ZENDESK, INC., 10-Q filed on 11/3/2017
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2017
Oct. 31, 2017
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Sep. 30, 2017 
 
Document Fiscal Year Focus
2017 
 
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 
 
Entity Common Stock, Shares Outstanding
 
101,507,140 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Current assets:
 
 
Cash and cash equivalents
$ 92,603 
$ 93,677 
Marketable securities
133,959 
131,190 
Accounts receivable, net of allowance for doubtful accounts of $751 and $1,269 as of September 30, 2017 and December 31, 2016, respectively
51,465 
37,343 
Prepaid expenses and other current assets
24,318 
17,608 
Total current assets
302,345 
279,818 
Marketable securities, noncurrent
90,263 
75,168 
Property and equipment, net
59,600 
62,731 
Goodwill and intangible assets, net
67,779 
53,296 
Other assets
9,350 
4,272 
Total assets
529,337 
475,285 
Current liabilities:
 
 
Accounts payable
11,212 
4,555 
Accrued liabilities
21,588 
19,106 
Accrued compensation and related benefits
26,325 
20,281 
Deferred revenue
154,163 
123,276 
Total current liabilities
213,288 
167,218 
Deferred revenue, noncurrent
1,727 
1,257 
Other liabilities
8,152 
7,382 
Total liabilities
223,167 
175,857 
Commitments and contingencies (Note 6)
   
   
Stockholders’ equity:
 
 
Preferred stock
Common stock
1,010 
971 
Additional paid-in capital
711,301 
624,026 
Accumulated other comprehensive loss
(2,205)
(5,197)
Accumulated deficit
(403,936)
(319,720)
Treasury stock, at cost (none and 0.5 million shares as of September 30, 2017 and December 31, 2016, respectively)
(652)
Total stockholders’ equity
306,170 
299,428 
Total liabilities and stockholders’ equity
$ 529,337 
$ 475,285 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Share data in Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Statement of Financial Position [Abstract]
 
 
Allowance for doubtful accounts
$ 751 
$ 1,269 
Treasury stock, shares (in shares)
0.5 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Income Statement [Abstract]
 
 
 
 
Revenue
$ 112,786 
$ 80,717 
$ 307,066 
$ 223,376 
Cost of revenue
33,693 1
23,866 1
92,464 1
68,318 1
Gross profit
79,093 
56,851 
214,602 
155,058 
Operating expenses:
 
 
 
 
Research and development
29,358 1
22,953 1
84,512 1
66,683 1
Sales and marketing
56,778 1
43,899 1
156,707 1
119,421 1
General and administrative
21,398 1
16,212 1
59,502 1
48,149 1
Total operating expenses
107,534 1
83,064 1
300,721 
234,253 1
Operating loss
(28,441)
(26,213)
(86,119)
(79,195)
Other income, net
619 
681 
1,345 
745 
Loss before provision for (benefit from) income taxes
(27,822)
(25,532)
(84,774)
(78,450)
Provision for (benefit from) income taxes
(133)
294 
(786)
800 
Net loss
$ (27,689)
$ (25,826)
$ (83,988)
$ (79,250)
Net loss per share, basic and diluted (usd per share)
$ (0.28)
$ (0.27)
$ (0.85)
$ (0.86)
Weighted-average shares used to compute net loss per share, basic and diluted (in shares)
100,659 
94,085 
99,203 
92,274 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Share-based compensation expense
 
 
$ 62,805 
$ 56,337 
Cost of revenue
 
 
 
 
Share-based compensation expense
2,408 
1,919 
6,668 
5,355 
Research and development
 
 
 
 
Share-based compensation expense
7,776 
7,172 
22,273 
20,548 
Sales and marketing
 
 
 
 
Share-based compensation expense
6,716 
6,657 
18,362 
17,780 
General and administrative
 
 
 
 
Share-based compensation expense
$ 5,619 
$ 4,247 
$ 15,502 
$ 12,654 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net loss
$ (27,689)
$ (25,826)
$ (83,988)
$ (79,250)
Other comprehensive gain, before tax:
 
 
 
 
Net change in unrealized gain (loss) on available-for-sale investments
80 
(35)
213 
80 
Foreign currency translation gain (loss)
(227)
824 
570 
Net change in unrealized gain (loss) on derivative instruments
344 
416 
3,692 
139 
Other comprehensive gain, before tax
424 
154 
4,729 
789 
Tax effect
(156)
(61)
(1,737)
(295)
Other comprehensive gain, net of tax
268 
93 
2,992 
494 
Comprehensive loss
$ (27,421)
$ (25,733)
$ (80,996)
$ (78,756)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Cash flows from operating activities
 
 
Net loss
$ (83,988)
$ (79,250)
Adjustments to reconcile net loss to net cash provided by operating activities
 
 
Depreciation and amortization
24,263 
20,000 
Share-based compensation
62,805 
56,337 
Excess tax benefit from share-based award activity
(133)
Other
380 
1,219 
Changes in operating assets and liabilities:
 
 
Accounts receivable
(15,039)
(11,782)
Prepaid expenses and other current assets
(5,109)
(7,401)
Other assets and liabilities
(5,513)
(1,829)
Accounts payable
7,237 
(2,220)
Accrued liabilities
6,843 
2,645 
Accrued compensation and related benefits
1,503 
812 
Deferred revenue
31,357 
25,596 
Net cash provided by operating activities
24,739 
3,994 
Cash flows from investing activities
 
 
Purchases of property and equipment
(13,334)
(12,494)
Internal-use software development costs
(5,237)
(4,313)
Purchases of marketable securities
(135,279)
(216,640)
Proceeds from maturities of marketable securities
88,960 
23,971 
Proceeds from sale of marketable securities
28,144 
39,244 
Cash paid for the acquisition of Outbound, net of cash acquired
(16,470)
Net cash used in investing activities
(53,216)
(170,232)
Cash flows from financing activities
 
 
Proceeds from exercise of employee stock options
18,550 
19,886 
Proceeds from employee stock purchase plan
10,980 
8,704 
Taxes paid related to net share settlement of share-based awards
(2,415)
(626)
Principal payment on debt
(323)
Excess tax benefit from share-based award activity
133 
Net cash provided by financing activities
27,115 
27,774 
Effect of exchange rate changes on cash and cash equivalents
288 
(173)
Net decrease in cash and cash equivalents
(1,074)
(138,637)
Cash and cash equivalents at beginning of period
93,677 
216,226 
Cash and cash equivalents at end of period
92,603 
77,589 
Supplemental cash flow data:
 
 
Cash paid for income taxes and interest
1,532 
968 
Non-cash investing and financing activities:
 
 
Share-based compensation capitalized in internal-use software development costs
1,984 
1,761 
Balance of property and equipment in accounts payable and accrued expenses
1,384 
2,466 
Property and equipment acquired through tenant improvement allowances
437 
64 
Vesting of early exercised stock options
$ 317 
$ 509 
Overview and Basis of Presentation
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 for the year ended December 31, 2016, filed with the SEC on February 27, 2017. 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.
In the first quarter of 2017, we changed our accounting policy for share-based compensation to recognize forfeitures as they occur, as permitted by Accounting Standards Update, or ASU, 2016-09. Refer to Recently Adopted Accounting Pronouncements below for a more detailed discussion.
The consolidated balance sheet as of December 31, 2016 included herein was derived from the audited financial statements as of that date. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly our financial position, results of operations, comprehensive loss, 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, 2017.
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, goodwill and unrecognized tax benefits, the useful lives of acquired intangible assets and property and equipment, the capitalization and estimated useful life of capitalized internal-use software, 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, 2017, 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, 2017 or 2016.
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board, or the FASB, issued new revenue guidance that provides principles for recognizing revenue to which an entity expects to be entitled for the transfer of promised goods or services to customers. The guidance also requires the deferral of incremental costs to acquire contracts with customers. As currently issued and amended, the new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, though early adoption is permitted for annual reporting periods beginning after December 15, 2016. The guidance may be applied retrospectively to each prior period presented (full retrospective method), or with the cumulative effect recognized as of the date of initial adoption (modified retrospective method).

