x | QUARTERLY 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 | 94-3288780 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
4420 Rosewood Drive, Suite 500 Pleasanton, California | 94588 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | ¨ |
Non-accelerated filer | o (Do not check if smaller reporting company) | Smaller reporting company | ¨ |
Class | Number of Shares | ||
Common Stock, $0.0001 par value | 29,989,281 |
Page | |
PART I—FINANCIAL INFORMATION | |
PART II—OTHER INFORMATION | |
Ellie Mae, Inc. | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(UNAUDITED) | |||||||
(in thousands, except share and per share amounts) | |||||||
March 31, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 28,540 | $ | 34,396 | |||
Short-term investments | 43,122 | 48,975 | |||||
Accounts receivable, net of allowances for doubtful accounts of $141 and $124 as of March 31, 2016 and December 31, 2015, respectively | 39,474 | 28,568 | |||||
Prepaid expenses and other current assets | 11,472 | 9,874 | |||||
Total current assets | 122,608 | 121,813 | |||||
Property and equipment, net | 96,673 | 81,360 | |||||
Long-term investments | 42,292 | 55,473 | |||||
Intangible assets, net | 21,353 | 22,810 | |||||
Deposits and other assets | 9,281 | 8,888 | |||||
Goodwill | 74,547 | 74,547 | |||||
Total assets | $ | 366,754 | $ | 364,891 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 8,910 | $ | 9,911 | |||
Accrued and other current liabilities | 22,107 | 37,307 | |||||
Deferred revenue | 17,009 | 15,864 | |||||
Total current liabilities | 48,026 | 63,082 | |||||
Leases payable, net of current portion | 571 | 685 | |||||
Other long-term liabilities | 11,206 | 10,273 | |||||
Total liabilities | 59,803 | 74,040 | |||||
Commitments and contingencies (Note 8) | |||||||
Stockholders' equity: | |||||||
Common stock, $0.0001 par value per share; 140,000,000 authorized shares, 29,971,612 and 29,566,511 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively | 3 | 3 | |||||
Additional paid-in capital | 298,607 | 285,342 | |||||
Accumulated other comprehensive income (loss) | 71 | (257 | ) | ||||
Retained earnings | 8,270 | 5,763 | |||||
Total stockholders' equity | 306,951 | 290,851 | |||||
Total liabilities and stockholders' equity | $ | 366,754 | $ | 364,891 |
Ellie Mae, Inc. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||
(UNAUDITED) | |||||||
(in thousands, except share and per share amounts) | |||||||
Three Months ended March 31, | |||||||
2016 | 2015 | ||||||
Revenues | $ | 73,625 | $ | 54,189 | |||
Cost of revenues | 26,631 | 17,350 | |||||
Gross profit | 46,994 | 36,839 | |||||
Operating expenses: | |||||||
Sales and marketing | 15,287 | 9,760 | |||||
Research and development | 12,453 | 8,297 | |||||
General and administrative | 15,731 | 12,302 | |||||
Total operating expenses | 43,471 | 30,359 | |||||
Income from operations | 3,523 | 6,480 | |||||
Other income, net | 199 | 132 | |||||
Income before income taxes | 3,722 | 6,612 | |||||
Income tax provision | 1,216 | 3,028 | |||||
Net income | $ | 2,506 | $ | 3,584 | |||
Net income per share of common stock: | |||||||
Basic | $ | 0.09 | $ | 0.12 | |||
Diluted | $ | 0.08 | $ | 0.12 | |||
Weighted average common shares used in computing net income per share of common stock: | |||||||
Basic | 29,471,214 | 28,768,144 | |||||
Diluted | 31,080,314 | 30,442,163 | |||||
Net income | $ | 2,506 | $ | 3,584 | |||
Other comprehensive income, net of taxes: | |||||||
Unrealized gain on investments | 328 | 171 | |||||
Comprehensive income | $ | 2,834 | $ | 3,755 |
Ellie Mae, Inc. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(UNAUDITED) | |||||||
(in thousands) | |||||||
Three Months ended March 31, | |||||||
2016 | 2015 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 2,506 | $ | 3,584 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | 3,954 | 1,767 | |||||
Provision for uncollectible accounts receivable | 33 | 38 | |||||
Amortization of intangible assets | 1,457 | 1,332 | |||||
Stock-based compensation expense | 6,690 | 5,007 | |||||
Excess tax benefit from stock-based compensation | — | (2,906 | ) | ||||
Deferred income taxes | 1,172 | — | |||||
Loss on disposal of property and equipment | 5 | — | |||||
Amortization of investment premium | 239 | 275 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (10,939 | ) | (5,188 | ) | |||
Prepaid expenses and other current assets | (1,598 | ) | 3,007 | ||||
Deposits and other assets | (1,565 | ) | — | ||||
Accounts payable | 625 | 379 | |||||
Accrued, other current and other liabilities | (13,817 | ) | 846 | ||||
Deferred revenue | 1,178 | 2,805 | |||||
Net cash provided by (used in) operating activities | (10,060 | ) | 10,946 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Acquisition of property and equipment | (13,298 | ) | (10,253 | ) | |||
Acquisition of internal-use software | (7,112 | ) | (5,762 | ) | |||
Purchases of investments | (18,971 | ) | (15,816 | ) | |||
Maturities of investments | 18,094 | 15,665 | |||||
Sale of investments | 20,000 | — | |||||
Net cash used in investing activities | (1,287 | ) | (16,166 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Payment of capital lease obligations | (868 | ) | (1,320 | ) | |||
Proceeds from issuance of common stock under employee stock plans | 6,719 | 5,071 | |||||
Payments for repurchase of common stock | — | (2,520 | ) | ||||
Tax payments related to shares withheld for vested restricted stock units | (360 | ) | (320 | ) | |||
Excess tax benefit from stock-based compensation | — | 2,906 | |||||
Net cash provided by financing activities | 5,491 | 3,817 | |||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (5,856 | ) | (1,403 | ) | |||
CASH AND CASH EQUIVALENTS, Beginning of period | 34,396 | 26,756 | |||||
CASH AND CASH EQUIVALENTS, End of period | $ | 28,540 | $ | 25,353 |
Ellie Mae, Inc. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (continued) | |||||||
(UNAUDITED) | |||||||
(in thousands) | |||||||
Three Months ended March 31, | |||||||
2016 | 2015 | ||||||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest | $ | 79 | $ | 33 | |||
Cash paid for income taxes | $ | 97 | $ | 50 | |||
Supplemental disclosure of non-cash investing and financing activities: | |||||||
Fixed asset purchases accrued but not paid | $ | 2,036 | $ | 2,628 | |||
Stock-based compensation capitalized to property and equipment | $ | 488 | $ | 207 | |||
Acquisition of property and equipment under capital leases | $ | — | $ | 5,996 |
Three Months ended March 31, | |||||||
2016 | 2015 | ||||||
(in thousands, except share and per share amounts) | |||||||
Net income | $ | 2,506 | $ | 3,584 | |||
Basic shares: | |||||||
Weighted average common shares outstanding | 29,471,214 | 28,768,144 | |||||
Diluted shares: | |||||||
Weighted average shares used to compute basic net income per share | 29,471,214 | 28,768,144 | |||||
Effect of potentially dilutive securities: | |||||||
Employee stock options, RSUs, performance-vesting RSUs, Performance Awards and ESPP shares | 1,609,100 | 1,674,019 | |||||
Weighted average shares used to compute diluted net income per share | 31,080,314 | 30,442,163 | |||||
Net income per share: | |||||||
Basic | $ | 0.09 | $ | 0.12 | |||
Diluted | $ | 0.08 | $ | 0.12 |
Three Months ended March 31, | |||||
2016 | 2015 | ||||
Employee stock options and awards | 224,366 | 346,256 |
Fair Value at | Fair Value Measurements Using Inputs Considered as | ||||||||||||||
March 31, 2016 | Level 1 | Level 2 | Level 3 | ||||||||||||
(in thousands) | |||||||||||||||
Money market funds | $ | 4,639 | $ | 4,639 | $ | — | $ | — | |||||||
Certificates of deposit | 9,481 | — | 9,481 | — | |||||||||||
Corporate notes and obligations | 30,670 | — | 30,670 | — | |||||||||||
Municipal obligations | 3,655 | — | 3,655 | — | |||||||||||
U.S. government and government agency obligations | 41,608 | 12,359 | 29,249 | — | |||||||||||
$ | 90,053 | $ | 16,998 | $ | 73,055 | $ | — | ||||||||
Fair Value at | Fair Value Measurements Using Inputs Considered as | ||||||||||||||
December 31, 2015 | Level 1 | Level 2 | Level 3 | ||||||||||||
(in thousands) | |||||||||||||||
Money market funds | $ | 6,788 | $ | 6,788 | $ | — | $ | — | |||||||
Certificates of deposit | 12,928 | — | 12,928 | — | |||||||||||
Corporate notes and obligations | 28,205 | — | 28,205 | — | |||||||||||
Municipal obligations | 2,648 | — | 2,648 | — | |||||||||||
U.S. government and government agency obligations | 60,667 | 19,429 | 41,238 | — | |||||||||||
$ | 111,236 | $ | 26,217 | $ | 85,019 | $ | — |
