contracted revenue that has not yet been recognized and does not include contract amounts which are cancelable by the customer and amounts associated with optional renewal periods. |
Net Loss Per Share |
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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):
*Adjusted to reflect the adoption of ASC 606 (see Note 1). The anti-dilutive securities excluded from the shares used to calculate diluted net loss per share are as follows (in thousands):
The shares related to convertible senior notes calculated in the table above are calculated based on the average market price of our common stock for the three months ended September 30, 2018. We expect to settle the principal amount of the convertible senior 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 will have a dilutive impact on diluted net income per share when the average market price of our common stock for a given period exceeds the initial conversion price of $63.07 per share for the convertible senior notes. The convertible senior notes are not convertible as of September 30, 2018. |
Income Taxes |
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Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We reported a benefit from income taxes of $2.3 million and $7.3 million in the three and nine months ended September 30, 2018, respectively, primarily due to the recognition of net income tax benefits of $2.5 million and $8.1 million related to taxable temporary differences of the convertible senior notes and the capped call. We reported a benefit from income taxes of $0.1 million and $0.8 million for the three and nine months ended September 30, 2017, 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. |
Geographic Information |
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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):
*Adjusted to reflect the adoption of ASC 606 (see Note 1). Long-Lived Assets The following table presents our long-lived assets by geographic area (in thousands):
The carrying values of capitalized internal-use software and intangible assets are excluded from the balance of long-lived assets presented in the table above. |
Overview and Basis of Presentation (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Basis of Presentation | 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, as amended by Form 10-K/A, for the year ended December 31, 2017, filed with the SEC on November 5, 2018. There have been no changes to our significant accounting policies described in the Annual Report on Form 10-K that have had a material impact on our condensed consolidated financial statements and related notes, except as described below. Effective January 1, 2018, we adopted the requirements of Accounting Standards Update, or ASU, 2014-09, “Revenue from Contracts with Customers” regarding Accounting Standards Codification, or ASC, Topic 606 and ASU 2016-18, “Statement of Cash Flows - Restricted Cash,” as discussed below. All amounts and disclosures set forth in this Form 10-Q have been updated to comply with the new standards, as indicated by “as adjusted.” The unaudited consolidated balance sheet as of December 31, 2017 included herein was derived from the audited financial statements as of that date, giving effect to the adoption of ASC 606, as discussed below. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly our financial position, results of operations, comprehensive loss, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2018. |
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Use of Estimates | Use of Estimates The preparation of our consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods. Significant items subject to such estimates and assumptions include the fair value of share-based awards, acquired intangible assets, and goodwill as well as unrecognized tax benefits, the useful lives of acquired intangible assets and property and equipment, the capitalization and estimated useful life of capitalized costs to obtain customer contracts and capitalized internal-use software, variable consideration related to revenue recognition, and financial forecasts used in currency hedging. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ from those estimates. |
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Recently Issued and Adopted Accounting Pronouncements | Recently Issued Accounting Pronouncements In February 2016, the Financial Accounting Standards Board, or FASB, issued ASU 2016-02, regarding ASC Topic 842 “Leases,” including subsequent amendments. This new guidance requires lessees to recognize most leases on their balance sheets as right-of-use assets with corresponding lease liabilities and eliminates certain real estate-specific provisions. The new guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We have completed our process to identify our population of lease arrangements and we are nearing the completion of applying the new guidance to each arrangement. We are also in the process of determining the incremental borrowing rate for each arrangement. We plan to adopt utilizing the modified retrospective method of transition. While the adoption remains in progress, we expect that adoption will result in the recognition of right-of-use assets and lease liabilities that were not previously recognized, which will increase total assets and liabilities on our consolidated balance sheet. In August 2017, the FASB issued ASU 2017-12, regarding ASC Topic 815 “Derivatives and Hedging.” This amendment simplifies various aspects of hedge accounting, including the measurement and presentation of hedge ineffectiveness and certain documentation and assessment requirements. The amendment also makes more hedging strategies eligible for hedge accounting. The guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the effect of this standard on our consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income,” which provides for the reclassification of the effect of remeasuring deferred tax balances related to items within accumulated other comprehensive income to retained earnings resulting from the Tax Cuts and Jobs Act, or Tax Act. The guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We do not expect the adoption of this standard to have a material effect on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, regarding ASC Topic 718 “Compensation - Stock Compensation,” which largely aligns the accounting for share-based compensation for non-employees with employees. The guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We do not expect the adoption of this standard to have a material effect on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-08, regarding ASC Topic 958 “Not-for-Profit Entities,” which clarified the guidance on how entities determine whether to account for a transfer of assets as an exchange transaction or a contribution. The guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. We do not expect the adoption of this standard to have a material effect on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, regarding ASC Topic 820 “Fair Value Measurement,” which modifies the disclosure requirements for fair value measurements for certain types of investments. The guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. Early adoption is permitted. We do not expect the adoption of this standard to have a material effect on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, regarding ASC Topic 350-40 “Intangibles - Internal-Use Software,” which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the effect of this standard on our consolidated financial statements. Recently Adopted Accounting Pronouncements In May 2014, the FASB issued new revenue guidance under ASU 2014-09 that provides principles for recognizing revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for the promised goods or services provided to customers. ASC 606 and ASC 340-40 also require the deferral of incremental costs of obtaining contracts with customers and subsequent amortization of those costs over the period of anticipated benefit. Collectively, we refer to this guidance as “ASC 606.” We adopted ASC 606 on January 1, 2018, utilizing the full retrospective method of transition. The adoption resulted in changes to our accounting policies for revenue recognition and incremental costs to acquire contracts, as described below. We applied ASC 606 using the following practical expedients:
