Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Accounts receivable, allowances | $ 2,714 | $ 9,052 |
Preferred stock, issued (in shares) | 0 | 95,899,214 |
Common stock, par value (USD per share) | $ 0.000005 | $ 0.000005 |
Common stock, authorized (in shares) | 1,000,000,000 | 300,000,000 |
Common stock, issued (in shares) | 273,537,000 | 123,261,000 |
Common stock, outstanding (in shares) | 273,537,000 | 123,261,000 |
Preferred Stock | ||
Preferred stock, par value (USD per share) | $ 0.000005 | $ 0.000005 |
Preferred stock, authorized (in shares) | 100,000,000 | 0 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Convertible preferred stock | ||
Preferred stock, par value (USD per share) | $ 0.000005 | $ 0.000005 |
Preferred stock, authorized (in shares) | 0 | 102,674,000 |
Preferred stock, issued (in shares) | 0 | 95,899,000 |
Preferred stock, outstanding (in shares) | 0 | 95,899,000 |
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (282,308) | $ (163,190) | $ (131,602) |
Other comprehensive income (loss), net of taxes: | |||
Change in foreign currency translation adjustment | 161 | (155) | (186) |
Change in unrealized gains on marketable securities | 53 | 0 | 0 |
Other comprehensive income (loss) | 214 | (155) | (186) |
Comprehensive loss | $ (282,094) | $ (163,345) | $ (131,788) |
Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands |
Total |
Adjustment |
Convertible preferred stock |
Convertible Series D-1 Preferred Stock |
Convertible Series E Preferred Stock |
Non Chief Executive Officer Related |
Chief Executive Officer |
Non-IPO |
IPO |
Charitable Contribution, IPO |
Convertible Preferred Stock |
Convertible Preferred Stock
Convertible preferred stock
|
Convertible Preferred Stock
Convertible Series D-1 Preferred Stock
|
Convertible Preferred Stock
Convertible Series E Preferred Stock
|
Common Stock |
Common Stock
Non Chief Executive Officer Related
|
Common Stock
Chief Executive Officer
|
Common Stock
Non-IPO
|
Common Stock
IPO
|
Common Stock
Charitable Contribution, IPO
|
Additional Paid-In Capital |
Additional Paid-In Capital
Convertible preferred stock
|
Additional Paid-In Capital
Non Chief Executive Officer Related
|
Additional Paid-In Capital
Chief Executive Officer
|
Additional Paid-In Capital
Non-IPO
|
Additional Paid-In Capital
IPO
|
Additional Paid-In Capital
Charitable Contribution, IPO
|
Accumulated Other Comprehensive Loss |
Accumulated Deficit |
Accumulated Deficit
Adjustment
|
Treasury Stock |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Beginning Balance (in shares) at Dec. 31, 2017 | 84,989,264 | 104,583,992 | |||||||||||||||||||||||||||||
Beginning Balance at Dec. 31, 2017 | $ 256,390 | $ 22,361 | $ 455,166 | $ 1 | $ 148,998 | $ (3,291) | $ (242,759) | $ 22,361 | $ (101,725) | ||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||||||||||||
Issuance of common stock from exercise of stock options (in shares) | 2,484,894 | ||||||||||||||||||||||||||||||
Issuance of common stock from exercise of stock options | $ 3,303 | $ 3,303 | |||||||||||||||||||||||||||||
Issuance of stock (in shares) | 12,003,311 | ||||||||||||||||||||||||||||||
Issuance of stock | $ 144,948 | $ 144,948 | |||||||||||||||||||||||||||||
Stock‑based compensation expense | 20,625 | 20,625 | |||||||||||||||||||||||||||||
Stock-based compensation expense in connection with modified awards for certain employees | 288 | 288 | |||||||||||||||||||||||||||||
Net loss | (131,602) | (131,602) | |||||||||||||||||||||||||||||
Change in foreign currency translation adjustment | (186) | (186) | |||||||||||||||||||||||||||||
Unrealized gains on investments | 0 | ||||||||||||||||||||||||||||||
Ending Balance (in shares) at Dec. 31, 2018 | 96,992,575 | 107,068,886 | |||||||||||||||||||||||||||||
Ending Balance at Dec. 31, 2018 | 316,127 | $ 600,114 | $ 1 | 173,214 | (3,477) | (352,000) | (101,725) | ||||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||||||||||||
Issuance of common stock from exercise of stock options (in shares) | 6,427,160 | ||||||||||||||||||||||||||||||
Issuance of common stock from exercise of stock options | 11,813 | 11,813 | |||||||||||||||||||||||||||||
Issuance of stock (in shares) | 5,681,818 | 22,297,024 | |||||||||||||||||||||||||||||
Issuance of stock | $ 124,918 | $ 460,200 | $ 124,918 | $ 460,200 | |||||||||||||||||||||||||||
Common stock issued in connection with acquisitions (in shares) | 1,734,737 | ||||||||||||||||||||||||||||||
Common stock issued in connection with acquisitions | 34,807 | 34,807 | |||||||||||||||||||||||||||||
Purchase and retirement of stock (in shares) | (6,775,179) | (14,266,783) | |||||||||||||||||||||||||||||
Purchase and retirement of stock | (286,375) | $ (148,714) | $ (38,473) | (388,100) | $ (110,241) | 101,725 | |||||||||||||||||||||||||
Stock‑based compensation expense | 30,959 | 30,959 | |||||||||||||||||||||||||||||
Stock-based compensation expense in connection with modified awards for certain employees | 13,521 | 13,521 | |||||||||||||||||||||||||||||
Net loss | (163,190) | (163,190) | |||||||||||||||||||||||||||||
Change in foreign currency translation adjustment | (155) | (155) | |||||||||||||||||||||||||||||
Unrealized gains on investments | 0 | ||||||||||||||||||||||||||||||
Ending Balance (in shares) at Dec. 31, 2019 | 95,899,214 | 123,261,024 | |||||||||||||||||||||||||||||
Ending Balance at Dec. 31, 2019 | $ 393,911 | $ 686,559 | $ 1 | 226,173 | (3,632) | (515,190) | 0 | ||||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||||||||||||
Issuance of common stock from exercise of stock options (in shares) | 6,758,226 | 6,758,226 | 5,656,927 | ||||||||||||||||||||||||||||
Issuance of common stock from exercise of stock options | $ 25,404 | $ 8,856 | $ 25,404 | $ 8,856 | |||||||||||||||||||||||||||
Issuance of stock (in shares) | 6,818,182 | 4,545,455 | 28,750,000 | 750,000 | |||||||||||||||||||||||||||
Issuance of stock | $ 149,970 | $ 100,000 | $ 1,417,582 | $ 63,615 | $ 149,970 | $ 100,000 | $ 1,417,582 | $ 63,615 | |||||||||||||||||||||||
Common stock issued in connection with acquisitions (in shares) | 1,103,190 | ||||||||||||||||||||||||||||||
Common stock issued in connection with acquisitions | $ 25,380 | 25,380 | |||||||||||||||||||||||||||||
Purchase and retirement of stock (in shares) | (5,000) | ||||||||||||||||||||||||||||||
Purchase and retirement of stock | $ (110) | (110) | |||||||||||||||||||||||||||||
Conversion of convertible preferred stock to common stock upon initial public offering (in shares) | 102,717,396 | 102,717,396 | 102,717,396 | ||||||||||||||||||||||||||||
Conversion of convertible preferred stock to common stock upon initial public offering | $ 0 | $ (836,529) | $ 1 | 836,528 | |||||||||||||||||||||||||||
Stock‑based compensation expense | 134,554 | 134,554 | |||||||||||||||||||||||||||||
Stock-based compensation expense in connection with modified awards for certain employees | 75 | 75 | |||||||||||||||||||||||||||||
Net loss | (282,308) | (282,308) | |||||||||||||||||||||||||||||
Change in foreign currency translation adjustment | 161 | 161 | |||||||||||||||||||||||||||||
Unrealized gains on investments | 53 | 53 | |||||||||||||||||||||||||||||
Ending Balance (in shares) at Dec. 31, 2020 | 0 | 273,537,218 | |||||||||||||||||||||||||||||
Ending Balance at Dec. 31, 2020 | $ 2,037,143 | $ 0 | $ 2 | $ 2,838,057 | $ (3,418) | $ (797,498) | $ 0 |
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Statement of Cash Flows [Abstract] | ||||
Cash and cash equivalents | $ 1,272,578 | $ 129,959 | $ 258,731 | |
Restricted cash | 21,369 | 17,137 | 14,542 | |
Total cash, cash equivalents, and restricted cash | $ 1,293,947 | $ 147,096 | $ 273,273 | $ 246,132 |
Description of Business and Summary of Significant Accounting Policies |
12 Months Ended |
---|---|
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | Description of Business and Summary of Significant Accounting Policies Description of Business We were founded as Over the Edge Entertainment in Denmark in 2004. We reorganized as a Delaware corporation on May 28, 2009 as Unity Software Inc. (collectively referred to with its wholly owned subsidiaries as “we,” “our” or “us,”). We provide a comprehensive set of software solutions to create, run and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices, among others. We are headquartered in San Francisco, California and have operations in the United States, Denmark, Belgium, Canada, China, Colombia, Finland, France, Germany, Ireland, Israel, Japan, Lithuania, Singapore, South Korea, Spain, Sweden, and the United Kingdom. We market our solutions directly through our online store and field sales operations in North America, Denmark, Finland, the United Kingdom, Germany, Japan, China, Singapore, and South Korea and indirectly through independent distributors and resellers worldwide. Basis of Presentation and Consolidation We prepared the accompanying consolidated financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). The consolidated financial statements include the accounts of Unity Software Inc. and its wholly owned subsidiaries. We have eliminated all intercompany balances and transactions. In our opinion, the information contained herein reflects all adjustments necessary for a fair presentation of our results of operations, financial position, cash flows, and stockholders’ equity. All such adjustments are of a normal, recurring nature. Effective January 1, 2020, we adopted the requirements of updates to accounting pronouncements as described below under the heading “Leases” and in Note 2, “Summary of Accounting Pronouncements,” of the Notes to Consolidated Financial Statements. Initial Public Offering (“IPO”) On September 22, 2020, we completed our IPO, in which we issued and sold 25,000,000 shares of our common stock at the public offering price of $52.00 per share, resulting in net proceeds of $1,241.3 million after deducting underwriting discounts and commissions. On September 24, 2020, the underwriters exercised their option to purchase an additional 3,750,000 shares of our common stock at the public offering price of $52.00 per share, resulting in total issued shares of 28,750,000. This option exercise closed on September 28, 2020, resulting in additional net proceeds to us of $186.2 million after deducting underwriting discounts and commissions. In connection with the IPO, all of the shares of our outstanding convertible preferred stock automatically converted into an aggregate of 102,717,396 shares of our common stock. Deferred offering costs consist primarily of accounting, legal, and other fees related to our IPO. Upon completion of the IPO, $9.9 million of deferred offering costs incurred were presented in stockholders’ equity as a reduction of the IPO proceeds. Use of Estimates The preparation of 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 reporting period. For us, these estimates include, but are not limited to, revenue recognition, allowances for doubtful accounts, fair values of financial instruments, useful lives of fixed assets, the incremental borrowing rate (“IBR”) we use to determine our operating lease liabilities, income taxes, valuation of deferred tax assets and liabilities, valuation of intangible assets, useful lives of intangible assets, assets acquired and liabilities assumed through business combinations, fair value of our common stock prior to our IPO, valuation of stock-based compensation, capitalization of software costs and software implementation costs, customer life for capitalized commissions, and other contingencies, among others. Actual results could differ from those estimates, and such differences could be material to our financial position and results of operations. Revenue Recognition Revenue is recognized upon the transfer of control of promised products and services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We evaluate and recognize revenue by: •identifying the contract(s) with the customer; •identifying the performance obligation(s) in the contract(s); •determining the transaction price; •allocating the transaction price to performance obligation(s) in the contract(s); and •recognizing revenue as each performance obligation is satisfied through the transfer of a promised good or service to a customer (“transfer of control”). The five-step model requires us to make significant estimates in situations where we are unable to establish stand-alone selling price based on various observable prices using all information that is reasonably available. Observable inputs and information we use to make these estimates include historical internal pricing data and cost plus margin analysis. We generate revenue through three sources: (1) Create Solutions, which consists primarily of our subscription offerings and professional services; (2) Operate Solutions, which includes our monetization services, hosting, and multiplayer services, and voice services; and (3) Strategic Partnerships and Other, which are primarily arrangements with strategic hardware, operating system, device, game console, and other technology providers for the customization and development of our software to enable interoperability with these platforms. We recognize revenue as our contractual performance obligations are satisfied. When contracts with our customers contain multiple performance obligations, we allocate the overall transaction price, which is the amount of consideration to which we expect to receive in exchange for promised goods or services, to each of the distinct performance obligations based on their estimated relative standalone selling prices. Create Solutions Create Solutions Subscriptions Our subscriptions, mainly consisting of Unity Pro and Unity Plus (collectively, the “Create Solutions subscriptions”) are fully integrated content development solutions that enable customers to build interactive real-time 2D and 3D applications. These Create Solutions subscriptions provide customers with the rights to a software license with embedded cloud functionality and multi-platform support. Significant judgment is required to determine the level of integration and interdependency between individual promises of the Create Solutions subscriptions. This determination influences whether the software is considered distinct and accounted for separately as a license performance obligation recognized at a point in time, or not distinct and accounted for together with other promises in the Create Solutions subscriptions as a single performance obligation recognized over time. Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“Topic 606”), we have concluded that the software license is not distinct from the multi-platform support as they are highly interdependent and interrelated considering the significant two-way dependency between the promises. Although the promise to the embedded cloud functionality represents separate performance obligations under Topic 606, we have accounted for these obligations as if they are a single performance obligation that includes the software license and the multi-platform support because the cloud functionality has the same pattern of transfer to the customer over the duration of the subscription term. The transaction price is determined based on the consideration that we will be entitled to receive in exchange for transferring our Create Solutions subscriptions to the customer, and we do not have material variable consideration. We recognize the single performance obligation ratably over the contract term beginning when the license key is delivered. Enterprise customers may purchase an enhanced support offering (“Enterprise Support”) that is sold separately from the Create Solutions subscriptions, and is capable of being distinct, and is distinct within the context of the contract due to its separate utility. Enterprise Support is generally billed in advance and is recognized ratably over the support term as we have a stand-ready performance obligation over the support term. When an arrangement includes Enterprise Support and Create Solutions subscriptions, which have the same pattern of transfer to the customer (the services transfer to the customer over the same period), we account for those performance obligations as if they are a single performance obligation. If an arrangement includes Enterprise Support and Create Solutions subscriptions that do not have the same pattern of transfer, we allocate the transaction price to the distinct performance obligations and recognize them ratably over their respective terms. Create Solutions subscriptions typically have a term of one to three years and are generally billed in advance and recognized ratably over the term. Professional Services Our professional services revenue is primarily composed of consulting, integration, training, and custom application and workflow development. Professional services may be billed in advance or on a time and materials basis and we recognize the related revenue as services are rendered. We typically invoice our customers up front or when promised services are delivered, and the payment terms vary by customer type and location. The term between billing and payment due dates is not significant. As a result, we have determined that our contracts do not include significant financing component. Customer billings related to taxes imposed by and remitted to governmental authorities on revenue-producing transactions are reported on a net basis. Operate Solutions Monetization We generate advertising revenue through our monetization solutions, including the Unified Auction, which allows publishers to sell the available advertising inventory from their mobile applications to advertisers. We enter into contracts with both advertisers and publishers to participate in the Unified Auction. For advertisements placed through the Unified Auction, we evaluate whether we are the principal (in which case revenue is reported on a gross basis) or the agent (in which case revenue is reported on a net basis). The evaluation to present revenue on a gross basis versus net basis requires significant judgment. We have concluded that the publisher is our customer and we are the agent in facilitating the fulfillment of the advertising inventory in the Unified Auction primarily because we do not control the advertising inventory prior to the placement of an advertisement. As the operator of the Unified Auction, our role is to enable the publisher to monetize its advertising inventory with the advertiser based on the bid/ask price from the auction. We do not control the outcome of the bids and do not have pricing latitude in the transaction. Based on these and other factors, we report advertising revenue based on the net amount retained from the transaction which is our revenue share. Advertising revenue is recognized at a point in time when control is transferred to the customer. This occurs when a user installs an application after seeing an advertisement contracted on a cost-per-install basis or when an advertisement starts on a cost-per-impression basis. Typically, we do not retain a share of the revenue generated through Unity IAP (“In-App Purchases”). Publisher payables represent amounts earned by publishers in the Unified Auction and are presented as a reduction of revenue in our consolidated statements of operations. Payment terms are contractually defined and vary by publisher and location. Cloud and Hosting Services We provide cloud-based services as well as enterprise hosting (“Hosting Services”) to developers that develop and operate multiuser/multiplayer games and applications through a combination of hardware server and cloud-based infrastructure and services. The