We currently intend to adopt using the full retrospective method; however, our decision has not been finalized. We have completed a preliminary assessment to determine the effect of adoption on our existing revenue arrangements and are nearing final conclusions. We are continuing to progress in the implementation of our new revenue recognition systems. As a result of adoption, we also expect to capitalize a significant portion of our sales commissions and other incremental costs to acquire contracts, which we historically expensed as incurred, resulting in an increase in deferred costs recognized on our balance sheet. We have not yet concluded the useful life of our capitalized costs, which will affect the classification and magnitude of the deferred costs at each reporting period. We are nearing the completion of our analysis to quantify the total effect of adoption on our consolidated financial statements. To meet the incremental disclosure requirements of the new guidance, we are also developing processes that will enable our ability to disclose backlog.
In February 2016, the FASB issued ASU 2016-02, regarding Accounting Standards Codification, or ASC, Topic 842 “Leases.” This new standard requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets 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 are currently evaluating the effect of this standard on our consolidated financial statements.
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 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.
Recently Adopted Accounting Pronouncements
In March 2016, the FASB issued ASU 2016-09, regarding ASC Topic 718 “Compensation - Stock Compensation. This amendment changes certain aspects of accounting for share-based awards to employees, including the recognition of income tax effects of awards when the awards vest or are settled, requirements on net share settlement to cover tax withholding, and accounting for forfeitures. We adopted the standard in the first quarter of 2017.
As required by the new standard, we now recognize excess tax effects from share-based awards as a component of provision for income taxes in our statement of operations when awards vest or are settled. Upon adoption, we recorded a deferred tax asset of $52.8 million to reflect, on a modified retrospective basis, the previously unrecognized excess tax benefits; however, the deferred tax asset was fully offset by a valuation allowance, resulting in no impact to our consolidated financial statements. In our statement of cash flows, we no longer classify excess tax benefits as a reduction from operating cash flows. This change was made prospectively beginning with the quarter ended March 31, 2017.
We also elected to account for forfeitures as they occur; therefore, share-based compensation expense for the three and nine months ended September 30, 2017 has been calculated based on actual forfeitures in our consolidated statement of operations, rather than our previous approach, which was net of estimated forfeitures. The cumulative-effect adjustment of this change on a modified retrospective basis was not material. Share-based compensation expense for the three and nine months ended September 30, 2016 was recorded net of estimated forfeitures.

In October 2016, the FASB issued ASU 2016-16, “Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory,” which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The new guidance is effective for annual reporting periods beginning after December 15, 2017. Early adoption is permitted as of the beginning of an annual reporting period. The new standard must be adopted using a modified retrospective basis, with the cumulative effect recognized as of the date of adoption. We early adopted the standard in the first quarter of 2017. Upon adoption, we recorded a deferred tax asset of $6.2 million to reflect the previously unrecognized tax benefits; however, the deferred tax asset was fully offset by a valuation allowance, resulting in no impact to our consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09, regarding ASC Topic 718 “Compensation - Stock Compensation: Scope of Modification Accounting.” This amendment clarified what changes to terms or conditions of share-based awards require an entity to apply modification accounting. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We early adopted this standard in the second quarter of 2017 on a prospective basis, as permitted by the standard. The adoption did not have a material effect on our consolidated financial statements.
Business Combination
Business Combination
Business Combination
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.
As of September 30, 2017, we finalized our purchase accounting for the acquisition. 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.
Net tangible assets acquired
$
96

Net deferred tax liability recognized
(492
)
Identifiable intangible assets:
 
Developed technology
3,200

Customer relationships
410

Goodwill
13,350

Total purchase price
$
16,564



The developed technology and customer relationship 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
Financial Instruments
Financial Instruments
Investments
The following tables present information about our financial assets measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 based on the three-tier fair value hierarchy (in thousands):
 
 
Fair Value Measurement at
September 30, 2017
Level 1
 
Level 2
 
Total
Description
 
 
 
 
 
Corporate bonds
$

 
$
152,888

 
152,888

U.S. treasury securities

 
28,434

 
28,434

Asset-backed securities

 
24,471

 
24,471

Commercial paper

 
15,397

 
15,397

Money market funds
12,354

 

 
12,354

Agency securities

 
8,532

 
8,532

Total
$
12,354

 
$
229,722

 
$
242,076

Included in cash and cash equivalents
 
 
 
 
$
17,854

Included in marketable securities
 
 
 
 
$
224,222

 
Fair Value Measurement at
December 31, 2016
Level 1
 
Level 2
 
Total
Description
 
 
 
 
 
Corporate bonds
$

 
$
124,930

 
$
124,930

Asset-backed securities

 
32,567

 
32,567

U.S. treasury securities

 
30,585

 
30,585

Commercial paper

 
9,787

 
9,787

Agency securities

 
8,489

 
8,489

Money market funds
3,545

 
$

 
$
3,545

Total
$
3,545

 
$
206,358

 
$
209,903

Included in cash and cash equivalents
 
 
 
 
$
3,545

Included in marketable securities
 
 
 
 
$
206,358


 
As of September 30, 2017 and December 31, 2016, 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, 2017. Gross unrealized gains and losses for cash equivalents and marketable securities as of September 30, 2017 and December 31, 2016 were not material. Unrealized losses for securities that have been in an unrealized loss position for more than 12 months as of September 30, 2017 and December 31, 2016 were not material.
The following table classifies our marketable securities by contractual maturity as of September 30, 2017 and December 31, 2016 (in thousands):
 
 
September 30,
2017
 
December 31,
2016
Due in one year or less
$
133,959

 
$
131,190

Due after one year
90,263

 
75,168

Total
$
224,222

 
$
206,358


 
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 for subscriptions to 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, 2017, the balance of accumulated other comprehensive loss included an unrecognized net gain of $0.7 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 gain of $0.9 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 as of September 30, 2017 and December 31, 2016 (in thousands):
 
 
September 30, 2017
Asset Derivatives
 
Liability Derivatives
Derivative Instrument
Balance Sheet Location
 
Fair Value
(Level 2)
 
Balance Sheet Location
 
Fair Value
(Level 2)
Foreign currency forward contracts
Other current assets
 
$
2,459

 
Accrued liabilities
 
$
1,873

Total
 
 
$
2,459

 
 
 
$
1,873

 
December 31, 2016
Asset Derivatives
 
Liability Derivatives
Derivative Instrument
Balance Sheet Location
 
Fair Value
(Level 2)
 
Balance Sheet Location
 
Fair Value
(Level 2)
Foreign currency forward contracts
Other current assets
 
$
868

 
Accrued liabilities
 
$
4,280

Total
 
 
$
868

 
 
