Document and Entity Information - shares |
3 Months Ended | |
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Mar. 31, 2019 |
Apr. 30, 2019 |
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Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
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 | 109,564,955 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
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Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 3,060 | $ 2,571 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | ||||
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Mar. 31, 2019 |
Mar. 31, 2018 |
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Income Statement [Abstract] | |||||
Revenue | $ 181,484 | $ 129,791 | |||
Cost of revenue | [1] | 55,654 | 39,056 | ||
Gross profit | 125,830 | 90,735 | |||
Operating expenses: | |||||
Research and development | [1] | 46,791 | 37,085 | ||
Sales and marketing | [1] | 91,700 | 65,058 | ||
General and administrative | [1] | 31,253 | 22,207 | ||
Total operating expenses | [1] | 169,744 | 124,350 | ||
Operating loss | (43,914) | (33,615) | |||
Other income (expense), net: | |||||
Interest income | 5,472 | 1,519 | |||
Interest expense | (6,544) | (764) | |||
Other income, net | 700 | 245 | |||
Total other income (expense), net | (372) | 1,000 | |||
Loss before provision for (benefit from) income taxes | (44,286) | (32,615) | |||
Provision for (benefit from) income taxes | 434 | (3,290) | |||
Net loss | $ (44,720) | $ (29,325) | |||
Net loss per share, basic and diluted (usd per share) | $ (0.41) | $ (0.28) | |||
Weighted-average shares used to compute net loss per share, basic and diluted (in shares) | 108,630 | 103,692 | |||
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2019 |
Mar. 31, 2018 |
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Share-based compensation | $ 36,657 | $ 26,988 |
Cost of revenue | ||
Share-based compensation | 4,937 | 3,098 |
Research and development | ||
Share-based compensation | 11,636 | 10,231 |
Sales and marketing | ||
Share-based compensation | 12,399 | 8,007 |
General and administrative | ||
Share-based compensation | $ 7,685 | $ 5,652 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2019 |
Mar. 31, 2018 |
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Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (44,720) | $ (29,325) |
Other comprehensive gain (loss), before tax: | ||
Net unrealized gain (loss) on available-for-sale investments | 3,342 | (636) |
Foreign currency translation loss | 0 | (12) |
Net unrealized gain (loss) on derivative instruments | 1,124 | |
Net unrealized gain (loss) on derivative instruments | (742) | |
Other comprehensive gain (loss), before tax | 4,466 | (1,390) |
Tax effect | (1,072) | 0 |
Other comprehensive gain (loss), net of tax | 3,394 | (1,390) |
Comprehensive loss | $ (41,326) | $ (30,715) |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (PARENTHETICAL) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2019 |
Mar. 31, 2018 |
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Statement of Cash Flows [Abstract] | ||
Payments of debt issuance costs | $ 0 | $ 12,937 |
Overview and Basis of Presentation |
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Mar. 31, 2019 | |||||||||
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 experiences. 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. With our origins in customer service, we have evolved our offerings over time to a family of products and platform that work together to help organizations understand the broader customer journey, improve communications across all channels, and engage where and when it’s needed most. References to Zendesk, the “Company,” “our,” or “we” in these notes refer to Zendesk, Inc. and its subsidiaries on a consolidated basis. Basis of Presentation These unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K, for the year ended December 31, 2018, filed with the SEC on February 14, 2019. 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. The consolidated balance sheet as of December 31, 2018 included herein was derived from the audited financial statements as of that date. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly our financial position, results of operations, comprehensive loss, stockholders' equity, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2019. Use of Estimates The preparation of our consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods. Significant items subject to such estimates and assumptions include: •the estimate of variable consideration related to revenue recognition; •the fair value and useful lives of acquired intangible assets; •the capitalization and useful life of capitalized costs to obtain customer contracts; •the valuation of strategic investments; •the useful lives of property and equipment; •the capitalization and useful lives of internal-use software; •the lease term and incremental borrowing rate for lease liabilities; •the fair value of our convertible senior notes; •the fair value and expense recognition for certain share-based awards; •the preparation of financial forecasts used in currency hedging; and •the recognition of tax benefits. 