Hosting Services facilitate the connection of end users, and allow content game and application operators to monitor network traffic. Our cloud-based services provide our customers with tools and services to develop and operate live games and applications, including voice chat services. We primarily sell these services on a fixed fee or usage-based model with fixed fees billed monthly in advance and usage fees billed monthly in arrears. We recognize revenue ratably over the contractual service term for fixed fee arrangements as we have a stand-ready performance obligation that is generally fulfilled evenly throughout the hosting period. We recognize revenue for usage-based arrangements as services are provided. Strategic Partnerships and Other We enter into strategic contracts with owners of hardware, operating system, device, game console and other technology providers to customize our software licenses to enable interoperability with these platforms (“Strategic Partnerships”). This allows customers using our Create Solutions subscriptions to build and publish content to more than one platform without having to write platform-specific code. We consider these strategic partners as our customers and generally provide them with the following promises in our contracts: (i) development and customization of our software to integrate with the customer’s platform and (ii) post-integration ongoing support and updates. We generally view these promises as one single performance obligation as they are not distinct within the context of the contract. This is because the customized software license that is integrated with the customer’s platform requires continuous updates that are critical to the utility of the customized software. The transaction price is determined based on the consideration that we will be entitled to receive in exchange for transferring our goods and services to the customer. We do not have material variable consideration. When Strategic Partnerships contain non-monetary consideration, we measure and record the transaction price at the estimated fair value of the non-cash consideration received from the customer. Typically, we recognize revenue for these contracts over time as service is performed using the input method to measure progress of the satisfaction of the performance obligation. Certain Strategic Partnerships also require the customer to pay sales-based royalties based on the sales of games on the Strategic Partner platform that incorporate our customized software. Since customized software intellectual property is the predominant item to which royalty relates, we recognize revenue for sales-based royalties when the later of the subsequent sale or usage occurs, or the performance to which some or all of the sales-based royalty has been allocated has been satisfied. We record revenue under these arrangements for the amounts due to us based on estimates of the sales of these customers and pursuant to the terms of the contracts. The Strategic Partnerships are typically multi-year arrangements where customers make payments commensurate with milestones accomplished with respect to the development and integration service or pay in advance on a quarterly basis. Contract Balances Timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets relate to performance completed in advance of scheduled billings. The primary changes in our contract assets and contract liabilities are due to our performance under the contracts and billings. Contract assets (unbilled receivables) included in accounts receivable are recorded when revenue is recognized in advance of customer invoicing. Unbilled receivables totaled $26.3 million and $24.6 million as of December 31, 2020 and 2019, respectively. Contract liabilities (deferred revenue) relate to payments received in advance of performance under the contract. Revenue recognized during the year ended December 31, 2020 that was included in the deferred revenue balances at January 1, 2020 was $83.1 million. The satisfaction of performance obligations typically lags behind payments received under contract from customers, which may lead to an increase in our deferred revenue balance over time. Remaining Performance Obligations As of December 31, 2020, we had total remaining performance obligations of $230.1 million, which represents the total contract transaction price allocated to undelivered performance obligations primarily for Create Solutions subscriptions, Enterprise Support, and Strategic Partnership contracts, which are generally recognized over the next one year to three years. Transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and unbilled amounts that will be recognized as revenue in future periods. This amount excludes contracts with an original expected term of one year or less and contracts for which we recognize revenue in the amount and in the same period in which we invoice for services performed. We expect to recognize $100.1 million or 44% of this revenue during the next 12 months. We expect to recognize the remaining $130.0 million or 56% of this revenue thereafter. Sales Commissions We consider internal sales commissions as potential incremental costs of obtaining the contract with a customer. We apply a practical expedient to expense incremental costs incurred if the period of the benefit is one year or less. Incremental costs that have a period of benefit greater than one year are capitalized and amortized over the estimated period of benefit. Capitalized commissions, net of amortization, are included in other current assets and other assets on our consolidated balance sheets. We capitalized $8.8 million and $0 of sales commissions for the years ended December 31, 2020 and 2019, respectively. As of December 31, 2020, capitalized commissions, net of amortization, included in other current assets and other assets were $2.9 million and $4.4 million, respectively. Capitalized commissions, net of amortization, included in other current assets and other assets were $0 as of December 31, 2019. Capitalized commissions are amortized over the expected period of benefit, which we have determined, based on analysis, to be three years. Amortization of capitalized commissions are included in sales and marketing expenses on our consolidated statements of operations. For the years ended December 31, 2020 and 2019, we amortized $1.5 million and $0 of capitalized commissions, respectively. We did not incur any impairment losses for the years ended December 31, 2020 and 2019. Cost of Revenue Cost of revenue for the delivery of software tools, support, updates and advertising consists primarily of hosting expenses, personnel costs (including salaries, stock-based compensation, and benefits) for employees associated with our product support and professional services organizations, credit card fees, third party license fees, and allocated shared costs, including facilities, information technology, and security costs, as well as amortization of related capitalized software costs and depreciation of related property and equipment. Stock-Based Compensation We measure all stock-based awards, including stock options and restricted stock units (“RSUs”), based on their estimated fair value on the grant date for awards to our employees and directors. RSUs granted by us prior to our IPO have service and liquidity event vesting conditions while stock options, as well as RSUs granted subsequent to our IPO, only have a service vesting condition. We account for forfeitures as they occur. We use the Black-Scholes pricing model to determine the fair values of stock options. We recognize as an expense, the grant date fair values of stock-based compensation on a straight-line basis, over the requisite service period, generally, a vesting period of four years. We measure the fair value of RSUs based on the grant-date share price of the underlying common stock. For RSUs granted prior to our IPO, expense was recognized when the liquidity event vesting condition was satisfied upon the completion of our IPO. At that date, cumulative stock-based compensation expense using the graded vesting method for those RSUs for which the service condition has been satisfied prior to the liquidity event was recognized and the remaining expense will be thereafter recognized over the remaining vesting period of the award under a graded vesting method. For RSUs granted subsequent to our IPO, we recognize the expense on a straight-line basis, over the requisite service period, generally, a vesting period of one year to four years. Common Stock Valuation Prior to our IPO, given the absence of a public trading market for our common stock, and in accordance with the American Institute of Certified Public Accountants Accounting and Valuation Guide: Valuation of Privately-Held Company Equity Securities Issued as Compensation, our board of directors along with management exercised its reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of fair value of our common stock, including: •the prices at which we or other holders sold our common and redeemable convertible preferred stock to outside investors in arms-length transactions; •independent third-party valuations of our common stock; •the rights, preferences and privileges of our redeemable convertible preferred stock relative to those of our common stock; •our financial condition, results of operations and capital resources; •the industry outlook; •the valuation of comparable companies; •the lack of marketability of our common stock; •the fact that option and RSU grants have involved rights in illiquid securities in a private company; •the likelihood of achieving a liquidity event, such as an initial public offering or a sale of our company given prevailing market conditions; •the history and nature of our business, industry trends and competitive environment; and •general economic outlook including economic growth, inflation and unemployment, interest rate environment and global economic trends. Following the completion of our IPO, the fair value of our common stock is based on the closing price as reported on the date of grant on the primary stock exchange on which our common stock is traded. Cash, Cash Equivalents, and Restricted Cash We consider all highly liquid investments with original maturities of three months or less at date of purchase to be cash equivalents. Our cash equivalents include money market funds and commercial paper. As of December 31, 2020 and 2019, restricted cash was $21.4 million and $17.1 million, respectively. Restricted cash consists of secured letters of credit issued in connection with our operating leases. Restrictions typically lapse at the end of the lease term, and restricted cash is classified as current or non-current based on the remaining term of the restriction. Marketable Securities Our marketable securities consist of investments in U.S. treasury securities, asset-backed securities, corporate bonds, commercial paper, and supranational bonds. We classify our investments in debt securities as available-for-sale at the time of purchase. We consider all debt securities as available for use in current operations, including those with maturity dates beyond one year, and therefore classify these securities as current assets in the consolidated balance sheets. Unrealized gains and losses, net of taxes, are included in accumulated other comprehensive loss, which is reflected as a separate component of stockholders’ equity in our consolidated balance sheets. These investments are considered impaired when a decline in fair value is judged to be other-than-temporary. We consider available quantitative and qualitative evidence in evaluating potential impairment of our investments on a quarterly basis. If the cost of an individual investment exceeds its fair value, we evaluate, among other factors, general market conditions, the duration and extent to which the fair value is less than cost, and our intent and ability to hold the investment. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis in the investment is established. Accounts Receivable We record accounts receivable at the invoiced amount. We maintain an allowance for doubtful accounts for any receivables we may be unable to collect, based on historical loss patterns, the number of days that billings are past due, and an evaluation of the potential risk of loss associated with delinquent accounts. In addition, we review the accounts receivable amounts due from customers that are past due to identify specific customers with known disputes or collectability issues. In determining the amount of the reserve, we make judgments about the creditworthiness of customers based on ongoing credit evaluations. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of December 31, 2020 and 2019, the allowance for doubtful accounts was $2.7 million and $9.1 million, respectively. We include the allowances for doubtful accounts in accounts receivable, net, on the consolidated balance sheets. Credit Risk and Concentrations Financial instruments that potentially subject us to a concentration of credit risk consist primarily of cash and cash equivalents, marketable securities, and accounts receivable. We place our domestic and foreign cash and cash equivalents, as well as our marketable securities, with large, creditworthy financial institutions. Balances in these accounts may exceed federally insured limits at times. In general, we do not require our customers to provide collateral or other security to support accounts receivable. To reduce credit risk, management performs credit evaluations of our customers’ financial condition, as warranted, and continually analyzes the allowance for doubtful accounts, which we maintain based upon the expected collectability of accounts receivable. As of December 31, 2020 and 2019, no individual customer represented 10% or more of the aggregate receivables. For the years ended December 31, 2020, 2019, and 2018, no individual customer represented 10% or more of total revenue. Fair Value of Financial Instruments We define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, we consider the principal or most advantageous market in which to transact and the market-based risk. We apply fair value accounting for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Goodwill, intangible assets, and other long-lived assets are measured at fair value on a nonrecurring basis, only if impairment is indicated. The carrying amounts reported in the consolidated financial statements approximate the fair value for cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities, due to their short-term nature. Property and Equipment, Net Property and equipment are stated at cost less accumulated depreciation and amortization, computed using the straight-line method based on the estimated useful lives of the assets. Depreciation commences upon placing the asset in service. An estimated useful life of three years is used for computer and other hardware and five years is used for furniture. Leasehold improvements are amortized over the shorter of the estimated useful life or the remaining term of the lease. Software is amortized over the estimated useful life or license term, generally either or five years. The costs of repairs and maintenance are expensed when incurred, while expenditures for refurbishments and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to the consolidated statement of operations. Leases We account for leases in accordance with Accounting Standards Update (“ASU”) No. 2016-02, Leases (“Topic 842”), which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. We adopted Topic 842 along with all subsequent ASU clarifications and improvements that are applicable to us on January 1, 2020 using the modified retrospective transition method and used the effective date as the date of initial application. Consequently, financial information is not updated and the disclosures required under Topic 842 are not provided for dates and periods prior to January 1, 2020. Topic 842 provides a number of optional practical expedients in transition. We elected the “package of practical expedients,” which permits us to not reassess under Topic 842 our prior conclusions about lease identification, lease classification and initial direct costs. We also made a policy election not to separate lease and non-lease components for each of our existing underlying asset classes; therefore we will account for lease and non-lease components as a single lease component. We determine if a contract contains a lease based on whether we have the right to obtain substantially all of the economic benefits from the use of an identified asset and whether we have the right to direct the use of an identified asset in exchange for consideration, which relates to an asset which we do not own. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets are recognized as the lease liability, adjusted for lease incentives received and prepayments made. Lease liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future lease payments is our IBR because the interest rate implicit in most of our leases is not readily determinable. The IBR is a hypothetical rate based on our understanding of what our credit rating would be. Lease payments may be fixed or variable; however, only fixed payments or in-substance fixed payments are included in our lease liability calculation. Variable lease payments are recognized in operating expenses in the period in which the obligation for those payments are incurred. Upon adoption of Topic 842, we recognized ROU assets of $105.1 million and liabilities for operating leases of $120.5 million as of January 1, 2020. Goodwill and Intangible Assets Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Intangible assets that are not considered to have an indefinite useful life are amortized on a straight-line basis over their estimated useful lives, which typically range from to six years. On an annual basis, we evaluate the estimated remaining useful life of purchased intangible assets and whether events or changes in circumstances warrant a revision to the remaining amortization period. No changes to the useful lives of our intangible assets were deemed necessary in 2020 or 2019 based on management’s evaluation. Segments We operate as a single operating segment. The chief operating decision maker is our Chief Executive Officer, who makes resource allocation decisions and assesses performance based on financial information presented on a consolidated basis, accompanied by disaggregated information of our revenue. Accordingly, we have determined that we have a single reportable segment and operating segment structure. Capitalized Software Costs and Software Implementation Costs We capitalize implementation costs incurred in our cloud computing service arrangements related to enterprise software solutions (“capitalized implementation costs”) and costs associated with customized internal‑use software systems that have reached the application development stage. Such capitalized costs include external direct costs utilized in developing or obtaining the applications and payroll and payroll‑related expenses for employees, who are directly associated with the development of the applications. We capitalize such costs during the application development stage, which begins when the preliminary project stage is complete and ceases at the point in which the project is substantially complete and is ready for its intended purpose. Costs related to preliminary project activities and post implementation activities are expensed as incurred. Capitalized software costs are amortized on a straight-line basis over their estimated useful life, which is generally to three years. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. Capitalized implementation costs are expensed over the term of the hosting arrangement, which is the fixed, non-cancellable term of the arrangement, plus any reasonably certain renewal periods. The amount of capitalized software costs and capitalized implementation costs was $0.8 million and $7.0 million, respectively, during the year ended December 31, 2020 and $0.3 million and $6.5 million, respectively, during the year ended December 31, 2019. Capitalized software costs are included in property and equipment, net, on the consolidated balance sheets. The current portion of capitalized implementation costs are included in prepaid expenses on the consolidated balance sheets, and the non-current portion of capitalized implementation costs are included in other assets on the consolidated balance sheets. Impairment Analysis We evaluate intangible assets and long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. This includes but is not limited to significant adverse changes in business climate, market conditions, or other events that indicate an asset’s carrying amount may not be recoverable. Recoverability of these assets is measured by comparing the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value. We evaluate and test the recoverability of our goodwill for impairment at least annually during our fourth quarter of each calendar year or more often if and when circumstances indicate that goodwill may not be recoverable. There were no material impairments of capitalized software costs, capitalized implementation costs, intangible assets, long-lived assets or goodwill during the years ended December 31, 2020, 2019, and 2018. Income Taxes We are subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgment is required in determining our provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws. We record an income tax expense (or benefit) for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, we recognize deferred income tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as for net operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We recognize the deferred income tax effects of a change in tax rates in the period of the enactment. We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income, and ongoing tax planning strategies in assessing the need for a valuation allowance. We recognize tax benefits from uncertain tax positions only if we believe that the position is more likely than not to be sustained on examination by the taxing authorities based on the technical merits of the position. Although we believe that we have adequately reserved for our uncertain tax positions (including net interest and penalties), we can provide no assurance that the final tax outcome of these matters will not be materially different. We make adjustments to these reserves in accordance with the income tax accounting guidance when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences will affect our income tax expense (or benefit) in the period in which such determination is made, and could have a material impact on our financial condition and operating results. We recognize interest and penalties related to unrecognized tax benefits within income tax expense in the accompanying consolidated statement of operations. Accrued interest and penalties are included in income and other taxes payable on the consolidated balance sheets. Translation of Foreign Currencies The functional currency of the majority of our foreign subsidiaries is the U.S. dollar. Foreign currency transaction gains and losses are included in interest and other income (expense), net, on the consolidated statements of operations for the period. For U.S. dollar functional currency subsidiaries, all assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenue and expenses are translated at the average exchange rate during the period. Equity transactions are translated using historical exchange rates. For a foreign subsidiary where the local currency is the functional currency, adjustments to translate those statements into U.S. dollars are recorded in accumulated other comprehensive loss in stockholders’ equity. Warranties and Indemnifications From time to time, we enter into certain types of contracts that contingently require us to indemnify parties against third‑party claims. These contracts primarily relate to agreements under which we indemnify customers and partners for claims arising from intellectual property infringement. The terms of such obligations vary, and the overall maximum amount of the obligations cannot be reasonably estimated. Historically, we have not been obligated to make any payments for these obligations, and no liabilities have been recorded for these obligations as of December 31, 2020 and 2019. We generally do not offer warranties for our software products. With certain customers, we will warrant that our software products will operate without material error and/or substantially in conformity with product documentation. We have not experienced any warranty claims to date, and no liabilities have been recorded as of December 31, 2020 and 2019. Research and Development Research and development costs, which consist primarily of software development costs, are expensed as incurred. FASB ASC Topic 985‑20, Costs of Software to Be Sold, Leased or Marketed, requires development costs incurred subsequent to establishment of technological feasibility related to software incorporated in our products to be capitalized and amortized over the estimated useful lives of the related products. Based upon our product development process, technological feasibility is established upon completion of a working model. Costs incurred between completion of the working model and the point at which the product is ready for general release have not been significant. Therefore, all product development costs have been charged to research and development expense in the accompanying consolidated statements of operations. Advertising Costs Advertising costs are expensed as incurred as a component of sales and marketing expense in the consolidated statements of operations. Advertising expense was approximately $12.3 million, $4.5 million, and $4.9 million for the years ended December 31, 2020, 2019, and 2018, respectively.
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Summary of Accounting Pronouncements |
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Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Accounting Pronouncements | Summary of Accounting Pronouncements Accounting Pronouncements Recently Adopted In February 2016, the FASB issued Topic 842, and subsequent amendments in July 2018, that superseded the existing lease guidance, including on-balance sheet recognition of operating leases for lessees. Under this update, lessees are required to provide enhanced disclosures and recognize a lease liability and an ROU asset for most leases. We elected to not include leases that have a duration of 12 months or less on our consolidated balance sheet. We adopted this update on January 1, 2020. Refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements for information on the impact on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. This update modifies the disclosure requirements on fair value measurements. We adopted this update on January 1, 2020. There was no material impact on our consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance. The new standard is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. We early adopted this new standard on October 1, 2020. There was no material impact on our consolidated financial statements. Recent Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequent amendments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost, including trade receivables. This update replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. The new impairment methodology eliminates the probable initial recognition threshold and, instead, estimates the expected credit losses in consideration of past events, current conditions and forecasted information. This update becomes effective and will be adopted by us in the first quarter of the year ending December 31, 2021. Based on the composition and credit quality of our trade receivables, as well as the economic conditions at the time of adoption, we do not expect this update to have a material impact on our consolidated financial statements.
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Revenue |
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Revenue | Revenue Disaggregation of Revenue Revenue by Source The following table presents our revenue disaggregated by source (in thousands):
Additional information regarding our revenue by source is discussed under the heading “Revenue Recognition” in Note 1, “Description of Business and Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements. Revenue by Geographic Area The following table presents our revenue disaggregated by geography, based on the invoice address of our customers (in thousands):
(1) No individual country, other than those disclosed above, exceeded 10% of our total revenue for any period presented. (2) Greater China includes China, Hong Kong, and Taiwan. (3) Europe, the Middle East, and Africa (“EMEA”) (4) Asia-Pacific, excluding Greater China (“APAC”) (5) Canada and Latin America (“Other Americas”)
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Cash Equivalents and Marketable Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Equivalents and Marketable Securities | Cash Equivalents and Marketable Securities Cash equivalents and marketable securities consist of the following as of December 31, 2020 (in thousands):
Based on our evaluation of available evidence, which includes an assessment of whether it is more likely than not we will be required to sell the investment before recovery of the investment's amortized cost basis, we do not believe the unrealized losses represent other-than-temporary impairments as of December 31, 2020. The following table summarizes the amortized cost and fair value of our marketable securities as of December 31, 2020, by contractual years to maturity (in thousands):
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Fair Value Measurements |
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Fair Value Measurements | Fair Value Measurements We categorize assets and liabilities recorded or disclosed at fair value on our consolidated balance sheets based upon the level of judgment associated with inputs used to measure their fair value. The categories are as follows: •Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities. •Level 2—Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments. •Level 3—Inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation. The following table presents the fair value of our financial assets and liabilities measured at fair value on a recurring basis using the above input categories as of December 31, 2020:
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Acquisitions |
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Acquisitions | Acquisitions Acquisitions are accounted for in accordance with FASB ASC Topic 805, Business Combinations, and the revenue and earnings of the acquired businesses have been included in our results from the respective dates of the acquisitions and were not material to our consolidated financial statements. The total purchase price allocated to the net assets acquired is assigned based on the fair values as of the date of acquisition. The fair value assigned to identifiable intangible assets acquired was determined using the income approach and the cost approach. We believe that these identified intangible assets will have no residual value after their estimated economic useful lives. The identifiable intangible assets are subject to amortization on a straight-line basis, as this best approximates the benefit period related to these assets. The excess of the purchase price over the identified tangible and intangible assets, less liabilities assumed, is recorded as goodwill. Goodwill is not subject to amortization and it is not deductible for U.S. income tax purposes. For 2020 and certain 2019 acquisitions, the fair values of assets acquired and liabilities assumed, including current income taxes payable and deferred taxes, may change over the measurement period as additional information is received and certain tax returns are finalized. Accordingly, the provisional measurements of fair value of the current income taxes payable and deferred taxes are subject to change. We expect to finalize the valuation as soon as practicable, but not later than one year from the respective acquisition dates. 2020 Acquisitions Finger Food In April 2020, we completed the acquisition of 100% of the issued share capital of Finger Food Studios Inc. (“Finger Food”) for consideration of $46.8 million payable in a combination of $23.6 million in cash and the issuance of 1,030,711 shares of common stock valued at $23.1 million. Finger Food creates developer applications on top of our solutions for a variety of industries, such as automotive, construction, gaming and retail. The acquisition of Finger Food was strategic in nature as we look to create repeatable solutions from Finger Food’s projects and apply the know-how of customer engagement to our offerings. The following table summarizes the consideration paid for Finger Food and the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands):
The acquired customer relationships and trademark intangible assets have useful lives of two years and six months, respectively. Goodwill of $44.8 million reflects the expected future benefits of certain synergies and acquired assembled workforce, which does not qualify for separate recognition as an identifiable intangible asset. Other 2020 Acquisitions During the year ended December 31, 2020, we completed other acquisitions for total consideration of approximately $31.6 million payable in a combination of $29.6 million in cash and the issuance of 72,479 shares of common stock valued at $2.0 million. In aggregate, $0.4 million represented cash acquired, $9.1 million was attributed to intangible assets and represents acquired developed technology, customer relationships and trademarks, $2.6 million was attributed to other assets, $23.3 million was attributed to goodwill and $3.8 million was attributed to other liabilities assumed. These acquisitions were strategic in nature as they enhanced our product offerings. We recorded approximately $4.1 million in transaction costs associated with acquisitions for the year ended December 31, 2020. These costs were recorded within general and administrative expenses. Pro forma results of operations for these acquisitions have not been presented because they are not material to the consolidated statements of operations. 2019 Acquisitions Vivox In January 2019, we completed the acquisition of 100% of the issued share capital of Mercer Road Corporation (“Vivox”) for consideration of $123.4 million payable in a combination of $119.0 million in cash and the issuance of 348,739 shares of common stock valued at $4.4 million. Vivox provides cross-platform voice and text communication tools for social experiences where players can communicate regardless of location in game play, on any platform, whether it is mobile, personal computer or console. The acquisition of Vivox was strategic in nature as we look to deliver more services for connected games and other use cases. The acquired developed technology has an estimated useful life of six years. The acquired customer relationships and trademark intangible assets have useful lives of two years and four years, respectively. Goodwill of $94.2 million reflects the expected future benefits of certain synergies and acquired assembled workforce, which does not qualify for separate recognition as an identifiable intangible asset. deltaDNA In September 2019, we completed the acquisition of 100% of the issued share capital of deltaDNA Limited (“deltaDNA”) for consideration of $53.1 million payable in a combination of $32.8 million in cash and $20.3 million of our common stock. The total purchase price includes 928,123 common shares issued by us. deltaDNA provides analytics, messaging and ad campaign management tools to enable real-time player life-cycle management. The acquisition of deltaDNA was strategic in nature as we look to integrate deltaDNA’s engagement tools and services to support our monetization products. The acquired developed technology has an estimated useful life of six years. The acquired customer relationships and trademark intangible assets have useful lives of two years and three years, respectively. Goodwill of $35.2 million reflects the expected future benefits of certain synergies and acquired assembled workforce, which does not qualify for separate recognition as an identifiable intangible asset. Artomatix In December 2019, we completed the acquisition of 100% of the issued share capital of Artomatix Limited (“Artomatix”) for consideration of $48.8 million payable in a combination of $38.7 million in cash and $10.1 million of our common stock. The total purchase price includes 457,875 common shares issued by us. Artomatix offers artificial intelligence (“AI”) and machine learning powered tools to simplify and automate parts of the 3D art creation process. The acquisition of Artomatix was strategic in nature as we look to expand our offering for 3D artists in addition to developers. The acquired developed technology has an estimated useful life of six years. Goodwill of $39.0 million reflects the expected future benefits of certain synergies and acquired assembled workforce, which does not qualify for separate recognition as an identifiable intangible asset. Other 2019 Acquisitions During the year ended December 31, 2019, we completed other acquisitions and purchases of intangible assets for total consideration of approximately $8.2 million. In aggregate, $0.4 million represented cash acquired, $3.5 million was attributed to intangible assets and represents acquired developed technology, $0.4 million was attributed to other assets, $4.5 million was attributed to goodwill and $0.7 million was attributed to other liabilities assumed. These acquisitions generally enhance the breadth and depth of our offerings and expand our expertise in different functional areas. We recorded $3.6 million in transaction costs associated with these acquisitions for the year ended December 31, 2019. These costs were recorded within general and administrative expenses. 2018 Acquisition During the year ended December 31, 2018, we completed an acquisition for total consideration of $2.0 million, which includes the assumption of $0.2 million in stockholder loans, payable in cash at the date of acquisition. $1.4 million of the consideration paid was attributed to intangible assets and represents acquired developed technology, customer relationships, and trademark, $0.9 million was attributed to goodwill, and $0.3 million was attributed to other liabilities assumed. This acquisition was expected to bolster our ability to effectively gain market share within the film industry, as well as enhance our product offerings to our existing customer base. The purchase price allocation has been completed, and the total purchase price allocated to the net assets acquired was assigned based on the fair values as of the date of acquisition. The transaction costs associated with this acquisition were not material.