 
$
4,280


 
Our foreign currency forward contracts had a total notional value of $119.4 million and $79.6 million as of September 30, 2017 and December 31, 2016, respectively. We have a master netting arrangement with each of our counterparties, which permits 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, 2017 and December 31, 2016, our balances of cash collateral posted with counterparties were none and $1.1 million, respectively.
The following table presents information about our derivative instruments on the statement of operations for the three and nine months ended September 30, 2017 and 2016 (in thousands):
 
 
 
 
Three Months Ended September 30, 2017
 
Nine Months Ended September 30, 2017
Hedging Instrument
Location of Gain (Loss) Reclassified into Earnings
 
Gain Recognized in AOCI
 
Gain Reclassified from AOCI into Earnings
 
Gain Recognized in AOCI
 
Loss Reclassified from AOCI into Earnings
Foreign currency forward contracts
Revenue, cost of revenue, operating expenses
 
$
629

 
$
285

 
$
3,117

 
$
(575
)
Total
 
 
$
629

 
$
285

 
$
3,117

 
$
(575
)

 
 
 
Three Months Ended September 30, 2016
 
Nine Months Ended September 30, 2016
Hedging Instrument
Location of Loss Reclassified into Earnings
 
Gain Recognized in AOCI
 
Loss Reclassified from AOCI into Earnings
 
Loss Recognized in AOCI
 
Loss Reclassified from AOCI into Earnings
Foreign currency forward contracts
Revenue, cost of revenue, operating expenses
 
$
207

 
$
(209
)
 
$
(218
)
 
$
(357
)
Total
 
 
$
207

 
$
(209
)
 
$
(218
)
 
$
(357
)
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, 2017 and 2016 were not material.
Property and Equipment
Property and Equipment
Property and Equipment
Property and equipment, net consists of the following (in thousands): 
 
September 30,
2017
 
December 31,
2016
Hosting equipment
$
37,423

 
$
35,018

Capitalized internal-use software
30,449

 
25,773

Leasehold improvements
28,117

 
25,396

Computer equipment and licensed software and patents
15,122

 
11,879

Furniture and fixtures
9,496

 
8,014

Construction in progress
7,070

 
7,993

Total
127,677

 
114,073

Less: accumulated depreciation and amortization
(68,077
)
 
(51,342
)
Property and equipment, net
$
59,600

 
$
62,731


 
Depreciation expense was $5.3 million and $4.1 million for the three months ended September 30, 2017 and 2016, respectively, and $15.1 million and $11.8 million for the nine months ended September 30, 2017 and 2016, respectively.
Amortization expense of capitalized internal-use software was $1.8 million for each of the three months ended September 30, 2017 and 2016, and $6.0 million and $5.2 million for the nine months ended September 30, 2017 and 2016, respectively. The carrying value of capitalized internal-use software at September 30, 2017 and December 31, 2016 was $16.4 million and $15.4 million, respectively, including $6.7 million and $5.4 million in construction in progress, respectively.
Goodwill and Acquired Intangible Assets
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, 2017 are as follows (in thousands):
 
Balance as of December 31, 2016
$
45,347

Goodwill acquired
13,350

Foreign currency translation adjustments
434

Balance as of September 30, 2017
$
59,131


 
Acquired intangible assets subject to amortization as of September 30, 2017 and December 31, 2016 consist of the following (in thousands):
 
 
As of September 30, 2017
Cost
 
Accumulated
Amortization
 
Foreign 
Currency Translation Adjustments
 
Net
 
Weighted Average Remaining Useful Life
 
 
 
 
 
 
 
 
(In years)
Developed technology
$
17,200

 
$
(9,225
)
 
$
(93
)
 
$
7,882

 
3.9
Customer relationships
2,210

 
(1,414
)
 
(30
)
 
766

 
2.4
 
$
19,410

 
$
(10,639
)
 
$
(123
)
 
$
8,648

 
 
 
 
As of December 31, 2016
Cost
 
Accumulated
Amortization
 
Foreign
Currency Translation Adjustments
 
Net
 
Weighted Average Remaining Useful Life
 
 
 
 
 
 
 
 
(In years)
Developed technology
$
14,000

 
$
(6,584
)
 
$
(169
)
 
$
7,247

 
2.9
Customer relationships
1,800

 
(1,044
)
 
(53
)
 
703

 
2.3
 
$
15,800

 
$
(7,628
)
 
$
(222
)
 
$
7,950

 
 

 
Amortization expense of acquired intangible assets was $1.0 million for each of the three months ended September 30, 2017 and 2016, and $3.0 million and $2.9 million for the nine months ended September 30, 2017 and 2016, respectively.
Estimated future amortization expense as of September 30, 2017 is as follows (in thousands):
Remainder of 2017
$
741

2018
2,735

2019
2,676

2020
1,102

2021
492

Thereafter
902

 
$
8,648

Commitments and Contingencies
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 $2.8 million and $2.6 million for the three months ended September 30, 2017 and 2016, respectively, and $8.3 million and $7.2 million for the nine months ended September 30, 2017 and 2016, respectively.

Except as discussed below, there were no material changes in our commitments under contractual obligations, as disclosed in our audited consolidated financial statements for the year ended December 31, 2016.

During the nine months ended September 30, 2017, we entered into three operating lease agreements for which the remaining anticipated amount of rent to be paid over the noncancelable terms of the leases is approximately $76.9 million as of September 30, 2017.

During the nine months ended September 30, 2017, we entered into two agreements with cloud infrastructure providers for which we have remaining purchase obligations of approximately $15.6 million as of September 30, 2017.

The following table summarizes our remaining obligations under the three operating lease agreements and the two agreements with cloud infrastructure providers discussed above as of September 30, 2017 (in thousands):
 
Total
 
Less than 1
Year
 
1 to 3 Years
 
3 to 5 Years
 
More than 5
Years
Operating lease obligations
$
76,909

 
$
1,477

 
$
18,131

 
$
19,409

 
$
37,892

Purchase obligations
$
15,559

 
8,392

 
7,167

 

 


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
Common Stock and Stockholders' Equity
Common Stock and Stockholders’ Equity
Common Stock
As of September 30, 2017 and December 31, 2016, there were 400 million shares authorized for issuance with a par value of $0.01 per share. There were 101.1 million and 97.2 million shares of common stock issued and 101.1 million and 96.7 million shares outstanding as of September 30, 2017 and December 31, 2016, respectively. Included within the number of shares issued and outstanding were approximately 14 thousand and 0.1 million shares of common stock subject to repurchase, as of September 30, 2017 and December 31, 2016, respectively.
Preferred Stock
As of each of September 30, 2017 and December 31, 2016, 10.0 million shares of preferred stock were authorized for issuance with a par value of $0.01 per share and no shares of preferred stock were issued or outstanding.
Treasury Stock
During the nine months ended September 30, 2017, we retired all 0.5 million of our treasury shares, which had been classified as treasury stock, at cost in the stockholders’ equity section of our consolidated balance sheet.
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, 2017, 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, 2017. As of September 30, 2017, 3.9 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 4.8 million shares on January 1, 2017. As of September 30, 2017, we had 8.1 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. 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 stock option and restricted stock unit, or RSU, activity for the nine months ended September 30, 2017 is as follows (in thousands, except per share information):
 
 
 
