Delaware | 77-0438629 | |
(State or Other Jurisdiction of | (I.R.S. Employer | |
Incorporation or Organization) | Identification Number) |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company o | |
(Do not check if a smaller reporting company) | Emerging growth company o |
Page | |
June 30, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 132,206 | $ | 148,008 | |||
Short-term investments | 40,240 | 39,266 | |||||
Accounts receivable, net of allowances of $1,364 and $1,536 at June 30, 2017 and December 31, 2016, respectively | 55,807 | 55,464 | |||||
Prepaid and other current assets | 20,281 | 18,275 | |||||
Total current assets | 248,534 | 261,013 | |||||
Property and equipment, net | 42,243 | 35,456 | |||||
Goodwill | 75,049 | 63,957 | |||||
Intangible assets, net | 23,761 | 21,659 | |||||
Deposits and other non-current assets | 4,209 | 4,416 | |||||
Total assets | $ | 393,796 | $ | 386,501 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 5,850 | $ | 3,573 | |||
Accrued payroll and related expenses | 13,427 | 17,831 | |||||
Accrued expenses | 22,742 | 15,126 | |||||
Deferred revenue | 106,023 | 99,758 | |||||
Total current liabilities | 148,042 | 136,288 | |||||
Deferred revenue, non-current | 1,511 | 3,209 | |||||
Deferred income taxes, non-current | 2,137 | 1,541 | |||||
Other non-current liabilities | 8,363 | 8,602 | |||||
Total liabilities | 160,053 | 149,640 | |||||
Commitments and contingencies (Note 5) | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding | — | — | |||||
Common stock, $0.001 par value; 100,000 shares authorized; 67,618 and 66,031 shares issued and 65,279 and 63,692 shares outstanding at June 30, 2017 and December 31, 2016, respectively | 65 | 64 | |||||
Additional paid-in capital | 568,128 | 559,200 | |||||
Treasury stock, 2,339 shares at June 30, 2017 and December 31, 2016 | (14,430 | ) | (14,430 | ) | |||
Accumulated other comprehensive loss | (2,943 | ) | (5,141 | ) | |||
Accumulated deficit | (317,077 | ) | (302,832 | ) | |||
Total stockholders’ equity | 233,743 | 236,861 | |||||
Total liabilities and stockholders’ equity | $ | 393,796 | $ | 386,501 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue: | |||||||||||||||
Recurring | $ | 48,605 | $ | 39,290 | $ | 94,802 | $ | 76,896 | |||||||
Services and license | 12,658 | 10,461 | 24,602 | 21,233 | |||||||||||
Total revenue | 61,263 | 49,751 | 119,404 | 98,129 | |||||||||||
Cost of revenue: | |||||||||||||||
Recurring | 13,535 | 10,137 | 26,557 | 20,099 | |||||||||||
Services and license | 10,919 | 8,332 | 20,859 | 16,593 | |||||||||||
Total cost of revenue | 24,454 | 18,469 | 47,416 | 36,692 | |||||||||||
Gross profit | 36,809 | 31,282 | 71,988 | 61,437 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing | 21,983 | 19,682 | 44,674 | 38,585 | |||||||||||
Research and development | 9,277 | 7,248 | 18,578 | 14,490 | |||||||||||
General and administrative | 12,356 | 9,296 | 21,722 | 17,551 | |||||||||||
Restructuring and other | 375 | 86 | 972 | 402 | |||||||||||
Total operating expenses | 43,991 | 36,312 | 85,946 | 71,028 | |||||||||||
Operating loss | (7,182 | ) | (5,030 | ) | (13,958 | ) | (9,591 | ) | |||||||
Interest income and other income (expense) | 271 | (277 | ) | 336 | (52 | ) | |||||||||
Interest expense | (23 | ) | (39 | ) | (42 | ) | (82 | ) | |||||||
Loss before provision for income taxes | (6,934 | ) | (5,346 | ) | (13,664 | ) | (9,725 | ) | |||||||
Provision for income taxes | 413 | 341 | 581 | 497 | |||||||||||
Net loss | $ | (7,347 | ) | $ | (5,687 | ) | $ | (14,245 | ) | $ | (10,222 | ) | |||
Net loss per share | |||||||||||||||
Basic and diluted | $ | (0.11 | ) | $ | (0.10 | ) | $ | (0.22 | ) | $ | (0.18 | ) | |||
Weighted average shares used in computing net loss per share: | |||||||||||||||
Basic and diluted | 65,079 | 57,098 | 64,726 | 56,894 | |||||||||||
Comprehensive loss: | |||||||||||||||
Net loss | $ | (7,347 | ) | $ | (5,687 | ) | $ | (14,245 | ) | $ | (10,222 | ) | |||
Unrealized (loss) gain on available-for-sale securities | (18 | ) | 11 | (21 | ) | 59 | |||||||||
Foreign currency translation adjustments | 1,621 | (1,140 | ) | 2,219 | (1,535 | ) | |||||||||
Comprehensive loss | $ | (5,744 | ) | $ | (6,816 | ) | $ | (12,047 | ) | $ | (11,698 | ) |
Six Months Ended June 30, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (14,245 | ) | $ | (10,222 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation expense | 5,600 | 3,582 | |||||
Amortization of intangible assets | 3,991 | 2,835 | |||||
Provision for doubtful accounts | 567 | 891 | |||||
Stock-based compensation | 18,191 | 14,065 | |||||
Loss on foreign currency from mark-to-market derivative | 249 | — | |||||
Deferred income taxes | (9 | ) | 51 | ||||
Excess tax benefit from stock-based compensation | — | (11 | ) | ||||
Loss on disposal of property and equipment | 3 | 4 | |||||
Amortization of premium on investments | 103 | 91 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (361 | ) | (3,268 | ) | |||
Prepaid and other current assets | (1,913 | ) | (846 | ) | |||
Other non-current assets | 220 | 251 | |||||
Accounts payable | 2,349 | 462 | |||||
Accrued expenses | (624 | ) | 1,412 | ||||
Accrued payroll and related expenses | (4,404 | ) | (1,996 | ) | |||
Accrued restructuring and other expenses | 220 | (285 | ) | ||||
Deferred revenue | 3,757 | 5,959 | |||||
Net cash provided by operating activities | 13,694 | 12,975 | |||||
Cash flows from investing activities: | |||||||
Purchases of investments | (6,456 | ) | (8,483 | ) | |||
Proceeds from maturities and sale of investments | 5,360 | 8,751 | |||||
Purchases of property and equipment | (7,661 | ) | (3,924 | ) | |||
Purchases of intangible assets | (458 | ) | (444 | ) | |||
Acquisitions, net of cash acquired | (11,477 | ) | (11,500 | ) | |||
Net cash used in investing activities | (20,692 | ) | (15,600 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock | 2,603 | 1,951 | |||||
Restricted stock units acquired to settle employee withholding liability | (11,864 | ) | (1,821 | ) | |||
Excess tax benefit from stock-based compensation | — | 11 | |||||
Payment of consideration related to acquisitions | (100 | ) | (104 | ) | |||
Net cash (used in) provided by financing activities | (9,361 | ) | 37 | ||||
Effect of foreign currency exchange rates on cash and cash equivalents | 557 | (313 | ) | ||||
Net (decrease) in cash and cash equivalents | (15,802 | ) | (2,901 | ) | |||
Cash and cash equivalents at beginning of period | 148,008 | 77,232 | |||||
Cash and cash equivalents at end of period | $ | 132,206 | $ | 74,331 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid for income taxes | $ | 385 | $ | 475 | |||
Cash paid for interest on line of credit | $ | 37 | $ | 18 | |||
Non-cash investing and financing activities: | |||||||
Purchases of property and equipment through accounts payable and other current and non-current accrued liabilities | $ | 4,093 | $ | 4,856 |
Fair Value | |||
Net liabilities assumed | $ | (1,170 | ) |
Intangible assets | 3,250 | ||
Goodwill | 7,512 | ||
Total purchase price, net of cash acquired | $ | 9,592 |
Fair Value | Weighted Average Useful Life | Consolidated statements of comprehensive loss Classification: Amortization expense | |||||
Customer contracts and related relationships | $ | 1,840 | 7 years | Sales and marketing expense | |||
Education course content | 1,410 | 5 years | Cost of sales | ||||
Total intangible assets subject to amortization | $ | 3,250 |
Fair Value | |||
Net assets assumed | $ | 13 | |
Intangible assets | 2,890 | ||
Goodwill | 2,516 | ||
Total purchase price, net of cash acquired | $ | 5,419 |
Fair Value | Weighted Average Useful Life | Consolidated statements of comprehensive loss Classification: Amortization expense | |||||
Developed technology | $ | 2,700 | 3 years | Cost of sales | |||
Customer contracts and related relationships | 100 | 3 years | Sales and marketing expense | ||||
Trademarks/tradenames/ domain names | 90 | 3 years | General and administrative | ||||
Total intangible assets subject to amortization | $ | 2,890 |
Fair Value | |||
Net liabilities assumed | $ | (600 | ) |
Intangible assets | 5,350 | ||
Goodwill | 8,138 | ||
Total purchase price, net of cash acquired | $ | 12,888 |
Fair Value | Weighted Average Useful Life | Consolidated statements of comprehensive loss Classification: Amortization expense | |||||
Developed technology | $ | 3,800 | 4 years | Cost of sales | |||
Customer contracts and related relationships | 1,250 | 6 years | Sales and marketing expense | ||||
Trademarks/tradenames/ domain names | 150 | 3 years | General and administrative | ||||
Order backlog | 150 | 2 years | Cost of sales | ||||
Total intangible assets subject to amortization | $ | 5,350 |
June 30, 2017 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Cash | $ | 92,098 | $ | — | $ | — | $ | 92,098 | ||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | 40,108 | — | — | 40,108 | ||||||||||||
Total cash equivalents | 40,108 | — | — | 40,108 | ||||||||||||
Total cash and cash equivalents | $ | 132,206 | $ | — | $ | — | $ | 132,206 | ||||||||
Short-term investments: | ||||||||||||||||
Certificates of deposits | $ | 950 | $ | — | $ | — | $ | 950 | ||||||||
U.S. government and agency obligations | 20,628 | 13 | (22 | ) | 20,619 | |||||||||||
Corporate notes and obligations | 18,672 | 14 | (15 | ) | 18,671 | |||||||||||
Total short-term investments | $ | 40,250 | $ | 27 | $ | (37 | ) | $ | 40,240 |
December 31, 2016 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Cash | $ | 147,680 | $ | — | $ | — | $ | 147,680 | ||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | 328 | — | — | 328 | ||||||||||||
Total cash equivalents | 328 | — | — | 328 | ||||||||||||
Total cash and cash equivalents | $ | 148,008 | $ | — | $ | — | $ | 148,008 | ||||||||
Short-term investments: | ||||||||||||||||
Certificate of deposits | $ | 1,200 | $ | — | $ | — | $ | 1,200 | ||||||||
U.S. government and agency obligations | 19,351 | 19 | (18 | ) | 19,352 | |||||||||||
Corporate notes and obligations | 18,716 | 18 | (20 | ) | 18,714 | |||||||||||
Total short-term investments | $ | 39,267 | $ | 37 | $ | (38 | ) | $ | 39,266 |
Contractual maturity | Amortized Cost | Estimated Fair value | |||||
Less than 1 year | $ | 35,595 | $ | 35,570 | |||
Between 1 and 2 years | 4,655 | 4,670 | |||||
Total | $ | 40,250 | $ | 40,240 |
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||
June 30, 2017 | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Assets: | ||||||||||||||||
Money market funds (1) | $ | 40,108 | $ | 40,108 | $ | — | $ | — | ||||||||
Certificates of deposit (2) | 950 | — | 950 | — | ||||||||||||
U.S. government and agency obligations (2) | 20,619 | — | 20,619 | — | ||||||||||||
Corporate notes and obligations (2) | 18,671 | — | 18,671 | — | ||||||||||||
Foreign currency derivative contracts (3) | 37 | — | 37 | $ | — | |||||||||||
Total | $ | 80,385 | $ | 40,108 | $ | 40,277 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Foreign currency derivative contracts (4) | $ | 285 | $ | — | $ | 285 | $ | — | ||||||||
Total | $ | 285 | $ | — | $ | 285 | $ | — |
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||
December 31, 2016 | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Assets: | ||||||||||||||||
Money market funds (1) | $ | 328 | $ | 328 | $ | — | $ | — | ||||||||
Certificates of deposit (2) | 1,200 | — | 1,200 | — | ||||||||||||
U.S. government and agency obligations (2) | 19,352 | — | 19,352 | — | ||||||||||||
Corporate notes and obligations (2) | 18,714 | — | 18,714 | — | ||||||||||||
Foreign currency derivative contracts (3) | 76 | — | 76 | $ | — | |||||||||||
Total | $ | 39,670 | $ | 328 | $ | 39,342 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Foreign currency derivative contracts (4) | $ | 53 | $ | — | $ | 53 | $ | — | ||||||||
Total | $ | 53 | $ | — | $ | 53 | $ | — |
June 30, 2017 | December 31, 2016 | |||||||||
Notional amount of foreign currency derivative contracts | $ | 6,622 | $ | 3,850 | ||||||
Fair value of foreign currency derivative contracts | $ | 6,374 | $ | 3,873 | ||||||
The fair value of the Company’s outstanding derivative instruments are summarized below (in thousands): | ||||||||||
Fair Value of Derivative Instruments | ||||||||||
Balance Sheet Location | June 30, 2017 | December 31, 2016 | ||||||||
Derivative Assets | ||||||||||
Derivatives not designated as hedging instruments: | ||||||||||
Foreign currency derivative contracts | Prepaid expenses and other current assets | $ | 37 | $ | 75 | |||||
Derivative Liabilities | ||||||||||
Derivatives not designated as hedging instruments: | ||||||||||
Foreign currency derivative contracts | Accrued expenses | $ | 285 | $ | 52 |
Unconditional Purchase Commitments (1) | Operating Lease Commitments (2) | |||||||
Years ending: | ||||||||
Remainder of 2017 | $ | 11,482 | $ | 2,142 | ||||
2018 | 14,774 | 4,689 | ||||||
2019 | 10,305 | 4,385 | ||||||
2020 | 3,008 | 4,425 | ||||||
2021 | — | 4,049 | ||||||
2022 and beyond | — | 2,693 | ||||||
Future minimum payments | $ | 39,569 | $ | 22,383 |
(1) | Primarily represents amounts associated with agreements that are enforceable, legally binding and specific terms, including: software purchases, data center equipment purchases and maintenance agreements. In addition, amounts include unconditional purchase agreements during the normal course of business with various vendors for future services. |
(2) | The Company has facilities under non-cancellable operating lease agreements that expire at various dates through 2022. |
December 31, 2016 | Additions | Adjustments | Cash Payments | June 30, 2017 | |||||||||||||||
Severance and termination related costs | $ | — | $ | 872 | $ | — | $ | (577 | ) | $ | 295 | ||||||||
Facilities related costs | 269 | 100 | — | (179 | ) | 190 | |||||||||||||
Total accrued restructuring and other expenses | $ | 269 | $ | 972 | $ | — | $ | (756 | ) | $ | 485 |
December 31, 2015 | Additions | Adjustments | Cash Payments | June 30, 2016 | |||||||||||||||
Facilities related costs | $ | 17 | $ | 405 | $ | — | $ | (120 | ) | $ | 302 | ||||||||
Total accrued restructuring and other expenses | $ | 17 | $ | 405 | $ | — | $ | (120 | ) | $ | 302 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Restricted Stock Units | 3,582 | 3,893 | 3,666 | 3,655 | |||||||
