þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 04-3432319 | |
State or other jurisdiction of incorporation or organization | (I.R.S. Employer Identification No.) |
Title of each class | Name of each exchange on which registered |
Common Stock, $.01 par value | NASDAQ Global Select Market |
Large accelerated filer þ | Accelerated filer o |
Non-accelerated filer o (Do not check if smaller reporting company) | Smaller reporting company o |
PART I | ||
Item 1. | ||
Item 1A. | ||
Item 1B. | ||
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PART II | ||
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Item 6. | ||
Item 7. | ||
Item 7A. | ||
Item 8. | ||
Item 9. | ||
Item 9A. | ||
Item 9B. | ||
PART III | ||
Item 10. | ||
Item 11. | ||
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Item 13. | ||
Item 14. | ||
PART IV | ||
Item 15. | ||
• | traffic congestion at data centers and between networks; |
• | traffic exceeding the capacity of routing equipment; |
• | absence of a coordinated security system to protect against hackers, bots and other malefactors that want to steal assets and disrupt the functioning of the web; |
• | increased use of mobile networks, which tend to be slower and less reliable than the fixed line Internet; and |
• | “last mile” issues – such as bandwidth constraints between consumers and their Internet access provider. |
• | increasingly dynamic and personalized websites; |
• | growth in the transmission of rich content, including high definition, or HD, video, music and games; |
• | rapid expansion in the use of mobile devices leveraging different technologies and delivery systems; and |
• | the desire of millions of consumers worldwide to be able to enjoy the same high-quality experience across all of the devices they use. |
One: | Delivering video with excellent quality, scale and affordability; |
Two: | Providing superior performance for websites and applications accessed by all types of devices from anywhere in the world; |
Three: | Protecting websites and data centers from cyber-attacks that aim to disrupt their online operations, corrupt their data or steal sensitive information; and |
Four: | Enabling enterprise networks to handle growing cloud computing workloads with high performance and low cost. |
• | identify, absorb and block security threats; |
• | make routing and delivery decisions based on comprehensive knowledge of network conditions; |
• | provide device-level detection and optimization; and |
• | provide our customers with business and technical insights into their online operations. |
• | Ion – Ion is a situational performance solution that consists of an integrated suite of web delivery, acceleration and optimization technologies that make real-time optimization decisions based on the requirements of the device, network location and browser. Ion is designed to simplify increasingly complex web delivery and enable a faster website experience that is highly available, secure and scalable to meet peak capacity demands. |
• | Dynamic Site Accelerator – Dynamic Site Accelerator is designed to help customers experience globally consistent and faster website performance, handling the specific requirements of dynamically-generated content. Our platform continuously pulls and caches fresh site content onto Akamai servers, automatically directs content requests to an optimal server, routes the request via the most reliable path to data centers to retrieve and deliver dynamic interactive content. |
• | Global Traffic Management – Global Traffic Management is designed to ensure responsiveness to end user requests by leveraging our global load balancing technology. Unlike traditional hardware-based solutions that reside within the data center, our Global Traffic Management service is a fault-tolerant solution that makes intelligent routing decisions based on real-time data center performance health and global Internet conditions to help ensure user requests are routed to the most appropriate data center for that user at that moment. |
• | Cloudlets – Cloudlets are applications that provide our customers with self-serviceable controls and capabilities designed to help simplify web operations and improve user experiences. Examples include Visitor Prioritization for managing potentially overloaded applications, Image Converter to improve delivery of images particularly to mobile devices, IP/Geo Access to handle access restrictions and Forward Rewrite for managing delivery of targeted content without changing the page's Internet address. |
• | Kona Site Defender – Kona Site Defender is a cloud computing security solution that defends against network and application layer distributed denial of service, or DDoS, attacks, web application attacks and direct-to-origin attacks. By leveraging our distributed network and proprietary technology, Akamai can absorb traffic targeted at the application layer, deflect DDoS traffic targeted at the network layer, such as SYN Floods or UDP Floods, and authenticate valid traffic at the network edge. |
• | Fast DNS – The Domain Name System, or DNS, translates human-readable domain names into numerical IP addresses to enable individuals who type in a website name to reach the desired location on the Internet. Our Fast DNS offering is a DNS resolution solution that is designed to quickly and dependably direct individuals to our customers' websites. Importantly, we have architected this service to protect against DNS-based DDoS attacks. |
• | Prolexic Routed – Prolexic Routed is designed to protect web- and IP-based applications in data centers from the threat of DDoS attacks by preventing attacks before they reach the data center. It provides protection against high-bandwidth, sustained web attacks as well as potentially crippling DDoS attacks that target specific applications and services. |
• | Client Reputation – Client Reputation provides an additional layer of protection against DDoS and web application attacks by allowing customers to automatically block requests from IP addresses. Client Reputation leverages advanced algorithms to compute a risk score based on prior behavior as observed over the Akamai network. The algorithms use both legitimate and attack traffic to profile the behavior of attacks, clients and applications. Based on this information, Akamai assigns risk scores to each IP address and allows customers to choose which actions they wish to have Kona Site Defender perform on an IP address with specific risk scores. |
• | Cloud Networking Suite – Our Cloud Networking Suite of solutions is designed to improve application and network performance, reliability and security for branch location users who are connecting to software as a service and cloud applications over the Internet. The services include Internet Transport Optimization, which provides route optimization and forward error correction; SaaS and Cloud Acceleration, which enables caching, data deduplication, and transport optimization; and Secure Web Gateway, which offers outbound web filtering and inbound malware protection. |
• | Cisco Intelligent WAN with Akamai Connect – This is a fully-integrated solution from Akamai and Cisco for enterprises with broadly distributed branches and office locations. By combining WAN optimization and intelligent caching directly into a Cisco router in enterprise branch locations, Akamai Connect extends the Akamai Intelligent Platform directly into the branch. The solution is architected to enable customers to reduce costs while delivering high-quality application experiences with minimal bandwidth impact, regardless of device, connectivity or public/private cloud architectures. |
• | Steelhead Cloud Accelerator – Steelhead Cloud Accelerator is a cloud management solution that combines our Internet optimization technology with Riverbed Technology's private WAN optimization. By integrating the Akamai Intelligent Platform with Riverbed's RiOS, the solution optimizes Office 365 and Salesforce.com SaaS application performance whether users are located at corporate headquarters or branch offices. |
• | Aura Licensed CDN – Aura Licensed CDN is a suite of solutions designed to enable delivery of next generation IP video services delivered to myriad types of devices across the Internet. With this solution, a network operator can build and operate a highly scalable media content delivery network that efficiently delivers its own content as well as content from Akamai customers and other targeted services, all utilizing a common HTTP caching infrastructure. The Aura Licensed CDN federates with the Akamai Intelligent Platform, providing global delivery of operator content with a single business agreement. The solution also includes HyperCache, a common HTTP caching layer in the network that supports traffic offload and delivery of content, and Request Router, a DNS-based content request router that directs user requests to an optimal available CDN node. |
• | Aura Managed CDN – Aura Managed CDN is a scalable, turnkey CDN solution designed to provide network operators with CDN capabilities through an infrastructure that is maintained by Akamai. With it, an operator can leverage the same CDN techniques used by Akamai, but on servers that are dedicated to the network operator's services. Operators can deliver multi-screen video services and large objects, plus offer commercial CDN services, relying on Akamai CDN experts and proven technology for content provisioning, delivery and reporting. |
• | AnswerX – AnswerX is an intelligent recursive DNS platform built for effective management of DNS traffic. To help make web services fast, safe and uniquely personal for subscribers, AnswerX manages subscriber preferences (e.g., opt-in or opt-out), tracks popular destinations and maintains lists of typo squatters (website addresses that are similar to popular ones but with misspelled names) and phishing domains. |
• | Adaptive Delivery – We provide adaptive delivery solutions for streaming video content that are designed to cope with variable connection speeds, different devices and disparate locations around the world. |
• | Download Delivery – Our download delivery offerings provide accelerated distribution for large file downloads, including games, progressive media (video and audio) files, documents and other file-based content. |
• | the performance and reliability of our services; |
• | return on investment in terms of cost savings and new revenue opportunities for our customers; |
• | reduced infrastructure complexity; |
• | sophistication and functionality of our offerings; |
• | scalability; |
• | security; |
• | ease of implementation and use of service; |
• | customer support; and |
• | price. |
• | decisions by our customers to delay introduction of over the top (OTT) video delivery initiatives; |
• | customers, particularly larger media customers, implementing their own data centers and delivery approaches to limit their reliance on third party providers like us; and |
• | macro-economic market and industry pressures. |
• | inability to increase sales of our core services and advanced features; |
• | increased headcount expenses; |
• | changes in our customers' business models that we do not fully anticipate or that we fail to address adequately; and |
• | increased reliance by customers on our secure socket layer, or SSL, network which is more expensive to maintain and operate. |
• | our customers or partners becoming our competitors; |
• | our network suppliers becoming partners with us or, conversely, no longer seeking to work with us; |
• | our working more closely with hardware providers; |
• | large technology companies that previously did not appear to show interest in the markets we seek to address entering into those markets as competitors; and |
• | needing to expand into new lines of business or to change or abandon existing strategies. |
• | develop superior products or services, gain greater market acceptance, and expand their service offerings more efficiently or more rapidly; |
• | adapt to new or emerging technologies and changes in customer requirements more quickly; |
• | take advantage of acquisition and other opportunities more readily; |
• | adopt more aggressive pricing policies and allocate greater resources to the promotion, marketing, and sales of their services; and |
• | dedicate greater resources to the research and development of their products and services. |
• | attract customers by offering less-sophisticated versions of services than we provide at lower prices than those we charge; |
• | develop new business models that are disruptive to us; and |
• | respond more quickly than we can to new or emerging technologies, changes in customer requirements and market and industry developments, resulting in superior offerings. |
• | pursue a "do-it-yourself" approach by putting in place equipment, software and other technology solutions for content and application delivery within their internal systems; |
• | enter into relationships directly with network providers instead of relying on an overlay network like ours; or |
• | implement multi-vendor policies to reduce reliance on external providers like us. |
• | difficulty integrating the operations and personnel of acquired companies; |
• | potential disruption of our ongoing business; |
• | potential distraction of management; |
• | diversion of business resources from core operations; |
• | expenses related to the transactions; |
• | failure to realize synergies or other expected benefits; |
• | increased accounting charges such as impairment of goodwill or intangible assets, amortization of intangible assets acquired and a reduction in the useful lives of intangible assets acquired; and |
• | potential unknown liabilities associated with acquired businesses. |
• | quarterly variations in operating results; |
• | slower than expected growth in traffic over our network; |
• | announcements by our customers related to their businesses that could be viewed as impacting their usage of our solutions; |
• | introduction of new products, services and strategic developments by us or our competitors; |
• | market speculation about whether we are a takeover target; |
• | activism by any single large stockholders or combination of stockholders; |
• | changes in financial estimates and recommendations by securities analysts; |
• | failure to meet the expectations of securities analysts; |
• | purchases or sales of our stock by our officers and directors; |
• | macro-economic factors; |
• | repurchases of shares of our common stock; |
• | performance by other companies in our industry; and |
• | geopolitical conditions such as acts of terrorism or military conflicts. |
• | currency exchange rate fluctuations and limitations on the repatriation and investment of funds; |
• | difficulties in transferring funds from, or converting currencies in, certain countries; |
• | changes in regulatory requirements that could pose risks to our intellectual property, increase the cost of doing business in a country or create other disadvantages to our business; |
• | interpretations of laws or regulations that would subject us to regulatory supervision or, in the alternative, require us to exit a country, which could have a negative impact on the quality of our services or our results of operations; |
• | uncertainty regarding liability for content or services; |
• | adjusting to different employee/employer relationships and different regulations governing such relationships; |
• | corporate and personal liability for alleged or actual violations of laws and regulations; |
• | difficulty in staffing, developing and managing foreign operations as a result of distance, language and cultural differences; |
• | reliance on channel partners over which we have limited control or influence on a day-to-day basis; and |
• | potentially adverse tax consequences. |
• | cease selling, incorporating or using features, functionalities, products or services that incorporate the challenged intellectual property; |
• | pay substantial damages and incur significant litigation expenses; |
• | obtain a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms or at all; or |
• | redesign products or services. |
• | a classified board structure so that only approximately one-third of our Board of Directors is up for re-election in any one year; |
• | our Board of Directors has the right to elect directors to fill a vacancy created by the expansion of the Board of Directors or the resignation, death or removal of a director; |
• | stockholders must provide advance notice to nominate individuals for election to the Board of Directors or to propose matters that can be acted upon at a stockholders' meeting; and |
• | our Board of Directors may issue, without stockholder approval, shares of undesignated preferred stock. |
2015 | 2014 | ||||||||||||||
High | Low | High | Low | ||||||||||||
First quarter | $ | 73.53 | $ | 56.85 | $ | 63.15 | $ | 45.59 | |||||||
Second quarter | $ | 78.44 | $ | 69.13 | $ | 62.76 | $ | 50.52 | |||||||
Third quarter | $ | 76.98 | $ | 63.14 | $ | 64.74 | $ | 56.40 | |||||||
Fourth quarter | $ | 76.39 | $ | 50.56 | $ | 65.39 | $ | 51.74 |
Period(1) | Total Number of Shares Purchased(2) | Average Price Paid per Share(3) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(4) | Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs(4) | ||||||||||
October 1, 2015 – October 31, 2015 | 386,238 | $ | 71.47 | 386,238 | $ | 203,599 | ||||||||
November 1, 2015 – November 30, 2015 | 528,720 | 60.21 | 528,720 | 171,765 | ||||||||||
December 1, 2015 – December 31, 2015 | 750,906 | 54.25 | 750,906 | 131,028 | ||||||||||
Total | 1,665,864 | $ | 60.14 | 1,665,864 | $ | 131,028 |
(1) | Information is based on settlement dates of repurchase transactions. |
(2) | Consists of shares of our common stock, par value $0.01 per share. All repurchases were made pursuant to a previously-announced program. |
(3) | Includes commissions paid. |
(4) | In October 2013, the Board of Directors authorized a $750.0 million share repurchase program, announced on October 23, 2013, which is effective through December 31, 2016. As of December 31, 2015, $131,028 remained available for repurchase under that program. In February 2016, the Board of Directors authorized a new $1.0 billion share repurchase program, announced on February 9, 2016, which is effective through December 31, 2018. |
Year ended December 31, | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
Revenue | $ | 2,197,448 | $ | 1,963,874 | $ | 1,577,922 | $ | 1,373,947 | $ | 1,158,538 | ||||||||||
Total costs and operating expenses | 1,731,298 | 1,474,355 | 1,163,954 | 1,059,460 | 867,889 | |||||||||||||||
Income from operations | 466,150 | 489,519 | 413,968 | 314,487 | 290,649 | |||||||||||||||
Net income | 321,406 | 333,948 | 293,487 | 203,989 | 200,904 | |||||||||||||||
Basic net income per share | 1.80 | 1.87 | 1.65 | 1.15 | 1.09 | |||||||||||||||
Diluted net income per share | 1.78 | 1.84 | 1.61 | 1.12 | 1.07 | |||||||||||||||
Cash, cash equivalents and marketable securities | 1,524,235 | 1,628,284 | 1,246,922 | 1,095,240 | 1,229,955 | |||||||||||||||
Total assets | 4,187,925 | 4,001,546 | 2,957,685 | 2,600,627 | 2,345,501 | |||||||||||||||
Convertible senior notes | 624,288 | 604,851 | — | — | — | |||||||||||||||
Other long-term liabilities | 110,319 | 117,349 | 65,088 | 51,929 | 40,859 | |||||||||||||||
Total stockholders’ equity | 3,120,878 | 2,945,335 | 2,629,431 | 2,345,754 | 2,156,250 |
• | During the years presented in the table above, various acquisitions occurred. In 2015, we completed three acquisitions having an aggregate purchase price of $142.3 million. In 2014, we completed one acquisition for a total purchase price of $392.1 million. In 2013, we completed two acquisitions having an aggregate purchase price of $61.9 million. In 2012, we completed four acquisitions having an aggregate purchase price of $344.7 million. See Note 8 to our consolidated financial statements included elsewhere in this annual report on Form 10-K for more details regarding these acquisitions. |
• | Effective January 1, 2013, we increased the expected average useful lives of our network assets, primarily servers, from three to four years to reflect software and hardware related initiatives to manage our global network more efficiently. For the years ended December 31, 2015, 2014 and 2013, this change decreased depreciation expense on network assets as compared to the years ended December 31, 2012 and 2011. The change increased net income and both basic and diluted net income per share for the years ended December 31, 2015, 2014 and 2013 as compared to the years ended December 31, 2012 and 2011. |
• | We divested our Advertising Decision Solutions, or ADS, business in January 2013. Revenue from the ADS business was $2.7 million, $44.0 million and $42.7 million for the years ended December 31, 2013, 2012 and 2011, respectively. |
• | Our effective income tax rate was 29.6%, 30.4%, 30.0%, 36.6% and 34.6% for the years ended December 31, 2015, 2014, 2013, 2012 and 2011, respectively. The variability of the rate was caused by certain one-time items recognized in the past few years and also the composition of income from foreign jurisdictions that is taxed at lower rates as compared to the statutory rates in the U.S. Our effective income tax rate for 2015 was lower than the federal statutory rate of 35.0%, primarily due to the retroactive application of a U.S. tax court ruling with respect to the treatment of stock-based compensation in intercompany arrangements, which resulted in a tax benefit of $9.1 million for the period from January 1, 2010 to December 31, 2014. In 2014, our effective income tax rate was favorably impacted by a state tax benefit from software development activities, which resulted in a tax benefit of $16.0 million for the period from January 1, 2010 to December 31, 2014. In 2013, our effective income tax rate was favorably impacted by $18.3 million from the retroactive adoption of the domestic production activities deduction for the period from January 1, 2010 to December 31, 2013 and the reinstatement of the federal research and development credit, which was retroactive to 2012. |
• | Increased sales of our Cloud Security Solutions have made a significant contribution to our increased revenue, and we expect to continue our focus on security solutions in the future. |
• | We have increased committed recurring revenue by adding new customers and increasing sales of incremental services to our existing customers. These increases helped to limit the impact of reductions in usage of our services and contract terminations by certain customers, as well as the effect of price decreases negotiated as part of contract renewals. |
• | We have experienced increases in the amount of traffic delivered for our customers that use our solutions for video, gaming, social media and software downloads. In the second half of 2015, however, we experienced a slower growth rate in revenue from these services and expect this trend to continue into 2016. We believe that this development is primarily attributable to an increase in "do-it-yourself" approaches by our two largest media customers based in the U.S., which led to a moderation in the overall rate of growth of customer traffic on our network. |
• | The unit prices paid by some of our customers have declined, reflecting the impact of competition. Our profitability would have been higher absent these price declines. |
• | We have experienced variations in certain types of revenue from quarter to quarter; in particular, we experience higher revenue in the fourth quarter of the year for some of our solutions as a result of the holiday season. We also experience lower revenue in the summer months, particularly in Europe, from both e-commerce and media customers because overall Internet use declines during that time. In addition, we experience quarterly variations in revenue attributable to the nature and timing of software and gaming releases by our customers using our software download solutions and the frequency and timing of custom services. |
• | We have made investments to support the potential future growth of over the top, or OTT, media offerings and to support other strategic initiatives that we anticipate will generate revenue in the future. On a relative basis, these investments have increased our expenses ahead of expected revenue benefits. |
• | Network bandwidth costs represent a significant portion of our cost of revenue. Historically, we have been able to mitigate increases in these costs by reducing our network bandwidth costs per unit and investing in internal-use software development to improve the performance and efficiency of our network. Our total bandwidth costs may |
• | Co-location costs are also a significant portion of our cost of revenue. By improving our internal-use software and managing our hardware deployments to enable us to use servers more efficiently, we have been able to manage the growth of co-location costs. We expect to continue to scale our network in the future and will need to effectively manage our co-location costs to maintain current levels of profitability. |
• | Payroll and related compensation costs have increased as we have increased headcount to support our revenue growth and strategic initiatives. We increased our headcount by 979 and 1,200 employees during the years ended December 31, 2015 and 2014, respectively. We expect to continue to hire additional employees, but at a slower rate, both domestically and internationally, in support of our strategic initiatives. |
2015 | 2014 | 2013 | ||||||
Revenue | 100.0 | % | 100.0 | % | 100.0 | % | ||
Costs and operating expenses: | ||||||||
Cost of revenue (exclusive of amortization of acquired intangible assets shown below) | 33.0 | 31.1 | 32.4 | |||||
Research and development | 6.8 | 6.4 | 5.9 | |||||
Sales and marketing | 20.1 | 19.3 | 17.8 | |||||
General and administrative | 17.7 | 16.6 | 16.2 | |||||
Amortization of acquired intangible assets | 1.2 | 1.6 | 1.4 | |||||
Restructuring charges | — | 0.1 | 0.1 | |||||
Total costs and operating expenses | 78.8 | 75.1 | 73.8 | |||||
Income from operations | 21.2 | 24.9 | 26.2 | |||||
Interest income | 0.5 | 0.4 | 0.4 | |||||
Interest expense | (0.8 | ) | (0.8 | ) | — | |||
Other expense, net | (0.1 | ) | (0.1 | ) | — | |||
Income before provision for income taxes | 20.8 | 24.4 | 26.6 | |||||
Provision for income taxes | 6.2 | 7.4 | 8.0 | |||||
Net income | 14.6 | % | 17.0 | % | 18.6 | % |
For the Years Ended December 31, | For the Years Ended December 31, | ||||||||||||||||||||||||||
2015 | 2014 | % Change | % Change at Constant Currency | 2014 | 2013 | % Change | % Change at Constant Currency | ||||||||||||||||||||
Revenue | $ | 2,197,448 | $ | 1,963,874 | 11.9 | % | 15.5 | % | $ | 1,963,874 | $ | 1,577,922 | 24.5 | % | 25.1 | % |
For the Years Ended December 31, | For the Years Ended December 31, | ||||||||||||||||||||||||||
2015 | 2014 | % Change | % Change at Constant Currency | 2014 | 2013 | % Change | % Change at Constant Currency | ||||||||||||||||||||
U.S. | $ | 1,604,492 | $ | 1,429,063 | 12.3 | % | 12.3 | % | $ | 1,429,063 | $ | 1,145,362 | 24.8 | % | 24.8 | % | |||||||||||
International | 592,956 | 534,811 | 10.9 | 24.3 | 534,811 | 432,560 | 23.6 | 25.4 | |||||||||||||||||||
Total revenue | $ | 2,197,448 | $ | 1,963,874 | 11.9 | % | 15.5 | % | $ | 1,963,874 | $ | 1,577,922 | 24.5 | % | 25.1 | % |
For the Years Ended December 31, | For the Years Ended December 31, | ||||||||||||||||||||||||||
2015 | 2014 | % Change | % Change at Constant Currency | 2014 | 2013 | % Change | % Change at Constant Currency | ||||||||||||||||||||
Performance and Security Solutions | $ | 1,049,732 | $ | 899,232 | 16.7 | % | 20.2 | % | $ | 899,232 | $ | 697,825 | 28.9 | % | 29.2 | % | |||||||||||