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill Goodwill represents the excess of purchase price and related costs over the value assigned to net tangible and identifiable intangible assets acquired in business combinations. The following table presents the changes in the carrying amount of goodwill for the years ended December 31, 2020 and 2019 (in thousands):
Intangible Assets, Net The following tables present details of our intangible assets, excluding goodwill (in thousands, except for weighted-average useful life):
(1) Based on weighted-average useful life established as of the acquisition date. The following table presents the amortization of finite-lived intangible assets included on our consolidated statements of operations (in thousands):
As of December 31, 2020, the estimated future amortization of finite-lived intangible assets for each of the next five years and thereafter was as follows (in thousands):
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Balance Sheet Components |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Components | Balance Sheet Components The following tables provide details of selected balance sheet items (in thousands):
(1) The following table presents the depreciation and amortization of property and equipment included on our consolidated statements of operations (in thousands):
Long-lived Assets, Net, by Geographic Area The following table presents our long-lived assets, net, disaggregated by geography, which consists of our property and equipment, net, but excludes internally developed software and purchased software (in thousands):
(1) No individual country, other than those disclosed above, exceeded 10% of our total long-lived assets, net, for any period presented.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases We have operating leases for various office spaces, which have remaining lease terms of less than 1 year to approximately 10 years, some of which include options to extend the lease with renewal terms from to five years. Some leases include an option to terminate the lease from less than one year up to five years from the lease commencement date. Components of lease expense were as follows (in thousands):
Other information related to operating leases was as follows (in thousands):
As of December 31, 2020, our operating leases had a weighted-average remaining lease term of 5.97 years and a weighted-average discount rate of 4.5%. As of December 31, 2020, future minimum lease payments under our non-cancellable operating leases were as follows (in thousands):
(1) Excludes future minimum payments for leases which have not yet commenced as of December 31, 2020. As of December 31, 2020, we had entered into leases that have not yet commenced with future minimum lease payments of $159.0 million that are not yet reflected on our consolidated balance sheets. These operating leases will commence in 2021 or later with lease terms of 7.33 years to 11.75 years. The operating lease liabilities and ROU assets as of December 31, 2020 include leases assumed in the acquisition of Finger Food with the remaining lease term exceeding one year at the acquisition date. See Note 6, “Acquisitions,” of the Notes to Consolidated Financial Statements for further discussion.
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Borrowings |
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Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings On December 20, 2019, we entered into a revolving credit agreement (the “Credit Agreement”), which provides for a committed revolving loan facility of up to $125.0 million (the “Revolving Facility”) and includes a $20.0 million letter of credit subfacility (the “LC Capacity” and together with the Revolving Facility, the “Credit Facility”). Borrowings under the Credit Facility are available for working capital and general corporate purposes. The Credit Facility has a maturity date of December 20, 2024. At our option, we shall specify whether the loans made under the Revolving Facility is an Alternate Base Rate (“ABR”) borrowing or a Eurodollar borrowing, which then determines the annual interest rate. ABR borrowings bear interest at the ABR plus 0.50%. Eurodollar borrowings bear interest at the adjusted LIBO Rate plus 1.50%. The ABR equals the greatest of (i) the prime rate, (ii) the federal funds rate plus 0.50%, and (iii) the sum of the adjusted one-month LIBO Rate for a Eurodollar borrowing plus 1.00%. The ABR is subject to a floor of 1.00%. For ABR borrowings, interest is payable on the last day of March, June, September, and December of each year. For Eurodollar borrowings, interest is payable on the last day of each interest period for the applicable borrowing, and if such interest period extends over three months, each day prior to the last day of each three-month interval during such interest period. Commitments under the Revolving Facility are subject to a commitment fee of 0.25% on the difference between the total committed amount of the Revolving Facility on the one hand, and the amount drawn thereunder plus the aggregate amount of LC Capacity used on the other. An annual letter of credit fee of 1.50% of the average daily undrawn amount of the letters of credit issued thereunder is also payable quarterly. Letters of credit issued under the letter of credit subfacility are subject to a fronting fee of 0.125% on the average daily undrawn amount on such letters of credit. There was no principal amount outstanding under the Credit Facility, and the full $125.0 million was available for future borrowing under the Revolving Facility as of December 31, 2019. There were no commitment and fronting fees on the undrawn portion of the Credit Facility for the year ended December 31, 2019. In March 2020, we borrowed the full $125.0 million amount as a Eurodollar borrowing under our Revolving Facility. In connection with this borrowing, we recognized $1.5 million and $0.1 million in expense primarily related to the interest cost associated with this borrowing and partially due to commitment fees on the undrawn portion and amortization of debt issuance costs during the year ended December 31, 2020, respectively. This amount is reported within “Interest expense” on our consolidated statements of operations. In September 2020, we repaid the outstanding $125.0 million of indebtedness under the Credit Facility using a portion of the net proceeds we received from our IPO. Under the Credit Agreement, we must maintain a minimum liquidity balance of $75.0 million as of the last day of the most recently completed four consecutive fiscal quarters, which commenced on June 30, 2020. The Credit Agreement contains customary conditions to borrowing, representations and warranties, events of default and covenants, including covenants that restrict our ability to incur indebtedness, grant liens, make investments, undergo corporate changes, make dispositions, prepay other indebtedness, pay dividends or other distributions and engage in transactions with our affiliates. We were in compliance in all material respects with the covenants in the Credit Agreement as of December 31, 2020. The obligations under the Credit Agreement are secured by a perfected security interest in (i) all of our tangible and intangible assets, except for certain customary excluded assets, and (ii) all of our ownership in capital stock of restricted subsidiaries (limited, in the case of the stock of non-U.S. subsidiaries and U.S. subsidiaries that have no material assets other than equity interests and/or indebtedness in foreign subsidiaries that are controlled foreign corporations, to 65% of the capital stock of such subsidiaries). The obligations under the Credit Agreement are also guaranteed by our existing and subsequently acquired or formed material domestic subsidiaries.
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Commitment and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies The following table summarizes our non‑cancellable contractual commitments as of December 31, 2020 (in thousands):
(1) The substantial majority of our purchase commitments are related to agreements with our data center hosting providers. Data Center Hosting Commitments In March 2018, we entered into a cloud service agreement with a total term of six years. Under the agreement, we were granted access to use certain cloud services. Minimum annual commitments increase annually over the term of the agreement. The aggregate value of all annual minimum commitments over the contract term is $210.5 million. Total spend under the agreement for the years ended December 31, 2020, 2019, and 2018 was approximately $63.2 million, $32.7 million, and $7.0 million, respectively. We expect to meet our remaining commitment. Legal Matters In the normal course of business, we are subject to various legal matters. We accrue a liability when management believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. We also disclose material contingencies when we believe a loss is not probable but reasonably possible. Legal costs related to such potential losses are expensed as incurred. In addition, recoveries are shown as a reduction in legal costs in the period in which they are realized. With respect to our outstanding matters, based on our current knowledge, we believe that the resolution of such matters will not, either individually or in aggregate, have a material adverse effect on our business or our consolidated financial statements. However, litigation is inherently uncertain, and the outcome of these matters cannot be predicted with certainty. Accordingly, cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these matters. Indemnifications In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, investors, directors, officers, employees and other parties with respect to certain matters. Indemnification may include losses from our breach of such agreements, services we provide, or third-party intellectual property infringement claims. These indemnifications may survive termination of the underlying agreement and the maximum potential amount of future indemnification payments may not be subject to a cap. As of December 31, 2020, there were no known events or circumstances that have resulted in a material indemnification liability to us and we did not incur material costs to defend lawsuits or settle claims related to these indemnifications. Letters of Credit We had $21.4 million and $17.1 million of secured letters of credit outstanding as of December 31, 2020 and 2019, respectively. These primarily relate to our office space leases and are fully collateralized by certificates of deposit which we record in restricted cash on our consolidated balance sheets based on the term of the remaining restriction.
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Stockholders' Equity and Employee Compensation Plans |
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Stockholders' Equity and Employee Compensation Plans | Stockholders’ Equity and Employee Compensation Plans Stockholders' Equity Convertible Preferred Stock The following table presents shares and amount of convertible preferred stock authorized, issued and outstanding, by series type (in thousands, except share data):
In March 2020, we sold 6.8 million shares of convertible Series E preferred stock. The total transaction price of convertible preferred stock issued, net of issuance costs, was $150.0 million. Each share of convertible Series A, B, C, D, D-1 and E preferred stock was convertible into one share of common stock. Upon completion of our IPO, all of the outstanding shares of our convertible preferred stock, totaling 102,717,396 shares, were automatically converted into an equivalent number of shares of common stock on a one-to-one basis. We recognized the $836.5 million in excess over par of the carrying value upon conversion to additional paid-in capital as of December 31, 2020. As of December 31, 2020, there were no shares of convertible preferred stock issued and outstanding. In connection with the IPO, our Amended and Restated Certificate of Incorporation (“COI”) became effective, which authorized the issuance of 100,000,000 shares of undesignated preferred stock with a par value of $0.000005 with rights and preferences, including voting rights, designated from time to time by our board of directors. Common Stock In January 2020, we sold 4.5 million shares of our common stock. The total transaction price of the common stock issued was $100.0 million. Our Amended and Restated COI also authorized the issuance of 1,000,000,000 shares of common stock with a par value of $0.000005 per share. After the completion of our IPO on September 22, 2020, we issued and donated 750,000 shares of our common stock valued, for accounting purposes, at $63.6 million to a charitable foundation. Employee Compensation Plans 2009 Stock Plan Our 2009 Stock Plan was adopted by the Board of Directors on September 9, 2009. The 2009 Stock Plan provides for the issuance of stock-based awards to employees, including executive officers, and consultants. The 2009 Stock Plan permits the granting of incentive stock options, nonstatutory stock options, and restricted stock. The 2009 Stock Plan also provides for nonqualified stock options or common stock awards to be issued to employees and consultants. The 2009 Stock Plan provides for incentive stock options to be granted to employees at an exercise price not less than 100% of the fair value at the grant date as determined by the Board of Directors, with the exception of certain members of executive management who own more than 10% of the outstanding common stock, in which case the option price will be 110% of such fair market value. Options granted generally have a maximum term of 10 years from the grant date, are exercisable upon vesting unless otherwise designated for early exercise by the Board of Directors at the time of grant, and generally vest over a year period. Options exercised early are subject to the vesting provisions, and any unvested shares are subject to repurchase, at the original price, upon termination of employment, death, or disability. As of December 31, 2019 and 2018, there were no shares subject to repurchase under the 2009 Stock Plan and options granted outside the plan (nonplan options) related to early exercise options. The 2009 Stock Plan was terminated in September 2019, and accordingly, no shares of common stock remain available for the future grant of stock awards under our 2009 Stock Plan. 2019 Stock Incentive Plan In succession to the 2009 Stock Plan, our board of directors approved our 2019 Stock Incentive Plan (“2019 Stock Plan”) in September 2019. The 2019 Stock Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock or cash awards to employees, consultants, and directors. The exercise price of stock options granted under the 2019 Stock Plan must be at least equal to the fair market value of a share of stock on grant date and the exercise price of incentive stock options granted to any participant, who owns more than 10% of the total voting power of all classes of our outstanding stock, must be at least 110% of the fair market value on the grant date. The term of a stock option and stock appreciation right may not exceed 10 years, except with respect to any participant who owns 10% of the voting power of all classes of our outstanding stock, the term of an incentive stock option may not exceed five years. Our 2019 Stock Plan was replaced by our 2020 Equity Incentive Plan in September 2020. All shares remaining available for issuance under our 2019 Stock Plan as of the effectiveness of our 2020 Equity Inventive Plan have become available for issuance under our 2020 Plan, and no further grants will be made under our 2019 Plan. 2020 Equity Incentive Plan In succession to and continuation of our 2019 Stock Plan, our board of directors approved our 2020 Equity Incentive Plan (“2020 Plan”) in August 2020, and our stockholders approved in September 2020. No grants were made under our 2020 Plan prior to its effectiveness on September 17, 2020. As our 2020 Plan has become effective, no further grants will be made under our 2019 Stock Plan. In addition, shares subject to outstanding stock awards granted under our 2009 Stock Plan and 2019 Stock Plan that expire, or are forfeited, cancelled, withheld, or reacquired become available for grant pursuant to the 2020 Plan. The 2020 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, and other forms of awards to employees, directors, and consultants, including employees and consultants of our affiliates. The exercise price of stock options granted under the 2020 Plan must be at least equal to the fair market value of a share of our common stock on grant date and the exercise price of incentive stock options granted to any participant, who owns more than 10% of the total voting power of all classes of our outstanding stock, must be at least 110% of the fair market value on the grant date. The term of a stock option and stock appreciation right may not exceed 10 years, except with respect to any participant who owns 10% of the voting power of all classes of our outstanding stock, the term of an incentive stock option may not exceed five years. As of December 31, 2020, we have reserved a total of 79.0 million shares of common stock under the 2020 Stock Plan, of which 28.2 million were available for grant. 2020 Employee Stock Purchase Plan (“2020 ESPP”) Our board of directors also adopted our 2020 ESPP in August 2020, and our stockholders approved our 2020 ESPP in September 2020. The maximum number of shares of our common stock that may be issued under our 2020 ESPP is 5,288,091 shares, of which 5,288,091 were available for issuance as of December 31, 2020. Our 2020 ESPP permits participants to purchase shares of our common stock through payroll deductions of up to 15% of their earnings. Unless otherwise determined by the administrator, the purchase price of the shares will be 85% of the lower of the fair market value of our common stock on the first day of an offering or on the date of purchase. Participants may end their participation at any time during an offering and will be paid their accrued contributions that have not yet been used to purchase shares. Participation ends automatically upon termination of employment with us. As of December 31, 2020, we had not yet launched our 2020 ESPP and are under no obligation to do so. Employee 401(k) Plan We have a qualified defined contribution plan under Section 401(k) of the Internal Revenue Code. U.S. full-time employees qualify for participation in the plan. Contribution to the plan is under our discretion. For the years ended December 31, 2020, 2019, and 2018, we contributed and expensed $6.8 million, $5.9 million, and $4.0 million, respectively, to the plan. Defined Contribution Pension Plan For other operations outside the United States, we have a defined contribution pension plan. We contribute up to 10% of total salary into the plan annually when employees contribute to the plan. For the years ended December 31, 2020, 2019, and 2018, we contributed and expensed $10.6 million, $7.1 million, and $6.0 million, respectively, to the plan.