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 March 31, 2019 and December 31, 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 months ended March 31, 2019 or 2018. Recently Issued Accounting Pronouncements In June 2016, the Financial Accounting Standards Board, or FASB, issued ASU 2016-13, regarding ASC Topic 326 “Measurement of Credit Losses on Financial Instruments,” which modifies the accounting methodology for most financial instruments. The guidance establishes a new “expected loss model” that requires entities to estimate current expected credit losses on financial instruments by using all practical and relevant information. Additionally, any expected credit losses are to be reflected as allowances rather than reductions in the amortized cost of available-for-sale debt securities. This 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 impact of the adoption of this standard on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, regarding ASC Topic 350 “Simplifying the Test for Goodwill Impairment,” which simplifies the required methodology to calculate an impairment charge for goodwill. The standard is effective for fiscal years beginning after December 15, 2019, however 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. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, regarding ASC Topic 842 “Leases,” including subsequent amendments. We refer to the new guidance as “ASC 842.” This new guidance requires lessees to recognize most leases on their balance sheets as lease 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. We adopted ASC 842 on January 1, 2019 and applied the following practical expedients:
The effect of adopting ASC 842 resulted in the recognition of lease right-of-use assets and corresponding lease liabilities on our condensed consolidated balance sheets. As of March 31, 2019, the aggregate balance of lease right-of-use assets and lease liabilities was $99 million and $114 million, respectively. The standard did not affect our consolidated statement of operations or cash flows. In August 2017, the FASB issued ASU 2017-12, regarding ASC Topic 815 “Derivatives and Hedging.” This guidance simplifies various aspects of hedge accounting, including the measurement and presentation of hedge ineffectiveness and certain documentation and assessment requirements. The guidance also makes more hedging strategies eligible for hedge accounting. We adopted this standard in the first quarter of 2019. Upon adoption, we no longer recognize hedge ineffectiveness immediately in our consolidated statements of operations, but we instead recognize the entire change in the fair value of the hedge contract in other comprehensive income. The cumulative-effect adjustment to eliminate ineffectiveness was not material. The presentation and disclosures have been modified on a prospective basis, as required by the guidance. 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. We adopted this standard in the first quarter of 2019. We have elected not to reclassify the income tax effects of the Tax Act from accumulated other comprehensive income to retained earnings, therefore the adoption did not have an 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. We adopted this standard in the first quarter of 2019. The adoption did not have an 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. We adopted the standard in the first quarter of 2019. The adoption did not have an 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. We early adopted the standard in the first quarter of 2019. The adoption did not have an effect on our consolidated financial statements. |
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 million in cash. We incurred transaction costs of $2 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 evaluation of certain tax-related items. The total purchase consideration was allocated to the assets acquired and liabilities assumed as set forth below (in thousands). During the three months ended March 31, 2019, we made certain immaterial adjustments to the preliminary purchase price allocation, which are reflected in the table below. 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. |
Financial Instruments |
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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 March 31, 2019 and December 31, 2018, there were no securities within Level 3 of the fair value hierarchy. There were no transfers between fair value measurement levels during the three months ended March 31, 2019. Gross unrealized gains and losses for cash equivalents and marketable securities as of March 31, 2019 and December 31, 2018 were not material. Unrealized losses for securities that have been in an unrealized loss position for more than 12 months as of March 31, 2019 and December 31, 2018 were not material. The following table classifies our marketable securities by contractual maturity (in thousands):