The effect of adopting ASC 606 on our 2017 and 2016 revenues was not material. The primary effect relates to the deferral of sales commissions and other incremental costs to acquire contracts, which we historically expensed as incurred. The impact of adoption is summarized in the tables below. Under ASC 606, all incremental costs to acquire contracts are capitalized and amortized on a straight-line basis over the anticipated period of benefit, which we have determined to be three years. In August 2016, the FASB issued ASU 2016-15, regarding ASC Topic 230 “Statement of Cash Flows.” This update addresses eight specific cash flow issues with the objective of reducing diversity in practice. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We adopted this standard in the first quarter of 2018. The adoption did not have an effect on our consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows - Restricted Cash,” which requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. We adopted this standard in the first quarter of 2018 on a retrospective basis, resulting in an immaterial change to our previously reported statement of cash flows for the nine months ended September 30, 2017, which is summarized in the table below. In January 2017, the FASB issued ASU 2017-01, “Business Combinations - Clarifying the Definition of a Business,” which clarifies the definition of a business when evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. We adopted this standard in the first quarter of 2018. The adoption did not have an effect on our consolidated financial statements. In March 2018, the FASB issued ASU 2018-05, which amends ASC Topic 740 “Income Taxes” to conform with SEC Staff Accounting Bulletin 118, issued in December 2017. The guidance was issued to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. The standard is effective upon issuance. We are nearing completion of our analysis of our deferred tax assets and liabilities and our historical foreign earnings as well as potential correlative adjustments. We will finalize our assessment in the fourth quarter of 2018. |
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Revenue Recognition, Costs to Obtain Customer Contracts, Deferred Revenue, Accounts Receivable and Allowance for Doubtful Accounts | Revenue Recognition We generate substantially all of our revenue from subscription services, which are comprised of subscription fees from customer accounts on Zendesk Support and, to a lesser extent, Chat, Talk, Guide, Connect, and Base. In addition, we generate revenue by providing additional features to certain of our subscription plans for a fee that is incremental to the base subscription rate for such plans. Subscription service arrangements are generally non-cancelable and do not provide for refunds to customers in the event of cancellations or any other right of return. We record revenue net of sales or excise taxes. We also derive revenue from implementation, Talk usage, and training services, for which we recognize revenue upon completion. Revenues are recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. We determine revenue recognition through the following steps: •Identification of the contract, or contracts, with a customer •Identification of the performance obligations in the contract •Determination of the transaction price •Allocation of the transaction price to the performance obligations in the contract •Recognition of revenue when, or as, the performance obligations are satisfied Subscription revenue is recognized on a ratable basis over the contractual subscription term of the arrangement beginning on the date that our service is made available to the customer. Payments received in advance of services being rendered are recorded as deferred revenue. In limited circumstances, certain customers have arrangements that provide for a maximum number of users over the subscription term, with usage measured monthly. Incremental fees are incurred when the maximum number of users is exceeded. In determining the transaction price for these arrangements, we evaluate the expected usage pattern to estimate any incremental fees that we are entitled to throughout the subscription term and recognize revenue ratably over the subscription term. In making these assessments, we constrain our estimates based on factors that could lead to a probable reversal of revenue. Certain of our product offerings include service-level agreements warranting defined levels of uptime reliability and performance and permitting 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. Costs to Obtain Customer Contracts Sales commissions and related expenses are considered incremental and recoverable costs of acquiring customer contracts. These costs are capitalized and amortized on a straight-line basis over the anticipated period of benefit, which we have estimated to be three years. We determined the period of benefit by taking into consideration the length of our customer contracts, our technology lifecycle, and other factors. Amortization expense is recorded in sales and marketing expense within our consolidated statement of operations. Deferred Revenue We invoice customers for subscriptions to our products in monthly, quarterly, or annual installments. Deferred revenue consists primarily of customer billings made in advance of performance obligations being satisfied and revenue being recognized, and includes an immaterial amount of billings for subscriptions with customer cancellation rights. The term between invoicing and when payment is due is not significant and we do not provide financing arrangements to customers. Deferred revenue associated with performance obligations that are anticipated to be satisfied, and thus revenue recognized, during the succeeding 12-month period is recorded as current deferred revenue and the remaining portion is recorded as noncurrent deferred revenue. Deferred revenue associated with implementation, Talk usage, and training services was immaterial as of December 31, 2017 and September 30, 2018. We invoice customers based on billing schedules established in our contracts. Accounts receivable are recorded when the right to consideration becomes unconditional. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded at the invoiced amount, net of allowance for doubtful accounts. The allowance is based upon historical loss patterns, the age of each past due invoice, and an evaluation of the potential risk of loss associated with delinquent accounts. Accounts receivable deemed uncollectable are charged against the allowance for doubtful accounts when identified. The balance of accounts receivable also includes contract assets, which are recorded when revenue is recognized in advance of invoicing. |
Overview and Basis of Presentation (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Impact of New Accounting Pronouncements | Select unaudited condensed consolidated balance sheet line items, which reflect the adoption of ASC 606 are as follows (in thousands):
Select unaudited condensed consolidated statement of operations line items, which reflect the adoption of ASC 606 are as follows (in thousands, except per share data):
Select unaudited condensed consolidated statement of cash flows line items, which reflect the adoption of ASC 606 and ASU 2016-18 are as follows (in thousands):
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Business Combinations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Assets Acquired and Liabilities Assumed | Goodwill will not be amortized but instead will be tested for impairment at least annually and more frequently if certain indicators of impairment are present.