 
Options Outstanding
 
RSUs Outstanding
Shares
Available
for Grant
 
Number of
Shares
 
Weighted
Average
Exercise Price
 
Weighted
Average
Remaining
Contractual
Term
 
Aggregate
Intrinsic
Value
 
Outstanding
RSUs
 
Weighted
Average
Grant Date
Fair Value
 
 
 
 
 
 
(In years)
 
 
 
 
 
 
Outstanding — January 1, 2017
6,039

 
8,479

 
$
14.52

 
7.49
 
$
66,449

 
6,936

 
$
20.81

Increase in authorized shares
4,833

 
 
 
 
 
 
 
 
 
 
 
 
Stock options granted
(998
)
 
998

 
27.03

 
 
 
 
 
 
 
 
RSUs granted
(3,068
)
 
 
 
 
 
 
 
 
 
3,068

 
27.69

Stock options exercised
 
 
(1,771
)
 
10.47

 
 
 
 
 
 
 
 
RSUs vested
 
 
 
 
 
 
 
 
 
 
(2,343
)
 
20.11

Stock options forfeited or canceled
288

 
(288
)
 
23.81

 
 
 
 
 
 
 
 
RSUs forfeited or canceled
995

 
 
 
 
 
 
 
 
 
(995
)
 
22.11

RSUs forfeited or canceled and unavailable for grant
 
 
 
 
 
 
 
 
 
 
(202
)
 
23.44

Stock options forfeited or canceled and unavailable for grant
 
 
(200
)
 
23.44

 
 
 
 
 
 
 
 
Outstanding — September 30, 2017
8,089

 
7,218

 
$
16.63

 
7.21
 
$
90,199

 
6,464

 
$
24.05


 
The RSUs and stock options 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 stock price of our common stock and the exercise price of outstanding, in-the-money options.
As of September 30, 2017, we had a total of $184.5 million in future share-based compensation expense related to all equity awards to be recognized over a weighted average period of 2.7 years.
Net Loss Per Share
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 outstanding share-based awards, to the extent dilutive. Basic and diluted net loss per share were the same for each period presented as the inclusion of all potential common stock outstanding would have been anti-dilutive.
The following table presents the calculation of basic and diluted net loss per share for the periods presented (in thousands, except per share data): 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
2017
 
2016
 
2017
 
2016
Net loss
$
(27,689
)
 
$
(25,826
)
 
$
(83,988
)
 
$
(79,250
)
Weighted-average shares used to compute basic and diluted net loss per share
100,659


94,085


99,203


92,274

Net loss per share, basic and diluted
$
(0.28
)
 
$
(0.27
)
 
$
(0.85
)
 
$
(0.86
)

 
The anti-dilutive securities excluded from the shares used to calculate diluted net loss per share are as follows (in thousands):
 
As of September 30,
2017
 
2016
Shares subject to outstanding common stock options and employee stock purchase plan
7,488

 
9,753

Restricted stock units
6,464

 
7,565

 
13,952

 
17,318

Income Taxes
Income Taxes
Income Taxes
Our effective tax rates for each of the three and nine months ended September 30, 2017 and 2016 were approximately 1% or less. 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
Geographic Information
Geographic Information
Our chief operating decision maker reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating our financial performance. Accordingly, we have determined that we operate in a single reporting segment.
Revenue
The following table presents our revenue by geographic area, as determined based on the billing address of our customers (in thousands):
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
2017
 
2016
 
2017
 
2016
United States
$
59,455

 
$
43,587

 
$
163,971

 
$
121,222

EMEA
32,447

 
22,601

 
87,338

 
62,208

Other
20,884

 
14,529

 
55,757

 
39,946

Total
$
112,786

 
$
80,717

 
$
307,066

 
$
223,376


 
Long-Lived Assets
The following table presents our long-lived assets by geographic area (in thousands):
 
 
As of
September 30, 2017
 
As of
December 31, 2016
United States
$
25,395

 
$
26,372

EMEA:
 
 
 
Republic of Ireland
4,788

 
5,703

Other EMEA
5,423

 
6,834

Total EMEA
10,211

 
12,537

APAC
7,486

 
8,357

Total
$
43,092

 
$
47,266


 
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)
Basis of Presentation
These unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on February 27, 2017. 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.
In the first quarter of 2017, we changed our accounting policy for share-based compensation to recognize forfeitures as they occur, as permitted by Accounting Standards Update, or ASU, 2016-09. Refer to Recently Adopted Accounting Pronouncements below for a more detailed discussion.
The consolidated balance sheet as of December 31, 2016 included herein was derived from the audited financial statements as of that date. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly our financial position, results of operations, comprehensive loss, 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, 2017.
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, goodwill and unrecognized tax benefits, the useful lives of acquired intangible assets and property and equipment, the capitalization and estimated useful life of capitalized internal-use software, 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.
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board, or the FASB, issued new revenue guidance that provides principles for recognizing revenue to which an entity expects to be entitled for the transfer of promised goods or services to customers. The guidance also requires the deferral of incremental costs to acquire contracts with customers. As currently issued and amended, the new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, though early adoption is permitted for annual reporting periods beginning after December 15, 2016. The guidance may be applied retrospectively to each prior period presented (full retrospective method), or with the cumulative effect recognized as of the date of initial adoption (modified retrospective method).

We currently intend to adopt using the full retrospective method; however, our decision has not been finalized. We have completed a preliminary assessment to determine the effect of adoption on our existing revenue arrangements and are nearing final conclusions. We are continuing to progress in the implementation of our new revenue recognition systems. As a result of adoption, we also expect to capitalize a significant portion of our sales commissions and other incremental costs to acquire contracts, which we historically expensed as incurred, resulting in an increase in deferred costs recognized on our balance sheet. We have not yet concluded the useful life of our capitalized costs, which will affect the classification and magnitude of the deferred costs at each reporting period. We are nearing the completion of our analysis to quantify the total effect of adoption on our consolidated financial statements. To meet the incremental disclosure requirements of the new guidance, we are also developing processes that will enable our ability to disclose backlog.
In February 2016, the FASB issued ASU 2016-02, regarding Accounting Standards Codification, or ASC, Topic 842 “Leases.” This new standard requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets 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 are currently evaluating the effect of this standard on our consolidated financial statements.
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 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.
Recently Adopted Accounting Pronouncements
In March 2016, the FASB issued ASU 2016-09, regarding ASC Topic 718 “Compensation - Stock Compensation. This amendment changes certain aspects of accounting for share-based awards to employees, including the recognition of income tax effects of awards when the awards vest or are settled, requirements on net share settlement to cover tax withholding, and accounting for forfeitures. We adopted the standard in the first quarter of 2017.
As required by the new standard, we now recognize excess tax effects from share-based awards as a component of provision for income taxes in our statement of operations when awards vest or are settled. Upon adoption, we recorded a deferred tax asset of $52.8 million to reflect, on a modified retrospective basis, the previously unrecognized excess tax benefits; however, the deferred tax asset was fully offset by a valuation allowance, resulting in no impact to our consolidated financial statements. In our statement of cash flows, we no longer classify excess tax benefits as a reduction from operating cash flows. This change was made prospectively beginning with the quarter ended March 31, 2017.
We also elected to account for forfeitures as they occur; therefore, share-based compensation expense for the three and nine months ended September 30, 2017 has been calculated based on actual forfeitures in our consolidated statement of operations, rather than our previous approach, which was net of estimated forfeitures. The cumulative-effect adjustment of this change on a modified retrospective basis was not material. Share-based compensation expense for the three and nine months ended September 30, 2016 was recorded net of estimated forfeitures.

