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 | 20-2056195 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Large accelerated filer x | Accelerated filer ¨ |
Non-accelerated filer ¨ (Do not check if a smaller reporting company) | Smaller reporting company ¨ |
Emerging growth company ¨ |
Page | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
September 30, | December 31, | ||||||
2017 | 2016 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Short-term investments | |||||||
Accounts receivable, net | |||||||
Current portion of deferred commissions | |||||||
Prepaid expenses and other current assets | |||||||
Total current assets | |||||||
Deferred commissions, less current portion | |||||||
Long-term investments | |||||||
Property and equipment, net | |||||||
Intangible assets, net | |||||||
Goodwill | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | $ | |||||
Accrued expenses and other current liabilities | |||||||
Current portion of deferred revenue | |||||||
Total current liabilities | |||||||
Deferred revenue, less current portion | |||||||
Convertible senior notes, net | |||||||
Other long-term liabilities | |||||||
Total liabilities | |||||||
Stockholders’ equity: | |||||||
Common stock | |||||||
Additional paid-in capital | |||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Accumulated deficit | ( | ) | ( | ) | |||
Total stockholders’ equity | |||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues: | |||||||||||||||
Subscription | $ | $ | $ | $ | |||||||||||
Professional services and other | |||||||||||||||
Total revenues | |||||||||||||||
Cost of revenues(1): | |||||||||||||||
Subscription | |||||||||||||||
Professional services and other | |||||||||||||||
Total cost of revenues | |||||||||||||||
Gross profit | |||||||||||||||
Operating expenses(1): | |||||||||||||||
Sales and marketing | |||||||||||||||
Research and development | |||||||||||||||
General and administrative | |||||||||||||||
Legal settlements | |||||||||||||||
Total operating expenses | |||||||||||||||
Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Interest income and other income (expense), net | |||||||||||||||
Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Provision for (benefit from) income taxes | ( | ) | |||||||||||||
Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Net loss per share - basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Weighted-average shares used to compute net loss per share - basic and diluted | |||||||||||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation adjustments | $ | $ | $ | $ | ( | ) | |||||||||
Unrealized gain (loss) on investments, net of tax | ( | ) | ( | ) | |||||||||||
Other comprehensive income (loss), net of tax | ( | ) | |||||||||||||
Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
(1) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Cost of revenues: | |||||||||||||||
Subscription | $ | $ | $ | $ | |||||||||||
Professional services and other | |||||||||||||||
Sales and marketing | |||||||||||||||
Research and development | |||||||||||||||
General and administrative |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | ( | ) | $ | ( | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Amortization of premiums on investments | |||||||
Amortization of deferred commissions | |||||||
Amortization of debt discount and issuance costs | |||||||
Stock-based compensation | |||||||
Deferred income tax | ( | ) | ( | ) | |||
Other | ( | ) | ( | ) | |||
Changes in operating assets and liabilities, net of effect of business combinations: | |||||||
Accounts receivable | ( | ) | |||||
Deferred commissions | ( | ) | ( | ) | |||
Prepaid expenses and other assets | ( | ) | ( | ) | |||
Accounts payable | ( | ) | ( | ) | |||
Deferred revenue | |||||||
Accrued expenses and other liabilities | |||||||
Net cash provided by operating activities | |||||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | ( | ) | ( | ) | |||
Business combinations, net of cash acquired | ( | ) | ( | ) | |||
Purchases of other intangibles | ( | ) | ( | ) | |||
Purchases of investments | ( | ) | ( | ) | |||
Purchases of strategic investments | ( | ) | |||||
Sales of investments | |||||||
Maturities of investments | |||||||
Restricted cash | ( | ) | ( | ) | |||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities: | |||||||
Net proceeds from borrowings on convertible senior notes | |||||||
Proceeds from issuance of warrants | |||||||
Purchases of convertible note hedges | ( | ) | |||||
Repurchases and retirement of common stock | ( | ) | |||||
Proceeds from employee stock plans | |||||||
Taxes paid related to net share settlement of equity awards | ( | ) | ( | ) | |||
Payments on financing obligations | ( | ) | ( | ) | |||
Net cash provided by (used in) financing activities | ( | ) | |||||
Foreign currency effect on cash and cash equivalents | ( | ) | |||||
Net increase (decrease) in cash and cash equivalents | ( | ) | |||||
Cash and cash equivalents at beginning of period | |||||||
Cash and cash equivalents at end of period | $ | $ | |||||
Non-cash investing and financing activities: | |||||||
Property and equipment included in accounts payable and accrued expenses | $ | $ |
September 30, 2017 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Available-for-sale securities: | |||||||||||||||
Commercial paper | $ | $ | $ | $ | |||||||||||
Corporate notes and bonds | ( | ) | |||||||||||||
Certificates of deposit | |||||||||||||||
U.S. government agency securities | ( | ) | |||||||||||||
Marketable equity securities | |||||||||||||||
Total available-for-sale securities | $ | $ | $ | ( | ) | $ |
December 31, 2016 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Available-for-sale securities: | |||||||||||||||
Commercial paper | $ | $ | $ | $ | |||||||||||
Corporate notes and bonds | ( | ) | |||||||||||||
Certificates of deposit | |||||||||||||||
U.S. government agency securities | ( | ) | |||||||||||||
Total available-for-sale securities | $ | $ | $ | ( | ) | $ |
September 30, 2017 | |||
Due in 1 year or less | $ | ||
Due in 1 to 2 years | |||
Total | $ |
September 30, 2017 | |||||||||||||||||||||||
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||
Corporate notes and bonds | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||
U.S. government agency securities | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Total | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) |
December 31, 2016 | |||||||||||||||||||||||
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||
Corporate notes and bonds | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||
U.S. government agency securities | ( | ) | ( | ) | |||||||||||||||||||
Total | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) |
Level 1 | Level 2 | Total | |||||||||
Cash equivalents: | |||||||||||
Money market funds | $ | $ | $ | ||||||||
Commercial paper | |||||||||||
Certificates of deposit | |||||||||||
U.S. government agency securities | |||||||||||
Short-term investments: | |||||||||||
Commercial paper | |||||||||||
Corporate notes and bonds | |||||||||||
Certificates of deposit | |||||||||||
U.S. government agency securities | |||||||||||
Marketable equity securities | |||||||||||
Long-term investments: | |||||||||||
Corporate notes and bonds | |||||||||||
Certificates of deposit | |||||||||||
U.S. government agency securities | |||||||||||
Total | $ | $ | $ |
Level 1 | Level 2 | Total | |||||||||
Cash equivalents: | |||||||||||
Money market funds | $ | $ | $ | ||||||||
Short-term investments: | |||||||||||
Commercial paper | |||||||||||
Corporate notes and bonds | |||||||||||
Certificates of deposit | |||||||||||
U.S. government agency securities | |||||||||||
Long-term investments: | |||||||||||
Corporate notes and bonds | |||||||||||
U.S. government agency securities | |||||||||||
Total | $ | $ | $ |
Purchase Price Allocation (in thousands) | Useful Life (in years) | ||||
Net tangible assets acquired | $ | ||||
Intangible assets: | |||||
Developed technology | |||||
Goodwill | |||||
Net deferred tax liabilities(1) | ( | ) | |||
Total purchase price | $ |
(1) |
Purchase Price Allocation (in thousands) | Useful Life (in years) | ||||
Intangible assets: | |||||
Developed technology | $ | ||||
Customer contracts and related relationships | |||||
Goodwill | |||||
Net tangible liabilities acquired | ( | ) | |||
Net deferred tax liabilities(1) | ( | ) | |||
Total purchase price | $ |
(1) |
Purchase Price Allocation (in thousands) | Useful Life (in years) | ||||
Net tangible assets acquired | $ | ||||
Intangible assets: | |||||
Developed technology | |||||
Customer contracts and related relationships | |||||
Goodwill | |||||
Net deferred tax liabilities(1) | ( | ) | |||
Total purchase price | $ |
(1) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||
Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Weighted-average shares used to compute net loss per share - basic and diluted | |||||||||||||||
Net loss per share - basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Carrying Amount | |||
Balance as of December 31, 2016 | $ | ||
Goodwill acquired | |||
Foreign currency translation adjustments | |||
Balance as of September 30, 2017 | $ |
September 30, 2017 | |||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||
Developed technology | $ | $ | ( | ) | $ | ||||||
Patents | ( | ) | |||||||||
Other | ( | ) | |||||||||
Total intangible assets | $ | $ | ( | ) | $ |
December 31, 2016 | |||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||
Developed technology | $ | $ | ( | ) | $ | ||||||
Patents | ( | ) | |||||||||
Other | ( | ) | |||||||||
Total intangible assets | $ | $ | ( | ) | $ |
Years Ending December 31, | |||||||
2017 | $ | ||||||
2018 | |||||||
2019 | |||||||
2020 | |||||||
2021 | |||||||
Thereafter | |||||||
Total future amortization expense | $ |
September 30, | December 31, | ||||||
2017 | 2016 | ||||||
Computer equipment | $ | $ | |||||
Computer software | |||||||
Leasehold improvements | |||||||
Furniture and fixtures | |||||||
Building | |||||||
Construction in progress | |||||||
Less: Accumulated depreciation | ( | ) | ( | ) | |||
Total property and equipment, net | $ | $ |
September 30, | December 31, | ||||||
2017 | 2016 | ||||||
Taxes payable | $ | $ | |||||
Bonuses and commissions | |||||||
Accrued compensation | |||||||
Other employee related liabilities | |||||||
Other | |||||||
Total accrued expenses and other current liabilities | $ | $ |
Convertible Date | Initial Conversion Price per Share | Initial Conversion Rate per $1,000 Par Value | Initial Number of Shares | |||||||
2022 Notes | February 1, 2022 | $ | 7.42 shares | |||||||
2018 Notes | July 1, 2018 | $ | 13.54 shares |
• | during any calendar quarter (and only during such calendar quarter) if the last reported sale price of our common stock for at least |
• | during the five-business day period after any five-consecutive trading day period, or the measurement period, in which the trading price per $ |
• | upon the occurrence of specified corporate events. |
September 30, 2017 | December 31, 2016 | ||||||
Liability component: | |||||||
Principal: | |||||||
2022 Notes | $ | $ | |||||
2018 Notes | |||||||
Less: debt issuance cost and debt discount, net of amortization | |||||||
2022 Notes | ( | ) | |||||
2018 Notes | ( | ) | ( | ) | |||
Net carrying amount | $ | $ |
2022 Notes | 2018 Notes | ||||||
Equity component recorded at issuance: | |||||||
Note | $ | $ | |||||
Issuance cost | ( | ) | ( | ) | |||
Net amount recorded in equity | $ | $ |
September 30, 2017 | December 31, 2016 | ||||||
2022 Notes | $ | N/A | |||||
2018 Notes | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Amortization of debt issuance cost | |||||||||||||||
2022 Notes | $ | $ | $ | $ | |||||||||||
2018 Notes | |||||||||||||||
Amortization of debt discount | |||||||||||||||
2022 Notes | |||||||||||||||
2018 Notes | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Effective interest rate of the liability component | |||||||||||||||
2022 Notes | |||||||||||||||
2018 Notes |
Purchase | Shares | |||||
(in thousands) | ||||||
2022 Note Hedge | $ | |||||
2018 Note Hedge | $ |
Proceeds | Shares | Strike Price | ||||||||
(in thousands) | ||||||||||
2022 Warrants | $ | $ | ||||||||
2018 Warrants | $ | $ |
September 30, | December 31, | ||||||
2017 | 2016 | ||||||
Foreign currency translation adjustment | $ | ( | ) | $ | ( | ) | |
Net unrealized gain (loss) on investments, net of tax | ( | ) | |||||
Accumulated other comprehensive loss | $ | ( | ) | $ | ( | ) |
September 30, 2017 | ||
Stock plans: | ||
Options outstanding | ||
RSUs | ||
Shares of common stock available for future grants: | ||
2012 Equity Incentive Plan(1) | ||
2012 Employee Stock Purchase Plan(1) | ||
Total reserved shares of common stock for future issuance |
(1) | Refer to Note 12 for a description of these plans. |
Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (in thousands) | |||||||||
Outstanding at December 31, 2016 | $ | |||||||||||
Granted | ||||||||||||
Exercised | ( | ) | $ | |||||||||
Canceled | ( | ) | ||||||||||
Outstanding at March 31, 2017 | ||||||||||||
Granted | ||||||||||||
Exercised | ( | ) | $ | |||||||||
Canceled | ( | ) | ||||||||||
Outstanding at June 30, 2017 | ||||||||||||
Exercised | ( | ) | $ | |||||||||
Canceled | ( | ) | ||||||||||
Outstanding at September 30, 2017 | $ | $ | ||||||||||
Vested and expected to vest as of September 30, 2017 | $ | $ | ||||||||||
Vested and exercisable as of September 30, 2017 | $ | $ |
Number of Shares | Weighted Average Grant Date Fair Value (Per Share) | Aggregate Intrinsic Value (in thousands) | ||||||||
Non-vested at December 31, 2016 | $ | |||||||||
Granted | ||||||||||
Vested | ( | ) | $ | |||||||
Forfeited | ( | ) | ||||||||
Non-vested at March 31, 2017 | ||||||||||
Granted | ||||||||||
Vested | ( | ) | $ | |||||||
Forfeited | ( | ) | ||||||||
Non-vested at June 30, 2017 | ||||||||||
Granted | ||||||||||
Vested | ( | ) | $ | |||||||
Forfeited | ( | ) | ||||||||
Non-vested at September 30, 2017 | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Numerator: | |||||||||||||||
Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Denominator: | |||||||||||||||
Weighted-average shares outstanding—basic and diluted | |||||||||||||||
Net loss per share—basic and diluted: | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
September 30, | |||||
2017 | 2016 | ||||
Common stock options | |||||
Restricted stock units | |||||
ESPP obligations | |||||
2018 convertible senior notes | |||||
Warrants related to the issuance of 2018 convertible senior notes | |||||
2022 convertible senior notes | |||||
Warrants related to the issuance of 2022 convertible senior notes | |||||
Total potentially dilutive securities |
Leases, net of Sublease Income | Purchase Obligations(1) | Other | Total | ||||||||||||
Years Ending December 31, | |||||||||||||||
Remainder of 2017 | $ | $ | $ | $ | |||||||||||
2018 | |||||||||||||||
2019 | |||||||||||||||
2020 | |||||||||||||||
2021 | |||||||||||||||
Thereafter | |||||||||||||||
Total | $ | $ | $ | $ |
(1) | Consists of future minimum payments under non-cancelable purchase commitments primarily related to data center and IT operations and sales and marketing activities. Not included in the table above are certain purchase commitments related to our future annual Knowledge user conferences and other customer or sales conferences. If we were to cancel these contractual commitments as of September 30, 2017, we would have been obligated to pay cancellation penalties of approximately $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
North America (1) | $ | $ | $ | $ | |||||||||||
EMEA (2) | |||||||||||||||
Asia Pacific and other | |||||||||||||||
Total revenues | $ | $ | $ | $ |
September 30, | December 31, | ||||||
2017 | 2016 | ||||||
North America(3) | $ | $ | |||||
EMEA(2) | |||||||
Asia Pacific and other | |||||||
Total property and equipment, net | $ | $ |
(1) | Revenues attributed to the United States were approximately |
(2) | Europe, the Middle East and Africa |
(3) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service Management solutions | $ | $ | $ | $ | |||||||||||
IT Operations Management solutions | |||||||||||||||
Total subscription revenues | $ | $ | $ | $ |
Three Months Ended September 30, | % Change | Nine Months Ended September 30, | % Change | ||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||||
Billings: | |||||||||||||||||||||
Total revenues | $ | 498,170 | $ | 357,656 | 39 | % | $ | 1,386,656 | $ | 1,004,847 | 38 | % | |||||||||
Change in deferred revenue from the condensed consolidated statements of cash flows | 47,932 | 46,620 | 3 | % | 193,594 | 151,019 | 28 | % | |||||||||||||
Total billings | $ | 546,102 | $ | 404,276 | 35 | % | $ | 1,580,250 | $ | 1,155,866 | 37 | % |
• | Billings duration. While we typically bill customers annually for our subscription services, customers sometimes request, and we accommodate, billings with durations less or greater than the typical 12-month term. |
• | Contract start date. From time to time, we enter into contracts with a contract start date in the future, and we exclude these amounts from billings as these amounts are not included in our condensed consolidated balance sheets, unless such amounts have been paid as of the balance sheet date. |
• | Foreign currency exchange rates. While a majority of our billings have historically been in U.S. Dollars, an increasing percentage of our billings in recent periods has been in foreign currencies, particularly the Euro and British Pound Sterling. |
• | Timing of contract renewals. While customers typically renew their contracts at the end of the contract term, from time to time customers may do so either before or after the scheduled expiration date. For example, in cases where we are successful in upselling additional products or services, a customer may decide to renew its existing contract early to ensure that all its contracts expire on the same date. In other cases, prolonged negotiations or other factors may result in a contract not being renewed until after it has expired. |
Nine Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Free cash flow: | ||||||||||
Net cash provided by operating activities | $ | 458,039 | $ | 27,234 | NM | |||||
Purchases of property and equipment | (115,856 | ) | (84,112 | ) | 38 | % | ||||
Free cash flow (1) | $ | 342,183 | $ | (56,878 | ) | NM |
(1) | Free cash flow includes the effect of a $267.5 million payment for legal settlement during the nine months ended September 30, 2016. Refer to Note 15 in the notes to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Revenues: | |||||||||||||||
Subscription | $ | 455,421 | $ | 318,934 | $ | 1,242,563 | $ | 877,035 | |||||||
Professional services and other | 42,749 | 38,722 | 144,093 | 127,812 | |||||||||||
Total revenues | 498,170 | 357,656 | 1,386,656 | 1,004,847 | |||||||||||
Cost of revenues(1): | |||||||||||||||
Subscription | 81,878 | 61,566 | 228,046 | 170,707 | |||||||||||
Professional services and other | 45,402 | 41,271 | 137,366 | 123,039 | |||||||||||
Total cost of revenues | 127,280 | 102,837 | 365,412 | 293,746 | |||||||||||
Gross profit | 370,890 | 254,819 | 1,021,244 | 711,101 | |||||||||||
Operating expenses(1): | |||||||||||||||
Sales and marketing | 227,015 | 166,491 | 686,325 | 511,607 | |||||||||||
Research and development | 98,465 | 75,018 | 272,959 | 211,306 | |||||||||||
General and administrative | 52,465 | 40,085 | 150,242 | 117,393 | |||||||||||
Legal settlements | — | — | — | 270,000 | |||||||||||
Total operating expenses | 377,945 | 281,594 | 1,109,526 | 1,110,306 | |||||||||||
Loss from operations | (7,055 | ) | (26,775 | ) | (88,282 | ) | (399,205 | ) | |||||||
Interest expense | (16,566 | ) | (8,389 | ) | (36,581 | ) | (24,746 | ) | |||||||
Interest income and other income (expense), net | 853 | 1,783 | 739 | 4,745 | |||||||||||
Loss before income taxes | (22,768 | ) | (33,381 | ) | (124,124 | ) | (419,206 | ) | |||||||
Provision for (benefit from) income taxes | 1,420 | 2,877 | (2,801 | ) | 9 | ||||||||||
Net loss | $ | (24,188 | ) | $ | (36,258 | ) | $ | (121,323 | ) | $ | (419,215 | ) |
(1) | Stock-based compensation included in the statements of operations above was as follows: |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Cost of revenues: | |||||||||||||||
Subscription | $ | 8,980 | $ | 7,140 | $ | 25,860 | $ | 20,698 | |||||||
Professional services and other | 7,056 | 7,150 | 21,622 | 20,045 | |||||||||||