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Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
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Schedule of Marketable Securities Classified by Contractual Maturity | The following table classifies our marketable securities by contractual maturity (in thousands):
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Schedule of Derivative Instruments on Consolidated Balance Sheets | The following tables present information about our derivative instruments on our consolidated balance sheets (in thousands):
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Schedule of Derivative Instruments on Statement of Operations | The following table presents information about our derivative instruments on our condensed consolidated statements of operations (in thousands):
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Property and Equipment (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Property and Equipment | Property and equipment, net consists of the following (in thousands):
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Goodwill and Acquired Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2018 are as follows (in thousands):
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Summary of Intangible Assets Acquired | Acquired intangible assets subject to amortization consist of the following (in thousands):
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Summary of Estimated Future Amortization Expense | Estimated future amortization expense as of September 30, 2018 is as follows (in thousands):
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0.25% Convertible Senior Notes and Capped Call (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Carrying Amount of Liability and Equity Component of Convertible Notes | The net impact to our stockholders' equity, included in additional paid-in capital, of the above components of the Notes is as follows (in thousands):
The net carrying amount of the liability component of the Notes is as follows (in thousands):
The net carrying amount of the equity component of the Notes is as follows (in thousands):
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Schedule of Interest Expense | Interest expense related to the Notes is as follows (in thousands):
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Common Stock and Stockholders' Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock Option and RSU Award Activity | A summary of our share-based award activity for the nine months ended September 30, 2018 is as follows (in thousands, except per share information):
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Net Loss Per Share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
*Adjusted to reflect the adoption of ASC 606 (see Note 1). |
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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):
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Geographic Information (Tables) |
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
*Adjusted to reflect the adoption of ASC 606 (see Note 1). |
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Schedule of Long-Lived Assets by Geographic Areas | The following table presents our long-lived assets by geographic area (in thousands):
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Overview and Basis of Presentation - Narrative (Details) |
Sep. 30, 2018 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Amortization period of capitalized contract cost | 3 years |
Overview and Basis of Presentation - Schedule of Cumulative Effects of New Revenue Standard on Balance Sheet (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
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Assets | |||||
Deferred costs | $ 21,183 | $ 15,771 | [1] | ||
Deferred costs, noncurrent | 22,175 | 15,395 | [1] | ||
Liabilities and stockholders’ equity | |||||
Deferred revenue | 222,936 | 173,147 | [1] | ||
Accumulated deficit | $ (495,878) | (398,043) | [1] | ||
As Previously Reported | |||||
Assets | |||||
Deferred costs | 0 | ||||
Deferred costs, noncurrent | 0 | ||||
Liabilities and stockholders’ equity | |||||
Deferred revenue | 174,524 | ||||
Accumulated deficit | (430,586) | ||||
Adjustments | Accounting Standards Update 2014-09 | |||||
Assets | |||||
Deferred costs | 15,771 | ||||
Deferred costs, noncurrent | 15,395 | ||||
Liabilities and stockholders’ equity | |||||
Deferred revenue | (1,377) | ||||
Accumulated deficit | $ 32,543 | ||||
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Overview and Basis of Presentation - Schedule of Cumulative Effects of New Revenue Standard on Income Statement (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||||
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Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
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Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||||||||
Revenue | $ 154,828 | $ 112,265 | [1] | $ 426,501 | $ 308,249 | [1] | ||||||
Operating expenses: | ||||||||||||
Sales and marketing | [2] | 74,270 | 54,383 | [1] | 208,778 | 151,064 | [1] | |||||
Operating loss | (34,201) | (26,567) | [1] | (101,411) | (79,293) | [1] | ||||||
Net loss | $ (34,144) | $ (25,815) | [1],[3] | $ (97,835) | $ (77,163) | [1],[3] | ||||||
Net loss per share, basic and diluted (usd per share) | $ (0.32) | $ (0.26) | [1] | $ (0.93) | $ (0.78) | [1] | ||||||