As of March 31, 2019 and December 31, 2018, the balance of strategic investments without readily determinable fair values was $11 million and $10 million, respectively. There have been no adjustments to the carrying value of strategic investments resulting from impairments or observable price changes. 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. Upon the adoption of ASU 2017-12 in the first quarter of 2019, we include time value related to our cash flow hedges for effectiveness testing purposes and the entire change in the unrecognized value of our hedge contracts is recorded in accumulated other comprehensive income (loss), or AOCI. Prior to adoption, we excluded time value for effectiveness testing purposes and we recognized changes in time value immediately in other income (expense), net. As of March 31, 2019, the balance of AOCI included an unrecognized net loss of $1 million related to the changes in the fair value of foreign currency forward contracts designated as cash flow hedges. We expect to reclassify a net loss of $1 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 $232 million and $200 million as of March 31, 2019 and December 31, 2018, respectively. We have a master netting arrangement with each of our counterparties, which permit net settlement of multiple, separate derivative contracts with a single payment. We may also be required to exchange cash collateral with certain of our counterparties on a regular basis. GAAP permits companies to present the fair value of derivative instruments on a net basis according to master netting arrangements. We have elected to present our derivative instruments on a gross basis in our consolidated financial statements. We do not enter into any derivative contracts for trading or speculative purposes. As of March 31, 2019 and December 31, 2018, there was no cash collateral posted with counterparties. All derivatives have been designated as hedging instruments. The following table presents information about our foreign currency forward contracts on our condensed consolidated statements of operations for the three months ended March 31, 2019 (in thousands):
The loss recognized in AOCI related to foreign currency forward contracts was not material for the three months ended March 31, 2019. The gain recognized in AOCI related to foreign currency forward contracts was not material for the three months ended March 31, 2018. The gain reclassified from AOCI into earnings related to foreign currency forward contracts was $1 million for the three months ended March 31, 2018, which was included within revenue, cost of revenue and operating expenses on our consolidated statements of operations. The cash flow effects related to foreign currency forward contracts are included within operating activities on our consolidated statements of cash flows. Convertible Senior Notes As of March 31, 2019, the fair value of our convertible senior notes was $838 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. Based on the closing price of our common stock of $85.00 on March 31, 2019, the if-converted value of our convertible senior notes exceeded the principal amount of $575 million. |
Costs to Obtain Customer Contracts |
3 Months Ended |
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Mar. 31, 2019 | |
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 $55 million and $52 million as of March 31, 2019 and December 31, 2018, respectively. Amortization expense for these deferred costs was $7 million and $5 million for the three months ended March 31, 2019 and 2018, 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 March 31, 2019 and 2018, $118 million and $86 million of revenue was recognized that was included in the deferred revenue balances at the beginning of each period, respectively. The aggregate balance of remaining performance obligations as of March 31, 2019 was $441 million. We expect to recognize $346 million of the balance as revenue in the next 12 months and the remainder thereafter. The aggregate balance of remaining 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 and Equipment | Property and Equipment Property and equipment, net consists of the following (in thousands):
Depreciation expense was $5 million and $6 million for the three months ended March 31, 2019 and 2018, respectively. Amortization expense of capitalized internal-use software was $2 million for each of the three months ended March 31, 2019 and 2018. The carrying value of capitalized internal-use software at March 31, 2019 and December 31, 2018 was $19 million, including $3 million in construction in progress, for both periods. During the first quarter of 2019, we completed the transition from our self-managed colocation data centers to third-party managed hosting services, at which time, management concluded that these assets met the criteria to be classified as held for sale. Accordingly, these assets were written down to their estimated salvage value and reclassified from property and equipment to other current assets, with $34 million and $33 million being reclassified from hosting equipment and accumulated depreciation respectively, for a net amount of $1 million. |
Leases |
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Leases | Leases We lease office space under noncancelable operating leases with various expiration dates. Additionally, we are the sublessor for certain office space. All of our office leases are classified as operating leases with lease expense recognized on a straight-line basis over the lease term. Lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The lease right-of-use assets also include any lease payments made and exclude lease incentives such as tenant improvement allowances. Options to extend the lease term are included in the lease term when it is reasonably certain that we will exercise the extension option. Our operating leases typically include non-lease components such as common-area maintenance costs. We have elected to include non-lease components with lease payments for the purpose of calculating lease right-of-use assets and liabilities, to the extent that they are fixed. Non-lease components that are not fixed are expensed as incurred as variable lease payments. Leases with a term of one year or less are not recognized on our consolidated balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. The following tables present information about leases on our consolidated balance sheet (in thousands):