Sales and marketing | 43,962 | 31,898 | 124,650 | 95,757 | |||||||||||
Research and development | 23,092 | 21,376 | 67,624 | 62,956 | |||||||||||
General and administrative | 17,352 | 13,523 | 48,695 | 35,004 | |||||||||||
Total stock-based compensation | $ | 100,442 | $ | 81,087 | $ | 288,451 | $ | 234,460 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Revenues: | |||||||||||
Subscription | 91 | % | 89 | % | 90 | % | 87 | % | |||
Professional services and other | 9 | 11 | 10 | 13 | |||||||
Total revenues | 100 | 100 | 100 | 100 | |||||||
Cost of revenues(1): | |||||||||||
Subscription | 16 | 17 | 17 | 17 | |||||||
Professional services and other | 10 | 12 | 9 | 12 | |||||||
Total cost of revenues | 26 | 29 | 26 | 29 | |||||||
Gross profit | 74 | 71 | 74 | 71 | |||||||
Operating expenses(1): | |||||||||||
Sales and marketing | 46 | 47 | 49 | 51 | |||||||
Research and development | 19 | 21 | 19 | 21 | |||||||
General and administrative | 10 | 11 | 12 | 12 | |||||||
Legal settlements | — | — | — | 27 | |||||||
Total operating expenses | 75 | 79 | 80 | 111 | |||||||
Loss from operations | (1 | ) | (8 | ) | (6 | ) | (40 | ) | |||
Interest expense | (4 | ) | (2 | ) | (3 | ) | (2 | ) | |||
Interest income and other income (expense), net | — | — | — | — | |||||||
Loss before income taxes | (5 | ) | (9 | ) | (9 | ) | (42 | ) | |||
Provision for (benefit from) income taxes | — | 1 | — | — | |||||||
Net loss | (5 | )% | (10 | )% | (9 | )% | (42 | )% |
(1) | Stock-based compensation included in the statements of operations above as a percentage of revenues was as follows: |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Cost of revenues: | |||||||||||
Subscription | 2 | % | 2 | % | 2 | % | 2 | % | |||
Professional services and other | 1 | 2 | 2 | 2 | |||||||
Sales and marketing | 9 | 9 | 9 | 10 | |||||||
Research and development | 5 | 6 | 5 | 6 | |||||||
General and administrative | 3 | 4 | 3 | 3 | |||||||
Total stock-based compensation | 20 | % | 23 | % | 21 | % | 23 | % |
Three Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Revenues: | ||||||||||
Subscription | $ | 455,421 | $ | 318,934 | 43 | % | ||||
Professional services and other | 42,749 | 38,722 | 10 | % | ||||||
Total revenues | $ | 498,170 | $ | 357,656 | 39 | % | ||||
Percentage of revenues: | ||||||||||
Subscription | 91 | % | 89 | % | ||||||
Professional services and other | 9 | % | 11 | % | ||||||
Total | 100 | % | 100 | % |
Three Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Service Management solutions | $ | 399,795 | $ | 290,005 | 38 | % | ||||
IT Operations Management solutions | 55,626 | 28,929 | 92 | % | ||||||
Total subscription revenues | $ | 455,421 | $ | 318,934 | 43 | % |
Three Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Cost of revenues: | ||||||||||
Subscription | $ | 81,878 | $ | 61,566 | 33 | % | ||||
Professional services and other | 45,402 | 41,271 | 10 | % | ||||||
Total cost of revenues | $ | 127,280 | $ | 102,837 | 24 | % | ||||
Gross profit (loss) percentage: | ||||||||||
Subscription | 82 | % | 81 | % | ||||||
Professional services and other | (6 | )% | (7 | )% | ||||||
Total gross profit percentage | 74 | % | 71 | % | ||||||
Gross Profit | $ | 370,890 | $ | 254,819 | ||||||
Headcount (at period end) | ||||||||||
Subscription | 886 | 691 | 28 | % | ||||||
Professional services and other | 555 | 504 | 10 | % | ||||||
Total headcount | 1,441 | 1,195 | 21 | % |
Three Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Sales and marketing | $ | 227,015 | $ | 166,491 | 36 | % | ||||
Percentage of revenues | 46 | % | 47 | % | ||||||
Headcount (at period end) | 2,279 | 1,740 | 31 | % |
Three Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Research and development | $ | 98,465 | $ | 75,018 | 31 | % | ||||
Percentage of revenues | 19 | % | 21 | % | ||||||
Headcount (at period end) | 1,322 | 970 | 36 | % |
Three Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
General and administrative | $ | 52,465 | $ | 40,085 | 31 | % | ||||
Percentage of revenues | 10 | % | 11 | % | ||||||
Headcount (at period end) | 853 | 596 | 43 | % |
Three Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Cost of revenues: | ||||||||||
Subscription | $ | 8,980 | $ | 7,140 | 26 | % | ||||
Professional services and other | 7,056 | 7,150 | (1 | )% | ||||||
Sales and marketing | 43,962 | 31,898 | 38 | % | ||||||
Research and development | 23,092 | 21,376 | 8 | % | ||||||
General and administrative | 17,352 | 13,523 | 28 | % | ||||||
Total stock-based compensation | $ | 100,442 | $ | 81,087 | 24 | % | ||||
Percentage of revenues | 20 | % | 23 | % |
Three Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Interest expense | $ | 16,566 | $ | 8,389 | 97 | % | ||||
Percentage of revenues | 4 | % | 2 | % |
Three Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Interest income | $ | 4,546 | $ | 2,049 | 122 | % | ||||
Foreign currency exchange loss | (4,119 | ) | (303 | ) | NM | |||||
Other | 426 | 37 | NM | |||||||
Interest and other income (expense), net | $ | 853 | $ | 1,783 | NM | |||||
Percentage of revenues | — | % | — | % |
Three Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Loss before income taxes | $ | (22,768 | ) | $ | (33,381 | ) | (32 | )% | ||
Provision for income taxes | 1,420 | 2,877 | (51 | )% | ||||||
Effective tax rate | (6 | )% | (9 | )% |
Three Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Net loss | $ | (24,188 | ) | $ | (36,258 | ) | (33 | )% | ||
Percentage of revenues | (5 | )% | (10 | )% |
Nine Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Revenues: | ||||||||||
Subscription | $ | 1,242,563 | $ | 877,035 | 42 | % | ||||
Professional services and other | 144,093 | 127,812 | 13 | % | ||||||
Total revenues | $ | 1,386,656 | $ | 1,004,847 | 38 | % | ||||
Percentage of revenues: | ||||||||||
Subscription | 90 | % | 87 | % | ||||||
Professional services and other | 10 | % | 13 | % | ||||||
Total | 100 | % | 100 | % |
Nine Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Service Management solutions | $ | 1,097,177 | $ | 799,278 | 37 | % | ||||
IT Operations Management solutions | 145,386 | 77,757 | 87 | % | ||||||
Total subscription revenues | $ | 1,242,563 | $ | 877,035 | 42 | % |
Nine Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Cost of revenues: | ||||||||||
Subscription | $ | 228,046 | $ | 170,707 | 34 | % | ||||
Professional services and other | 137,366 | 123,039 | 12 | % | ||||||
Total cost of revenues | $ | 365,412 | $ | 293,746 | 24 | % | ||||
Gross profit percentage: | ||||||||||
Subscription | 82 | % | 81 | % | ||||||
Professional services and other | 5 | % | 4 | % | ||||||
Total gross profit percentage | 74 | % | 71 | % | ||||||
Gross Profit | $ | 1,021,244 | $ | 711,101 | ||||||
Headcount (at period end) | ||||||||||
Subscription | 886 | 691 | 28 | % | ||||||
Professional services and other | 555 | 504 | 10 | % | ||||||
Total headcount | 1,441 | 1,195 | 21 | % |
Nine Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Sales and marketing | $ | 686,325 | $ | 511,607 | 34 | % | ||||
Percentage of revenues | 49 | % | 51 | % | ||||||
Headcount (at period end) | 2,279 | 1,740 | 31 | % |
Nine Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Research and development | $ | 272,959 | $ | 211,306 | 29 | % | ||||
Percentage of revenues | 19 | % | 21 | % | ||||||
Headcount (at period end) | 1,322 | 970 | 36 | % |
Nine Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
General and administrative | $ | 150,242 | $ | 117,393 | 28 | % | ||||
Percentage of revenues | 12 | % | 12 | % | ||||||
Headcount (at period end) | 853 | 596 | 43 | % |
Nine Months Ended September 30, | % Change | ||||||||
2017 | 2016 | ||||||||
(dollars in thousands) | |||||||||
Legal settlements | $ | — | $ | 270,000 | NM | ||||
Percentage of revenues | NM | 27 | % |
Nine Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Cost of revenues: | ||||||||||
Subscription | $ | 25,860 | $ | 20,698 | 25 | % | ||||
Professional services and other | 21,622 | 20,045 | 8 | % | ||||||
Sales and marketing | 124,650 | 95,757 | 30 | % | ||||||
Research and development | 67,624 | 62,956 | 7 | % | ||||||
General and administrative | 48,695 | 35,004 | 39 | % | ||||||
Total stock-based compensation | $ | 288,451 | $ | 234,460 | 23 | % | ||||
Percentage of revenues | 21 | % | 23 | % |
Nine Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Interest expense | $ | 36,581 | $ | 24,746 | 48 | % | ||||
Percentage of revenues | 3 | % | 2 | % |
Nine Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Interest income | $ | 10,268 | $ | 5,838 | 76 | % | ||||
Foreign currency exchange loss | (10,280 | ) | (1,262 | ) | 715 | % | ||||
Other | 751 | 169 | 344 | % | ||||||
Interest and other income (expense), net | $ | 739 | $ | 4,745 | NM | |||||
Percentage of revenues | — | % | — | % |
Nine Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Loss before income taxes | $ | (124,124 | ) | $ | (419,206 | ) | (70 | )% | ||
Provision for (benefit from) income taxes | (2,801 | ) | 9 | NM | ||||||
Effective tax rate | 2 | % | — | % |
Nine Months Ended September 30, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Net loss | $ | (121,323 | ) | $ | (419,215 | ) | (71 | )% | ||
Percentage of revenues | (9 | )% | (42 | )% |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(dollars in thousands) | |||||||
Net cash provided by operating activities | $ | 458,039 | $ | 27,234 | |||
Net cash used in investing activities | (366,403 | ) | (79,138 | ) | |||
Net cash provided by (used in) financing activities | 586,118 | (34,865 | ) | ||||
Net increase (decrease) in cash and cash equivalents, net of foreign currency effect on cash and cash equivalents | 703,633 | (87,238 | ) |
• | our ability to attract new customers, retain and increase sales to existing customers, and satisfy our customers’ requirements; |
• | changes in our mix of products and services; |
• | changes in foreign currency exchange rates; |
• | the rate of expansion and productivity of our sales force; |
• | the number of new employees added; |
• | the cost, timing and management effort for our development of new products and services; |
• | general economic conditions that may adversely affect either our customers’ ability or willingness to purchase additional subscriptions, delay a prospective customer’s purchasing decision, reduce the value of new subscription contracts or adversely affect renewal rates; |
• | the amount and timing of operating costs and capital expenditures related to the operation and expansion of our business; |
• | seasonality in terms of when we enter into customer agreements for our services; |
• | the length of the sales cycle for our services; |
• | changes to our management team; |
• | changes in our pricing policies, whether initiated by us or as a result of competition; |
• | significant security breaches, technical difficulties or interruptions of our services; |
• | new solutions, products or changes in pricing policies introduced by our competitors; |
• | changes in effective tax rates; |
• | changes in the average contract term of our customer agreements and changes in billings duration; |
• | changes in our renewal and upsell rates; |
• | the timing of customer payments and payment defaults by customers; |
• | extraordinary expenses such as litigation costs or damages, including settlement payments; |
• | the costs associated with acquiring new businesses and technologies and the follow-on costs of integration, including the tax effects of acquisitions; |
• | the impact of new accounting pronouncements, including the new revenue recognition standards that are effective for us beginning January 1, 2018; |
• | changes in laws or regulations impacting the delivery of our services; |
• | the amount and timing of stock awards and the related financial statement expenses; and |
• | our ability to accurately estimate the total addressable market for our products and services. |
• | compliance with multiple, conflicting and changing governmental laws and regulations, including employment, tax, competition, privacy and data protection laws and regulations; |
• | compliance by us and our business partners with international bribery and anti-corruption laws, including the UK Bribery Act and the Foreign Corrupt Practices Act; |
• | the risk that illegal or unethical activities of our business partners will be attributed to or result in liability to us; |
• | longer and potentially more complex sales cycles; |
• | longer accounts receivable payment cycles and other collection difficulties; |
• | tax treatment of revenues from international sources and changes to tax codes, including being subject to foreign tax laws and being liable for paying withholding, income or other taxes in foreign jurisdictions; |
• | different pricing and distribution environments; |
• | foreign currency fluctuations which may cause transactional and translational remeasurement losses; |
• | potential changes in international trade policies and agreements; |
• | local business practices and cultural norms that may favor local competitors; and |
• | localization of our services, including translation into foreign languages and associated expenses. |
• | assimilating or integrating the businesses, technologies, products, personnel or operations of the acquired companies; |
• | failing to achieve the expected benefits of the acquisition or investment; |
• | potential loss of key employees of the acquired company; |
• | inability to maintain relationships with customers and partners of the acquired business; |
• | unanticipated expenses related to acquired technology and its integration into our existing technology; |
• | potential adverse tax consequences; |
• | inability to generate sufficient revenue to offset acquisition or investment costs; |
• | disruption to our business and diversion of management attention and other resources; |
• | potential financial and credit risks associated with acquired customers; |
• | dependence on acquired technologies or licenses for which alternatives may not be available to us without significant cost or complexity; |
• | in the case of foreign acquisitions, the challenges associated with integrating operations across different cultures and languages and any currency and regulatory risks associated with specific countries; and |
• | potential unknown liabilities associated with the acquired businesses. |
• | changes in the estimates of our operating results or changes in recommendations by securities analysts that elect to follow our common stock; |
• | announcements of new products, services or technologies, new applications or enhancements to services, strategic alliances, acquisitions, or other significant events by us or by our competitors; |
• | fluctuations in the valuation of companies perceived by investors to be comparable to us, such as high-growth or cloud companies; |
• | changes to our management team; |
• | trading activity by directors, executive officers and significant stockholders, or the perception in the market that the holders of a large number of shares intend to sell their shares; |
• | the size of our market float; |
• | the volume of trading in our common stock, including sales upon exercise of outstanding options or vesting of equity awards or sales and purchases of any common stock issued upon conversion of the 2022 Notes or 2018 Notes or in connection with the 2022 Note Hedge and 2022 Warrant transactions relating to the 2022 Notes, or 2018 Note Hedge and 2018 Warrant transactions relating to the 2018 Notes; |
• | the economy as a whole, market conditions in our industry, and the industries of our customers; and |
• | overall performance of the equity markets. |
• | establish a classified board of directors so that not all members of our board are elected at one time; |
• | permit the board of directors to establish the number of directors; |
• | provide that directors may only be removed “for cause” and only with the approval of 66 2/3% of our stockholders; |
• | require super-majority voting to amend some provisions in our restated certificate of incorporation and restated bylaws; |
• | authorize the issuance of “blank check” preferred stock that our board could use to implement a stockholder rights plan; |
• | eliminate the ability of our stockholders to call special meetings of stockholders; |
• | prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; |
• | provide that the board of directors is expressly authorized to make, alter or repeal our restated bylaws; and |
• | establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings (though our restated bylaws have implemented stockholder proxy access). |
Exhibit Number | Description of Document | Incorporated by Reference | Filed | |||||||
Form | File No. | Exhibit | Herewith | |||||||
8-K | 171153208 | 3.1 | ||||||||
X | ||||||||||
X | ||||||||||
X | ||||||||||
X | ||||||||||
X | ||||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | X | ||||||||
101.SCH | XBRL Taxonomy Extension Schema Document. | X | ||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | X | ||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | X | ||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | X | ||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | X |
SERVICENOW, INC. | |||
Date: November 6, 2017 | By: | /s/ John J. Donahoe | |
John J. Donahoe | |||
President and Chief Executive Officer | |||
(On behalf of the Registrant) | |||
Date: November 6, 2017 | By: | /s/ Michael P. Scarpelli | |
Michael P. Scarpelli | |||
Chief Financial Officer | |||
(As Principal Financial and Accounting Officer) |
1. | Position. You will continue to serve as the Company’s Chief Product Officer reporting to the Company’s Chief Executive Officer (the “CEO”). You will have all of the duties, responsibilities and authority commensurate with the position. Your employment with the Company commenced on December 12, 2016 (your “Start Date”). Your office will be at the Company’s headquarters, currently located in Santa Clara, CA. You will be expected to devote your full working time and attention to the business of the Company. |
2. | Term. Subject to the terms of this Agreement, this Agreement will remain in effect for a period commencing on the Start Date and continuing until termination of your employment as set forth herein (the “Employment Term”). |
3. | Cash Compensation. |
a. | Base Salary. Your current annual base salary (the “Base Salary”) as of the Effective Date will be four hundred fifty thousand dollars ($450,000), less required deductions and withholdings, payable in accordance with the Company’s normal payroll practices. Your Base Salary will be subject to adjustment by the Leadership Development and Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”). Your Base Salary will be pro-rated for any partial years of employment during your Employment Term. |
b. | Target Bonus. During the Employment Term, you will be eligible to participate in our executive corporate bonus program. Your current annual bonus target is sixty seven (67%) of your Base Salary, which equals three hundred thousand dollars ($300,000) for the applicable fiscal year (your “Target Bonus”). Whether you receive the Target Bonus, and the amount of any actual bonus amount awarded (your “Actual Bonus”), will be determined by the Compensation Committee in its sole discretion based in all cases upon the achievement of both Company and individual performance objectives as established by the Compensation Committee. To earn any Actual Bonus, you must be employed by the Company on the last day of the period to which such bonus relates and at the time bonuses are paid, except as otherwise provided herein. Your bonus participation will be subject to all the terms, conditions and restrictions of the applicable Company bonus plan, as amended from time to time. The Actual Bonus shall be subject to required deductions and withholdings. |
4. | Benefits, Vacation & Expenses. |
a. | You will be entitled to participate in all employee retirement, welfare, insurance, benefit and vacation programs of the Company as are in effect from time to time and in which other senior executives of the Company are eligible to participate, on the same terms as such other senior executives, pursuant to the governing plan documents. |
b. | The Company will, in accordance with applicable Company policies and guidelines, reimburse you for all reasonable and necessary expenses incurred by you in connection with your performance of services on behalf of the Company. |