Stock Options | 366 | 586 | 382 | 611 | |||||||
ESPP Shares | 108 | 131 | 94 | 114 | |||||||
Total | 4,056 | 4,610 | 4,142 | 4,380 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Stock options | $ | 136 | $ | 144 | $ | 281 | $ | 289 | |||||||
Restricted stock units | |||||||||||||||
Performance-based awards | 1,771 | 1,269 | 3,191 | 2,449 | |||||||||||
Service-based awards | 7,646 | 5,696 | 13,984 | 10,454 | |||||||||||
ESPP shares | 388 | 503 | 735 | 873 | |||||||||||
Total stock-based compensation | $ | 9,941 | $ | 7,612 | $ | 18,191 | $ | 14,065 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Cost of recurring revenue | $ | 412 | $ | 453 | $ | 835 | $ | 962 | |||||||
Cost of services and license | 559 | 524 | 1,190 | 1,036 | |||||||||||
Sales and marketing | 2,027 | 2,144 | 4,564 | 4,298 | |||||||||||
Research and development | 1,765 | 1,171 | 3,397 | 2,340 | |||||||||||
General and administrative | 5,178 | 3,320 | 8,205 | 5,429 | |||||||||||
Total stock-based compensation | $ | 9,941 | $ | 7,612 | $ | 18,191 | $ | 14,065 |
Six Months Ended June 30, | |||||
Employee Stock Purchase Plan | 2017 | 2016 | |||
Expected life (in years) | 0.50 to 1.00 | 0.50 to 1.00 | |||
Risk-free interest rate | 0.65% to 0.82% | 0.42% to 0.51% | |||
Volatility | 33.0% to 33.1% | 45% to 51% | |||
Dividend yield | None | None |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
United States and Canada | $ | 49,953 | $ | 40,732 | $ | 97,478 | $ | 80,617 | |||||||
EMEA | 6,784 | 5,452 | 13,268 | 10,328 | |||||||||||
Asia Pacific | 3,145 | 2,442 | 6,110 | 4,985 | |||||||||||
Other | 1,381 | 1,125 | 2,548 | 2,199 | |||||||||||
$ | 61,263 | $ | 49,751 | $ | 119,404 | $ | 98,129 |
Three Months Ended June 30, 2017 | Percentage of Revenues | Three Months Ended June 30, 2016 | Percentage of Revenues | Increase (Decrease) | Percentage Change | ||||||||||||
Revenue: | |||||||||||||||||
Recurring | $ | 48,605 | 79% | $ | 39,290 | 79% | $ | 9,315 | 24% | ||||||||
Services and license | 12,658 | 21% | 10,461 | 21% | 2,197 | 21% | |||||||||||
Total revenue | $ | 61,263 | 100% | $ | 49,751 | 100% | $ | 11,512 | 23% | ||||||||
Cost of revenue: | |||||||||||||||||
Recurring | $ | 13,535 | 28% | $ | 10,137 | 26% | $ | 3,398 | 34% | ||||||||
Services and license | 10,919 | 86% | 8,332 | 80% | 2,587 | 31% | |||||||||||
Total cost of revenue | $ | 24,454 | 40% | $ | 18,469 | 37% | $ | 5,985 | 32% | ||||||||
Gross profit: | |||||||||||||||||
Recurring | $ | 35,070 | 72% | $ | 29,153 | 74% | $ | 5,917 | 20% | ||||||||
Services and license | 1,739 | 14% | 2,129 | 20% | (390 | ) | (18)% | ||||||||||
Total gross profit | $ | 36,809 | 60% | $ | 31,282 | 63% | $ | 5,527 | 18% |
Six Months Ended June 30, 2017 | Percentage of Revenues | Six Months Ended June 30, 2016 | Percentage of Revenues | Increase (Decrease) | Percentage Change | ||||||||||||
Revenue: | |||||||||||||||||
Recurring | $ | 94,802 | 79% | $ | 76,896 | 78% | $ | 17,906 | 23% | ||||||||
Services and license | 24,602 | 21% | 21,233 | 22% | 3,369 | 16% | |||||||||||
Total revenue | $ | 119,404 | 100% | $ | 98,129 | 100% | $ | 21,275 | 22% | ||||||||
Cost of revenue: | |||||||||||||||||
Recurring | $ | 26,557 | 28% | $ | 20,099 | 26% | $ | 6,458 | 32% | ||||||||
Services and license | 20,859 | 85% | 16,593 | 78% | 4,266 | 26% | |||||||||||
Total cost of revenue | $ | 47,416 | 40% | $ | 36,692 | 37% | $ | 10,724 | 29% | ||||||||
Gross profit: | |||||||||||||||||
Recurring | $ | 68,245 | 72% | $ | 56,797 | 74% | $ | 11,448 | 20% | ||||||||
Services and license | 3,743 | 15% | 4,640 | 22% | (897 | ) | (19)% | ||||||||||
Total gross profit | $ | 71,988 | 60% | $ | 61,437 | 63% | $ | 10,551 | 17% |
Three Months Ended June 30, 2017 | Percentage of Total Revenues | Three Months Ended June 30, 2016 | Percentage of Total Revenues | Increase (Decrease) | Percentage Change | ||||||||||||
Operating expenses: | |||||||||||||||||
Sales and marketing | $ | 21,983 | 36% | $ | 19,682 | 40% | $ | 2,301 | 12% | ||||||||
Research and development | 9,277 | 15% | 7,248 | 15% | 2,029 | 28% | |||||||||||
General and administrative | 12,356 | 20% | 9,296 | 19% | 3,060 | 33% | |||||||||||
Restructuring and other expenses | 375 | 1% | 86 | —% | 289 | —% | |||||||||||
Total operating expenses | $ | 43,991 | 72% | $ | 36,312 | 73% | $ | 7,679 | 21% |
Six Months Ended June 30, 2017 | Percentage of Total Revenues | Six Months Ended June 30, 2016 | Percentage of Total Revenues | Increase (Decrease) | Percentage Change | ||||||||||||
Operating expenses: | |||||||||||||||||
Sales and marketing | $ | 44,674 | 37% | $ | 38,585 | 39% | $ | 6,089 | 16% | ||||||||
Research and development | 18,578 | 16% | 14,490 | 15% | 4,088 | 28% | |||||||||||
General and administrative | 21,722 | 18% | 17,551 | 18% | 4,171 | 24% | |||||||||||
Restructuring and other expenses | 972 | 1% | 402 | —% | 570 | 142% | |||||||||||
Total operating expenses | $ | 85,946 | 72% | $ | 71,028 | 72% | $ | 14,918 | 21% |
Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | Increase (Decrease) | Percentage Change | ||||||||||
Stock-based compensation: | |||||||||||||
Cost of recurring revenue | $ | 412 | $ | 453 | $ | (41 | ) | (9)% | |||||
Cost of services revenue | 559 | 524 | 35 | 7% | |||||||||
Sales and marketing | 2,027 | 2,144 | (117 | ) | (5)% | ||||||||
Research and development | 1,765 | 1,171 | 594 | 51% | |||||||||
General and administrative | 5,178 | 3,320 | 1,858 | 56% | |||||||||
Total stock-based compensation | $ | 9,941 | $ | 7,612 | $ | 2,329 | 31% |
Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | Increase (Decrease) | Percentage Change | ||||||||||
Stock-based compensation: | |||||||||||||
Cost of recurring revenue | $ | 835 | $ | 962 | $ | (127 | ) | (13)% | |||||
Cost of services revenue | 1,190 | 1,036 | 154 | 15% | |||||||||
Sales and marketing | 4,564 | 4,298 | 266 | 6% | |||||||||
Research and development | 3,397 | 2,340 | 1,057 | 45% | |||||||||
General and administrative | 8,205 | 5,429 | 2,776 | 51% | |||||||||
Total stock-based compensation | $ | 18,191 | $ | 14,065 | $ | 4,126 | 29% |
Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | Increase (Decrease) | Percentage Change | ||||||||||
Other income (expense) | |||||||||||||
Interest income and other income (expense) | $ | 271 | $ | (277 | ) | $ | 548 | (198)% | |||||
Interest expense | (23 | ) | (39 | ) | 16 | (41)% | |||||||
$ | 248 | $ | (316 | ) | $ | 564 | (178)% | ||||||
Provision for income taxes | $ | 413 | $ | 341 | $ | 72 | 21% |
Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | Increase (Decrease) | Percentage Change | ||||||||||
Other income (expense) | |||||||||||||
Interest income and other income (expense) | $ | 336 | $ | (52 | ) | $ | 388 | (746)% | |||||
Interest expense | (42 | ) | (82 | ) | 40 | 49% | |||||||
$ | 294 | $ | (134 | ) | $ | 428 | (319)% | ||||||
Provision for income taxes | $ | 581 | $ | 497 | $ | 84 | 17% |
Six Months Ended June 30, | |||||||
2017 | 2016 | ||||||
Net cash provided by operating activities | $ | 13,694 | $ | 12,975 | |||
Net cash used in investing activities | $ | (20,692 | ) | $ | (15,600 | ) | |
Net cash (used in) provided by financing activities | $ | (9,361 | ) | $ | 37 |
• | timing of customer budget cycles; |
• | the priority our customers place on our products compared to other business investments; |
• | size, timing and contract terms of new customer contracts, and unpredictable or lengthy sales cycles; |
• | reduced renewals of subscription and maintenance agreements; |
• | competitive factors, including new product introductions, upgrades and discounted pricing or special payment terms offered by our competitors, as well as strategic actions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; |
• | technical difficulties, errors or service interruptions in our solutions that may cause customer dissatisfaction with our solutions; |
• | consolidation among our customers, which may alter their buying patterns, or business failures that may reduce demand for our solutions; |
• | operating expenses associated with expansion of our sales force or business and our product development efforts; |
• | cost, timing and management efforts related to the introduction of new features to our solutions; |
• | our ability to obtain, maintain and protect our intellectual property rights and adequately safeguard the information imported into our solutions or otherwise provided to us by our customers; |
• | changes in the regulatory environment, including with respect to security, or privacy laws and regulations, or their enforcement; and |
• | extraordinary expenses such as impairment charges, litigation or other payments related to settlement of disputes. |
• | customer attrition as customers decide not to renew for any reason; |
• | our inability to maintain or increase the prices customers pay for our solutions, due to competitive pricing pressures or limited demand; |
• | our inability to reduce operating costs through technology-based efficiencies and streamlined processes; |
• | increased direct and indirect cost of third-party services, including hosting facilities and professional services contractors performing implementation and support services; |
• | higher personnel and personnel-related costs; |
• | increased costs to integrate products or personnel that we acquire, including time and expense associated with new sales personnel reaching full productivity; and |
• | increased costs to license and maintain and replace third-party software embedded in our solutions or to create alternatives to such third-party software. |
• | anticipated benefits, such as increased revenue, may not materialize if, for example, a larger than expected number of customers choose not to renew their contracts or if we are unable to cross-sell the acquired company's solutions to our existing customer base; |
• | we may have difficulty integrating and managing the acquired technologies or products with our existing product lines, and maintaining uniform standards, controls, procedures and policies across locations; |
• | we may experience challenges in, and have difficulty penetrating, new markets where we have little or no prior experience and where competitors have stronger market positions; |
• | integrating the financial systems and personnel of the acquired business and retaining key employees may be difficult, and, to the extent we issue shares of stock or other rights to purchase stock to such individuals, existing stockholders may be diluted; |
• | our ongoing business and management's attention may be disrupted or diverted by transition or integration, or by the complexity of overseeing geographically and culturally diverse locations; |
• | we may find that the acquired businesses or assets do not further our business strategy, or that we overpaid for the businesses or assets, or that we do not realize the expected operating efficiencies or product integration benefits; |
• | our use of cash consideration for one or more significant acquisitions may require us to use a substantial portion of our available cash or incur substantial debt, and if we incur substantial debt, it could result in material limitations on the conduct of our business; |
• | we may fail to uncover or realize the significance of, or otherwise become exposed to, liabilities and other issues assumed from an acquired business, such as claims from terminated employees or third-parties and unfavorable revenue recognition or other accounting practices; and |
• | we may experience customer confusion as a result of product overlap, particularly when we offer, price and support various product lines differently. |
• | rapid technological advances, |
• | changing customer needs, and |
• | frequent new product introductions and enhancements. |
• | require costly litigation to resolve; |
• | absorb significant management time; |
• | cause us to enter into unfavorable royalty or license agreements; |
• | require us to discontinue the sale of, or materially modify, all or a portion of our products or services; |
• | require us to indemnify our customers or third-party service providers; and |
• | require us to expend additional development resources to redesign our products or services. |
• | greater difficulty in supporting and localizing our solutions; |
• | complying with numerous regulatory requirements, taxes, trade and export laws and tariffs that may conflict or change unexpectedly, including labor, tax, privacy and data protection; |
• | using international resellers and complying with anti-bribery and anti-corruption laws; |
• | greater difficulty in establishing, staffing and managing foreign operations; |
• | greater difficulty in maintaining acceptable quality standards in support, product development and professional services by our international third-party service providers; |
• | differing abilities to protect our intellectual property rights; and |
• | possible political and economic instability. |
• | the complex nature of some of our products; |
• | the need to educate potential customers about the uses and benefits of our solutions; |
• | budget cycles of our potential customers that affect the timing of purchases; |
• | the expiration date of existing point solutions that we seek to replace; |
• | customer requirements for competitive evaluation and often lengthy internal approval processes and protracted contract negotiations (particularly of large organizations) before purchasing our solutions; and |
• | potential delays of purchases due to announcements or planned introductions of new solutions by us or our competitors. |
• | our flexibility to plan for, or react to, changes in our business and industry conditions; |
• | our ability to use our cash flows, or obtain additional financing, for future working capital, capital expenditures, acquisitions or other general corporate purposes; |
• | place us at a competitive disadvantage compared to our less leveraged competitors; and |
• | increase our vulnerability to the impact of adverse economic and industry conditions. |
• | our actual and anticipated operating performance and the performance of other similar companies; |
• | actual and anticipated fluctuations in our financial results; |
• | failure of securities analysts to maintain coverage of us; |
• | ratings changes by any securities analysts who follow us; |