As Previously Reported | ||||||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||||||||
Revenue | $ 112,786 | $ 307,066 | ||||||||||
Operating expenses: | ||||||||||||
Sales and marketing | 56,778 | 156,707 | ||||||||||
Operating loss | (28,441) | (86,119) | ||||||||||
Net loss | $ (27,689) | $ (83,988) | ||||||||||
Net loss per share, basic and diluted (usd per share) | $ (0.28) | $ (0.85) | ||||||||||
Adjustments | Accounting Standards Update 2014-09 | ||||||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||||||||
Revenue | $ (521) | $ 1,183 | ||||||||||
Operating expenses: | ||||||||||||
Sales and marketing | (2,395) | (5,643) | ||||||||||
Operating loss | 1,874 | 6,826 | ||||||||||
Net loss | $ 1,874 | $ 6,826 | ||||||||||
Net loss per share, basic and diluted (usd per share) | $ 0.02 | $ 0.07 | ||||||||||
|
Overview and Basis of Presentation - Schedule of Cumulative Effects of New Revenue Standard on Cash Flows Statement (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|||||||
Cash flows from operating activities | ||||||||||
Net loss | $ (34,144) | $ (25,815) | [1],[2] | $ (97,835) | $ (77,163) | [1],[2] | ||||
Adjustments to reconcile net loss to net cash provided by operating activities | ||||||||||
Share-based compensation | 86,581 | 62,425 | [2] | |||||||
Amortization of deferred costs | 5,600 | 3,700 | 15,124 | 10,332 | [2] | |||||
Changes in operating assets and liabilities: | ||||||||||
Prepaid expenses and other current assets | (10,167) | (5,116) | [2] | |||||||
Deferred costs | (26,716) | (15,595) | [2] | |||||||
Other assets and liabilities | (8,026) | (5,323) | [2] | |||||||
Deferred revenue | 50,552 | 30,174 | [2] | |||||||
Net cash provided by operating activities | 55,682 | 24,922 | [2] | |||||||
Net increase in cash, cash equivalents and restricted cash | 47,695 | (891) | [2] | |||||||
Cash, cash equivalents and restricted cash at beginning of period | 110,888 | 95,062 | [2] | |||||||
Cash, cash equivalents and restricted cash at end of period | $ 158,583 | 94,171 | [2] | $ 158,583 | 94,171 | [2] | ||||
As Previously Reported | ||||||||||
Cash flows from operating activities | ||||||||||
Net loss | (27,689) | (83,988) | ||||||||
Adjustments to reconcile net loss to net cash provided by operating activities | ||||||||||
Share-based compensation | 62,805 | |||||||||
Amortization of deferred costs | 0 | |||||||||
Changes in operating assets and liabilities: | ||||||||||
Prepaid expenses and other current assets | (5,109) | |||||||||
Deferred costs | 0 | |||||||||
Other assets and liabilities | (5,513) | |||||||||
Deferred revenue | 31,357 | |||||||||
Net cash provided by operating activities | 24,739 | |||||||||
Net increase in cash, cash equivalents and restricted cash | (1,074) | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | 93,677 | |||||||||
Cash, cash equivalents and restricted cash at end of period | 92,603 | 92,603 | ||||||||
Adjustments | Accounting Standards Update 2014-09 | ||||||||||
Cash flows from operating activities | ||||||||||
Net loss | 1,874 | 6,826 | ||||||||
Adjustments to reconcile net loss to net cash provided by operating activities | ||||||||||
Share-based compensation | (380) | |||||||||
Amortization of deferred costs | 10,332 | |||||||||
Changes in operating assets and liabilities: | ||||||||||
Prepaid expenses and other current assets | (7) | |||||||||
Deferred costs | (15,595) | |||||||||
Other assets and liabilities | 190 | |||||||||
Deferred revenue | (1,183) | |||||||||
Net cash provided by operating activities | 183 | |||||||||
Net increase in cash, cash equivalents and restricted cash | 183 | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | 1,385 | |||||||||
Cash, cash equivalents and restricted cash at end of period | $ 1,568 | $ 1,568 | ||||||||
|
Business Combinations - Narrative (Details) - USD ($) $ in Millions |
Sep. 10, 2018 |
Apr. 27, 2017 |
---|---|---|
FutureSimple Inc. | ||
Business Acquisition [Line Items] | ||
Cash consideration | $ 81.0 | |
Transaction costs associated with transaction | $ 1.6 | |
FutureSimple Inc. | Developed technology | ||
Business Acquisition [Line Items] | ||
Acquired intangible assets weighted average useful life | 6 years 6 months | |
FutureSimple Inc. | Customer relationships | ||
Business Acquisition [Line Items] | ||
Acquired intangible assets weighted average useful life | 5 years | |
FutureSimple Inc. | Backlog | ||
Business Acquisition [Line Items] | ||
Acquired intangible assets weighted average useful life | 2 years | |
Outbound Solutions Inc | ||
Business Acquisition [Line Items] | ||
Cash consideration | $ 16.6 | |
Outbound Solutions Inc | Developed technology | ||
Business Acquisition [Line Items] | ||
Acquired intangible assets weighted average useful life | 6 years 6 months | |
Outbound Solutions Inc | Customer relationships | ||
Business Acquisition [Line Items] | ||
Acquired intangible assets weighted average useful life | 3 years 6 months |
Business Combinations - Summary of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Sep. 10, 2018 |
Dec. 31, 2017 |
Apr. 27, 2017 |
---|---|---|---|---|
Business Acquisition [Line Items] | ||||
Goodwill | $ 112,225 | $ 59,131 | ||
FutureSimple Inc. | ||||
Business Acquisition [Line Items] | ||||
Net tangible liabilities acquired | $ (3,371) | |||
Goodwill | 53,094 | |||
Total purchase price | 81,023 | |||
Outbound Solutions Inc | ||||
Business Acquisition [Line Items] | ||||