March 31, 2016 | |||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Carrying or Fair Value | ||||||||||||
(in thousands) | |||||||||||||||
Cash and cash equivalents: | |||||||||||||||
Cash | $ | 23,901 | $ | — | $ | — | $ | 23,901 | |||||||
Money market funds | 4,639 | — | — | 4,639 | |||||||||||
$ | 28,540 | $ | — | $ | — | $ | 28,540 | ||||||||
Investments: | |||||||||||||||
Corporate notes and obligations | $ | 30,649 | $ | 42 | $ | (21 | ) | $ | 30,670 | ||||||
Certificates of deposit | 9,467 | 16 | (2 | ) | 9,481 | ||||||||||
Municipal obligations | 3,648 | 7 | — | 3,655 | |||||||||||
U.S. government and government agency obligations | 41,579 | 39 | (10 | ) | 41,608 | ||||||||||
$ | 85,343 | $ | 104 | $ | (33 | ) | $ | 85,414 | |||||||
December 31, 2015 | |||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Carrying or Fair Value | ||||||||||||
(in thousands) | |||||||||||||||
Cash and cash equivalents: | |||||||||||||||
Cash | $ | 27,608 | $ | — | $ | — | $ | 27,608 | |||||||
Money market funds | 6,788 | — | — | 6,788 | |||||||||||
$ | 34,396 | $ | — | $ | — | $ | 34,396 | ||||||||
Investments: | |||||||||||||||
Corporate notes and obligations | $ | 28,314 | $ | 1 | $ | (110 | ) | $ | 28,205 | ||||||
Certificates of deposit | 12,945 | 5 | (22 | ) | 12,928 | ||||||||||
Municipal obligations | 2,647 | 1 | — | 2,648 | |||||||||||
U.S. government and government agency obligations | 60,799 | 10 | (142 | ) | 60,667 | ||||||||||
$ | 104,705 | $ | 17 | $ | (274 | ) | $ | 104,448 |
March 31, 2016 | |||||||||||||||||||||||
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Corporate notes and obligations | $ | 10,728 | $ | (21 | ) | $ | 421 | $ | — | $ | 11,149 | $ | (21 | ) | |||||||||
Certificates of deposit | 1,576 | (1 | ) | 200 | (1 | ) | 1,776 | (2 | ) | ||||||||||||||
U.S. government, government agency, and municipal obligations | 11,722 | (8 | ) | 1,113 | (2 | ) | 12,835 | (10 | ) | ||||||||||||||
$ | 24,026 | $ | (30 | ) | $ | 1,734 | $ | (3 | ) | $ | 25,760 | $ | (33 | ) | |||||||||
December 31, 2015 | |||||||||||||||||||||||
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Corporate notes and obligations | $ | 23,969 | $ | (99 | ) | $ | 2,514 | $ | (11 | ) | $ | 26,483 | $ | (110 | ) | ||||||||
Certificates of deposit | 9,284 | (22 | ) | — | — | 9,284 | (22 | ) | |||||||||||||||
U.S. government, government agency, and municipal obligations | 48,394 | (139 | ) | 1,793 | (3 | ) | 50,187 | (142 | ) | ||||||||||||||
$ | 81,647 | $ | (260 | ) | $ | 4,307 | $ | (14 | ) | $ | 85,954 | $ | (274 | ) |
Carrying or Fair Value | |||||||
(in thousands) | |||||||
Remainder of 2016 | $ | 31,669 | |||||
2017 | 33,007 | ||||||
2018 | 18,269 | ||||||
2019 | 2,091 | ||||||
Thereafter | 378 | ||||||
Total | $ | 85,414 |
March 31, | December 31, | ||||||
2016 | 2015 | ||||||
(in thousands) | |||||||
Computer equipment and software(1) | $ | 62,646 | $ | 55,928 | |||
Furniture and fixtures | 6,287 | 5,292 | |||||
Leasehold improvements | 18,116 | 14,405 | |||||
Property and equipment | 87,049 | 75,625 | |||||
Accumulated depreciation and amortization(1) | (32,485 | ) | (28,552 | ) | |||
Net property and equipment | 54,564 | 47,073 | |||||
Internal-use software and other assets not placed in service | 42,109 | 34,287 | |||||
$ | 96,673 | $ | 81,360 |
March 31, | December 31, | ||||||
2016 | 2015 | ||||||
(in thousands) | |||||||
Computer equipment | $ | 8,715 | $ | 8,715 | |||
Software | 1,517 | 1,517 | |||||
Accumulated amortization | (4,211 | ) | (3,371 | ) | |||
Net computer equipment and software under capital leases | $ | 6,021 | $ | 6,861 |
March 31, | December 31, | ||||||
2016 | 2015 | ||||||
(in thousands) | |||||||
Accrued payroll and related expenses | $ | 10,786 | $ | 23,938 | |||
Accrued commissions | 1,068 | 1,993 | |||||
Accrued professional fees | 578 | 223 | |||||
Accrued royalties | 2,434 | 1,546 | |||||
Sales and other taxes | 1,901 | 1,536 | |||||
Current portion of leases payable | 3,092 | 3,845 | |||||
Other accrued expenses | 2,248 | 4,226 | |||||
$ | 22,107 | $ | 37,307 |
March 31, 2016 | |||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Intangibles | Weighted Average Remaining Useful Life | ||||||||||
(in thousands) | (in years) | ||||||||||||
Assets subject to amortization: | |||||||||||||
Developed technology | $ | 11,535 | $ | (6,370 | ) | $ | 5,165 | 3.0 | |||||
Trade names | 331 | (314 | ) | 17 | 0.6 | ||||||||
Customer relationships | 19,400 | (7,597 | ) | 11,803 | 4.6 | ||||||||
Order backlog | 370 | (41 | ) | 329 | 3.6 | ||||||||
Total assets subject to amortization: | 31,636 | (14,322 | ) | 17,314 | 4.1 | ||||||||
Assets not subject to amortization: | |||||||||||||
Trade name | 4,039 | — | 4,039 | ||||||||||
$ | 35,675 | $ | (14,322 | ) | $ | 21,353 | |||||||
December 31, 2015 | |||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Intangibles | Weighted Average Remaining Useful Life | ||||||||||
(in thousands) | (in years) | ||||||||||||
Assets subject to amortization: | |||||||||||||
Developed technology | $ | 11,535 | $ | (5,668 | ) | $ | 5,867 | 3.1 | |||||
Trade names | 331 | (307 | ) | 24 | 0.8 | ||||||||
Customer relationships | 19,400 | (6,875 | ) | 12,525 | 4.8 | ||||||||
Order backlog | 370 | (15 | ) | 355 | 3.8 | ||||||||
Total assets subject to amortization: | 31,636 | (12,865 | ) | 18,771 | 4.2 | ||||||||
Assets not subject to amortization: | |||||||||||||
Trade name | 4,039 | — | 4,039 | ||||||||||
$ | 35,675 | $ | (12,865 | ) | $ | 22,810 |
Amortization | |||
(in thousands) | |||
Remainder of 2016 | $ | 4,064 | |
2017 | 4,294 | ||
2018 | 3,443 | ||
2019 | 3,166 | ||
2020 | 1,778 | ||
2021 | 314 | ||
Thereafter | 255 | ||
$ | 17,314 |
Three Months ended March 31, | |||||||
2016 | 2015 | ||||||
(in thousands) | |||||||
Cost of revenues | $ | 970 | $ | 615 | |||
Sales and marketing | 878 | 517 | |||||
Research and development | 1,504 | 1,147 | |||||
General and administrative | 3,338 | 2,728 | |||||
$ | 6,690 | $ | 5,007 |
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||
(in years) | (in thousands) | |||||||||||
Outstanding at January 1, 2016 | 2,515,329 | $ | 24.40 | 7.14 | $ | 90,818 | ||||||
Granted | 14,506 | 59.78 | ||||||||||
Exercised | (220,646 | ) | 17.43 | |||||||||
Forfeited or expired | (11,501 | ) | 44.94 | |||||||||
Outstanding at March 31, 2016 | 2,297,688 | $ | 25.19 | 6.98 | $ | 150,378 | ||||||
Ending vested and expected to vest at March 31, 2016 | 2,249,491 | $ | 24.88 | 6.95 | $ | 147,928 | ||||||
Exercisable at March 31, 2016 | 1,415,853 | $ | 17.38 | 6.19 | $ | 103,730 |
Three Months ended March 31, | |||||||
2016 | 2015 | ||||||
(in thousands, except per option amounts) | |||||||
Weighted average fair value per option granted | $ | 27.57 | $ | 21.66 | |||
Grant-date fair value of options vested | $ | 2,511 | $ | 1,729 | |||
Intrinsic value of options exercised | $ | 12,926 | $ | 12,829 | |||
Proceeds received from options exercised | $ | 3,846 | $ | 3,349 |
RSUs | Performance Awards and Performance-Vesting RSUs | ||||||||||||
Number of Shares | Weighted Average Grant Date Fair Value Per Share | Number of Shares | Weighted Average Grant Date Fair Value Per Share | ||||||||||
Outstanding at January 1, 2016 | 748,688 | $ | 45.52 | 508,282 | $ | 34.68 | |||||||
Granted | 109,704 | 66.22 | 90,810 | 59.78 | |||||||||
Released | (34,622 | ) | 32.42 | (109,219 | ) | 32.44 | |||||||
Forfeited or expired | (16,298 | ) | 57.03 | — | — | ||||||||
Outstanding at March 31, 2016 | 807,472 | $ | 48.66 | 489,873 | $ | 39.83 | |||||||
Ending vested and expected to vest at March 31, 2016 | 731,053 | 489,873 |
Three Months ended March 31, | |||||
2016 | 2015 | ||||
Stock option plans: | |||||
Risk-free interest rate | 1.38 | % | 1.75 | % | |
Expected life of options (in years) | 6.08 | 6.08 | |||
Expected dividend yield | — | % | — | % | |
Volatility | 47 | % | 48 | % | |
Employee Stock Purchase Plan: | |||||
Risk-free interest rate | 0.36 | % | 0.13 | % | |
Expected life of options (in years) | 0.50 | 0.50 | |||
Expected dividend yield | — | % | — | % | |
Volatility | 46 | % | 35 | % |
Reserved Shares | ||
Options and awards outstanding under stock option plans | 3,595,033 | |
Shares available for future grant under the 2011 Equity Incentive Award Plan | 4,202,280 | |
Shares available under the Employee Stock Purchase Plan | 1,452,840 | |
Total | 9,250,153 |
Three Months ended March 31, | |||||||
2016 | 2015 | ||||||
(in thousands) | |||||||
On-demand revenues(1) | $ | 73,099 | $ | 52,972 | |||
On-premise revenues(1) | 526 | 1,217 | |||||
$ | 73,625 | $ | 54,189 |
• | increased quality standards imposed by regulators, lenders, and investors; |