• | failure to meet our projected results or the published operating estimates or expectations of securities analysts and investors; |
• | failure to achieve revenue or earnings expectations; |
• | price and volume fluctuations in the overall stock market, including as a result of trends in the global economy; |
• | significant sales by existing investors, coupled with limited trading volume for our stock; |
• | announcements by us or our competitors of significant contracts, results of operations, projections, or new technologies; |
• | lawsuits threatened or filed against us; |
• | adverse publicity; |
• | acquisitions, commercial relationships, joint-ventures or capital commitments; |
• | changes in our management team or board of directors; |
• | publication of research reports, particularly those that are inaccurate or unfavorable, about us or our industry by securities analysts; and |
• | other events or factors, including those resulting from war, incidents or terrorism or responses to these events. |
CALLIDUS SOFTWARE INC. | |||
Date: | August 4, 2017 | By: | /s/ ROXANNE OULMAN |
Roxanne Oulman | |||
Executive Vice President, Chief Financial Officer | |||
(duly authorized officer) |
Exhibit Number | Description | |
10.1 | Amendment Number Seven, dated May 18, 2017, to Credit Agreement by and among Wells Fargo Bank National Association, as administrative agent, the lender that is a party thereto, and Callidus Software Inc., dated May 13, 2014. | |
31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934. | |
31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934. | |
32.1 | Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350. | |
101 | Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016, (ii) Condensed Consolidated Statements of Comprehensive Loss for the three months and six months ended June 30, 2017 and 2016, (iii) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016 and (iv) Notes to Condensed Consolidated Financial Statements. |
BORROWER: | CALLIDUS SOFTWARE, INC., a Delaware corporation By: /s/ Roxanne Oulman Name: Roxanne Oulman Title: CFO |
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent and a Lender By: /s/ Akiko Farnsworth Name: Akiko Farnsworth Title: Vice President |
1. | I have reviewed this quarterly report of Callidus Software Inc. on Form 10-Q; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 4, 2017 | |
/s/ LESLIE J. STRETCH | |
Leslie J. Stretch | |
President and Chief Executive Officer | |
(Principal Executive Officer) |
1. | I have reviewed this quarterly report of Callidus Software Inc. on Form 10-Q; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 4, 2017 | |
/s/ ROXANNE OULMAN | |
Roxanne Oulman | |
Executive Vice President, Chief Financial Officer | |
(Principal Financial Officer) |
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: August 4, 2017 | |
/s/ LESLIE J. STRETCH | |
Leslie J. Stretch | |
President and Chief Executive Officer | |
(Principal Executive Officer) | |
/s/ ROXANNE OULMAN | |
Roxanne Oulman | |
Executive Vice President, Chief Financial Officer | |
(Principal Financial Officer) |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jul. 27, 2017 |
|
Document and Entity Information | ||
Entity Registrant Name | CALLIDUS SOFTWARE INC | |
Entity Central Index Key | 0001035748 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 67,642,666 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances (in dollars) | $ 1,364 | $ 1,536 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 67,618,000 | 66,031,000 |
Common stock, shares outstanding | 65,279,000 | 63,692,000 |
Treasury stock, shares | 2,339,000 | 2,339,000 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Revenue: | ||||
Recurring | $ 48,605 | $ 39,290 | $ 94,802 | $ 76,896 |
Services and license | 12,658 | 10,461 | 24,602 | 21,233 |
Total revenue | 61,263 | 49,751 | 119,404 | 98,129 |
Cost of revenue: | ||||
Recurring | 13,535 | 10,137 | 26,557 | 20,099 |
Services and license | 10,919 | 8,332 | 20,859 | 16,593 |
Total cost of revenue | 24,454 | 18,469 | 47,416 | 36,692 |
Gross profit | 36,809 | 31,282 | 71,988 | 61,437 |
Operating expenses: | ||||
Sales and marketing | 21,983 | 19,682 | 44,674 | 38,585 |
Research and development | 9,277 | 7,248 | 18,578 | 14,490 |
General and administrative | 12,356 | 9,296 | 21,722 | 17,551 |
Restructuring and other | 375 | 86 | 972 | 402 |
Total operating expenses | 43,991 | 36,312 | 85,946 | 71,028 |
Operating loss | (7,182) | (5,030) | (13,958) | (9,591) |
Interest income and other income (expense) | 271 | (277) | 336 | (52) |
Interest expense | (23) | (39) | (42) | (82) |
Loss before provision for income taxes | (6,934) | (5,346) | (13,664) | (9,725) |
Provision for income taxes | 413 | 341 | 581 | 497 |
Net loss | $ (7,347) | $ (5,687) | $ (14,245) | $ (10,222) |
Net loss per share | ||||
Basic and Diluted (in dollars per share) | $ (0.11) | $ (0.10) | $ (0.22) | $ (0.18) |
Basic and Diluted (in shares) | 65,079 | 57,098 | 64,726 | 56,894 |
Comprehensive loss: | ||||
Net loss | $ (7,347) | $ (5,687) | $ (14,245) | $ (10,222) |
Unrealized (loss) gain on available-for-sale securities | (18) | 11 | (21) | 59 |
Foreign currency translation adjustments | 1,621 | (1,140) | 2,219 | (1,535) |
Comprehensive loss | $ (5,744) | $ (6,816) | $ (12,047) | $ (11,698) |
Summary of Significant Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Summary of Accounting Policies All amounts included herein related to these condensed consolidated financial statements as of June 30, 2017 and for the three and six months ended June 30, 2017 and 2016 are unaudited and should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2016 for Callidus Software Inc., doing business as CallidusCloud ("Company"). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to the Securities and Exchange Commission ("SEC") rules and regulations regarding interim financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all necessary adjustments for the fair presentation of the Company’s financial position, results of operations and cash flows. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the full fiscal year ending December 31, 2017. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which include wholly-owned subsidiaries in Australia, Canada, Germany, Hong Kong, India, Ireland, Japan, Malaysia, Mexico, Netherlands, New Zealand, Serbia, Singapore and the United Kingdom. All intercompany transactions and balances have been eliminated upon consolidation. Use of Estimates Preparation of the unaudited condensed consolidated financial statements in conformity with GAAP and the rules and regulations of the SEC requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, the reported amounts of revenue and expenses during the reporting period and the accompanying notes. Estimates are used for, but not limited to, the allocation of the value of purchase consideration for business acquisitions and other contingencies, allowances for doubtful accounts, the useful lives of fixed assets and intangible assets, the attainment of performance-based restricted stock units, stock-based compensation forfeiture rates, accrued liabilities and uncertain tax positions. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates such estimates and assumptions on an ongoing basis for continued reasonableness, using historical experience and other factors, including the current economic environment. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such evaluation. Illiquid credit markets, volatile equity and foreign currency markets and fluctuations in information technology spending by prospective customers can increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ materially from those estimates. Changes in those estimates, if any, resulting from continuing changes in the economic environment, will be reflected in the consolidated financial statements in future periods. Revenue Recognition The Company generates revenue by providing software as a service ("SaaS") solutions through on-demand subscription and term licenses and related software maintenance, and professional services. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. Recurring Revenue. Recurring revenue, which includes SaaS revenue and maintenance revenue, is recognized ratably over the stated contractual period. SaaS revenue consists of subscription fees from customers accessing the Company's cloud-based service offerings. Maintenance revenue consists of fees from customers purchasing licenses and receiving support for such on-premise solutions. The Company also recognizes SaaS and maintenance revenue associated with customers using its products in excess of contracted usage ("Overages"). Overages are primarily attributed to SaaS products and such Overages are recorded in SaaS revenue in the period incurred. Revenue related to Overages was immaterial during the three and six month periods ended June 30, 2017 and 2016. Service and License Revenue. Service and license revenue primarily consists of training, integration and configuration services. Generally, the Company's professional services arrangements are billed on a time-and-materials basis. Time and material services are recognized as the services are rendered based on inputs to the project, such as billable hours incurred. For fixed-fee professional services arrangements, the Company recognizes revenue under the proportional performance method of accounting and estimates the proportional performance on a monthly basis, utilizing hours incurred to date as a percentage of total estimated hours to complete the project. If the Company does not have a sufficient basis to measure progress toward completion, revenue is recognized upon completion. Service and license revenue also includes revenue from perpetual licenses, which is recognized upon delivery of the product, using the residual method, assuming all the other conditions for revenue recognition have been met. Revenue related to perpetual licenses was immaterial during the three and six month periods ended June 30, 2017 and 2016. In a limited number of arrangements with non-standard acceptance criteria, the Company defers the revenue until the acceptance criteria are satisfied. Reimbursements, including those related to travel and out-of-pocket expenses, are included in services and license revenue, and an equivalent amount of reimbursable expenses is included in cost of services and license revenue. In general, recurring revenue agreements are entered into for 12 to 36 months, and the professional services are performed within nine months of entering into a contract with the customer, depending on the size of integration. SaaS agreements provide specified service level commitments, excluding scheduled maintenance. The failure to meet this level of service availability may require the Company to credit qualifying customers a portion of their subscription and support fees. Based on the Company's historical experience meeting its service level commitments, the Company does not currently have any liabilities on its balance sheet for these commitments. The Company recognizes revenue when all of the following conditions are met: • Persuasive evidence of an arrangement exists; • Delivery has occurred or services have been rendered; • The fees are fixed or determinable; and • Collection of the fees is reasonably assured. If the Company determines that any one of the four criteria is not met, it will defer recognition of revenue until all the criteria are met. Multiple-deliverable arrangements with on-demand subscription. For on-demand subscription agreements with multiple deliverables, the Company evaluates each element to determine whether it represents a separate unit of accounting. The Company determines the best estimated selling price of each deliverable in an arrangement based on a selling price hierarchy of methods contained in Finance Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2009-13, "Revenue Recognition (Accounting Standards Codification (“ASC”) Topic 605)-Multiple-Deliverable Revenue Arrangements." The best estimated selling price for a deliverable is based on its vendor-specific objective evidence (“VSOE”), if available, third-party evidence (“TPE”), if VSOE is not available, or estimated selling price (“ESP”), if neither VSOE nor TPE is available. Total arrangement fees are allocated to each element using the relative selling price method. The Company has currently established VSOE for most deliverables, except for fixed fee service arrangements and on-premise software licenses. The Company considered all of the following factors to establish the ESP for fixed fee service arrangements when sold with its on-demand services: the weighted average actual sales prices of professional services sold on a stand-alone basis for on-demand services; average billing rates for fixed fee service agreements when sold with on-demand services, cost plus a reasonable mark-up and other factors such as gross margin objectives, pricing practices and growth strategy. Multiple-deliverable arrangements with on-premise license. For arrangements with multiple deliverables, including license, professional services and maintenance, the Company recognizes license revenue using the residual method of accounting pursuant to the requirements of the guidance contained in ASC 985-605, "Software Revenue Recognition." Under the residual method, revenue is recognized when VSOE for fair value exists for all of the undelivered elements in the arrangement, but does not exist for one or more of the delivered elements in the arrangement. If evidence of fair value cannot be established for the undelivered elements, all of the revenue is deferred until evidence of fair value can be established, or until the items for which evidence of fair value cannot be established are delivered. For maintenance and certain professional services, the Company has established VSOE because it has a sufficient history of selling these deliverables at an established price. The Company's revenue arrangements do not include a general right of return relative to the delivered products. Generally, for the Company's term-based licenses, if the only undelivered element is maintenance, the entire amount of revenue is recognized