As of March 31, 2019, the weighted average remaining lease term was 6.2 years and the weighted average discount rate was 5.3%. The following table presents information about leases on our consolidated statement of operations (in thousands):
The following table presents supplemental cash flow information about our leases (in thousands):
As of March 31, 2019, remaining maturities of lease liabilities are as follows:
The table above excludes future payments of $9 million related to signed leases that have not yet commenced. |
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 three months ended March 31, 2019 are as follows (in thousands):
Acquired intangible assets subject to amortization consist of the following (in thousands):
Amortization expense of acquired intangible assets was $2 million and $1 million for the three months ended March 31, 2019 and 2018, respectively. Estimated future amortization expense as of March 31, 2019 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 $575 million aggregate principal amount of 0.25% convertible senior notes due March 15, 2023 in a private offering (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, were approximately $561 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 months ended March 31, 2019, the conditions allowing holders of the Notes to convert have not been met. The Notes are therefore not convertible during the three months ended March 31, 2019 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 conversion feature. The carrying amount of the equity component representing the Conversion Option was $125 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 $14 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 $11 million and are 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 $64 million incurred in connection with the Capped Calls was recorded as a reduction to additional paid-in capital. 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 |
3 Months Ended |
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Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Commitments As of March 31, 2019, 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, 2018. 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 | 10. Common Stock and Stockholders’ Equity Common Stock As of March 31, 2019 and December 31, 2018, there were 400 million shares of common stock authorized for issuance with a par value of $0.01 per share and 109.3 million and 108.0 million shares were issued and outstanding, respectively. Preferred Stock As of each of March 31, 2019 and December 31, 2018, 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. No shares of common stock were purchased under the ESPP during the three months ended March 31, 2019. Pursuant to the terms of the ESPP, the number of shares reserved under the ESPP increased by 1.1 million shares on January 1, 2019. As of March 31, 2019, 5.0 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 5.4 million shares on January 1, 2019. As of March 31, 2019, we had 12.1 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 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 three months ended March 31, 2019 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. The total intrinsic value of stock options exercised during three months ended March 31, 2019 and 2018 was $21 million and $13 million, respectively. The intrinsic value for options exercised represents the difference between the exercise price and the market value on the date of exercise. The weighted-average grant date fair value of stock options granted during the three months ended March 31, 2019 and 2018 was $28.65 and $16.38, respectively. The total fair value of RSUs vested during the three months ended March 31, 2019 and 2018 was $63 million and $30 million, respectively. The fair value of RSUs vested represents market value on the vesting date. The weighted-average grant date fair value of RSUs granted during the three months ended March 31, 2019 and 2018 was $64.88, and $36.90, respectively. As of March 31, 2019, we had a total of $330 million in future expense related to our stock options and RSUs to be recognized over a weighted average period of 2.9 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 March 31, 2019, we recorded $1 million of share-based compensation expense related to the PRSUs and no PRSUs were vested. 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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Mar. 31, 2019 | |
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 $55 million and $52 million as of March 31, 2019 and December 31, 2018, respectively. Amortization expense for these deferred costs was $7 million and $5 million for the three months ended March 31, 2019 and 2018, 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 March 31, 2019 and 2018, $118 million and $86 million of revenue was recognized that was included in the deferred revenue balances at the beginning of each period, respectively. The aggregate balance of remaining performance obligations as of March 31, 2019 was $441 million. We expect to recognize $346 million of the balance as revenue in the next 12 months and the remainder thereafter. The aggregate balance of remaining 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):