• | increased regulation affecting lenders and investors; |
• | greater focus by our customers on operational efficiencies; |
• | customers adopting multi-channel strategies; and |
• | greater focus by customers and regulators on data security and consumer privacy |
1 | Mortgage Bankers Association, Independent Mortgage Banker Profits Reach New Lows in the Fourth Quarter of 2013, March 26, 2014. | |
2 | Mortgage Bankers Association, Independent Mortgage Banks' Profits in 4th Quarter 2014 Down from Previous Quarter; Up on Year-Over-Year Basis, March 31, 2015. | |
3 | Mortgage Bankers Association, Independent Mortgage Banks Profits Down 60 percent in 4th Quarter, March 17, 2016. |
Three Months ended March 31, | |||||||
2016 | 2015 | ||||||
Revenues (in thousands): | |||||||
Total revenues | $ | 73,625 | $ | 54,189 | |||
Total contracted revenues | $ | 45,956 | $ | 31,886 | |||
Users at end of period: | |||||||
Contracted users | 180,595 | 133,581 | |||||
Active users | 144,533 | 118,672 | |||||
Active users as a percentage of contracted users | 80 | % | 89 | % | |||
Average active users: | |||||||
Average active users during the period | 141,079 | 114,413 | |||||
Revenue per average active user during the period | $ | 522 | $ | 474 |
Three Months ended March 31, | |||||||
2016 | 2015 | ||||||
(in thousands) | |||||||
Revenues | $ | 73,625 | $ | 54,189 | |||
Cost of revenues(1) | 26,631 | 17,350 | |||||
Gross profit | 46,994 | 36,839 | |||||
Operating expenses: | |||||||
Sales and marketing(1) | 15,287 | 9,760 | |||||
Research and development(1) | 12,453 | 8,297 | |||||
General and administrative(1) | 15,731 | 12,302 | |||||
Total operating expenses | 43,471 | 30,359 | |||||
Income from operations | 3,523 | 6,480 | |||||
Other income, net | 199 | 132 | |||||
Income before income taxes | 3,722 | 6,612 | |||||
Income tax provision | 1,216 | 3,028 | |||||
Net income | $ | 2,506 | $ | 3,584 |
Three Months ended March 31, | |||||||
2016 | 2015 | ||||||
(in thousands) | |||||||
Cost of revenues | $ | 970 | $ | 615 | |||
Sales and marketing | 878 | 517 | |||||
Research and development | 1,504 | 1,147 | |||||
General and administrative | 3,338 | 2,728 | |||||
$ | 6,690 | $ | 5,007 |
Three Months ended March 31, | |||||
2016 | 2015 | ||||
Revenues | 100.0 | % | 100.0 | % | |
Cost of revenues | 36.2 | 32.0 | |||
Gross profit | 63.8 | 68.0 | |||
Operating expenses: | |||||
Sales and marketing | 20.8 | 18.0 | |||
Research and development | 16.9 | 15.3 | |||
General and administrative | 21.3 | 22.7 | |||
Total operating expenses | 59.0 | 56.0 | |||
Income from operations | 4.8 | 12.0 | |||
Other income, net | 0.3 | 0.2 | |||
Income before income taxes | 5.1 | 12.2 | |||
Income tax provision | 1.7 | 5.6 | |||
Net income | 3.4 | % | 6.6 | % |
Three Months ended March 31, | |||||||
2016 | 2015 | ||||||
(dollars in thousands) | |||||||
Revenue by type: | |||||||
On-demand(1) | $ | 73,099 | $ | 52,972 | |||
On-premise(1) | 526 | 1,217 | |||||
Total | $ | 73,625 | $ | 54,189 | |||
Three Months ended March 31, | |||||||
2016 | 2015 | ||||||
Revenue by type: | |||||||
On-demand | 99.3 | % | 97.8 | % | |||
On-premise | 0.7 | % | 2.2 | % | |||
Total | 100.0 | % | 100.0 | % |
Three Months ended March 31, | |||||||
2016 | 2015 | ||||||
(dollars in thousands) | |||||||
Gross profit | $ | 46,994 | $ | 36,839 | |||
Gross margin | 63.8 | % | 68.0 | % |
Three Months ended March 31, | |||||||
2016 | 2015 | ||||||
(dollars in thousands) | |||||||
Sales and marketing | $ | 15,287 | $ | 9,760 | |||
Sales and marketing as a % of revenues | 20.8 | % | 18.0 | % |
Three Months ended March 31, | |||||||
2016 | 2015 | ||||||
(dollars in thousands) | |||||||
Research and development | $ | 12,453 | $ | 8,297 | |||
Research and development as a % of revenues | 16.9 | % | 15.3 | % |
Three Months ended March 31, | |||||||
2016 | 2015 | ||||||
(dollars in thousands) | |||||||
General and administrative | $ | 15,731 | $ | 12,302 | |||
General and administrative as a % of revenues | 21.3 | % | 22.7 | % |
Three Months ended March 31, | Net | ||||||||||
2016 | 2015 | Change | |||||||||
(in thousands) | |||||||||||
Net cash provided by (used in) operating activities | $ | (10,060 | ) | $ | 10,946 | $ | (21,006 | ) | |||
Net cash used in investing activities | (1,287 | ) | (16,166 | ) | 14,879 | ||||||
Net cash provided by financing activities | 5,491 | 3,817 | 1,674 | ||||||||
Net decrease in cash and cash equivalents | $ | (5,856 | ) | $ | (1,403 | ) | $ | (4,453 | ) |
Payment due by period (as of March 31, 2016) | |||||||||||||||||||
Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
(in thousands) | |||||||||||||||||||
Capital lease obligations | $ | 3,716 | $ | 3,010 | $ | 706 | $ | — | $ | — | |||||||||
Operating lease obligations | 44,037 | 3,744 | 9,801 | 10,025 | 20,467 | ||||||||||||||
Purchase obligations | $ | 10,737 | $ | 6,578 | $ | 4,159 | $ | — | $ | — | |||||||||
Total | $ | 58,490 | $ | 13,332 | $ | 14,666 | $ | 10,025 | $ | 20,467 |
ITEM 1A. | RISK FACTORS |
• | the number of Encompass users; |
• | the volume of mortgages originated by Encompass users, especially users on our Success Based Pricing model; |
• | transaction volume on the Ellie Mae Network; |
• | fluctuations in mortgage lending volume; |
• | the relative mix of purchase and refinance volume handled by Encompass users; |
• | the level of demand for our services; |
• | the timing of the introduction and acceptance of Ellie Mae Network offerings and new on-demand services; |
• | any write-downs in the value of our property and equipment, goodwill or intangible assets as a result of our investment or acquisition activities; |
• | costs associated with defending intellectual property infringement and other litigation claims; and |
• | changes in government regulation affecting Ellie Mae Network participants or our business. |
• | write-offs of acquired assets or investments; |
• | potential financial and credit risks associated with acquired customers; |
• | unknown liabilities associated with the acquired businesses; |
• | unanticipated expenses related to acquired technology and its integration into existing technology; |
• | limitations to our ability to recognize revenue from acquired deferred revenue; |
• | depreciation and amortization of amounts related to acquired intangible assets, fixed assets, and deferred compensation; and |
• | adverse tax consequences of any such acquisitions. |
• | enhance our existing solutions; |
• | develop and potentially license new solutions and technologies that address the needs of our prospective customers; and |
• | respond to changes in industry standards and practices on a cost-effective and timely basis. |
• | our operating performance and the operating performance of similar companies; |
• | the overall performance of the equity markets; |
• | the number of shares our common stock publicly owned and available for trading; |
• | threatened or actual litigation; |
• | changes in laws or regulations relating to our solutions; |
• | any major change in our board of directors or management; |
• | publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts; |
• | large volumes of sales of our shares of common stock by existing stockholders; and |
• | general political and economic conditions. |
• | a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; |
• | no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; |
• | the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; |
• | the ability of our board of directors to determine to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; |
• | a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; |
• | the requirement that a special meeting of stockholders may be called only by the chairman of the board of directors, the chief executive officer, the president or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and |
• | advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us. |
Total Number | Approximate | ||||||||||||
of Shares | Dollar Value or | ||||||||||||
Total | Purchased as | Shares that May | |||||||||||
Number of | Average | Part of Publicly | Yet be Purchased | ||||||||||
Shares | Price Paid | Announced Plans | Under the Plans | ||||||||||
Period | Purchased | per Share | or Programs | or Programs (1) | |||||||||
January 1, 2016 to January 31, 2016 | — | $ | — | — | $ | 43,469,986 | |||||||
February 1, 2016 to February 29, 2016 | — | $ | — | — | $ | 43,469,986 | |||||||
March 1, 2016 to March 31, 2016 | — | $ | — | — | $ | 43,469,986 |
Exhibit Number | Description of Document |