ratably over the maintenance period. Sales and other taxes collected from customers to be remitted to government authorities are excluded from revenue. Recently Adopted Accounting Pronouncements In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which simplifies various aspects related to the accounting and presentation of stock-based payments. The amendments require entities to record all tax effects related to stock-based payments at settlement or expiration through the income statement and the windfall tax benefit to be recorded when it arises, subject to normal valuation allowance considerations. All tax-related cash flows resulting from the stock-based payments are required to be reported as operating activities in the statement of cash flows. The updates relating to the income tax effects of the stock-based payments including the cash flow presentation was adopted prospectively. Further, the amendments allow the entities to make an accounting policy election to either estimate forfeitures or recognize forfeitures as they occur. The Company adopted this guidance during the first quarter of 2017. Adoption of the new standard did not have a material impact to the Company's condensed financial statements and resulted in the recognition of excess tax benefits to the Company's income taxes rather than paid-in capital. The Company elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. Recently Issued Accounting Pronouncements In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting, which amends the scope of modification accounting for stock-based payment arrangements, provides guidance on the types of changes to the terms or conditions of stock-based payment awards to which an entity would be required to apply modification accounting under ASC 718, Compensation- Stock Compensation. This ASU is effective for public business entities for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company is currently evaluating the impact this ASU will have on its unaudited condensed consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory. This guidance improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. Under current U.S. GAAP, the recognition of current and deferred income taxes for an intra-entity asset transfer is prohibited until the asset has been sold to an outside party. Under the new standard, an entity will recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Two common examples of assets included in the scope of this update are intellectual property and property, plant and equipment. The amendments in this update are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact this ASU will have on its unaudited condensed consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice for certain cash receipts and cash payments. The amendments in this guidance are effective for public business entities for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Entities are permitted to adopt the standard early in any interim or annual period, and a retrospective application is required. The Company is currently evaluating the impact this ASU will have on its unaudited condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases, which requires the recognition of assets and liabilities arising from lease transactions on the balance sheet and the disclosure of key information about leasing arrangements. Accordingly, a lessee will recognize a lease asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation. Both the asset and liability will initially be measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement, including the presentation of expenses and cash flows, will depend on the classification of the lease as either finance or an operating lease. Initial costs directly attributable to negotiating and arranging the lease will be included in the asset. For leases with a term of 12 months or less, a lessee can make an accounting policy election by class of underlying asset to not recognize an asset and corresponding liability. Lessees will also be required to provide additional qualitative and quantitative disclosures regarding the amount, timing and uncertainty of cash flows arising from leases. These disclosures are intended to supplement the amounts recorded in the financial statements and provide additional information about the nature of an organization’s leasing activities. The new standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. In transition, lessees are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The transition guidance also provides specific guidance for sale and leaseback transactions, build-to-suit leases and amounts previously recognized in accordance with the business combinations guidance for leases. The updated standard is effective for the Company beginning in the first quarter of 2019. The Company is currently evaluating its expected adoption method and timeline, and the impact of this new standard on its unaudited condensed consolidated financial statements. In May 2014, August 2015, April 2016 and May 2016, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, ASU 2015-14, Revenue from Contracts with Customers, Deferral of the Effective Date, ASU 2016-10, Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing, and ASU 2016-12, Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients, respectively, (collectively referred to as "Topic 606"). Topic 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers, and supersedes current revenue recognition guidance, including industry-specific guidance. It also requires entities to disclose both quantitative and qualitative information that enable financial statements users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in these ASUs are effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted for annual periods beginning after December 15, 2016, but the Company has elected not to early adopt. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. The Company will adopt the guidance on January 1, 2018 and currently intends to elect the modified retrospective transition approach. The Company is in the process of evaluating the impact of the adoption of Topic 606 on its unaudited condensed consolidated financial statements. Except for the updated standards discussed above, there have been no new accounting pronouncements not yet effective that have significance, or potential significance, to the Company's unaudited condensed consolidated financial statements. |
Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions Learning Heroes Ltd. On June 2, 2017, the Company acquired Learning Heroes Ltd. ("Learning Heroes"), a privately-held company that is a provider of innovative education content. The purchase of Learning Heroes enhances the Company's mobile learning platform, and accelerates its creation of high quality, engaging and impactful learning experiences. Learning Heroes' creates courses that run on any Learning Management System. The purchase consideration was $10.3 million, which included $8.8 million in cash and 1.2 million Pound Sterling indemnity holdback to be paid one year from the date of the agreement. The preliminary purchase price allocation for Learning Heroes is summarized as follows (in thousands):
Under the acquisition method of accounting, the Company allocated the purchase price to the identifiable assets and liabilities based on their estimated fair value at the date of acquisition. The fair value of the intangible assets at the date of acquisition require significant judgment, and were measured primarily based on inputs that are not observable in the market and thus represent a Level 3 measurement as defined in ASC 820, Fair Value Measurements. The methodologies used in valuing the intangible assets include, but are not limited to, the multiple period excess earnings method for customer contracts and related relationships, and the relief-from-royalty method for education content. The values assigned to the assets acquired and liabilities assumed are based on preliminary estimates of fair value available as of June 30, 2017, and may be adjusted during the measurement period of up to 12 months from the date of acquisition as further information becomes available. Any changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill. As of June 30, 2017, the primary areas that are not yet finalized due to information that may become available subsequently and may result in changes in the values assigned to various assets and liabilities, include the fair values of intangible assets and deferred tax liabilities as well as assumed tax assets and liabilities. The excess of the purchase price over the total net identifiable assets has been recorded as goodwill, which includes synergies expected from the expanded learning capabilities and the value of the assembled workforce in accordance with GAAP. The goodwill balance is primarily attributed to the expansion of the learning library. The goodwill balance is not deductible for income tax purposes. The Company did not record any in-process research and development intangible assets in connection with the acquisition. The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives, as of the date of the Leaning Heroes acquisition (in thousands):
The financial results of Leaning Heroes are included in the Company's unaudited condensed consolidated financial statements from the date of acquisition through June 30, 2017. The acquisition of Learning Heroes did not have a material impact on the Company's unaudited condensed consolidated financial statements and therefore pro forma disclosures have not been presented. RevSym Inc. On May 18, 2017, the Company acquired RevSym Inc. ("RevSym"), a privately-held company focused on innovative cloud-based solutions for the management of revenue. RevSym is a cloud solution that takes into account the new accounting guidance of Topic 606. The Company purchased RevSym, a cloud solution, in order to integrate with the Company's leading commissions, Configure Price Quote and Contract Lifecycle Management solutions, to enable customers to optimize their critical revenue and commissions processes to streamline compliance under Topic 606. The purchase consideration was $5.5 million, which included $3.0 million in cash and an indemnity holdback with the first payment of $1.0 million to be paid six months from the date of the agreement and the remaining balance of $1.5 million to be paid one year from the date of the agreement. The preliminary purchase price allocation for RevSym is summarized as follows (in thousands):
Under the acquisition method of accounting, the Company allocated the purchase price to the identifiable assets and liabilities based on their estimated fair value at the date of acquisition. The fair value of the intangible assets at the date of acquisition require significant judgment, and were measured primarily based on inputs that are not observable in the market and thus represent a Level 3 measurement as defined in ASC 820, Fair Value Measurements. The methodologies used in valuing the intangible assets include, but are not limited to, multiple period excess earnings method for developed technology, cost method for customer contracts and related relationships, and the relief-from-royalty method for trademarks, tradenames and domain names. The values assigned to the assets acquired and liabilities assumed are based on preliminary estimates of fair value available as of June 30, 2017, and may be adjusted during the measurement period of up to 12 months from the date of acquisition as further information becomes available. Any changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill. As of June 30, 2017, the primary areas that are not yet finalized, due to information that may become available subsequently and may result in changes in the values assigned to various assets and liabilities, include the fair values of intangible assets and deferred tax liabilities as well as assumed tax assets and liabilities. The excess of the purchase price over the total net identifiable assets has been recorded as goodwill, which includes synergies expected from the expanded service capabilities and the value of the assembled workforce in accordance with GAAP. The goodwill balance is primarily attributed to new accounting guidance under Topic 606 and how it integrates the powerful combination of RevSym and the Company's leading commissions solutions. The goodwill balance is deductible for U.S. income tax purposes. The Company did not record any in-process research and development intangible assets in connection with the acquisition. The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives, as of the date of the RevSym acquisition (in thousands):
The financial results of RevSym are included in the Company's unaudited condensed consolidated financial statements from the date of acquisition through June 30, 2017. The acquisition of RevSym did not have a material impact on the Company's unaudited condensed consolidated financial statements and therefore pro forma disclosures have not been presented. DataHug Ltd. On November 7, 2016, the Company acquired DataHug Ltd. ("DataHug"), a privately-held company and provider of SaaS predictive forecasting and sales analytics. The Company's purchase of DataHug is intended to utilize its unique, patented technology to deliver predictive analysis of sales pipelines that is easy to understand and visualize. The purchase consideration was $13.0 million which included $11.7 million paid in cash and a $1.3 million indemnity holdback to be paid one year from the date of the agreement. The preliminary purchase price allocation for DataHug is summarized as follows (in thousands):