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Stock-Based Compensation |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock‑Based Compensation We recorded stock-based compensation expense related to grants to employees, including those in connection with modified awards, on our consolidated statements of operations as follows (in thousands):
As of December 31, 2020, there was unrecognized compensation expense related to outstanding stock options of $121.2 million to be recognized over the weighted-average remaining vesting period of 2.75 years. As of December 31, 2020, there was unrecognized compensation expense related to unvested restricted stock units of $448.3 million to be recognized over the weighted-average remaining vesting period of 3.41 years. In future periods, stock-based compensation expense may increase as we issue additional equity-based awards to continue to attract and retain employees. In November 2019, we entered into a separation agreement with our former Chief People Officer, who is engaged to our Chief Executive Officer (“CEO”). Our Board of Directors (excluding the CEO) approved the agreement providing for payment of her earned bonus, payment for coverage under COBRA or applicable state law until December 2020, standard release of claims against us and vesting acceleration in full and an extension of the exercise period of her outstanding equity awards. Stock-based compensation expense of $13.5 million in connection with the modified equity awards was recorded in general and administrative expense in the year ended December 31, 2019 related to this agreement, which is included in the amount shown in the table above. Stock Options A summary of our stock option activity under the 2009 Stock Plan, 2019 Stock Plan, and 2020 Plan is as follows:
In 2014, we issued nonplan options to purchase 4,250,000 shares of common stock, 8,500,000 when taking into account the 2:1 forward stock split we effected in 2017, to our CEO with an exercise price of $2.85 per share. These options vested over four years and were immediately exercisable. We accepted a promissory note receivable from our CEO in consideration for the early exercise of these nonplan options. The note receivable, totaling $12.1 million, bore interest at a rate of 1.72% and had a term of seven years. The promissory note receivable was considered nonrecourse. Due to the nonrecourse nature of the note, the resulting exercise of the nonplan options was determined to not be substantive. Therefore, we did not reflect the exercise of the stock options or the note receivable for accounting purposes on our consolidated balance sheets at the time the promissory note was executed. The shares issued were considered restricted until the note was repaid. During 2016, $4.2 million of the note was partially repaid and an amended promissory note was put in place for an amount of $8.0 million bearing interest at a rate of 1.72% and with a remaining term of five years. For accounting and reporting purposes, the repayment of the note was considered to be a $4.2 million exercise of stock options during the year ended December 31, 2016. In June 2020, our CEO fully repaid the $8.0 million principal balance and $0.9 million in related interest of the nonrecourse promissory note that we issued in 2016. For accounting and reporting purposes, the repayment of the note was considered to be an $8.9 million exercise of stock options during the year ended December 31, 2020. The aggregate pretax intrinsic value of stock options exercised during the years ended December 31, 2020, 2019, and 2018, was $441.0 million, $92.0 million, and $13.9 million respectively. The intrinsic value is the difference between the estimated fair value of our common stock on the date of exercise and the exercise price for in-the-money options. The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2020, 2019, and 2018, was $10.66, $8.39, and $6.74 per share, respectively. The fair value of stock options vested during the years ended December 31, 2020, 2019, and 2018, was $44.1 million, $27.8 million, and $20.7 million, respectively. The calculated grant-date fair value of stock options granted was estimated using the Black-Scholes option-pricing model with the following assumptions:
For stock options granted prior to our IPO, the expected term is based on the vesting terms, estimated exercise behavior, post-vesting cancellations and contractual terms of the awards. For stock options granted after our IPO, we estimate the expected term using the simplified method as specified under Staff Accounting Bulletin Topic 14, which utilizes the midpoint between the stock options' vesting date and the end of the contractual term. We do not plan to pay cash dividends in the foreseeable future; therefore, we used an expected dividend yield of zero. The risk-free interest rate is based on U.S. Treasury rates in effect at the time of grant with maturities equal to the grant’s expected term. The expected volatility is based on historical volatility of peer companies. The fair value of common stock is estimated based on observable transactions in the secondary market for stock options granted prior to our IPO and based on the grant-date closing price of our common stock for stock options granted after our IPO. Restricted Stock Units (“RSUs”) A summary of our RSU activity under the 2019 Stock Plan and 2020 Plan is as follows:
The total fair value of RSUs vested as of the vesting dates during the year ended December 31, 2020 was $85.9 million. No RSUs vested during the years ended December 31, 2019 and 2018. The RSUs granted prior to our IPO are subject to both a service-based vesting condition, which is satisfied over to four years, and a liquidity event vesting condition, which was satisfied upon the completion of our IPO. The RSUs granted subsequent to our IPO only have a service-based vesting condition, which is satisfied over one year to four years. In the third quarter of 2020, we recorded cumulative stock-based compensation expense of $47.8 million related to all then-outstanding RSUs as the liquidity event vesting condition was satisfied upon the completion of our IPO.
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Loss before provision for income taxes consisted of the following for the years ended December 31, 2020, 2019, and 2018 (in thousands):
The components of the provision for income taxes consists of the following for the years ended December 31, 2020, 2019, and 2018 (in thousands):
Reconciliations of the income tax provision at the U.S. federal statutory tax rate to the provision for income taxes are as follows (in thousands):
Certain prior year amounts for rate reconciliation items in the table above have been reclassified to conform to the current year presentation for the components of rate reconciling items, specifically the change in the valuation allowance for foreign and state purposes is now presented together with the change in the U.S. valuation allowance, which resulted in an increase to the change in valuation allowance of $28.5 million and $21.1 million as of December 31, 2019 and 2018, respectively, and reductions to the remaining reconciling items, primarily foreign income taxed at different rates. Such reclassifications had no effect on the net current or net long-term deferred tax assets or liabilities presented in the consolidated balance sheets as of December 31, 2019 and 2018. Our income tax provision for the year ended December 31, 2020 was primarily driven by the earnings of our foreign subsidiaries, which are taxed at rates that differ from the U.S. statutory rate. This tax is partially offset by an income tax benefit of $3.1 million as a result of stock option exercises in our foreign subsidiaries. Our income tax provision for the year ended December 31, 2019 was primarily driven by $8.5 million tax expense related to one-time intercompany transactions with a subsidiary. Our income tax provision for the year ended December 31, 2018 was primarily driven by losses in our foreign subsidiaries. The types of temporary differences that give rise to significant portions of our deferred tax assets and liabilities as of December 31, 2020 and 2019 are set forth below (in thousands):
The realization of deferred tax assets is dependent upon the generation of sufficient taxable income of the appropriate character in future periods. We regularly assess the ability to realize our deferred tax assets and establish a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized. We weigh all available positive and negative evidence, including our earnings history and results of recent operations, scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. Due to the weight of objectively verifiable negative evidence, including our history of losses, we believe that it is more likely than not that our U.S. federal, state, and certain foreign deferred tax assets will not be realized as of December 31, 2020 and 2019, and as such, we have maintained a full valuation allowance against such deferred tax assets. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth. In the event we determine that we will be able to realize all or part of our net deferred tax assets in the future, the valuation allowance against deferred tax assets will be reversed in the period in which we make such determination. The release of a valuation allowance against deferred tax assets may cause greater volatility in the effective tax rate in the periods in which the valuation allowance is released. The valuation allowance against our U.S. federal, state and foreign deferred tax assets increased by $142.4 million, $52.8 million, and $16.2 million in the years ended December 31, 2020, 2019, and 2018, respectively. The increase in the valuation allowance in the years ended December 31, 2020, 2019, and 2018 was primarily related to tax losses for which insufficient positive evidence exists to support their realizability. In 2020, we capitalized certain research and development costs incurred by our foreign subsidiary, which resulted in a deferred tax asset of $56.6 million. In addition, we recorded deferred tax asset related to unused charitable contribution of $13.8 million arising from the stock donations to the donor-advised fund. The unused portion of the charitable contribution can be carried forward for five years. Deferred tax assets for both the capitalized research and development costs and unused charitable contribution were offset by valuation allowance. Our net operating loss carryforwards for U.S. federal, state, and foreign purposes were $322.2 million, $93.9 million, and $274.2 million, respectively. The net operating loss carryforwards, if not utilized, will begin to expire in 2032, 2024, and 2039, respectively. Our U.S. federal, state, and foreign research and development credit carryforwards were $30.3 million, $13.6 million and $1.2 million, respectively. The U.S. federal credit carryforwards, if not utilized, will begin to expire in 2032, while the California credit carryforwards have no expiration. The foreign credit carryforwards, if not utilized, will begin to expire in 2039. Federal and state tax laws impose restrictions on the utilization of net operating loss and research and development credit carryforwards in the event of a change in ownership of our business as defined by the Internal Revenue Code, Sections 382 and 383. Under Section 382 and 383 of the Code, substantial changes in our ownership may limit the amount of net operating loss and research and development credit carryforwards that are available to offset taxable income. The annual limitation would not automatically result in the loss of net operating loss or research and development credit carryforwards but may limit the amount available in any given future period. A reconciliation of the beginning and ending amount of total gross unrecognized tax benefits, excluding accrued net interest and penalties, is as follows (in thousands):
As of December 31, 2020 and 2019, we had unrecognized tax benefits of $74.7 million and $37.4 million, respectively, of which $9.0 million and $8.4 million would affect the effective tax rate if recognized. We recognize interest and penalties related to our unrecognized tax benefits within our provision for income taxes. The amount of interest and penalties accrued as of December 31, 2020 and 2019 were $2.2 million and $2.4 million, respectively. We are subject to taxation in the United States and various other state and foreign jurisdictions. The material jurisdictions in which we are subject to potential examination include the United States and Denmark. Our 2017 and subsequent tax years remain open to examination by the Internal Revenue Service. Our 2017 and subsequent tax years remain open to examination in Denmark. We believe that adequate amounts have been reserved in accordance with ASC 740 for any adjustments to the provision for income taxes or other tax items that may ultimately result from examinations. The timing of the resolution, settlement, and closure of any audits is highly uncertain, and it is reasonably possible that the balance of gross unrecognized tax benefits could significantly change in the next 12 months. Given the number of years remaining that are subject to examination, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits. If the taxing authorities prevail in the assessment of additional tax due, the assessed tax, interest, and penalties, if any, could have a material adverse impact on our financial position, results of operations, or cash flows.
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Net Loss per Share of Common Stock |
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Net Loss per Share of Common Stock | Net Loss per Share of Common Stock Basic net loss per share attributable to our common stockholders is computed using the weighted-average number of common shares outstanding during the period, less shares subject to repurchase. Diluted net loss per share is the same as basic net loss per share for all periods presented because the effects of potentially dilutive items were antidilutive given our net loss in each period presented. Potentially dilutive common shares result from the assumed exercise of outstanding stock options and assumed vesting of outstanding RSUs, both using the treasury stock method. The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):
The following table presents the forms of antidilutive potential common shares excluded from the computation of diluted net loss per share for the following periods (in thousands):
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Subsequent Events |
12 Months Ended |
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Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsIn March 2021, we completed the acquisition of a company that provides augmented reality solutions for industrial applications across a variety of industries. This acquisition was not significant. |
Description of Business and Summary of Significant Accounting Policies (Policies) |
12 Months Ended |
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Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation and ConsolidationWe prepared the accompanying consolidated financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). |
Consolidation | The consolidated financial statements include the accounts of Unity Software Inc. and its wholly owned subsidiaries. We have eliminated all intercompany balances and transactions. In our opinion, the information contained herein reflects all adjustments necessary for a fair presentation of our results of operations, financial position, cash flows, and stockholders’ equity. All such adjustments are of a normal, recurring nature. |
Use of Estimates | Use of Estimates The preparation of 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 reporting period. For us, these estimates include, but are not limited to, revenue recognition, allowances for doubtful accounts, fair values of financial instruments, useful lives of fixed assets, the incremental borrowing rate (“IBR”) we use to determine our operating lease liabilities, income taxes, valuation of deferred tax assets and liabilities, valuation of intangible assets, useful lives of intangible assets, assets acquired and liabilities assumed through business combinations, fair value of our common stock prior to our IPO, valuation of stock-based compensation, capitalization of software costs and software implementation costs, customer life for capitalized commissions, and other contingencies, among others. Actual results could differ from those estimates, and such differences could be material to our financial position and results of operations.