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 March 31, 2019. 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 has a dilutive impact on diluted net income per share when the average market price of our common stock for a given reporting period exceeds the initial conversion price of $63.07 per share for the convertible senior notes. Based on the initial conversion price, potential dilution related to the convertible senior notes is approximately 9.1 million shares. The convertible senior notes are not convertible as of March 31, 2019. |
Income Taxes |
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Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We reported immaterial income tax expense in the three months ended March 31, 2019. We reported a benefit from income taxes of $3 million in the three months ended March 31, 2018, primarily due to the recognition of an income tax benefit of $4 million related to taxable temporary differences of the convertible senior notes and the capped call. 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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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographic Information | Geographic Information Our chief operating decision maker reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating our financial performance. Accordingly, we have determined that we operate in a single reporting segment. Revenue The following table presents our revenue by geographic area, as determined based on the billing address of our customers (in thousands):
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 | 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, 2018, filed with the SEC on February 14, 2019. 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. The consolidated balance sheet as of December 31, 2018 included herein was derived from the audited financial statements as of that date. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly our financial position, results of operations, comprehensive loss, stockholders' equity, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2019. |
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Use of Estimates | The preparation of our consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods. Significant items subject to such estimates and assumptions include: •the estimate of variable consideration related to revenue recognition; •the fair value and useful lives of acquired intangible assets; •the capitalization and useful life of capitalized costs to obtain customer contracts; •the valuation of strategic investments; •the useful lives of property and equipment; •the capitalization and useful lives of internal-use software; •the lease term and incremental borrowing rate for lease liabilities; •the fair value of our convertible senior notes; •the fair value and expense recognition for certain share-based awards; •the preparation of financial forecasts used in currency hedging; and •the recognition of tax benefits. 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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Concentrations of Risk | As of March 31, 2019 and December 31, 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 months ended March 31, 2019 or 2018. |
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Recently Issued and Adopted Accounting Pronouncements | In June 2016, the Financial Accounting Standards Board, or FASB, issued ASU 2016-13, regarding ASC Topic 326 “Measurement of Credit Losses on Financial Instruments,” which modifies the accounting methodology for most financial instruments. The guidance establishes a new “expected loss model” that requires entities to estimate current expected credit losses on financial instruments by using all practical and relevant information. Additionally, any expected credit losses are to be reflected as allowances rather than reductions in the amortized cost of available-for-sale debt securities. This 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 impact of the adoption of this standard on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, regarding ASC Topic 350 “Simplifying the Test for Goodwill Impairment,” which simplifies the required methodology to calculate an impairment charge for goodwill. The standard is effective for fiscal years beginning after December 15, 2019, however 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. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, regarding ASC Topic 842 “Leases,” including subsequent amendments. We refer to the new guidance as “ASC 842.” This new guidance requires lessees to recognize most leases on their balance sheets as lease 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. We adopted ASC 842 on January 1, 2019 and applied the following practical expedients:
The effect of adopting ASC 842 resulted in the recognition of lease right-of-use assets and corresponding lease liabilities on our condensed consolidated balance sheets. As of March 31, 2019, the aggregate balance of lease right-of-use assets and lease liabilities was $99 million and $114 million, respectively. The standard did not affect our consolidated statement of operations or cash flows. In August 2017, the FASB issued ASU 2017-12, regarding ASC Topic 815 “Derivatives and Hedging.” This guidance simplifies various aspects of hedge accounting, including the measurement and presentation of hedge ineffectiveness and certain documentation and assessment requirements. The guidance also makes more hedging strategies eligible for hedge accounting. We adopted this standard in the first quarter of 2019. Upon adoption, we no longer recognize hedge ineffectiveness immediately in our consolidated statements of operations, but we instead recognize the entire change in the fair value of the hedge contract in other comprehensive income. The cumulative-effect adjustment to eliminate ineffectiveness was not material. The presentation and disclosures have been modified on a prospective basis, as required by the guidance. 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. We adopted this standard in the first quarter of 2019. We have elected not to reclassify the income tax effects of the Tax Act from accumulated other comprehensive income to retained earnings, therefore the adoption did not have an 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. We adopted this standard in the first quarter of 2019. The adoption did not have an 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. We adopted the standard in the first quarter of 2019. The adoption did not have an 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. We early adopted the standard in the first quarter of 2019. The adoption did not have an effect on our consolidated financial statements. |
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Leases | Lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The lease right-of-use assets also include any lease payments made and exclude lease incentives such as tenant improvement allowances. Options to extend the lease term are included in the lease term when it is reasonably certain that we will exercise the extension option. |
Business Combinations (Tables) |
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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) |
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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 foreign currency forward contracts on our condensed consolidated statements of operations for the three months ended March 31, 2019 (in thousands):
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Property and Equipment (Tables) |
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Property and Equipment | Property and equipment, net consists of the following (in thousands):
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Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Lease Impact on Balance Sheet | The following tables present information about leases on our consolidated balance sheet (in thousands):
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Schedule of Lease Cost and Supplemental Cash Flow Information | The following table presents information about leases on our consolidated statement of operations (in thousands):
The following table presents supplemental cash flow information about our leases (in thousands):
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Schedule of Maturities of Leases | As of March 31, 2019, remaining maturities of lease liabilities are as follows:
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Goodwill and Acquired Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the three months ended March 31, 2019 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 March 31, 2019 is as follows (in thousands):
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0.25% Convertible Senior Notes and Capped Call (Tables) |
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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 three months ended March 31, 2019 is as follows (in thousands, except per share information):
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Net Loss Per Share (Tables) |
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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):
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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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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):
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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) $ in Thousands |
Mar. 31, 2019
USD ($)
|
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Lease right-of-use assets | $ 99,435 |
Operating lease liabilities | $ 114,345 |
Business Combinations - Narrative (Details) - FutureSimple Inc. $ in Millions |
Sep. 10, 2018
USD ($)
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Business Acquisition [Line Items] | |
Cash consideration | $ 81 |
Transaction costs associated with transaction | $ 2 |
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 | 5 years |
Backlog | |
Business Acquisition [Line Items] | |
Acquired intangible assets weighted average useful life | 2 years |
Business Combinations - Summary of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
Sep. 10, 2018 |
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Business Acquisition [Line Items] | |||
Goodwill | $ 111,520 | $ 111,584 | |
FutureSimple Inc. | |||
Business Acquisition [Line Items] | |||
Net tangible liabilities acquired | $ (2,966) | ||
Goodwill | 52,389 | ||
Total purchase price | 81,023 | ||
Developed technology | FutureSimple Inc. | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets: | 19,000 | ||
Customer relationships | FutureSimple Inc. | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets: | 10,400 | ||