Net tangible assets acquired | $ 96 | |||
Net deferred tax liability recognized | (492) | |||
Goodwill | 13,350 | |||
Total purchase price | 16,564 | |||
Developed technology | FutureSimple Inc. | ||||
Business Acquisition [Line Items] | ||||
Identifiable intangible assets: | 19,000 | |||
Developed technology | Outbound Solutions Inc | ||||
Business Acquisition [Line Items] | ||||
Identifiable intangible assets: | 3,200 | |||
Customer relationships | FutureSimple Inc. | ||||
Business Acquisition [Line Items] | ||||
Identifiable intangible assets: | 10,800 | |||
Customer relationships | Outbound Solutions Inc | ||||
Business Acquisition [Line Items] | ||||
Identifiable intangible assets: | $ 410 | |||
Backlog | FutureSimple Inc. | ||||
Business Acquisition [Line Items] | ||||
Identifiable intangible assets: | $ 1,500 |
Financial Instruments - Financial Assets Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Included in marketable securities | $ 653,948 | $ 235,023 |
Fair Value Measurements, Recurring | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 730,910 | 272,554 |
Included in cash and cash equivalents | 76,962 | 37,531 |
Included in marketable securities | 653,948 | 235,023 |
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 | 443,934 | 149,069 |
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 | 110,786 | 27,738 |
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 | 56,031 | 32,832 |
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 | 51,730 | 19,622 |
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 | 50,690 | 28,382 |
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 | 15,489 | 14,911 |
Fair Value Measurements, Recurring | Certificates of deposit | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 2,250 | |
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 | 56,031 | 32,832 |
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 | 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 | Money market funds | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 56,031 | 32,832 |
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 | 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 | 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 | Certificates of deposit | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 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 | 674,879 | 239,722 |
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 | 443,934 | 149,069 |
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 | 110,786 | 27,738 |
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 | Commercial paper | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 51,730 | 19,622 |
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 | 50,690 | 28,382 |
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 | 15,489 | $ 14,911 |
Fair Value Measurements, Recurring | Level 2 | Certificates of deposit | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | $ 2,250 |
Financial Instruments - Narrative (Details) - USD ($) |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Fair Value Disclosures [Abstract] | ||
Gross unrealized gain (loss) | $ 0 | $ 0 |
Unrealized losses recognized by securities in continuous loss position for twelve months or longer | 0 | 0 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Cash collateral posted | 0 | 0 |
Shares related to convertible senior notes | Convertible Debt | Level 2 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value | 726,300,000 | |
Foreign currency forward contracts | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Unrealized loss in accumulated other comprehensive loss | 2,500,000 | |
Reclassification of net loss | 2,700,000 | |
Notional value | $ 179,900,000 | $ 139,700,000 |
Foreign currency forward contracts | Maximum | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative, maturity | 15 months |
Financial Instruments - Marketable Securities by Contractual Maturity (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
|||
---|---|---|---|---|---|
Fair Value Disclosures [Abstract] | |||||
Due in one year or less | $ 293,598 | $ 137,576 | [1] | ||
Due after one year | 360,350 | 97,447 | [1] | ||
Total | $ 653,948 | $ 235,023 | |||
|
Financial Instruments - Schedule of Derivative Instruments on Consolidated Balance Sheets (Details) - Designated as Hedging Instrument - Level 2 - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Derivatives Fair Value [Line Items] | ||
Asset Derivatives | $ 1,731 | $ 2,359 |
Liability Derivatives | 4,593 | 1,220 |
Foreign currency forward contracts | Other current assets | ||
Derivatives Fair Value [Line Items] | ||
Asset Derivatives | 1,731 | 2,359 |
Foreign currency forward contracts | Accrued liabilities | ||
Derivatives Fair Value [Line Items] | ||
Liability Derivatives | $ 4,593 | $ 1,220 |
Financial Instruments - Schedule of Derivative Instruments on Statement of Operations (Details) - Designated as Hedging Instrument - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Derivative Instruments Gain Loss [Line Items] | ||||
Gain (Loss) Recognized in AOCI | $ (930) | $ 629 | $ (3,729) | $ 3,117 |
Gain (Loss) Reclassified from AOCI into Earnings | (1,348) | 285 | (273) | (575) |
Revenue, cost of revenue, operating expenses | Foreign currency forward contracts | ||||
Derivative Instruments Gain Loss [Line Items] | ||||
Gain (Loss) Recognized in AOCI | (930) | 629 | (3,729) | 3,117 |