10.1# | 2016 Senior Executive Performance Share Program. |
10.2# | Form of Notice of Grant of and Grant Agreement for Performance Shares for Senior Executives under the Ellie Mae, Inc. 2016 Senior Executive Performance Share Program and Ellie Mae, Inc. 2011 Equity Incentive Award Plan. |
31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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 Extension Calculation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing. |
# | Indicated management contract or compensatory plan. |
ELLIE MAE, INC. | |||
Date: | May 5, 2016 | By: | /s/ Edgar A. Luce |
Edgar A. Luce | |||
Executive Vice President, Finance and Administration and Chief Financial Officer (Principal Financial and Accounting Officer and duly authorized signatory) |
Holder: | |
Grant Date: | |
Number of Performance Shares: |
ELLIE MAE, INC. | HOLDER | |||
HOLDER: | ||||
By: | By: | |||
Print Name: | Print Name: | |||
Title: | ||||
Address: | Address: | |||
i. | by cash or check made payable to the Company; |
ii. | by the deduction of such amount from other compensation payable to Holder; |
iii. | with the consent of the Committee, by tendering shares of Common Stock, including Common Stock otherwise issuable upon such grant or issuance, which have a then-current Fair Market Value on the date of delivery not greater than the amount necessary to satisfy the Company’s withholding obligation based on the minimum statutory withholding rates for federal, state and local income tax and payroll tax purposes; |
iv. | by surrendering other property acceptable to the Committee (including, without limitation, through the delivery of a notice that Holder has placed a market sell order with a broker with respect to shares payable pursuant to the Performance Shares, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of its withholding obligations; provided that payment of such proceeds is then made to the Company at such time as may be required by the Company, but in any event not later than the settlement of such sale); or |
i. | No shares of Common Stock shall be issued and delivered pursuant to Performance Shares unless and until all applicable registration requirements of the Securities Act of 1933, as amended, all applicable listing requirements of any national securities exchange on which the Common Stock is then listed, and all other requirements of law or of any regulatory bodies having jurisdiction over such issuance and delivery, shall have been complied with. In particular, the Committee may require certain investment (or other) representations and undertakings in connection with the issuance of securities in connection with the Plan in order to comply with applicable law. |
ii. | If any provision of this Grant Agreement is determined to be unenforceable or invalid under any applicable law, such provision will be applied to the maximum extent permitted by applicable law, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable law. Furthermore, if any provision of this Grant Agreement is determined to be illegal under any applicable law, such provision shall be null and void to the extent necessary to comply with applicable law, but the other provisions of this Grant Agreement shall remain in full force and effect. |
i. | Neither the granting of the Performance Shares nor their settlement shall (a) affect or restrict in any way the power of the Company to undertake any corporate action otherwise permitted under applicable law, (b) confer upon the Holder the right to continue performing services for the Company, or (c) interfere in any way with the right of the Company to terminate the services of the Holder at any time, with or without Cause. |
ii. | The Holder acknowledges that (a) this is a one-time grant, (b) the making of this grant does not mean that the Holder will receive any similar grant or grants in the future, or any future grants at all, and (c) this grant does not in any way entitle the Holder to future grants under the Plan, if any, and the Company retains sole and absolute discretion as to whether to make any additional grants to the Holder in the future and, if so, the quantity, terms, conditions and provisions of any such grants. |
iii. | Without limiting the generality of subsections i. and ii. immediately above and subject to the Program, if the Holder’s employment with the Company terminates, the Holder shall not be entitled to any compensation for any loss of any right or benefit or prospective right or benefit relating to the Performance Shares or under the Plan which he or she might otherwise have enjoyed, whether such compensation is claimed by way of damages for wrongful dismissal or other breach of contract or by way of compensation for loss of office or otherwise. |
Performance Period Revenue Growth Rate(1) | |||||||
15% | 21% | 26% | 30% | 34% | 36% | ||
Number of Contracted SaaS Users (at end of Performance Period) | ≥ 175,000 | 50 | 70 | 90 | 100 | 125 | 150 |
≥ 185,000 | 65 | 80 | 100 | 125 | 145 | 175 | |
≥192,500 | 80 | 90 | 125 | 135 | 160 | 190 | |
≥200,000 | 90 | 100 | 135 | 150 | 175 | 200 |
Executive | Individual Allocation |
Jonathan Corr | 26,765 |
Edgar Luce | 6,901 |
Limin Hu | 5,688 |
Joseph Tyrrell | 6,901 |
Cathleen Schreiner-Gates | 6,901 |
Pete Hirsch | 6,901 |
Brian Brown | 4,392 |
1. | I have reviewed this Quarterly Report on Form 10-Q of Ellie Mae, 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(s) 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(s) 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. |
/s/ Jonathan Corr |
Jonathan Corr Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Ellie Mae, 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(s) 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(s) 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. |
/s/ Edgar A. Luce |
Edgar A. Luce Chief Financial Officer |
1. | The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2016, to which this Certification is attached as Exhibit 32.1 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Jonathan Corr |
Jonathan Corr Chief Executive Officer (Principal Executive Officer) |
1. | The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2016, to which this Certification is attached as Exhibit 32.2 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Edgar A. Luce |
Edgar A. Luce Chief Financial Officer (Principal Financial Officer) |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
May. 03, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ELLIE MAE INC | |
Entity Central Index Key | 0001122388 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 29,989,281 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances for doubtful accounts | $ 141 | $ 124 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 140,000,000 | 140,000,000 |
Common stock, shares issued | 29,971,612 | 29,566,511 |
Common stock, shares outstanding | 29,971,612 | 29,566,511 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Revenues | $ 73,625 | $ 54,189 |
Cost of revenues | 26,631 | 17,350 |
Gross profit | 46,994 | 36,839 |
Operating expenses: | ||
Sales and marketing | 15,287 | 9,760 |
Research and development | 12,453 | 8,297 |
General and administrative | 15,731 | 12,302 |
Total operating expenses | 43,471 | 30,359 |
Income from operations | 3,523 | 6,480 |
Other income, net | 199 | 132 |
Income before income taxes | 3,722 | 6,612 |
Income tax provision | 1,216 | 3,028 |
Net income | $ 2,506 | $ 3,584 |
Net income per share of common stock: | ||
Basic | $ 0.09 | $ 0.12 |
Diluted | $ 0.08 | $ 0.12 |
Weighted average common shares used in computing net income per share of common stock: | ||
Basic | 29,471,214 | 28,768,144 |
Diluted | 31,080,314 | 30,442,163 |
Other comprehensive income, net of taxes: | ||
Net income | $ 2,506 | $ 3,584 |
Unrealized gain on investments | 328 | 171 |
Comprehensive income | $ 2,834 | $ 3,755 |
Description of Business |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Ellie Mae, Inc. (“Ellie Mae,” “the Company,” “we,” “our” or “us”) is a leading provider of innovative on-demand software solutions and services for the residential mortgage industry in the United States. The Company’s Encompass all-in-one mortgage management solution provides one system of record that allows banks, credit unions, and mortgage lenders to originate and fund mortgages and improve compliance, loan quality, and efficiency. |