5. | Equity Awards. |
a. | Prior Equity Awards. The Company has previously granted you equity awards under the Company’s 2012 Equity Incentive Plan (the “Equity Plan”). Such awards will continue to be subject to their existing terms and any additional terms set forth in this Agreement. |
b. | Future Equity. You may be eligible for future equity grants as determined by and pursuant to the terms established by the Compensation Committee. The amount and performance metrics for subsequent performance-based restricted stock units will be determined by the Compensation Committee. |
6. | Definitions. As used in this Agreement, the following terms have the following meanings. |
a. | Cause. For purposes of this Agreement, “Cause” for the Company to terminate your employment hereunder shall mean the occurrence of any of the following events, as determined by the Company in its sole and absolute discretion: |
i. | your conviction of, or plea of nolo contendere to, any felony or any crime involving fraud, dishonesty or moral turpitude; |
ii. | your commission of or participation in a fraud or act of dishonesty against the Company that results in (or would reasonably be expected to result in) material harm to the business of the Company; |
iii. | your intentional, material violation of any contract or agreement between you and the Company or any statutory duty you owe to the Company or the improper disclosure of confidential information (as defined in the Company’s standard confidentiality agreement); |
iv. | your conduct that constitutes gross insubordination, incompetence or habitual neglect of duties and that results in (or would reasonably be expected to result in) material harm to the business of the Company; |
v. | your material failure to perform the duties of your position as Chief Product Officer; |
vi. | your material failure to follow the Company’s material policies; or |
vii. | your failure to cooperate with the Company in any investigation or formal proceeding; |
b. | Change in Control. For purposes of this Agreement, “Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events (excluding in any case transactions in which the Company or its successors issues securities to investors primarily for capital raising purposes): |
i. | the acquisition by a third party of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction; |
ii. | a merger, consolidation or similar transaction following which the stockholders of the Company immediately prior thereto do not own at least fifty percent (50%) of the combined outstanding voting power of the surviving entity (or that entity’s parent) in such merger, consolidation or similar transaction; |
iii. | the dissolution or liquidation of the Company; or |
iv. | the sale, lease, exclusive license or other disposition of all or substantially all of the assets of the Company. |
c. | COBRA. For purposes of this Agreement, “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended. |
d. | Code. For purposes of this Agreement, “Code” means the Internal Revenue Code of 1986, as amended. |
e. | Disability. For purposes of this Agreement, “Disability” shall have that meaning set forth in Section 22(e)(3) of the Code. |
f. | Good Reason. For purposes of this Agreement, “Good Reason” for you to terminate your employment hereunder shall mean the occurrence of any of the following events without your consent: |
i. | any material diminution in your authority, duties or responsibilities as in effect immediately prior to such reduction or a material diminution in the authority, duties or responsibilities of the person or persons to whom you are required to report; |
ii. | a material reduction by the Company in your annual Base Salary or Target Bonus, as initially set forth herein or as increased thereafter; provided, however, that Good Reason shall not be deemed to have occurred in the event of a reduction in your annual Base Salary or Target Bonus that is pursuant to a salary or bonus reduction program affecting substantially all of the employees of the Company or substantially all similarly situated executive employees and that does not adversely affect you to a greater extent than other similarly situated employees; |
iii. | a relocation of your business office to a location that would increase your one-way commute distance by more than thirty-five (35) miles from the current location at which you performed your duties immediately prior to the relocation, except for required travel by you on the Company’s business to an extent substantially consistent with your business travel obligations prior to the relocation; or |
iv. | failure of a successor entity to assume this Agreement; |
7. | Effect of Termination of Employment. |
a. | Termination by the Company for Cause, Death or Disability or Resignation without Good Reason. In the event your employment is terminated by the Company for Cause, your employment terminates due to your death or Disability (which termination may be implemented by written notice by the Company if you have a Disability), or you resign your employment other than for Good Reason, you will be paid only: (i) any earned but unpaid Base Salary; (ii) except in the case of termination for Cause or resignation without Good Reason, the amount of any Actual Bonus earned and payable from a prior bonus period which remains unpaid by the Company as of the date of the termination of employment determined in good faith in accordance with customary practice, to be paid at the same time as bonuses are paid for that period to other eligible executives; (iii) other unpaid and then-vested amounts, including any amount payable to you under the specific terms of any agreements, plans or awards, including insurance and health and benefit plans in which you participate, unless otherwise specifically provided in this Agreement; and (iv) reimbursement for all reasonable and necessary expenses incurred by you in connection with your performance of services on behalf of the Company in accordance with applicable Company policies and guidelines, in each case as of the effective date of such termination of employment (the “Accrued Compensation”). |
b. | Termination without Cause or Resignation for Good Reason, Absent a Change in Control. During the time period from the Effective Date through the third (3rd) anniversary of the Effective Date, if the Company terminates your employment without Cause or you resign your employment for Good Reason, in either case not in connection with a Change in Control (which is dealt with in Section 7(c) below), provided that (except with respect to the Accrued Compensation) you deliver to the Company a signed general release of claims in favor of the Company on the Company’s standard form of release (the “Release”) and satisfy all conditions to make the Release effective within sixty (60) days following your termination of employment, then, you shall be entitled to: |
i. | the Accrued Compensation; and |
ii. | a lump sum payment equal to six (6) months of your then-current Base Salary, less required deductions and withholdings; |
iii. | a lump sum payment equal to fifty percent (50%) of your Actual Bonus for the then-current fiscal year based on: (x) actual achievement of Company performance objectives and (y) deemed 100% achievement of personal performance objectives, if any, less any quarterly payment previously paid, if any, subject to required deductions and withholdings and paid when annual bonuses are otherwise paid to active employees, but no later than March 15th of the year following the year in which the termination of employment occurs; and |
iv. | a payment of the COBRA premiums (or reimbursement to you of such premiums) for continued health coverage for you and your dependents for a period of six (6) months. |
c. | Termination without Cause or Resignation for Good Reason, in Connection with a Change in Control. During the time period from the Effective Date through the third (3rd) anniversary of the Effective Date, in the event a Change in Control occurs and if the Company terminates your employment without Cause or if you resign your employment for Good Reason, in either case within the period beginning three (3) months before, and ending twelve (12) months following, such Change in Control; and provided that (except with respect to the Accrued Compensation) you deliver to the Company the signed Release and satisfy all conditions to make the Release effective within sixty (60) days following your termination of employment, then, (in lieu of any benefits pursuant to Section 7(b)), you shall be entitled to: |
i. | the Accrued Compensation; |
ii. | a lump sum payment equal to six (6) months of your then-current Base Salary, less required deductions and withholdings; |
iii. | a lump sum payment equal to fifty percent (50%) of your Target Bonus for the then-current fiscal year less any quarterly payment previously paid, if any, subject to required deductions and withholdings; |
iv. | a payment of the COBRA premiums (or reimbursement to you of such premiums) for continued health coverage for you and your dependents for a period of six (6) months; and |
v. | immediate acceleration of one hundred percent (100%) of the number of then-unvested shares subject to equity grants, unless otherwise provided (and to the extent specified) by the terms of such grants. |
d. | Miscellaneous. For the avoidance of doubt, the benefits payable pursuant to Sections 7(b) through (c) are mutually exclusive and not cumulative. All lump sum payments provided in this Section 7 shall be made no later than the 60th day following your termination of employment (unless explicitly provided otherwise above). In addition, Sections 7(b) and 7(c) and the benefits conferred therein shall expire and terminate on the third (3rd) anniversary of the Effective Date. Notwithstanding anything to the contrary in this Agreement, (i) any reference herein to a termination of your employment is intended to constitute a “separation from service” within the meaning of Section 409A of the Code, and Section 1.409A-1(h) of the regulations promulgated thereunder, and shall be so construed, and (ii) no payment will be made or become due to you during any period that you continue in a role with the Company that does not constitute a separation from service, and will be paid once you experience a “separation from service” from the Company within the meaning of Section 409A of the Code. In addition, notwithstanding anything to the contrary in this Agreement, upon a termination of your employment, you agree to resign prior to the time you deliver the Release from all positions you may hold with the Company and any of its subsidiaries or affiliated entities at such time, and no payment will be made or become due to you until you resign from all such positions, unless requested otherwise by the Board. |
8. | Parachute Payments. In the event that the severance and other benefits provided for in this Agreement or otherwise payable to you (i) constitute “parachute payments” within the meaning of Section 280G of the Code and (ii) but for this Section, would be subject to the excise tax imposed by Section 4999 of the Code, then, at your discretion, your severance and other benefits under this Agreement shall be payable either (i) in full, or (ii) as to such lesser amount which would result in no portion of such severance and other benefits being subject to the excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by you on an after-tax basis, of the greatest amount of severance benefits under this Agreement, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code. Any reduction shall be made in the following manner: first a pro-rata reduction of (i) cash payments subject to Section 409A of the Code as deferred compensation and (ii) cash payments not subject to Section 409A of the Code, and second a pro rata cancellation of (i) equity-based compensation subject to Section 409A of the Code as deferred compensation and (ii) equity-based compensation not subject to Section 409A of the Code, with equity all being reduced in reverse order of vesting and equity not subject to treatment under Treasury regulation 1.280G- Q & A 24(c) being reduced before equity that is so subject. Unless the Company and you otherwise agree in writing, any determination required under this Section shall be made in writing by the Company’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon you and the Company for all purposes. For purposes of making the calculations required by this Section, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and you shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. The Accountants shall deliver to the Company and you sufficient documentation for you to rely on it for purpose of filing your tax returns. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section. |
9. | Section 409A. To the extent (i) any payments to which you become entitled under this Agreement, or any agreement or plan referenced herein, in connection with your termination of employment with the Company constitute deferred compensation subject to Section 409A of the Code and (ii) you are deemed at the time of such termination of employment to be a “specified” employee under Section 409A of the Code, then such payment or payments shall not be made or commence until the earlier of (i) the expiration of the six (6)-month period measured from the date of your “separation from service” (as such term is at the time defined in regulations under Section 409A of the Code) with the Company; or (ii) the date of your death following such separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you, including (without limitation) the additional twenty percent (20%) tax for which you would otherwise be liable under Section 409A(a)(1)(B) of the Code in the absence of such deferral. Upon the expiration of the applicable deferral period, any payments which would have otherwise been made during that period (whether in a single sum or in installments) in the absence of this paragraph shall be paid to you or your beneficiary in one lump sum (without interest). |
10. | At Will Employment. Employment with the Company is for no specific period of time. Your employment with the Company continues to be “at will,” meaning that either you or the Company may terminate your employment at any time, with or without cause, and with or without advance notice. Any contrary representations that may have been made to you are superseded by this Agreement. This is the full and complete agreement between you and the Company on this term. Although your compensation and benefits, as well as the Company’s personnel policies and procedures, may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement signed by you and a duly authorized officer of the Company (other than you). |
11. | Confidential Information and Other Company Policies. You will continue to be bound by and comply fully with your existing At Will Employment, Confidential Information and Invention Assignment Agreement (the “CIIA”) and Arbitration Agreement (the “Arbitration Agreement”) as well as the insider trading policy, code of conduct, and any other policies and programs adopted by the Company regulating the behavior of its employees, as such policies and programs may be amended from time to time to the extent the same are not inconsistent with this Agreement, unless you consent to the same at the time of such amendment. |
12. | Company Records and Confidential Information. |
a. | Records. All records, files, documents and the like, or abstracts, summaries or copies thereof, relating to the business of the Company or the business of any subsidiary or affiliated companies, which the Company or you prepare or use or come into contact with, will remain the sole property of the Company or the affiliated or subsidiary company, as the case may be, and will be promptly returned upon termination of employment. |
b. | Confidentiality. You acknowledge that you have acquired and will acquire knowledge regarding confidential, proprietary and/or trade secret information in the course of performing your responsibilities for the Company, and you further acknowledge that such knowledge and information is the sole and exclusive property of the Company. You recognize that disclosure of such knowledge and information, or use of such knowledge and information, to or by a competitor could cause serious and irreparable harm to the Company. |
13. | Indemnification. You and the Company will enter into the form of indemnification agreement provided to other similarly situated officers of the Company. |
14. | Compensation Recoupment. All amounts payable to you hereunder shall be subject to recoupment pursuant to the Company’s current compensation recoupment policy, and any additional compensation recoupment policy or amendments to the current policy adopted by the Board from time to time hereafter, as allowed by applicable law. |
15. | Miscellaneous. |
a. | Absence of Conflicts; Competition with Prior Employer. You represent that your performance of your duties under this Agreement will not breach any other agreement as to which you are a party. You agree that you have disclosed to the Company all of your existing employment and/or business relationships, including, but not limited to, any consulting or advising relationships, outside directorships, investments in privately held companies, and any other relationships that may create a conflict of interest. You are not to bring with you to the Company, or use or disclose to any person associated with the Company, any confidential or proprietary information belonging to any former employer or other person or entity with respect to which you owe an obligation of confidentiality under any agreement or otherwise. The Company does not need and will not use such information and we will assist you in any way possible to preserve and protect the confidentiality of proprietary information belonging to third parties. Also, we expect you to abide by any obligations to refrain from soliciting any person employed by or otherwise associated with any former employer and suggest that you refrain from having any contact with such persons until such time as any non-solicitation obligation expires. |
b. | Successors. This Agreement is binding on and may be enforced by the Company and its successors and permitted assigns and is binding on and may be enforced by you and your heirs and legal representatives. Any successor to the Company or substantially all of its business (whether by purchase, merger, consolidation or otherwise) will in advance assume in writing and be bound by all of the Company’s obligations under this Agreement and shall be the only permitted assignee. |
c. | Notices. Notices under this Agreement must be in writing and will be deemed to have been given when personally delivered or two days after mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. Mailed notices to you will be addressed to you at the home address which you have most recently communicated to the Company in writing. Notices to the Company will be addressed to the CEO at the Company’s corporate headquarters. |
d. | Waiver. No provision of this Agreement will be modified or waived except in writing signed by you and an officer of the Company duly authorized by its Board or the Compensation Committee. No waiver by either party of any breach of this Agreement by the other party will be considered a waiver of any other breach of this Agreement. |
e. | Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision. |
f. | Withholding. All sums payable to you hereunder shall be reduced by all federal, state, local and other withholding and similar taxes and payments required by applicable law. |
g. | Entire Agreement. This Agreement, together with the CIIA and Arbitration Agreement, supersede and replace any prior agreements, representations or understandings (whether written, oral, implied or otherwise) between you and the Company, including, without limitation, your offer letter with the Company dated December 6, 2016, and constitute the entire agreement between you and the Company concerning the subject matter herein. This Agreement may be amended, or any of its provisions waived, only by a written document executed by both parties in the case of an amendment, or by the party against whom the waiver is asserted. |
h. | Governing Law. This Agreement will be governed by the laws of the State of California without reference to conflict of laws provisions. |