Backlog | FutureSimple Inc. | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets: | $ 2,200 |
Financial Instruments - Marketable Securities by Contractual Maturity (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
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Fair Value Disclosures [Abstract] | ||
Due in one year or less | $ 301,941 | $ 300,213 |
Due after one year and within five years | 401,079 | 393,671 |
Total | $ 703,020 | $ 693,884 |
Financial Instruments - Schedule of Derivative Instruments on Consolidated Balance Sheets (Details) - Designated as Hedging Instrument - Level 2 - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
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Derivatives Fair Value [Line Items] | ||
Asset Derivatives | $ 1,842 | $ 2,047 |
Liability Derivatives | 3,726 | 4,862 |
Foreign Currency Forward Contracts | Other current assets | ||
Derivatives Fair Value [Line Items] | ||
Asset Derivatives | 1,842 | 2,047 |
Foreign Currency Forward Contracts | Accrued liabilities | ||
Derivatives Fair Value [Line Items] | ||
Liability Derivatives | $ 3,726 | $ 4,862 |
Financial Instruments - Schedule of Derivative Instruments on Statement of Operations (Details) - Foreign Currency Forward Contracts $ in Thousands |
3 Months Ended |
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Mar. 31, 2019
USD ($)
| |
Derivative Instruments Gain Loss [Line Items] | |
Gain (Loss) Reclassified from AOCI into Earnings | $ (1,531) |
Revenue | |
Derivative Instruments Gain Loss [Line Items] | |
Gain (Loss) Reclassified from AOCI into Earnings | 443 |
Cost of revenue | |
Derivative Instruments Gain Loss [Line Items] | |
Gain (Loss) Reclassified from AOCI into Earnings | (474) |
Research and development | |
Derivative Instruments Gain Loss [Line Items] | |
Gain (Loss) Reclassified from AOCI into Earnings | (434) |
Sales and marketing | |
Derivative Instruments Gain Loss [Line Items] | |
Gain (Loss) Reclassified from AOCI into Earnings | (790) |
General and administrative | |
Derivative Instruments Gain Loss [Line Items] | |
Gain (Loss) Reclassified from AOCI into Earnings | $ (276) |
Costs to Obtain Customer Contracts (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Revenue from Contract with Customer [Abstract] | |||
Deferred costs to obtain customer contracts | $ 55,000,000 | $ 52,000,000 | |
Amortization of deferred costs | 6,918,000 | $ 4,510,000 | |
Impairment related to deferred costs | $ 0 | $ 0 |
Property and Equipment - Components of Property and Equipment (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Total | $ 134,986 | $ 165,569 |
Less: accumulated depreciation and amortization | (59,367) | (89,915) |
Property and equipment, net | 75,619 | 75,654 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total | 58,119 | 51,832 |
Capitalized internal-use software | ||
Property, Plant and Equipment [Line Items] | ||
Total | 37,489 | 36,444 |
Computer equipment and licensed software and patents | ||
Property, Plant and Equipment [Line Items] | ||
Total | 22,768 | 21,100 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total | 12,046 | 11,550 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Total | 4,564 | 10,538 |
Hosting equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 0 | $ 34,105 |
Property and Equipment - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 5 | $ 6 | |
Amortization expense of capitalized internal-use software | 2 | $ 2 | |
Carrying value of capitalized internal-use software | 19 | $ 19 | |
Capitalized internal-use software included in construction in progress | 3 | $ 3 | |
Hosting equipment | |||
Property, Plant and Equipment [Line Items] | |||
Reclassification from property and equipment, gross | 34 | ||
Reclassification of accumulated depreciations associated with property and equipment | 33 | ||
Reclassification from property and equipment, net of accumulated depreciation | $ 1 |
Leases - Schedule of Lease Impact on Balance Sheet (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Assets | |
Lease right-of-use assets | $ 99,435 |
Liabilities | |
Lease liabilities | 19,402 |
Lease liabilities, noncurrent | $ 94,943 |
Leases - Narrative (Details) $ in Millions |
Mar. 31, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
Weighted average remaining lease term | 6 years 2 months 12 days |
Weighted average discount rate | 5.30% |
Operating lease payments for leases that have not yet commenced | $ 9 |
Leases - Schedule of Lease Cost (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Leases [Abstract] | |
Operating lease expense | $ 5,045 |
Short-term lease expense | 874 |
Variable lease expense | 885 |
Sublease income | $ 401 |
Leases - Schedule of Supplemental Cash Flow Information (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Leases [Abstract] | |
Cash paid for amounts included in the measurement of lease liabilities | $ 4,176 |
Operating lease assets obtained in exchange for new lease liabilities | $ 19,550 |
Leases - Schedule of Maturities of Leases (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Operating Lease Liabilities, Payments Due [Abstract] | |
Remainder of 2019 | $ 17,599 |
2020 | 25,880 |
2021 | 23,598 |
2022 | 22,102 |
2023 | 15,464 |
Thereafter | 29,315 |
Total lease payments | 133,958 |
Less imputed interest | (19,613) |
Total | $ 114,345 |
Goodwill and Acquired Intangible Assets - Schedule of Carrying Amount of Goodwill (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Goodwill [Roll Forward] | |