In October 2016, the FASB issued ASU 2016-16, “Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory,” which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The new guidance is effective for annual reporting periods beginning after December 15, 2017. Early adoption is permitted as of the beginning of an annual reporting period. The new standard must be adopted using a modified retrospective basis, with the cumulative effect recognized as of the date of adoption. We early adopted the standard in the first quarter of 2017. Upon adoption, we recorded a deferred tax asset of $6.2 million to reflect the previously unrecognized tax benefits; however, the deferred tax asset was fully offset by a valuation allowance, resulting in no impact to our consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09, regarding ASC Topic 718 “Compensation - Stock Compensation: Scope of Modification Accounting.” This amendment clarified what changes to terms or conditions of share-based awards require an entity to apply modification accounting. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We early adopted this standard in the second quarter of 2017 on a prospective basis, as permitted by the standard. The adoption did not have a material effect on our consolidated financial statements.
Business Combination (Tables)
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.
Net tangible assets acquired
$
96

Net deferred tax liability recognized
(492
)
Identifiable intangible assets:
 
Developed technology
3,200

Customer relationships
410

Goodwill
13,350

Total purchase price
$
16,564

Financial Instruments (Tables)
The following tables present information about our financial assets measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 based on the three-tier fair value hierarchy (in thousands):
 
 
Fair Value Measurement at
September 30, 2017
Level 1
 
Level 2
 
Total
Description
 
 
 
 
 
Corporate bonds
$

 
$
152,888

 
152,888

U.S. treasury securities

 
28,434

 
28,434

Asset-backed securities

 
24,471

 
24,471

Commercial paper

 
15,397

 
15,397

Money market funds
12,354

 

 
12,354

Agency securities

 
8,532

 
8,532

Total
$
12,354

 
$
229,722

 
$
242,076

Included in cash and cash equivalents
 
 
 
 
$
17,854

Included in marketable securities
 
 
 
 
$
224,222

 
Fair Value Measurement at
December 31, 2016
Level 1
 
Level 2
 
Total
Description
 
 
 
 
 
Corporate bonds
$

 
$
124,930

 
$
124,930

Asset-backed securities

 
32,567

 
32,567

U.S. treasury securities

 
30,585

 
30,585

Commercial paper

 
9,787

 
9,787

Agency securities

 
8,489

 
8,489

Money market funds
3,545

 
$

 
$
3,545

Total
$
3,545

 
$
206,358

 
$
209,903

Included in cash and cash equivalents
 
 
 
 
$
3,545

Included in marketable securities
 
 
 
 
$
206,358

The following table classifies our marketable securities by contractual maturity as of September 30, 2017 and December 31, 2016 (in thousands):
 
 
September 30,
2017
 
December 31,
2016
Due in one year or less
$
133,959

 
$
131,190

Due after one year
90,263

 
75,168

Total
$
224,222

 
$
206,358

The following tables present information about our derivative instruments on our consolidated balance sheets as of September 30, 2017 and December 31, 2016 (in thousands):
 
 
September 30, 2017
Asset Derivatives
 
Liability Derivatives
Derivative Instrument
Balance Sheet Location
 
Fair Value
(Level 2)
 
Balance Sheet Location
 
Fair Value
(Level 2)
Foreign currency forward contracts
Other current assets
 
$
2,459

 
Accrued liabilities
 
$
1,873

Total
 
 
$
2,459

 
 
 
$
1,873

 
December 31, 2016
Asset Derivatives
 
Liability Derivatives
Derivative Instrument
Balance Sheet Location
 
Fair Value
(Level 2)
 
Balance Sheet Location
 
Fair Value
(Level 2)
Foreign currency forward contracts
Other current assets
 
$
868

 
Accrued liabilities
 
$
4,280

Total
 
 
$
868

 
 
 
$
4,280

The following table presents information about our derivative instruments on the statement of operations for the three and nine months ended September 30, 2017 and 2016 (in thousands):
 
 
 
 
Three Months Ended September 30, 2017
 
Nine Months Ended September 30, 2017
Hedging Instrument
Location of Gain (Loss) Reclassified into Earnings
 
Gain Recognized in AOCI
 
Gain Reclassified from AOCI into Earnings
 
Gain Recognized in AOCI
 
Loss Reclassified from AOCI into Earnings
Foreign currency forward contracts
Revenue, cost of revenue, operating expenses
 
$
629

 
$
285

 
$
3,117

 
$
(575
)
Total
 
 
$
629

 
$
285

 
$
3,117

 
$
(575
)

 
 
 
Three Months Ended September 30, 2016
 
Nine Months Ended September 30, 2016
Hedging Instrument
Location of Loss Reclassified into Earnings
 
Gain Recognized in AOCI
 
Loss Reclassified from AOCI into Earnings
 
Loss Recognized in AOCI
 
Loss Reclassified from AOCI into Earnings
Foreign currency forward contracts
Revenue, cost of revenue, operating expenses
 
$
207

 
$
(209
)
 
$
(218
)
 
$
(357
)
Total
 
 
$
207

 
$
(209
)
 
$
(218
)
 
$
(357
)
Property and Equipment (Tables)
Components of Property and Equipment
Property and equipment, net consists of the following (in thousands): 
 
September 30,
2017
 
December 31,
2016
Hosting equipment
$
37,423

 
$
35,018

Capitalized internal-use software
30,449

 
25,773

Leasehold improvements
28,117

 
25,396

Computer equipment and licensed software and patents
15,122

 
11,879

Furniture and fixtures
9,496

 
8,014

Construction in progress
7,070

 
7,993

Total
127,677

 
114,073

Less: accumulated depreciation and amortization
(68,077
)
 
(51,342
)
Property and equipment, net
$
59,600

 
$
62,731

Goodwill and Acquired Intangible Assets (Tables)
The changes in the carrying amount of goodwill for the nine months ended September 30, 2017 are as follows (in thousands):
 
Balance as of December 31, 2016
$
45,347

Goodwill acquired
13,350

Foreign currency translation adjustments
434

Balance as of September 30, 2017
$
59,131

Acquired intangible assets subject to amortization as of September 30, 2017 and December 31, 2016 consist of the following (in thousands):
 
 
As of September 30, 2017
Cost
 
Accumulated
Amortization
 
Foreign 
Currency Translation Adjustments
 
Net
 
Weighted Average Remaining Useful Life
 
 
 
 
 
 
 
 
(In years)
Developed technology
$
17,200

 
$
(9,225
)
 
$
(93
)
 
$
7,882

 
3.9
Customer relationships
2,210

 
(1,414
)
 
(30
)
 
766

 
2.4
 
$
19,410

 
$
(10,639
)
 
$
(123
)
 
$
8,648

 
 
 
 
As of December 31, 2016
Cost
 
Accumulated
Amortization
 
Foreign
Currency Translation Adjustments
 
Net
 
Weighted Average Remaining Useful Life
 
 
 
 
 
 
 
 
(In years)
Developed technology
$
14,000

 
$
(6,584
)
 
$
(169
)
 
$
7,247

 
2.9
Customer relationships
1,800

 
(1,044
)
 
(53
)
 
703

 
2.3
 
$
15,800

 
$
(7,628
)
 
$
(222
)
 
$
7,950

 
 