Media Delivery Solutions | 977,369 | 917,407 | 6.5 | 10.3 | 917,407 | 760,550 | 20.6 | 21.3 | |||||||||||||||||||
Service and Support Solutions | 170,347 | 147,235 | 15.7 | 19.8 | 147,235 | 117,418 | 25.4 | 25.8 | |||||||||||||||||||
Advertising Decision Solutions | — | — | — | — | — | 2,129 | (100.0 | ) | — | ||||||||||||||||||
Total revenue | $ | 2,197,448 | $ | 1,963,874 | 11.9 | % | 15.5 | % | $ | 1,963,874 | $ | 1,577,922 | 24.5 | % | 25.1 | % |
For the Years Ended December 31, | For the Years Ended December 31, | ||||||||||||||||||||
2015 | 2014 | % Change | 2014 | 2013 | % Change | ||||||||||||||||
Bandwidth fees | $ | 150,607 | $ | 124,470 | 21.0 | % | $ | 124,470 | $ | 103,344 | 20.4 | % | |||||||||
Co-location fees | 125,983 | 113,661 | 10.8 | % | 113,661 | 111,052 | 2.3 | ||||||||||||||
Network build-out and supporting services | 58,207 | 42,114 | 38.2 | % | 42,114 | 37,123 | 13.4 | ||||||||||||||
Payroll and related costs | 158,742 | 143,468 | 10.6 | % | 143,468 | 112,806 | 27.2 | ||||||||||||||
Stock-based compensation, including amortization of prior capitalized amounts | 26,222 | 21,866 | 19.9 | % | 21,866 | 18,568 | 17.8 | ||||||||||||||
Depreciation of network equipment | 130,098 | 107,250 | 21.3 | % | 107,250 | 83,811 | 28.0 | ||||||||||||||
Amortization of internal-use software | 75,761 | 58,114 | 30.4 | % | 58,114 | 44,383 | 30.9 | ||||||||||||||
Total cost of revenue | $ | 725,620 | $ | 610,943 | 18.8 | % | $ | 610,943 | $ | 511,087 | 19.5 | % | |||||||||
As a percentage of revenue | 33.0 | % | 31.1 | % | 31.1 | % | 32.4 | % |
• | amounts paid to network providers for bandwidth fees to support the increase in traffic served on our network; |
• | amounts paid for network build-out and supporting services related to the increase in server deployments and investments in network expansion; |
• | payroll and related costs of service personnel due to headcount growth to support our product-aligned and discrete services revenue growth and our network operations personnel to support our product revenue; and |
• | depreciation of network equipment and amortization of internal-use software as we continued to invest in our infrastructure and release internally developed software onto our network. |
• | payroll and related costs of service personnel due to headcount growth to support our our product-aligned and discrete services revenue growth, as well as headcount growth related to our network operations to support our other solution categories and from acquisitions; |
• | amounts paid to network providers for bandwidth fees to support the increase in traffic served on our network; and |
• | depreciation and amortization of network equipment and internal-use software as we continued to invest in our infrastructure and release internally developed software onto our network. |
For the Years Ended December 31, | For the Years Ended December 31, | ||||||||||||||||||||
2015 | 2014 | % Change | 2014 | 2013 | % Change | ||||||||||||||||
Payroll and related costs | $ | 220,198 | $ | 188,509 | 16.8 | % | $ | 188,509 | $ | 139,018 | 35.6 | % | |||||||||
Stock-based compensation | 23,926 | 19,351 | 23.6 | 19,351 | 17,472 | 10.8 | |||||||||||||||
Capitalized salaries and related costs | (103,352 | ) | (91,106 | ) | 13.4 | (91,106 | ) | (67,935 | ) | 34.1 | |||||||||||
Other expenses | 7,819 | 8,532 | (8.4 | ) | 8,532 | 5,324 | 60.3 | ||||||||||||||
Total research and development | $ | 148,591 | $ | 125,286 | 18.6 | % | $ | 125,286 | $ | 93,879 | 33.5 | % | |||||||||
As a percentage of revenue | 6.8 | % | 6.4 | % | 6.4 | % | 5.9 | % |
For the Years Ended December 31, | For the Years Ended December 31, | ||||||||||||||||||||
2015 | 2014 | % Change | 2014 | 2013 | % Change | ||||||||||||||||
Payroll and related costs | $ | 316,845 | $ | 264,788 | 19.7 | % | $ | 264,788 | $ | 191,554 | 38.2 | % | |||||||||
Stock-based compensation | 53,542 | 47,571 | 12.6 | 47,571 | 39,290 | 21.1 | |||||||||||||||
Marketing programs and related costs | 43,990 | 35,833 | 22.8 | 35,833 | 26,449 | 35.5 | |||||||||||||||
Other expenses | 26,611 | 30,843 | (13.7 | ) | 30,843 | 23,087 | 33.6 | ||||||||||||||
Total sales and marketing | $ | 440,988 | $ | 379,035 | 16.3 | % | $ | 379,035 | $ | 280,380 | 35.2 | % | |||||||||
As a percentage of revenue | 20.1 | % | 19.3 | % | 19.3 | % | 17.8 | % |
For the Years Ended December 31, | For the Years Ended December 31, | ||||||||||||||||||||
2015 | 2014 | % Change | 2014 | 2013 | % Change | ||||||||||||||||
Payroll and related costs | $ | 161,660 | $ | 146,373 | 10.4 | % | $ | 146,373 | $ | 105,205 | 39.1 | % | |||||||||
Stock-based compensation | 35,062 | 33,151 | 5.8 | 33,151 | 28,255 | 17.3 | |||||||||||||||
Depreciation and amortization | 54,562 | 40,053 | 36.2 | 40,053 | 26,991 | 48.4 | |||||||||||||||
Facilities-related costs | 64,302 | 52,684 | 22.1 | 52,684 | 44,030 | 19.7 | |||||||||||||||
Provision for doubtful accounts | 1,717 | 1,229 | 39.7 | 1,229 | 475 | 158.7 | |||||||||||||||
Acquisition-related costs | 1,756 | 3,911 | (55.1 | ) | 3,911 | 1,853 | 111.1 | ||||||||||||||
Professional fees and other expenses | 69,206 | 48,444 | 42.9 | 48,444 | 48,409 | 0.1 | |||||||||||||||
Total general and administrative | $ | 388,265 | $ | 325,845 | 19.2 | % | $ | 325,845 | $ | 255,218 | 27.7 | % | |||||||||
As a percentage of revenue | 17.7 | % | 16.6 | % | 16.6 | % | 16.2 | % |
For the Years Ended December 31, | For the Years Ended December 31, | ||||||||||||||||||||
(in thousands) | 2015 | 2014 | % Change | 2014 | 2013 | % Change | |||||||||||||||
Amortization of acquired intangible assets | $ | 27,067 | $ | 32,057 | (15.6 | )% | $ | 32,057 | $ | 21,547 | 48.8 | % | |||||||||
As a percentage of revenue | 1.2 | % | 1.6 | % | 1.6 | % | 1.4 | % |
For the Years Ended December 31, | For the Years Ended December 31, | ||||||||||||||||||||
(in thousands) | 2015 | 2014 | % Change | 2014 | 2013 | % Change | |||||||||||||||
Restructuring charges | $ | 767 | $ | 1,189 | (35.5 | )% | $ | 1,189 | $ | 1,843 | (35.5 | )% | |||||||||
As a percentage of revenue | — | % | 0.1 | % | 0.1 | % | 0.1 | % |
For the Years Ended December 31, | For the Years Ended December 31, | ||||||||||||||||||||
(in thousands) | 2015 | 2014 | % Change | 2014 | 2013 | % Change | |||||||||||||||
Interest income | $ | 11,200 | $ | 7,680 | 45.8 | % | $ | 7,680 | $ | 6,077 | 26.4 | % | |||||||||
As a percentage of revenue | 0.5 | % | 0.4 | % | 0.4 | % | 0.4 | % | |||||||||||||
Interest expense | $ | (18,525 | ) | $ | (15,463 | ) | 19.8 | % | $ | (15,463 | ) | $ | — | 100.0 | % | ||||||
As a percentage of revenue | (0.8 | )% | (0.8 | )% | (0.8 | )% | — | % | |||||||||||||
Other expense, net | $ | (2,201 | ) | $ | (1,960 | ) | 12.3 | % | $ | (1,960 | ) | $ | (491 | ) | 299.2 | % | |||||
As a percentage of revenue | (0.1 | )% | (0.1 | )% | (0.1 | )% | — | % |
For the Years Ended December 31, | For the Years Ended December 31, | ||||||||||||||||||||
(in thousands) | 2015 | 2014 | % Change | 2014 | 2013 | % Change | |||||||||||||||
Provision for income taxes | $ | 135,218 | $ | 145,828 | (7.3 | )% | $ | 145,828 | $ | 126,067 | 15.7 | % | |||||||||
As a percentage of revenue | 6.2 | % | 7.4 | % | 7.4 | % | 8.0 | % | |||||||||||||
Effective income tax rate | 29.6 | % | 30.4 | % | 30.4 | % | 30.0 | % |
• | Amortization of acquired intangible assets – We have incurred amortization of intangible assets, included in our GAAP financial statements, related to various acquisitions we made. The amount of an acquisition's purchase price allocated to intangible assets and term of its related amortization can vary significantly and are unique to each acquisition; therefore, we exclude amortization of acquired intangible assets from our non-GAAP financial measures to provide investors with a consistent basis for comparing pre- and post-acquisition operating results. |
• | Stock-based compensation and amortization of capitalized stock-based compensation – Although stock-based compensation is an important aspect of the compensation paid to our employees and executives, the grant date fair value varies based on the stock price at the time of grant, varying valuation methodologies, subjective assumptions and the variety of award types. This makes the comparison of our current financial results to previous |
• | Acquisition-related costs – Acquisition-related costs include transaction fees, due diligence costs and other direct costs associated with strategic activities. In addition, subsequent adjustments to our initial estimated amounts of contingent consideration and indemnification associated with specific acquisitions are included within acquisition-related costs. These amounts are impacted by the timing and size of the acquisitions. We exclude acquisition-related costs from our non-GAAP financial measures to provide a useful comparison of our operating results to prior periods and to our peer companies because such amounts vary significantly based on the magnitude of our acquisition transactions. |
• | Restructuring charges – We have incurred restructuring charges that are included in our GAAP financial statements, primarily related to workforce reductions and estimated costs of exiting facility lease commitments. We exclude these items from our non-GAAP financial measures when evaluating our continuing business performance as such items vary significantly based on the magnitude of the restructuring action and do not reflect expected future operating expense, and do not necessarily provide meaningful insight into the fundamentals of current or past operations of our business. |
• | Amortization of debt discount and issuance costs and amortization of capitalized interest expense – In February 2014, we issued $690 million of convertible senior notes due 2019 with a coupon interest rate of 0%. The imputed interest rate of the convertible senior notes was approximately 3.2%. This is a result of the debt discount recorded for the conversion feature that is required to be separately accounted for as equity under GAAP, thereby reducing the carrying value of the convertible debt instrument. The debt discount is amortized as interest expense together with the issuance costs of the debt which are recorded as an asset in the consolidated balance sheet. All of our interest expense is comprised of these non-cash components and is excluded from management's assessment of our operating performance because management believes the non-cash expense is not indicative of ongoing operating performance. |
• | Loss on investments and legal matters – We have incurred losses from the impairment of certain investments and the settlement of legal matters. In addition, we have incurred costs with respect to our internal investigation related to sales practices in a country outside of the U.S. We believe excluding these amounts from our non-GAAP financial measures is useful to investors as the types of events giving rise to them occur infrequently and are not representative of our core business operations. |
• | Income tax effect of non-GAAP adjustments and certain discrete tax items – The non-GAAP adjustments described above are reported on a pre-tax basis. The income tax effect of non-GAAP adjustments is the difference between GAAP and non-GAAP income tax expense. Non-GAAP income tax expense is computed on non-GAAP pre-tax income (GAAP pre-tax income adjusted for non-GAAP adjustments) and excludes certain discrete tax items (such as recording or release of valuation allowances), if any. We believe that applying the non-GAAP adjustments and their related income tax effect allows us to highlight income attributable to our core operations. |
2015 | 2014 | 2013 | |||||||||
Income from operations | $ | 466,150 | $ | 489,519 | $ | 413,968 | |||||
Amortization of acquired intangible assets | 27,067 | 32,057 | 21,547 | ||||||||
Stock-based compensation | 126,677 | 111,996 | 95,884 | ||||||||
Amortization of capitalized stock-based compensation and capitalized interest expense | 13,618 | 10,506 | 8,077 | ||||||||
Other operating expenses | 4,923 | 3,611 | 2,508 | ||||||||
Non-GAAP income from operations | $ | 638,435 | $ | 647,689 | $ | 541,984 | |||||
GAAP operating margin | 21 | % | 25 | % | 26 | % | |||||
Non-GAAP operating margin | 29 | % | 33 | % | 34 | % |
2015 | 2014 | 2013 | |||||||||
Net income | $ | 321,406 | $ | 333,948 | $ | 293,487 | |||||
Amortization of acquired intangible assets | 27,067 | 32,057 | 21,547 | ||||||||
Stock-based compensation | 126,677 | 111,996 | 95,884 | ||||||||
Amortization of capitalized stock-based compensation and capitalized interest expense | 13,618 | 10,506 | 8,077 | ||||||||
Other operating expenses | 4,923 | 3,611 | 2,508 | ||||||||
Amortization of debt discount and issuance costs | 18,525 | 15,463 | — | ||||||||
Loss on investments | 25 | 443 | — | ||||||||
Income tax effect of above non-GAAP adjustments and certain discrete tax items | (58,309 | ) | (59,202 | ) | (54,124 | ) | |||||
Non-GAAP net income | $ | 453,932 | $ | 448,822 | $ | 367,379 | |||||
GAAP net income per diluted share | $ | 1.78 | $ | 1.84 | $ | 1.61 | |||||
Non-GAAP net income per diluted share | $ | 2.52 | $ | 2.48 | $ | 2.02 | |||||
Shares used in per share calculations | 180,415 | 181,186 | 181,783 |
2015 | 2014 | 2013 | |||||||||
Net income | $ | 321,406 | $ | 333,948 | $ | 293,487 | |||||
Amortization of acquired intangible assets | 27,067 | 32,057 | 21,547 | ||||||||
Stock-based compensation | 126,677 | 111,996 | 95,884 | ||||||||
Amortization of capitalized stock-based compensation and capitalized interest expense | 13,618 | 10,506 | 8,077 | ||||||||
Other operating expenses | 4,923 | 3,611 | 2,508 | ||||||||
Interest income | (11,200 | ) | (7,680 | ) | (6,077 | ) | |||||
Amortization of debt discount and issuance costs | 18,525 | 15,463 | — | ||||||||
Provision for income taxes | 135,218 | 145,828 | 126,067 | ||||||||
Depreciation and amortization | 258,878 | 204,843 | 154,807 | ||||||||
Other expense, net | 2,201 | 1,960 | 491 | ||||||||
Adjusted EBITDA | $ | 897,313 | $ | 852,532 | $ | 696,791 | |||||
Adjusted EBITDA margin | 41 | % | 43 | % | 44 | % |
For the Years Ended December 31, | |||||||||||
(in thousands) | 2015 | 2014 | 2013 | ||||||||
Net income | $ | 321,406 | $ | 333,948 | $ | 293,487 | |||||
Non-cash reconciling items included in net income | 425,366 | 319,312 | 286,033 | ||||||||
Changes in operating assets and liabilities | 17,379 | 4,810 | (15,612 | ) | |||||||
Net cash flows provided by operating activities | $ | 764,151 | $ | 658,070 | $ | 563,908 |
For the Years Ended December 31, | |||||||||||
(in thousands) | 2015 | 2014 | 2013 | ||||||||
Cash paid for acquired businesses, net of cash acquired | $ | (141,147 | ) | $ | (386,532 | ) | $ | (30,657 | ) | ||
Purchases of property and equipment and capitalization of internal-use software development costs | (444,983 | ) | (318,627 | ) | (260,073 | ) | |||||
Net marketable securities activity | 153,060 | (479,392 | ) | (19,750 | ) | ||||||
Other investing activity | (2,494 | ) | 5,745 | (2,628 | ) | ||||||
Net cash used in investing activities | $ | (435,564 | ) | $ | (1,178,806 | ) | $ | (313,108 | ) |
For the Years Ended December 31, | |||||||||||
(in thousands) | 2015 | 2014 | 2013 | ||||||||
Activity related to convertible senior notes | $ | — | $ | 655,413 | $ | — | |||||
Activity related to stock-based compensation | 36,928 | 68,698 | 45,176 | ||||||||
Repurchases of common stock | (302,606 | ) | (268,647 | ) | (160,419 | ) | |||||
Other financing activity | (2,050 | ) | (19,437 | ) | — | ||||||
Net cash (used in) provided by financing activities | $ | (267,728 | ) | $ | 436,027 | $ | (115,243 | ) |
Payments Due by Period | |||||||||||||||||||
Total | Less than 12 Months | 12 to 36 Months | 36 to 60 Months | More than 60 Months | |||||||||||||||
Real estate operating leases | $ | 279,521 | $ | 52,456 | $ | 95,661 | $ | 59,287 | $ | 72,117 | |||||||||
Bandwidth and co-location agreements | 147,432 | 117,044 | 30,314 | 74 | — | ||||||||||||||
Open vendor purchase orders | 123,199 | 102,832 | 19,776 | 591 | — | ||||||||||||||
Convertible senior notes | 690,000 | — | — | 690,000 | — | ||||||||||||||
Total contractual obligations | $ | 1,240,152 | $ | 272,332 | $ | 145,751 | $ | 749,952 | $ | 72,117 |
(in thousands, except share data) | December 31, 2015 | December 31, 2014 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 289,473 | $ | 238,650 | |||
Marketable securities | 460,088 | 519,642 | |||||
Accounts receivable, net of reserves of $7,364 and $9,023 at December 31, 2015 and 2014, respectively | 380,399 | 329,578 | |||||
Prepaid expenses and other current assets | 123,228 | 128,981 | |||||
Deferred income tax assets | — | 45,704 | |||||
Total current assets | 1,253,188 | 1,262,555 | |||||
Property and equipment, net | 753,180 | 601,591 | |||||
Marketable securities | 774,674 | 869,992 | |||||
Goodwill | 1,150,244 | 1,051,294 | |||||
Acquired intangible assets, net | 156,095 | 132,412 | |||||
Deferred income tax assets | 4,700 | 1,955 | |||||
Other assets | 95,844 | 81,747 | |||||
Total assets | $ | 4,187,925 | $ | 4,001,546 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 61,982 | $ | 77,412 | |||
Accrued expenses | 216,166 | 204,686 | |||||
Deferred revenue | 54,154 | 49,679 | |||||
Other current liabilities | 138 | 2,234 | |||||
Total current liabilities | 332,440 | 334,011 | |||||
Deferred revenue | 4,163 | 3,829 | |||||
Deferred income tax liabilities | 12,888 | 39,299 | |||||
Convertible senior notes | 624,288 | 604,851 | |||||
Other liabilities | 93,268 | 74,221 | |||||
Total liabilities | 1,067,047 | 1,056,211 | |||||
Commitments and contingencies (Note 10) | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.01 par value; 5,000,000 shares authorized; 700,000 shares designated as Series A Junior Participating Preferred Stock; no shares issued or outstanding | — | — | |||||
Common stock, $0.01 par value; 700,000,000 shares authorized; 177,212,181 shares and 178,300,603 shares issued and outstanding at December 31, 2015 and 2014, respectively | 1,772 | 1,783 | |||||
Additional paid-in capital | 4,437,420 | 4,559,430 | |||||
Accumulated other comprehensive loss | (41,453 | ) | (17,611 | ) | |||
Accumulated deficit | (1,276,861 | ) | (1,598,267 | ) | |||
Total stockholders’ equity | 3,120,878 | 2,945,335 | |||||
Total liabilities and stockholders’ equity | $ | 4,187,925 | $ | 4,001,546 |
(in thousands, except per share data) | For the Years Ended December 31, | ||||||||||
2015 | 2014 | 2013 | |||||||||
Revenue | $ | 2,197,448 | $ | 1,963,874 | $ | 1,577,922 | |||||
Costs and operating expenses: | |||||||||||
Cost of revenue (exclusive of amortization of acquired intangible assets shown below) | 725,620 | 610,943 | 511,087 | ||||||||
Research and development | 148,591 | 125,286 | 93,879 | ||||||||
Sales and marketing | 440,988 | 379,035 | 280,380 | ||||||||
General and administrative | 388,265 | 325,845 | 255,218 | ||||||||
Amortization of acquired intangible assets | 27,067 | 32,057 | 21,547 | ||||||||
Restructuring charges | 767 | 1,189 | 1,843 | ||||||||
Total costs and operating expenses | 1,731,298 | 1,474,355 | 1,163,954 | ||||||||
Income from operations | 466,150 | 489,519 | 413,968 | ||||||||
Interest income | 11,200 | 7,680 | 6,077 | ||||||||
Interest expense | (18,525 | ) | (15,463 | ) | — | ||||||
Other expense, net | (2,201 | ) | (1,960 | ) | (491 | ) | |||||
Income before provision for income taxes | 456,624 | 479,776 | 419,554 | ||||||||
Provision for income taxes | 135,218 | 145,828 | 126,067 | ||||||||
Net income | $ | 321,406 | $ | 333,948 | $ | 293,487 | |||||
Net income per share: | |||||||||||
Basic | $ | 1.80 | $ | 1.87 | $ | 1.65 | |||||
Diluted | $ | 1.78 | $ | 1.84 | $ | 1.61 | |||||
Shares used in per share calculations: | |||||||||||
Basic | 178,391 | 178,279 | 178,196 | ||||||||
Diluted | 180,415 | 181,186 | 181,783 |
For the Years Ended December 31, | |||||||||||
(in thousands) | 2015 | 2014 | 2013 | ||||||||
Net income | $ | 321,406 | $ | 333,948 | $ | 293,487 | |||||
Other comprehensive loss: | |||||||||||
Foreign currency translation adjustments | (22,872 | ) | (15,349 | ) | (4,361 | ) | |||||
Unrealized (losses) gains on investments, net of income tax benefit of $773, $689 and $457 for the years ended December 31, 2015, 2014 and 2013, respectively | (970 | ) | (171 | ) | 3,910 | ||||||
Other comprehensive loss | (23,842 | ) | (15,520 | ) | (451 | ) | |||||
Comprehensive income | $ | 297,564 | $ | 318,428 | $ | 293,036 |
(in thousands) | For the Years Ended December 31, | ||||||||||
2015 | 2014 | 2013 | |||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 321,406 | $ | 333,948 | $ | 293,487 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 299,563 | 247,406 | 184,431 | ||||||||
Stock-based compensation | 126,677 | 111,996 | 95,884 | ||||||||
Excess tax benefits from stock-based compensation | (29,301 | ) | (32,238 | ) | (22,801 | ) | |||||
Provision (benefit) for deferred income taxes | 4,098 | (25,880 | ) | 27,343 | |||||||
Amortization of debt discount and issuance costs | 18,525 | 15,463 | — | ||||||||
Other non-cash reconciling items, net | 5,804 | 2,565 | 1,176 | ||||||||
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: | |||||||||||
Accounts receivable | (56,247 | ) | (58,397 | ) | (67,184 | ) | |||||
Prepaid expenses and other current assets | 7,137 | (60,788 | ) | (3,842 | ) | ||||||
Accounts payable and accrued expenses | 51,624 | 94,698 | 40,533 | ||||||||
Deferred revenue | 3,224 | 7,725 | 11,495 | ||||||||
Other current liabilities | (345 | ) | (702 | ) | 52 | ||||||
Other non-current assets and liabilities | 11,986 | 22,274 | 3,334 | ||||||||
Net cash provided by operating activities | 764,151 | 658,070 | 563,908 | ||||||||
Cash flows from investing activities: | |||||||||||
Cash paid for acquisitions, net of cash acquired | (141,147 | ) | (386,532 | ) | (30,657 | ) | |||||
Purchases of property and equipment | (311,676 | ) | (207,159 | ) | (187,964 | ) | |||||
Capitalization of internal-use software development costs | (133,307 | ) | (111,468 | ) | (72,109 | ) | |||||
Purchases of short- and long-term marketable securities | (692,879 | ) | (1,225,409 | ) | (494,885 | ) | |||||
Proceeds from sales of short- and long-term marketable securities | 2,008 | 373,730 | 160,210 | ||||||||
Proceeds from maturities of short- and long-term marketable securities | 843,931 | 372,287 | 314,925 | ||||||||
Other non-current assets and liabilities | (2,494 | ) | 5,745 | (2,628 | ) | ||||||
Net cash used in by investing activities | (435,564 | ) | (1,178,806 | ) | (313,108 | ) |
(in thousands) | For the Years Ended December 31, | ||||||||||
2015 | 2014 | 2013 | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from the issuance of convertible senior notes, net of issuance costs | — | 678,735 | — | ||||||||
Proceeds from the issuance of warrants related to convertible senior notes | — | 77,970 | — | ||||||||
Purchase of note hedge related to convertible senior notes | — | (101,292 | ) | — | |||||||
Repayment of acquired debt and capital leases | — | (17,862 | ) | — | |||||||
Proceeds related to the issuance of common stock under stock plans | 61,791 | 87,109 | 63,707 | ||||||||
Excess tax benefits from stock-based compensation | 29,301 | 32,238 | 22,801 | ||||||||
Employee taxes paid related to net share settlement of stock-based awards | (54,164 | ) | (50,649 | ) | (41,332 | ) | |||||
Repurchases of common stock | (302,606 | ) | (268,647 | ) | (160,419 | ) | |||||
Other non-current assets and liabilities | (2,050 | ) | (1,575 | ) | — | ||||||
Net cash (used in) provided by financing activities | (267,728 | ) | 436,027 | (115,243 | ) | ||||||
Effects of exchange rate changes on cash and cash equivalents | (10,036 | ) | (10,532 | ) | (3,655 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 50,823 | (95,241 | ) | 131,902 | |||||||
Cash and cash equivalents at beginning of year | 238,650 | 333,891 | 201,989 | ||||||||
Cash and cash equivalents at end of year | $ | 289,473 | $ | 238,650 | $ | 333,891 | |||||
Supplemental disclosure of cash flow information: | |||||||||||
Cash paid for income taxes, net of refunds received in the year ended December 31, 2015 of $19,374 | $ | 75,033 | $ | 166,211 | $ | 63,508 | |||||
Non-cash financing and investing activities: | |||||||||||
Purchases of property and equipment and capitalization of internal-use software development costs included in accounts payable and accrued expenses | $ | 19,327 | $ | 45,868 | $ | 19,927 | |||||
Capitalization of stock-based compensation | $ | 17,867 | $ | 15,226 | $ | 12,325 | |||||
Convertible note receivable received for divestiture of a business | $ | — | $ | — | $ | 18,882 |
(in thousands, except share data) | Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders' Equity | ||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance at January 1, 2013 | 177,782,814 | $ | 2,015 | $ | 5,195,543 | $ | (624,462 | ) | $ | (1,640 | ) | $ | (2,225,702 | ) | $ | 2,345,754 | ||||||||||
Issuance of common stock upon the exercise of stock options and vesting of restricted and deferred stock units, net of shares withheld for employee taxes | 4,050,525 | 50 | (218 | ) | (168 | ) | ||||||||||||||||||||
Issuance of common stock under employee stock purchase plan | 644,639 | 6 | 22,086 | 22,092 | ||||||||||||||||||||||
Stock-based compensation | 107,882 | 107,882 | ||||||||||||||||||||||||
Tax benefit from stock-based award activity, net | 20,926 | 20,926 | ||||||||||||||||||||||||
Stock-based compensation from awards issued to non-employees for services rendered | 327 | 327 | ||||||||||||||||||||||||
Repurchases of common stock | (3,897,282 | ) | (160,418 | ) | (160,418 | ) | ||||||||||||||||||||
Treasury stock retirement | (263 | ) | (784,617 | ) | 784,880 | — | ||||||||||||||||||||
Net income | 293,487 | 293,487 | ||||||||||||||||||||||||
Foreign currency translation adjustment | (4,361 | ) | (4,361 | ) | ||||||||||||||||||||||
Change in unrealized gain on investments, net of tax | 3,910 | 3,910 | ||||||||||||||||||||||||
Balance at December 31, 2013 | 178,580,696 | 1,808 | 4,561,929 | — | (2,091 | ) | (1,932,215 | ) | 2,629,431 | |||||||||||||||||
Issuance of common stock upon the exercise of stock options and vesting of restricted and deferred stock units, net of shares withheld for employee taxes | 3,648,994 | 14 | 6,444 | 6,458 | ||||||||||||||||||||||
Issuance of common stock under employee stock purchase plan | 700,879 | 7 | 29,264 | 29,271 | ||||||||||||||||||||||
Stock-based compensation | 127,222 | 127,222 | ||||||||||||||||||||||||
Tax benefit from stock-based award activity, net | 26,867 | 26,867 | ||||||||||||||||||||||||
Equity component of convertible senior notes, net of issuance costs of $1,649 | 99,627 | 99,627 | ||||||||||||||||||||||||
Issuance of warrants related to convertible senior notes | 77,970 | 77,970 | ||||||||||||||||||||||||
Purchase of note hedge related to convertible senior notes | (101,292 | ) | (101,292 | ) | ||||||||||||||||||||||
Repurchases of common stock | (4,629,966 | ) | (268,647 | ) | (268,647 | ) | ||||||||||||||||||||
Treasury stock retirement | (46 | ) | (268,601 | ) | 268,647 | — | ||||||||||||||||||||
Net income | 333,948 | 333,948 | ||||||||||||||||||||||||
Foreign currency translation adjustment | (15,349 | ) | (15,349 | ) | ||||||||||||||||||||||
Change in unrealized gain on investments, net of tax | (171 | ) | (171 | ) | ||||||||||||||||||||||
Balance at December 31, 2014 | 178,300,603 | 1,783 | 4,559,430 | — | (17,611 | ) | (1,598,267 | ) | 2,945,335 |
(in thousands, except share data) | Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders' Equity | ||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance at December 31, 2014 | 178,300,603 | $ | 1,783 | 4,559,430 | — | (17,611 | ) | (1,598,267 | ) | 2,945,335 | ||||||||||||||||
Issuance of common stock upon the exercise of stock options and vesting of restricted and deferred stock units, net of shares withheld for employee taxes | 2,756,357 | 27 | (27,697 | ) | (27,670 | ) | ||||||||||||||||||||