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Revenue Recognition | Revenue Recognition Revenue is recognized upon the transfer of control of promised products and services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We evaluate and recognize revenue by: •identifying the contract(s) with the customer; •identifying the performance obligation(s) in the contract(s); •determining the transaction price; •allocating the transaction price to performance obligation(s) in the contract(s); and •recognizing revenue as each performance obligation is satisfied through the transfer of a promised good or service to a customer (“transfer of control”). The five-step model requires us to make significant estimates in situations where we are unable to establish stand-alone selling price based on various observable prices using all information that is reasonably available. Observable inputs and information we use to make these estimates include historical internal pricing data and cost plus margin analysis. We generate revenue through three sources: (1) Create Solutions, which consists primarily of our subscription offerings and professional services; (2) Operate Solutions, which includes our monetization services, hosting, and multiplayer services, and voice services; and (3) Strategic Partnerships and Other, which are primarily arrangements with strategic hardware, operating system, device, game console, and other technology providers for the customization and development of our software to enable interoperability with these platforms. We recognize revenue as our contractual performance obligations are satisfied. When contracts with our customers contain multiple performance obligations, we allocate the overall transaction price, which is the amount of consideration to which we expect to receive in exchange for promised goods or services, to each of the distinct performance obligations based on their estimated relative standalone selling prices. Create Solutions Create Solutions Subscriptions Our subscriptions, mainly consisting of Unity Pro and Unity Plus (collectively, the “Create Solutions subscriptions”) are fully integrated content development solutions that enable customers to build interactive real-time 2D and 3D applications. These Create Solutions subscriptions provide customers with the rights to a software license with embedded cloud functionality and multi-platform support. Significant judgment is required to determine the level of integration and interdependency between individual promises of the Create Solutions subscriptions. This determination influences whether the software is considered distinct and accounted for separately as a license performance obligation recognized at a point in time, or not distinct and accounted for together with other promises in the Create Solutions subscriptions as a single performance obligation recognized over time. Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“Topic 606”), we have concluded that the software license is not distinct from the multi-platform support as they are highly interdependent and interrelated considering the significant two-way dependency between the promises. Although the promise to the embedded cloud functionality represents separate performance obligations under Topic 606, we have accounted for these obligations as if they are a single performance obligation that includes the software license and the multi-platform support because the cloud functionality has the same pattern of transfer to the customer over the duration of the subscription term. The transaction price is determined based on the consideration that we will be entitled to receive in exchange for transferring our Create Solutions subscriptions to the customer, and we do not have material variable consideration. We recognize the single performance obligation ratably over the contract term beginning when the license key is delivered. Enterprise customers may purchase an enhanced support offering (“Enterprise Support”) that is sold separately from the Create Solutions subscriptions, and is capable of being distinct, and is distinct within the context of the contract due to its separate utility. Enterprise Support is generally billed in advance and is recognized ratably over the support term as we have a stand-ready performance obligation over the support term. When an arrangement includes Enterprise Support and Create Solutions subscriptions, which have the same pattern of transfer to the customer (the services transfer to the customer over the same period), we account for those performance obligations as if they are a single performance obligation. If an arrangement includes Enterprise Support and Create Solutions subscriptions that do not have the same pattern of transfer, we allocate the transaction price to the distinct performance obligations and recognize them ratably over their respective terms. Create Solutions subscriptions typically have a term of one to three years and are generally billed in advance and recognized ratably over the term. Professional Services Our professional services revenue is primarily composed of consulting, integration, training, and custom application and workflow development. Professional services may be billed in advance or on a time and materials basis and we recognize the related revenue as services are rendered. We typically invoice our customers up front or when promised services are delivered, and the payment terms vary by customer type and location. The term between billing and payment due dates is not significant. As a result, we have determined that our contracts do not include significant financing component. Customer billings related to taxes imposed by and remitted to governmental authorities on revenue-producing transactions are reported on a net basis. Operate Solutions Monetization We generate advertising revenue through our monetization solutions, including the Unified Auction, which allows publishers to sell the available advertising inventory from their mobile applications to advertisers. We enter into contracts with both advertisers and publishers to participate in the Unified Auction. For advertisements placed through the Unified Auction, we evaluate whether we are the principal (in which case revenue is reported on a gross basis) or the agent (in which case revenue is reported on a net basis). The evaluation to present revenue on a gross basis versus net basis requires significant judgment. We have concluded that the publisher is our customer and we are the agent in facilitating the fulfillment of the advertising inventory in the Unified Auction primarily because we do not control the advertising inventory prior to the placement of an advertisement. As the operator of the Unified Auction, our role is to enable the publisher to monetize its advertising inventory with the advertiser based on the bid/ask price from the auction. We do not control the outcome of the bids and do not have pricing latitude in the transaction. Based on these and other factors, we report advertising revenue based on the net amount retained from the transaction which is our revenue share. Advertising revenue is recognized at a point in time when control is transferred to the customer. This occurs when a user installs an application after seeing an advertisement contracted on a cost-per-install basis or when an advertisement starts on a cost-per-impression basis. Typically, we do not retain a share of the revenue generated through Unity IAP (“In-App Purchases”). Publisher payables represent amounts earned by publishers in the Unified Auction and are presented as a reduction of revenue in our consolidated statements of operations. Payment terms are contractually defined and vary by publisher and location. Cloud and Hosting Services We provide cloud-based services as well as enterprise hosting (“Hosting Services”) to developers that develop and operate multiuser/multiplayer games and applications through a combination of hardware server and cloud-based infrastructure and services. The Hosting Services facilitate the connection of end users, and allow content game and application operators to monitor network traffic. Our cloud-based services provide our customers with tools and services to develop and operate live games and applications, including voice chat services. We primarily sell these services on a fixed fee or usage-based model with fixed fees billed monthly in advance and usage fees billed monthly in arrears. We recognize revenue ratably over the contractual service term for fixed fee arrangements as we have a stand-ready performance obligation that is generally fulfilled evenly throughout the hosting period. We recognize revenue for usage-based arrangements as services are provided. Strategic Partnerships and Other We enter into strategic contracts with owners of hardware, operating system, device, game console and other technology providers to customize our software licenses to enable interoperability with these platforms (“Strategic Partnerships”). This allows customers using our Create Solutions subscriptions to build and publish content to more than one platform without having to write platform-specific code. We consider these strategic partners as our customers and generally provide them with the following promises in our contracts: (i) development and customization of our software to integrate with the customer’s platform and (ii) post-integration ongoing support and updates. We generally view these promises as one single performance obligation as they are not distinct within the context of the contract. This is because the customized software license that is integrated with the customer’s platform requires continuous updates that are critical to the utility of the customized software. The transaction price is determined based on the consideration that we will be entitled to receive in exchange for transferring our goods and services to the customer. We do not have material variable consideration. When Strategic Partnerships contain non-monetary consideration, we measure and record the transaction price at the estimated fair value of the non-cash consideration received from the customer. Typically, we recognize revenue for these contracts over time as service is performed using the input method to measure progress of the satisfaction of the performance obligation. Certain Strategic Partnerships also require the customer to pay sales-based royalties based on the sales of games on the Strategic Partner platform that incorporate our customized software. Since customized software intellectual property is the predominant item to which royalty relates, we recognize revenue for sales-based royalties when the later of the subsequent sale or usage occurs, or the performance to which some or all of the sales-based royalty has been allocated has been satisfied. We record revenue under these arrangements for the amounts due to us based on estimates of the sales of these customers and pursuant to the terms of the contracts. The Strategic Partnerships are typically multi-year arrangements where customers make payments commensurate with milestones accomplished with respect to the development and integration service or pay in advance on a quarterly basis. Contract Balances Timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets relate to performance completed in advance of scheduled billings. The primary changes in our contract assets and contract liabilities are due to our performance under the contracts and billings. Remaining Performance ObligationsAs of December 31, 2020, we had total remaining performance obligations of $230.1 million, which represents the total contract transaction price allocated to undelivered performance obligations primarily for Create Solutions subscriptions, Enterprise Support, and Strategic Partnership contracts, which are generally recognized over the next one year to three years. Transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and unbilled amounts that will be recognized as revenue in future periods. This amount excludes contracts with an original expected term of one year or less and contracts for which we recognize revenue in the amount and in the same period in which we invoice for services performed.Sales CommissionsWe consider internal sales commissions as potential incremental costs of obtaining the contract with a customer. We apply a practical expedient to expense incremental costs incurred if the period of the benefit is one year or less. Incremental costs that have a period of benefit greater than one year are capitalized and amortized over the estimated period of benefit. Capitalized commissions, net of amortization, are included in other current assets and other assets on our consolidated balance sheets.Capitalized commissions are amortized over the expected period of benefit, which we have determined, based on analysis, to be three years. Amortization of capitalized commissions are included in sales and marketing expenses on our consolidated statements of operations.Cost of Revenue Cost of revenue for the delivery of software tools, support, updates and advertising consists primarily of hosting expenses, personnel costs (including salaries, stock-based compensation, and benefits) for employees associated with our product support and professional services organizations, credit card fees, third party license fees, and allocated shared costs, including facilities, information technology, and security costs, as well as amortization of related capitalized software costs and depreciation of related property and equipment.
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Stock-Based Compensation | Stock-Based Compensation We measure all stock-based awards, including stock options and restricted stock units (“RSUs”), based on their estimated fair value on the grant date for awards to our employees and directors. RSUs granted by us prior to our IPO have service and liquidity event vesting conditions while stock options, as well as RSUs granted subsequent to our IPO, only have a service vesting condition. We account for forfeitures as they occur. We use the Black-Scholes pricing model to determine the fair values of stock options. We recognize as an expense, the grant date fair values of stock-based compensation on a straight-line basis, over the requisite service period, generally, a vesting period of four years. We measure the fair value of RSUs based on the grant-date share price of the underlying common stock. For RSUs granted prior to our IPO, expense was recognized when the liquidity event vesting condition was satisfied upon the completion of our IPO. At that date, cumulative stock-based compensation expense using the graded vesting method for those RSUs for which the service condition has been satisfied prior to the liquidity event was recognized and the remaining expense will be thereafter recognized over the remaining vesting period of the award under a graded vesting method. For RSUs granted subsequent to our IPO, we recognize the expense on a straight-line basis, over the requisite service period, generally, a vesting period of one year to four years.
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Common Stock Valuation | Common Stock Valuation Prior to our IPO, given the absence of a public trading market for our common stock, and in accordance with the American Institute of Certified Public Accountants Accounting and Valuation Guide: Valuation of Privately-Held Company Equity Securities Issued as Compensation, our board of directors along with management exercised its reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of fair value of our common stock, including: •the prices at which we or other holders sold our common and redeemable convertible preferred stock to outside investors in arms-length transactions; •independent third-party valuations of our common stock; •the rights, preferences and privileges of our redeemable convertible preferred stock relative to those of our common stock; •our financial condition, results of operations and capital resources; •the industry outlook; •the valuation of comparable companies; •the lack of marketability of our common stock; •the fact that option and RSU grants have involved rights in illiquid securities in a private company; •the likelihood of achieving a liquidity event, such as an initial public offering or a sale of our company given prevailing market conditions; •the history and nature of our business, industry trends and competitive environment; and •general economic outlook including economic growth, inflation and unemployment, interest rate environment and global economic trends. Following the completion of our IPO, the fair value of our common stock is based on the closing price as reported on the date of grant on the primary stock exchange on which our common stock is traded.
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Cash, Cash Equivalents, and Restricted Cash | Cash, Cash Equivalents, and Restricted Cash We consider all highly liquid investments with original maturities of three months or less at date of purchase to be cash equivalents. Our cash equivalents include money market funds and commercial paper. Restricted cash consists of secured letters of credit issued in connection with our operating leases. Restrictions typically lapse at the end of the lease term, and restricted cash is classified as current or non-current based on the remaining term of the restriction.
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Accounts Receivable | Accounts ReceivableWe record accounts receivable at the invoiced amount. We maintain an allowance for doubtful accounts for any receivables we may be unable to collect, based on historical loss patterns, the number of days that billings are past due, and an evaluation of the potential risk of loss associated with delinquent accounts. In addition, we review the accounts receivable amounts due from customers that are past due to identify specific customers with known disputes or collectability issues. In determining the amount of the reserve, we make judgments about the creditworthiness of customers based on ongoing credit evaluations. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. |
Marketable Securities | Marketable Securities Our marketable securities consist of investments in U.S. treasury securities, asset-backed securities, corporate bonds, commercial paper, and supranational bonds. We classify our investments in debt securities as available-for-sale at the time of purchase. We consider all debt securities as available for use in current operations, including those with maturity dates beyond one year, and therefore classify these securities as current assets in the consolidated balance sheets. Unrealized gains and losses, net of taxes, are included in accumulated other comprehensive loss, which is reflected as a separate component of stockholders’ equity in our consolidated balance sheets. These investments are considered impaired when a decline in fair value is judged to be other-than-temporary. We consider available quantitative and qualitative evidence in evaluating potential impairment of our investments on a quarterly basis. If the cost of an individual investment exceeds its fair value, we evaluate, among other factors, general market conditions, the duration and extent to which the fair value is less than cost, and our intent and ability to hold the investment. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis in the investment is established.
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Credit Risk and Concentrations | Credit Risk and Concentrations Financial instruments that potentially subject us to a concentration of credit risk consist primarily of cash and cash equivalents, marketable securities, and accounts receivable. We place our domestic and foreign cash and cash equivalents, as well as our marketable securities, with large, creditworthy financial institutions. Balances in these accounts may exceed federally insured limits at times. In general, we do not require our customers to provide collateral or other security to support accounts receivable. To reduce credit risk, management performs credit evaluations of our customers’ financial condition, as warranted, and continually analyzes the allowance for doubtful accounts, which we maintain based upon the expected collectability of accounts receivable.
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Fair Value of Financial Instruments | Fair Value of Financial Instruments We define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, we consider the principal or most advantageous market in which to transact and the market-based risk. We apply fair value accounting for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Goodwill, intangible assets, and other long-lived assets are measured at fair value on a nonrecurring basis, only if impairment is indicated. The carrying amounts reported in the consolidated financial statements approximate the fair value for cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities, due to their short-term nature.
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Property and Equipment, Net | Property and Equipment, Net Property and equipment are stated at cost less accumulated depreciation and amortization, computed using the straight-line method based on the estimated useful lives of the assets. Depreciation commences upon placing the asset in service. An estimated useful life of three years is used for computer and other hardware and five years is used for furniture. Leasehold improvements are amortized over the shorter of the estimated useful life or the remaining term of the lease. Software is amortized over the estimated useful life or license term, generally either or five years. The costs of repairs and maintenance are expensed when incurred, while expenditures for refurbishments and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to the consolidated statement of operations.
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Leases | Leases We account for leases in accordance with Accounting Standards Update (“ASU”) No. 2016-02, Leases (“Topic 842”), which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. We adopted Topic 842 along with all subsequent ASU clarifications and improvements that are applicable to us on January 1, 2020 using the modified retrospective transition method and used the effective date as the date of initial application. Consequently, financial information is not updated and the disclosures required under Topic 842 are not provided for dates and periods prior to January 1, 2020. Topic 842 provides a number of optional practical expedients in transition. We elected the “package of practical expedients,” which permits us to not reassess under Topic 842 our prior conclusions about lease identification, lease classification and initial direct costs. We also made a policy election not to separate lease and non-lease components for each of our existing underlying asset classes; therefore we will account for lease and non-lease components as a single lease component. We determine if a contract contains a lease based on whether we have the right to obtain substantially all of the economic benefits from the use of an identified asset and whether we have the right to direct the use of an identified asset in exchange for consideration, which relates to an asset which we do not own. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets are recognized as the lease liability, adjusted for lease incentives received and prepayments made. Lease liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future lease payments is our IBR because the interest rate implicit in most of our leases is not readily determinable. The IBR is a hypothetical rate based on our understanding of what our credit rating would be. Lease payments may be fixed or variable; however, only fixed payments or in-substance fixed payments are included in our lease liability calculation. Variable lease payments are recognized in operating expenses in the period in which the obligation for those payments are incurred.
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Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Intangible assets that are not considered to have an indefinite useful life are amortized on a straight-line basis over their estimated useful lives, which typically range from to six years. On an annual basis, we evaluate the estimated remaining useful life of purchased intangible assets and whether events or changes in circumstances warrant a revision to the remaining amortization period.
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Segments | Segments We operate as a single operating segment. The chief operating decision maker is our Chief Executive Officer, who makes resource allocation decisions and assesses performance based on financial information presented on a consolidated basis, accompanied by disaggregated information of our revenue. Accordingly, we have determined that we have a single reportable segment and operating segment structure.