Estimated future amortization expense as of September 30, 2017 is as follows (in thousands):
Remainder of 2017
$
741

2018
2,735

2019
2,676

2020
1,102

2021
492

Thereafter
902

 
$
8,648

Commitments and Contingencies (Tables)
Summary of Remaining Obligations Under Operating Lease Agreements
The following table summarizes our remaining obligations under the three operating lease agreements and the two agreements with cloud infrastructure providers discussed above as of September 30, 2017 (in thousands):
 
Total
 
Less than 1
Year
 
1 to 3 Years
 
3 to 5 Years
 
More than 5
Years
Operating lease obligations
$
76,909

 
$
1,477

 
$
18,131

 
$
19,409

 
$
37,892

Purchase obligations
$
15,559

 
8,392

 
7,167

 

 

Common Stock and Stockholders' Equity (Tables)
Summary of Stock Option and RSU Award Activity
A summary of our stock option and restricted stock unit, or RSU, activity for the nine months ended September 30, 2017 is as follows (in thousands, except per share information):
 
 
 
 
Options Outstanding
 
RSUs Outstanding
Shares
Available
for Grant
 
Number of
Shares
 
Weighted
Average
Exercise Price
 
Weighted
Average
Remaining
Contractual
Term
 
Aggregate
Intrinsic
Value
 
Outstanding
RSUs
 
Weighted
Average
Grant Date
Fair Value
 
 
 
 
 
 
(In years)
 
 
 
 
 
 
Outstanding — January 1, 2017
6,039

 
8,479

 
$
14.52

 
7.49
 
$
66,449

 
6,936

 
$
20.81

Increase in authorized shares
4,833

 
 
 
 
 
 
 
 
 
 
 
 
Stock options granted
(998
)
 
998

 
27.03

 
 
 
 
 
 
 
 
RSUs granted
(3,068
)
 
 
 
 
 
 
 
 
 
3,068

 
27.69

Stock options exercised
 
 
(1,771
)
 
10.47

 
 
 
 
 
 
 
 
RSUs vested
 
 
 
 
 
 
 
 
 
 
(2,343
)
 
20.11

Stock options forfeited or canceled
288

 
(288
)
 
23.81

 
 
 
 
 
 
 
 
RSUs forfeited or canceled
995

 
 
 
 
 
 
 
 
 
(995
)
 
22.11

RSUs forfeited or canceled and unavailable for grant
 
 
 
 
 
 
 
 
 
 
(202
)
 
23.44

Stock options forfeited or canceled and unavailable for grant
 
 
(200
)
 
23.44

 
 
 
 
 
 
 
 
Outstanding — September 30, 2017
8,089

 
7,218

 
$
16.63

 
7.21
 
$
90,199

 
6,464

 
$
24.05

Net Loss Per Share (Tables)
The following table presents the calculation of basic and diluted net loss per share for the periods presented (in thousands, except per share data): 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
2017
 
2016
 
2017
 
2016
Net loss
$
(27,689
)
 
$
(25,826
)
 
$
(83,988
)
 
$
(79,250
)
Weighted-average shares used to compute basic and diluted net loss per share
100,659


94,085


99,203


92,274

Net loss per share, basic and diluted
$
(0.28
)
 
$
(0.27
)
 
$
(0.85
)
 
$
(0.86
)
The anti-dilutive securities excluded from the shares used to calculate diluted net loss per share are as follows (in thousands):
 
As of September 30,
2017
 
2016
Shares subject to outstanding common stock options and employee stock purchase plan
7,488

 
9,753

Restricted stock units
6,464

 
7,565

 
13,952

 
17,318

Geographic Information (Tables)
The following table presents our revenue by geographic area, as determined based on the billing address of our customers (in thousands):
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
2017
 
2016
 
2017
 
2016
United States
$
59,455

 
$
43,587

 
$
163,971

 
$
121,222

EMEA
32,447

 
22,601

 
87,338

 
62,208

Other
20,884

 
14,529

 
55,757

 
39,946

Total
$
112,786

 
$
80,717

 
$
307,066

 
$
223,376

The following table presents our long-lived assets by geographic area (in thousands):
 
 
As of
September 30, 2017
 
As of
December 31, 2016
United States
$
25,395

 
$
26,372

EMEA:
 
 
 
Republic of Ireland
4,788

 
5,703

Other EMEA
5,423

 
6,834

Total EMEA
10,211

 
12,537

APAC
7,486

 
8,357

Total
$
43,092

 
$
47,266

Overview and Basis of Presentation - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended 3 Months Ended 9 Months Ended
Mar. 31, 2017
Accounting Standards Update 2016-16
Sep. 30, 2017
Accounts Receivable
Customer Concentration Risk
Sep. 30, 2017
Sales Revenue, Net
Customer Concentration Risk
Sep. 30, 2017
Sales Revenue, Net
Customer Concentration Risk
Mar. 31, 2017
Adjustments for New Accounting Principle, Early Adoption
Accounting Standards Update 2016-16
Subsidiary, Sale of Stock [Line Items]
 
 
 
 
 
Concentration risk (percent)
 
10.00% 
10.00% 
10.00% 
 
Deferred tax asset, gross
$ 52.8 
 
 
 
$ 6.2 
Deferred tax asset valuation allowance
$ 52.8 
 
 
 
 
Business Combination - Narrative (Details) (Outbound Solutions Inc, USD $)
0 Months Ended
Apr. 27, 2017
Apr. 27, 2017
Business Acquisition [Line Items]
 
 
Cash consideration
$ 16,600,000 
 
Goodwill expected to be tax deductible
 
$ 0 
Developed technology
 
 
Business Acquisition [Line Items]
 
 
Acquired intangible assets weighted average useful life
6 years 6 months 
 
Customer relationships
 
 
Business Acquisition [Line Items]
 
 
Acquired intangible assets weighted average useful life
3 years 6 months 
 
Business Combination - Summary of Assets Acquired and Liabilities Assumed (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Apr. 27, 2017
Outbound Solutions Inc
Apr. 27, 2017
Developed technology
Outbound Solutions Inc
Apr. 27, 2017
Customer relationships
Outbound Solutions Inc
Business Acquisition [Line Items]
 
 
 
 
 
Net tangible assets acquired
 
 
$ 96 
 
 
Net deferred tax liability recognized
 
 
(492)
 
 
Identifiable intangible assets:
 
 
 
3,200 
410 
Goodwill
59,131 
45,347 
13,350 
 
 
Total purchase price
 
 
$ 16,564 
 
 
Financial Instruments - Financial Assets Measured at Fair Value on Recurring Basis (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Included in marketable securities
$ 224,222 
$ 206,358 
Fair Value Measurements, Recurring
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
242,076 
209,903 
Included in cash and cash equivalents
17,854 
3,545 
Included in marketable securities
224,222 
206,358 
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
152,888 
124,930 
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
28,434 
30,585 
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
24,471 
32,567 
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
15,397 
9,787 
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
8,532 
8,489 
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
12,354 
3,545 
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
12,354 
3,545 
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
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
12,354 
3,545 
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
229,722 
206,358 
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
152,888 
124,930 
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
28,434 
30,585 
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
24,471 
32,567 
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
15,397 
9,787 
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
8,532 
8,489 
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 
Financial Instruments - Additional Information (Details) (USD $)
9 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Sep. 30, 2017
Foreign currency forward contracts
Dec. 31, 2016
Foreign currency forward contracts
Sep. 30, 2017
Level 3
Dec. 31, 2016
Level 3
Sep. 30, 2017
Maximum
Foreign currency forward contracts
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
 
 
 
 
 
Securities within Level 3 of the fair value hierarchy
 
 
 
 
$ 0 
$ 0 
 
Securities that were in an unrealized loss position for more than 12 months.
 