Issuance of common stock under employee stock purchase plan | 668,654 | 7 | 34,834 | 34,841 | ||||||||||||||||||||||
Stock-based compensation | 144,544 | 144,544 | ||||||||||||||||||||||||
Tax benefit from stock-based award activity, net | 28,870 | 28,870 | ||||||||||||||||||||||||
Repurchases of common stock | (4,513,433 | ) | (302,606 | ) | (302,606 | ) | ||||||||||||||||||||
Treasury stock retirement | (45 | ) | (302,561 | ) | 302,606 | — | ||||||||||||||||||||
Net income | 321,406 | 321,406 | ||||||||||||||||||||||||
Foreign currency translation adjustment | (22,872 | ) | (22,872 | ) | ||||||||||||||||||||||
Change in unrealized gain on investments, net of tax | (970 | ) | (970 | ) | ||||||||||||||||||||||
Balance at December 31, 2015 | 177,212,181 | $ | 1,772 | $ | 4,437,420 | $ | — | $ | (41,453 | ) | $ | (1,276,861 | ) | $ | 3,120,878 |
Gross Unrealized | Aggregate Fair Value | Classification on Balance Sheet | |||||||||||||||||||||
Amortized Cost | Short-Term Marketable Securities | Long-Term Marketable Securities | |||||||||||||||||||||
As of December 31, 2015 | Gains | Losses | |||||||||||||||||||||
Commercial paper | $ | 2,491 | $ | — | $ | (4 | ) | $ | 2,487 | $ | 2,487 | $ | — | ||||||||||
Corporate bonds | 995,100 | 73 | (3,365 | ) | 991,808 | 432,585 | 559,223 | ||||||||||||||||
U.S. government agency obligations | 239,587 | 41 | (575 | ) | 239,053 | 25,016 | 214,037 | ||||||||||||||||
$ | 1,237,178 | $ | 114 | $ | (3,944 | ) | $ | 1,233,348 | $ | 460,088 | $ | 773,260 | |||||||||||
As of December 31, 2014 | |||||||||||||||||||||||
Certificates of deposit | $ | 39 | $ | — | $ | — | $ | 39 | $ | — | $ | 39 | |||||||||||
Commercial paper | 10,487 | — | (2 | ) | 10,485 | 10,485 | — | ||||||||||||||||
Corporate bonds | 1,077,387 | 454 | (2,132 | ) | 1,075,709 | 424,777 | 650,932 | ||||||||||||||||
U.S. government agency obligations | 303,808 | 20 | (427 | ) | 303,401 | 84,380 | 219,021 | ||||||||||||||||
$ | 1,391,721 | $ | 474 | $ | (2,561 | ) | $ | 1,389,634 | $ | 519,642 | $ | 869,992 |
Total Fair Value | Fair Value Measurements at Reporting Date Using | ||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||
As of December 31, 2015 | |||||||||||||||
Cash Equivalents and Marketable Securities: | |||||||||||||||
Money market funds | $ | 1,250 | $ | 1,250 | $ | — | $ | — | |||||||
Commercial paper | 2,487 | — | 2,487 | — | |||||||||||
Corporate bonds | 991,808 | — | 991,808 | — | |||||||||||
U.S. government agency obligations | 239,053 | — | 239,053 | — | |||||||||||
Mutual funds | 1,414 | 1,414 | — | — | |||||||||||
$ | 1,236,012 | $ | 2,664 | $ | 1,233,348 | $ | — | ||||||||
As of December 31, 2014 | |||||||||||||||
Cash Equivalents and Marketable Securities: | |||||||||||||||
Money market funds | $ | 501 | $ | 501 | $ | — | $ | — | |||||||
Certificates of deposit | 39 | 39 | — | — | |||||||||||
Commercial paper | 10,485 | — | 10,485 | — | |||||||||||
Corporate bonds | 1,075,709 | — | 1,075,709 | — | |||||||||||
U.S. government agency obligations | 303,401 | — | 303,401 | — | |||||||||||
$ | 1,390,135 | $ | 540 | $ | 1,389,595 | $ | — | ||||||||
Other Liabilities: | |||||||||||||||
Contingent consideration obligation related to Velocius acquisition | $ | (900 | ) | $ | — | $ | — | $ | (900 | ) |
Other Assets: Note Receivable | Other Liabilities: Contingent Consideration Obligation | ||||||
Balance, January 1, 2014 | $ | 22,879 | $ | (2,600 | ) | ||
Fair value adjustment to Velocius contingent consideration included in general and administrative expense | — | (300 | ) | ||||
Achievement of first milestone related to Velocius contingent consideration | — | 2,000 | |||||
Unrealized gain on convertible note receivable included in other comprehensive income | 2,121 | — | |||||
Amendment of the convertible note receivable for preferred stock of the issuer and cash | (25,000 | ) | — | ||||
Balance, December 31, 2014 | $ | — | $ | (900 | ) | ||
Fair value adjustment to Velocius contingent consideration included in general and administrative expense | — | (100 | ) | ||||
Achievement of final milestone related to Velocius contingent consideration | — | 1,000 | |||||
Balance, December 31, 2015 | $ | — | $ | — |
December 31, 2015 | December 31, 2014 | ||||||
Due in 1 year or less | $ | 460,088 | $ | 519,642 | |||
Due after 1 year through 5 years | 773,260 | 869,992 | |||||
$ | 1,233,348 | $ | 1,389,634 |
December 31, 2015 | December 31, 2014 | ||||||
Trade accounts receivable | $ | 262,885 | $ | 222,531 | |||
Unbilled accounts receivable | 124,878 | 116,070 | |||||
Gross accounts receivable | 387,763 | 338,601 | |||||
Allowance for doubtful accounts | (906 | ) | (1,033 | ) | |||
Reserve for cash-basis customers | (6,458 | ) | (7,990 | ) | |||
Total accounts receivable reserves | (7,364 | ) | (9,023 | ) | |||
Accounts receivable, net | $ | 380,399 | $ | 329,578 |
2015 | 2014 | 2013 | |||||||||
Beginning balance | $ | 9,023 | $ | 3,703 | $ | 3,807 | |||||
Charges to income from operations | 37,870 | 32,293 | 17,900 | ||||||||
Collections from cash basis customers and write-offs | (39,529 | ) | (26,973 | ) | (18,004 | ) | |||||
Ending balance | $ | 7,364 | $ | 9,023 | $ | 3,703 |
December 31, 2015 | December 31, 2014 | ||||||
Prepaid income taxes | $ | 31,045 | $ | 44,631 | |||
Other prepaid expenses | 43,751 | 37,669 | |||||
Other current assets | 48,432 | 46,681 | |||||
Total | $ | 123,228 | $ | 128,981 |
December 31, 2015 | December 31, 2014 | Estimated Useful Life in Years | |||||||
Computer and networking equipment | $ | 1,046,739 | $ | 850,533 | 3-7 | ||||
Purchased software | 46,509 | 46,537 | 3-10 | ||||||
Furniture and fixtures | 35,212 | 27,923 | 5 | ||||||
Office equipment | 21,108 | 14,035 | 3-5 | ||||||
Leasehold improvements | 119,466 | 92,544 | 1-16 | ||||||
Internal-use software | 546,520 | 448,777 | 2-7 | ||||||
Property and equipment, gross | 1,815,554 | 1,480,349 | |||||||
Accumulated depreciation and amortization | (1,062,374 | ) | (878,758 | ) | |||||
Property and equipment, net | $ | 753,180 | $ | 601,591 |
2015 | 2014 | ||||||
Beginning balance | $ | 1,051,294 | $ | 757,368 | |||
Acquisition of Prolexic Technologies, Inc. | — | 293,926 | |||||
Acquisition of Xerocole, Inc. | 12,859 | — | |||||
Acquisition of Codemate A/S | 69,445 | — | |||||
Acquisition of Bloxx Limited | 17,694 | — | |||||
Foreign currency translation | (1,048 | ) | — | ||||
Ending balance | $ | 1,150,244 | $ | 1,051,294 |
December 31, 2015 | December 31, 2014 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
Completed technologies | $ | 120,791 | $ | (58,633 | ) | $ | 62,158 | $ | 88,331 | $ | (45,537 | ) | $ | 42,794 | |||||||||
Customer-related intangible assets | 191,710 | (102,872 | ) | 88,838 | 173,600 | (91,160 | ) | 82,440 | |||||||||||||||
Non-compete agreements | 6,540 | (3,374 | ) | 3,166 | 8,890 | (4,224 | ) | 4,666 | |||||||||||||||
Trademarks and trade names | 3,700 | (1,767 | ) | 1,933 | 3,700 | (1,188 | ) | 2,512 | |||||||||||||||
Acquired license rights | 490 | (490 | ) | — | 490 | (490 | ) | — | |||||||||||||||
Total | $ | 323,231 | $ | (167,136 | ) | $ | 156,095 | $ | 275,011 | $ | (142,599 | ) | $ | 132,412 |
Total purchase consideration | $ | 107,047 | ||
Allocation of the purchase consideration: | ||||
Cash | $ | 664 | ||
Accounts receivable | 1,976 | |||
Other current assets | 393 | |||
Identifiable intangible assets | 41,950 | |||
Goodwill | 69,445 | |||
Deferred tax assets | 5,230 | |||
Total assets acquired | 119,658 | |||
Other current liabilities | (1,983 | ) | ||
Current deferred revenue | (770 | ) | ||
Deferred tax liabilities | (9,858 | ) | ||
Total liabilities assumed | (12,611 | ) | ||
Net assets acquired | $ | 107,047 |
Gross Carrying Amount | Weighted Average Useful Life (in years) | ||||
Completed technologies | $ | 25,310 | 9.8 | ||
Customer-related intangible assets | 16,560 | 11.8 | |||
Non-compete agreements | 80 | 2.0 | |||
Total | $ | 41,950 |
Total purchase consideration | $ | 392,104 | ||
Allocation of the purchase consideration: | ||||
Cash | $ | 33,072 | ||
Accounts receivable | 11,208 | |||
Property and equipment | 12,225 | |||
Identifiable intangible assets | 87,040 | |||
Goodwill | 293,926 | |||
Deferred tax assets | 16,340 | |||
Other current and long-term assets | 5,664 | |||
Total assets acquired | 459,475 | |||
Other current liabilities | (5,940 | ) | ||
Current deferred revenue | (5,812 | ) | ||
Deferred tax liabilities | (36,203 | ) | ||
Debt, capital leases and other long-term liabilities | (19,416 | ) | ||
Total liabilities assumed | (67,371 | ) | ||
Net assets acquired | $ | 392,104 |
Gross Carrying Amount | Weighted Average Useful Life (in years) | ||||
Completed technologies | $ | 26,800 | 6.9 | ||
Customer-related intangible assets | 58,500 | 10.4 | |||
Non-compete agreements | 940 | 3.0 | |||
Trademark | 800 | 4.9 | |||
Total | $ | 87,040 |
December 31, 2015 | December 31, 2014 | ||||||
Payroll and other related benefits | $ | 108,230 | $ | 125,938 | |||
Bandwidth and co-location | 48,228 | 28,459 | |||||
Property, use and other taxes | 47,364 | 40,411 | |||||
Professional service fees | 4,636 | 4,434 | |||||
Other | 7,708 | 5,444 | |||||
Total | $ | 216,166 | $ | 204,686 |
2016 | $ | 52,456 | |
2017 | 51,978 | ||
2018 | 43,683 | ||
2019 | 39,800 | ||
2020 | 19,487 | ||
Thereafter | 72,117 | ||
Total | $ | 279,521 |
Bandwidth and Co-location Commitments | Purchase Order Commitments | ||||||
2016 | $ | 117,044 | $ | 102,832 | |||
2017 | 29,914 | 11,363 | |||||
2018 | 400 | 8,413 | |||||
2019 | 74 | 591 | |||||
2020 | — | — | |||||
Thereafter | — | — | |||||
Total | $ | 147,432 | $ | 123,199 |
• | during any calendar quarter commencing after the calendar quarter ended June 30, 2014 (and only during such calendar quarter), if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; or |
• | during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company's common stock and the conversion rate on each such trading day; or upon the occurrence of specified corporate events. |
December 31, 2015 | |||
Liability component: | |||
Principal | $ | 690,000 | |
Less: debt discount, net of amortization | (65,712 | ) | |
Net carrying amount | $ | 624,288 | |
Equity component: | $ | 101,276 |
2015 | 2014 | ||||||
Amortization of debt discount | $ | 19,436 | $ | 16,127 | |||
Amortization of debt issuance costs | 1,844 | 1,531 | |||||
Capitalization of interest expense | (2,755 | ) | (2,195 | ) | |||
Total interest expense | $ | 18,525 | $ | 15,463 |
Foreign Currency Translation | Net Unrealized Gains (Losses) on Investments | Total | |||||||||
Balance as of January 1, 2015 | $ | (22,064 | ) | $ | 4,453 | $ | (17,611 | ) | |||
Other comprehensive loss | (22,872 | ) | (970 | ) | (23,842 | ) | |||||
Balance as of December 31, 2015 | $ | (44,936 | ) | $ | 3,483 | $ | (41,453 | ) |
2015 | 2014 | 2013 | |||||||||
Cost of revenue | $ | 14,145 | $ | 11,934 | $ | 10,867 | |||||
Research and development | 23,927 | 19,341 | 17,472 | ||||||||
Sales and marketing | 53,542 | 47,570 | 39,290 | ||||||||
General and administrative | 35,063 | 33,151 | 28,255 | ||||||||
Total stock-based compensation | 126,677 | 111,996 | 95,884 | ||||||||
Provision for income taxes | (49,033 | ) | (39,182 | ) | (34,829 | ) | |||||
Total stock-based compensation, net of taxes | $ | 77,644 | $ | 72,814 | $ | 61,055 |
2014 | 2013 | ||||
Expected term (in years) | 4.4 | 4.5 | |||
Risk-free interest rate | 0.8 | % | 0.8 | % | |
Expected volatility | 40.4 | % | 44.4 | % | |
Dividend yield | — | % | — | % |
2015 | 2014 | 2013 | ||||||
Expected term (in years) | 0.5 | 0.5 | 0.5 | |||||
Risk-free interest rate | 0.2 | % | 0.1 | % | 0.1 | % | ||
Expected volatility | 28.0 | % | 33.5 | % | 42.0 | % | ||
Dividend yield | — | % | — | % | — | % |
Shares (in thousands) | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in thousands) | |||||||||
Outstanding at January 1, 2015 | 2,671 | $ | 28.65 | |||||||||
Exercised | (1,132 | ) | 23.40 | |||||||||
Forfeited | (15 | ) | 29.23 | |||||||||
Outstanding at December 31, 2015 | 1,524 | $ | 32.39 | 3.06 | $ | 30,875 | ||||||
Exercisable at December 31, 2015 | 1,244 | $ | 33.33 | 2.64 | $ | 24,033 | ||||||
Vested or expected to vest December 31, 2015 | 1,498 | $ | 32.46 | 3.03 | $ | 30,225 |
Units (in thousands) | Weighted Average Grant Date Fair Value | |||||
Outstanding at January 1, 2015 | 260 | $ | 36.35 | |||
Granted | 28 | 76.12 | ||||
Vested and distributed | (142 | ) | 34.63 | |||
Outstanding at December 31, 2015 | 146 | $ | 45.42 |
December 31, 2015 | December 31, 2014 | December 31, 2013 | ||||||
RSUs with service-based vesting conditions | 2,507 | 1,949 | 2,338 | |||||
RSUs with performance-based vesting conditions | 583 | 575 | 760 | |||||
Total | 3,090 | 2,524 | 3,098 |
Units (in thousands) | Weighted Average Grant Date Fair Value | |||||
Outstanding at January 1, 2015 | 4,542 | $ | 48.98 | |||
Granted | 3,090 | 69.00 | ||||
Vested | (2,289 | ) | 46.01 | |||
Forfeited | (274 | ) | 57.37 | |||
Outstanding at December 31, 2015 | 5,069 | $ | 62.20 |
2015 | 2014 | 2013 | |||||||||
U.S. | $ | 233,247 | $ | 408,391 | $ | 365,821 | |||||
Foreign | 223,377 | 71,385 | 53,733 | ||||||||
Income before provision for income taxes | $ | 456,624 | $ | 479,776 | $ | 419,554 |
2015 | 2014 | 2013 | |||||||||
Current tax provision (benefit): | |||||||||||
Federal | $ | 70,298 | $ | 153,471 | $ | 77,671 | |||||
State | (1,750 | ) | 4,978 | 8,034 | |||||||
Foreign | 62,572 | 13,259 | 13,019 | ||||||||
Deferred tax provision (benefit): | |||||||||||
Federal | 23,381 | (13,073 | ) | 24,210 | |||||||
State | (742 | ) | (15,220 | ) | (1,106 | ) | |||||
Foreign | (18,536 | ) | 2,442 | 1,869 | |||||||
Change in valuation allowance | (5 | ) | (29 | ) | 2,370 | ||||||
Total | $ | 135,218 | $ | 145,828 | $ | 126,067 |
2015 | 2014 | 2013 | ||||||
U.S. federal income tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
State taxes | 1.7 | 2.3 | 3.4 | |||||
Nondeductible stock-based compensation | 1.9 | 1.4 | 0.8 | |||||
U.S. federal, state and foreign research and development credits | (4.1 | ) | (3.2 | ) | (3.5 | ) | ||
Foreign earnings | (4.6 | ) | (1.9 | ) | (2.6 | ) | ||
Domestic production activities deduction | (1.2 | ) | (2.2 | ) | (4.3 | ) | ||
State software development activities benefit | — | (2.4 | ) | — | ||||
Other | 0.9 | 1.4 | 1.2 | |||||
29.6 | % | 30.4 | % | 30.0 | % |
2015 | 2014 | ||||||
Accrued bonus | $ | 13,161 | $ | 19,572 | |||
Deferred revenue | 11,334 | 9,536 | |||||
Deferred rent | 13,224 | 10,518 | |||||
Stock-based compensation | 31,705 | 27,538 | |||||
Net operating losses | 8,855 | 11,466 | |||||
Unrealized losses | 1,421 | 748 | |||||
Tax credit carryforwards | 22,918 | 18,066 | |||||
Other | 5,989 | 6,528 | |||||
Deferred tax assets | 108,607 | 103,972 | |||||
Depreciation and amortization | (10,848 | ) | (14,868 | ) | |||
Acquired intangible assets | (37,923 | ) | (40,126 | ) | |||
Internal-use software development costs capitalized | (66,807 | ) | (39,396 | ) | |||
Deferred tax liabilities | (115,578 | ) | (94,390 | ) | |||
Valuation allowance | (1,217 | ) | (1,222 | ) | |||
Net deferred tax (liabilities) assets | $ | (8,188 | ) | $ | 8,360 |
2015 | 2014 | Expirations at Various Dates Through: | |||||||
NOL carryforwards: | |||||||||
Federal | $ | 21,500 | $ | 26,100 | 2029 | ||||
State | 28,200 | 45,000 | 2034 | ||||||
Foreign | — | 300 | |||||||
Federal and state research and development tax credit carryforwards | 39,800 | 30,500 | 2030 |
2015 | 2014 | 2013 | |||||||||
Balance at beginning of year | $ | 33,320 | $ | 24,651 | $ | 20,902 | |||||
Gross increases — tax positions of prior periods | 11,238 | 12,925 | 2,878 | ||||||||
Gross increases — current-period tax positions | 27,043 | 2,106 | 2,834 | ||||||||
Gross decreases — tax positions of prior periods | (5,996 | ) | (6,362 | ) | (1,213 | ) | |||||
Gross decreases — settlements | (315 | ) | — | (750 | ) | ||||||
Balance at end of year | $ | 65,290 | $ | 33,320 | $ | 24,651 |
2015 | 2014 | 2013 | |||||||||
Numerator: | |||||||||||
Net income | $ | 321,406 | $ | 333,948 | $ | 293,487 | |||||
Denominator: | |||||||||||
Shares used for basic net income per share | 178,391 | 178,279 | 178,196 | ||||||||
Effect of dilutive securities: | |||||||||||
Stock options | 794 | 1,221 | 1,622 | ||||||||
RSUs and DSUs | 1,230 | 1,686 | 1,965 | ||||||||
Convertible senior notes | — | — | — | ||||||||
Warrants related to issuance of convertible senior notes | — | — | — | ||||||||
Shares used for diluted net income per share | 180,415 | 181,186 | 181,783 | ||||||||
Basic net income per share | $ | 1.80 | $ | 1.87 | $ | 1.65 | |||||
Diluted net income per share | $ | 1.78 | $ | 1.84 | $ | 1.61 |
2015 | 2014 | 2013 | ||||||
Stock options | 22 | 402 | 1,649 | |||||
Service-based RSUs | 660 | 786 | 188 | |||||
Performance-based RSUs | 1,007 | 570 | 985 | |||||
Convertible senior notes | 7,704 | 7,704 | — | |||||
Warrants related to issuance of convertible senior notes | 7,704 | 7,704 | — | |||||
Total shares excluded from computation | 17,097 | 17,166 | 2,822 |
(in thousands, except per share data) | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||
Year ended December 31, 2015: | |||||||||||||||
Revenue | $ | 526,536 | $ | 540,723 | $ | 551,030 | $ | 579,159 | |||||||
Cost of revenue (exclusive of amortization of acquired intangible assets) | 169,294 | 179,910 | 183,204 | 193,212 | |||||||||||
Net income | 77,746 | 67,200 | 88,040 | 88,420 | |||||||||||
Basic net income per share | 0.44 | 0.38 | 0.49 | 0.50 | |||||||||||
Diluted net income per share | 0.43 | 0.37 | 0.49 | 0.49 | |||||||||||
Year ended December 31, 2014: | |||||||||||||||
Revenue | $ | 453,502 | $ | 476,035 | $ | 498,042 | $ | 536,295 | |||||||
Cost of revenue (exclusive of amortization of acquired intangible assets) | 139,612 | 149,318 | 158,812 | 163,201 | |||||||||||
Net income | 72,800 | 72,886 | 91,155 | 97,107 | |||||||||||
Basic net income per share | 0.41 | 0.41 | 0.51 | 0.55 | |||||||||||
Diluted net income per share | 0.40 | 0.40 | 0.50 | 0.54 |
• | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; |
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. |
Name | Position | |
F. Thomson Leighton | Chief Executive Officer and Director (Principal Executive Officer) | |
James Benson | Chief Financial Officer (Principal Financial and Accounting Officer) | |
Robert Blumofe | Executive Vice President – Platform | |
James Gemmell | Executive Vice President and Chief Human Resources Officer | |
Melanie Haratunian | Executive Vice President and General Counsel | |
Robert W. Hughes | President – Worldwide Operations | |
Rick McConnell | President – Products and Development | |
George H. Conrades | Director | |
Pamela J. Craig | Director | |
Monte E. Ford | Director | |
Jill A. Greenthal | Director | |
Jonathan F. Miller | Director | |
Paul Sagan | Director | |
Frederic V. Salerno | Director | |
Steven Scopellite | Director | |
Naomi O. Seligman | Director | |
Bernardus Verwaayen | Director |
(a) | Documents Filed as Part of this Annual Report on Form 10-K |
1. | Financial Statements (included in Item 8 of this Annual Report on Form 10-K): |
• | Report of Independent Registered Public Accounting Firm |
• | Consolidated Balance Sheets as of December 31, 2015 and 2014 |
• | Consolidated Statements of Income for the years ended December 31, 2015, 2014 and 2013 |
• | Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014 and 2013 |
• | Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013 |
• | Consolidated Statements of Stockholders' Equity for the years ended December 31, 2015, 2014 and 2013 |
• | Notes to Consolidated Financial Statements |
2. | Financial Statement Schedules |
(b) | The exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index immediately preceding the exhibits and are incorporated herein. |
(c) | Not applicable. |
February 29, 2016 | AKAMAI TECHNOLOGIES, INC. | |
By: | /s/ JAMES BENSON | |
James Benson Chief Financial Officer |
Signature | Title | Date | ||
/s/ F. THOMSON LEIGHTON | Chief Executive Officer and Director (Principal Executive Officer) | February 29, 2016 | ||
F. Thomson Leighton | ||||
/s/ JAMES BENSON | Chief Financial Officer (Principal Financial and Accounting Officer) | February 29, 2016 | ||
James Benson | ||||
/s/ GEORGE H. CONRADES | Director | February 29, 2016 | ||
George H. Conrades | ||||
/s/ PAMELA J. CRAIG | Director | February 29, 2016 | ||
Pamela J. Craig | ||||
/s/ MONTE E. FORD | Director | February 29, 2016 | ||
Monte E. Ford | ||||
/s/ JILL A. GREENTHAL | Director | February 29, 2016 | ||
Jill A. Greenthal | ||||
/s/ JONATHAN F MILLER | Director | February 29, 2016 | ||
Jonathan F. Miller | ||||
/s/ PAUL SAGAN | Director | February 29, 2016 | ||
Paul Sagan | ||||
/s/ FREDERIC V. SALERNO | Director | February 29, 2016 | ||
Frederic V. Salerno | ||||
/s/ STEVEN SCOPELLITE | Director | February 29, 2016 | ||
Steven Scopellite | ||||
/s/ NAOMI O. SELIGMAN | Director | February 29, 2016 | ||
Naomi O. Seligman | ||||
/s/ BERNARDUS VERWAAYEN | Director | February 29, 2016 | ||
Bernardus Verwaayen |
3.1(A) | Amended and Restated Certificate of Incorporation of the Registrant |
3.2(B) | Amended and Restated By-Laws of the Registrant, as amended |
4.1(C) | Specimen common stock certificate |
4.2(D) | Indenture (including form of Notes) with respect to Akamai’s 0% Convertible Senior Notes due 2019, dated as of February 20, 2014, between Akamai and U.S. Bank National Association, as trustee. |
10.1(E) | Summary of the Registrant’s Compensatory Arrangements with Non-Executive Directors |
10.2 | Summary of the Registrant’s Compensatory Arrangements with Executive Officers |
10.3(F)@ | Second Amended and Restated 1998 Stock Incentive Plan of the Registrant, as amended |
10.4(G)@ | Amended and Restated 1999 Employee Stock Purchase Plan of the Registrant |
10.5(H)@ | Amendment to Amended and Restated 1999 Employee Stock Purchase Plan of the Registrant |
10.6(I)@ | 2001 Stock Incentive Plan of the Registrant |
10.7(J) | 2006 Stock Incentive Plan of the Registrant |
10.8(K) | Speedera Networks, Inc. 1999 Equity Incentive Plan, as amended |
10.9(L) | Netli, Inc. Amended and Restated Stock Option Plan |
10.10(L) | Netli, Inc. 2002 Equity Incentive Plan |
10.11(M) | Blaze Software Inc. Stock Option Plan |
10.12(N) | Cotendo, Inc. Amended and Restated 2008 Stock Plan |
10.13(O) | Amended and Restated 1999 Stock Compensation Plan of Acerno Intermediate Holdings, Inc. (formerly known as I-Behavior Inc.) |
10.14(P)@ | 2009 Akamai Technologies, Inc. Stock Incentive Plan |
10.15(Q)@ | 2013 Akamai Technologies, Inc. Stock Incentive Plan (as amended) |
10.16(R)@ | Form of Incentive Stock Option Agreement granted under the 2006 Stock Incentive Plan |
10.17(R)@ | Form of Nonstatutory Stock Option Agreement granted under the 2006 Stock Incentive Plan |
10.18(S) | Four Cambridge Center Lease Agreement dated October 1, 2007 |
10.19(S) | Eight Cambridge Center Lease Agreement dated October 1, 2007 |
10.20(T)† | Exclusive Patent and Non-Exclusive Copyright License Agreement, dated as of October 26, 1998, between the Registrant and Massachusetts Institute of Technology |
10.21(U)@ | Employment Letter Agreement between the Registrant and F. Thomson Leighton dated February 25, 2013 |
10.22 (V)@ | Amendment to Employment Letter Agreement between the Registrant and F. Thomson Leighton dated November 12, 2015 |
10.22@ | Form of Executive Bonus Plan |
10.23(W)@ | Akamai Technologies, Inc. Executive Severance Pay Plan |
10.24(V)@ | Form of Executive Change in Control and Severance Agreement |
10.25(X)@ | Akamai Technologies, Inc. Policy on Departing Director Compensation |
10.26(Y)@ | Form of Incentive Stock Option Agreement for use under the 2009 Stock Incentive Plan |
10.27(Y)@ | Form of Non-Qualified Stock Option Agreement for use under the 2009 Stock Incentive Plan (four year vest) |
10.28(Y) | Form of Time-Based Vesting Restricted Stock Unit Agreement for use under the 2009 Stock Incentive Plan |
10.29(Y)@ | Form of Baseline Restricted Stock Unit Agreement for Executives for use under the 2009 Stock Incentive Plan |
10.30(Z) | Form of Stock Option Agreement for Director Options for use under the 2009 Stock Incentive Plan |
10.31(AA)@ | Form of Restricted Stock Unit Agreement for use under the 2009 Stock Incentive Plan |
10.32(AA)@ | Form of Stock Option Agreement for use under the 2009 Stock Incentive Plan (three-year vest) |
10.33(BB)@ | Form of Stock Option Grant Agreement for use under the 2009 Stock Incentive Plan |
10.34(BB) | Form of Deferred Stock Unit Grant Agreement for use under the 2009 Stock Incentive Plan |
10.35(BB)@ | Form of Time-Based Vesting Restricted Stock Unit Agreement for use under the 2009 Stock Incentive Plan (2012) |
10.36(BB)@ | Form of Performance-Based Vesting Restricted Stock Unit Agreement for use under the 2009 Stock Incentive Plan (2012) |
10.37(CC)@ | Form of Restricted Stock Unit Agreement for use under the 2013 Stock Incentive Plan (time vesting) |
10.38(CC)@ | Form of Restricted Stock Unit Agreement for use under the 2013 Stock Incentive Plan (performance vesting) |
10.39(CC)@ | Form of Stock Option Agreement for use under the 2013 Stock Incentive Plan |
10.40(CC) | Form of Deferred Stock Unit Agreement for use under the 2013 Stock Incentive Plan |
10.41(DD)@ | Form of Performance-Based Vesting Restricted Stock Unit Agreement with Retirement Provision |
10.42(D) | Form of Call Option Confirmation between Akamai and each Option Counterparty |
10.43(D) | Form of Warrant Confirmation between Akamai and each Option Counterparty |
10.44(V)@ | Form of Restricted Stock Unit Agreement for use under the 2013 Stock Incentive Plan (performance vesting 2015) |
10.45(EE)@ | Akamai Technologies, Inc. U.S. Non-Qualified Deferred Compensation Plan |
21.1 | Subsidiaries of the Registrant |
23.1 | Consent of Independent Registered Public Accounting Firm |
31.1 | Certification of Chief Executive Officer pursuant to Rule 13a- 14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended |
31.2 | Certification of Chief Financial Officer pursuant to Rule 13a- 14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended |
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Calculation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | XBRL Taxonomy Label Linkbase Document |
101.PRE | XBRL Taxonomy Presentation Linkbase Document |
(A) | Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (File No. 000-27275, 701319) filed with the Commission on August 14, 2000. |
(B) | Incorporated by reference to the Registrant's Current Report on Form 8-K (File No. 000-27275, 141172551) filed with the Commission on October 24, 2014. |
(C) | Incorporated by reference to the Registrant’s Registration Statement on Form S-1, as amended, filed with the Commission on October 13, 1999. |
(D) | Incorporated by reference to the Registrant's Current Report on Form 8-K (File No. 000-27275, 14629736) filed with the Commission on February 20, 2014. |
(E) | Incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-27275, 4660513) filed with the Commission on March 3, 2014. |
(F) | Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (File No. 000-27275, 04961682) filed with the Commission on August 9, 2004. |
(G) | Incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-27275, 06691330) filed with the Commission on March 16, 2006. |
(H) | Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (File No. 000-27275, 08823347) filed with the Commission on May 12, 2008. |
(I) | Incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-27275, 02560808) filed with the Commission on February 27, 2002. |
(J) | Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-27275, 06870771) filed with the Commission on May 26, 2006. |
(K) | Incorporated by reference to the Registrant’s Registration Statement on Form S-8 filed with the Commission on June 24, 2005. |
(L) | Incorporated by reference to the Registrant’s Registration Statement on Form S-8 filed with the Commission on April 3, 2007. |