Basis of Presentation and Significant Accounting Policies |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the SEC on February 25, 2016 (“2015 Form 10-K”). The condensed consolidated balance sheet as of December 31, 2015, included herein, was derived from the audited financial statements as of that date but does not include all disclosures, including notes required by U.S. GAAP. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial positions, results of operations and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year 2016 or any future period. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management evaluates estimates on a regular basis including those relating to revenue recognition, allowance for doubtful accounts, goodwill, intangible assets, valuation of deferred income taxes, stock-based compensation, and unrecognized tax benefits, among others. Actual results could differ from those estimates and such differences may have a material impact on the Company’s condensed consolidated financial statements and footnotes. Significant Accounting Policies The Company’s significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements in its 2015 Form 10-K. There have been no significant changes to these policies during the three months ended March 31, 2016. Comprehensive Income Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes certain changes in equity that are excluded from net income, specifically unrealized gains on available-for-sale investments. Except for net realized gain on investments which was not significant, there were no reclassifications out of accumulated other comprehensive income that affected net income during the three months ended March 31, 2016 and 2015. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This standard also requires significantly expanded disclosures about revenue recognition. In August 2015, the FASB deferred the effective date of this standard by one year. The new effective date for public entities will be for fiscal years, and interim periods within those years, beginning after December 15, 2017, but entities will be permitted to early adopt the standard as of the original effective date. The Company has not yet developed an expectation of the impact that adoption will have on its consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-05, Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015-05”), which clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software. The company adopted ASU 2015-05 on January 1, 2016, which did not impact the Company’s consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and early adoption is not permitted. The Company has not yet developed an expectation of the impact that adoption may have on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The new standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. The Company has not yet developed an expectation of the impact that adoption may have on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718) (“ASU 2016-09”). This standard makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies. ASU 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. The Company has not yet developed an expectation of the impact that adoption may have on its consolidated financial statements. |
Net Income (Loss) Per Share of Common Stock |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) Per Share of Common Stock | Net income per share of common stock is calculated by dividing net income by the weighted average shares of common stock outstanding during the period. Diluted net income per share of common stock is calculated by dividing net income by the weighted average shares of common stock outstanding and potential shares of common stock during the period. Potential shares of common stock include dilutive shares attributable to the assumed exercise of stock options, restricted stock unit awards (“RSUs”), performance-vesting RSUs, performance share awards (“Performance Awards”), and Employee Stock Purchase Plan (“ESPP”) shares using the treasury stock method, if dilutive. The components of net income per share of common stock were as follows:
The following potential weighted average common shares were excluded from the computation of diluted net income per share, as their effect would have been anti-dilutive:
Performance-vesting RSUs and Performance Awards are included in the diluted shares outstanding for each period if the established performance criteria have been met at the end of the respective periods. However, if none of the required performance criteria have been met for such awards, the Company includes the number of shares that would be issuable if the end of the reporting period were the end of the contingency period. Accordingly, in addition to the employee stock options and awards noted above, 13,776 and 157,491 shares underlying performance-vesting RSUs and Performance Awards were excluded from the dilutive shares outstanding for each of the three months ended March 31, 2016 and 2015, respectively. |
Financial Instruments and Fair Value Measurements |
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Financial Instruments and Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments and Fair Value Measurements | Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified and disclosed in one of the following three categories: Level 1 — Valuations based on quoted prices in active markets for identical assets or liabilities. Level 2 — Valuations based on other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 — Valuations based on inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the assets or liabilities. The following tables set forth by level within the fair value hierarchy the Company’s financial assets that were accounted for at fair value on a recurring basis, according to the valuation techniques the Company used to determine their values:
Financial instruments include cash, cash equivalents, and investments including investment-grade interest-bearing securities, such as money market accounts, certificates of deposit, commercial paper, corporate bonds, municipal and government agency obligations, and guaranteed obligations of the U.S. government. The Company classifies its money market funds that are specifically backed by debt securities and U.S. government obligations as Level 1 instruments, due to the use of observable market prices for identical securities that are traded in active markets. When the Company uses observable market prices for identical securities that are traded in less active markets, the Company classifies its marketable financial instruments as Level 2. When observable market prices for identical securities are not available, the Company prices its marketable financial instruments using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments; or pricing models with all significant inputs derived from or corroborated with observable market data. Non-binding market consensus prices are based on the proprietary valuation models of pricing providers. These valuation models incorporate a number of inputs, including non-binding and binding broker quotes; observable market prices for identical or similar securities; and the internal assumptions of pricing providers or brokers that use observable market inputs and, to a lesser degree, unobservable market inputs. The Company corroborates non-binding market consensus prices with observable market data as such data exists. At March 31, 2016 and December 31, 2015, the Company did not have any assets or liabilities that were valued using Level 3 inputs. For the three months ended March 31, 2016 and 2015, there were no transfers of financial instruments among Level 1, Level 2 or Level 3 classifications. For the three months ended March 31, 2016 and 2015, the Company recognized interest income from financial instruments of $0.2 million and $0.2 million, respectively. Gross realized gains and gross realized losses from the sale of investments were not significant during the three months ended March 31, 2016 and 2015. At March 31, 2016, $47.8 million of the Company's investments had a contractual maturity of one year or less and $42.3 million had a contractual maturity of one to three years. The carrying amounts, gross unrealized gains and losses and estimated fair value of cash and cash equivalents and both short-term and long-term investments consisted of the following:
The following table shows the gross unrealized losses and the related fair values of the Company’s investments that have been in a continuous unrealized loss position. The Company did not identify any investments as other-than-temporarily impaired at March 31, 2016 or December 31, 2015.