i. | Survival. The provisions of this Agreement shall survive the termination of your employment for any reason to the extent necessary to enable the parties to enforce their respective rights under this Agreement. |
1. | I have reviewed this quarterly report on Form 10-Q of ServiceNow, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: November 6, 2017 | |
/s/ John J. Donahoe | |
John J. Donahoe President and Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of ServiceNow, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: November 6, 2017 | |
/s/ Michael P. Scarpelli | |
Michael P. Scarpelli Chief Financial Officer (Principal Financial and Accounting Officer) |
• | the Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2017 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein. |
Date: November 6, 2017 | |
/s/ John J. Donahoe | |
John J. Donahoe President and Chief Executive Officer (Principal Executive Officer) |
• | the Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2017 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein. |
Date: November 6, 2017 | |
/s/ Michael P. Scarpelli | |
Michael P. Scarpelli Chief Financial Officer (Principal Financial and Accounting Officer) |
Document and Entity Information shares in Millions |
9 Months Ended |
---|---|
Sep. 30, 2017
shares
| |
Document and Entity Information [Abstract] | |
Entity Registrant Name | SERVICENOW, INC. |
Trading Symbol | NOW |
Entity Central Index Key | 0001373715 |
Document Type | 10-Q |
Document Period End Date | Sep. 30, 2017 |
Amendment Flag | false |
Document Fiscal Year Focus | 2017 |
Document Fiscal Period Focus | Q3 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 172.7 |
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subscription | $ 455,421 | $ 318,934 | $ 1,242,563 | $ 877,035 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Professional services and other | 42,749 | 38,722 | 144,093 | 127,812 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total revenues | 498,170 | 357,656 | 1,386,656 | 1,004,847 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of revenues: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subscription | [1] | 81,878 | 61,566 | 228,046 | 170,707 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Professional services and other | [1] | 45,402 | 41,271 | 137,366 | 123,039 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total cost of revenues | [1] | 127,280 | 102,837 | 365,412 | 293,746 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross profit | 370,890 | 254,819 | 1,021,244 | 711,101 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales and marketing | [1] | 227,015 | 166,491 | 686,325 | 511,607 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Research and development | [1] | 98,465 | 75,018 | 272,959 | 211,306 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General and administrative | [1] | 52,465 | 40,085 | 150,242 | 117,393 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Legal settlements | [1] | 0 | 0 | 0 | 270,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total operating expenses | [1] | 377,945 | 281,594 | 1,109,526 | 1,110,306 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss from operations | (7,055) | (26,775) | (88,282) | (399,205) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense | (16,566) | (8,389) | (36,581) | (24,746) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income and other income (expense), net | 853 | 1,783 | 739 | 4,745 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss before income taxes | (22,768) | (33,381) | (124,124) | (419,206) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for (benefit from) income taxes | 1,420 | 2,877 | (2,801) | 9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | $ (24,188) | $ (36,258) | $ (121,323) | $ (419,215) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss per share - basic and diluted (in dollars per share) | $ (0.14) | $ (0.22) | $ (0.71) | $ (2.56) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted-average shares used to compute net loss per share - basic and diluted (in shares) | 171,883,190 | 165,378,836 | 170,359,717 | 163,767,329 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | $ 3,389 | $ 203 | $ 15,482 | $ (1,106) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gain (loss) on investments, net of tax | (2,864) | (615) | 5,243 | 1,523 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | 525 | (412) | 20,725 | 417 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive loss | $ (23,663) | $ (36,670) | $ (100,598) | $ (418,798) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Condensed Consolidated Statements of Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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Stock-based compensation | $ 288,451 | $ 234,460 | ||
Cost of revenues - subscription | ||||
Stock-based compensation | $ 8,980 | $ 7,140 | 25,860 | 20,698 |
Cost of revenues - professional services and other | ||||
Stock-based compensation | 7,056 | 7,150 | 21,622 | 20,045 |
Sales and marketing | ||||
Stock-based compensation | 43,962 | 31,898 | 124,650 | 95,757 |
Research and development | ||||
Stock-based compensation | 23,092 | 21,376 | 67,624 | 62,956 |
General and administrative | ||||
Stock-based compensation | $ 17,352 | $ 13,523 | $ 48,695 | $ 35,004 |
Description of the Business |
9 Months Ended |
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Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Business | Description of the Business |
Summary of Significant Accounting Policies |
9 Months Ended |
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Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements and condensed footnotes have been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for fair statement of results for the interim periods presented have been included. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for other interim periods or future years. The condensed consolidated balance sheet as of December 31, 2016 is derived from audited financial statements as of that date; however, it does not include all of the information and footnotes required by GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016, which was filed with the SEC on February 28, 2017. Principles of Consolidation The condensed consolidated financial statements have been prepared in conformity with GAAP, and include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation. Prior Period Reclassification Certain reclassifications of prior period amounts have been made in our condensed consolidated statements of cash flow and Note 16 to conform to the current period presentation. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as reported amounts of revenues and expenses during the reporting period. Such management estimates and assumptions include, but are not limited to, the best estimate of selling price of the deliverables included in multiple elements revenue arrangements, the fair value of assets acquired and liabilities assumed for business combinations, stock-based compensation expenses, the assessment of the useful life and recoverability of our property and equipment, goodwill and identifiable intangible assets, future taxable income and legal contingencies. Actual results could differ from those estimates. New Accounting Pronouncements Pending Adoption In May 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-09, "Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting," which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This new standard is effective for our interim and annual periods beginning January 1, 2018, and early adoption is permitted. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements. In March 2017, the FASB issued ASU 2017-08, "Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20)—Premium Amortization on Purchased Callable Debt Securities," which shortens the amortization period for certain callable debt securities held at a premium to require such premiums to be amortized to the earliest call date unless applicable guidance related to certain pools of securities is applied to consider estimated prepayments. This new standard is effective for our interim and annual periods beginning January 1, 2019, and early adoption is permitted. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, "Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which eliminates Step 2 from the goodwill impairment test. This standard requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. In addition, this new standard eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment. This new standard is effective for our interim and annual periods beginning January 1, 2020, and early adoption is permitted. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This new standard is required to be applied on a prospective basis, effective for our interim and annual periods beginning January 1, 2018, and early adoption is permitted. The actual impact upon adoption of this new standard will depend upon the nature of our future acquisitions, if any. In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force)," which requires that amounts generally described as restricted cash or restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This new standard is effective for our interim and annual periods beginning January 1, 2018, and early adoption is permitted. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, "Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory," which includes a revision of the accounting for the income tax consequences of intra-entity transfers of assets other than inventory to reduce the complexity in accounting standards. This new standard is effective for our interim and annual periods beginning January 1, 2018, and early adoption is permitted. The new standard is required to be applied on a modified retrospective basis through a cumulative effect adjustment directly to retained earnings as of the beginning of the period of adoption. While we believe the current impact upon the adoption of this standard on our consolidated financial statements will be immaterial, the actual impact will largely depend on future intra-entity asset transfers, if any. In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments," which provides guidance on eight specific cash flow issues. Among these issues, this standard requires, at the settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowings, the portion of the cash payment attributable to the accreted interest related to the debt discount to be classified as cash flows for operating activities, and the portion of the cash payments attributable to the principal to be classified as cash outflows for financing activities. This new standard is effective for our interim and annual periods beginning January 1, 2018, and early adoption is permitted. We currently expect to settle $575.0 million relating to the principal amount of our 0% convertible senior notes due November 1, 2018 in cash upon maturity. At that time, we expect to classify approximately $155.3 million of debt discount attributable to the difference between the 0% coupon interest rate and the 6.5% effective interest rate as an operating cash outflow in our consolidated statements of cash flows. The remaining $419.7 million will be presented as a financing cash outflow in our consolidated statements of cash flows. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. Credit losses relating to available-for-sale debt securities should be recorded through an allowance for credit losses. This new standard is effective for our interim and annual periods beginning January 1, 2020. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which requires lessees to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets, and to recognize on the income statement the expenses in a manner similar to current practice. This new standard, including related amendments recently issued by the FASB, is effective for our interim and annual periods beginning January 1, 2019, and early adoption is permitted. While we are currently evaluating the impact of the adoption of this standard on our consolidated financial statements, we currently anticipate that the adoption of this standard will have a material impact on our consolidated balance sheets given that we had operating lease commitments of approximately $352 million as of September 30, 2017. However, we do not anticipate that the adoption of this standard will have a material impact on our consolidated statements of comprehensive loss since the expense recognition under this new standard will be similar to current practice. In January 2016, the FASB issued ASU 2016-01, "Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments, and requires equity securities to be measured at fair value with changes in fair value recognized through net income. This new standard allows a measurement alternative for equity investments that do not have readily determinable fair values to be measured at cost, less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. This new standard is effective for our interim and annual periods beginning January 1, 2018, and will be adopted by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption, with prospective adoption of the amendments related to equity securities without readily determinable fair values existing as of the date of adoption. While we are currently evaluating the impact of the adoption of this standard on our consolidated financial statements, we preliminarily expect the adoption of this standard to impact our strategic investments and our marketable equity securities, and plan to elect the measurement alternative for equity investments that do not have readily determinable fair values. In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)." Under this new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, this standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued several amendments to the standard, including clarification on accounting for licenses of intellectual property and identifying performance obligations. This new standard is effective for our interim and annual periods beginning January 1, 2018. The Topic 606 guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method) or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method). We currently anticipate adopting the standard using the full retrospective method to restate each prior reporting period presented. Given the scope of work required to implement the recognition and disclosure requirements under the Topic 606 standard, we began our assessment process in 2014 and have since made significant progress, including the identification and on-going implementation of necessary changes to our policies, processes, systems and controls. We do not expect the Topic 606 standard to have a material impact on the timing of revenue recognition related to our cloud-based subscription offerings. However, we expect this new standard to have a material impact on the timing of revenue and expense recognition for our contracts related to on-premises offerings, in which we grant customers the right to deploy our software on the customer’s own servers, without significant penalty. Under this new standard, the requirement to have vendor specific objective evidence (VSOE) for undelivered elements is eliminated. As such, we may be required to recognize as revenue a portion of the sales price upon delivery of the software, compared to the current practice of recognizing the entire sales price ratably over an estimated subscription period due to the lack of VSOE. To the extent the amounts recognized as revenue have not been billed, the accrued revenue will be recorded as unbilled receivables on our consolidated balance sheets. We currently believe our total revenues reported for the year ended December 31, 2016 would have increased by approximately $10 to $15 million on a pro forma basis if the new standard had been applied for the entire 2016 fiscal year starting on January 1, 2016. In addition, we expect the Topic 606 standard to change the way we account for commissions paid on both our on-premises offerings and our cloud-based subscription offerings. Our current practice is to defer only direct and incremental commission costs to obtain a contract and amortize those costs over the contract term for both our on-premises offerings and our cloud-based subscription offerings. Under this new standard, we will defer all incremental commission costs to obtain customer contracts, including indirect costs that are not tied to a specific contract, for both our on-premises offerings and our cloud-based subscription offerings. Commissions allocated to the software element of our on-premises offerings, which are delivered up front, will be expensed immediately under this new standard, while commissions allocated to the support element of our on-premises offerings as well as commissions paid on our cloud-based subscription offerings, which are delivered over time, will be amortized over an expected period of benefit, which we have determined to be approximately five years. As a result, we currently expect the deferred commissions asset to increase and the related amortization expense in each reporting period to decrease under this new standard. The aggregate impact resulting from changes in the way we account for commission expense for both our cloud-based subscription offerings and our on-premises offerings would have reduced our sales and marketing expenses by approximately $20 to $25 million on a pro forma basis for the year ended December 31, 2016 if the new standard had been applied for the entire 2016 fiscal year starting on January 1, 2016. |
Investments |
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Available-for-sale Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments Marketable Securities The following is a summary of our available-for-sale investment securities, excluding those securities classified within cash and cash equivalents on the condensed consolidated balance sheets (in thousands):
As of September 30, 2017, the contractual maturities of our available-for-sale investment securities, excluding marketable equity securities and those securities classified within cash and cash equivalents on the condensed consolidated balance sheets, did not exceed 24 months. The fair values of these securities, by remaining contractual maturity, are as follows (in thousands):
The following table shows the fair values and the gross unrealized losses of our available-for-sale investment securities, classified by the length of time that the securities have been in a continuous unrealized loss position, and aggregated by investment types, excluding those securities classified within cash and cash equivalents on the condensed consolidated balance sheets (in thousands):
There were no impairments considered "other-than-temporary" as it is more likely than not we will hold the securities until maturity or a recovery of the cost basis. Strategic Investments |
Fair Value Measurements |
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Fair Value, Assets, Liabilities and Stockholders' Equity Measured on Recurring Basis [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The following table presents our fair value hierarchy for our assets measured at fair value on a recurring basis at September 30, 2017 (in thousands):
The following table presents our fair value hierarchy for our assets measured at fair value on a recurring basis at December 31, 2016 (in thousands):
We determine the fair value of our security holdings based on pricing from our service providers and market prices from industry-standard independent data providers. Such market prices may be quoted prices in active markets for identical assets (Level 1 inputs) or pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs), such as yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. |
Business Combinations |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations | Business Combinations 2017 Business Combinations DxContinuum On January 20, 2017, we completed the acquisition of a privately-held company, DxContinuum, Inc. (DxContinuum), by acquiring all issued and outstanding common shares of DxContinuum for approximately $15.0 million in an all-cash transaction to enhance the predictive capabilities of our solutions. The following table summarizes the allocation of the purchase price to the fair value of the tangible and intangible assets acquired and liabilities assumed as of the acquisition date:
The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. We believe the goodwill represents the synergies expected from expanded market opportunities when integrating DxContinuum technologies with our offerings. The goodwill balance is not deductible for income tax purposes. Other 2017 Business Combinations In addition to the DxContinuum acquisition during the nine months ended September 30, 2017, we also completed the acquisition of privately-held companies Qlue, Inc. and Digital Telepathy, Inc. (Telepathy) for approximately $11.6 million in cash, and have included the results of operations of these companies in our condensed consolidated financial statements from their respective dates of purchase. In allocating the aggregate purchase price based on the estimated fair value, we recorded $9.1 million of goodwill, $3.5 million of developed technology intangible assets (to be amortized over estimated useful life of five years) and $1.1 million of deferred tax liabilities. Amounts allocated to the remaining acquired tangible assets and assumed liabilities were not material. $4.1 million of the goodwill balance associated with these business combinations is deductible for income tax purposes. We are obligated to make cash payments of up to $5.0 million in connection with the acquisition of Telepathy,, contingent upon the continued employment by us of certain former employees of Telepathy on specified future dates. We determined that this additional consideration was not part of the purchase price and will be recognized as post-acquisition expense over the related requisite service period. Aggregate acquisition-related costs associated with all 2017 business combinations of $1.5 million for the nine months ended September 30, 2017 are included in general and administrative expenses in our condensed consolidated statements of comprehensive loss. 2016 Business Combinations BrightPoint Security On June 3, 2016, we completed the acquisition of a privately-held company, BrightPoint Security, Inc. (BrightPoint), by acquiring all issued and outstanding common shares of BrightPoint for approximately $19.6 million in an all-cash transaction in order to expand our Security Operations solutions. The following table summarizes the allocation of the purchase price to the fair value of the tangible and intangible assets acquired and liabilities assumed as of the acquisition date:
ITapp On April 8, 2016, we completed the acquisition of a privately-held company, ITapp Inc. (ITapp), by acquiring all issued and outstanding common shares of ITapp for approximately $14.5 million in an all-cash transaction in order to expand our IT Operations Management solutions. The following table summarizes the allocation of the purchase price to the fair value of the tangible and intangible assets acquired and liabilities assumed as of the acquisition date:
For both of the 2016 business combinations, the excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. We believe the goodwill represents the synergies expected from expanded market opportunities when integrating the acquired technologies with our offerings. The goodwill balance for both business combinations is not deductible for income tax purposes. Aggregate acquisition-related costs of $1.0 million are included in general and administrative expenses in our condensed consolidated statements of comprehensive loss. Unaudited Pro Forma Financial Information The results of operations of our 2017 and 2016 business combinations have been included in our condensed consolidated financial statements from their respective dates of purchase. The following pro forma consolidated financial information combines the results of operations from us and all the companies that we acquired since January 1, 2016 for the three and nine months ended September 30, 2017 and 2016, as if these acquisitions had occurred on January 1, 2016 (in thousands, except share and per share data):
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill balances are presented below (in thousands):
Intangible assets consist of the following (in thousands):
During the nine months ended September 30, 2017, we acquired patents with a weighted average useful life of 10 years for an aggregate purchase price of $6.2 million.
Amortization expense for intangible assets for the three months ended September 30, 2017 and 2016 was approximately $4.8 million and $4.3 million, respectively, and for the nine months ended September 30, 2017 and 2016 was approximately $14.3 million and $10.9 million, respectively. The following table presents the estimated future amortization expense related to intangible assets held at September 30, 2017 (in thousands):
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Property and Equipment |
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Property and Equipment | Property and Equipment Property and equipment, net consists of the following (in thousands):
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Accrued Expenses and Other Current Liabilities |
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Disclosure Summary Of Accrued Expenses And Other Current Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following (in thousands):
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Convertible Senior Notes |
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Convertible Notes Payable [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Senior Notes | Convertible Senior Notes During the three months ended June 30, 2017, we issued $782.5 million of 0% convertible senior notes (the 2022 Notes), due June 1, 2022 unless earlier converted or repurchased in accordance with their terms. In November 2013, we issued $575.0 million of 0% convertible senior notes (the 2018 Notes, and together with the 2022 Notes, the Notes), due November 1, 2018 unless earlier converted or repurchased in accordance with their terms. The Notes do not bear interest, and we cannot redeem the Notes prior to maturity. The Notes are unsecured obligations and do not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by us or any of our subsidiaries. Upon conversion of the Notes, we may choose to pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock. We currently intend to settle the principal amount of the Notes with cash.
Holders of the Notes may convert their Notes at their option at any time prior to the close of business on the business day immediately preceding February 1, 2022 and July 1, 2018, for the 2022 Notes and 2018 Notes, respectively (each, a Convertible Date), only under the following circumstances:
On or after the applicable Convertible Date, a holder may convert all or any portion of its Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. As noted above, we currently intend to settle the principal amount of the Notes with cash. The conversion price will be subject to adjustment in some events. Holders of the Notes who convert their Notes in connection with certain corporate events that constitute a “make-whole fundamental change” are, under certain circumstances, entitled to an increase in the conversion rate. Additionally, in the event of a corporate event that constitutes a “fundamental change,” holders of the Notes may require us to purchase with cash all or a portion of the Notes upon the occurrence of a fundamental change, at a purchase price equal to 100% of the principal amount of the respective Notes plus any accrued and unpaid special interest, if any. In accounting for the issuance of the Notes, we separated the Notes into liability and equity components. The carrying cost of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the Notes. The difference between the principal amount of the Notes and the proceeds allocated to the liability component, or the debt discount, is amortized to interest expense using the effective interest method over the term of the respective Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the transaction costs related to the issuance of the Notes, we allocated the total amount incurred to the liability and equity components based on their relative fair values. Transaction costs attributable to the liability component are being amortized to interest expense over the respective terms of the Notes, and transaction costs attributable to the equity component were netted with the equity component of the Notes in stockholders’ equity. The Notes consisted of the following (in thousands):
The price of our common stock was greater than or equal to 130% of the conversion price of the 2018 Notes for at least 20 trading days during the 30 consecutive trading days ending on the last trading day of the quarter ended June 30, 2017. Therefore, as of June 30, 2017, the 2018 Notes became convertible at the holders’ option beginning on July 1, 2017 and ending September 30, 2017. As of September 30, 2017, the 2018 Notes continue to be convertible at the holders' option for the period beginning October 1, 2017 and ending December 31, 2017. During the quarter ended September 30, 2017, we received requests to convert an aggregate of $4,000 principal amount of 2018 Notes, which we elected to settle in cash. As we have the option to settle the principal amount in shares and we are more than 12 months away from the maturity date, we continue to classify the net carrying amount of our 2018 Notes as a long-term liability and the equity component of our 2018 Notes continues to remain in permanent equity. Our 2018 Notes were not convertible as of December 31, 2016. Our 2022 Notes were not convertible as of September 30, 2017. We consider the fair value of the Notes at September 30, 2017 to be a Level 2 measurement. The estimated fair values of the Notes at September 30, 2017 and December 31, 2016 based on the closing trading price per $100 of the Notes were as follows (in thousands):
As of September 30, 2017, the remaining life of the 2022 Notes and 2018 Notes are 56 months and 13 months, respectively. The following table sets forth total interest expense recognized related to the Notes (in thousands):
Note Hedges To minimize the impact of potential economic dilution upon conversion of the Notes, we entered into convertible note hedge transactions (the 2022 Note Hedge and 2018 Note Hedge, respectively, and collectively, the Note Hedges) with certain investment banks, with respect to our common stock concurrently with the issuance of the 2022 Notes and 2018 Notes.
The Note Hedges cover shares of our common stock at a strike price per share that corresponds to the initial conversion price of the respective Notes, subject to adjustment, and are exercisable upon conversion of the Notes. If exercised, we may elect to receive cash, shares of our common stock, or a combination of cash and shares. We have accounted for the aggregate amount of purchase price for the Note Hedges as a reduction to additional paid-in capital. The Note Hedges will expire upon the maturity of the Notes. The Note Hedges are intended to reduce the potential economic dilution upon conversion of the Notes in the event that the fair value per share of our common stock at the time of exercise is greater than the conversion price of the Notes. The Note Hedges are separate transactions and are not part of the terms of the Notes. Holders of the Notes will not have any rights with respect to the Note Hedges. The Note Hedges do not impact earnings per share, as they were entered into to offset any dilution from the Notes. Warrants
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Accumulated Other Comprehensive Loss |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss, net of tax, consist of the following (in thousands):
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Stockholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders' Equity Common Stock We were authorized to issue 600,000,000 shares of common stock as of September 30, 2017. Holders of our common stock are not entitled to receive dividends unless declared by our board of directors. As of September 30, 2017, we had 172,706,935 shares of common stock outstanding and had reserved shares of common stock for future issuance as follows:
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Equity Awards |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Awards | Equity Awards We currently have two equity incentive plans, our 2005 Stock Option Plan (the 2005 Plan) and our 2012 Equity Incentive Plan (the 2012 Plan). Our 2005 Plan was terminated in connection with our initial public offering in 2012 but continues to govern the terms of outstanding stock options that were granted prior to the termination of the 2005 Plan. We no longer grant equity awards pursuant to our 2005 Plan. Our 2012 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, RSUs, performance-based stock awards and other forms of equity compensation (collectively, equity awards). In addition, the 2012 Plan provides for the grant of performance cash awards. Incentive stock options may be granted only to employees. All other equity awards may be granted to employees, including officers, as well as directors and consultants. The share reserve may increase to the extent outstanding stock options under the 2005 Plan expire or terminate unexercised. The share reserve also automatically increases on January 1 of each year until January 1, 2022, by up to 5% of the total number of shares of common stock outstanding on December 31 of the preceding year as determined by our board of directors. On January 1, 2017, 8,371,539 shares of common stock were automatically added to the 2012 Plan pursuant to the provision described in the preceding sentence. Our 2012 Employee Stock Purchase Plan (the 2012 ESPP) authorizes the issuance of shares of common stock pursuant to purchase rights granted to our employees. The price at which common stock is purchased under the 2012 ESPP is equal to 85% of the fair market value of our common stock on the first or last day of the offering period, whichever is lower. Offering periods are six months long and begin on February 1 and August 1 of each year. The number of shares of common stock reserved for issuance automatically increases on January 1 of each year until January 1, 2022, by up to 1% of the total number of shares of common stock outstanding on December 31 of the preceding year as determined by our board of directors. On January 1, 2017, 1,674,308 shares of common stock were automatically added to the 2012 ESPP pursuant to the provision described in the preceding sentence. Stock Options A summary of the stock option activity for the nine months ended September 30, 2017 is as follows:
Aggregate intrinsic value represents the difference between the estimated fair value of our common stock and the exercise price of outstanding, in-the-money options. The weighted-average grant date fair value per share of options granted was $37.57 for the nine months ended September 30, 2017. The total fair value of stock options vested during the nine months ended September 30, 2017 was $8.6 million. Included in the number of options granted during the nine months ended September 30, 2017 are 396,720 options with both service and market-based criteria, which were granted to our President and Chief Executive Officer, who started his employment with us during the second quarter. The fair values of the options granted and the corresponding derived service periods were calculated using a Monte Carlo simulation, which estimates the potential outcome of reaching the market condition based on simulated future stock prices. The stock-based compensation expense associated with these options are recorded on a graded vesting basis. As of September 30, 2017, total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock options was approximately $29.7 million. The weighted-average remaining vesting period of unvested stock options at September 30, 2017 was 3.34 years. RSUs A summary of RSU activity for the nine months ended September 30, 2017 is as follows:
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share | Net Loss Per Share Basic net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, adjusted for the effects of dilutive shares of common stock, which are comprised of outstanding common stock options, RSUs, ESPP obligations, convertible senior notes and warrants. The dilutive potential shares of common stock are computed using the treasury stock method or the as-if converted method, as applicable. The effects of outstanding common stock options, RSUs, ESPP obligations, convertible senior notes and warrants are excluded from the computation of diluted net loss per share in periods in which the effect would be antidilutive. The following table presents the calculation of basic and diluted net loss per share (in thousands, except share and per share data):
Potentially dilutive securities that are not included in the calculation of diluted net loss per share because doing so would be antidilutive are as follows:
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Income Taxes |
9 Months Ended |
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Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We compute our provision for income taxes by applying the estimated annual effective tax rate to year-to-date loss from recurring operations and adjust the provision for discrete tax items recorded in the period. Our effective tax rate was (6)% and 2% for the three and nine months ended September 30, 2017, which was lower than the U.S. federal statutory tax rate of 34%. The lower tax rate was primarily attributable to our loss from operations, the foreign tax rate differential, a release of the valuation allowance in connection with acquisitions, excess tax benefits of stock-based compensation and the tax effects of unrealized gains in investment securities. Our effective tax rate was (9)% and 0% for the three and nine months ended September 30, 2016, which was lower than the U.S. federal statutory tax rate of 34%. The lower tax rate was primarily attributable to our loss from operations, the foreign tax rate differential, a release of the valuation allowance in connection with acquisitions and excess tax benefits of stock-based compensation. We are subject to taxation in the United States and foreign jurisdictions. As of September 30, 2017, our tax years 2005 to 2016 remain subject to examination in most jurisdictions. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Operating Leases and Other Contractual Commitments For some of our offices and data centers, we have entered into non-cancelable operating lease agreements with various expiration dates. Future minimum payments under our non-cancelable operating leases and other contractual commitments outstanding as of September 30, 2017 are presented in the table below (in thousands):
In addition to the amounts above, the repayment of our 2022 Notes with an aggregate principal amount of $782.5 million is due on June 1, 2022, and the repayment of our 2018 Notes with an aggregate principal amount of $575.0 million is due on November 1, 2018. Refer to Note 9 for further information regarding our Notes. Legal Proceedings From time to time, we are party to litigation and other legal proceedings in the ordinary course of business. While the results of any litigation or other legal proceedings are uncertain, management does not believe the ultimate resolution of any pending legal matters is likely to have a material adverse effect on our financial position, results of operations or cash flows, except for those matters for which we have recorded a loss contingency. We accrue for loss contingencies when it is both probable that we will incur the loss and when we can reasonably estimate the amount of the loss or range of loss. Generally, our subscription agreements require us to defend our customers for third-party intellectual property infringement and other claims. Any adverse determination related to intellectual property claims or other litigation could prevent us from offering our services and adversely affect our financial condition and results of operations. On February 6, 2014, Hewlett-Packard Company (Hewlett-Packard) filed a lawsuit against us in the U.S. District Court for the Northern District of California. The lawsuit alleged patent infringement and sought damages and an injunction. On or about November 1, 2015, Hewlett Packard Enterprise Company (HPE) separated from Hewlett-Packard as an independent company, Hewlett-Packard assigned to HPE all right, title, and interest in the eight Hewlett-Packard patents in the lawsuit, and HPE was substituted as plaintiff in the litigation. On March 4, 2016, we entered into a confidential settlement agreement resolving the lawsuit with HPE (HPE Settlement). As a result, on March 9, 2016, the lawsuit was dismissed. BMC Software, Inc. (BMC) filed lawsuits against us in the U.S. District Court for the Eastern District of Texas on September 23, 2014 and February 12, 2016, and in the Dusseldorf (Germany) Regional Court, Patent Division, on March 2, 2016. Each of the lawsuits alleged patent infringement and sought damages and an injunction. On April 8, 2016, we entered into a confidential settlement agreement resolving all the lawsuits with BMC (BMC Settlement). As a result, the second Texas lawsuit was dismissed on April 14, 2016, and each of the initial Texas lawsuit and the German lawsuit was dismissed on April 25, 2016. |