(M) | Incorporated by reference to the Registrant’s Registration Statement on Form S-8 filed with the Commission on February 29, 2012. |
(N) | Incorporated by reference to the Registrant’s Registration Statement on Form S-8 filed with the Commission on March 14, 2012. |
(O) | Incorporated by reference to the Registrant’s Registration Statement on Form S-8 filed with the Commission on November 18, 2008. |
(P) | Incorporated by reference to the Registrant's Current Report on Form 8-K (File No. 000-27275, 11865051) filed with the Commission on May 23, 2011. |
(Q) | Incorporated by reference to the Registrant’s Registration Statement on Form S-8 filed with the Commission on May 15, 2015. |
(R) | Incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-27275, 07663384) filed with the Commission on March 1, 2007. |
(S) | Incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-27275, 08655930) filed with the Commission on February 29, 2008. |
(T) | Incorporated by reference to the Registrant's Registration Statement on Form S-1 filed with the Commission on September 27, 1999. |
(U) | Incorporated by reference to the Registrant's Annual Report on Form 10-K (File No. 000-27275, 13657899) filed with the Commission on March 1, 2013. |
(V) | Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-27275, 151238671) filed with the Commission on November 17, 2015. |
(W) | Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-27275, 12974652) filed with the Commission on July 23, 2012. |
(X) | Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (File No. 000-27275, 061202248) filed with the Commission on November 9, 2006. |
(Y) | Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-27275, 09851919) filed with the Commission on May 26, 2009. |
(Z) | Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (File No. 000-27275, 12829214) filed with the Commission on May 10, 2012. |
(AA) | Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-27275, 12532825) filed with the Commission on January 18, 2012. |
(BB) | Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (File No. 000-27275, 121192724) filed with the Commission on November 9, 2012. |
(CC) | Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q (File No. 000-27275, 131025074) filed with the Commission on August 9, 2013. |
(DD) | Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-27275, 15585212) filed with the Commission on February 6, 2015. |
(EE) | Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q (File No. 000-27275, 15850176) filed with the Commission on May 11, 2015. |
Name and Title | Base Salary for 2016 | |
F. Thomson Leighton Chief Executive Officer | $1 | |
James Benson Chief Financial Officer | $450,000 | |
Robert Blumofe Executive Vice President - Platform | $430,000 | |
James Gemmell Executive Vice President - CHRO | $400,000 | |
Melanie Haratunian Executive Vice President and General Counsel | $430,000 | |
Robert Hughes President - Worldwide Operations | $530,000 | |
Rick McConnell President - Products and Development | $530,000 | |
William Wheaton EVP - Media | $420,000 |
Base salary: | $____________ |
Annual cash incentive bonus at target: | $____________ |
Total Cash Compensation at target: | $____________ |
AKAMAI TECHNOLOGIES LTD. | Incorporated in the United Kingdom | |
AKAMAI TECHNOLOGIES GMBH | Incorporated in Germany | |
AKAMAI TECHNOLOGIES SARL | Incorporated in France | |
AKAMAI TECHNOLOGIES NETHERLANDS BV | Incorporated in the Netherlands | |
AKAMAI INTERNATIONAL BV | Incorporated in the Netherlands | |
AKAMAI TECHNOLOGIES SECURITIES CORPORATION | Incorporated in Massachusetts | |
K STREAMING LLC | Organized in Delaware | |
AKAMAI SALES LLC | Organized in Delaware | |
AKAMAI JAPAN G.K. | Incorporated in Japan | |
AKAMAI TECHNOLOGIES INDIA PRIVATE LTD. | Incorporated in India | |
AKAMAI TECHNOLOGIES SPAIN SL | Incorporated in Spain | |
AKAMAI TECHNOLOGIES SINGAPORE PVT. LTD. | Incorporated in Singapore | |
AJ TECHNOLOGIES LTD | Incorporated in the Cayman Islands | |
AKAMAI (BEIJING) TECHNOLOGIES, CO. LTD. | Incorporated in the People's Republic of China | |
AKAMAI TECHNOLOGIES AB | Incorporated in Sweden | |
AKAMAI TECHNOLOGIES SOLUTIONS (INDIA) PRIVATE LTD. | Incorporated in India | |
AKAMAI TECHNOLOGIES YUHAN HOESA | Incorporated in South Korea | |
AKAMAI TECHNOLOGIES S.R.I. | Incorporated in Italy | |
AKAMAI TECHNOLOGIES INTERNATIONAL AG | Incorporated in Switzerland | |
AKAMAI TECHNOLOGIES HONG KONG LIMITED | Incorporated in Hong Kong | |
AKAMAI TECHNOLOGIES POLAND SP. Z.O.O. | Incorporated in Poland | |
AKAMAI TECHNOLOGIES S.R.O. | Incorporated in the Czech Republic | |
AKAMAI TECHNOLOGIES E SERVICOS DO BRASIL LTDA. | Incorporated in Brazil | |
AKAMAI TECHNOLOGIES APJ PTE LTD. | Incorporated in Singapore | |
AKAMAI TECHNOLOGIES ISRAEL LIMITED | Incorporated in Israel | |
AKAMAI TECHNOLOGIES CANADA | Incorporated in Canada | |
AKAMAI TECHNOLOGIES COSTA RICA SRL | Incorporated in Costa Rica | |
AKAMI TEKNOLOGI HIZMETLERI LIMIITED SIKRETI | Incorporated in Turkey | |
AKAMAI NETWORKS B.V. | Incorporated in the Netherlands | |
AKAMAI TECHNOLOGIES LIMITED | Incorporated in Taiwan | |
AKAMAI TECHNOLOGIES MALAYSIA SDN BHD | Incorporated in Malaysia | |
AKAMAI TECHNOLOGIES BELGIUM SPRL | Incorporated in Belgium | |
PROLEXIC TECHNOLOGIES UK LTD. | Incorporated in the United Kingdom | |
PROLEXIC TECHNOLOGIES HONG KONG LTD. | Incorporated in Hon Kong | |
AKAMAI TECHNOLOGIES LLC | Organized in Russia | |
AKAMAI TECHNOLOGIES DENMARK APS | Incorporated in Denmark | |
AKAMAI TECHNOLOGIES LUXEMBOURGH SARL | Incorporated in Luxembourg | |
BLOXX LTD. | Incorporated in the United Kingdom | |
BLOXX INC. | Incorporated in Delaware | |
CODEMATE APS | Incorporated in Denmark | |
OCTOSHAPE APS | Incorporated in Denmark | |
OCTOSHAPE UK LTD. | Incorporated in the United Kingdom | |
OCTOSHAPE SINGAPORE PTE LTD. | Incorporated in Singapore |
1. | I have reviewed this Annual Report on Form 10-K of Akamai Technologies, Inc.; |
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 an 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: | February 29, 2016 | /s/ F. Thomson Leighton | |
F. Thomson Leighton, Chief Executive Officer |
1. | I have reviewed this Annual Report on Form 10-K of Akamai Technologies, Inc.; |
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 an 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: | February 29, 2016 | /s/ James Benson | |
James Benson, Chief Financial Officer |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; 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 | February 29, 2016 | /s/ F. Thomson Leighton | |
F. Thomson Leighton, Chief Executive Officer | |||
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; 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: | February 29, 2016 | /s/ James Benson | |
James Benson | |||
Document and Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Feb. 23, 2016 |
Jun. 30, 2015 |
|
Document and Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Year Focus | 2015 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | AKAMAI TECHNOLOGIES INC | ||
Entity Central Index Key | 0001086222 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 176,747,531 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 12,136.9 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable reserve (in dollars) | $ 7,364 | $ 9,023 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares designated as Series A Junior Participating Preferred Stock | 700,000 | 700,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 700,000,000 | 700,000,000 |
Common stock, shares issued | 177,212,181 | 178,300,603 |
Common stock, shares outstanding | 177,212,181 | 178,300,603 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 321,406 | $ 333,948 | $ 293,487 |
Other comprehensive loss: | |||
Foreign currency translation adjustments | (22,872) | (15,349) | (4,361) |
Unrealized (losses) gains on investments, net of income tax benefit of $773, $689 and $457 for the years ended December 31, 2015, 2014 and 2013, respectively | (970) | (171) | 3,910 |
Other comprehensive loss | (23,842) | (15,520) | (451) |
Comprehensive income | $ 297,564 | $ 318,428 | $ 293,036 |
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Statement of Comprehensive Income [Abstract] | |||
Tax on change in unrealized gain on investments, net | $ 773 | $ 689 | $ 457 |
Consolidated Statements of Cash Flows (Parenthetical) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
| |
Statement of Cash Flows [Abstract] | |
Income tax refund received | $ 19,374 |
Nature of Business and Basis of Presentation |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business and Basis of Presentation | Nature of Business and Basis of Presentation Akamai Technologies, Inc. (the “Company”) provides cloud services for delivering, optimizing and securing content and business applications. The Company's globally distributed platform comprises more than 200,000 servers in more than 1,400 networks in 120 countries. The Company was incorporated in Delaware in 1998 and is headquartered in Cambridge, Massachusetts. The Company currently operates in one industry segment: providing cloud services for delivering, optimizing and securing content and business applications over the Internet. The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in the accompanying consolidated financial statements. |
Summary of Significant Accounting Policies |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Use of Estimates The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. These principles require management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and the amounts disclosed in the related notes to the consolidated financial statements. Actual results and outcomes may differ materially from management’s estimates, judgments and assumptions. Significant estimates, judgments and assumptions used in these financial statements include, but are not limited to, those related to revenue, accounts receivable and related reserves, valuation and impairment of investments and marketable securities, useful lives and realizability of long-lived assets, capitalized internal-use software development costs, income tax reserves and accounting for stock-based compensation. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. The effects of material revisions in estimates are reflected in the consolidated financial statements prospectively from the date of the change in estimate. Cash, Cash Equivalents and Marketable Securities Cash and cash equivalents consist of cash held in bank deposit accounts and short-term, highly-liquid investments with remaining maturities of three months or less at the date of purchase. Marketable securities consist of corporate, government and other securities. Securities having remaining maturities of more than three months at the date of purchase and less than one year from the date of the balance sheet are classified as short-term, and those with maturities of more than one year from the date of the balance sheet are classified as long-term in the consolidated balance sheet. The Company classifies its debt and equity investments with readily determinable market values as available-for-sale. These investments are classified as marketable securities on the consolidated balance sheets and are carried at fair market value, with unrealized gains and losses considered to be temporary in nature and reported as accumulated other comprehensive loss, a separate component of stockholders’ equity. The Company reviews all investments for reductions in fair value that are other-than-temporary. When such reductions occur, the cost of the investment is adjusted to fair value through recording a loss on investments in the consolidated statements of income. Gains and losses on investments are calculated on the basis of specific identification. Marketable securities are considered to be impaired when a decline in fair value below cost basis is determined to be other-than-temporary. The Company periodically evaluates whether a decline in fair value below cost basis is other-than-temporary by considering available evidence regarding these investments including, among other factors: the duration of the period that, and extent to which, the fair value is less than cost basis; the financial health and business outlook of the issuer, including industry and sector performance and operational and financing cash flow factors; overall market conditions and trends and the Company’s intent and ability to retain its investment in the security for a period of time sufficient to allow for an anticipated recovery in market value. Once a decline in fair value is determined to be other-than-temporary, a write-down is recorded and a new cost basis in the security is established. Assessing the above factors involves inherent uncertainty. Write-downs, if recorded, could be materially different from the actual market performance of marketable securities in the Company’s portfolio if, among other things, relevant information related to the marketable securities was not publicly available or other factors not considered by the Company would have been relevant to the determination of impairment. Accounts Receivable and Related Reserves The Company’s accounts receivable balance includes unbilled amounts that represent revenue recorded for customers that are typically billed monthly in arrears. The Company records reserves against its accounts receivable balance. These reserves consist of allowances for doubtful accounts and reserves for cash-basis customers. Increases and decreases in the allowance for doubtful accounts are included as a component of general and administrative expense in the consolidated statements of income. The Company’s reserve for cash-basis customers increases as services are provided to customers where collection is no longer assured. Increases to the reserve for cash-basis customers are recorded as reductions of revenue. The reserve decreases and revenue is recognized when and if cash payments are received. Estimates are used in determining these reserves and are based upon the Company’s review of outstanding balances on a customer-specific, account-by-account basis. The allowance for doubtful accounts is based upon a review of customer receivables from prior sales with collection issues where the Company no longer believes that the customer has the ability to pay for services previously provided. The Company also performs ongoing credit evaluations of its customers. If such an evaluation indicates that payment is no longer reasonably assured for services provided, any future services provided to that customer will result in the creation of a cash-basis reserve until the Company receives consistent payments. The Company does not have any off-balance sheet credit exposure related to its customers. Concentrations of Credit Risk The amounts reflected in the consolidated balance sheets for accounts receivable, other current assets, accounts payable, accrued liabilities and other current liabilities approximate their fair values due to their short-term maturities. The Company maintains the majority of its cash, cash equivalents and marketable securities with major financial institutions that the Company believes to be of high credit standing. The Company believes that, as of December 31, 2015, its concentration of credit risk related to cash equivalents and marketable securities was not significant. Concentrations of credit risk with respect to accounts receivable are primarily limited to certain customers to which the Company makes substantial sales. The Company’s customer base consists of a large number of geographically-dispersed customers diversified across several industries. To reduce risk, the Company routinely assesses the financial strength of its customers. Based on such assessments, the Company believes that its accounts receivable credit risk exposure is limited. For the years ended December 31, 2015, 2014 and 2013, no customer accounted for more than 10% of total revenue. As of December 31, 2015 and 2014, no customers had an accounts receivable balance greater than 10% of total accounts receivable. The Company believes that, as of December 31, 2015, its concentration of credit risk related to accounts receivable was not significant. Fair Value of Financial Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company has certain financial assets and liabilities recorded at fair value, principally cash equivalents and short- and long-term marketable securities, that have been classified as Level 1, 2 or 3 within the fair value hierarchy. Fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the reporting date. Fair values determined by Level 2 inputs utilize data points other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Fair values determined by Level 3 inputs are based on unobservable data points for the asset or liability. Property and Equipment Property and equipment are recorded at cost, net of accumulated depreciation and amortization. Property and equipment generally include purchases of items with a per-unit value greater than $1,000 and an estimated useful life greater than one year. Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the related lease terms or their estimated useful lives. The Company periodically reviews the estimated useful lives of property and equipment and any changes to the estimated useful lives are recorded prospectively from the date of the change. Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are removed from the accounts, and any resulting gain or loss is included in income from operations. Repairs and maintenance costs are expensed as incurred. Goodwill, Acquired Intangible Assets and Long-Lived Assets Goodwill is the amount by which the cost of acquired net assets in a business combination exceeds the fair value of the net identifiable assets on the date of purchase and is carried at its historical cost. The Company tests goodwill for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company performs its impairment test of goodwill as of December 31. As of December 31, 2015, 2014 and 2013, the fair value of the Company's reporting unit was substantially in excess of the carrying value. The tests did not result in an impairment to goodwill during the years ended December 31, 2015, 2014 and 2013. Acquired intangible assets consist of completed technologies, customer relationships, trademarks and trade names, non-compete agreements and acquired license rights. Acquired intangible assets, other than goodwill, are amortized over their estimated useful lives based upon the estimated economic value derived from the related intangible asset. Long-lived assets, including property and equipment and acquired intangible assets, are reviewed for impairment whenever events or changes in circumstances, such as service discontinuance, technological obsolescence, significant decreases in the Company’s market capitalization, facility closures or work-force reductions indicate that the carrying amount of the long-lived asset may not be recoverable. When such events occur, the Company compares the carrying amount of the asset to the undiscounted expected future cash flows related to the asset. If this comparison indicates that an impairment is present, the amount of the impairment is calculated as the difference between the carrying amount and the fair value of the asset. The Company did not have any impairments during the years ended December 31, 2015, 2014 and 2013. Revenue Recognition The Company recognizes service revenue in accordance with the authoritative guidance for revenue recognition, including guidance on revenue arrangements with multiple deliverables. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. The Company primarily derives revenue from the sale of services to customers executing contracts having terms of one year or longer. These contracts generally commit the customer to a minimum of monthly, quarterly or annual level of usage and specify the rate at which the customer must pay for actual usage above the monthly, quarterly or annual minimum. For contracts with a monthly commitment, the Company recognizes the monthly minimum as revenue each month, provided that an enforceable contract has been signed by both parties, the service has been delivered to the customer, the fee for the service is fixed or determinable and collection is reasonably assured. Should a customer’s usage of the Company's services exceed the monthly, quarterly or annual minimum, the Company recognizes revenue for such excess in the period of additional usage. For annual or other non-monthly period revenue commitments, the Company recognizes revenue monthly based upon the customer’s actual usage each month of the commitment period and only recognizes any remaining committed amount for the applicable period in the last month thereof. The Company typically charges its customers an integration fee when the services are first activated. Integration fees are recorded as deferred revenue and recognized as revenue ratably over the estimated life of the customer arrangement. The Company also derives revenue from services sold as discrete, non-recurring events or based solely on usage. For these services, the Company recognizes revenue once the event or usage has occurred. When more than one element is contained in a revenue arrangement, the Company determines the fair value for each element in the arrangement based on vendor-specific objective evidence (“VSOE”) for each respective element, including any renewal rates for services contractually offered to the customer. Elements typically included in the Company's multiple element arrangements consist of its core services – the delivery of content, applications and software over the Internet – as well as mobile and security solutions, and enterprise professional services. These elements have value to the customer on a stand-alone basis in that they can be sold separately by another vendor. Generally, there is no right of return relative to these services. The Company typically uses VSOE to determine the fair value of its separate elements. All stand-alone sales of professional services are reviewed to establish the average stand-alone selling price for those services. For the Company's core services, the fair value is the price charged for a single deliverable on a per unit basis when it is sold separately. For arrangements in which the Company is unable to establish VSOE, third party evidence ("TPE") of the fair value of each element is determined based upon the price charged when the element is sold separately by another vendor. For arrangements in which the Company is unable to establish VSOE or TPE for each element, the Company uses the best estimate of selling price ("BESP") to determine the fair value of the separate deliverables. The Company estimates BESP based upon a management-approved listing of all solution unit pricing and pre-established discount levels for each solution that takes into consideration volume, geography and industry lines. The Company allocates arrangement consideration across the multiple elements using the relative selling price method. At the inception of a customer contract, the Company makes an assessment as to that customer’s ability to pay for the services provided. The Company bases its assessment on a combination of factors, including the successful completion of a credit check or financial review, its collection experience with the customer and other forms of payment assurance. Upon the completion of these steps, the Company recognizes revenue monthly in accordance with its revenue recognition policy. If the Company subsequently determines that collection from the customer is not reasonably assured, the Company records an allowance for doubtful accounts and bad debt expense for all of that customer’s unpaid invoices and ceases recognizing revenue for continued services provided until cash is received from the customer. Changes in the Company’s estimates and judgments about whether collection is reasonably assured would change the timing of revenue or amount of bad debt expense that the Company recognizes. The Company also sells its services through a reseller channel. Assuming all other revenue recognition criteria are met, the Company recognizes revenue from reseller arrangements based on the reseller’s contracted non-refundable minimum purchase commitments over the term of the contract, plus amounts sold by the reseller to its customers in excess of the minimum commitments. Amounts attributable to this excess usage are recognized as revenue in the period in which the service is provided. From time to time, the Company enters into contracts to sell its services or license its technology to unrelated enterprises at or about the same time that it enters into contracts to purchase products or services from the same enterprises. If the Company concludes that these contracts were negotiated concurrently, the Company records as revenue only the net cash received from the vendor, unless the product or service received has a separate identifiable benefit, and the fair value of the vendor’s product or service can be established objectively. The Company may from time to time resell licenses or services of third parties. The Company records revenue for these transactions on a gross basis when the Company has risk of loss related to the amounts purchased from the third party and the Company adds value to the license or service, such as by providing maintenance or support for such license or service. If these conditions are present, the Company recognizes revenue when all other revenue recognition criteria are satisfied. Deferred revenue represents amounts billed to customers for which revenue has not been recognized. Deferred revenue primarily consists of the unearned portion of monthly billed service fees, prepayments made by customers for future periods, deferred integration and activation set-up fees and amounts billed under customer arrangements with extended payment terms. Cost of Revenue Cost of revenue consists primarily of fees paid to network providers for bandwidth and to third party network data centers for housing servers, also known as co-location costs. Cost of revenue also includes employee costs for network operation, build-out and support and services delivery; network storage costs; cost of software licenses; depreciation of network equipment used to deliver the Company’s services; amortization of network-related internal-use software; and costs for the production of live events. The Company enters into contracts for bandwidth with third party network providers with terms typically ranging from several months to two years. These contracts generally commit the Company to pay minimum monthly fees plus additional fees for bandwidth usage above the committed level. In some circumstances, Internet service providers (“ISPs”) make rack space available for the Company’s servers and access to their bandwidth at a discount or no cost. In exchange, the ISP and its customers benefit by receiving content through a local Company server resulting in better content delivery. The Company does not consider these relationships to represent the culmination of an earnings process. Accordingly, the Company does not recognize as revenue the value to the ISPs associated with the use of the Company’s servers, nor does the Company recognize as expense the value of the rack space and bandwidth received at discounted or no cost. Research and Development Costs and Capitalized Internal-Use Software Research and development costs consist primarily of payroll and related personnel costs for the design, development, deployment, testing and enhancement of the Company’s services and network. Costs incurred in the development of the Company’s services are expensed as incurred, except certain internal-use software development costs eligible