Balance as of December 31, 2018 | $ 111,584 |
Goodwill adjustments | (64) |
Balance as of March 31, 2019 | $ 111,520 |
Goodwill and Acquired Intangible Assets - Acquired Intangible Assets Subject to Amortization (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Finite Lived Intangible Assets [Line Items] | ||
Cost | $ 44,510 | $ 44,510 |
Accumulated Amortization | (11,961) | (9,767) |
Net | 32,549 | 34,743 |
Developed technology | ||
Finite Lived Intangible Assets [Line Items] | ||
Cost | 31,000 | 31,000 |
Accumulated Amortization | (9,492) | (8,151) |
Net | $ 21,508 | $ 22,849 |
Weighted Average Remaining Useful Life | 5 years 3 months 18 days | 5 years 6 months |
Customer relationships | ||
Finite Lived Intangible Assets [Line Items] | ||
Cost | $ 11,310 | $ 11,310 |
Accumulated Amortization | (1,827) | (1,249) |
Net | $ 9,483 | $ 10,061 |
Weighted Average Remaining Useful Life | 4 years 3 months 18 days | 4 years 7 months 6 days |
Backlog | ||
Finite Lived Intangible Assets [Line Items] | ||
Cost | $ 2,200 | $ 2,200 |
Accumulated Amortization | (642) | (367) |
Net | $ 1,558 | $ 1,833 |
Weighted Average Remaining Useful Life | 1 year 4 months 24 days | 1 year 8 months 12 days |
Goodwill and Acquired Intangible Assets - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 2 | $ 1 |
Goodwill and Acquired Intangible Assets - Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2019 | $ 6,605 | |
2020 | 6,832 | |
2021 | 5,490 | |
2022 | 5,490 | |
2023 | 4,719 | |
Thereafter | 3,413 | |
Total estimated future amortization expense | $ 32,549 | $ 34,743 |
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 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 15, 2018 |
---|---|---|---|
Net Carrying Amount of Liability Component of Convertible Notes [Abstract] | |||
Principal | $ 575,000 | $ 575,000 | |
Unamortized Debt Discount | (101,743) | (107,494) | |
Unamortized issuance costs | (8,893) | (9,330) | $ (11,000) |
Net carrying amount | 464,364 | 458,176 | |
Net Carrying Amount of Equity Component of Convertible Notes [Abstract] | |||
Debt Discount for Conversion Option | 124,976 | 124,976 | $ 125,000 |
Issuance costs | (2,948) | (2,948) | |
Net carrying amount | $ 122,028 | $ 122,028 |
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 | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Debt Instrument [Line Items] | ||
Contractual interest expense | $ 356 | $ 44 |
Amortization of Debt Discount | 5,751 | 671 |
Amortization of issuance costs | 437 | 49 |
Total interest expense | $ 6,544 | $ 764 |
0.25% Convertible Senior Notes and Capped Call - Summary of Impact to Stockholder's Equity (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 15, 2018 |
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Debt Instrument [Line Items] | ||||
Net impact to stockholder's equity | $ 44,255 | |||
Convertible Debt | Shares related to convertible senior notes | ||||
Debt Instrument [Line Items] | ||||
Conversion Option | $ 125,000 | $ 124,976 | $ 124,976 | |
Purchase of Capped Calls | (63,940) | |||
Issuance costs | (2,948) | $ (2,948) | ||
Net deferred tax liability | (13,784) | |||
Net impact to stockholder's equity | $ 64,000 | $ 44,304 |
Deferred Revenue and Performance Obligations - Deferred Revenue (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Revenue from Contract with Customer [Abstract] | ||
Revenue recognized and included in deferred revenue | $ 118 | $ 86 |
Deferred Revenue and Performance Obligations - Performance Obligations (Details) $ in Millions |
Mar. 31, 2019
USD ($)
|
---|---|
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 441 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 346 |
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 | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Earnings Per Share [Abstract] | ||
Net loss | $ (44,720) | $ (29,325) |
Weighted-average shares used to compute basic and diluted net loss per share | 108,630 | 103,692 |
Net loss per share, basic and diluted (usd per share) | $ (0.41) | $ (0.28) |
Net Loss Per Share - Narrative (Details) - $ / shares shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 15, 2018 |
|
Debt Instrument [Line Items] | ||
Potential dilution based on initial conversion price (in shares) | 9.1 | |
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 | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Income Tax Disclosure [Abstract] | ||
Income tax benefit | $ (434) | $ 3,290 |
Income tax benefit related to temporary differences | $ 4,000 |
Geographic Information - Narrative (Details) |
3 Months Ended |
---|---|
Mar. 31, 2019
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |
Geographic Information - Schedule of Revenue by Geographic Areas (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Revenue | $ 181,484 | $ 129,791 |
United States | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Revenue | 94,901 | 68,354 |
EMEA | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Revenue | 52,075 | 37,872 |
APAC | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Revenue | 19,476 | 13,996 |
Other | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Revenue | $ 15,032 | $ 9,569 |
Label | Element | Value |
---|---|---|
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | $ 682,000 |
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | 1,891,000 |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | 634,000 |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | $ 719,000 |