The following table summarizes the maturities of the Company’s investments at March 31, 2016:
Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations. |
Balance Sheet Components (Notes) |
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Supplemental Balance Sheet Disclosures [Text Block] | Property and Equipment Property and equipment, net, consisted of the following:
(1) Includes computer equipment and software under capital leases:
Depreciation expense for the three months ended March 31, 2016 and 2015 was $4.0 million and $1.8 million, respectively. Amortization of assets under capital leases which is included in depreciation expense for the three months ended March 31, 2016 and 2015 was $0.8 million and $0.2 million, respectively. Accrued and Other Current Liabilities Accrued and other current liabilities consisted of the following:
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Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | The carrying value of goodwill at March 31, 2016 was $74.5 million. There were no changes in the carrying value of goodwill during the three months ended March 31, 2016. Other intangible assets, net, consisted of the following:
Amortization expense associated with intangible assets for the three months ended March 31, 2016 and 2015 was $1.5 million and $1.3 million, respectively. Minimum future amortization expense for intangible assets at March 31, 2016 was as follows:
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Income Taxes |
3 Months Ended |
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Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The estimated annual effective tax rate as of March 31, 2016 and 2015 was 37.9% and 47.8%, respectively. The Company computes its interim provision for income taxes by applying the estimated annual effective tax rate to the year-to-date income from recurring operations and adjusts the provision for discrete tax items recorded in the period. The Company evaluates and updates its estimated annual effective income tax rate on a quarterly basis. The difference between the federal statutory rate of 35% and the Company’s estimated effective tax rate for the three months ended March 31, 2016 was primarily due to the Company’s state income tax provision, non-deductible stock-based compensation expenses, and R&D credits. The Company accounts for stock-based compensation pursuant to ASC 718 and uses ASC 740 ordering when determining when excess tax benefits have been realized. The Company did not record a tax benefit for the three months ended March 31, 2016 related to the exercise of employee stock options and the vesting of RSUs, performance-vesting RSUs and Performance Awards. The Company realized a tax benefit of $2.9 million for the three months ended March 31, 2015 related to the exercise of employee stock options and the vesting of RSUs, performance-vesting RSUs and Performance Awards. The net income tax benefit in excess of the expenses recorded for financial reporting purposes has been recorded as an increase to additional paid-in capital and is reflected as a financing cash inflow in the condensed consolidated statements of cash flows. The Company’s tax positions are subject to income tax audits by multiple tax jurisdictions. The Company accounts for uncertain tax positions and believes that it has provided adequate reserves for its unrecognized tax benefits for all tax years still open for assessment. The Company also believes that it does not have any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months. The Company has a policy to classify accrued interest and penalties associated with uncertain tax positions together with the related liability in the balance sheet, and to include the expenses incurred related to such accruals in the provision for income taxes. There were no interest or penalties included in the provision for income taxes during the three months ended March 31, 2016 and 2015, respectively. The Company is currently under examination by the U.S. Internal Revenue Service for the 2013 tax year. At this time, the Company is not able to estimate the potential impact that the examination may have on income tax expense. If the examination is resolved unfavorably, it may have a negative impact on the Company’s results of operations. |
Commitments and Contingencies |
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Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Leases As of March 31, 2016, the Company leased eight facilities under operating lease arrangements. The lease expiration dates range from September 2016 to December 2024. Certain leases contain escalation clauses calling for increased rents. The Company recognizes rent expense on a straight-line basis over the lease period and has recorded deferred rent for the difference between rent payments and rent expense recognized. Pursuant to the expiration of the Company’s Irvine office lease, in February 2016, the Company entered into a new lease agreement for approximately 4,600 square feet of office space in Irvine, California. The term of the lease is scheduled to commence on May 1, 2016 with an initial term of 60 months, with payments ranging from $12,800 per month to $15,000 per month. Legal Proceedings From time to time, the Company is involved in litigation that it believes is of the type common to companies engaged in the Company’s line of business, including commercial and employment disputes. As of the date of this Quarterly Report on Form 10-Q, the Company is not involved in any pending legal proceedings whose outcome the Company expects to have a material adverse effect on its financial position, results of operations or cash flows. However, litigation is unpredictable and excessive verdicts, both in the form of monetary damages and injunctions, could occur. In the future, litigation could result in substantial costs and diversion of resources and the Company could incur judgments or enter into settlements of claims that could have a material adverse effect on its business. |
Stock Incentive Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Incentive Plans | The Company recognized stock-based compensation related to awards granted under its 2009 Stock Option and Incentive Plan (the “2009 Plan”), 2011 Equity Incentive Award Plan (the “2011 Plan”), and ESPP. Total stock-based compensation expense recognized consisted of:
2009 Stock Option and Incentive Plan and 2011 Equity Incentive Award Plan Stock Options The following table summarizes the Company’s stock option activity under the 2009 Plan and 2011 Plan:
Stock options granted during the three months ended March 31, 2016 were made under the 2011 Plan. There were no grants under the 2009 Plan during the three months ended March 31, 2016. Intrinsic value of an option is the difference between the fair value of the Company’s common stock at the time of exercise and the exercise price to be paid. The aggregate intrinsic value for options outstanding at March 31, 2016 in the table above represents the total intrinsic value, based on the Company’s closing stock price of $90.64 as of March 31, 2016, which would have been received by option holders had all option holders exercised their in-the-money options as of that date. Options outstanding that are expected to vest are net of estimated future option forfeitures. Following is additional information pertaining to the Company’s stock option activity:
As of March 31, 2016, total unrecognized stock-based compensation expense related to unvested stock options, adjusted for estimated forfeitures, was $13.9 million and is expected to be recognized over a weighted average period of 2.2 years. Restricted Stock Units, Performance-Vesting Restricted Stock Units, and Performance Awards The Performance Awards granted represent the right to receive shares of the Company’s common stock, contingent upon the achievement of certain of the Company’s performance metrics during the performance period. On a date subsequent to the performance period, the Compensation Committee of the Board of Directors (the “Compensation Committee”) determines and approves the achievement of the performance goals (the “Determination Date”) and the earned shares are issued, with 25% of the shares vested upon issuance and the remaining shares to vest 25% on each of the first three anniversaries of the Determination Date, subject to the continuous employment of the participant through such dates. In December 2014, the Company granted Sigmund Anderman, then Chief Executive Officer and current Chairman of the Board of Directors of the Company, an option to purchase 76,648 shares of Company common stock and 37,203 performance-vesting RSUs. In January 2015, the Company granted Mr. Anderman an option to purchase 71,648 shares of Company common stock and 34,714 performance-vesting RSUs. On the Determination Date in February 2016, the Compensation Committee determined that 143,834 shares of common stock had been earned in connection with the performance-based RSUs. In February 2015 and March 2015, the Company granted 24,766 and 10,324 Performance Awards to designated participants under the 2011 Plan with a performance period of January 1, 2015 through December 31, 2015. On the Determination Date in February 2016, the Compensation Committee determined that 70,180 shares of common stock had been earned in connection with the Performance Awards. In October 2015, in connection with the acquisition of Mortgage Returns, the Company agreed to pay up to 29,006 of performance-vesting RSUs for a total value of $2.0 million to the former Chief Executive Officer of Mortgage Returns. The performance-vesting RSUs granted represent the right to receive shares of the Company’s common stock upon achievement of certain performance criteria and a service requirement during the performance period of October 23, 2015 through October 23, 2019. The performance-vesting RSUs will vest annually based on the achievement of the performance criteria and the service requirement. In February 2016, the Company granted Mr. Anderman an option to purchase 14,506 shares of Company common stock and 6,692 performance-vesting RSUs. Mr. Anderman may earn between zero and 2.0 shares of common stock for each performance-vesting RSU. As of March 31, 2016, the Company expects that each of these performance-vesting RSUs will convert to 1.05 shares of common stock on the Determination Date. Additionally, in February 2016, the Company granted 64,449 Performance Awards with a performance period of January 1, 2016 through December 31, 2016 to designated participants under the 2011 Plan. The designated participants may earn between zero and 2.0 shares of common stock for each Performance Award. As of March 31, 2016, the Company expects that each of these Performance Awards will convert to 1.3 shares of common stock on the Determination Date in 2017. The following table summarizes the Company’s RSU, Performance Award and performance-vesting RSU activity:
RSUs, performance-vesting RSUs and Performance Awards that are expected to vest are presented net of estimated future forfeitures. RSUs released during the three months ended March 31, 2016 and 2015 had an aggregate intrinsic value of $2.6 million and $1.6 million, respectively, and had an aggregate grant-date fair value of $1.1 million and $0.8 million, respectively. Performance-vesting RSUs and Performance Awards released during the three months ended March 31, 2016 had an aggregate intrinsic value of $9.3 million and had an aggregate grant-date fair value of $3.5 million. Performance-vesting RSUs and Performance Awards released during the three months ended March 31, 2015 had an aggregate intrinsic value of $1.6 million and had an aggregate grant-date fair value of $0.6 million. The number of RSUs released includes shares that the Company withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements. As of March 31, 2016, total unrecognized compensation expense related to unvested RSUs, performance-vesting RSUs and Performance Awards was $39.7 million and is expected to be recognized over a weighted average period of 2.5 years. Employee Stock Purchase Plan For the three months ended March 31, 2016 and 2015, employees purchased 47,819 shares and 58,239 shares, respectively, under the ESPP for a total of $2.9 million and $1.7 million, respectively. As of March 31, 2016, unrecognized compensation expense related to the current ESPP period, which ends on August 31, 2016, was $1.1 million and is expected to be recognized over five months. Valuation Information The fair value of stock options and stock purchase rights granted under the 2009 Plan, the 2011 Plan, and the ESPP were estimated at the date of grant using the Black-Scholes option valuation model with the following weighted average assumptions:
Common Stock The following numbers of shares of common stock were reserved and available for future issuance at March 31, 2016:
In February 2016, 295,665 additional shares were reserved under the ESPP and 1,478,325 additional shares were reserved under the 2011 Plan, pursuant to the automatic increase provisions in the plan. Stock Repurchase Program In May 2014, the Company’s board of directors approved a stock repurchase program under which the Company is authorized to repurchase up to $75.0 million of its common stock, which expires in May 2017. All shares are retired upon repurchase. The Company did not repurchase any shares during the three months ended March 31, 2016. As of March 31, 2016, $43.5 million remained available for future repurchases under the program. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | The Company operates in one industry—mortgage-related software and services. The Company’s chief operating decision maker is its chief executive officer, who makes decisions about resource allocation and reviews financial information presented on a consolidated basis. Accordingly, the Company has determined that it has a single reporting segment and operating unit structure, specifically technology-enabled solutions to help streamline and automate the residential mortgage origination process for its network participants. The Company is organized primarily on the basis of service lines. Supplemental disclosure of revenues by type is as follows:
(1) Certain reclassifications of prior period amounts have been made to conform to the current period presentation, such reclassification did not materially change previously reported consolidated financial statements. On-demand revenue is generated from company-hosted software subscriptions that customers access through the Internet and from customers that pay fees based on a per closed loan, or success, basis subject to monthly base fees, which the Company refers to as Success-Based Pricing. Additionally, on-demand revenue is comprised of software services sold both as subscriptions and transactionally; Ellie Mae Network fees; education and training, loan product, and guideline data and analytics services under the AllRegs brand; and professional services which include consulting, implementation, and training services. On-premise revenue is generated from maintenance services, sales of customer-hosted software licenses, and related professional services. |
Basis of Presentation and Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |
Principles of Consolidation [Policy Text Block] | Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management evaluates estimates on a regular basis including those relating to revenue recognition, allowance for doubtful accounts, goodwill, intangible assets, valuation of deferred income taxes, stock-based compensation, and unrecognized tax benefits, among others. Actual results could differ from those estimates and such differences may have a material impact on the Company’s condensed consolidated financial statements and footnotes. |
Significant Accounting Policies [Text Block] | Significant Accounting Policies The Company’s significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements in its 2015 Form 10-K. There have been no significant changes to these policies during the three months ended March 31, 2016. |
Comprehensive Income [Policy Text Block] | Comprehensive Income Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes certain changes in equity that are excluded from net income, specifically unrealized gains on available-for-sale investments. Except for net realized gain on investments which was not significant, there were no reclassifications out of accumulated other comprehensive income that affected net income during the three months ended March 31, 2016 and 2015 |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This standard also requires significantly expanded disclosures about revenue recognition. In August 2015, the FASB deferred the effective date of this standard by one year. The new effective date for public entities will be for fiscal years, and interim periods within those years, beginning after December 15, 2017, but entities will be permitted to early adopt the standard as of the original effective date. The Company has not yet developed an expectation of the impact that adoption will have on its consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-05, Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015-05”), which clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software. The company adopted ASU 2015-05 on January 1, 2016, which did not impact the Company’s consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and early adoption is not permitted. The Company has not yet developed an expectation of the impact that adoption may have on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The new standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. The Company has not yet developed an expectation of the impact that adoption may have on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718) (“ASU 2016-09”). This standard makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies. ASU 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. The Company has not yet developed an expectation of the impact that adoption may have on its consolidated financial statements. |
Net Income (Loss) Per Share of Common Stock (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of net income (loss) per share of common stock | The components of net income per share of common stock were as follows:
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Common shares excluded from computation of diluted net income (loss) per share | The following potential weighted average common shares were excluded from the computation of diluted net income per share, as their effect would have been anti-dilutive:
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Financial Instruments and Fair Value Measurements (Tables) |
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Financial Instruments and Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Available-for-sale Securities Reconciliation [Table Text Block] | The carrying amounts, gross unrealized gains and losses and estimated fair value of cash and cash equivalents and both short-term and long-term investments consisted of the following:
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Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Table Text Block] | The following table shows the gross unrealized losses and the related fair values of the Company’s investments that have been in a continuous unrealized loss position. The Company did not identify any investments as other-than-temporarily impaired at March 31, 2016 or December 31, 2015.