for capitalization. Capitalized costs include external consulting fees, payroll and payroll-related costs and stock-based compensation for employees in the Company’s development and information technology groups who are directly associated with, and who devote time to, the Company’s internal-use software projects. Capitalization begins when the planning stage is complete and the Company commits resources to the software project, and continues during the application development stage. Capitalization ceases when the software has been tested and is ready for its intended use. Costs incurred during the planning, training and post-implementation stages of the software development life-cycle are expensed as incurred. The Company amortizes completed internal-use software that is used on its network to cost of revenue over its estimated useful life. Advertising Expense The Company recognizes advertising expense as incurred. The Company recognized total advertising expense of $3.6 million for the year ended December 31, 2015, and $2.7 million for each of the years ended December 31, 2014 and 2013. Accounting for Stock-Based Compensation The Company recognizes compensation costs for all stock-based payment awards made to employees based upon the awards’ grant-date fair value. The stock-based payment awards include stock options, restricted stock units, deferred stock units and employee stock purchases related to the Company’s employee stock purchase plan. For stock options, the Company has selected the Black-Scholes option-pricing model to determine the fair value of stock option awards. For stock options, restricted stock units and deferred stock units that contain only a service-based vesting feature, the Company recognizes compensation cost on a straight-line basis over the award's vesting period. For awards with a performance condition-based vesting feature, the Company recognizes compensation cost on a graded-vesting basis over the award's expected vesting period, commencing when achievement of the performance condition is deemed probable. In addition, for awards that vest and become exercisable only upon achievement of specified performance conditions, the Company makes judgments and estimates each quarter about the probability that such performance conditions will be met or achieved. Any changes to those estimates that the Company makes from time to time may have a significant impact on the stock-based compensation expense recorded and could materially impact the Company’s results of operation. Foreign Currency Translation and Forward Currency Contracts The assets and liabilities of the Company's subsidiaries are translated at the applicable exchange rate as of the balance sheet date, and revenue and expenses are translated at an average rate over the period. Resulting currency translation adjustments are recorded as a component of accumulated other comprehensive loss, a separate component of stockholders’ equity. Gains and losses on inter-company and other non-functional currency transactions are recorded in other expense, net. The Company enters into short-term foreign currency forward contracts to offset foreign exchange gains and losses generated by the re-measurement of certain assets and liabilities recorded in non-functional currencies. Changes in the fair value of these derivatives, as well as re-measurement gains and losses, are recognized in current earnings in other expense, net. As of December 31, 2015 and 2014, the fair value of the forward currency contracts and the underlying net gains for the years ended December 31, 2015, 2014 and 2013 were immaterial. The Company's foreign currency forward contracts may be exposed to credit risk to the extent that its counterparties are unable to meet the terms of the agreements. The Company seeks to minimize counterparty credit (or repayment) risk by entering into transactions only with major financial institutions of investment grade credit rating. Taxes The Company's provision for income taxes is comprised of a current and a deferred portion. The current income tax provision is calculated as the estimated taxes payable or refundable on tax returns for the current year. The deferred income tax provision is calculated as the estimated future tax effects attributable to temporary differences and carryforwards using expected tax rates in effect during the years in which the differences are expected to reverse or the carryforwards are expected to be realized. The Company currently has net deferred tax assets consisting of net operating loss (“NOL”) carryforwards, tax credit carryforwards and deductible temporary differences. Management periodically weighs the positive and negative evidence to determine if it is more likely than not that some or all of the deferred tax assets will be realized. The Company has recorded certain tax reserves to address potential exposures involving its income tax and sales and use tax positions. These potential tax liabilities result from the varying application of statutes, rules, regulations and interpretations by different taxing jurisdictions. The Company's estimate of the value of its tax reserves contains assumptions based on past experiences and judgments about the interpretation of statutes, rules and regulations by taxing jurisdictions. It is possible that the costs of the ultimate tax liability or benefit from these matters may be more or less than the amount the Company estimated. Uncertainty in income taxes is recognized in the Company's consolidated financial statements using a two-step process. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company has elected to account for the indirect income tax effects of stock-based compensation as provision for income taxes. This primarily includes the impact of the research and development tax credit and the domestic production activities deduction. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued updated guidance and disclosure requirements for recognizing revenue. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard will be effective for the Company on January 1, 2018, and may be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is evaluating the potential impact of adopting this new accounting guidance. In April 2015, the FASB issued updated guidance that will change the current presentation of debt issuance costs on the balance sheet. This new guidance will move debt issuance costs from the assets section of the balance sheet to the liabilities section as a direct deduction from the carrying amount of the debt issued. The guidance will be effective for the Company on January 1, 2016. The Company will reclassify its debt issuance costs included in other assets on the consolidated balance sheet to convertible senior notes within the liabilities and stockholders' equity section. The amount of deferred financing costs expected to be reclassified as of January 1, 2016 is $6.2 million. This revision will have no impact on the Company's results of operations or cash flows. In September 2015, the FASB issued updated guidance that eliminates the requirement to restate prior period financial statements for measurement period adjustments. In an effort to reduce complexity in financial reporting, the new guidance requires that the cumulative impact of a measurement period adjustment, including the impact on prior periods, be recognized in the reporting period in which the adjustment is identified. The standard will be effective for the Company on January 1, 2016. The Company does not expect this guidance to have a material impact on its results of operations, financial condition or cash flows. In November 2015, the FASB issued guidance that requires companies to present deferred income tax assets and liabilities as noncurrent in a classified balance sheet instead of the current requirement to separate deferred income tax assets and liabilities into current and noncurrent amounts. The standard is effective for the Company on January 1, 2016, but early adoption is permitted. The Company has adopted this standard as of December 31, 2015, and has applied it prospectively. The Company early adopted the standard because it simplifies the Company's process of determining balance sheet classification for its deferred taxes. Prior period deferred income tax assets and liabilities have not been adjusted, due to the prospective application of the standard. The adoption of this standard did not have an impact on the Company's results of operations or financial condition. |
Fair Value Measurements |
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Fair Value Measurements | Fair Value Measurements The following is a summary of available-for-sale marketable securities held as of December 31, 2015 and 2014 (in thousands):
During the first quarter of 2015, the Company began offering eligible employees the ability to participate in a non-qualified deferred compensation plan. The mutual funds held by the Company that are associated with this plan are classified as restricted trading securities. These securities are not included in the available-for-sale securities table above but are included in marketable securities in the consolidated balance sheets. Unrealized gains and unrealized temporary losses on investments classified as available-for-sale are included within accumulated other comprehensive loss in the consolidated balance sheets. Upon realization, those amounts are reclassified from accumulated other comprehensive loss to interest income in the consolidated statements of income. As of December 31, 2015, the Company held for investment corporate bonds with a fair value of $71.4 million, which are classified as available-for-sale marketable securities and have been in a continuous unrealized loss position for more than 12 months. The unrealized losses are not significant and are attributable to changes in interest rates. The Company does not believe any unrealized losses represent other than temporary impairments based on the evaluation of available evidence. As of December 31, 2014, there were no securities in a continuous unrealized loss position for more than 12 months. The following table details the fair value measurements within the fair value hierarchy of the Company’s financial assets and liabilities as of December 31, 2015 and 2014 (in thousands):
The following table reflects the activity for the Company’s major classes of assets and liabilities measured at fair value using Level 3 inputs for the years ended December 31, 2015 and 2014 (in thousands):
As of December 31, 2015 and 2014, the Company grouped money market funds, certificates of deposit, and mutual funds using a Level 1 valuation because market prices for such investments are readily available in active markets. As of December 31, 2015 and 2014, the Company grouped commercial paper, U.S. government agency obligations and corporate bonds using a Level 2 valuation because quoted prices for identical or similar assets are available in markets that are inactive. The Company did not have any transfers of assets and liabilities between Level 1 and Level 2 of the fair value measurement hierarchy during the years ended December 31, 2015 and 2014. When developing fair value estimates, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs. When available, the Company uses quoted market prices to measure fair value. The valuation technique used to measure fair value for the Company's Level 1 and Level 2 assets is a market approach, using prices and other relevant information generated by market transactions involving identical or comparable assets. If market prices are not available, the fair value measurement is based on models that use primarily market-based parameters including yield curves, volatilities, credit ratings and currency rates. In certain cases where market rate assumptions are not available, the Company is required to make judgments about assumptions market participants would use to estimate the fair value of a financial instrument. The valuation technique used to measure the fair value of a Level 3 asset held by the Company, which consisted of a $25.0 million face value convertible note receivable, was primarily an income approach, where the expected weighted average future cash flows were discounted back to present value. The significant unobservable inputs used in the fair value measurement of the convertible note receivable were the probability of conversion to equity and the fair value of equity into which the note was convertible. In the second quarter of 2014, the note was amended. Under the terms of the amendment, the note became convertible into shares of preferred stock of the issuer valued at $12.5 million at the time of conversion; the remaining $12.5 million was paid in cash in the second and third quarters of 2014. The valuation technique used to measure fair value of the Company's Level 3 liability, which consisted of contingent consideration related to the acquisition of Velocius Networks, Inc. ("Velocius") in 2013 (Note 8), was primarily an income approach. The significant unobservable input used in the fair value measurement of the Velocius contingent consideration was the likelihood of achieving development milestones to integrate the acquired technology into the Company's technology. During the third quarter of 2014, the first of two milestones was achieved and a portion of the contingent consideration was paid. The remaining milestone was achieved in June 2015 and was paid in the third quarter of 2015. Contractual maturities of the Company’s available-for-sale marketable securities held as of December 31, 2015 and 2014 were as follows (in thousands):
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Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable | Accounts Receivable Net accounts receivable consisted of the following as of December 31, 2015 and 2014 (in thousands):
A summary of activity in the accounts receivable reserves for the years ended December 31, 2015, 2014 and 2013, is as follows (in thousands):
Charges to income from operations represent charges to bad debt expense for increases in the allowance for doubtful accounts and reductions to revenue for increases in reserves for cash basis customers. |
Prepaid Expenses and Other Current Assets |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following as of December 31, 2015 and 2014 (in thousands):
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Property and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and Equipment Property and equipment consisted of the following as of December 31, 2015 and 2014 (dollars in thousands):
Depreciation and amortization expense on property and equipment and capitalized internal-use software for the years ended December 31, 2015, 2014 and 2013 was $272.5 million, $215.3 million and $162.9 million, respectively. During the years ended December 31, 2015, 2014 and 2013, the Company capitalized $17.9 million, $15.2 million and $12.3 million, respectively, of stock-based compensation related to employees who developed and enhanced internal-use software applications. During the years ended December 31, 2015 and 2014, the Company wrote off $48.7 million and $100.1 million, respectively, of property and equipment, gross, along with the associated accumulated depreciation and amortization. The write-offs were primarily related to computer and networking equipment and internal-use software no longer in use. These assets had been substantially depreciated and amortized. |
Goodwill and Acquired Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Acquired Intangible Assets | Goodwill and Acquired Intangible Assets The changes in the carrying amount of goodwill for the years ended December 31, 2015 and 2014 were as follows (in thousands):
Acquired intangible assets that are subject to amortization consisted of the following as of December 31, 2015 and 2014 (in thousands):
Aggregate expense related to amortization of acquired intangible assets for the years ended December 31, 2015, 2014 and 2013 was $27.1 million, $32.1 million and $21.5 million, respectively. Based on the Company's acquired intangible assets as of December 31, 2015, aggregate expense related to amortization of acquired intangible assets is expected to be approximately $26.5 million, $27.8 million, $23.7 million, $21.7 million and $17.7 million for the years ending December 31, 2016, 2017, 2018, 2019 and 2020, respectively. |
Business Acquisitions and Divestitures |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisitions and Divestitures | Business Acquisitions and Divestitures Acquisition-related costs were $1.8 million, $4.2 million and $3.1 million during the years ended December 31, 2015, 2014 and 2013, respectively, and are included in general and administrative expense in the consolidated statements of income. Pro forma results of operations for the acquisitions completed in the years ended December 31, 2015, 2014 and 2013 have not been presented because the effects of the acquisitions, individually or in the aggregate, are not material to the Company's consolidated financial results. Revenue and earnings since the dates of the acquisitions included in the Company's consolidated statements of income are also not presented because they are not material. 2015 Acquisitions Xerocole On February 27, 2015, the Company acquired Xerocole, Inc. ("Xerocole"), a provider of recursive Domain Name System ("DNS") functionality, for $16.6 million in cash. The Company acquired Xerocole with a goal of expanding its existing Authoritative DNS products. The Company allocated $12.9 million of the cost of the acquisition to goodwill and $4.9 million to acquired intangible assets. The allocation of the purchase price was finalized in the third quarter of 2015. The total weighted average useful life of the intangible assets acquired from Xerocole is 8.8 years. The value of the goodwill from the acquisition can be attributed to a number of business factors including a trained technical workforce and cost synergies expected to be realized. The total amount of goodwill expected to be deducted for tax purposes is $2.7 million. Octoshape On April 6, 2015, the Company acquired all of the outstanding capital stock of Codemate A/S and its wholly-owned subsidiary Octoshape ApS (together, "Octoshape") in exchange for $107.0 million in cash. Octoshape is a cloud service provider focused on delivering broadcast, enterprise and carrier solutions. The goal of acquiring Octoshape is to make available for the Company's customers additional delivery and optimization technologies for video streams of over-the-top ("OTT") content and to enable the Company to more fully support Internet Protocol television ("IPTV") solutions. The consolidated financial statements include the operating results of Octoshape from the date of acquisition. The purchase price allocation was finalized in the fourth quarter of 2015. The Company recorded a decrease of $0.5 million to goodwill upon the finalization of net working capital adjustments to the purchase price in the third quarter of 2015. The following table presents the final allocation of the purchase price for Octoshape (in thousands):
The value of the goodwill can be attributed to a number of business factors, including a trained technical and sales workforce and cost synergies expected to be realized. The total amount of goodwill related to the acquisition of Octoshape expected to be deducted for tax purposes is $69.4 million. The following were the identified intangible assets acquired and their respective weighted average useful lives (in thousands, except years):
The total weighted average amortization period for the intangible assets acquired from Octoshape is 10.6 years. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized. Bloxx On October 30, 2015, the Company acquired Bloxx Limited ("Bloxx"), a provider of Secure Web Gateway technology, for $18.7 million in cash. The acquisition is expected to provide the Company with technology to complement the Company's cloud security strategy for protecting businesses against Internet vulnerabilities. The Company allocated $17.7 million of the cost of the acquisition to goodwill and $3.9 million to the acquired intangible assets. The allocation of the purchase price has not been finalized as the Company is in the process of gathering the facts and circumstances existing as of the acquisition date in order to finalize the valuation. The total weighted average useful life of the intangible assets acquired from Bloxx is 7.2 years. The value of the goodwill from the acquisition can be attributed to a number of business factors including a trained technical workforce and cost synergies expected to be realized. The total amount of goodwill related to the acquisition of Bloxx expected to be deducted for tax purposes is $17.7 million. 2014 Acquisitions Prolexic Acquisition On February 18, 2014, the Company acquired all of the outstanding capital stock of Prolexic Technologies, Inc. ("Prolexic") in exchange for $392.1 million in cash and the assumption of unvested stock options. The goal of acquiring Prolexic was to provide the Company's customers with a comprehensive portfolio of security solutions designed to defend an enterprise’s web and IP infrastructure against application-layer, network-layer and data center attacks delivered via the Internet. The consolidated financial statements include the operating results of Prolexic from the date of acquisition. The purchase price allocation was finalized in the fourth quarter of 2014. The Company recorded an increase of $2.2 million to goodwill upon the finalization of measurement period adjustments related to certain tax-related assets and liabilities in the fourth quarter of 2014. The following table presents the final allocation of the purchase price for Prolexic (in thousands):
The value of the goodwill can be attributed to a number of business factors, including a trained technical and sales workforce and the fair value of cost synergies expected to be realized. The total amount of goodwill related to the acquisition of Prolexic expected to be deducted for tax purposes is $62.4 million. The following were the identified intangible assets acquired and their respective weighted average useful lives (in thousands, except for years):
The total weighted average amortization period for the intangible assets acquired from Prolexic is 9.2 years. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized. 2013 Acquisitions Velocius Acquisition On November 8, 2013, the Company acquired Velocius in exchange for $4.3 million in cash. In addition, the Company recorded a liability of $2.6 million for contingent consideration related to expected achievement of post-closing milestones. The maximum potential payout of the contingent consideration was $3.0 million. As of December 31, 2015, all milestones were achieved and $3.0 million had been paid. The Company acquired Velocius with a goal of complementing its hybrid cloud optimization strategy for optimizing IP application traffic across the Internet for remote and branch-end users. The Company allocated $5.4 million of the cost of the acquisition to goodwill and $2.5 million to acquired intangible assets. The allocation of the purchase price was finalized in the first quarter of 2014. The total weighted average useful life of the intangible assets acquired from Velocius is 7.9 years. The value of the goodwill from the acquisition can be attributed to a number of business factors including a trained technical workforce and cost synergies expected to be realized. The total amount of goodwill related to the acquisition of Velocius expected to be deducted for tax purposes is $0.3 million. Strategic Network Transaction On November 30, 2012, the Company entered into a strategic alliance with AT&T. Under the agreement, AT&T became a reseller of the Company's services and the Company acquired certain assets and contracted to purchase bandwidth, co-location and related services from AT&T. The Company entered into the agreement with a goal of expanding its content delivery network customer base and developing a relationship with AT&T as a bandwidth and co-location service provider. The transaction meets the definition of a business combination, and it was determined that the Company obtained control of the acquired assets in July 2013. The total consideration was $55.0 million, of which $27.5 million was paid during the third quarter of 2013 and $27.5 million was paid during the first quarter of 2014. The Company allocated $30.2 million of the consideration to goodwill and $16.1 million to acquired intangible assets. The allocation of the purchase price was finalized in the fourth quarter of 2013. The weighted average useful life of the intangible assets acquired is 9.8 years. The value of the goodwill acquired can be attributed to synergies expected to be realized by the Company related to anticipated future customer expansion and cost reductions. The total amount of goodwill expected to be deducted for tax purposes is $30.2 million. Divestitures ADS Divestiture Consistent with its strategy to prioritize higher-margin businesses, the Company sold its Advertising Decision Solutions ("ADS") business to MediaMath, Inc. ("MediaMath") in exchange for a $25.0 million face value convertible note receivable (Note 3). The transaction closed during the first quarter of 2013. These operations were not material to the Company's annual net sales, net income or earnings per share, and no significant gains or losses were realized on the transaction. The accompanying consolidated financial statements for the year ended December 31, 2013 include the impact of approximately one month of ADS operations prior to the sale. All assets and liabilities used by the ADS operations have been excluded from the consolidated balance sheets. Simultaneously with the sale, the Company entered into a multi-year relationship agreement whereby MediaMath will have exclusive rights to leverage the Company's pixel-free technology for use within digital advertising and marketing applications. During the second quarter of 2014, the convertible note receivable was amended. Under the terms of the amendment, the note became convertible into shares of preferred stock of MediaMath valued at $12.5 million at the time of conversion and was included in other assets in the consolidated balance sheet as of December 31, 2015 and 2014; the remaining $12.5 million was received in cash during the second and third quarters of 2014. |
Accrued Expenses |
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Accounts Payable and Accrued Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses | Accrued Expenses Accrued expenses consisted of the following as of December 31, 2015 and 2014 (in thousands):
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Operating Lease Commitments The Company leases its facilities under non-cancelable operating leases. These operating leases expire at various dates through May 2027 and generally require the payment of real estate taxes, insurance, maintenance and operating costs. The minimum aggregate future obligations under non-cancelable leases as of December 31, 2015 were as follows (in thousands):
Rent expense for the years ended December 31, 2015, 2014 and 2013 was $47.9 million, $39.9 million and $30.8 million, respectively. The Company has entered into sublease agreements with tenants of various properties previously vacated by the Company. The amounts paid to the Company by these sublease tenants was $3.6 million, $3.4 million and $1.9 million for the years ended December 31, 2015, 2014 and 2013, respectively. As of December 31, 2015, the Company had outstanding letters of credit in the amount of $6.0 million related to certain of its real estate leases. The letters of credit expire as the Company fulfills its operating lease obligations. Purchase Commitments As of December 31, 2015, the Company had long-term commitments for bandwidth usage and co-location with various networks and ISPs and for asset purchases for network equipment. Additionally, as of December 31, 2015, the Company had entered into purchase orders with various vendors. The minimum future commitments as of December 31, 2015 were as follows (in thousands):