Information about Geographic Areas and Products |
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Segments, Geographical Areas [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Information about Geographic Areas and Products | Information about Geographic Areas and Products Revenues by geographic area, based on the location of our users, were as follows for the periods presented (in thousands):
Property and equipment, net by geographic area were as follows (in thousands):
Subscription revenues consist of the following (in thousands):
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Subsequent Event |
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Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event |
Summary of Significant Accounting Policies (Policies) |
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Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements and condensed footnotes have been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for fair statement of results for the interim periods presented have been included. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for other interim periods or future years. The condensed consolidated balance sheet as of December 31, 2016 is derived from audited financial statements as of that date; however, it does not include all of the information and footnotes required by GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016, which was filed with the SEC on February 28, 2017. |
Principles of Consolidation | The condensed consolidated financial statements have been prepared in conformity with GAAP, and include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation. |
Prior Period Reclassification | Certain reclassifications of prior period amounts have been made in our condensed consolidated statements of cash flow and Note 16 to conform to the current period presentation |
Use of Estimates | The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as reported amounts of revenues and expenses during the reporting period. Such management estimates and assumptions include, but are not limited to, the best estimate of selling price of the deliverables included in multiple elements revenue arrangements, the fair value of assets acquired and liabilities assumed for business combinations, stock-based compensation expenses, the assessment of the useful life and recoverability of our property and equipment, goodwill and identifiable intangible assets, future taxable income and legal contingencies. Actual results could differ from those estimates. |
New Accounting Pronouncements Pending Adoption | In May 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-09, "Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting," which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This new standard is effective for our interim and annual periods beginning January 1, 2018, and early adoption is permitted. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements. In March 2017, the FASB issued ASU 2017-08, "Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20)—Premium Amortization on Purchased Callable Debt Securities," which shortens the amortization period for certain callable debt securities held at a premium to require such premiums to be amortized to the earliest call date unless applicable guidance related to certain pools of securities is applied to consider estimated prepayments. This new standard is effective for our interim and annual periods beginning January 1, 2019, and early adoption is permitted. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, "Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which eliminates Step 2 from the goodwill impairment test. This standard requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. In addition, this new standard eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment. This new standard is effective for our interim and annual periods beginning January 1, 2020, and early adoption is permitted. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This new standard is required to be applied on a prospective basis, effective for our interim and annual periods beginning January 1, 2018, and early adoption is permitted. The actual impact upon adoption of this new standard will depend upon the nature of our future acquisitions, if any. In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force)," which requires that amounts generally described as restricted cash or restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This new standard is effective for our interim and annual periods beginning January 1, 2018, and early adoption is permitted. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, "Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory," which includes a revision of the accounting for the income tax consequences of intra-entity transfers of assets other than inventory to reduce the complexity in accounting standards. This new standard is effective for our interim and annual periods beginning January 1, 2018, and early adoption is permitted. The new standard is required to be applied on a modified retrospective basis through a cumulative effect adjustment directly to retained earnings as of the beginning of the period of adoption. While we believe the current impact upon the adoption of this standard on our consolidated financial statements will be immaterial, the actual impact will largely depend on future intra-entity asset transfers, if any. In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments," which provides guidance on eight specific cash flow issues. Among these issues, this standard requires, at the settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowings, the portion of the cash payment attributable to the accreted interest related to the debt discount to be classified as cash flows for operating activities, and the portion of the cash payments attributable to the principal to be classified as cash outflows for financing activities. This new standard is effective for our interim and annual periods beginning January 1, 2018, and early adoption is permitted. We currently expect to settle $575.0 million relating to the principal amount of our 0% convertible senior notes due November 1, 2018 in cash upon maturity. At that time, we expect to classify approximately $155.3 million of debt discount attributable to the difference between the 0% coupon interest rate and the 6.5% effective interest rate as an operating cash outflow in our consolidated statements of cash flows. The remaining $419.7 million will be presented as a financing cash outflow in our consolidated statements of cash flows. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. Credit losses relating to available-for-sale debt securities should be recorded through an allowance for credit losses. This new standard is effective for our interim and annual periods beginning January 1, 2020. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which requires lessees to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets, and to recognize on the income statement the expenses in a manner similar to current practice. This new standard, including related amendments recently issued by the FASB, is effective for our interim and annual periods beginning January 1, 2019, and early adoption is permitted. While we are currently evaluating the impact of the adoption of this standard on our consolidated financial statements, we currently anticipate that the adoption of this standard will have a material impact on our consolidated balance sheets given that we had operating lease commitments of approximately $352 million as of September 30, 2017. However, we do not anticipate that the adoption of this standard will have a material impact on our consolidated statements of comprehensive loss since the expense recognition under this new standard will be similar to current practice. In January 2016, the FASB issued ASU 2016-01, "Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments, and requires equity securities to be measured at fair value with changes in fair value recognized through net income. This new standard allows a measurement alternative for equity investments that do not have readily determinable fair values to be measured at cost, less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. This new standard is effective for our interim and annual periods beginning January 1, 2018, and will be adopted by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption, with prospective adoption of the amendments related to equity securities without readily determinable fair values existing as of the date of adoption. While we are currently evaluating the impact of the adoption of this standard on our consolidated financial statements, we preliminarily expect the adoption of this standard to impact our strategic investments and our marketable equity securities, and plan to elect the measurement alternative for equity investments that do not have readily determinable fair values. In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)." Under this new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, this standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued several amendments to the standard, including clarification on accounting for licenses of intellectual property and identifying performance obligations. This new standard is effective for our interim and annual periods beginning January 1, 2018. The Topic 606 guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method) or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method). We currently anticipate adopting the standard using the full retrospective method to restate each prior reporting period presented. Given the scope of work required to implement the recognition and disclosure requirements under the Topic 606 standard, we began our assessment process in 2014 and have since made significant progress, including the identification and on-going implementation of necessary changes to our policies, processes, systems and controls. We do not expect the Topic 606 standard to have a material impact on the timing of revenue recognition related to our cloud-based subscription offerings. However, we expect this new standard to have a material impact on the timing of revenue and expense recognition for our contracts related to on-premises offerings, in which we grant customers the right to deploy our software on the customer’s own servers, without significant penalty. Under this new standard, the requirement to have vendor specific objective evidence (VSOE) for undelivered elements is eliminated. As such, we may be required to recognize as revenue a portion of the sales price upon delivery of the software, compared to the current practice of recognizing the entire sales price ratably over an estimated subscription period due to the lack of VSOE. To the extent the amounts recognized as revenue have not been billed, the accrued revenue will be recorded as unbilled receivables on our consolidated balance sheets. We currently believe our total revenues reported for the year ended December 31, 2016 would have increased by approximately $10 to $15 million on a pro forma basis if the new standard had been applied for the entire 2016 fiscal year starting on January 1, 2016. In addition, we expect the Topic 606 standard to change the way we account for commissions paid on both our on-premises offerings and our cloud-based subscription offerings. Our current practice is to defer only direct and incremental commission costs to obtain a contract and amortize those costs over the contract term for both our on-premises offerings and our cloud-based subscription offerings. Under this new standard, we will defer all incremental commission costs to obtain customer contracts, including indirect costs that are not tied to a specific contract, for both our on-premises offerings and our cloud-based subscription offerings. Commissions allocated to the software element of our on-premises offerings, which are delivered up front, will be expensed immediately under this new standard, while commissions allocated to the support element of our on-premises offerings as well as commissions paid on our cloud-based subscription offerings, which are delivered over time, will be amortized over an expected period of benefit, which we have determined to be approximately five years. As a result, we currently expect the deferred commissions asset to increase and the related amortization expense in each reporting period to decrease under this new standard. The aggregate impact resulting from changes in the way we account for commission expense for both our cloud-based subscription offerings and our on-premises offerings would have reduced our sales and marketing expenses by approximately $20 to $25 million on a pro forma basis for the year ended December 31, 2016 if the new standard had been applied for the entire 2016 fiscal year starting on January 1, 2016. |
Strategic Investments | Our strategic investments consist of debt and non-marketable equity investments in privately-held companies. Debt investments in privately-held companies are classified as available-for-sale and are recorded at their estimated fair value with changes in fair value recorded through accumulated other comprehensive income, while non-marketable equity securities are recorded at cost. |
Fair Value Measurements | We determine the fair value of our security holdings based on pricing from our service providers and market prices from industry-standard independent data providers. Such market prices may be quoted prices in active markets for identical assets (Level 1 inputs) or pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs), such as yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. |
Net Loss Per Share | Basic net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, adjusted for the effects of dilutive shares of common stock, which are comprised of outstanding common stock options, RSUs, ESPP obligations, convertible senior notes and warrants. The dilutive potential shares of common stock are computed using the treasury stock method or the as-if converted method, as applicable. The effects of outstanding common stock options, RSUs, ESPP obligations, convertible senior notes and warrants are excluded from the computation of diluted net loss per share in periods in which the effect would be antidilutive. |
Legal Proceedings | From time to time, we are party to litigation and other legal proceedings in the ordinary course of business. While the results of any litigation or other legal proceedings are uncertain, management does not believe the ultimate resolution of any pending legal matters is likely to have a material adverse effect on our financial position, results of operations or cash flows, except for those matters for which we have recorded a loss contingency. We accrue for loss contingencies when it is both probable that we will incur the loss and when we can reasonably estimate the amount of the loss or range of loss. Generally, our subscription agreements require us to defend our customers for third-party intellectual property infringement and other claims. Any adverse determination related to intellectual property claims or other litigation could prevent us from offering our services and adversely affect our financial condition and results of operations. |
Investments (Tables) |
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Available-for-sale Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Investments | The following is a summary of our available-for-sale investment securities, excluding those securities classified within cash and cash equivalents on the condensed consolidated balance sheets (in thousands):
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Investments Classified by Contractual Maturity Date | The fair values of these securities, by remaining contractual maturity, are as follows (in thousands):
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Fair Values and Gross Unrealized Losses of Available-for-Sale Securities Aggregated by Investment Category | The following table shows the fair values and the gross unrealized losses of our available-for-sale investment securities, classified by the length of time that the securities have been in a continuous unrealized loss position, and aggregated by investment types, excluding those securities classified within cash and cash equivalents on the condensed consolidated balance sheets (in thousands):
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets, Liabilities and Stockholders' Equity Measured on Recurring Basis [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table presents our fair value hierarchy for our assets measured at fair value on a recurring basis at September 30, 2017 (in thousands):
The following table presents our fair value hierarchy for our assets measured at fair value on a recurring basis at December 31, 2016 (in thousands):
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Business Combinations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Pro Forma Consolidated Financial Information | The following pro forma consolidated financial information combines the results of operations from us and all the companies that we acquired since January 1, 2016 for the three and nine months ended September 30, 2017 and 2016, as if these acquisitions had occurred on January 1, 2016 (in thousands, except share and per share data):
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DxContinuum, Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The following table summarizes the allocation of the purchase price to the fair value of the tangible and intangible assets acquired and liabilities assumed as of the acquisition date:
(1) Deferred tax liabilities, net primarily relates to purchased identifiable intangible assets and is shown net of deferred tax assets.
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BrightPoint Security | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The following table summarizes the allocation of the purchase price to the fair value of the tangible and intangible assets acquired and liabilities assumed as of the acquisition date:
(1) Deferred tax liabilities, net primarily relates to purchased identifiable intangible assets and is shown net of deferred tax assets.
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ITapp | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The following table summarizes the allocation of the purchase price to the fair value of the tangible and intangible assets acquired and liabilities assumed as of the acquisition date:
(1) Deferred tax liabilities, net primarily relates to purchased identifiable intangible assets and is shown net of deferred tax assets.
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Goodwill and Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Goodwill balances are presented below (in thousands):
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Schedule of Intangible Assets | Intangible assets consist of the following (in thousands):
During the nine months ended September 30, 2017, we acquired patents with a weighted average useful life of 10 years for an aggregate purchase price of $6.2 million.