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Capitalized Software Costs and Software Implementation Costs | Capitalized Software Costs and Software Implementation Costs We capitalize implementation costs incurred in our cloud computing service arrangements related to enterprise software solutions (“capitalized implementation costs”) and costs associated with customized internal‑use software systems that have reached the application development stage. Such capitalized costs include external direct costs utilized in developing or obtaining the applications and payroll and payroll‑related expenses for employees, who are directly associated with the development of the applications. We capitalize such costs during the application development stage, which begins when the preliminary project stage is complete and ceases at the point in which the project is substantially complete and is ready for its intended purpose. Costs related to preliminary project activities and post implementation activities are expensed as incurred. Capitalized software costs are amortized on a straight-line basis over their estimated useful life, which is generally to three years. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. Capitalized implementation costs are expensed over the term of the hosting arrangement, which is the fixed, non-cancellable term of the arrangement, plus any reasonably certain renewal periods. The current portion of capitalized implementation costs are included in prepaid expenses on the consolidated balance sheets, and the non-current portion of capitalized implementation costs are included in other assets on the consolidated balance sheets.
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Impairment Analysis | Impairment Analysis We evaluate intangible assets and long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. This includes but is not limited to significant adverse changes in business climate, market conditions, or other events that indicate an asset’s carrying amount may not be recoverable. Recoverability of these assets is measured by comparing the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value. We evaluate and test the recoverability of our goodwill for impairment at least annually during our fourth quarter of each calendar year or more often if and when circumstances indicate that goodwill may not be recoverable.
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Income Taxes | Income Taxes We are subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgment is required in determining our provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws. We record an income tax expense (or benefit) for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, we recognize deferred income tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as for net operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We recognize the deferred income tax effects of a change in tax rates in the period of the enactment. We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income, and ongoing tax planning strategies in assessing the need for a valuation allowance. We recognize tax benefits from uncertain tax positions only if we believe that the position is more likely than not to be sustained on examination by the taxing authorities based on the technical merits of the position. Although we believe that we have adequately reserved for our uncertain tax positions (including net interest and penalties), we can provide no assurance that the final tax outcome of these matters will not be materially different. We make adjustments to these reserves in accordance with the income tax accounting guidance when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences will affect our income tax expense (or benefit) in the period in which such determination is made, and could have a material impact on our financial condition and operating results. We recognize interest and penalties related to unrecognized tax benefits within income tax expense in the accompanying consolidated statement of operations. Accrued interest and penalties are included in income and other taxes payable on the consolidated balance sheets.
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Translation of Foreign Currencies | Translation of Foreign Currencies The functional currency of the majority of our foreign subsidiaries is the U.S. dollar. Foreign currency transaction gains and losses are included in interest and other income (expense), net, on the consolidated statements of operations for the period. For U.S. dollar functional currency subsidiaries, all assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenue and expenses are translated at the average exchange rate during the period. Equity transactions are translated using historical exchange rates. For a foreign subsidiary where the local currency is the functional currency, adjustments to translate those statements into U.S. dollars are recorded in accumulated other comprehensive loss in stockholders’ equity.
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Warranties and Indemnifications | Warranties and Indemnifications From time to time, we enter into certain types of contracts that contingently require us to indemnify parties against third‑party claims. These contracts primarily relate to agreements under which we indemnify customers and partners for claims arising from intellectual property infringement. The terms of such obligations vary, and the overall maximum amount of the obligations cannot be reasonably estimated. Historically, we have not been obligated to make any payments for these obligations, and no liabilities have been recorded for these obligations as of December 31, 2020 and 2019. We generally do not offer warranties for our software products. With certain customers, we will warrant that our software products will operate without material error and/or substantially in conformity with product documentation. We have not experienced any warranty claims to date, and no liabilities have been recorded as of December 31, 2020 and 2019.
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Research and Development | Research and Development Research and development costs, which consist primarily of software development costs, are expensed as incurred. FASB ASC Topic 985‑20, Costs of Software to Be Sold, Leased or Marketed, requires development costs incurred subsequent to establishment of technological feasibility related to software incorporated in our products to be capitalized and amortized over the estimated useful lives of the related products. Based upon our product development process, technological feasibility is established upon completion of a working model. Costs incurred between completion of the working model and the point at which the product is ready for general release have not been significant. Therefore, all product development costs have been charged to research and development expense in the accompanying consolidated statements of operations.
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Advertising Costs | Advertising CostsAdvertising costs are expensed as incurred as a component of sales and marketing expense in the consolidated statements of operations. |
Accounting Pronouncements Recently Adopted and Recent Accounting Pronouncements Not Yet Adopted | Accounting Pronouncements Recently Adopted In February 2016, the FASB issued Topic 842, and subsequent amendments in July 2018, that superseded the existing lease guidance, including on-balance sheet recognition of operating leases for lessees. Under this update, lessees are required to provide enhanced disclosures and recognize a lease liability and an ROU asset for most leases. We elected to not include leases that have a duration of 12 months or less on our consolidated balance sheet. We adopted this update on January 1, 2020. Refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements for information on the impact on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. This update modifies the disclosure requirements on fair value measurements. We adopted this update on January 1, 2020. There was no material impact on our consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance. The new standard is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. We early adopted this new standard on October 1, 2020. There was no material impact on our consolidated financial statements. Recent Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequent amendments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost, including trade receivables. This update replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. The new impairment methodology eliminates the probable initial recognition threshold and, instead, estimates the expected credit losses in consideration of past events, current conditions and forecasted information. This update becomes effective and will be adopted by us in the first quarter of the year ending December 31, 2021. Based on the composition and credit quality of our trade receivables, as well as the economic conditions at the time of adoption, we do not expect this update to have a material impact on our consolidated financial statements.
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Revenue (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue by Source | The following table presents our revenue disaggregated by source (in thousands):
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Schedule of Revenue by Geographic Area | The following table presents our revenue disaggregated by geography, based on the invoice address of our customers (in thousands):
(1) No individual country, other than those disclosed above, exceeded 10% of our total revenue for any period presented. (2) Greater China includes China, Hong Kong, and Taiwan. (3) Europe, the Middle East, and Africa (“EMEA”) (4) Asia-Pacific, excluding Greater China (“APAC”) (5) Canada and Latin America (“Other Americas”)
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Cash Equivalents and Marketable Securities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Equivalents and Marketable Securities | Cash equivalents and marketable securities consist of the following as of December 31, 2020 (in thousands):
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Schedule of Cash Equivalents | Cash equivalents and marketable securities consist of the following as of December 31, 2020 (in thousands):
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Schedule of Maturities for Marketable Securities | The following table summarizes the amortized cost and fair value of our marketable securities as of December 31, 2020, by contractual years to maturity (in thousands):
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Fair Value Measurements (Tables) |
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value of Assets Measured on Recurring Basis | The following table presents the fair value of our financial assets and liabilities measured at fair value on a recurring basis using the above input categories as of December 31, 2020:
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Acquisitions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the consideration paid for Finger Food and the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands):
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Goodwill and Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The following table presents the changes in the carrying amount of goodwill for the years ended December 31, 2020 and 2019 (in thousands):
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Schedule of Intangible Assets | The following tables present details of our intangible assets, excluding goodwill (in thousands, except for weighted-average useful life):
(1) Based on weighted-average useful life established as of the acquisition date.
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Schedule of Finite-lived Intangible Assets Amortization Expense | The following table presents the amortization of finite-lived intangible assets included on our consolidated statements of operations (in thousands):
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Schedule of Finite-Lived Intangible Assets Future Amortization Expense | As of December 31, 2020, the estimated future amortization of finite-lived intangible assets for each of the next five years and thereafter was as follows (in thousands):
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Balance Sheet Components (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment | The following tables provide details of selected balance sheet items (in thousands):
(1) The following table presents the depreciation and amortization of property and equipment included on our consolidated statements of operations (in thousands):
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Schedule of Long-lived Assets by Geographic Areas | The following table presents our long-lived assets, net, disaggregated by geography, which consists of our property and equipment, net, but excludes internally developed software and purchased software (in thousands):
(1) No individual country, other than those disclosed above, exceeded 10% of our total long-lived assets, net, for any period presented.
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Schedule of Accrued Expenses and Current Liabilities |
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Leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Lease Cost | Components of lease expense were as follows (in thousands):
Other information related to operating leases was as follows (in thousands):
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Schedule of Future Minimum Lease Payments | As of December 31, 2020, future minimum lease payments under our non-cancellable operating leases were as follows (in thousands):
(1) Excludes future minimum payments for leases which have not yet commenced as of December 31, 2020.
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Commitment and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maturities of Future Purchase Obligations | The following table summarizes our non‑cancellable contractual commitments as of December 31, 2020 (in thousands):
(1) The substantial majority of our purchase commitments are related to agreements with our data center hosting providers.
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Stockholders' Equity and Employee Compensation Plans (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Convertible Preferred Stock Authorized, Issued, and Outstanding | The following table presents shares and amount of convertible preferred stock authorized, issued and outstanding, by series type (in thousands, except share data):
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Stock-Based Compensation (Tables) |
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock-Based Compensation Expense | We recorded stock-based compensation expense related to grants to employees, including those in connection with modified awards, on our consolidated statements of operations as follows (in thousands):
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Schedule of Stock Options | A summary of our stock option activity under the 2009 Stock Plan, 2019 Stock Plan, and 2020 Plan is as follows:
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Summary of Valuation Assumptions of Stock Options | The calculated grant-date fair value of stock options granted was estimated using the Black-Scholes option-pricing model with the following assumptions:
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Summary of Restricted Stock Unit Activity | A summary of our RSU activity under the 2019 Stock Plan and 2020 Plan is as follows:
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loss Before Provision for Income Taxes | Loss before provision for income taxes consisted of the following for the years ended December 31, 2020, 2019, and 2018 (in thousands):
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Schedule of Components of Income Tax Expense (Benefit) | The components of the provision for income taxes consists of the following for the years ended December 31, 2020, 2019, and 2018 (in thousands):
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Schedule of Income Tax Provision Reconciliation | Reconciliations of the income tax provision at the U.S. federal statutory tax rate to the provision for income taxes are as follows (in thousands):
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Summary of Deferred Tax Assets and Liabilities | The types of temporary differences that give rise to significant portions of our deferred tax assets and liabilities as of December 31, 2020 and 2019 are set forth below (in thousands):
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Schedule of Unrecognized Tax Benefits Roll Forward | A reconciliation of the beginning and ending amount of total gross unrecognized tax benefits, excluding accrued net interest and penalties, is as follows (in thousands):
|
Net Loss per Share of Common Stock (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted Earnings Per Share | The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):
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Schedule of Antidilutive Securities Excluded from Computation of Diluted Earnings Per Share | The following table presents the forms of antidilutive potential common shares excluded from the computation of diluted net loss per share for the following periods (in thousands):
|
Description of Business and Summary of Significant Accounting Policies - IPO (Details) - USD ($) $ / shares in Units, $ in Millions |
1 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 28, 2020 |
Sep. 24, 2020 |
Sep. 24, 2020 |
Sep. 22, 2020 |
Jan. 31, 2020 |
Dec. 31, 2020 |
|
Class of Stock [Line Items] | |||||||
Issuance of stock (in shares) | 4,500,000 | ||||||
Proceeds from issuance of stock | $ 100.0 | ||||||
Conversion of convertible preferred stock to common stock upon initial public offering (in shares) | 102,717,396 | ||||||
IPO | |||||||
Class of Stock [Line Items] | |||||||
Issuance of stock (in shares) | 28,750,000 | 25,000,000 | |||||
Stock issued price (USD per share) | $ 52.00 | ||||||
Proceeds from issuance of stock | $ 1,241.3 | ||||||
Conversion of convertible preferred stock to common stock upon initial public offering (in shares) | 102,717,396 | ||||||
Deferred offering costs | $ 9.9 | ||||||