Legal Matters The Company is party to various litigation matters that management considers routine and incidental to its business. Management does not expect the results of any of these routine actions to have a material effect on the Company’s business, results of operations, financial condition or cash flows. The Company is conducting an internal investigation, with the assistance of outside counsel, relating to sales practices in a country outside the U.S. that represented less than 1% of the Company’s revenue in each of the years ended December 31, 2015, 2014 and 2013. The internal investigation includes a review of compliance with the requirements of the U.S. Foreign Corrupt Practices Act and other applicable laws and regulations by employees in that market. In February 2015, the Company voluntarily contacted the U.S. Securities and Exchange Commission and Department of Justice to advise both agencies of this internal investigation. The Company is cooperating with those agencies. As of the filing of these financial statements, the Company cannot predict the outcome of this matter. No provision with respect to this matter has been made in the Company's consolidated financial statements. Indemnification The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to these agreements, the Company agrees to indemnify, hold harmless and reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company's business partners or customers, in connection with its provision of its services. Generally, these obligations are limited to claims relating to infringement of a patent, copyright or other intellectual property right or the Company’s negligence, willful misconduct or violation of law. Subject to applicable statutes of limitation, the term of these indemnification agreements is generally perpetual from the time of execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company carries insurance that covers certain third party claims relating to its services and could limit the Company’s exposure in that respect. The Company has agreed to indemnify each of its officers and directors during his or her lifetime for certain events or occurrences that happen by reason of the fact that the officer or director is or was or has agreed to serve as an officer or director of the Company. The Company has director and officer insurance policies that may limit its exposure and may enable the Company to recover a portion of certain future amounts paid. To date, the Company has not encountered material costs as a result of such indemnification obligations and has not accrued any related liabilities in its financial statements. In assessing whether to establish an accrual, the Company considers such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. |
Convertible Senior Notes |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Senior Notes | Convertible Senior Notes In February 2014, the Company issued $690.0 million in par value of convertible senior notes due 2019 (the "Notes"). The Notes are senior unsecured obligations of the Company, do not bear regular interest and mature on February 15, 2019, unless repurchased or converted prior to maturity. At their option, holders may convert their Notes prior to the close of business on the business day immediately preceding August 15, 2018 only under the following circumstances:
On or after August 15, 2018, holders may convert all or any portion of their Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date, regardless of the foregoing circumstances. Upon conversion, the Company, at its election, may pay or deliver to holders cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock. The initial conversion rate is 11.1651 shares of the Company's common stock per $1,000 principal amount, which is equivalent to an initial conversion price of approximately $89.56 per share, subject to adjustments in certain events, and represents a potential conversion into 7.7 million shares. In accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components. The carrying cost of the liability component was calculated by measuring the fair value of a similar debt obligation that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the Notes. The difference between the principal amount of the Notes and the proceeds allocated to the liability component (“debt discount”) is amortized to interest expense using the effective interest method over the term of the Notes. The equity component is recorded in additional paid-in capital in the consolidated balance sheet and will not be remeasured as long as it continues to meet the conditions for equity classification. In accounting for the transaction costs related to the issuance of the Notes, the Company allocated the total transaction costs incurred to the liability and equity components based on their relative values. Transaction costs attributable to the liability component are being amortized to interest expense over the term of the Notes, and transaction costs attributable to the equity component are netted with the equity component of the Notes in stockholders’ equity. The Notes consisted of the following components as of December 31, 2015 (in thousands):
The estimated fair value of the Notes at December 31, 2015 was $660.7 million. The fair value was determined based on data points other than quoted prices that are observable, either directly or indirectly, and has been classified as Level 2 within the fair value hierarchy. Based on the closing price of the Company's common stock of $52.63 on December 31, 2015, the value of the Notes if converted to common stock was less than the principal amount of $690.0 million. The Company used $62.0 million of the proceeds from the offering to repurchase shares of its common stock, concurrent with the issuance of the Notes. The repurchase was made in accordance with the share repurchase program previously approved by the Board of Directors (Note 12). Additionally, $23.3 million of the proceeds was used for the net cost of convertible note hedge and warrant transactions. The Company intends to use the remaining net proceeds for working capital, share repurchases and other general corporate purposes, as well as for potential acquisitions and other strategic transactions. Note Hedge To minimize the impact of potential dilution upon conversion of the Notes, the Company entered into convertible note hedge transactions with respect to its common stock in February 2014. The Company paid $101.3 million for the note hedge transactions. The note hedge transactions cover approximately 7.7 million shares of the Company’s common stock at a strike price that corresponds to the initial conversion price of the Notes, also subject to adjustment, and are exercisable upon conversion of the Notes. The note hedge transactions are intended to reduce dilution in the event of conversion of the Notes. Warrants Separately, in February 2014, the Company entered into warrant transactions, whereby the Company sold warrants to acquire, subject to anti-dilution adjustments, up to 7.7 million shares of the Company’s common stock at a strike price of approximately $104.49 per share. The Company received aggregate proceeds of $78.0 million from the sale of the warrants. The convertible note hedge and warrant transactions will generally have the effect of increasing the conversion price of the Notes to approximately $104.49 per share. Interest Expense The Notes do not bear regular interest, but have an effective interest rate of 3.2% attributable to the conversion feature. The following table sets forth total interest expense included in the statement of income related to the Notes for the years ended December 31, 2015 and 2014 (in thousands):
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Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Stock Repurchase Program In October 2013, the Board of Directors authorized a $750.0 million share repurchase program, effective from October 16, 2013 through December 31, 2016. During the years ended December 31, 2015, 2014 and 2013, the Company repurchased 4.5 million, 4.6 million and 3.9 million shares, respectively, of its common stock for $302.6 million, $268.6 million and $160.4 million, respectively, pursuant to the current repurchase program as well as prior ones approved by the Board of Directors. As of December 31, 2015, the Company had $131.0 million available for future purchases of shares under the current repurchase program. In February 2016, the Board of Directors authorized a new $1.0 billion share repurchase program, effective from February 9, 2016 through December 31, 2018. The Company's goal for this program is to offset the dilution created by its employee equity compensation programs and provide the flexibility to return capital to shareholders as business and market conditions warrant. The Board of Directors authorized the retirement of all the outstanding shares of its treasury stock as of each of December 31, 2015, 2014 and 2013. The retired shares were returned to the number of authorized but unissued shares of the Company's common stock, and the retirement was recorded to additional paid-in capital. |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The following table summarizes the changes in accumulated other comprehensive loss, which is reported as a component of stockholders' equity, for the year ended December 31, 2015 (in thousands):
The tax effect on accumulated unrealized gains on investments was insignificant as of December 31, 2015 and 2014. Amounts reclassified from accumulated other comprehensive loss to net income were insignificant for the year ended December 31, 2015. |
Employee Benefit Plan |
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Dec. 31, 2015 | |
Compensation Related Costs [Abstract] | |
Employee Benefit Plan | Employee Benefit Plan The Company has established a savings plan for its employees that is designed to be qualified under Section 401(k) of the Internal Revenue Code. Eligible employees are permitted to contribute to this plan through payroll deductions within statutory and plan limits. The Company contributed approximately $13.1 million, $16.6 million and $11.1 million of cash to the savings plan for the years ended December 31, 2015, 2014 and 2013, respectively, under a matching program. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Stock-Based Compensation Equity Plans In May 2013, the Company's stockholders approved the Akamai Technologies, Inc. 2013 Stock Incentive Plan (the "2013 Plan"). The 2013 Plan replaced the Akamai Technologies, Inc. 2009 Stock Incentive Plan (the "2009 Plan"), which in turn replaced the Akamai Technologies, Inc. 2006 Stock Incentive Plan, the Akamai Technologies, Inc. 2001 Stock Incentive Plan and the Akamai Technologies, Inc. 1998 Stock Incentive Plan (together with the 2009 Plan, the "Previous Plans"). The Company no longer issues equity awards under the Previous Plans, and they solely exist to satisfy outstanding equity awards previously granted under those plans. The 2013 Plan allows for the issuance of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards and cash-based awards up to 11.0 million shares of common stock to employees, officers, directors, consultants and advisers of the Company. Additionally, the Company may grant up to 3.8 million shares of common stock thereunder that were available for grant under the 2009 Plan immediately prior to stockholder approval of the 2013 Plan. Any shares of common stock that are currently outstanding under the Previous Plans that are terminated, canceled, surrendered or forfeited will become available to grant. As of December 31, 2015, the Company had reserved approximately 10.4 million shares of common stock available for future issuance of equity awards under the 2013 Plan. The Company has assumed certain stock option plans and the outstanding stock options of companies that it has acquired (“Assumed Plans”). Stock options outstanding as of the date of acquisition under the Assumed Plans were exchanged for the Company’s stock options and adjusted to reflect the appropriate conversion ratio as specified by the applicable acquisition agreement, but are otherwise administered in accordance with the terms of the Assumed Plans. Stock options under the Assumed Plans generally vest over four years and expire ten years from the date of grant. The 1999 Employee Stock Purchase Plan ("1999 ESPP") permits eligible employees to purchase up to 1.5 million shares each June 1 and December 1, provided that the aggregate number of shares issued shall not exceed 20.0 million. The 1999 ESPP allows participants to purchase shares of common stock at a 15% discount from the fair market value of the stock as determined on specific dates at six-month intervals. During the years ended December 31, 2015, 2014 and 2013, the Company issued 0.7 million, 0.7 million and 0.6 million shares under the 1999 ESPP, respectively, with a weighted average purchase price per share of $52.05, $41.76 and $34.26, respectively. Total cash proceeds from the purchase of shares under the 1999 ESPP in the years ended December 31, 2015, 2014 and 2013 were $34.8 million, $29.3 million and $22.1 million, respectively. As of December 31, 2015, approximately $3.7 million had been withheld from employees for future purchases under the 1999 ESPP. Stock-Based Compensation Expense The following table summarizes the components of total stock-based compensation expense included in the Company’s consolidated statements of income for the years ended December 31, 2015, 2014 and 2013 (in thousands):
In addition to the amounts of stock-based compensation reported in the table above, the Company’s consolidated statements of income for the years ended December 31, 2015, 2014 and 2013 also include stock-based compensation reflected as a component of amortization of capitalized internal-use software; the additional stock-based compensation was $12.7 million, $10.3 million and $8.1 million, respectively, before taxes. The Company uses the Black-Scholes option pricing model to determine the fair value of the Company’s stock option awards. This model requires the input of subjective assumptions, including expected stock price volatility and the estimated term of each award. The estimated fair value of the Company's stock-based awards, less expected forfeitures, is amortized over the awards’ vesting period on a straight-line basis. Expected volatilities are based on the Company’s historical stock price volatility and implied volatility from traded options in its stock. The Company uses historical data to estimate the expected term of options granted within the valuation model. The risk-free interest rate for periods commensurate with the expected term of the option is based on the U.S. Treasury yield rate in effect at the time of grant. The expected dividend yield is zero, as the Company currently does not pay a dividend and does not anticipate doing so in the future. The Company did not grant any stock options during 2015. The grant-date fair values of the Company's stock option awards granted during the years ended December 31, 2014 and 2013 were estimated using the Black-Scholes option pricing model with the following weighted-average assumptions:
For the years ended December 31, 2014 and 2013, the weighted average fair value of stock option awards granted was $49.67 per share and $14.17 per share, respectively. The grant-date fair values of the Company's ESPP awards granted during the years ended December 31, 2015, 2014 and 2013 were estimated using the Black-Scholes option pricing model with the following weighted-average assumptions:
For the years ended December 31, 2015, 2014 and 2013, the weighted average fair value of ESPP awards granted was $15.63 per share, $12.64 per share and $11.34 per share, respectively. As of December 31, 2015, total pre-tax unrecognized compensation cost for stock options, restricted stock units, deferred stock units and shares of common stock issued under the 1999 ESPP was $213.3 million. The expense is expected to be recognized through 2019 over a weighted average period of 1.5 years. Stock Options The following table summarizes stock option activity during the year ended December 31, 2015:
The total pre-tax intrinsic value of options exercised during the years ended December 31, 2015, 2014 and 2013 was $53.6 million, $45.8 million and $47.2 million, respectively. The total fair value of options vested for the years ended December 31, 2015, 2014 and 2013 was $10.3 million, $16.9 million and $12.4 million, respectively. The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on the Company’s closing stock price of $52.63 on December 31, 2015, that would have been received by the option holders had all option holders exercised their “in-the-money” options as of that date. The total number of shares issuable upon the exercise of “in-the-money” options exercisable as of December 31, 2015 was approximately 1.2 million. Deferred Stock Units The Company has granted deferred stock units ("DSUs") to non-employee members of its Board of Directors. Each DSU represents the right to receive one share of the Company’s common stock upon vesting. The holder may elect to defer receipt of the vested shares of stock represented by the DSU for a period of at least one year but not more than ten years from the grant date. For those granted prior to 2014, DSUs vest 50% upon the first anniversary of the grant date, with the remaining 50% vesting in equal installments of 12.5% each quarter thereafter so that all DSUs are vested in full at the end of two years from date of grant. Beginning in 2014, DSUs vest 100% on the first anniversary of the grant date. If a director has completed one year of Board service, vesting of 100% of the DSUs held by such director will accelerate at the time of his or her departure from the Board. The following table summarizes the DSU activity for the year ended December 31, 2015:
The total pre-tax intrinsic value of DSUs that were vested and distributed during the years ended December 31, 2015, 2014 and 2013 was $10.7 million, $1.4 million and $3.8 million, respectively. The total fair value of DSUs that were vested and distributed during the years ended December 31, 2015, 2014 and 2013 was $4.9 million, $0.8 million and $1.5 million, respectively. The grant-date fair value is calculated based upon the Company’s closing stock price on the date of grant. As of December 31, 2015, 28,000 DSUs were unvested, with an aggregate intrinsic value of approximately $1.5 million and a weighted average remaining contractual life of approximately 0.4 years. These units are expected to vest in May 2016. Restricted Stock Units The following table summarizes the different types of restricted stock units ("RSUs") granted by the Company during the years ended December 31, 2015, 2014 and 2013 (in thousands):
RSUs represent the right to receive one share of the Company’s common stock upon vesting. RSUs are granted at the discretion of the Board of Directors, a committee thereof or, subject to defined limitations, the Chief Executive Officer of the Company, acting as a committee of one director, to whom such authority has been delegated. The Company has issued RSUs that vest based on the passage of time assuming continued service with the Company, as well as RSUs that vest only upon the achievement of defined performance metrics tied primarily to revenue and income targets or other key financial performance indicators. For RSUs with service-based vesting conditions, the fair value is calculated based upon the Company’s closing stock price on the date of grant, and the stock-based compensation expense is being recognized over the vesting period. Most RSUs with service-based vesting provisions vest in installments over a three- or four-year period following the grant date. For the years ended December 31, 2015, 2014 and 2013, management measured compensation expense for performance-based RSUs based upon a review of the Company’s expected achievement against specified financial performance targets. Such compensation cost is being recorded using a graded-vesting method for each series of grants of performance-based RSUs, to the extent management has deemed that such awards are probable of vesting based upon the expected achievement against the specified targets. On a periodic basis, management reviews the Company’s expected performance and adjusts the compensation cost, if needed, at such time. The following table summarizes the RSU activity for the year ended December 31, 2015:
The total pre-tax intrinsic value of RSUs that vested during the years ended December 31, 2015, 2014 and 2013 was $153.6 million, $145.6 million and $117.5 million, respectively. The total fair value of RSUs that vested during the years ended December 31, 2015, 2014 and 2013 was $105.3 million, $86.9 million and $89.2 million, respectively. The grant-date fair value of each RSU is calculated based upon the Company’s closing stock price on the date of grant. As of December 31, 2015, 5.1 million RSUs were outstanding and unvested, with an aggregate intrinsic value of $266.8 million and a weighted average remaining vesting period of approximately 1.5 years. These RSUs are expected to vest on various dates through December 2019. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The components of income before provision for income taxes were as follows for the years ended December 31, 2015, 2014 and 2013 (in thousands):
The provision for income taxes consisted of the following for the years ended December 31, 2015, 2014 and 2013 (in thousands):
The Company includes the provision for income taxes incurred on intercompany sales as part of its current tax provision. The amount of the current year provision for income taxes required to be deferred is included as a deferred tax benefit. The amount of the current year deferral included in the Company’s deferred tax provision was a benefit of $15.5 million and $24.3 million in the years ended December 31, 2015 and 2014, respectively. There were no amounts included in the deferred tax provision in 2013. The Company’s effective rate differed from the U.S. federal statutory rate as follows for the years ended December 31, 2015, 2014 and 2013:
The components of the net deferred tax asset and the related valuation allowance as of December 31, 2015 and 2014 were as follows (in thousands):
During the years ended December 31, 2015 and 2014, the valuation allowance related to the Company's deferred tax assets decreased by an insignificant amount. As of December 31, 2015 and 2014, the Company had the following NOL and credit carryforwards (in thousands):
The Company's U.S. federal NOL carryforwards relate to acquisitions completed during 2012. As of December 31, 2015, the Company had no foreign tax credit carryforwards. As of December 31, 2015, undistributed earnings of non-U.S. subsidiaries totaled $349.8 million. No provision for U.S. income and foreign withholding taxes has been made for these permanently reinvested foreign earnings because it is expected that such earnings will be reinvested indefinitely. If these earnings were distributed to the U.S. in the form of dividends or otherwise, it would be included in the Company's U.S. taxable income. The amount of unrecognized deferred income tax liability related to these earnings is $53.8 million. The following is a rollforward of the Company’s unrecognized tax benefits for the years ended December 31, 2015, 2014 and 2013 (in thousands):
As of December 31, 2015, 2014 and 2013, the Company had approximately $72.3 million, $41.1 million and $30.6 million, respectively, of total unrecognized tax benefits, including $10.0 million, $7.7 million, and $5.9 million of accrued interest and penalties as of December 31, 2015, 2014 and 2013, respectively. Interest and penalties related to unrecognized tax benefits are recorded in the provision for income taxes and were $2.2 million and $1.8 million for the years ended December 31, 2015 and 2014, respectively. Interest and penalties included in the provision for income taxes for the year ended December 31, 2013 were insignificant. If recognized, all amounts of unrecognized tax benefits would have resulted in a reduction of income tax expense, impacting the effective income tax rate. As of December 31, 2015, the Company does not expect to recognize any of its unrecognized tax benefits in earnings in the next 12 months. The Company's U.S. federal income tax return for the 2013 tax year is currently under audit by the Internal Revenue Service. In addition, certain state and foreign income tax returns from 2008 through 2013 are currently under audit in those jurisdictions. The Company does not expect the results of these examinations to have a material effect on its financial condition, results of operations or cash flows. Generally, in the U.S. federal and state taxing jurisdictions, tax periods in which certain loss and credit carryovers are generated remain open for audit until such time as the limitation period ends for the year in which such losses or credits are utilized. In major foreign jurisdictions, tax years after 2011 are open for examination. |
Net Income per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income per Share | Net Income per Share Basic net income per share is computed using the weighted average number of common shares outstanding during the applicable period. Diluted net income per share is computed using the weighted average number of common shares outstanding during the period, plus the dilutive effect of potential common stock. Potential common stock consists of shares issuable pursuant to stock options, RSUs, DSUs, convertible senior notes and warrants issued by the Company. The dilutive effect of outstanding awards and convertible securities is reflected in diluted earnings per share by application of the treasury stock method. The following table sets forth the components used in the computation of basic and diluted net income per share for the years ended December 31, 2015, 2014 and 2013 (in thousands, except per share data):
For the years ended December 31, 2015, 2014 and 2013, certain potential outstanding shares from stock options, service-based RSUs, convertible notes and warrants were excluded from the computation of diluted net income per share because the effect of including these items was anti-dilutive. Additionally, certain performance-based RSUs were excluded from the computation of diluted net income per share because the underlying performance conditions for such RSUs had not been met as of these dates. The number of potentially outstanding shares excluded from the computation of diluted net income per share for the years ended December 31, 2015, 2014 and 2013 (in thousands):
The calculation of assumed proceeds used to determine the diluted weighted average shares outstanding under the treasury stock method in the periods presented was adjusted by tax windfalls and shortfalls associated with all of the Company’s outstanding stock awards. Such windfalls and shortfalls are computed by comparing the tax deductible amount of outstanding stock awards to their grant-date fair values and multiplying the results by the applicable statutory tax rate. A positive result creates a windfall, which increases the assumed proceeds, and a negative result creates a shortfall, which reduces the assumed proceeds. |
Segment and Geographic Information |
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Segment Reporting [Abstract] | |