Gain (Loss) Reclassified from AOCI into Earnings | $ (1,348) | $ 285 | $ (273) | $ (575) |
Costs to Obtain Customer Contracts (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
||||
Revenue from Contract with Customer [Abstract] | ||||||||
Deferred costs to obtain customer contracts | $ 43,400,000 | $ 43,400,000 | $ 31,200,000 | |||||
Amortization of deferred costs | 5,600,000 | $ 3,700,000 | 15,124,000 | $ 10,332,000 | [1] | |||
Impairment related to deferred costs | $ 0 | $ 0 | $ 0 | $ 0 | ||||
|
Property and Equipment - Components of Property and Equipment (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
|||
---|---|---|---|---|---|
Property Plant And Equipment [Line Items] | |||||
Total | $ 163,066 | $ 134,045 | |||
Less: accumulated depreciation and amortization | (90,731) | (74,888) | |||
Property and equipment, net | 72,335 | 59,157 | [1] | ||
Leasehold improvements | |||||
Property Plant And Equipment [Line Items] | |||||
Total | 51,049 | 28,113 | |||
Capitalized internal-use software | |||||
Property Plant And Equipment [Line Items] | |||||
Total | 36,348 | 31,593 | |||
Hosting equipment | |||||
Property Plant And Equipment [Line Items] | |||||
Total | 34,104 | 37,222 | |||
Computer equipment and licensed software and patents | |||||
Property Plant And Equipment [Line Items] | |||||
Total | 19,949 | 16,316 | |||
Furniture and fixtures | |||||
Property Plant And Equipment [Line Items] | |||||
Total | 11,136 | 9,581 | |||
Construction in progress | |||||
Property Plant And Equipment [Line Items] | |||||
Total | $ 10,480 | $ 11,220 | |||
|
Property and Equipment - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Property, Plant and Equipment [Abstract] | |||||
Depreciation expense | $ 5.8 | $ 5.3 | $ 18.6 | $ 15.1 | |
Amortization expense of capitalized internal-use software | 1.5 | $ 1.8 | 4.4 | $ 6.0 | |
Impairment loss related to internal-use software | 0.0 | 2.0 | |||
Carrying value of capitalized internal-use software | 19.0 | 19.0 | $ 17.7 | ||
Capitalized internal-use software included in construction in progress | $ 8.7 | $ 8.7 | $ 8.7 |
Goodwill and Acquired Intangible Assets - Schedule of Carrying Amount of Goodwill (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Goodwill [Roll Forward] | |
Balance as of December 31, 2017 | $ 59,131 |
Goodwill acquired | 53,094 |
Balance as of September 30, 2018 | $ 112,225 |
Goodwill and Acquired Intangible Assets - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 1.2 | $ 1.0 | $ 2.5 | $ 3.0 |
Goodwill and Acquired Intangible Assets - Acquired Intangible Assets Subject to Amortization (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Finite Lived Intangible Assets [Line Items] | ||
Cost | $ 44,210 | $ 19,410 |
Accumulated Amortization | (7,549) | (11,384) |
Foreign Currency Translation Adjustments | (123) | |
Net | 36,661 | 7,903 |
Developed technology | ||
Finite Lived Intangible Assets [Line Items] | ||
Cost | 31,000 | 17,200 |
Accumulated Amortization | (6,807) | (9,835) |
Foreign Currency Translation Adjustments | (93) | |
Net | $ 24,193 | $ 7,272 |
Weighted Average Remaining Useful Life | 5 years 8 months 12 days | 3 years 8 months 12 days |
Customer relationships | ||
Finite Lived Intangible Assets [Line Items] | ||
Cost | $ 11,710 | $ 2,210 |
Accumulated Amortization | (679) | (1,549) |
Foreign Currency Translation Adjustments | (30) | |
Net | $ 11,031 | $ 631 |
Weighted Average Remaining Useful Life | 4 years 9 months 18 days | 2 years 4 months 24 days |
Backlog | ||
Finite Lived Intangible Assets [Line Items] | ||
Cost | $ 1,500 | |
Accumulated Amortization | (63) | |
Net | $ 1,437 | |
Weighted Average Remaining Useful Life | 1 year 10 months 24 days |
Goodwill and Acquired Intangible Assets - Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2018 | $ 2,144 | |
2019 | 8,504 | |
2020 | 6,682 | |
2021 | 5,572 | |
2022 | 5,572 | |
2023 and after | 8,187 | |
Net | $ 36,661 | $ 7,903 |
0.25% Convertible Senior Notes and Capped Call - Narrative (Details) $ / shares in Units, shares in Millions |
3 Months Ended | 9 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 15, 2018
USD ($)
day
$ / shares
shares
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
[2] |
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
Dec. 31, 2017
USD ($)
|
||||||
Debt Instrument [Line Items] | ||||||||||||
Proceeds from issuance of convertible senior notes, net of issuance costs | $ 561,439,000 | $ 0 | [1] | |||||||||
Income tax benefit related to temporary differences | $ 2,500,000 | 8,100,000 | ||||||||||
Income tax expense (benefit) related to estimated effective tax rate | 366,000 | $ 156,000 | $ (716,000) | $ 1,737,000 | [2] | |||||||
Convertible Debt | Shares related to convertible senior notes | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Aggregate principal amount | $ 500,000,000 | |||||||||||
Interest rate | 0.25% | |||||||||||
Additional aggregate principal amount | $ 75,000,000 | |||||||||||
Proceeds from issuance of convertible senior notes, net of issuance costs | $ 561,400,000 | |||||||||||
Initial conversion rate of common stock | 0.0158554 | |||||||||||
Conversion price (usd per share) | $ / shares | $ 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 | $ 125,000,000 | $ 124,976,000 | $ 124,976,000 | $ 0 | ||||||||
Effective interest rate | 5.26% | 5.26% | ||||||||||
Debt issuance costs, gross | $ 13,600,000 | $ 13,600,000 | ||||||||||
Issuance costs attributable to the liability component | $ 10,600,000 | 9,755,000 | 9,755,000 | $ 0 | ||||||||