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Schedule of Estimated Future Amortization Expense Related to Intangible Assets | The following table presents the estimated future amortization expense related to intangible assets held at September 30, 2017 (in thousands):
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Property and Equipment (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Property and Equipment, Net | Property and equipment, net consists of the following (in thousands):
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Accrued Expenses and Other Current Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure Summary Of Accrued Expenses And Other Current Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consist of the following (in thousands):
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Convertible Senior Notes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Notes Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Convertible Senior Notes | The Notes consisted of the following (in thousands):
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Schedule of Estimated Fair Values of Notes | The estimated fair values of the Notes at September 30, 2017 and December 31, 2016 based on the closing trading price per $100 of the Notes were as follows (in thousands):
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Schedule of Interest Expense Related to Notes | The following table sets forth total interest expense recognized related to the Notes (in thousands):
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Schedule of Note Hedges |
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Schedule of Warrants |
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Accumulated Other Comprehensive Loss (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss, Net of Tax | The components of accumulated other comprehensive loss, net of tax, consist of the following (in thousands):
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Stockholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||
Schedule of Common Stock Outstanding and Reserved Shares of Common Stock for Future Issuance | As of September 30, 2017, we had 172,706,935 shares of common stock outstanding and had reserved shares of common stock for future issuance as follows:
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Equity Awards (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Option Activity | A summary of the stock option activity for the nine months ended September 30, 2017 is as follows:
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Schedule of Restricted Stock Unit Activity | A summary of RSU activity for the nine months ended September 30, 2017 is as follows:
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Net Loss Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted Net Loss Per Share | The following table presents the calculation of basic and diluted net loss per share (in thousands, except share and per share data):
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Schedule of Potentially Dilutive Securities | Potentially dilutive securities that are not included in the calculation of diluted net loss per share because doing so would be antidilutive are as follows:
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Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Payments | Future minimum payments under our non-cancelable operating leases and other contractual commitments outstanding as of September 30, 2017 are presented in the table below (in thousands):
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Information about Geographic Areas and Products (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments, Geographical Areas [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenues by Geographic Area | Revenues by geographic area, based on the location of our users, were as follows for the periods presented (in thousands):
Property and equipment, net by geographic area were as follows (in thousands):
(3) Property and equipment, net attributed to the United States were approximately 88% and 92% of property and equipment, net attributable to North America as of September 30, 2017 and December 31, 2016, respectively.
|
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Schedule of Subscription Revenue | Subscription revenues consist of the following (in thousands):
|
Investments - Summary of Investments (Detail) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | $ 985,093 | $ 762,336 |
Gross Unrealized Gains | 8,064 | 98 |
Gross Unrealized Losses | (1,273) | (1,652) |
Estimated Fair Value | 991,884 | 760,782 |
Due in 1 year or less | 549,088 | |
Due in 1 to 2 years | 424,858 | |
Total | 973,946 | |
Commercial paper | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 52,596 | 56,839 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 52,596 | 56,839 |
Corporate notes and bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 775,622 | 628,054 |
Gross Unrealized Gains | 126 | 91 |
Gross Unrealized Losses | (1,064) | (1,590) |
Estimated Fair Value | 774,684 | 626,555 |
Certificates of deposit | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 38,288 | 35,355 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 38,288 | 35,355 |
U.S. government agency securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 108,587 | 42,088 |
Gross Unrealized Gains | 0 | 7 |
Gross Unrealized Losses | (209) | (62) |
Estimated Fair Value | 108,378 | $ 42,033 |
Marketable equity securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 10,000 | |
Gross Unrealized Gains | 7,938 | |
Gross Unrealized Losses | 0 | |
Estimated Fair Value | $ 17,938 |
Investments - Fair Values and Gross Unrealized Losses of Available-for-Sale Securities Aggregated by Investment Category (Detail) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, fair value, less than 12 months | $ 591,477 | $ 522,536 |
Available-for-sale securities, gross unrealized losses, less than 12 months | (1,007) | (1,592) |
Available-for-sale securities, fair value, 12 months or greater | 123,086 | 47,940 |
Available-for-sale securities, gross unrealized losses, 12 months or greater | (266) | (60) |
Fair value | 714,563 | 570,476 |
Gross unrealized losses | (1,273) | (1,652) |
Corporate notes and bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, fair value, less than 12 months | 499,576 | 492,503 |
Available-for-sale securities, gross unrealized losses, less than 12 months | (822) | (1,530) |
Available-for-sale securities, fair value, 12 months or greater | 114,109 | 47,940 |
Available-for-sale securities, gross unrealized losses, 12 months or greater | (242) | (60) |
Fair value | 613,685 | 540,443 |
Gross unrealized losses | (1,064) | (1,590) |
U.S. government agency securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, fair value, less than 12 months | 91,901 | 30,033 |
Available-for-sale securities, gross unrealized losses, less than 12 months | (185) | (62) |
Available-for-sale securities, fair value, 12 months or greater | 8,977 | 0 |
Available-for-sale securities, gross unrealized losses, 12 months or greater | (24) | 0 |
Fair value | 100,878 | 30,033 |
Gross unrealized losses | $ (209) | $ (62) |
Investments - Additional Information (Detail) - USD ($) |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Schedule of Available-for-sale Securities [Line Items] | |||
Available for sale securities maturities term maximum | 24 months | ||
Other than temporary impairment losses | $ 0 | ||
Other long-term investments | 5,000,000.0 | $ 11,000,000.0 | |
Amortized cost for short-term and long-term investments | 985,093,000 | 762,336,000 | |
Payments to acquire additional strategic investments | 4,000,000 | $ 0 | |
Marketable equity securities | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized cost for short-term and long-term investments | 10,000,000 | ||
Unrealized holding gain | 7,900,000 | ||
Level 3 | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Payments to acquire additional strategic investments | 4,000,000.0 | ||
Strategic investments | $ 1,500,000 | $ 500,000 |
Fair Value Measurements (Detail) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | $ 1,756,080 | $ 926,409 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 214,936 | 165,627 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 1,541,144 | 760,782 |
Cash equivalents | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 196,998 | 165,627 |
Cash equivalents | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 12,478 | |
Cash equivalents | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 2,948 | |
Cash equivalents | U.S. government agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 551,772 | |
Cash equivalents | Level 1 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 196,998 | 165,627 |
Cash equivalents | Level 1 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | |
Cash equivalents | Level 1 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | |
Cash equivalents | Level 1 | U.S. government agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | |
Cash equivalents | Level 2 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Cash equivalents | Level 2 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 12,478 | |
Cash equivalents | Level 2 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 2,948 | |
Cash equivalents | Level 2 | U.S. government agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 551,772 | |
Short-term investments | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 52,596 | 56,839 |
Short-term investments | Corporate notes and bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 449,379 | 388,429 |
Short-term investments | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 18,755 | 35,355 |
Short-term investments | U.S. government agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 28,358 | 17,501 |
Short-term investments | Marketable equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 17,938 | |
Short-term investments | Level 1 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Short-term investments | Level 1 | Corporate notes and bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Short-term investments | Level 1 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Short-term investments | Level 1 | U.S. government agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Short-term investments | Level 1 | Marketable equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 17,938 | |
Short-term investments | Level 2 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 52,596 | 56,839 |
Short-term investments | Level 2 | Corporate notes and bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 449,379 | 388,429 |
Short-term investments | Level 2 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 18,755 | 35,355 |
Short-term investments | Level 2 | U.S. government agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 28,358 | 17,501 |
Short-term investments | Level 2 | Marketable equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | |
Long-term investments | Corporate notes and bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 325,305 | 238,125 |
Long-term investments | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 19,533 | |
Long-term investments | U.S. government agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 80,020 | 24,533 |
Long-term investments | Level 1 | Corporate notes and bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Long-term investments | Level 1 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | |
Long-term investments | Level 1 | U.S. government agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Long-term investments | Level 2 | Corporate notes and bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 325,305 | 238,125 |
Long-term investments | Level 2 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 19,533 | |
Long-term investments | Level 2 | U.S. government agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | $ 80,020 | $ 24,533 |
Business Combinations (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jan. 20, 2017 |
Jun. 03, 2016 |
Apr. 08, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Business Acquisition [Line Items] | ||||||||
Goodwill | $ 108,097 | $ 108,097 | $ 82,534 | |||||
Aggregate acquisition-related costs | 1,500 | 1,500 | ||||||
Revenues | 499,529 | $ 359,362 | 1,390,582 | $ 1,010,374 | ||||
Net loss | $ (24,152) | $ (37,134) | $ (120,882) | $ (426,883) | ||||
Weighted-average shares used to compute net loss per share - basic and diluted (in shares) | 171,883,190 | 165,378,836 | 170,359,717 | 163,767,329 | ||||
Net loss per share - basic (in dollars per share) | $ (0.14) | $ (0.22) | $ (0.71) | $ (2.61) | ||||
Net loss per share - diluted (in dollars per share) | $ (0.14) | $ (0.22) | $ (0.71) | $ (2.61) | ||||
DxContinuum, Inc. | ||||||||
Business Acquisition [Line Items] | ||||||||
Payments to acquire businesses | $ 15,000 | |||||||
Net tangible assets acquired | 37 | |||||||
Goodwill | 11,159 | |||||||
Net deferred tax liabilities | (2,561) | |||||||
Total purchase price | 15,035 | |||||||
Series of Individually Immaterial Business Acquisitions | ||||||||
Business Acquisition [Line Items] | ||||||||
Payments to acquire businesses | $ 11,600 | |||||||
Goodwill | $ 9,100 | 9,100 | ||||||
Net deferred tax liabilities | (1,100) | (1,100) | ||||||
Income tax deductible goodwill | 4,100 | 4,100 | ||||||
Digital Telapathy | ||||||||
Business Acquisition [Line Items] | ||||||||
Additional payments to acquire businesses | 5,000 | 5,000 | ||||||
BrightPoint Security | ||||||||
Business Acquisition [Line Items] | ||||||||
Payments to acquire businesses | $ 19,600 | |||||||
Goodwill | 15,258 | |||||||
Net tangible liabilities acquired | (1,339) | |||||||
Net deferred tax liabilities | (2,890) | |||||||
Total purchase price | 19,629 | |||||||
ITapp | ||||||||
Business Acquisition [Line Items] | ||||||||
Payments to acquire businesses | $ 14,500 | |||||||
Net tangible assets acquired | 140 | |||||||
Goodwill | 11,437 | |||||||
Net deferred tax liabilities | (2,015) | |||||||
Total purchase price | 14,462 | |||||||
BrightPoint Security and ITapp | ||||||||
Business Acquisition [Line Items] | ||||||||
Aggregate acquisition-related costs | $ 1,000 | $ 1,000 | ||||||
Developed technology | DxContinuum, Inc. | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets | $ 6,400 | |||||||
Intangible assets, useful life | 5 years | |||||||
Developed technology | Series of Individually Immaterial Business Acquisitions | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets | $ 3,500 | $ 3,500 | ||||||
Intangible assets, useful life | 5 years | |||||||
Developed technology | BrightPoint Security | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets | $ 8,100 | |||||||
Intangible assets, useful life | 6 years | |||||||
Developed technology | ITapp | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets | $ 4,700 | |||||||
Intangible assets, useful life | 5 years | |||||||
Customer contracts and related relationships | BrightPoint Security | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets | $ 500 | |||||||
Intangible assets, useful life | 1 year 6 months | |||||||
Customer contracts and related relationships | ITapp | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets | $ 200 | |||||||
Intangible assets, useful life | 1 year 6 months |
Goodwill and Intangible Assets - Schedule of Goodwill (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill, beginning of period | $ 82,534 |
Goodwill acquired | 20,281 |
Foreign currency translation adjustments | 5,282 |
Goodwill, end of period | $ 108,097 |
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | $ 117,082 | $ 117,082 | $ 98,591 | ||
Accumulated Amortization | (48,112) | (48,112) | (32,737) | ||
Net Carrying Amount | 68,970 | 68,970 | 65,854 | ||
Amortization expense | 4,800 | $ 4,300 | 14,300 | $ 10,900 | |
2017 | 4,769 | 4,769 | |||
2018 | 18,772 | 18,772 | |||
2019 | 18,692 | 18,692 | |||
2020 | 8,796 | 8,796 | |||
2021 | 6,871 | 6,871 | |||
Thereafter | 11,070 | 11,070 | |||
Total future amortization expense | 68,970 | 68,970 | |||
Developed technology | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 91,527 | 91,527 | 79,206 | ||
Accumulated Amortization | (44,069) | (44,069) | (30,858) | ||
Net Carrying Amount | 47,458 | 47,458 | 48,348 | ||
Patents | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 23,780 | 23,780 | 17,610 | ||
Accumulated Amortization | (2,532) | (2,532) | (867) | ||
Net Carrying Amount | 21,248 | $ 21,248 | 16,743 | ||
Weighted average useful life of acquired patents | 10 years | ||||
Aggregate purchase price of acquired patents | $ 6,200 | ||||
Other | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 1,775 | 1,775 | 1,775 | ||
Accumulated Amortization | (1,511) | (1,511) | (1,012) | ||
Net Carrying Amount | $ 264 | $ 264 | $ 763 |
Property and Equipment (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 442,841 | $ 442,841 | $ 332,363 | ||
Less: Accumulated depreciation | (211,537) | (211,537) | (150,743) | ||
Total property and equipment, net | 231,304 | 231,304 | 181,620 | ||
Depreciation | 24,300 | $ 17,900 | 66,900 | $ 48,700 | |
Computer equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 303,336 | 303,336 | 222,648 | ||
Computer software | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 41,200 | 41,200 | 32,132 | ||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 48,000 | 48,000 | 37,095 | ||
Furniture and fixtures | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 36,283 | 36,283 | 31,574 | ||
Building | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 6,978 | 6,978 | 6,379 | ||
Construction in progress | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 7,044 | $ 7,044 | $ 2,535 |
Accrued Expenses and Other Current Liabilities (Detail) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Disclosure Summary Of Accrued Expenses And Other Current Liabilities [Abstract] | ||
Taxes payable | $ 18,694 | $ 19,472 |