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Fair value hierarchy of Company's financial assets on recurring basis | The following tables set forth by level within the fair value hierarchy the Company’s financial assets that were accounted for at fair value on a recurring basis, according to the valuation techniques the Company used to determine their values:
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Summary of the maturities of the Company's investments | The following table summarizes the maturities of the Company’s investments at March 31, 2016:
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Balance Sheet Components (Tables) |
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Property, Plant and Equipment [Table Text Block] | Property and equipment, net, consisted of the following:
(1) Includes computer equipment and software under capital leases:
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Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] | Accrued and other current liabilities consisted of the following:
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Goodwill and Other Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other intangible assets, net | intangible assets, net, consisted of the following:
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Minimum future amortization expense for intangible assets | Minimum future amortization expense for intangible assets at March 31, 2016 was as follows:
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Stock Incentive Plans (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | Total stock-based compensation expense recognized consisted of:
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Summary of Company's stock option activities | The following table summarizes the Company’s stock option activity under the 2009 Plan and 2011 Plan:
Stock options granted during the three months ended March 31, 2016 were made under the 2011 Plan. There were no grants under the 2009 Plan during the three months ended March 31, 2016. |
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Stock options activity, additional information | Following is additional information pertaining to the Company’s stock option activity:
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Summary of RSU activities | The following table summarizes the Company’s RSU, Performance Award and performance-vesting RSU activity:
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Schedule of Stock Options and Employee Stock Purchase Plan Valuation Assumptions | The fair value of stock options and stock purchase rights granted under the 2009 Plan, the 2011 Plan, and the ESPP were estimated at the date of grant using the Black-Scholes option valuation model with the following weighted average assumptions:
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ScheduleOfSharesOfCommonStockAvailableForFutureIssuanceUnderStockOptionPlansTextBlock [Table Text Block] | The following numbers of shares of common stock were reserved and available for future issuance at March 31, 2016:
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental disclosure of revenue by service type | Supplemental disclosure of revenues by type is as follows:
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Net Income (Loss) Per Share of Common Stock (Details Table) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
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Components of net income (loss) per share | ||
Net income | $ 2,506 | $ 3,584 |
Basic shares: | ||
Weighted average common shares outstanding | 29,471,214 | 28,768,144 |
Diluted shares: | ||
Weighted average common shares outstanding | 29,471,214 | 28,768,144 |
Effect of potentially dilutive securities: | ||
Weighted Average Number Diluted Shares Outstanding Adjustment | 1,609,100 | 1,674,019 |
Weighted average shares used to compute diluted net income per share | 31,080,314 | 30,442,163 |
Net income (loss) per share: | ||
Basic | $ 0.09 | $ 0.12 |
Diluted | $ 0.08 | $ 0.12 |
Net Income (Loss) Per Share of Common Stock (Details Table 1) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
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Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Net income | $ 2,506 | $ 3,584 |
Employee Stock Options and Awards [Member] | ||
Antidilutive securities excluded from computation of earning per share | ||
Anti-dilutive securities excluded from computation of earnings per share amount | 224,366 | 346,256 |
Net Income (Loss) Per Share of Common Stock (Details Textual) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
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Performance-Based Awards [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from computation of earnings per share amount | 13,776 | 157,491 |
Financial Instruments and Fair Value Measurements (Summary of Investment Maturities) (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale Securities, Debt Maturities, Next Twelve Months, Fair Value | $ 47,800 | |
Available For Sale Securities Debt Maturities after One Through Three Years Fair Value | 42,300 | |
Maturities of the Company's investments | ||
Available-for-sale Securities, Debt Maturities, Remainder of Fiscal Year, Fair Value | 31,669 | |
Available For Sale Securities, Debt Maturities, Next Fiscal Year, Fair Value | 33,007 | |
Available For Sale Securities, Debt Maturities, In Two Years, Fair Value | 18,269 | |
Available For Sale Securities, Debt Maturities, In Three Years, Fair Value | 2,091 | |
Available For Sale Securities, Debt Maturities, Thereafter, Fair Value | 378 | |
Total | $ 85,414 | $ 104,448 |
Financial Instruments and Fair Value Measurements Investment income (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
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Net Investment Income [Line Items] | ||
Interest and Dividend Income, Securities, Operating | $ 216 | $ 159 |
Balance Sheet Components Accrued and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
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Accrued and Other Current Liabilities [Line Items] | ||
Employee-related Liabilities, Current | $ 10,786 | $ 23,938 |
Accrued Sales Commission, Current | 1,068 | 1,993 |
Accrued Professional Fees, Current | 578 | 223 |
Accrued Royalties, Current | 2,434 | 1,546 |
Sales and Excise Tax Payable, Current | 1,901 | 1,536 |
Capital Lease Obligations, Current | 3,092 | 3,845 |
Other Accrued Liabilities, Current | 2,248 | 4,226 |
Accrued and other current liabilities | $ 22,107 | $ 37,307 |
Goodwill and Other Intangible Assets (Schedule of Goodwill) (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
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Goodwill [Line Items] | ||
Goodwill | $ 74,547,000 | $ 74,547,000 |
Goodwill, Transfers | $ 0 |
Goodwill and Other Intangible Assets (Intangible Assets Future Amortization) (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Minimum future amortization expense for intangible assets | ||
Finite-Lived Intangible Assets, Amortization Expense, Remainder of Fiscal Year | $ 4,064 | |
Finite-Lived Intangible Assets, Amortization Expense, Next Fiscal Year | 4,294 | |
Finite-Lived Intangible Assets, Amortization Expense, in Two Years | 3,443 | |
Finite-Lived Intangible Assets, Amortization Expense, in Three Years | 3,166 | |
Finite-Lived Intangible Assets, Amortization Expense, in Four Years | 1,778 | |
Finite-Lived Intangible Assets, Amortization Expense, in Five Years | 314 | |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | 255 | |
Finite-Lived Intangible Assets, Net | $ 17,314 | $ 18,771 |
Goodwill and Other Intangible Assets (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
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Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | $ 1,457 | $ 1,332 |
Income Taxes (Details Textual) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
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Income Tax Disclosure [Abstract] | ||
Annual effective tax rate | 37.90% | 47.80% |
Federal statutory tax rate | 35.00% | 35.00% |
Excess Tax Benefit from Share-based Compensation, Financing Activities | $ 0 | $ 2,906,000 |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense | $ 0 | $ 0 |
Commitments and Contingencies (Details Textual1) |
Mar. 31, 2016
USD ($)
Facilities
|
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Operating Leased Assets [Line Items] | |
Property Subject to or Available for Operating Lease, Number of Units | Facilities | 8 |
Office Space - Irvine, CA | Minimum [Member] | |
Operating Leased Assets [Line Items] | |
Operating Leases, Future Minimum Payments Due | $ 12,800 |
Office Space - Irvine, CA | Maximum [Member] | |
Operating Leased Assets [Line Items] | |
Operating Leases, Future Minimum Payments Due | $ 15,000 |
Stock Incentive Plans (Details Table 1) (Stock Option Additional Information) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Stock options activity, additional information | ||
Weighted average fair value per option granted | $ 27.57 | $ 21.66 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value | $ 2,511 | $ 1,729 |
Intrinsic value of options exercised | 12,926 | 12,829 |
Proceeds received from options exercised | $ 3,846 | $ 3,349 |
Stock Incentive Plans (Details Table 4) (Fair Value Assumptions) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Stock Option [Member] | ||
Schedule of Stock Options and Employee Stock Purchase Plan Valuation Assumptions | ||
Risk-free interest rate | 1.38% | 1.75% |
Expected Life of options (in years) | 6 years 29 days | 6 years 29 days |
Expected dividend yield | 0.00% | 0.00% |
Volatility | 47.00% | 48.00% |
Employee Stock Purchase Plan [Member] | ||
Schedule of Stock Options and Employee Stock Purchase Plan Valuation Assumptions | ||
Risk-free interest rate | 0.36% | 0.13% |
Expected Life of options (in years) | 6 months | 6 months |
Expected dividend yield | 0.00% | 0.00% |
Volatility | 46.00% | 35.00% |
Stock Incentive Plans (Details Table 5) (Reserved Shares) |
Mar. 31, 2016
shares
|
---|---|
Class of Stock [Line Items] | |
Reserved Shares | 9,250,153 |
Options and Awards Outstanding [Member] | |
Class of Stock [Line Items] | |
Reserved Shares | 3,595,033 |
Shares Available for Future Grant [Member] | |
Class of Stock [Line Items] | |
Reserved Shares | 4,202,280 |
Shares Available Under Employee Stock Purchase Plan [Member] | |
Class of Stock [Line Items] | |
Reserved Shares | 1,452,840 |
Segment Information (Details Table) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Segment Reporting Information Revenue | ||
Revenues | $ 73,625 | $ 54,189 |
On Demand Revenues [Member] | ||
Segment Reporting Information Revenue | ||
Revenues | 73,099 | 52,972 |
On Premise Revenues [Member] | ||
Segment Reporting Information Revenue | ||
Revenues | $ 526 | $ 1,217 |
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