Capped calls, initial cap price (in usd per share) | $ / shares | $ 95.20 | |||||||||||
Number of shares covered by cap call (in shares) | shares | 9.1 | |||||||||||
Cost incurred related to capped calls | $ (63,900,000) | (44,304,000) | ||||||||||
Net deferred tax liability related to cap call | $ 13,800,000 | $ 13,784,000 | $ 13,784,000 | |||||||||
|
0.25% Convertible Senior Notes and Capped Call - Schedule of Net Carrying Amount of Liability and Equity Component of Convertible Notes (Details) - Convertible Debt - Shares related to convertible senior notes - USD ($) $ in Thousands |
Sep. 30, 2018 |
Mar. 15, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Net Carrying Amount of Liability Component of Convertible Notes [Abstract] | |||
Principal | $ 575,000 | $ 0 | |
Unamortized Debt Discount | (113,170) | 0 | |
Unamortized issuance costs | (9,755) | $ (10,600) | 0 |
Net carrying amount | 452,075 | 0 | |
Net Carrying Amount of Equity Component of Convertible Notes [Abstract] | |||
Debt Discount for Conversion Option | 124,976 | $ 125,000 | 0 |
Issuance costs | (2,948) | 0 | |
Net carrying amount | $ 122,028 | $ 0 |
0.25% Convertible Senior Notes and Capped Call - Schedule of Interest Expense (Details) - Convertible Debt - Shares related to convertible senior notes - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Debt Instrument [Line Items] | ||||
Contractual interest expense | $ 360 | $ 0 | $ 762 | $ 0 |
Amortization of Debt Discount | 5,603 | 0 | 11,806 | 0 |
Amortization of issuance costs | 412 | 0 | 859 | 0 |
Total interest expense | $ 6,375 | $ 0 | $ 13,427 | $ 0 |
0.25% Convertible Senior Notes and Capped Call - Summary of Impact to Stockholder's Equity (Details) - Convertible Debt - Shares related to convertible senior notes - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Mar. 15, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Debt Instrument [Line Items] | |||
Conversion Option | $ 125,000 | $ 124,976 | $ 0 |
Purchase of Capped Calls | (63,940) | ||
Issuance costs | (2,948) | $ 0 | |
Net deferred tax liability | (13,800) | (13,784) | |
Net impact to stockholder's equity | $ 63,900 | $ 44,304 |
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Oct. 31, 2018 |
|
Commitments and Contingencies Disclosure [Abstract] | |||||
Rent expense | $ 5.2 | $ 2.8 | $ 14.0 | $ 8.3 | |
Subsequent Event | |||||
Other Commitments [Line Items] | |||||
Minimum commitment | $ 255.0 |
Common Stock and Stockholders' Equity - Narrative (Details) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jan. 01, 2018
shares
|
May 06, 2016
shares
|
Sep. 30, 2018
USD ($)
$ / shares
shares
|
Sep. 30, 2018
USD ($)
offering_period
$ / shares
shares
|
Dec. 31, 2017
$ / 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 (usd per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | ||
Common stock, shares issued (in shares) | 106,600,000 | 106,600,000 | 106,600,000 | ||
Common stock, shares outstanding (in shares) | 103,100,000 | 103,100,000 | 103,100,000 | ||
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 | ||
Increase in authorized shares (in shares) | 5,156,000 | ||||
Shares of common stock available for issuance (in shares) | 8,644,000 | 8,644,000 | 8,001,000 | ||
Stock options granted (in shares) | 1,200,000 | 756,000 | |||
Future period share-based compensation expense | $ | $ 262.7 | $ 262.7 | |||
Future period share-based compensation expense, period to recognized | 2 years 9 months 29 days | ||||
Employee Stock Option | |||||
Class Of Stock [Line Items] | |||||
Offering period | 18 months | ||||
Number of offering periods | offering_period | 3 | ||||
Length of purchase period | 6 months | ||||
Performance-Based Restricted Stock Units | |||||
Class Of Stock [Line Items] | |||||
Number of vesting periods | 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) | 5,200,000.0 | ||||
Shares of common stock available for issuance (in shares) | 8,600,000 | 8,600,000 | |||
PSU Retention Plan | Performance-Based Restricted Stock Units | |||||
Class Of Stock [Line Items] | |||||
Shares granted (in shares) | 200,000 | ||||
Employee Stock Purchase Plan | |||||
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% | ||||
Common shares purchased (in shares) | 0 | 400,000 | |||
Increase in authorized shares (in shares) | 1,000,000.0 | ||||
Shares of common stock available for issuance (in shares) | 4,200,000 | 4,200,000 |
Common Stock and Stockholders' Equity - Summary of Stock Option and RSU Award Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
May 06, 2016 |
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Shares Available for Grant | |||
Outstanding at beginning of period (in shares) | 8,001 | ||
Increase in authorized shares (in shares) | 5,156 | ||
Stock options granted (in shares) | (756) | ||
RSUs granted (in shares) | (4,311) | ||
Stock options forfeited or canceled (in shares) | 68 | ||
RSUs forfeited or canceled (in shares) | 710 | ||
Outstanding at end of period (in shares) | 8,644 | 8,001 | |
Number of Shares | |||
Balance at the beginning of the period (in shares) | 6,239 | ||
Stock options granted (in shares) | 1,200 | 756 | |
Stock options exercised (in shares) | (861) | ||
Stock options forfeited or canceled (in shares) | (68) | ||
Balance at the end of the period (in shares) | 6,066 | 6,239 | |
Weighted-Average Exercise Price | |||
Balance at the beginning of the period (usd per share) | $ 17.31 | ||
