x | Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
¨ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Delaware | 20-2056195 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Title of each class | Name of each exchange on which registered | |
Common stock, par value $0.001 per share | New York Stock Exchange, Inc. |
(Do not check if a smaller reporting company) | Emerging growth company ¨ |
Page | ||
Item 1 | ||
Item 1A | ||
Item 1B | ||
Item 2 | ||
Item 3 | ||
Item 4 | ||
Item 5 | ||
Item 6 | ||
Item 7 | ||
Item 7A | ||
Item 8 | ||
Item 9 | ||
Item 9A | ||
Item 9B | ||
Item 10 | ||
Item 11 | ||
Item 12 | ||
Item 13 | ||
Item 14 | ||
Item 15 | ||
Item 16 | ||
Index to Exhibits |
ITEM 1. | BUSINESS |
ITEM 1A. | RISK FACTORS |
• | 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 and our ability to effectively hedge our foreign currency exposure; |
• | 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, changes in timing of renewals 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 were effective for us beginning January 1, 2018; |
• | changes in laws or regulations impacting the delivery of our services; |
• | our ability to comply with privacy laws and regulations, including the General Data Protection Regulation (GDPR); |
• | the amount and timing of equity 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). |
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
ITEM 2. | PROPERTIES |
ITEM 3. | LEGAL PROCEEDINGS |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
High | Low | ||||||
Year ended December 31, 2017 | |||||||
First Quarter | $ | 94.72 | $ | 74.63 | |||
Second Quarter | $ | 110.66 | $ | 84.03 | |||
Third Quarter | $ | 118.64 | $ | 103.00 | |||
Fourth Quarter | $ | 131.26 | $ | 112.84 | |||
Year ended December 31, 2016 | |||||||
First Quarter | $ | 85.67 | $ | 46.00 | |||
Second Quarter | $ | 77.76 | $ | 60.05 | |||
Third Quarter | $ | 80.31 | $ | 64.31 | |||
Fourth Quarter | $ | 89.79 | $ | 72.80 |
Base Period | |||||||||||||||||||||||
Dec 31, 2012 | Dec 31, 2013 | Dec 31, 2014 | Dec 31, 2015 | Dec 31, 2016 | Dec 31, 2017 | ||||||||||||||||||
ServiceNow, Inc. | $ | 100.00 | $ | 186.51 | $ | 225.94 | $ | 288.25 | $ | 247.55 | $ | 434.20 | |||||||||||
NYSE Composite | 100.00 | 126.28 | 134.81 | 129.29 | 144.73 | 171.83 | |||||||||||||||||
S&P Systems Software | 100.00 | 132.90 | 163.47 | 180.59 | 204.49 | 280.92 |
ITEM 6. | SELECTED CONSOLIDATED FINANCIAL DATA |
Year Ended December 31, | |||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
(in thousands, except share and per share data) | |||||||||||||||||||
Consolidated Statements of Operations Data: | |||||||||||||||||||
Revenues: | |||||||||||||||||||
Subscription | $ | 1,739,795 | $ | 1,221,639 | $ | 848,278 | $ | 567,217 | $ | 349,804 | |||||||||
Professional services and other | 193,231 | 168,874 | 157,202 | 115,346 | 74,846 | ||||||||||||||
Total revenues | 1,933,026 | 1,390,513 | 1,005,480 | 682,563 | 424,650 | ||||||||||||||
Cost of revenues (1): | |||||||||||||||||||
Subscription | 315,570 | 235,414 | 183,400 | 142,687 | 87,928 | ||||||||||||||
Professional services and other | 184,202 | 163,268 | 146,013 | 106,089 | 67,331 | ||||||||||||||
Total cost of revenues | 499,772 | 398,682 | 329,413 | 248,776 | 155,259 | ||||||||||||||
Gross profit | 1,433,254 | 991,831 | 676,067 | 433,787 | 269,391 | ||||||||||||||
Operating expenses (1): | |||||||||||||||||||
Sales and marketing | 946,617 | 700,464 | 498,439 | 341,119 | 195,190 | ||||||||||||||
Research and development | 377,518 | 285,239 | 217,389 | 148,258 | 78,678 | ||||||||||||||
General and administrative | 210,533 | 158,936 | 126,604 | 96,245 | 61,790 | ||||||||||||||
Legal settlements (2) | — | 270,000 | — | — | — | ||||||||||||||
Total operating expenses | 1,534,668 | 1,414,639 | 842,432 | 585,622 | 335,658 | ||||||||||||||
Loss from operations | (101,414 | ) | (422,808 | ) | (166,365 | ) | (151,835 | ) | (66,267 | ) | |||||||||