Over-Allotment Option | |||||||
Class of Stock [Line Items] | |||||||
Issuance of stock (in shares) | 3,750,000 | ||||||
Stock issued price (USD per share) | $ 52.00 | $ 52.00 | |||||
Proceeds from issuance of stock | $ 186.2 |
Description of Business and Summary of Significant Accounting Policies - Revenue Recognition (Details) |
12 Months Ended |
---|---|
Dec. 31, 2020
sources
| |
Accounting Policies [Abstract] | |
Number of revenue sources | 3 |
Revenue, performance obligation, description of timing | one to three years |
Description of Business and Summary of Significant Accounting Policies - Contract Balances (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Accounting Policies [Abstract] | ||
Unbilled receivables | $ 26.3 | $ 24.6 |
Revenue recognized | $ 83.1 |
Description of Business and Summary of Significant Accounting Policies - Remaining Performance Obligations (Details) $ in Millions |
Dec. 31, 2020
USD ($)
|
---|---|
Class of Stock [Line Items] | |
Revenue, remaining performance obligation, amount | $ 230.1 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Class of Stock [Line Items] | |
Revenue, remaining performance obligation, amount | $ 100.1 |
Recognition period | 12 months |
Revenue, remaining performance obligation, percentage | 44.00% |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Class of Stock [Line Items] | |
Revenue, remaining performance obligation, amount | $ 130.0 |
Recognition period | |
Revenue, remaining performance obligation, percentage | 56.00% |
Description of Business and Summary of Significant Accounting Policies - Sales Commissions (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Capitalized Contract Cost [Line Items] | ||
Capitalized contract cost in period | $ 8,800,000 | $ 0 |
Capitalized contract cost, amortization | 1,500,000 | 0 |
Capitalized contract cost, impairment loss | 0 | 0 |
Other Current Assets | ||
Capitalized Contract Cost [Line Items] | ||
Capitalized contract costs | 2,900,000 | 0 |
Other Assets | ||
Capitalized Contract Cost [Line Items] | ||
Capitalized contract costs | $ 4,400,000 | $ 0 |
Description of Business and Summary of Significant Accounting Policies - Stock-Based Compensation (Details) |
12 Months Ended |
---|---|
Dec. 31, 2020 | |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options vesting period | 4 years |
RSUs | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options vesting period | 1 year |
RSUs | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options vesting period | 4 years |
Description of Business and Summary of Significant Accounting Policies - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Accounting Policies [Abstract] | ||
Restricted Cash | $ 21.4 | $ 17.1 |
Description of Business and Summary of Significant Accounting Policies - Accounts Receivable (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Accounting Policies [Abstract] | ||
Accounts receivable, allowances | $ 2,714 | $ 9,052 |
Description of Business and Summary of Significant Accounting Policies - Property and Equipment, Net (Details) |
12 Months Ended |
---|---|
Dec. 31, 2020 | |
Computer and other hardware | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Furniture | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Purchased software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Purchased software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Description of Business and Summary of Significant Accounting Policies - Leases (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Jan. 01, 2020 |
Dec. 31, 2019 |
---|---|---|---|
Accounting Policies [Abstract] | |||
Operating lease right‑of‑use assets | $ 103,609 | $ 105,100 | $ 0 |
Operating lease liabilities | $ 123,907 | $ 120,500 |
Description of Business and Summary of Significant Accounting Policies - Goodwill and Intangible Assets (Details) |
12 Months Ended |
---|---|
Dec. 31, 2020 | |
Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets useful life | 3 years |
Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets useful life | 6 years |
Description of Business and Summary of Significant Accounting Policies - Segments (Details) |
12 Months Ended |
---|---|
Dec. 31, 2020
segment
| |
Accounting Policies [Abstract] | |
Number of Operating Segments | 1 |
Description of Business and Summary of Significant Accounting Policies - Capitalized Software Costs and Software Implementation Costs (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Property, Plant and Equipment [Line Items] | ||
Capitalized software costs | $ 0.8 | $ 0.3 |
Capitalized implementation costs | $ 7.0 | $ 6.5 |
Minimum | Internally developed software | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 2 years | |
Maximum | Internally developed software | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 3 years |
Description of Business and Summary of Significant Accounting Policies - Advertising Costs (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Accounting Policies [Abstract] | |||
Advertising expense | $ 12.3 | $ 4.5 | $ 4.9 |
Revenue - Disaggregation of Revenue By Source (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 772,445 | $ 541,779 | $ 380,755 |
Create Solutions | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 231,314 | 168,626 | 125,539 |
Operate Solutions | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 471,161 | 293,317 | 184,405 |
Strategic Partnerships and Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 69,970 | $ 79,836 | $ 70,811 |
Revenue - Disaggregation of Revenue by Geographic Area (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 772,445 | $ 541,779 | $ 380,755 |
United States | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 195,218 | 151,383 | 114,893 |
Greater China | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 110,175 | 64,784 | 40,551 |
EMEA | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 278,468 | 184,064 | 121,584 |
APAC | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 148,874 | 113,938 | 86,442 |
Other Americas | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 39,710 | $ 27,610 | $ 17,285 |
Cash Equivalents and Marketable Securities - Maturity of Marketable Securities (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Amortized Cost | ||
Due within one year | $ 311,178 | |
Due between one and two years | 168,175 | |
Amortized Cost | 479,353 | |
Fair Value | ||
Due within one year | 311,181 | |
Due between one and two years | 168,225 | |
Fair Value | $ 479,406 | $ 0 |
Acquisitions - 2018 Acquisitions (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Business Acquisition [Line Items] | |||
Fair value of common stock issued as consideration for business acquisitions | $ 25,144 | $ 34,807 | $ 0 |
Goodwill | $ 286,251 | $ 218,305 | 45,407 |
2018 Acquisitions | |||
Business Acquisition [Line Items] | |||
Consideration transferred | 2,000 | ||
Fair value of common stock issued as consideration for business acquisitions | 200 | ||
Intangible assets other than goodwill | 1,400 | ||
Goodwill | 900 | ||
Other liabilities assumed | $ (300) |
Goodwill and Intangible Assets - Changes in Goodwill (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Goodwill [Roll Forward] | ||
Beginning balance | $ 218,305 | $ 45,407 |
Measurement period adjustments | (65) | |
Ending balance | 286,251 | 218,305 |
Vivox | ||
Goodwill [Roll Forward] | ||
Goodwill from acquisition | 94,209 | |
deltaDNA | ||
Goodwill [Roll Forward] | ||
Goodwill from acquisition | 35,159 | |
Artomatix | ||
Goodwill [Roll Forward] | ||
Beginning balance | 39,000 | |
Goodwill from acquisition | 39,035 | |
Ending balance | 39,000 | |
Other Acquisitions | ||
Goodwill [Roll Forward] | ||
Beginning balance | 4,500 | |
Goodwill from acquisition | 23,201 | 4,495 |
Ending balance | 23,300 | $ 4,500 |
Finger Food | ||
Goodwill [Roll Forward] | ||
Goodwill from acquisition | $ 44,810 |
Goodwill and Intangible Assets - Amortization of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization expense | $ 17,755 | $ 11,570 | $ 3,861 |
Goodwill and Intangible Assets - Expected Amortization of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2021 | $ 16,551 | |
2022 | 13,702 | |
2023 | 11,292 | |
2024 | 10,826 | |
2025 | 5,088 | |
Thereafter | 0 | |
Intangible assets, net | $ 57,459 | $ 62,034 |
Balance Sheet Components - Schedule of Long Lived Assets by Geographic Region (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Total long-lived assets, net | $ 94,592 | $ 78,470 |
United States | ||
Property, Plant and Equipment [Line Items] | ||
Total long-lived assets, net | 35,494 | 35,602 |
Canada | ||
Property, Plant and Equipment [Line Items] | ||
Total long-lived assets, net | 20,063 | 10,396 |
United Kingdom | ||
Property, Plant and Equipment [Line Items] | ||
Total long-lived assets, net | 17,846 | 10,238 |
Greater China | ||
Property, Plant and Equipment [Line Items] | ||
Total long-lived assets, net | 5,653 | 6,097 |
EMEA, excluding United Kingdom | ||
Property, Plant and Equipment [Line Items] | ||
Total long-lived assets, net | 11,181 | 10,475 |
APAC | ||
Property, Plant and Equipment [Line Items] | ||
Total long-lived assets, net | 3,546 | 4,783 |
Other Americas, excluding Canada | ||
Property, Plant and Equipment [Line Items] | ||
Total long-lived assets, net | $ 809 | $ 879 |
Balance Sheet Components - Schedule of Accrued Expenses and Current Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Accrued expenses | $ 53,535 | $ 36,217 |
Accrued compensation | 52,771 | 30,246 |
Accrued expenses and other current liabilities | $ 106,306 | $ 66,463 |
Leases - Narrative (Details) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2020
USD ($)
| |
Lessee, Lease, Description [Line Items] | |
Operating lease, weighted average remaining lease term | 5 years 11 months 19 days |
Operating lease, weighted average discount rate, percent | 4.50% |
Lessee, operating lease, lease not yet commenced, undiscounted amount | $ 159.0 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating lease term | 1 year |
Operating lease renewal term | 1 year |
Operating lease termination period | 1 year |
Lessee, operating lease, lease not yet commenced, term | 7 years 3 months 29 days |
Minimum | Finger Food | |
Lessee, Lease, Description [Line Items] | |
Lessee, operating lease, remaining lease term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating lease term | 10 years |
Operating lease renewal term | 5 years |
Operating lease termination period | 5 years |
Lessee, operating lease, lease not yet commenced, term | 11 years 9 months |
Leases - Schedule of Lease Cost (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2020
USD ($)
| |
Leases [Abstract] | |
Operating lease expense, excluding ROU asset impairment | $ 29,265 |
Short-term lease expense | 953 |
Variable lease expense | 5,013 |
Sublease income | (130) |
Total lease expense | $ 35,101 |
Leases - Other Information (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2020
USD ($)
| |
Leases [Abstract] | |
Cash paid for amounts included in the measurement of operating lease liabilities | $ 29,336 |
Operating lease ROU assets obtained in exchange for new operating lease liabilities | $ 24,647 |
Leases - Schedule of Future Minimum Lease Payments (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Jan. 01, 2020 |
---|---|---|
Leases [Abstract] | ||
2021 | $ 30,176 | |
2022 | 27,545 | |
2023 | 22,022 | |
2024 | 18,901 | |
2025 | 13,834 | |
Thereafter | 29,284 | |
Total future minimum lease payments | 141,762 | |
Less: imputed interest | (17,855) | |
Present value of lease liabilities | $ 123,907 | $ 120,500 |
Commitment and Contingencies - Future Purchase Obligations (Details) $ in Thousands |
Dec. 31, 2020
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Total | $ 153,870 |
2021 | 48,502 |
2021‑2023 | 89,743 |
2024‑2025 | 15,625 |
Thereafter | $ 0 |
Commitment and Contingencies - Narrative (Details) - USD ($) $ in Millions |
1 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Letter of Credit | ||||
Long-term Purchase Commitment [Line Items] | ||||
Letter of credit outstanding | $ 21.4 | $ 17.1 | ||
Cloud Service | ||||
Long-term Purchase Commitment [Line Items] | ||||
Term of commitment | 6 years | |||
Minimum commitment amount | 210.5 | |||
Commitment amount spent | $ 63.2 | $ 32.7 | $ 7.0 |
Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total stock-based compensation expense | $ 134,629 | $ 44,480 | $ 20,913 |
Cost of revenue | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total stock-based compensation expense | 10,626 | 3,198 | 2,777 |
Research and development | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total stock-based compensation expense | 66,038 | 13,521 | 9,514 |
Sales and marketing | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total stock-based compensation expense | 23,769 | 6,124 | 3,916 |
General and administrative | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total stock-based compensation expense | $ 34,196 | $ 21,637 | $ 4,706 |
Stock-Based Compensation - Summary of Valuation Assumptions of Stock Options (Details) - Stock options |
12 Months Ended |
---|---|
Dec. 31, 2020
USD ($)
$ / shares
| |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |
Expected dividend yield | $ | $ 0 |
Expected term (in years) | 6 years |
Minimum | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |
Risk-free interest rate | 0.40% |
Expected volatility | 33.80% |
Fair value of underlying common stock (USD per share) | $ 22.00 |
Maximum | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |
Risk-free interest rate | 0.60% |
Expected volatility | 36.30% |
Fair value of underlying common stock (USD per share) | $ 152.00 |
Stock-Based Compensation - Summary of Restricted Stock Unit Activity (Details) - RSUs - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Unvested Restricted Stock Units | |||
Unvested as of December 31, 2019 (in shares) | 2,849,378 | ||
Granted (in shares) | 7,706,961 | ||
Vested (in shares) | (804,312) | 0 | 0 |
Forfeited (in shares) | (190,236) | ||
Unvested as of December 31, 2020 (in shares) | 9,561,791 | 2,849,378 | |
Weighted-Average Grant-Date Fair Value | |||
Unvested as of December 31, 2019 (USD per share) | $ 22.06 | ||
Granted (USD per share) | 62.26 | ||
Vested (USD per share) | 28.55 | ||
Forfeited (USD per share) | 28.43 | ||
Unvested as of December 31, 2020 (USD per share) | $ 53.79 | $ 22.06 |
Income Taxes - Loss Before Provision for Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||
United States | $ (185,580) | $ (120,135) | $ (23,852) |
Foreign | (94,637) | (33,107) | (108,776) |
Loss before provision for income taxes | $ (280,217) | $ (153,242) | $ (132,628) |
Income Taxes - Components of Income Tax Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Current: | |||
U.S. Federal | $ 183 | $ 331 | $ (152) |
State | 155 | 108 | 170 |
Foreign | 4,412 | 14,186 | 2,423 |
Total current tax expense (benefit) | 4,750 | 14,625 | 2,441 |
Deferred: | |||
U.S. Federal | 0 | (6,746) | 0 |
State | (156) | (1,147) | 0 |
Foreign | (2,503) | 3,216 | (3,467) |
Total deferred tax expense (benefit) | (2,659) | (4,677) | (3,467) |
Total tax provision | $ 2,091 | $ 9,948 | $ (1,026) |
Income Taxes - Income Tax Provision Reconciliation (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||
U.S. federal statutory tax rate | $ (58,846) | $ (32,181) | $ (27,852) |
Changes in income taxes resulting from: | |||
State tax expense, net of federal benefit | (12,698) | (4,865) | (786) |
Foreign income taxed at different rates | (29,958) | 7,695 | 5,378 |
Federal Research and development credits | (12,338) | (5,756) | (2,814) |
Stock-based compensation | (24,676) | (5,305) | 3,222 |
Change in valuation allowance | 139,219 | 49,477 | 20,028 |
Other | 1,388 | 883 | 1,798 |
Total tax provision | $ 2,091 | $ 9,948 | $ (1,026) |
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Deferred tax assets: | ||
Net operating losses | $ 118,244 | $ 89,955 |
Tax credits | 35,630 | 18,013 |
Accruals and reserves | 11,673 | 8,303 |
Deferred revenue | 4,960 | 3,949 |
Stock-based compensation | 20,394 | 6,506 |
Charitable contribution | 13,834 | 0 |
Capitalized cost | 56,596 | 0 |
Depreciation and amortization | 4,300 | 0 |
Other | 150 | 14 |
Gross deferred tax assets | 265,781 | 126,740 |
Valuation allowance | (265,781) | (123,412) |
Total deferred tax assets | 0 | 3,328 |
Deferred tax liabilities: | ||
Depreciation and amortization | 0 | (4,890) |
Goodwill | (260) | 0 |
Total deferred tax liabilities | (260) | (4,890) |
Net deferred tax assets | $ (260) | $ (1,562) |
Income Taxes - Reconciliation of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefits, beginning balance | $ 37,392 | $ 23,980 | $ 13,553 |
Gross increases for tax positions taken in prior years | 1,689 | 1,565 | 496 |
Gross decreases for tax positions taken in prior years | (75) | (6,239) | (589) |
Gross increases for tax positions taken in current year | 38,829 | 19,398 | 12,408 |
Gross decreases for tax positions taken in current year | (619) | 0 | 0 |
Reductions resulting from lapses of statues of limitations | (2,952) | (1,258) | (1,463) |
Foreign exchange gains and losses | 406 | ||
Foreign exchange gains and losses | (54) | (425) | |
Unrecognized tax benefits, ending balance | $ 74,670 | $ 37,392 | $ 23,980 |
Net Loss per Share of Common Stock - Schedule of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Numerator: | |||
Net loss | $ (282,308) | $ (163,190) | $ (131,602) |
Add: Deemed dividends representing excess paid over initial issuance price to repurchase convertible preferred stock | 0 | (110,241) | 0 |
Net loss attributable to our common stockholders | (282,308) | (273,431) | (131,602) |
Net loss attributable to our common stockholders | $ (282,308) | $ (273,431) | $ (131,602) |
Denominator: | |||
Weighted-average shares used in per share calculation attributable to our common stockholders, basic and diluted (in shares) | 169,973 | 114,442 | 105,992 |
Net loss per share attributable to our common stockholders, basic and diluted (USD per share) | $ (1.66) | $ (2.39) | $ (1.24) |
Net Loss per Share of Common Stock - Antidilutive Securities Excluded From Computation (Details) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Convertible preferred stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 95,899 | 96,993 |
Stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share (in shares) | 40,458 | 42,728 | 39,385 |
RSUs | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share (in shares) | 10,366 | 2,849 | 0 |