Under the acquisition method of accounting, the Company allocated the purchase price to the identifiable assets and liabilities based on their estimated fair value at the date of acquisition. The fair value of the intangible assets at the date of acquisition require significant judgment, and were measured primarily based on inputs that are not observable in the market and thus represent a Level 3 measurement as defined in ASC 820, Fair Value Measurements. The methodologies used in valuing the intangible assets include, but are not limited to, the multiple period excess earnings method for developed technology, the with and without method for customer contracts and related relationships, the relief-from-royalty method for trademarks, tradenames and domain names, and the multiple period excess earnings method for order backlog. The values assigned to the assets acquired and liabilities assumed are based on preliminary estimates of fair value available as of December 31, 2016, and may be adjusted during the measurement period of up to 12 months from the date of acquisition as further information becomes available. Any changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill. As of June 30, 2017, the primary areas that are not yet finalized, due to information that may become available subsequently and may result in changes in the values assigned to various assets and liabilities, include the fair values of intangible assets and deferred tax liabilities as well as assumed tax assets and liabilities. The excess of the purchase price over the total net identifiable assets has been recorded as goodwill, which includes synergies expected from the expanded service capabilities and the value of the assembled workforce in accordance with GAAP. The goodwill balance is primarily attributed to the extension of the predictive analysis of the sales pipeline to the Company's Lead to Money suite. The goodwill balance is not deductible for income tax purposes. The Company did not record any in-process research and development intangible assets in connection with the acquisition. The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives, as of the date of the DataHug acquisition (in thousands):
The financial results of DataHug are included in the Company's unaudited condensed consolidated financial statements from the date of acquisition through June 30, 2017. The acquisition of DataHug did not have a material impact on the Company's unaudited condensed consolidated financial statements and therefore pro forma disclosures have not been presented. |
Financial Instruments |
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Financial Instruments | Financial Instruments As of June 30, 2017 and December 31, 2016, all investment debt securities were classified as available-for-sale and carried at estimated fair value, which is determined based on the inputs discussed in Note 4. The Company classifies all highly liquid instruments with an original maturity on the date of purchase of three months or less as cash and cash equivalents. The Company classifies available-for-sale securities that have a maturity date longer than three months as short-term investments, including those investments with a maturity date of longer than one year that are highly liquid and which the Company does not intend to hold to maturity. Realized gains and losses are calculated using the specific identification method. As of June 30, 2017 and December 31, 2016, the Company had no short-term investments in a material unrealized loss position. The components of the Company’s cash, cash equivalents, and investments classified as available-for-sale were as follows at June 30, 2017 and December 31, 2016 (in thousands):
The market value and the amortized cost of available-for-sale debt securities by contractual maturities as of June 30, 2017 were as follows (in thousands):
The Company had no realized gains or losses on sales of its investments for the three and six months ended June 30, 2017 and 2016. The Company had $1.1 million net purchases from investments during the six months ended June 30, 2017 and $0.3 million net proceeds from investments during the six months ended June 30, 2016. The short-term investments in highly rated credit securities generally have minor to moderate fluctuations in the fair values from period to period. The Company monitors credit ratings, downgrades and significant events surrounding these securities in order to assess whether any of the impairments will be considered other-than-temporary. The Company did not identify any securities held as of June 30, 2017 or as of December 31, 2016 for which the fair value declined significantly below amortized cost and were considered other-than-temporary impairments. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Valuation of Investments Level 1 and Level 2 The Company’s available-for-sale securities include money market funds, certificates of deposits, corporate notes, and U.S. government and agency obligations. The Company values these securities using a pricing matrix from a pricing service provider, who may use quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs). The Company classifies all of its available-for-sale securities, except for money market funds, as having Level 2 inputs. The Company validates the estimated fair value of certain securities from a pricing service provider on a quarterly basis. The valuation techniques used to measure the fair value of the financial instruments having Level 2 inputs, all of which have counterparties with high credit ratings, were derived from the following: non-binding market consensus prices that are corroborated by observable market data, quoted market prices for similar instruments or pricing models, such as discounted cash flow techniques, with all significant inputs derived from or corroborated by observable market data. The Company measures financial assets and liabilities at fair value on an ongoing basis. The estimated fair value of the Company’s financial assets was determined using the following inputs at June 30, 2017 and December 31, 2016 (in thousands):
_____________________________________________________________________________ (1) Included in cash and cash equivalents on the unaudited condensed consolidated balance sheets. (2) Included in short-term investments on the unaudited condensed consolidated balance sheets. (3) Included in prepaid and other current assets on the unaudited condensed consolidated balance sheets. (4) Included in accrued expenses on the unaudited condensed consolidated balance sheets. Derivative Financial Instruments The Company entered into foreign currency derivative contracts with a financial institution to reduce the risk that its earnings will be adversely affected by foreign currency exchange rate fluctuations. The Company uses forward currency derivative contracts to minimize the Company’s exposure to balances primarily denominated in Australian, Canadian, Euros and Pound Sterling. Foreign currency derivative contracts are mark-to-market at the end of each reporting period with gains and losses recognized as other expense to offset the gains or losses resulting from the settlement or remeasurement of the underlying foreign currency denominated cash, receivables and payables. Details on outstanding foreign currency derivative contracts related primarily to receivables and payables are presented below (in thousands):
The Company accounts for the derivative instruments at fair value with changes in the fair value recorded as a component of interest income and other income (expense). During both the three and six months ended June 30, 2017 and June 30, 2016 such changes were immaterial. The Company did not have any transfers of its fair value measurement between Level 1, Level 2 and Level 3 during the periods presented. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Except as discussed below, there were no material changes in the Company's commitments under contractual obligations as disclosed in the Company’s audited consolidated financial statements for the year ended December 31, 2016. During the six months ended June 30, 2017, the Company entered into various contractual obligations, long-term operating lease obligations and unconditional purchase commitments. Future minimum lease payments under non-cancellable operating leases (with initial or remaining lease terms in excess of one year) and purchase commitments as of June 30, 2017 are as follows (in thousands):
Letter of Credit The Company obtained a $1.4 million letter of credit on October 1, 2016 for its leased space in Dublin, California. The letter of credit will expire on October 1, 2017. As of June 30, 2017 there was no balance outstanding under this letter of credit. Revolver Line of Credit In May 2014, the Company entered into a credit agreement with Wells Fargo Bank, National Association ("Wells Fargo"), under which Wells Fargo agreed to make a revolving loan ("Revolver") to the Company in an amount not to exceed $15.0 million. The Revolver matures in May 2019. Since the Revolver was paid in June 2015 there has not been a balance outstanding. There was no balance outstanding as of June 30, 2017. Pursuant to the agreement, the Company is required to maintain a leverage ratio of 3.00:1.00 and minimum liquidity of $7.5 million. The Company has met these leverage and liquidity covenants. Outstanding borrowings under the Revolver bear interest, at the Company's option, at a base rate plus an applicable margin. The applicable margin ranges between 0.75% and 2.25% depending on the Company's leverage ratio. A fee of 0.25% per annum is payable with respect to the unused portion of the commitment. Interest is payable every three months. Warranties and Indemnification The Company generally warrants that its software will perform in accordance with its standard documentation. Under the Company’s standard warranty, should a software product not perform as specified in the documentation within the warranty period, the Company will repair or replace the software or refund the license fee paid. To date, the Company has not incurred any incremental costs related to warranty obligations for its software. The Company’s product license and on-demand agreements typically include a limited indemnification provision for claims by third parties relating to the Company’s intellectual property. To date, the Company has not incurred material costs, and has not accrued any costs, related to such indemnification provisions. |
Restructuring and Other |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Other | Restructuring and Other Restructuring and other expenses primarily consist of costs associated with exit from excess facilities, streamlining operations and employee terminations. The Company incurred restructuring and other expenses of $0.4 million and $0.1 million during the three months ended June 30, 2017 and June 30, 2016, respectively, and $1.0 million and $0.4 million during the six months ended June 30, 2017 and June 30, 2016, respectively. The following tables set forth a summary of accrued restructuring and other expenses for the six months ended June 30, 2017 and 2016 (in thousands):
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Net Loss Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share | Net Loss Per Share Basic net loss per share is calculated by dividing net loss for the period by the weighted average common shares outstanding during the period. Diluted net loss per share is calculated by dividing the net loss for the period by the weighted average common shares outstanding, adjusted for all dilutive potential common shares, which includes shares issuable upon the exercise of outstanding common stock options, the release of restricted stock units and purchases of shares pursuant to the Company's employee stock purchase plan ("ESPP"), to the extent these shares are dilutive. For the three and six months ended June 30, 2017 and 2016, the diluted net loss per share calculation was the same as the basic net loss per share calculation as all potential common shares were anti-dilutive. Diluted net loss per share does not include the effect of the following potential weighted average common shares because to do so would be anti-dilutive for the periods presented (in thousands):
The weighted average exercise price per share of stock options excluded for the three months ended June 30, 2017 and June 30, 2016 was $6.69 and $6.72, respectively and six months ended June 30, 2017 and June 30, 2016 was $6.68 and $6.12, respectively. |
Stock-based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Compensation | Stock-based Compensation Expense Summary Stock-based compensation expense is measured based on the grant-date fair value of the stock-based awards. The Company recognizes stock-based compensation expense, for the portion of the awards that are ultimately expected to vest, on a straight-line basis over the requisite service period for those awards with graded vesting and service conditions. The table below sets forth a summary of stock-based compensation expense for the three and six months ended June 30, 2017 and 2016 (in thousands):
As of June 30, 2017, there was total unrecognized compensation expense of $36.0 million, $7.5 million, $45 thousand, and $0.8 million related to service-based awards, performance-based awards, stock options, and ESPP shares, respectively, which were expected to be recognized over weighted average periods of 2.0 years, 1.8 years, 0.2 years, and 0.4 years, respectively. The table below sets forth the functional classification of stock-based compensation expense for the three and six months ended June 30, 2017 and 2016 (in thousands):