 
 
 
 
Derivative, maturity
 
 
 
 
 
 
15 months 
Unrealized loss in accumulated other comprehensive loss
 
 
700,000 
 
 
 
 
Reclassification from accumulated other comprehensive income into earnings over next 12 month
 
 
900,000 
 
 
 
 
Notional value
 
 
119,400,000.0 
79,600,000.0 
 
 
 
Cash collateral posted
$ 0 
$ 1,100,000 
 
 
 
 
 
Financial Instruments - Marketable Securities by Contractual Maturity (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Fair Value Disclosures [Abstract]
 
 
Due in one year or less
$ 133,959 
$ 131,190 
Due after one year
90,263 
75,168 
Total
$ 224,222 
$ 206,358 
Financial Instruments - Schedule of Derivative Instruments on Consolidated Balance Sheets (Details) (Designated as Hedging Instrument, Level 2, USD $)
In Thousands, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Derivatives Fair Value [Line Items]
 
 
Asset Derivatives
$ 2,459 
$ 868 
Liability Derivatives
1,873 
4,280 
Foreign currency forward contracts |
Other current assets
 
 
Derivatives Fair Value [Line Items]
 
 
Asset Derivatives
2,459 
868 
Foreign currency forward contracts |
Accrued liabilities
 
 
Derivatives Fair Value [Line Items]
 
 
Liability Derivatives
$ 1,873 
$ 4,280 
Financial Instruments - Schedule of Derivative Instruments on Statement of Operations (Details) (Designated as Hedging Instrument, USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Gain Recognized in AOCI
$ 629 
$ 207 
$ 3,117 
$ (218)
Loss Reclassified from AOCI into Earnings
285 
(209)
(575)
(357)
Revenue, cost of revenue, operating expenses |
Foreign currency forward contracts
 
 
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Gain Recognized in AOCI
629 
207 
3,117 
(218)
Loss Reclassified from AOCI into Earnings
$ 285 
$ (209)
$ (575)
$ (357)
Property and Equipment - Components of Property and Equipment (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Property Plant And Equipment [Line Items]
 
 
Total
$ 127,677 
$ 114,073 
Less: accumulated depreciation and amortization
(68,077)
(51,342)
Property and equipment, net
59,600 
62,731 
Hosting equipment
 
 
Property Plant And Equipment [Line Items]
 
 
Total
37,423 
35,018 
Capitalized internal-use software
 
 
Property Plant And Equipment [Line Items]
 
 
Total
30,449 
25,773 
Leasehold improvements
 
 
Property Plant And Equipment [Line Items]
 
 
Total
28,117 
25,396 
Computer equipment and licensed software and patents
 
 
Property Plant And Equipment [Line Items]
 
 
Total
15,122 
11,879 
Furniture and fixtures
 
 
Property Plant And Equipment [Line Items]
 
 
Total
9,496 
8,014 
Construction in progress
 
 
Property Plant And Equipment [Line Items]
 
 
Total
$ 7,070 
$ 7,993 
Property and Equipment - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Dec. 31, 2016
Property, Plant and Equipment [Abstract]
 
 
 
 
 
Depreciation expense
$ 5.3 
$ 4.1 
$ 15.1 
$ 11.8 
 
Amortization expense of capitalized internal-use software
1.8 
1.8 
6.0 
5.2 
 
Carrying value of capitalized internal-use software
16.4 
 
16.4 
 
15.4 
Capitalized internal-use software included in construction in progress
$ 6.7 
 
$ 6.7 
 
$ 5.4 
Goodwill and Acquired Intangible Assets - Changes in Carrying Amount of Goodwill (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Goodwill [Roll Forward]
 
Balance as of December 31, 2016
$ 45,347 
Goodwill acquired
13,350 
Foreign currency translation adjustments
434 
Balance as of September 30, 2017
$ 59,131 
Goodwill and Acquired Intangible Assets - Acquired Intangible Assets Subject to Amortization (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended 12 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Finite Lived Intangible Assets [Line Items]
 
 
Cost
$ 19,410 
$ 15,800 
Accumulated Amortization
(10,639)
(7,628)
Foreign Currency Translation Adjustments
(123)
(222)
Net
8,648 
7,950 
Developed technology
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Cost
17,200 
14,000 
Accumulated Amortization
(9,225)
(6,584)
Foreign Currency Translation Adjustments
(93)
(169)
Net
7,882 
7,247 
Weighted Average Remaining Useful Life
3 years 10 months 24 days 
2 years 10 months 24 days 
Customer relationships
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Cost
2,210 
1,800 
Accumulated Amortization
(1,414)
(1,044)
Foreign Currency Translation Adjustments
(30)
(53)
Net
$ 766 
$ 703 
Weighted Average Remaining Useful Life
2 years 4 months 24 days 
2 years 3 months 2 days 
Goodwill and Acquired Intangible Assets - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
 
 
Amortization expense
$ 1.0 
$ 1.0 
$ 3.0 
$ 2.9 
Goodwill and Acquired Intangible Assets - Estimated Future Amortization Expense (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
Remainder of 2017
$ 741 
 
2018
2,735 
 
2019
2,676 
 
2020
1,102 
 
2021
492 
 
Thereafter
902 
 
Net
$ 8,648 
$ 7,950 
Commitments and Contingencies - Additional Information (Details) (USD $)
3 Months Ended 9 Months Ended 1 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Cloud Infrastructure Agreements
Nov. 30, 2017
Cloud Infrastructure Agreements
Subsequent Event
Other Commitments [Line Items]
 
 
 
 
 
 
Rent expense
$ 2,800,000 
$ 2,600,000 
$ 8,300,000 
$ 7,200,000 
 
 
Purchase obligation recognition period
 
 
 
 
 
3 years 
Operating Leases, Future Minimum Payments Due, Rolling Maturity [Abstract]
 
 
 
 
 
 
Total amount of rent to be paid
76,909,000 
 
76,909,000 
 
 
 
Operating lease obligations less than one year
1,477,000 
 
1,477,000 
 
 
 
Operating lease obligations one to three years
18,131,000 
 
18,131,000 
 
 
 
Operating lease obligations three to five years
19,409,000 
 
19,409,000 
 
 
 
Operating lease obligations more than five years
37,892,000 
 
37,892,000 
 
 
 
Purchase Obligation, Fiscal Year Maturity [Abstract]
 
 
 
 
 
 
Purchase obligations
 
 
 
 
15,559,000 
69,800,000 
Purchase obligations due in less than one year
 
 
 
 
8,392,000 
 
Purchase obligations due one to three years
 
 
 
 
7,167,000 
 
Purchase obligations due three to five years
 
 
 
 
 
Purchase obligations due after year five
 
 
 