Stock options granted (usd per share) | 42.08 | ||
Stock options exercised (usd per share) | 15.39 | ||
Stock options forfeited or canceled (usd per share) | 28.61 | ||
Balance at the end of the period (usd per share) | $ 20.54 | $ 17.31 | |
Weighted Average Remaining Contractual Term | |||
Weighted Average Remaining Contractual Term | 6 years 9 months 21 days | 7 years 1 month 9 days | |
Aggregate Intrinsic Value | |||
Aggregate Intrinsic Value | $ 306,172 | $ 103,380 | |
RSUs Outstanding | |||
Outstanding RSUs | |||
Balance at the beginning of the period (in shares) | 5,827 | ||
RSUs granted (in shares) | 4,311 | ||
RSUs vested (in shares) | (2,255) | ||
RSUs forfeited or canceled (in shares) | (710) | ||
RSUs forfeited and unavailable for grant (in shares) | (22) | ||
Balance at the end of the period (in shares) | 7,151 | 5,827 | |
Weighted-Average Grant Date Fair Value | |||
Balance at the beginning of the period (usd per share) | $ 25.00 | ||
Weighted average grant date fair value, RSUs granted (usd per share) | 42.32 | ||
Weighted average grant date fair value, RSUs vested (usd per share) | 26.20 | ||
Weighted average grant date fair value, RSUs forfeited or canceled (usd per share) | 29.15 | ||
Weighted average grant date fair value, forfeited and unavailable for grant (usd per share) | 23.44 | ||
Balance at the end of the period (usd per share) | $ 34.65 | $ 25.00 | |
Performance-Based Restricted Stock Units | |||
Shares Available for Grant | |||
Stock options granted (in shares) | (224) |
Deferred Revenue and Performance Obligations - Deferred Revenue (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Revenue from Contract with Customer [Abstract] | ||||
Revenue recognized and included in deferred revenue | $ 102.5 | $ 69.0 | $ 159.3 | $ 111.7 |
Deferred Revenue and Performance Obligations - Performance Obligations (Details) $ in Millions |
Sep. 30, 2018
USD ($)
|
---|---|
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 359.6 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 290.4 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 1 year |
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, 2018 |
Sep. 30, 2017 |
[1] | Sep. 30, 2018 |
Sep. 30, 2017 |
[1] | |||||
Earnings Per Share [Abstract] | ||||||||||
Net loss | $ (34,144) | $ (25,815) | [2] | $ (97,835) | $ (77,163) | [2] | ||||
Weighted-average shares used to compute basic and diluted net loss per share | 106,143 | 100,659 | 104,954 | 99,203 | ||||||
Net loss per share, basic and diluted (usd per share) | $ (0.32) | $ (0.26) | $ (0.93) | $ (0.78) | ||||||
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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, 2018 |
Sep. 30, 2017 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share amount (in shares) | 13,606 | 13,952 |
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) | 6,344 | 7,488 |
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) | 7,151 | 6,464 |
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) | 111 | 0 |
Net Loss Per Share - Narrative (Details) |
Mar. 15, 2018
$ / shares
|
---|---|
Convertible Debt | Shares related to convertible senior notes | |
Debt Instrument [Line Items] | |
Conversion price (usd per share) | $ 63.07 |
Income Taxes - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
[1] | Sep. 30, 2018 |
Sep. 30, 2017 |
[1] | ||||
Income Tax Disclosure [Abstract] | |||||||||
Provision for (benefit from) income taxes | $ (2,334) | [1] | $ (133) | $ (7,291) | $ (785) | ||||
Income tax benefit related to temporary differences | $ 2,500 | $ 8,100 | |||||||
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Geographic Information - Narrative (Details) |
9 Months Ended |
---|---|
Sep. 30, 2018
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |
Geographic Information - Schedule of Revenue by Geographic Areas (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Revenue | $ 154,828 | $ 112,265 | $ 426,501 | $ 308,249 |
United States | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Revenue | 78,848 | 59,181 | 220,221 | 164,613 |
EMEA | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Revenue | 45,927 | 32,297 | 125,564 | 87,643 |
APAC | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Revenue | 18,107 | 12,770 | 48,214 | 33,514 |
Other | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Revenue | $ 11,946 | $ 8,017 | $ 32,502 | $ 22,479 |
Geographic Information - Schedule of Long-Lived Assets by Geographic Areas (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Long-lived assets | $ 53,316 | $ 41,369 |
United States | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Long-lived assets | 27,358 | 23,609 |
Republic of Ireland | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Long-lived assets | 15,428 | 5,019 |
Other EMEA | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Long-lived assets | 2,816 | 5,007 |
EMEA | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Long-lived assets | 18,244 | 10,026 |
APAC | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Long-lived assets | $ 7,714 | $ 7,734 |
Label | Element | Value | ||
---|---|---|---|---|
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | $ 648,000 | [1] | |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | 599,000 | ||
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | 920,000 | [1] | |
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | $ 826,000 | ||
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