Performance-based Awards In 2017, the Company granted performance-based restricted stock units with vesting contingent on successful attainment of pre-set SaaS revenue growth and pre-set operating margin targets over the three-year period from January 1, 2017 through December 31, 2019. During the three and six months ended June 30, 2017, expense of $0.5 million and $0.8 million, respectively, net of forfeiture, was recognized. In 2016, the Company granted performance-based restricted stock units with vesting contingent on attainment of pre-set SaaS revenue growth and pre-set recurring revenue gross margin target over the three-year period from January 1, 2016 through December 31, 2018 and performance-based restricted stock units with vesting contingent upon the Company's relative total shareholder return over the same three-year period compared to an index of 17 SaaS companies in the Company's executive compensation peer group. During the three and six months ended June 30, 2017, expense of $0.1 million and $0.2 million, respectively, net of forfeiture, was recognized. In 2015, the Company granted performance-based restricted stock units with vesting contingent on successful attainment of pre-set SaaS revenue growth target over the three-year period from July 1, 2015 through June 30, 2018. During the three and six months ended June 30, 2017, expense of $0.8 million and $1.5 million, respectively, net of forfeiture, was recognized. In 2014, the Company granted performance-based restricted stock units with vesting contingent on absolute SaaS revenue growth over the three-year period from January 1, 2014 through December 31, 2016, and on the Company's relative total shareholder return over the same three-year period compared to an index of 17 SaaS companies. These performance shares vested in February 2017. During the first quarter of 2017, expense of $0.4 million, net of forfeiture was recognized. There was no expenses recorded in the second quarter of 2017. Determination of Fair Value The fair value of service-based awards is estimated based on the market value of the Company’s stock on the date of grant. Fair value of the performance-based awards, that are subject to SaaS revenue growth and Non-GAAP operating margin is estimated based on the market value of the awards at the date of the grant, adjusted by the respective SaaS revenue growth and Non-GAAP operating margin probability assessment. Fair value of the performance awards that are subject to relative stockholder return and market conditions, is calculated using a Monte Carlo simulation model that estimates the distribution of the potential outcomes of the grants of performance awards based on simulated future index of the peer companies. The fair value of each stock option is estimated on the date of grant using the Black-Scholes valuation model. No stock options were granted during the three and six months ended June 30, 2017 and June 30, 2016. The fair value of each ESPP share is estimated on the enrollment date of the offering period using the Black-Scholes valuation model and the assumptions noted in the following table:
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Income Taxes |
6 Months Ended |
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Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense for the three months ended June 30, 2017 and June 30, 2016 was $0.4 million and $0.3 million, respectively, and for the six months ended June 30, 2017 and June 30, 2016 was $0.6 million and $0.5 million, respectively. For both the three and six months ended June 30, 2017 and 2016, the income tax expense is mainly attributable to withholding taxes associated with some foreign customers and income in foreign jurisdictions subject to income tax. In addition, at the beginning of 2017, the Company adopted FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which resulted in the recognition of excess tax benefits in the Company's provision for income taxes rather than paid-in capital. Given the Company's current valuation allowance position in the United States jurisdiction, the adoption of this guidance did not have a material impact on its unaudited condensed consolidated financial statements. |
Segment, Geographic and Customer Information |
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Segment, Geographic and Customer Information | Segment, Geographic and Customer Information The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker, who in the Company's case is the chief executive officer, in deciding how to allocate resources and assess performance. The Company's chief executive officer ("CEO") is considered to be the chief operating decision maker. The CEO reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. By this definition, the Company operates in one business segment, which is the development, marketing and sale of the Company's cloud-based sales, marketing, learning and customer experience solutions. The following table summarizes revenue for the three and six months ended June 30, 2017 and 2016 by geographic areas (in thousands):
As of June 30, 2017, the Company's goodwill balance was $75.0 million, of which $24.3 million was located in the U.K. and Ireland (EMEA) and the Company's intangible asset balance was $23.8 million, of which $8.5 million was located in the U.K. and Ireland (EMEA). No other individual country outside the U.S. accounted for more than 10% of the goodwill and intangible asset balances as of June 30, 2017. During the three and six months ended June 30, 2017 and 2016, no customer accounted for more than 10% of total revenue. |
Related Party Transactions |
6 Months Ended |
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Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Related-Party Transactions Lithium Technologies, Inc. In the normal course of business, the Company entered into agreements with Lithium Technologies, Inc. (“Lithium”), whose then-current Chief Financial Officer was a member of the Company's Board of Directors. On August 31, 2016, that member of the Company's Board of Directors ceased to be the Chief Financial Officer of Lithium Technologies, Inc. In 2015, Lithium entered into a three-year SaaS subscription agreement with the Company in the amount of $0.1 million per year, from which the Company recognized SaaS revenue of $34,377 and $68,442 during the three and six months ended June 30, 2017, respectively, and $49,903 and $87,516 during the three and six months ended June 30, 2016, respectively. In addition, the Company entered into various agreements with Lithium and recognized professional services revenue of $3,238 and $5,701 during the three and six months ended June 30, 2017, respectively, and $13,035 and $17,325 during the three and six months ended June 30, 2016, respectively. TIBCO Software Inc. During 2016, the Company renewed an annual subscription services agreement for $0.1 million with TIBCO Software Inc. ("TIBCO"), whose chief executive officer and director is a member of the Company's Board of Directors. The original agreement had been entered into between TIBCO and ViewCentral for SaaS revenue prior to the Company's acquisition of the assets of ViewCentral, and the renewal was at the same terms as the original agreement. In connection with this agreement, the Company recognized SaaS revenue of $29,825 and $59,323 during the three and six months ended June 30, 2017, respectively, and none during the three and six months ended June 30, 2016. Further, the Company paid $39,000 for TIBCO Jaspersoft subscription fee in April 2017. |
Summary of Significant Accounting Policies (Policies) |
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Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Summary of Accounting Policies | Basis of Presentation and Summary of Accounting Policies All amounts included herein related to these condensed consolidated financial statements as of June 30, 2017 and for the three and six months ended June 30, 2017 and 2016 are unaudited and should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2016 for Callidus Software Inc., doing business as CallidusCloud ("Company"). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to the Securities and Exchange Commission ("SEC") rules and regulations regarding interim financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all necessary adjustments for the fair presentation of the Company’s financial position, results of operations and cash flows. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the full fiscal year ending December 31, 2017. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which include wholly-owned subsidiaries in Australia, Canada, Germany, Hong Kong, India, Ireland, Japan, Malaysia, Mexico, Netherlands, New Zealand, Serbia, Singapore and the United Kingdom. All intercompany transactions and balances have been eliminated upon consolidation. |
Use of Estimates | Use of Estimates Preparation of the unaudited condensed consolidated financial statements in conformity with GAAP and the rules and regulations of the SEC requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, the reported amounts of revenue and expenses during the reporting period and the accompanying notes. Estimates are used for, but not limited to, the allocation of the value of purchase consideration for business acquisitions and other contingencies, allowances for doubtful accounts, the useful lives of fixed assets and intangible assets, the attainment of performance-based restricted stock units, stock-based compensation forfeiture rates, accrued liabilities and uncertain tax positions. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates such estimates and assumptions on an ongoing basis for continued reasonableness, using historical experience and other factors, including the current economic environment. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such evaluation. Illiquid credit markets, volatile equity and foreign currency markets and fluctuations in information technology spending by prospective customers can increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ materially from those estimates. Changes in those estimates, if any, resulting from continuing changes in the economic environment, will be reflected in the consolidated financial statements in future periods. |
Revenue Recognition | Revenue Recognition The Company generates revenue by providing software as a service ("SaaS") solutions through on-demand subscription and term licenses and related software maintenance, and professional services. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. Recurring Revenue. Recurring revenue, which includes SaaS revenue and maintenance revenue, is recognized ratably over the stated contractual period. SaaS revenue consists of subscription fees from customers accessing the Company's cloud-based service offerings. Maintenance revenue consists of fees from customers purchasing licenses and receiving support for such on-premise solutions. The Company also recognizes SaaS and maintenance revenue associated with customers using its products in excess of contracted usage ("Overages"). Overages are primarily attributed to SaaS products and such Overages are recorded in SaaS revenue in the period incurred. Revenue related to Overages was immaterial during the three and six month periods ended June 30, 2017 and 2016. Service and License Revenue. Service and license revenue primarily consists of training, integration and configuration services. Generally, the Company's professional services arrangements are billed on a time-and-materials basis. Time and material services are recognized as the services are rendered based on inputs to the project, such as billable hours incurred. For fixed-fee professional services arrangements, the Company recognizes revenue under the proportional performance method of accounting and estimates the proportional performance on a monthly basis, utilizing hours incurred to date as a percentage of total estimated hours to complete the project. If the Company does not have a sufficient basis to measure progress toward completion, revenue is recognized upon completion. Service and license revenue also includes revenue from perpetual licenses, which is recognized upon delivery of the product, using the residual method, assuming all the other conditions for revenue recognition have been met. Revenue related to perpetual licenses was immaterial during the three and six month periods ended June 30, 2017 and 2016. In a limited number of arrangements with non-standard acceptance criteria, the Company defers the revenue until the acceptance criteria are satisfied. Reimbursements, including those related to travel and out-of-pocket expenses, are included in services and license revenue, and an equivalent amount of reimbursable expenses is included in cost of services and license revenue. In general, recurring revenue agreements are entered into for 12 to 36 months, and the professional services are performed within nine months of entering into a contract with the customer, depending on the size of integration. SaaS agreements provide specified service level commitments, excluding scheduled maintenance. The failure to meet this level of service availability may require the Company to credit qualifying customers a portion of their subscription and support fees. Based on the Company's historical experience meeting its service level commitments, the Company does not currently have any liabilities on its balance sheet for these commitments. The Company recognizes revenue when all of the following conditions are met: • Persuasive evidence of an arrangement exists; • Delivery has occurred or services have been rendered; • The fees are fixed or determinable; and • Collection of the fees is reasonably assured. If the Company determines that any one of the four criteria is not met, it will defer recognition of revenue until all the criteria are met. Multiple-deliverable arrangements with on-demand subscription. For on-demand subscription agreements with multiple deliverables, the Company evaluates each element to determine whether it represents a separate unit of accounting. The Company determines the best estimated selling price of each deliverable in an arrangement based on a selling price hierarchy of methods contained in Finance Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2009-13, "Revenue Recognition (Accounting Standards Codification (“ASC”) Topic 605)-Multiple-Deliverable Revenue Arrangements." The best estimated selling price for a deliverable is based on its vendor-specific objective evidence (“VSOE”), if available, third-party evidence (“TPE”), if VSOE is not available, or estimated selling price (“ESP”), if neither VSOE nor TPE is available. Total arrangement fees are allocated to each element using the relative selling price method. The Company has currently established VSOE for most deliverables, except for fixed fee service arrangements and on-premise software licenses. The Company considered all of the following factors to establish the ESP for fixed fee service arrangements when sold with its on-demand services: the weighted average actual sales prices of professional services sold on a stand-alone basis for on-demand services; average billing rates for fixed fee service agreements when sold with on-demand services, cost plus a reasonable mark-up and other factors such as gross margin objectives, pricing