Bonuses and commissions | 57,691 | 67,259 |
Accrued compensation | 41,229 | 30,816 |
Other employee related liabilities | 27,386 | 28,812 |
Other | 32,553 | 25,277 |
Total accrued expenses and other current liabilities | $ 177,553 | $ 171,636 |
Convertible Senior Notes - Additional Information (Details) |
9 Months Ended | ||||
---|---|---|---|---|---|
Sep. 30, 2017
USD ($)
day
|
Dec. 31, 2017
USD ($)
|
Jun. 30, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
Nov. 30, 2013
USD ($)
|
|
Debt Instrument [Line Items] | |||||
Percentage of purchase price of notes which should be paid upon fundamental change (percent) | 100.00% | ||||
Estimated fair value of the note based on the closing trading price | $ 100 | $ 100 | |||
Stock Price Trigger Measurement | |||||
Debt Instrument [Line Items] | |||||
Trading days threshold | day | 20 | ||||
Consecutive trading days threshold, total | day | 30 | ||||
Threshold percentage of stock price trigger (percent) | 130.00% | ||||
Notes Price Trigger Measurement | |||||
Debt Instrument [Line Items] | |||||
Trading days threshold | day | 5 | ||||
Consecutive trading days threshold, total | day | 5 | ||||
Threshold percentage of stock price trigger (percent) | 98.00% | ||||
Conversion of notes base conversion price | $ 1,000 | ||||
2022 Notes | |||||
Debt Instrument [Line Items] | |||||
Face amount of debt | $ 782,500,000 | $ 782,500,000 | 0 | ||
Stated interest rate (percent) | 0.00% | ||||
Remaining discount amortization period | 56 months | ||||
2018 Notes | |||||
Debt Instrument [Line Items] | |||||
Face amount of debt | $ 575,000,000 | $ 575,000,000 | $ 575,000,000.0 | ||
Stated interest rate (percent) | 0.00% | ||||
Remaining discount amortization period | 13 months | ||||
Scenario, Forecast | 2018 Notes | |||||
Debt Instrument [Line Items] | |||||
Request for conversion of Notes | $ 4,000 |
Convertible Senior Notes - Schedule of Conversion (Details) |
1 Months Ended | 2 Months Ended | 3 Months Ended |
---|---|---|---|
Nov. 30, 2013
shares
$ / shares
|
Jun. 30, 2017
$ / shares
|
Jun. 30, 2017
shares
$ / shares
|
|
2022 Notes | |||
Debt Instrument [Line Items] | |||
Initial Conversion Price per Share | $ / shares | $ 134.75 | $ 134.75 | |
Initial Conversion Rate per $1,000 Par Value | 0.00742 | ||
Initial Number of Shares | shares | 5,806,936 | ||
2018 Notes | |||
Debt Instrument [Line Items] | |||
Initial Conversion Price per Share | $ / shares | $ 73.88 | ||
Initial Conversion Rate per $1,000 Par Value | 0.01354 | ||
Initial Number of Shares | shares | 7,783,023 |
Convertible Senior Notes - Schedule of Notes Payable (Details) - USD ($) |
Sep. 30, 2017 |
Jun. 30, 2017 |
Dec. 31, 2016 |
Nov. 30, 2013 |
---|---|---|---|---|
Debt Instrument [Line Items] | ||||
Net carrying amount | $ 1,156,629,000 | $ 507,812,000 | ||
2022 Notes | ||||
Debt Instrument [Line Items] | ||||
Principal | 782,500,000 | $ 782,500,000 | 0 | |
Less: debt issuance cost and debt discount, net of amortization | (160,164,000) | 0 | ||
2018 Notes | ||||
Debt Instrument [Line Items] | ||||
Principal | 575,000,000 | 575,000,000 | $ 575,000,000.0 | |
Less: debt issuance cost and debt discount, net of amortization | $ (40,707,000) | $ (67,188,000) |
Convertible Senior Notes - Equity Components (Details) $ in Thousands |
Sep. 30, 2017
USD ($)
|
---|---|
2022 Notes | |
Debt Instrument [Line Items] | |
Note | $ 162,039 |
Issuance cost | (2,148) |
Net amount recorded in equity | 159,891 |
2018 Notes | |
Debt Instrument [Line Items] | |
Note | 155,319 |
Issuance cost | (3,257) |
Net amount recorded in equity | $ 152,062 |
Convertible Senior Notes - Schedule of Fair Value (Details) - Level 2 - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
2022 Notes | ||
Debt Instrument [Line Items] | ||
Estimated fair values of notes | $ 842,322 | |
2018 Notes | ||
Debt Instrument [Line Items] | ||
Estimated fair values of notes | $ 922,501 | $ 681,375 |
Convertible Senior Notes - Schedule of Interest Expense Recognized (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Debt Instrument [Line Items] | ||||
Total | $ 16,566 | $ 8,389 | $ 36,581 | $ 24,746 |
2022 Notes | ||||
Debt Instrument [Line Items] | ||||
Amortization of debt issuance cost | 367 | 0 | 489 | 0 |
Amortization of debt discount | $ 7,222 | $ 0 | $ 9,610 | $ 0 |
Effective interest rate of the liability component | 4.75% | 4.75% | 4.75% | 4.75% |
2018 Notes | ||||
Debt Instrument [Line Items] | ||||
Amortization of debt issuance cost | $ 481 | $ 450 | $ 1,421 | $ 1,327 |
Amortization of debt discount | $ 8,496 | $ 7,939 | $ 25,061 | $ 23,419 |
Effective interest rate of the liability component | 6.50% | 6.50% | 6.50% | 6.50% |
Convertible Senior Notes - Schedule of Note Hedges (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Derivative [Line Items] | ||
Purchase | $ 128,017 | $ 0 |
2022 Note Hedge | ||
Derivative [Line Items] | ||
Purchase | $ 128,017 | |
Shares | 5,806,936 | |
2018 Note Hedge | ||
Derivative [Line Items] | ||
Purchase | $ 135,815 | |
Shares | 7,783,023 |
Convertible Senior Notes - Schedule of Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Class of Warrant or Right [Line Items] | ||
Proceeds | $ 54,071 | $ 0 |
2022 Warrants | ||
Class of Warrant or Right [Line Items] | ||
Proceeds | $ 54,071 | |
Shares | 5,806,936 | |
Strike Price (in dollars per share) | $ 203.40 | |
2018 Warrants | ||
Class of Warrant or Right [Line Items] | ||
Proceeds | $ 84,525 | |
Shares | 7,783,023 | |
Strike Price (in dollars per share) | $ 107.46 |
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Equity [Abstract] | ||
Foreign currency translation adjustment | $ (3,795) | $ (19,277) |
Net unrealized gain (loss) on investments, net of tax | 3,387 | (1,856) |
Accumulated other comprehensive loss | $ (408) | $ (21,133) |
Stockholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions |
1 Months Ended | 9 Months Ended | |
---|---|---|---|
May 31, 2017 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Equity [Abstract] | |||
Shares of common stock, authorized (in shares) | 600,000,000 | ||
Shares of common stock, issued and sold (in shares) | 172,706,935 | ||
Stock issued during period, shares, new issues (in shares) | 5,816,968 | 5,225,336 | |
Stock repurchased and retired during period (in shares) | 540,806 | 0 | |
Stock repurchased and retired during period, value | $ 55.0 | ||
Stock repurchased and retired during period (in dollars per share) | $ 101.70 |
Stockholders' Equity - Outstanding and Reserved Shares of Common Stock for Future Issuance (Detail) - shares |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|
Common stock outstanding and reserved shares of common stock for future issuance | ||||
Options outstanding (in shares) | 4,117,639 | 4,992,394 | 5,649,375 | 5,818,435 |
Total reserved shares of common stock for future issuance | 51,737,794 | |||
2012 Equity Incentive Plan | ||||
Common stock outstanding and reserved shares of common stock for future issuance | ||||
Total reserved shares of common stock for future issuance | 25,731,336 | |||
2012 Employee Stock Purchase Plan | ||||
Common stock outstanding and reserved shares of common stock for future issuance | ||||
Total reserved shares of common stock for future issuance | 9,581,944 | |||
Options outstanding | ||||
Common stock outstanding and reserved shares of common stock for future issuance | ||||
Options outstanding (in shares) | 4,117,639 | |||
RSUs | ||||
Common stock outstanding and reserved shares of common stock for future issuance | ||||
RSUs (in shares) | 12,306,875 | 13,270,087 | 14,129,353 | 12,222,282 |
Equity Awards - Additional Information (Detail) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Jun. 30, 2017
shares
|
Mar. 31, 2017
shares
|
Sep. 30, 2017
USD ($)
incentive_plan
$ / shares
shares
|
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of equity incentive plans | incentive_plan | 2 | ||
Weighted-average grant date fair value of options granted (usd per share) | $ / shares | $ 37.57 | ||
Fair value of stock options vested | $ | $ 8.6 | ||
Number of shares, granted (in shares) | 50,000 | 566,720 | |
Total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock options | $ | $ 29.7 | ||
Options outstanding | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Remaining weighted-average period | 3 years 4 months 2 days | ||
Options outstanding | New President and CEO | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares, granted (in shares) | 396,720 | ||
RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Remaining weighted-average period | 2 years 9 months 29 days | ||
Unrecognized compensation expense expected to be recognized | $ | $ 698.8 | ||
2012 Equity Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares of common stock outstanding, increase, percentage | 5.00% | ||
Number of additional shares authorized (in shares) | 8,371,539 | ||
2012 Equity Incentive Plan | RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense recognized, vesting term | 4 years | ||
2012 Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares of common stock outstanding, increase, percentage | 1.00% | ||
Number of additional shares authorized (in shares) | 1,674,308 | ||
Common stock purchase price percentage | 85.00% | ||
Award offering period | 6 months |
Equity Awards - Summary of Stock Option Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Sep. 30, 2017 |
|
Number of Shares | ||||
Number of shares, outstanding, beginning balance | 4,992,394 | 5,649,375 | 5,818,435 | 5,818,435 |
Number of shares, granted | 50,000 | 566,720 | ||
Number of shares, exercised | (843,046) | (705,807) | (697,446) | |
Number of shares, canceled | (31,709) | (1,174) | (38,334) | |
Number of shares, outstanding, ending balance | 4,117,639 | 4,992,394 | 5,649,375 | 4,117,639 |
Number of shares, vested and expected to vest | 4,080,735 | 4,080,735 | ||
Number of shares, vested and exercisable | 3,040,729 | 3,040,729 | ||
Weighted- Average Exercise Price | ||||
Weighted-average exercise price, outstanding, beginning balance (in USD per share) | $ 30.65 | $ 27.26 | $ 20.57 | $ 20.57 |
Weighted-average exercise price, granted (in USD per share) | 103.60 | 84.81 | ||
Weighted-average exercise price, exercised (in USD per share) | 16.66 | 8.62 | 15.77 | |
Weighted-average exercise price canceled (in USD per share) | 69.45 | 57.78 | 71.68 | |
Weighted-average exercise price, outstanding, ending balance (in USD per share) | 33.22 | $ 30.65 | $ 27.26 | 33.22 |
Weighted-average exercise price, vested and expected to vest (in USD per share) | 32.87 | 32.87 | ||
Weighted-average exercise price, vested and exercisable (in USD per share) | $ 16.77 | $ 16.77 | ||
Weighted-average remaining contractual term, outstanding | 5 years 5 months 26 days | |||
Weighted-average remaining contractual term, vested and expected to vest | 5 years 5 months 19 days | |||
Weighted-average remaining contractual term, vested and exercisable | 4 years 3 months 7 days | |||
Aggregate intrinsic value, exercised | $ 78,926 | $ 62,617 | $ 51,560 | |
Aggregate intrinsic value, outstanding | 347,148 | $ 347,148 | ||
Aggregate intrinsic value, vested and expected to vest | 345,495 | 345,495 | ||
Aggregate intrinsic value, vested and exercisable | $ 306,399 | $ 306,399 |
Equity Awards - Restricted Stock Unit Table (Details) - RSUs - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
|
Number of Shares | |||
Number of shares, nonvested, beginning balance | 13,270,087 | 14,129,353 | 12,222,282 |
Number of shares, granted | 711,084 | 763,940 | 4,216,410 |
Number of shares, vested | (1,274,390) | (1,177,903) | (1,801,659) |
Number of shares, forfeited | (399,906) | (445,303) | (507,680) |
Number of shares, nonvested, ending balance | 12,306,875 | 13,270,087 | 14,129,353 |
Weighted Average Grant Date Fair Value (Per Share) | |||
Weighted-average grant date fair value, outstanding, beginning balance (in USD per share) | $ 73.89 | $ 71.60 | $ 63.66 |
Weighted average grant date fair value, granted (in USD per share) | 111.06 | 97.79 | 88.05 |
Weighted-average grant date fair value, vested (in USD per share) | 61.61 | 63.84 | 55.73 |
Weighted-average grant date fair value, forfeited (in USD per share) | 73.46 | 68.78 | 73.14 |
Weighted-average grant date fair value, outstanding, ending balance (in USD per share) | $ 77.33 | $ 73.89 | $ 71.60 |
Aggregate intrinsic value, vested | $ 137,021 | $ 115,487 | $ 164,367 |
Aggregate intrinsic value, non-vested | $ 1,446,427 |
Net Loss Per Share - Schedule of Basic and Diluted Net Income (Loss) Per Share Attributable to Common Stockholders (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Numerator: | ||||
Net loss | $ (24,188) | $ (36,258) | $ (121,323) | $ (419,215) |
Denominator: | ||||
Weighted-average shares outstanding—basic and diluted (in shares) | 171,883,190 | 165,378,836 | 170,359,717 | 163,767,329 |
Net loss per share—basic and diluted: | ||||
Net loss per share, basic and diluted (in dollars per share) | $ (0.14) | $ (0.22) | $ (0.71) | $ (2.56) |
Net Loss Per Share - Schedule of Potentially Dilutive Securities (Detail) - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive securities | 43,968,377 | 35,236,454 |
Common stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive securities | 4,117,639 | 6,475,548 |
Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive securities | 12,306,875 | 12,834,324 |
ESPP obligations | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive securities | 363,951 | 360,536 |
Convertible senior notes | 2018 convertible senior notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive securities | 7,783,023 | 7,783,023 |
Convertible senior notes | 2022 convertible senior notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive securities | 5,806,933 | 0 |
Warrants related to the issuance of convertible senior notes | 2018 convertible senior notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive securities | 7,783,023 | 7,783,023 |
Warrants related to the issuance of convertible senior notes | 2022 convertible senior notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive securities | 5,806,933 | 0 |
Income Taxes (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | (6.00%) | (9.00%) | 2.00% | 0.00% |
Federal statutory rate | 34.00% | 34.00% | 34.00% | 34.00% |
Commitments and Contingencies - Additional Information (Details) |
9 Months Ended | |||||
---|---|---|---|---|---|---|
Feb. 06, 2014
patent
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2017
USD ($)
|
Jun. 30, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
Nov. 30, 2013
USD ($)
|
|
Debt Instrument [Line Items] | ||||||
Legal settlements | $ 270,000,000.0 | |||||
2022 convertible senior notes | ||||||
Debt Instrument [Line Items] | ||||||
Face amount of debt | $ 782,500,000 | $ 782,500,000 | $ 0 | |||
2018 convertible senior notes | ||||||
Debt Instrument [Line Items] | ||||||
Face amount of debt | $ 575,000,000 | $ 575,000,000 | $ 575,000,000.0 | |||
ServiceNow Vs Hewlett-Packard Company | ||||||
Debt Instrument [Line Items] | ||||||
Number of patents allegedly infringed upon | patent | 8 |
Commitments and Contingencies - Maturity of Obligations (Details) $ in Thousands |
Sep. 30, 2017
USD ($)
|
---|---|
Leases, net of Sublease Income | |
Remainder of 2017 | $ 10,235 |
2018 | 44,460 |
2019 | 45,906 |
2020 | 45,688 |
2021 | 44,204 |
Thereafter | 161,530 |
Leases, net of sublease income, total | 352,023 |
Purchase Obligations | |
Remainder of 2017 | 9,988 |
2018 | 35,984 |
2019 | 16,599 |
2020 | 7,845 |
2021 | 5,605 |
Thereafter | 2,144 |
Purchase obligations, total | 78,165 |
Other | |
Remainder of 2017 | 141 |
2018 | 565 |
2019 | 565 |
2020 | 565 |
2021 | 565 |
Thereafter | 1,605 |
Other, total | 4,006 |
Total | |
Remainder of 2017 | 20,364 |
2018 | 81,009 |
2019 | 63,070 |
2020 | 54,098 |
2021 | 50,374 |
Thereafter | 165,279 |
Total | 434,194 |
Unrecorded Unconditional Purchase Obligation [Line Items] | |
Purchase obligations, cancellation policy | 22,900 |
Knowledge User Conferences | |
Unrecorded Unconditional Purchase Obligation [Line Items] | |
Purchase obligations, cancellation policy | $ 9,800 |
Information about Geographic Areas and Products - Geographic Disclosures (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Revenues by geography | |||||
Revenues | $ 498,170 | $ 357,656 | $ 1,386,656 | $ 1,004,847 | |
Percentage of U.S. revenues in North America | 94.00% | 95.00% | 94.00% | 95.00% | |
Property and equity by geography | |||||
Property and equipment, net | $ 231,304 | $ 231,304 | $ 181,620 | ||
Percentage of U.S. net property and equipment in North America | 88.00% | 88.00% | 92.00% | ||
North America | |||||
Revenues by geography | |||||
Revenues | $ 329,582 | $ 239,585 | $ 937,426 | $ 684,111 | |
Property and equity by geography | |||||
Property and equipment, net | 160,813 | 160,813 | $ 132,671 | ||
EMEA | |||||
Revenues by geography | |||||
Revenues | 127,518 | 90,399 | 340,054 | 246,745 | |
Property and equity by geography | |||||
Property and equipment, net | 50,692 | 50,692 | 37,449 | ||
Asia Pacific and other | |||||
Revenues by geography | |||||
Revenues | 41,070 | $ 27,672 | 109,176 | $ 73,991 | |
Property and equity by geography | |||||
Property and equipment, net | $ 19,799 | $ 19,799 | $ 11,500 |
Information about Geographic Areas and Products - Subscription Revenues (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Segment Reporting Information [Line Items] | ||||
Total subscription revenues | $ 455,421 | $ 318,934 | $ 1,242,563 | $ 877,035 |
Service Management solutions | ||||
Segment Reporting Information [Line Items] | ||||
Total subscription revenues | 399,795 | 290,005 | 1,097,177 | 799,278 |
IT Operations Management solutions | ||||
Segment Reporting Information [Line Items] | ||||
Total subscription revenues | $ 55,626 | $ 28,929 | $ 145,386 | $ 77,757 |
Subsequent Event (Details) $ in Millions |
Oct. 31, 2017
USD ($)
|
---|---|
SkyGiraffe Inc. | Subsequent Event | |
Subsequent Event [Line Items] | |
Total purchase consideration | $ 32 |
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