Segment and Geographic Information | Segment and Geographic Information The Company’s chief operating decision-maker is the chief executive officer and the executive management team. As of December 31, 2015, the Company operated in one industry segment: providing cloud services for delivering, optimizing and securing content and business applications over the Internet. The Company is not organized by market and is managed and operated as one business. A single management team that reports to the chief executive officer comprehensively manages the entire business. The Company does not operate any material separate lines of business or separate business entities with respect to its services. Accordingly, the Company does not accumulate discrete financial information with respect to separate solutions and does not have separate operating or reportable segments. The Company deploys its servers into networks worldwide. As of December 31, 2015, the Company had approximately $298.9 million and $227.8 million of net property and equipment, excluding internal-use software, located in the U.S. and foreign locations, respectively. As of December 31, 2014, the Company had approximately $249.5 million and $175.8 million of net property and equipment, excluding internal-use software, located in the U.S. and foreign locations, respectively. The Company sells its services and licenses through a sales force located both domestically and abroad. Revenue derived from operations outside of the U.S. is determined based on the country in which the sale originated and was $593.0 million, $531.9 million and $432.6 million for the years ended December 31, 2015, 2014 and 2013, respectively. Other than the U.S., no single country accounted for 10% or more of the Company’s total revenue for any reported period. |
Quarterly Financial Results (unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Results (unaudited) | Quarterly Financial Results (unaudited)
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Summary of Significant Accounting Policies (Policies) |
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Summary of Significant Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. These principles require management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and the amounts disclosed in the related notes to the consolidated financial statements. Actual results and outcomes may differ materially from management’s estimates, judgments and assumptions. Significant estimates, judgments and assumptions used in these financial statements include, but are not limited to, those related to revenue, accounts receivable and related reserves, valuation and impairment of investments and marketable securities, useful lives and realizability of long-lived assets, capitalized internal-use software development costs, income tax reserves and accounting for stock-based compensation. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. The effects of material revisions in estimates are reflected in the consolidated financial statements prospectively from the date of the change in estimate. |
Cash, Cash Equivalents and Marketable Securities | Cash, Cash Equivalents and Marketable Securities Cash and cash equivalents consist of cash held in bank deposit accounts and short-term, highly-liquid investments with remaining maturities of three months or less at the date of purchase. Marketable securities consist of corporate, government and other securities. Securities having remaining maturities of more than three months at the date of purchase and less than one year from the date of the balance sheet are classified as short-term, and those with maturities of more than one year from the date of the balance sheet are classified as long-term in the consolidated balance sheet. The Company classifies its debt and equity investments with readily determinable market values as available-for-sale. These investments are classified as marketable securities on the consolidated balance sheets and are carried at fair market value, with unrealized gains and losses considered to be temporary in nature and reported as accumulated other comprehensive loss, a separate component of stockholders’ equity. The Company reviews all investments for reductions in fair value that are other-than-temporary. When such reductions occur, the cost of the investment is adjusted to fair value through recording a loss on investments in the consolidated statements of income. Gains and losses on investments are calculated on the basis of specific identification. Marketable securities are considered to be impaired when a decline in fair value below cost basis is determined to be other-than-temporary. The Company periodically evaluates whether a decline in fair value below cost basis is other-than-temporary by considering available evidence regarding these investments including, among other factors: the duration of the period that, and extent to which, the fair value is less than cost basis; the financial health and business outlook of the issuer, including industry and sector performance and operational and financing cash flow factors; overall market conditions and trends and the Company’s intent and ability to retain its investment in the security for a period of time sufficient to allow for an anticipated recovery in market value. Once a decline in fair value is determined to be other-than-temporary, a write-down is recorded and a new cost basis in the security is established. Assessing the above factors involves inherent uncertainty. Write-downs, if recorded, could be materially different from the actual market performance of marketable securities in the Company’s portfolio if, among other things, relevant information related to the marketable securities was not publicly available or other factors not considered by the Company would have been relevant to the determination of impairment. |
Accounts Receivable and Related Reserves | Accounts Receivable and Related Reserves The Company’s accounts receivable balance includes unbilled amounts that represent revenue recorded for customers that are typically billed monthly in arrears. The Company records reserves against its accounts receivable balance. These reserves consist of allowances for doubtful accounts and reserves for cash-basis customers. Increases and decreases in the allowance for doubtful accounts are included as a component of general and administrative expense in the consolidated statements of income. The Company’s reserve for cash-basis customers increases as services are provided to customers where collection is no longer assured. Increases to the reserve for cash-basis customers are recorded as reductions of revenue. The reserve decreases and revenue is recognized when and if cash payments are received. Estimates are used in determining these reserves and are based upon the Company’s review of outstanding balances on a customer-specific, account-by-account basis. The allowance for doubtful accounts is based upon a review of customer receivables from prior sales with collection issues where the Company no longer believes that the customer has the ability to pay for services previously provided. The Company also performs ongoing credit evaluations of its customers. If such an evaluation indicates that payment is no longer reasonably assured for services provided, any future services provided to that customer will result in the creation of a cash-basis reserve until the Company receives consistent payments. The Company does not have any off-balance sheet credit exposure related to its customers. |
Concentrations of Credit Risk | Concentrations of Credit Risk The amounts reflected in the consolidated balance sheets for accounts receivable, other current assets, accounts payable, accrued liabilities and other current liabilities approximate their fair values due to their short-term maturities. The Company maintains the majority of its cash, cash equivalents and marketable securities with major financial institutions that the Company believes to be of high credit standing. The Company believes that, as of December 31, 2015, its concentration of credit risk related to cash equivalents and marketable securities was not significant. Concentrations of credit risk with respect to accounts receivable are primarily limited to certain customers to which the Company makes substantial sales. The Company’s customer base consists of a large number of geographically-dispersed customers diversified across several industries. To reduce risk, the Company routinely assesses the financial strength of its customers. Based on such assessments, the Company believes that its accounts receivable credit risk exposure is limited. For the years ended December 31, 2015, 2014 and 2013, no customer accounted for more than 10% of total revenue. As of December 31, 2015 and 2014, no customers had an accounts receivable balance greater than 10% of total accounts receivable. The Company believes that, as of December 31, 2015, its concentration of credit risk related to accounts receivable was not significant. |
Fair Value of Financial Measurements | Fair Value of Financial Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company has certain financial assets and liabilities recorded at fair value, principally cash equivalents and short- and long-term marketable securities, that have been classified as Level 1, 2 or 3 within the fair value hierarchy. Fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the reporting date. Fair values determined by Level 2 inputs utilize data points other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Fair values determined by Level 3 inputs are based on unobservable data points for the asset or liability. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost, net of accumulated depreciation and amortization. Property and equipment generally include purchases of items with a per-unit value greater than $1,000 and an estimated useful life greater than one year. Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the related lease terms or their estimated useful lives. The Company periodically reviews the estimated useful lives of property and equipment and any changes to the estimated useful lives are recorded prospectively from the date of the change. Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are removed from the accounts, and any resulting gain or loss is included in income from operations. Repairs and maintenance costs are expensed as incurred. |
Goodwill, Acquired Intangible Assets and Long-Lived Assets | Goodwill, Acquired Intangible Assets and Long-Lived Assets Goodwill is the amount by which the cost of acquired net assets in a business combination exceeds the fair value of the net identifiable assets on the date of purchase and is carried at its historical cost. The Company tests goodwill for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company performs its impairment test of goodwill as of December 31. As of December 31, 2015, 2014 and 2013, the fair value of the Company's reporting unit was substantially in excess of the carrying value. The tests did not result in an impairment to goodwill during the years ended December 31, 2015, 2014 and 2013. Acquired intangible assets consist of completed technologies, customer relationships, trademarks and trade names, non-compete agreements and acquired license rights. Acquired intangible assets, other than goodwill, are amortized over their estimated useful lives based upon the estimated economic value derived from the related intangible asset. Long-lived assets, including property and equipment and acquired intangible assets, are reviewed for impairment whenever events or changes in circumstances, such as service discontinuance, technological obsolescence, significant decreases in the Company’s market capitalization, facility closures or work-force reductions indicate that the carrying amount of the long-lived asset may not be recoverable. When such events occur, the Company compares the carrying amount of the asset to the undiscounted expected future cash flows related to the asset. If this comparison indicates that an impairment is present, the amount of the impairment is calculated as the difference between the carrying amount and the fair value of the asset. The Company did not have any impairments during the years ended December 31, 2015, 2014 and 2013. |
Revenue Recognition | Revenue Recognition The Company recognizes service revenue in accordance with the authoritative guidance for revenue recognition, including guidance on revenue arrangements with multiple deliverables. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. The Company primarily derives revenue from the sale of services to customers executing contracts having terms of one year or longer. These contracts generally commit the customer to a minimum of monthly, quarterly or annual level of usage and specify the rate at which the customer must pay for actual usage above the monthly, quarterly or annual minimum. For contracts with a monthly commitment, the Company recognizes the monthly minimum as revenue each month, provided that an enforceable contract has been signed by both parties, the service has been delivered to the customer, the fee for the service is fixed or determinable and collection is reasonably assured. Should a customer’s usage of the Company's services exceed the monthly, quarterly or annual minimum, the Company recognizes revenue for such excess in the period of additional usage. For annual or other non-monthly period revenue commitments, the Company recognizes revenue monthly based upon the customer’s actual usage each month of the commitment period and only recognizes any remaining committed amount for the applicable period in the last month thereof. The Company typically charges its customers an integration fee when the services are first activated. Integration fees are recorded as deferred revenue and recognized as revenue ratably over the estimated life of the customer arrangement. The Company also derives revenue from services sold as discrete, non-recurring events or based solely on usage. For these services, the Company recognizes revenue once the event or usage has occurred. When more than one element is contained in a revenue arrangement, the Company determines the fair value for each element in the arrangement based on vendor-specific objective evidence (“VSOE”) for each respective element, including any renewal rates for services contractually offered to the customer. Elements typically included in the Company's multiple element arrangements consist of its core services – the delivery of content, applications and software over the Internet – as well as mobile and security solutions, and enterprise professional services. These elements have value to the customer on a stand-alone basis in that they can be sold separately by another vendor. Generally, there is no right of return relative to these services. The Company typically uses VSOE to determine the fair value of its separate elements. All stand-alone sales of professional services are reviewed to establish the average stand-alone selling price for those services. For the Company's core services, the fair value is the price charged for a single deliverable on a per unit basis when it is sold separately. For arrangements in which the Company is unable to establish VSOE, third party evidence ("TPE") of the fair value of each element is determined based upon the price charged when the element is sold separately by another vendor. For arrangements in which the Company is unable to establish VSOE or TPE for each element, the Company uses the best estimate of selling price ("BESP") to determine the fair value of the separate deliverables. The Company estimates BESP based upon a management-approved listing of all solution unit pricing and pre-established discount levels for each solution that takes into consideration volume, geography and industry lines. The Company allocates arrangement consideration across the multiple elements using the relative selling price method. At the inception of a customer contract, the Company makes an assessment as to that customer’s ability to pay for the services provided. The Company bases its assessment on a combination of factors, including the successful completion of a credit check or financial review, its collection experience with the customer and other forms of payment assurance. Upon the completion of these steps, the Company recognizes revenue monthly in accordance with its revenue recognition policy. If the Company subsequently determines that collection from the customer is not reasonably assured, the Company records an allowance for doubtful accounts and bad debt expense for all of that customer’s unpaid invoices and ceases recognizing revenue for continued services provided until cash is received from the customer. Changes in the Company’s estimates and judgments about whether collection is reasonably assured would change the timing of revenue or amount of bad debt expense that the Company recognizes. The Company also sells its services through a reseller channel. Assuming all other revenue recognition criteria are met, the Company recognizes revenue from reseller arrangements based on the reseller’s contracted non-refundable minimum purchase commitments over the term of the contract, plus amounts sold by the reseller to its customers in excess of the minimum commitments. Amounts attributable to this excess usage are recognized as revenue in the period in which the service is provided. From time to time, the Company enters into contracts to sell its services or license its technology to unrelated enterprises at or about the same time that it enters into contracts to purchase products or services from the same enterprises. If the Company concludes that these contracts were negotiated concurrently, the Company records as revenue only the net cash received from the vendor, unless the product or service received has a separate identifiable benefit, and the fair value of the vendor’s product or service can be established objectively. The Company may from time to time resell licenses or services of third parties. The Company records revenue for these transactions on a gross basis when the Company has risk of loss related to the amounts purchased from the third party and the Company adds value to the license or service, such as by providing maintenance or support for such license or service. If these conditions are present, the Company recognizes revenue when all other revenue recognition criteria are satisfied. Deferred revenue represents amounts billed to customers for which revenue has not been recognized. Deferred revenue primarily consists of the unearned portion of monthly billed service fees, prepayments made by customers for future periods, deferred integration and activation set-up fees and amounts billed under customer arrangements with extended payment terms. |
Cost of Revenues | Cost of Revenue Cost of revenue consists primarily of fees paid to network providers for bandwidth and to third party network data centers for housing servers, also known as co-location costs. Cost of revenue also includes employee costs for network operation, build-out and support and services delivery; network storage costs; cost of software licenses; depreciation of network equipment used to deliver the Company’s services; amortization of network-related internal-use software; and costs for the production of live events. The Company enters into contracts for bandwidth with third party network providers with terms typically ranging from several months to two years. These contracts generally commit the Company to pay minimum monthly fees plus additional fees for bandwidth usage above the committed level. In some circumstances, Internet service providers (“ISPs”) make rack space available for the Company’s servers and access to their bandwidth at a discount or no cost. In exchange, the ISP and its customers benefit by receiving content through a local Company server resulting in better content delivery. The Company does not consider these relationships to represent the culmination of an earnings process. Accordingly, the Company does not recognize as revenue the value to the ISPs associated with the use of the Company’s servers, nor does the Company recognize as expense the value of the rack space and bandwidth received at discounted or no cost. |
Research and Development Costs and Capitalized Internal-Use Software | Research and Development Costs and Capitalized Internal-Use Software Research and development costs consist primarily of payroll and related personnel costs for the design, development, deployment, testing and enhancement of the Company’s services and network. Costs incurred in the development of the Company’s services are expensed as incurred, except certain internal-use software development costs eligible for capitalization. Capitalized costs include external consulting fees, payroll and payroll-related costs and stock-based compensation for employees in the Company’s development and information technology groups who are directly associated with, and who devote time to, the Company’s internal-use software projects. Capitalization begins when the planning stage is complete and the Company commits resources to the software project, and continues during the application development stage. Capitalization ceases when the software has been tested and is ready for its intended use. Costs incurred during the planning, training and post-implementation stages of the software development life-cycle are expensed as incurred. The Company amortizes completed internal-use software that is used on its network to cost of revenue over its estimated useful life. |
Advertising Expense | Advertising Expense The Company recognizes advertising expense as incurred. The Company recognized total advertising expense of $3.6 million for the year ended December 31, 2015, and $2.7 million for each of the years ended December 31, 2014 and 2013. |
Accounting for Stock-Based Compensation | Accounting for Stock-Based Compensation The Company recognizes compensation costs for all stock-based payment awards made to employees based upon the awards’ grant-date fair value. The stock-based payment awards include stock options, restricted stock units, deferred stock units and employee stock purchases related to the Company’s employee stock purchase plan. For stock options, the Company has selected the Black-Scholes option-pricing model to determine the fair value of stock option awards. For stock options, restricted stock units and deferred stock units that contain only a service-based vesting feature, the Company recognizes compensation cost on a straight-line basis over the award's vesting period. For awards with a performance condition-based vesting feature, the Company recognizes compensation cost on a graded-vesting basis over the award's expected vesting period, commencing when achievement of the performance condition is deemed probable. In addition, for awards that vest and become exercisable only upon achievement of specified performance conditions, the Company makes judgments and estimates each quarter about the probability that such performance conditions will be met or achieved. Any changes to those estimates that the Company makes from time to time may have a significant impact on the stock-based compensation expense recorded and could materially impact the Company’s results of operation. |
Foreign Currency Translation and Forward Currency Contracts | Foreign Currency Translation and Forward Currency Contracts The assets and liabilities of the Company's subsidiaries are translated at the applicable exchange rate as of the balance sheet date, and revenue and expenses are translated at an average rate over the period. Resulting currency translation adjustments are recorded as a component of accumulated other comprehensive loss, a separate component of stockholders’ equity. Gains and losses on inter-company and other non-functional currency transactions are recorded in other expense, net. The Company enters into short-term foreign currency forward contracts to offset foreign exchange gains and losses generated by the re-measurement of certain assets and liabilities recorded in non-functional currencies. Changes in the fair value of these derivatives, as well as re-measurement gains and losses, are recognized in current earnings in other expense, net. As of December 31, 2015 and 2014, the fair value of the forward currency contracts and the underlying net gains for the years ended December 31, 2015, 2014 and 2013 were immaterial. The Company's foreign currency forward contracts may be exposed to credit risk to the extent that its counterparties are unable to meet the terms of the agreements. The Company seeks to minimize counterparty credit (or repayment) risk by entering into transactions only with major financial institutions of investment grade credit rating. |
Taxes | Taxes The Company's provision for income taxes is comprised of a current and a deferred portion. The current income tax provision is calculated as the estimated taxes payable or refundable on tax returns for the current year. The deferred income tax provision is calculated as the estimated future tax effects attributable to temporary differences and carryforwards using expected tax rates in effect during the years in which the differences are expected to reverse or the carryforwards are expected to be realized. The Company currently has net deferred tax assets consisting of net operating loss (“NOL”) carryforwards, tax credit carryforwards and deductible temporary differences. Management periodically weighs the positive and negative evidence to determine if it is more likely than not that some or all of the deferred tax assets will be realized. The Company has recorded certain tax reserves to address potential exposures involving its income tax and sales and use tax positions. These potential tax liabilities result from the varying application of statutes, rules, regulations and interpretations by different taxing jurisdictions. The Company's estimate of the value of its tax reserves contains assumptions based on past experiences and judgments about the interpretation of statutes, rules and regulations by taxing jurisdictions. It is possible that the costs of the ultimate tax liability or benefit from these matters may be more or less than the amount the Company estimated. Uncertainty in income taxes is recognized in the Company's consolidated financial statements using a two-step process. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company has elected to account for the indirect income tax effects of stock-based compensation as provision for income taxes. This primarily includes the impact of the research and development tax credit and the domestic production activities deduction. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued updated guidance and disclosure requirements for recognizing revenue. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard will be effective for the Company on January 1, 2018, and may be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is evaluating the potential impact of adopting this new accounting guidance. In April 2015, the FASB issued updated guidance that will change the current presentation of debt issuance costs on the balance sheet. This new guidance will move debt issuance costs from the assets section of the balance sheet to the liabilities section as a direct deduction from the carrying amount of the debt issued. The guidance will be effective for the Company on January 1, 2016. The Company will reclassify its debt issuance costs included in other assets on the consolidated balance sheet to convertible senior notes within the liabilities and stockholders' equity section. The amount of deferred financing costs expected to be reclassified as of January 1, 2016 is $6.2 million. This revision will have no impact on the Company's results of operations or cash flows. In September 2015, the FASB issued updated guidance that eliminates the requirement to restate prior period financial statements for measurement period adjustments. In an effort to reduce complexity in financial reporting, the new guidance requires that the cumulative impact of a measurement period adjustment, including the impact on prior periods, be recognized in the reporting period in which the adjustment is identified. The standard will be effective for the Company on January 1, 2016. The Company does not expect this guidance to have a material impact on its results of operations, financial condition or cash flows. In November 2015, the FASB issued guidance that requires companies to present deferred income tax assets and liabilities as noncurrent in a classified balance sheet instead of the current requirement to separate deferred income tax assets and liabilities into current and noncurrent amounts. The standard is effective for the Company on January 1, 2016, but early adoption is permitted. The Company has adopted this standard as of December 31, 2015, and has applied it prospectively. The Company early adopted the standard because it simplifies the Company's process of determining balance sheet classification for its deferred taxes. Prior period deferred income tax assets and liabilities have not been adjusted, due to the prospective application of the standard. The adoption of this standard did not have an impact on the Company's results of operations or financial condition. |
Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Marketable Securities | The following is a summary of available-for-sale marketable securities held as of December 31, 2015 and 2014 (in thousands):
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Schedule of Fair Value Measurement | The following table details the fair value measurements within the fair value hierarchy of the Company’s financial assets and liabilities as of December 31, 2015 and 2014 (in thousands):
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Schedule of Activity of Major Classes of Assets Measured at Fair Value Using Level 3 Inputs | The following table reflects the activity for the Company’s major classes of assets and liabilities measured at fair value using Level 3 inputs for the years ended December 31, 2015 and 2014 (in thousands):
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Schedule of Contractual Maturities of Marketable Securities and Other Investment Related Assets | Contractual maturities of the Company’s available-for-sale marketable securities held as of December 31, 2015 and 2014 were as follows (in thousands):
|
Accounts Receivable (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Receivable | Net accounts receivable consisted of the following as of December 31, 2015 and 2014 (in thousands):
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Schedule of Activity in the Accounts Receivable Reserves | A summary of activity in the accounts receivable reserves for the years ended December 31, 2015, 2014 and 2013, is as follows (in thousands):
|
Prepaid Expenses and Other Current Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consisted of the following as of December 31, 2015 and 2014 (in thousands):
|
Property and Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment | Property and equipment consisted of the following as of December 31, 2015 and 2014 (dollars in thousands):
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Goodwill and Acquired Intangible Assets (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the Changes in the Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the years ended December 31, 2015 and 2014 were as follows (in thousands):
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Schedule of Acquired Intangible Assets | Acquired intangible assets that are subject to amortization consisted of the following as of December 31, 2015 and 2014 (in thousands):
|
Business Acquisitions and Divestitures (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Acquired Intangible Assets | Acquired intangible assets that are subject to amortization consisted of the following as of December 31, 2015 and 2014 (in thousands):
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Prolexic | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Purchase Price Allocation | The following table presents the final allocation of the purchase price for Prolexic (in thousands):
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Schedule of Acquired Intangible Assets | The following were the identified intangible assets acquired and their respective weighted average useful lives (in thousands, except for years):
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Octoshape | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Purchase Price Allocation | The following table presents the final allocation of the purchase price for Octoshape (in thousands):
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Schedule of Acquired Intangible Assets | The following were the identified intangible assets acquired and their respective weighted average useful lives (in thousands, except years):
|
Accrued Expenses (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses | Accrued expenses consisted of the following as of December 31, 2015 and 2014 (in thousands):
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Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Minimum Aggregate Future Obligations Under Non-Cancelable Leases | The minimum aggregate future obligations under non-cancelable leases as of December 31, 2015 were as follows (in thousands):
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Schedule of Long-Term Commitments | The minimum future commitments as of December 31, 2015 were as follows (in thousands):
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Convertible Senior Notes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Convertible Senior Notes | The Notes consisted of the following components as of December 31, 2015 (in thousands):
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Schedule of Interest Expense | The following table sets forth total interest expense included in the statement of income related to the Notes for the years ended December 31, 2015 and 2014 (in thousands):
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Accumulated Other Comprehensive Loss (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table summarizes the changes in accumulated other comprehensive loss, which is reported as a component of stockholders' equity, for the year ended December 31, 2015 (in thousands):
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Stock-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Based Compensation Expense | The following table summarizes the components of total stock-based compensation expense included in the Company’s consolidated statements of income for the years ended December 31, 2015, 2014 and 2013 (in thousands):
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Schedule of Stock Options Granted Black Scholes | he grant-date fair values of the Company's stock option awards granted during the years ended December 31, 2014 and 2013 were estimated using the Black-Scholes option pricing model with the following weighted-average assumptions:
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Schedule of ESPP Granted Black Scholes | The grant-date fair values of the Company's ESPP awards granted during the years ended December 31, 2015, 2014 and 2013 were estimated using the Black-Scholes option pricing model with the following weighted-average assumptions:
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Schedule of Summary of Stock Option Activity | The following table summarizes stock option activity during the year ended December 31, 2015:
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Schedule Of Deferred Stock Units Activity | The following table summarizes the DSU activity for the year ended December 31, 2015:
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Schedule of Restricted Stock Units by Type | The following table summarizes the different types of restricted stock units ("RSUs") granted by the Company during the years ended December 31, 2015, 2014 and 2013 (in thousands):
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Schedule of Restricted Stock Units Activity | The following table summarizes the RSU activity for the year ended December 31, 2015:
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Income Before Tax | The components of income before provision for income taxes were as follows for the years ended December 31, 2015, 2014 and 2013 (in thousands):
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Schedule of Provision for Income Tax | The provision for income taxes consisted of the following for the years ended December 31, 2015, 2014 and 2013 (in thousands):
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Schedule of Difference Between Effective and Statutory | The Company’s effective rate differed from the U.S. federal statutory rate as follows for the years ended December 31, 2015, 2014 and 2013:
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Net Deferred Tax and Valuation Allowance | The components of the net deferred tax asset and the related valuation allowance as of December 31, 2015 and 2014 were as follows (in thousands):
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Schedule of Operating Loss Carryforwards | As of December 31, 2015 and 2014, the Company had the following NOL and credit carryforwards (in thousands):
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Unrecognized Tax Benefits | The following is a rollforward of the Company’s unrecognized tax benefits for the years ended December 31, 2015, 2014 and 2013 (in thousands):
|
Net Income per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components Used in Diluted and Basic Income Per Common Share | The following table sets forth the components used in the computation of basic and diluted net income per share for the years ended December 31, 2015, 2014 and 2013 (in thousands, except per share data):
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The number of potentially outstanding shares excluded from the computation of diluted net income per share for the years ended December 31, 2015, 2014 and 2013 (in thousands):
|
Quarterly Financial Results (unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Unaudited Quarterly Financial Results |
|
Nature of Business and Basis of Presentation - Narrative (Details) server in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2015
network
segment
country
server
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of servers (in servers) (more than 200,000 servers) | server | 200 |
Number of networks (in networks) | network | 1,400 |
Number of countries with servers and networks (in countries) | country | 120 |
Number of operating segments (in number of segments) | segment | 1 |
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2014 |
Sep. 30, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Mar. 31, 2013 |
|
Schedule of Available-for-sale Securities [Line Items] | |||||
Available-for-sale marketable securities, continuous unrealized loss position for more than 12 months | $ 71.4 | $ 0.0 | |||
ADS Divesiture | |||||
Schedule of Available-for-sale Securities [Line Items] | |||||
Face value of convertible note receivable received for divestiture of a business | $ 25.0 | ||||
Convertible note receivable converted to preferred stock amount | $ 12.5 | ||||
Proceeds from conversion of note receivable | $ 12.5 | ||||
Level 3 | ADS Divesiture | |||||
Schedule of Available-for-sale Securities [Line Items] | |||||
Face value of convertible note receivable received for divestiture of a business | $ 25.0 |
Fair Value Measurements - Schedule of Contractual Maturities of Marketable Securities and Other Investment Related Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Due in 1 year or less | $ 460,088 | $ 519,642 |
Due after 1 year through 5 years | 773,260 | 869,992 |
Available-for-sale securities | $ 1,233,348 | $ 1,389,634 |
Accounts Receivable - Schedule of Accounts Receivable (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 387,763 | $ 338,601 |
Allowance for doubtful accounts | (906) | (1,033) |
Reserve for cash-basis customers | (6,458) | (7,990) |
Total accounts receivable reserves | (7,364) | (9,023) |
Accounts receivable, net | 380,399 | 329,578 |
Trade Accounts Receivable [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 262,885 | 222,531 |
Unbilled Accounts Receivable [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 124,878 | $ 116,070 |
Accounts Receivable - Activity in Accounts Receivable Reserves (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Beginning balance | $ 9,023 | $ 3,703 | $ 3,807 |
Charges to income from operations | 37,870 | 32,293 | 17,900 |
Collections from cash basis customers | (39,529) | (26,973) | (18,004) |
Ending balance | $ 7,364 | $ 9,023 | $ 3,703 |
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid income taxes | $ 31,045 | $ 44,631 |
Other prepaid expenses | 43,751 | 37,669 |
Other current assets | 48,432 | 46,681 |
Total | $ 123,228 | $ 128,981 |
Property and Equipment - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Property, Plant and Equipment [Line Items] | |||
Property, software and equipment depreciation, amortization expense | $ 272,500 | $ 215,300 | $ 162,900 |
Capitalization of stock-based compensation | 17,867 | 15,226 | $ 12,325 |
Impairment of long-lived assets held-for-use | $ 48,700 | $ 100,100 |
Goodwill and Acquired Intangible Assets - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization of acquired intangible assets | $ 27,067 | $ 32,057 | $ 21,547 |
Future amortization expense, 2016 | 26,500 | ||
Future amortization expense, 2017 | 27,800 | ||
Future amortization expense, 2018 | 23,700 | ||
Future amortization expense, 2019 | 21,700 | ||
Future amortization expense, 2020 | $ 17,700 |
Goodwill and Acquired Intangible Assets - Schedule of the Changes in the Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Changes in the carrying amount of goodwill | ||
Beginning balance | $ 1,051,294 | $ 757,368 |
Foreign currency translation | (1,048) | 0 |
Ending balance | 1,150,244 | 1,051,294 |
Xerocole, Inc. [Member] | ||
Changes in the carrying amount of goodwill | ||
Additions | 12,859 | 0 |
Codemate A/S [Member] | ||
Changes in the carrying amount of goodwill | ||
Additions | 69,445 | 0 |
Bloxx Limited [Member] | ||
Changes in the carrying amount of goodwill | ||
Additions | 17,694 | 0 |
Prolexic | ||
Changes in the carrying amount of goodwill | ||
Additions | $ 0 | $ 293,926 |
Accrued Expenses - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Accounts Payable and Accrued Liabilities, Current [Abstract] | ||
Payroll and other related benefits | $ 108,230 | $ 125,938 |
Bandwidth and co-location | 48,228 | 28,459 |
Property, use and other taxes | 47,364 | 40,411 |
Professional service fees | 4,636 | 4,434 |
Other | 7,708 | 5,444 |
Total | $ 216,166 | $ 204,686 |
Commitments and Contingencies - Minimum Aggregate Future Obligations Under Non-cancelable Leases and Narrative (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Commitments and Contingencies Disclosure [Abstract] | |||
2016 | $ 52,456,000 | ||
2017 | 51,978,000 | ||
2018 | 43,683,000 | ||
2019 | 39,800,000 | ||
2020 | 19,487,000 | ||
Thereafter | 72,117,000 | ||
Total | 279,521,000 | ||
Rent expense | 47,900,000 | $ 39,900,000 | $ 30,800,000 |
Proceeds from sublease tenants | 3,600,000 | $ 3,400,000 | $ 1,900,000 |
Letters of credit for real estate leases | $ 6,000,000 | ||
Percentage revenue representation for investigation of sales practices (less than 1%) | 1.00% | 1.00% | 1.00% |
Provision for sales practice internal investigation | $ 0 |
Commitments and Contingencies - Purchase Commitments (Details) $ in Thousands |
Dec. 31, 2015
USD ($)
|
---|---|
Bandwidth and Co-location Commitments | |
Unrecorded Unconditional Purchase Obligation [Line Items] | |
2016 | $ 117,044 |
2017 | 29,914 |
2018 | 400 |
2019 | 74 |
2020 | 0 |
Thereafter | 0 |
Total | 147,432 |
Purchase Order Commitments | |
Unrecorded Unconditional Purchase Obligation [Line Items] | |
2016 | 102,832 |
2017 | 11,363 |
2018 | 8,413 |
2019 | 591 |
2020 | 0 |
Thereafter | 0 |
Total | $ 123,199 |
Convertible Senior Notes - Schedule of Convertible Senior Notes (Details) - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
Feb. 28, 2014 |
---|---|---|---|
Liability component: | |||
Principal | $ 690,000,000 | $ 690,000,000 | |
Less: debt discount, net of amortization | (65,712,000) | ||
Net carrying amount | 624,288,000 | $ 604,851,000 | |
Convertible senior notes | |||
Liability component: | |||
Equity component: | $ 101,276,000 |
Convertible Senior Notes - Schedule of Interest Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Debt Disclosure [Abstract] | |||
Amortization of debt discount | $ 19,436 | $ 16,127 | |
Amortization of debt issuance costs | 1,844 | 1,531 | |
Capitalization of interest expense | (2,755) | (2,195) | |
Total interest expense | $ 18,525 | $ 15,463 | $ 0 |
Stockholders' Equity - Narrative (Details) - USD ($) shares in Millions |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
Feb. 29, 2016 |
Oct. 31, 2013 |
|
Class of Stock [Line Items] | |||||
Amount of common stock repurchases authorized | $ 750,000,000 | ||||
Value of shares repurchased during period | $ 302,606,000 | $ 268,647,000 | $ 160,418,000 | ||
Remaining amount available for future purchases of shares under approved repurchase program. | $ 131,000,000 | ||||
Common Stock | |||||
Class of Stock [Line Items] | |||||
Repurchases of common stock (in shares) | 4.5 | 4.6 | 3.9 | ||
Value of shares repurchased during period | $ 302,600,000 | $ 268,600,000 | $ 160,400,000 | ||
Subsequent Event [Member] | |||||
Class of Stock [Line Items] | |||||
Amount of common stock repurchases authorized | $ 1,000,000,000 |
Accumulated Other Comprehensive Loss - Schedule of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Changes in accumulated other comprehensive loss | |||
Balance as of January 1, 2015 | $ (17,611) | ||
Other comprehensive loss | (23,842) | $ (15,520) | $ (451) |
Balance as of December 31, 2015 | (41,453) | (17,611) | |
Foreign Currency Translation | |||
Changes in accumulated other comprehensive loss | |||
Balance as of January 1, 2015 | (22,064) | ||
Other comprehensive loss | (22,872) | ||
Balance as of December 31, 2015 | (44,936) | (22,064) | |
Net Unrealized Gains (Losses) on Investments | |||
Changes in accumulated other comprehensive loss | |||
Balance as of January 1, 2015 | 4,453 | ||
Other comprehensive loss | (970) | ||
Balance as of December 31, 2015 | $ 3,483 | $ 4,453 |
Employee Benefit Plan - Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Compensation Related Costs [Abstract] | |||
Contributions by employer | $ 13.1 | $ 16.6 | $ 11.1 |
Stock-Based Compensation - Schedule of Stock Options Granted Black Scholes (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (in years) | 4 years 5 months | 4 years 6 months 4 days |
Risk-free interest rate | 0.80% | 0.80% |
Expected volatility | 40.40% | 44.40% |
Dividend yield | 0.00% | 0.00% |
Stock-Based Compensation - Schedule of ESPP Granted Black Scholes (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (in years) | 4 years 5 months | 4 years 6 months 4 days | |
Risk-free interest rate | 0.80% | 0.80% | |
Expected volatility | 40.40% | 44.40% | |
Dividend yield | 0.00% | 0.00% | |
ESPP | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (in years) | 6 months | 6 months | 6 months |
Risk-free interest rate | 0.20% | 0.10% | 0.10% |
Expected volatility | 28.00% | 33.50% | 42.00% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Stock-Based Compensation - Schedule of Restricted Stock Units by Type (Details) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total restricted stock units vesting conditions granted | 3,090 | 2,524 | 3,098 |
Service-based RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Restricted stock units vesting conditions granted | 2,507 | 1,949 | 2,338 |
Performance-based RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Restricted stock units granted with performance based vesting | 583 | 575 | 760 |
Income Taxes - Narrative (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Tax Disclosure [Abstract] | |||
Deferred benefit on intercompany sales | $ 15,500,000 | $ 24,300,000 | $ 0 |
Deferred tax assets, valuation allowance | 1,217,000 | 1,222,000 | |
Undistributed foreign earnings | 349,800,000 | ||
Deferred income tax liability on undistributed foreign earnings | 53,800,000 | ||
Unrecognized tax benefits including accrued interest and penalties | 72,300,000 | 41,100,000 | 30,600,000 |
Unrecognized tax benefits, income tax penalties and interest accrued | 10,000,000 | 7,700,000 | $ 5,900,000 |
Income tax interest and penalties expense | $ 2,200,000 | $ 1,800,000 |
Income Taxes - Components of Income Tax Schedule (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Tax Disclosure [Abstract] | |||
U.S. | $ 233,247 | $ 408,391 | $ 365,821 |
Foreign | 223,377 | 71,385 | 53,733 |
Income before provision for income taxes | $ 456,624 | $ 479,776 | $ 419,554 |
Income Taxes - Provision for Income Tax Schedule (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Current tax provision (benefit): | |||
Federal | $ 70,298 | $ 153,471 | $ 77,671 |
State | (1,750) | 4,978 | 8,034 |
Foreign | 62,572 | 13,259 | 13,019 |
Deferred tax provision (benefit): | |||
Federal | 23,381 | (13,073) | 24,210 |
State | (742) | (15,220) | (1,106) |
Foreign | (18,536) | 2,442 | 1,869 |
Change in valuation allowance | (5) | (29) | 2,370 |
Total | $ 135,218 | $ 145,828 | $ 126,067 |
Income Taxes - Schedule of Difference Between Effective and Statutory (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Tax Disclosure [Abstract] | |||
U.S. federal income tax rate | 35.00% | 35.00% | 35.00% |
State taxes | 1.70% | 2.30% | 3.40% |
Nondeductible stock-based compensation | 1.90% | 1.40% | 0.80% |
U.S. federal, state and foreign research and development credits | (4.10%) | (3.20%) | (3.50%) |
Foreign earnings | (4.60%) | (1.90%) | (2.60%) |
Domestic production activities deduction | (1.20%) | (2.20%) | (4.30%) |
State software development activities benefit | (0.00%) | (2.40%) | (0.00%) |
Other | 0.90% | 1.40% | 1.20% |
Effective income tax rate | 29.60% | 30.40% | 30.00% |
Income Taxes - Schedule of Deferred Tax and Related Valuation Allowance (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Accrued bonus | $ 13,161 | $ 19,572 |
Deferred revenue | 11,334 | 9,536 |
Deferred rent | 13,224 | 10,518 |
Stock-based compensation | 31,705 | 27,538 |
Net operating losses | 8,855 | 11,466 |
Unrealized losses | 1,421 | 748 |
Tax credit carryforwards | 22,918 | 18,066 |
Other | 5,989 | 6,528 |
Deferred tax assets | 108,607 | 103,972 |
Depreciation and amortization | (10,848) | (14,868) |
Acquired intangible assets | (37,923) | (40,126) |
Internal-use software development costs capitalized | (66,807) | (39,396) |
Deferred tax liabilities | (115,578) | (94,390) |
Valuation allowance | (1,217) | (1,222) |
Net deferred tax (liabilities) assets | $ 8,188 | |
Net deferred tax (liabilities) assets | $ 8,360 |
Income Taxes - Schedule of NOL Carryforwards (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Operating Loss Carryforwards [Line Items] | ||
Federal and state research and development tax credit carryforwards | $ 39,800 | $ 30,500 |
Domestic country | ||
Operating Loss Carryforwards [Line Items] | ||
NOL carryforwards | 21,500 | 26,100 |
State and local jurisdiction | ||
Operating Loss Carryforwards [Line Items] | ||
NOL carryforwards | 28,200 | 45,000 |
Foreign country | ||
Operating Loss Carryforwards [Line Items] | ||
NOL carryforwards | $ 0 | $ 300 |
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Tax Disclosure [Abstract] | |||
Balance at beginning of year | $ 33,320 | $ 24,651 | $ 20,902 |
Gross increases — tax positions of prior periods | 11,238 | 12,925 | 2,878 |
Gross increases — current-period tax positions | 27,043 | 2,106 | 2,834 |
Gross decreases — tax positions of prior periods | (5,996) | (6,362) | (1,213) |
Gross decreases — settlements | (315) | 0 | (750) |
Balance at end of year | $ 65,290 | $ 33,320 | $ 24,651 |
Net Income per Share - Schedule of Components Used in Diluted and Basic Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Numerator: | |||||||||||
Net income | $ 88,420 | $ 88,040 | $ 67,200 | $ 77,746 | $ 97,107 | $ 91,155 | $ 72,886 | $ 72,800 | $ 321,406 | $ 333,948 | $ 293,487 |
Denominator: | |||||||||||
Shares used for basic net income per share (in shares) | 178,391 | 178,279 | 178,196 | ||||||||
Effect of dilutive securities: | |||||||||||
Stock options (in shares) | 794 | 1,221 | 1,622 | ||||||||
RSUs and deferred stock units (in shares) | 1,230 | 1,686 | 1,965 | ||||||||
Convertible senior notes (in shares) | 0 | 0 | 0 | ||||||||
Warrants related to issuance of convertible senior notes (in shares) | 0 | 0 | 0 | ||||||||
Shares used for diluted net income per share (in shares) | 180,415 | 181,186 | 181,783 | ||||||||
Basic net income per share (in dollars per share) | $ 0.50 | $ 0.49 | $ 0.38 | $ 0.44 | $ 0.55 | $ 0.51 | $ 0.41 | $ 0.41 | $ 1.80 | $ 1.87 | $ 1.65 |
Diluted net income per share (in dollars per share) | $ 0.49 | $ 0.49 | $ 0.37 | $ 0.43 | $ 0.54 | $ 0.50 | $ 0.40 | $ 0.40 | $ 1.78 | $ 1.84 | $ 1.61 |
Segment and Geographic Information - Narrative (Details) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015
USD ($)
|
Sep. 30, 2015
USD ($)
|
Jun. 30, 2015
USD ($)
|
Mar. 31, 2015
USD ($)
|
Dec. 31, 2014
USD ($)
|
Sep. 30, 2014
USD ($)
|
Jun. 30, 2014
USD ($)
|
Mar. 31, 2014
USD ($)
|
Dec. 31, 2015
USD ($)
segment
country
|
Dec. 31, 2014
USD ($)
country
|
Dec. 31, 2013
USD ($)
country
|
|
Segment Reporting Information [Line Items] | |||||||||||
Number of operating segments (in number of segments) | segment | 1 | ||||||||||
Property and equipment, net | $ 753,180 | $ 601,591 | $ 753,180 | $ 601,591 | |||||||
Revenue | 579,159 | $ 551,030 | $ 540,723 | $ 526,536 | 536,295 | $ 498,042 | $ 476,035 | $ 453,502 | 2,197,448 | 1,963,874 | $ 1,577,922 |
United States | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Property and equipment, net | 298,900 | 249,500 | 298,900 | 249,500 | |||||||
Foreign locations | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Property and equipment, net | $ 227,800 | $ 175,800 | 227,800 | 175,800 | |||||||
Revenue | $ 593,000 | $ 531,900 | $ 432,600 | ||||||||
Sales | Geographic Concentration Risk | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Concentration risk, number of foreign countries (in number of countries) | country | 0 | 0 | 0 | ||||||||
Concentration risk, percentage (in percentage) | 10.00% | 10.00% | 10.00% |
Quarterly Financial Results (unaudited) - Schedule of Quarterly Financial Results (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenue | $ 579,159 | $ 551,030 | $ 540,723 | $ 526,536 | $ 536,295 | $ 498,042 | $ 476,035 | $ 453,502 | $ 2,197,448 | $ 1,963,874 | $ 1,577,922 |
Cost of revenue (exclusive of amortization of acquired intangible assets) | 193,212 | 183,204 | 179,910 | 169,294 | 163,201 | 158,812 | 149,318 | 139,612 | 725,620 | 610,943 | 511,087 |
Net income | $ 88,420 | $ 88,040 | $ 67,200 | $ 77,746 | $ 97,107 | $ 91,155 | $ 72,886 | $ 72,800 | $ 321,406 | $ 333,948 | $ 293,487 |
Basic net income per share (in dollars per share) | $ 0.50 | $ 0.49 | $ 0.38 | $ 0.44 | $ 0.55 | $ 0.51 | $ 0.41 | $ 0.41 | $ 1.80 | $ 1.87 | $ 1.65 |
Diluted net income per share (in dollars per share) | $ 0.49 | $ 0.49 | $ 0.37 | $ 0.43 | $ 0.54 | $ 0.50 | $ 0.40 | $ 0.40 | $ 1.78 | $ 1.84 | $ 1.61 |
&PO