practices and growth strategy. Multiple-deliverable arrangements with on-premise license. For arrangements with multiple deliverables, including license, professional services and maintenance, the Company recognizes license revenue using the residual method of accounting pursuant to the requirements of the guidance contained in ASC 985-605, "Software Revenue Recognition." Under the residual method, revenue is recognized when VSOE for fair value exists for all of the undelivered elements in the arrangement, but does not exist for one or more of the delivered elements in the arrangement. If evidence of fair value cannot be established for the undelivered elements, all of the revenue is deferred until evidence of fair value can be established, or until the items for which evidence of fair value cannot be established are delivered. For maintenance and certain professional services, the Company has established VSOE because it has a sufficient history of selling these deliverables at an established price. The Company's revenue arrangements do not include a general right of return relative to the delivered products. Generally, for the Company's term-based licenses, if the only undelivered element is maintenance, the entire amount of revenue is recognized ratably over the maintenance period. Sales and other taxes collected from customers to be remitted to government authorities are excluded from revenue. |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which simplifies various aspects related to the accounting and presentation of stock-based payments. The amendments require entities to record all tax effects related to stock-based payments at settlement or expiration through the income statement and the windfall tax benefit to be recorded when it arises, subject to normal valuation allowance considerations. All tax-related cash flows resulting from the stock-based payments are required to be reported as operating activities in the statement of cash flows. The updates relating to the income tax effects of the stock-based payments including the cash flow presentation was adopted prospectively. Further, the amendments allow the entities to make an accounting policy election to either estimate forfeitures or recognize forfeitures as they occur. The Company adopted this guidance during the first quarter of 2017. Adoption of the new standard did not have a material impact to the Company's condensed financial statements and resulted in the recognition of excess tax benefits to the Company's income taxes rather than paid-in capital. The Company elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. Recently Issued Accounting Pronouncements In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting, which amends the scope of modification accounting for stock-based payment arrangements, provides guidance on the types of changes to the terms or conditions of stock-based payment awards to which an entity would be required to apply modification accounting under ASC 718, Compensation- Stock Compensation. This ASU is effective for public business entities for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company is currently evaluating the impact this ASU will have on its unaudited condensed consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory. This guidance improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. Under current U.S. GAAP, the recognition of current and deferred income taxes for an intra-entity asset transfer is prohibited until the asset has been sold to an outside party. Under the new standard, an entity will recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Two common examples of assets included in the scope of this update are intellectual property and property, plant and equipment. The amendments in this update are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact this ASU will have on its unaudited condensed consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice for certain cash receipts and cash payments. The amendments in this guidance are effective for public business entities for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Entities are permitted to adopt the standard early in any interim or annual period, and a retrospective application is required. The Company is currently evaluating the impact this ASU will have on its unaudited condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases, which requires the recognition of assets and liabilities arising from lease transactions on the balance sheet and the disclosure of key information about leasing arrangements. Accordingly, a lessee will recognize a lease asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation. Both the asset and liability will initially be measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement, including the presentation of expenses and cash flows, will depend on the classification of the lease as either finance or an operating lease. Initial costs directly attributable to negotiating and arranging the lease will be included in the asset. For leases with a term of 12 months or less, a lessee can make an accounting policy election by class of underlying asset to not recognize an asset and corresponding liability. Lessees will also be required to provide additional qualitative and quantitative disclosures regarding the amount, timing and uncertainty of cash flows arising from leases. These disclosures are intended to supplement the amounts recorded in the financial statements and provide additional information about the nature of an organization’s leasing activities. The new standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. In transition, lessees are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The transition guidance also provides specific guidance for sale and leaseback transactions, build-to-suit leases and amounts previously recognized in accordance with the business combinations guidance for leases. The updated standard is effective for the Company beginning in the first quarter of 2019. The Company is currently evaluating its expected adoption method and timeline, and the impact of this new standard on its unaudited condensed consolidated financial statements. In May 2014, August 2015, April 2016 and May 2016, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, ASU 2015-14, Revenue from Contracts with Customers, Deferral of the Effective Date, ASU 2016-10, Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing, and ASU 2016-12, Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients, respectively, (collectively referred to as "Topic 606"). Topic 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers, and supersedes current revenue recognition guidance, including industry-specific guidance. It also requires entities to disclose both quantitative and qualitative information that enable financial statements users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in these ASUs are effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted for annual periods beginning after December 15, 2016, but the Company has elected not to early adopt. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. The Company will adopt the guidance on January 1, 2018 and currently intends to elect the modified retrospective transition approach. The Company is in the process of evaluating the impact of the adoption of Topic 606 on its unaudited condensed consolidated financial statements. Except for the updated standards discussed above, there have been no new accounting pronouncements not yet effective that have significance, or potential significance, to the Company's unaudited condensed consolidated financial statements. |
Acquisitions (Tables) |
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Learning Heroes Ltd. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The preliminary purchase price allocation for Learning Heroes is summarized as follows (in thousands):
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Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives, as of the date of the Leaning Heroes acquisition (in thousands):
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RevSym, Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The preliminary purchase price allocation for RevSym is summarized as follows (in thousands):
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Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives, as of the date of the RevSym acquisition (in thousands):
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DataHug, Ltd. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The preliminary purchase price allocation for DataHug is summarized as follows (in thousands):
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Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives, as of the date of the DataHug acquisition (in thousands):
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Financial Instruments (Tables) |
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Financial Instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of cash, cash equivalents and investments classified as available-for-sale | The components of the Company’s cash, cash equivalents, and investments classified as available-for-sale were as follows at June 30, 2017 and December 31, 2016 (in thousands):
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Schedule of contractual maturities of available-for-sale debt securities | The market value and the amortized cost of available-for-sale debt securities by contractual maturities as of June 30, 2017 were as follows (in thousands):
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Fair Value Measurements (Tables) |
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Valuation of Investments Level 1 and Level 2 The Company’s available-for-sale securities include money market funds, certificates of deposits, corporate notes, and U.S. government and agency obligations. The Company values these securities using a pricing matrix from a pricing service provider, who may use quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs). The Company classifies all of its available-for-sale securities, except for money market funds, as having Level 2 inputs. The Company validates the estimated fair value of certain securities from a pricing service provider on a quarterly basis. The valuation techniques used to measure the fair value of the financial instruments having Level 2 inputs, all of which have counterparties with high credit ratings, were derived from the following: non-binding market consensus prices that are corroborated by observable market data, quoted market prices for similar instruments or pricing models, such as discounted cash flow techniques, with all significant inputs derived from or corroborated by observable market data. The Company measures financial assets and liabilities at fair value on an ongoing basis. The estimated fair value of the Company’s financial assets was determined using the following inputs at June 30, 2017 and December 31, 2016 (in thousands):
_____________________________________________________________________________ (1) Included in cash and cash equivalents on the unaudited condensed consolidated balance sheets. (2) Included in short-term investments on the unaudited condensed consolidated balance sheets. (3) Included in prepaid and other current assets on the unaudited condensed consolidated balance sheets. (4) Included in accrued expenses on the unaudited condensed consolidated balance sheets. Derivative Financial Instruments The Company entered into foreign currency derivative contracts with a financial institution to reduce the risk that its earnings will be adversely affected by foreign currency exchange rate fluctuations. The Company uses forward currency derivative contracts to minimize the Company’s exposure to balances primarily denominated in Australian, Canadian, Euros and Pound Sterling. Foreign currency derivative contracts are mark-to-market at the end of each reporting period with gains and losses recognized as other expense to offset the gains or losses resulting from the settlement or remeasurement of the underlying foreign currency denominated cash, receivables and payables. Details on outstanding foreign currency derivative contracts related primarily to receivables and payables are presented below (in thousands):
The Company accounts for the derivative instruments at fair value with changes in the fair value recorded as a component of interest income and other income (expense). During both the three and six months ended June 30, 2017 and June 30, 2016 such changes were immaterial. The Company did not have any transfers of its fair value measurement between Level 1, Level 2 and Level 3 during the periods presented. |
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Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | The estimated fair value of the Company’s financial assets was determined using the following inputs at June 30, 2017 and December 31, 2016 (in thousands):
_____________________________________________________________________________ (1) Included in cash and cash equivalents on the unaudited condensed consolidated balance sheets. (2) Included in short-term investments on the unaudited condensed consolidated balance sheets. (3) Included in prepaid and other current assets on the unaudited condensed consolidated balance sheets. (4) Included in accrued expenses on the unaudited condensed consolidated balance sheets. Derivative Financial Instruments The Company entered into foreign currency derivative contracts with a financial institution to reduce the risk that its earnings will be adversely affected by foreign currency exchange rate fluctuations. The Company uses forward currency derivative contracts to minimize the Company’s exposure to balances primarily denominated in Australian, Canadian, Euros and Pound Sterling. Foreign currency derivative contracts are mark-to-market at the end of each reporting period with gains and losses recognized as other expense to offset the gains or losses resulting from the settlement or remeasurement of the underlying foreign currency denominated cash, receivables and payables. Details on outstanding foreign currency derivative contracts related primarily to receivables and payables are presented below (in thousands):
The Company accounts for the derivative instruments at fair value with changes in the fair value recorded as a component of interest income and other income (expense). During both the three and six months ended June 30, 2017 and June 30, 2016 such changes were immaterial. The Company did not have any transfers of its fair value measurement between Level 1, Level 2 and Level 3 during the periods presented. |