 
$ 0 
 
Common Stock and Stockholders' Equity - Additional Information (Details) (USD $)
In Millions, except Share data, unless otherwise specified
0 Months Ended 9 Months Ended 9 Months Ended 0 Months Ended 0 Months Ended 3 Months Ended 9 Months Ended
May 6, 2016
Sep. 30, 2017
Dec. 31, 2016
Sep. 30, 2017
Employee Stock Purchase Plan Awards
Sep. 30, 2017
2009 Stock Option and Grant Plan
Jan. 1, 2017
2014 Plan
Employee Stock Option
Sep. 30, 2017
2014 Plan
Employee Stock Option
Jan. 1, 2017
Employee Stock Purchase Plan
Sep. 30, 2017
Employee Stock Purchase Plan
Sep. 30, 2017
Employee Stock Purchase Plan
Class Of Stock [Line Items]
 
 
 
 
 
 
 
 
 
 
Common stock, shares authorized (in shares)
 
400,000,000 
400,000,000 
 
 
 
 
 
 
 
Common stock, par value (usd per share)
 
$ 0.01 
$ 0.01 
 
 
 
 
 
 
 
Common stock, shares issued (in shares)
 
101,100,000 
97,200,000 
 
 
 
 
 
 
 
Common stock, shares outstanding (in shares)
 
101,100,000 
96,700,000 
 
 
 
 
 
 
 
Common stock shares outstanding, subject to repurchase (in shares)
 
14,000 
100,000 
 
 
 
 
 
 
 
Preferred stock, shares authorized (in shares)
 
10,000,000 
10,000,000 
 
 
 
 
 
 
 
Preferred stock, shares outstanding (in shares)
 
 
 
 
 
 
 
 
Preferred stock, par value (usd per share)
 
$ 0.01 
$ 0.01 
 
 
 
 
 
 
 
Preferred stock, shares issued (in shares)
 
 
 
 
 
 
 
 
Retired treasury shares (in shares)
 
500,000 
 
 
 
 
 
 
 
 
Offering period
 
 
 
18 months 
 
 
 
 
 
 
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)
 
 
 
 
 
 
 
 
400,000 
Increase in authorized shares (in shares)
 
4,833,000 
 
 
 
4,800,000 
 
1,000,000 
 
 
Shares of common stock available for issuance (in shares)
 
8,089,000 
6,039,000 
 
 
8,100,000 
 
3,900,000 
3,900,000 
Stock options granted (in shares)
1,200,000 
998,000 
 
 
 
 
 
 
 
 
Future period share-based compensation expense
 
$ 184.5 
 
 
 
 
 
 
 
 
Future period share-based compensation expense, period to recognized
 
2 years 8 months 12 days 
 
 
 
 
 
 
 
 
Common Stock and Stockholders' Equity - Summary of Stock Option and RSU Award Activity (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
0 Months Ended 9 Months Ended 12 Months Ended
May 6, 2016
Sep. 30, 2017
Dec. 31, 2016
Shares Available for Grant
 
 
 
Outstanding — January 1, 2017
 
6,039,000 
 
Increase in authorized shares, shares
 
4,833,000 
 
Stock options granted, shares
 
(998,000)
 
RSUs granted, shares
 
(3,068,000)
 
Stock options forfeited or canceled, shares
 
288,000 
 
RSUs forfeited or canceled, shares
 
995,000 
 
Outstanding — September 30, 2017
 
8,089,000 
6,039,000 
Number of Shares
 
 
 
Balance at the beginning of the period, shares
 
8,479,000 
 
Stock options granted, shares
1,200,000 
998,000 
 
Stock options exercised, shares
 
(1,771,000)
 
Stock options forfeited or canceled, shares
 
(288,000)
 
Stock options forfeited and unavailable for grant, shares
 
(200,000)
 
Balance at the end of the period, shares
 
7,218,000 
8,479,000 
Weighted-Average Exercise Price
 
 
 
Balance at the beginning of the period (usd per share)
 
$ 14.52 
 
Stock options granted (usd per share)
 
$ 27.03 
 
Stock options exercised (usd per share)
 
$ 10.47 
 
Stock options forfeited or canceled (usd per share)
 
$ 23.81 
 
Stock options forfeited and unavailable for grant (usd per share)
 
$ 23.44 
 
Balance at the end of the period (usd per share)
 
$ 16.63 
$ 14.52 
Weighted Average Remaining Contractual Term
 
 
 
Weighted Average Remaining Contractual Term
 
7 years 2 months 15 days 
7 years 5 months 27 days 
Aggregate Intrinsic Value
 
 
 
Aggregate intrinsic value, beginning
 
$ 66,449 
 
Aggregate intrinsic value, ending
 
$ 90,199 
$ 66,449 
RSUs Outstanding
 
 
 
Outstanding RSUs
 
 
 
Balance at the beginning of the period, shares
 
6,936,000 
 
RSUs granted, shares
 
3,068,000 
 
RSUs vested, shares
 
(2,343,000)
 
RSUs forfeited or canceled, shares
 
(995,000)
 
RSUs forfeited and unavailable for grant, shares
 
(202,000)
 
Balance at the end of the period, shares
 
6,464,000 
 
Weighted-Average Grant Date Fair Value
 
 
 
Balance at the beginning of the period (usd per share)
 
$ 20.81 
 
Weighted average grant date fair value, RSUs granted (usd per share)
 
$ 27.69 
 
Weighted average grant date fair value, RSUs vested (usd per share)
 
$ 20.11 
 
Weighted average grant date fair value, RSUs forfeited or canceled (usd per share)
 
$ 22.11 
 
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)
 
$ 24.05 
 
Net Loss per Share - Computation of Basic and Diluted Net Loss per Share of Common Stock (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Earnings Per Share [Abstract]
 
 
 
 
Net loss
$ (27,689)
$ (25,826)
$ (83,988)
$ (79,250)
Weighted-average shares used to compute basic and diluted net loss per share
100,659 
94,085 
99,203 
92,274 
Net loss per share, basic and diluted (usd per share)
$ (0.28)
$ (0.27)
$ (0.85)
$ (0.86)
Net Loss per Share - Schedule of Anti-Dilutive Securities Excluded from the Diluted per Share Calculation (Details)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Antidilutive securities excluded from computation of earnings per share amount (in shares)
13,952 
17,318 
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)
7,488 
9,753 
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)
6,464 
7,565 
Income Taxes - Additional Information (Details)
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Income Tax Disclosure [Abstract]
 
 
 
 
Effective income tax rate, percent, less than
1.00% 
1.00% 
1.00% 
1.00% 
Geographic Information - Additional Information (Details)
9 Months Ended
Sep. 30, 2017
segments
Segment Reporting [Abstract]
 
Number of reportable segments
Geographic Information - Schedule of Revenue by Geographic Areas (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
 
 
Revenue
$ 112,786 
$ 80,717 
$ 307,066 
$ 223,376 
United States
 
 
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
 
 
Revenue
59,455 
43,587 
163,971 
121,222 
EMEA
 
 
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
 
 
Revenue
32,447 
22,601 
87,338 
62,208 
Other
 
 
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
 
 
Revenue
$ 20,884 
$ 14,529 
$ 55,757 
$ 39,946 
Geographic Information - Schedule of Long-Lived Assets by Geographic Areas (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Long-lived assets
$ 43,092 
$ 47,266 
United States
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Long-lived assets
25,395 
26,372 
Republic of Ireland
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Long-lived assets
4,788 
5,703 
Other EMEA
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Long-lived assets
5,423 
6,834 
EMEA
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Long-lived assets
10,211 
12,537 
APAC
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Long-lived assets
$ 7,486 
$ 8,357