Commitments and Contingencies - (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractual Obligation, Fiscal Year Maturity Schedule [Table Text Block] | Future minimum lease payments under non-cancellable operating leases (with initial or remaining lease terms in excess of one year) and purchase commitments as of June 30, 2017 are as follows (in thousands):
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Restructuring and Other (Tables) |
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of accrued restructuring expenses | The following tables set forth a summary of accrued restructuring and other expenses for the six months ended June 30, 2017 and 2016 (in thousands):
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Net Loss Per Share (Tables) |
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of potential weighted average common shares excluded from computation of diluted net loss per share | Diluted net loss per share does not include the effect of the following potential weighted average common shares because to do so would be anti-dilutive for the periods presented (in thousands):
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Stock-based Compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of stock-based compensation expenses | The table below sets forth a summary of stock-based compensation expense for the three and six months ended June 30, 2017 and 2016 (in thousands):
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Schedule of functional classification of stock-based compensation expense | The table below sets forth the functional classification of stock-based compensation expense for the three and six months ended June 30, 2017 and 2016 (in thousands):
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Schedule of valuation assumptions for determining the fair value of stock options and employee stock purchase plans | The fair value of each ESPP share is estimated on the enrollment date of the offering period using the Black-Scholes valuation model and the assumptions noted in the following table:
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Segment, Geographic and Customer Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of revenues by geographic areas | The following table summarizes revenue for the three and six months ended June 30, 2017 and 2016 by geographic areas (in thousands):
|
Financial Instruments (Details 2) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017
USD ($)
investment
|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2017
USD ($)
investment
|
Jun. 30, 2016
USD ($)
|
Dec. 31, 2016
investment
|
|
Contractual maturity, Amortized Cost | |||||
Less than 1 year | $ 35,595,000 | $ 35,595,000 | |||
Between 1 and 2 years | 4,655,000 | 4,655,000 | |||
Total | 40,250,000 | 40,250,000 | |||
Contractual maturity, Estimated Fair value | |||||
Less than 1 year | 35,570,000 | 35,570,000 | |||
Between 1 and 2 years | 4,670,000 | 4,670,000 | |||
Total | $ 40,240,000 | $ 40,240,000 | |||
Other disclosures pertaining to available-for-sale securities | |||||
Short-term investments in a material unrealized loss position with maturities of greater than 12 months | investment | 0 | 0 | 0 | ||
Realized gains or losses on sales of investments | $ 0 | $ 0 | |||
Purchases of investments, net of proceeds from maturities of investments | $ 1,100,000 | $ 300,000 |
Commitments and Contingencies - Maturity Schedule (Details) $ in Thousands |
Jun. 30, 2017
USD ($)
|
---|---|
Recorded Unconditional Purchase Obligation, Fiscal Year Maturity Schedule [Abstract] | |
Remainder of 2017 | $ 11,482 |
2018 | 14,774 |
2019 | 10,305 |
2020 | 3,008 |
2021 | 0 |
2022 and beyond | 0 |
Future minimum payments | 39,569 |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
Remainder of 2017 | 2,142 |
2018 | 4,689 |
2019 | 4,385 |
2020 | 4,425 |
2021 | 4,049 |
2022 and beyond | 2,693 |
Future minimum payments | $ 22,383 |
Commitments and Contingencies (Details) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2015
USD ($)
|
Sep. 30, 2014
USD ($)
|
|
Contractual cash obligations | ||||
Line of credit outstanding | $ 0 | $ 0 | ||
Line of Credit | Wells Fargo Credit Agreement | ||||
Contractual cash obligations | ||||
Line of credit, borrowing capacity | $ 15,000,000 | |||
Minimum liquidity | $ 7,500,000 | |||
Line of Credit | Wells Fargo Credit Agreement | Revolving Credit Facility | ||||
Contractual cash obligations | ||||
Required leverage ratio | 3.00 | 3.00 | ||
Commitment fee percentage | 0.25% | |||
Line of Credit | Wells Fargo Credit Agreement | Minimum | Revolving Credit Facility | ||||
Contractual cash obligations | ||||
Basis spread on variable rate | 0.75% | |||
Line of Credit | Wells Fargo Credit Agreement | Maximum | Revolving Credit Facility | ||||
Contractual cash obligations | ||||
Basis spread on variable rate | 2.25% | |||
Letter of Credit | Dublin (CA) Headquarters | ||||
Contractual cash obligations | ||||
Line of credit facility, increase | $ 1,400,000 | |||
Line of credit | $ 0 | $ 0 |
Restructuring and Other (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expenses | $ 375 | $ 86 | $ 972 | $ 402 |
Restructuring Reserve [Roll Forward] | ||||
Balance at the beginning of the period | 269 | 17 | ||
Additions | 972 | 405 | ||
Adjustments | 0 | 0 | ||
Cash Payments | (756) | (120) | ||
Balance at the end of the period | 485 | 302 | 485 | 302 |
Severance and termination-related costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Balance at the beginning of the period | 0 | |||
Additions | 872 | |||
Adjustments | 0 | |||
Cash Payments | (577) | |||
Balance at the end of the period | 295 | 295 | ||
Facilities related costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Balance at the beginning of the period | 269 | 17 | ||
Additions | 100 | 405 | ||
Adjustments | 0 | 0 | ||
Cash Payments | (179) | (120) | ||
Balance at the end of the period | $ 190 | $ 302 | $ 190 | $ 302 |
Net Loss Per Share Net Income (Loss) Per Share (Calculation of basic and diluted net income (loss) per share) (Details) - $ / shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Earnings Per Share, Diluted | ||||
Anti-dilutive securities excluded from computation of diluted net loss per share (in shares) | 4,056 | 4,610 | 4,142 | 4,380 |
Restricted Stock Units | ||||
Earnings Per Share, Diluted | ||||
Anti-dilutive securities excluded from computation of diluted net loss per share (in shares) | 3,582 | 3,893 | 3,666 | 3,655 |
Stock Options | ||||
Earnings Per Share, Diluted | ||||
Anti-dilutive securities excluded from computation of diluted net loss per share (in shares) | 366 | 586 | 382 | 611 |
Antidilutive securities excluded from computation of earnings per share, weighted average exercise price | $ 6.69 | $ 6.72 | $ 6.68 | $ 6.12 |
ESPP shares | ||||
Earnings Per Share, Diluted | ||||
Anti-dilutive securities excluded from computation of diluted net loss per share (in shares) | 108 | 131 | 94 | 114 |
Stock-based Compensation (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Stock-based compensation | ||||
Stock-based compensation expense | $ 9,941 | $ 7,612 | $ 18,191 | $ 14,065 |
Stock options | ||||
Stock-based compensation | ||||
Stock-based compensation expense | 136 | 144 | 281 | 289 |
Compensation expense not yet recognized | 0 | $ 0 | ||
Recognition period for compensation expense not yet recognized | 2 months | |||
Performance-based awards | ||||
Stock-based compensation | ||||
Stock-based compensation expense | 1,771 | 1,269 | $ 3,191 | 2,449 |
Compensation expense not yet recognized | 7,500 | $ 7,500 | ||
Recognition period for compensation expense not yet recognized | 1 year 10 months | |||
Service-based awards | ||||
Stock-based compensation | ||||
Stock-based compensation expense | 7,646 | 5,696 | $ 13,984 | 10,454 |
Compensation expense not yet recognized | 36,000 | $ 36,000 | ||
Recognition period for compensation expense not yet recognized | 1 year 12 months | |||
ESPP shares | ||||
Stock-based compensation | ||||
Stock-based compensation expense | 388 | $ 503 | $ 735 | $ 873 |
Compensation expense not yet recognized | 800 | $ 800 | ||
Recognition period for compensation expense not yet recognized | 5 months | |||
Granted in 2017 | Performance stock units | ||||
Stock-based compensation | ||||
Stock-based compensation expense | 500 | $ 800 | ||
Granted in 2016 | Performance stock units | ||||
Stock-based compensation | ||||
Stock-based compensation expense | 100 | 200 | ||
Granted in 2015 | Performance stock units | ||||
Stock-based compensation | ||||
Stock-based compensation expense | 800 | $ 1,500 | ||
Granted in 2014 | Performance stock units | ||||
Stock-based compensation | ||||
Stock-based compensation expense | $ 400 |
Stock-based Compensation (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Classification of stock-based compensation expense | ||||
Stock-based compensation expense | $ 9,941 | $ 7,612 | $ 18,191 | $ 14,065 |
Cost of recurring revenues | ||||
Classification of stock-based compensation expense | ||||
Stock-based compensation expense | 412 | 453 | 835 | 962 |
Cost of services and other revenues | ||||
Classification of stock-based compensation expense | ||||
Stock-based compensation expense | 559 | 524 | 1,190 | 1,036 |
Sales and marketing | ||||
Classification of stock-based compensation expense | ||||
Stock-based compensation expense | 2,027 | 2,144 | 4,564 | 4,298 |
Research and development | ||||
Classification of stock-based compensation expense | ||||
Stock-based compensation expense | 1,765 | 1,171 | 3,397 | 2,340 |
General and administrative | ||||
Classification of stock-based compensation expense | ||||
Stock-based compensation expense | $ 5,178 | $ 3,320 | $ 8,205 | $ 5,429 |
Stock-based Compensation (Details 3) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
|
Stock-based compensation | |||||
Stock-based compensation expense | $ 9,941 | $ 7,612 | $ 18,191 | $ 14,065 | |
Performance stock units | |||||
Stock-based compensation | |||||
Performance period | 3 years | ||||
Performance stock units | Granted in 2017 | |||||
Stock-based compensation | |||||
Stock-based compensation expense | 500 | 800 | |||
Performance stock units | Granted in 2016 | |||||
Stock-based compensation | |||||
Stock-based compensation expense | 100 | 200 | |||
Performance stock units | Granted in 2015 | |||||
Stock-based compensation | |||||
Stock-based compensation expense | 800 | 1,500 | |||
ESPP shares | |||||
Stock-based compensation | |||||
Stock-based compensation expense | $ 388 | $ 503 | $ 735 | $ 873 | |
Fair value assumptions using the Black-Scholes-Merton valuation model | |||||
Risk-free interest rate, minimum (as a percent) | 0.65% | 0.42% | |||
Risk-free interest rate, maximum (as a percent) | 0.82% | 0.51% | |||
Volatility, minimum (as a percent) | 33.00% | 45.00% | |||
Volatility, maximum (as a percent) | 33.10% | 51.00% | |||
Dividend yield (as a percent) | 0.00% | 0.00% | |||
ESPP shares | Minimum | |||||
Fair value assumptions using the Black-Scholes-Merton valuation model | |||||
Expected life (in years) | 6 months | 6 months | |||
ESPP shares | Maximum | |||||
Fair value assumptions using the Black-Scholes-Merton valuation model | |||||
Expected life (in years) | 1 year | 1 year |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Income Tax Disclosure [Abstract] | ||||
Provision for income taxes | $ 413 | $ 341 | $ 581 | $ 497 |
Segment, Geographic and Customer Information (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017
USD ($)
customer
|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2017
USD ($)
segment
customer
|
Jun. 30, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Segment Reporting [Abstract] | |||||
Number of operating segments | segment | 1 | ||||
Revenues by geographic area | |||||
Goodwill | $ 75,049 | $ 75,049 | $ 63,957 | ||
Revenues | 61,263 | $ 49,751 | 119,404 | $ 98,129 | |
Intangible assets, net | $ 23,761 | $ 23,761 | $ 21,659 | ||
Number of customers accounted for more than 10% of total revenues | customer | 0 | 0 | |||
United States and Canada | |||||
Revenues by geographic area | |||||
Revenues | $ 49,953 | 40,732 | $ 97,478 | 80,617 | |
EMEA | |||||
Revenues by geographic area | |||||
Goodwill | 8,500 | 8,500 | |||
Revenues | 6,784 | 5,452 | 13,268 | 10,328 | |
Intangible assets, net | 24,300 | 24,300 | |||
Asia Pacific | |||||
Revenues by geographic area | |||||
Revenues | 3,145 | 2,442 | 6,110 | 4,985 | |
Other | |||||
Revenues by geographic area | |||||
Revenues | $ 1,381 | $ 1,125 | $ 2,548 | $ 2,199 |
Related Party Transactions (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|---|
Apr. 30, 2017 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Lithium | Subscription Arrangement | |||||||
Related party transactions | |||||||
Revenue recongnized in related party transaction | $ 100,000 | ||||||
Lithium | Subscription Arrangement | Affiliated Entity | |||||||
Related party transactions | |||||||
Agreement term | 3 years | ||||||
Lithium | Service Agreements | |||||||
Related party transactions | |||||||
Revenue recongnized in related party transaction | $ 3,238 | $ 13,035 | 5,701 | $ 17,325 | |||
Lithium | Service Agreements | Affiliated Entity | |||||||
Related party transactions | |||||||
Revenue recongnized in related party transaction | 34,377 | $ 49,903 | 68,442 | $ 87,516 | |||
TIBCO | |||||||
Related party transactions | |||||||
Annual subscription recorded in prepaid expense and other current assets | $ 39,000 | ||||||
TIBCO | Service Agreements | |||||||
Related party transactions | |||||||
Annual subscription recorded in prepaid expense and other current assets | $ 100,000 | ||||||
TIBCO | Hosting Agreement | |||||||
Related party transactions | |||||||
Revenue recongnized in related party transaction | $ 29,825 | $ 59,323 |
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