Interest expense | (53,394 | ) | (33,278 | ) | (31,097 | ) | (29,059 | ) | (3,498 | ) | |||||||||
Interest income and other income (expense), net | 5,804 | 6,035 | 4,450 | 5,354 | (1,432 | ) | |||||||||||||
Loss before income taxes | (149,004 | ) | (450,051 | ) | (193,012 | ) | (175,540 | ) | (71,197 | ) | |||||||||
Provision for income taxes | 126 | 1,753 | 5,414 | 3,847 | 2,511 | ||||||||||||||
Net loss | $ | (149,130 | ) | $ | (451,804 | ) | $ | (198,426 | ) | $ | (179,387 | ) | $ | (73,708 | ) | ||||
Net loss per share - basic and diluted | $ | (0.87 | ) | $ | (2.75 | ) | $ | (1.27 | ) | $ | (1.23 | ) | $ | (0.54 | ) | ||||
Weighted-average shares used to compute net loss per share - basic and diluted | 171,175,577 | 164,533,823 | 155,706,643 | 145,355,543 | 135,415,809 |
(1) | Stock-based compensation included in the statements of operations data above was as follows: |
Year Ended December 31, | |||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
(in thousands) | |||||||||||||||||||
Cost of revenues: | |||||||||||||||||||
Subscription | $ | 35,334 | $ | 28,420 | $ | 23,416 | $ | 14,988 | $ | 8,434 | |||||||||
Professional services and other | 27,475 | 26,442 | 23,265 | 13,116 | 4,749 | ||||||||||||||
Sales and marketing | 170,527 | 131,571 | 102,349 | 54,006 | 21,609 | ||||||||||||||
Research and development | 92,025 | 81,731 | 70,326 | 42,535 | 16,223 | ||||||||||||||
General and administrative | 68,717 | 49,416 | 38,357 | 29,674 | 14,566 | ||||||||||||||
Total stock-based compensation | $ | 394,078 | $ | 317,580 | $ | 257,713 | $ | 154,319 | $ | 65,581 |
(2) | For details regarding the legal settlements expenses of $270.0 million included in the year ended December 31, 2016, refer to Note 16 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. |
As of December 31, | |||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
(in thousands) | |||||||||||||||||||
Consolidated Balance Sheet Data: | |||||||||||||||||||
Cash and cash equivalents and investments | $ | 2,170,740 | $ | 1,162,020 | $ | 1,223,917 | $ | 935,563 | $ | 889,910 | |||||||||
Working capital, excluding current portion of deferred revenue and convertible senior notes, net | 2,133,850 | 1,132,819 | 947,002 | 809,660 | 722,214 | ||||||||||||||
Total assets | 3,397,904 | 2,033,767 | 1,807,052 | 1,424,752 | 1,168,077 | ||||||||||||||
Deferred revenue, current and non-current portion | 1,320,383 | 895,101 | 603,754 | 422,238 | 266,722 | ||||||||||||||
Convertible senior notes, net, current and non-current portion | 1,173,436 | 507,812 | 474,534 | 443,437 | 414,378 | ||||||||||||||
Total stockholders’ equity | 584,132 | 386,961 | 566,814 | 428,675 | 394,259 |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(dollars in thousands) | |||||||||||
Billings: | |||||||||||
Total revenues | $ | 1,933,026 | $ | 1,390,513 | $ | 1,005,480 | |||||
Change in deferred revenue from the consolidated statements of cash flows | 381,562 | 300,167 | 195,900 | ||||||||
Total billings | $ | 2,314,588 | $ | 1,690,680 | $ | 1,201,380 | |||||
Year-over-year percentage change in total billings | 37 | % | 41 | % | 41 | % |
• | Billings duration. While we typically bill customers annually for our subscription services, customers sometimes request, and we accommodate, billings with durations less than 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 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. |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(dollars in thousands) | |||||||||||
Free cash flow: | |||||||||||
Net cash provided by operating activities | $ | 642,825 | $ | 159,921 | $ | 317,754 | |||||
Purchases of property and equipment | (150,510 | ) | (105,562 | ) | (87,481 | ) | |||||
Free cash flow (1) | $ | 492,315 | $ | 54,359 | $ | 230,273 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(in thousands) | |||||||||||
Revenues: | |||||||||||
Subscription | $ | 1,739,795 | $ | 1,221,639 | $ | 848,278 | |||||
Professional services and other | 193,231 | 168,874 | 157,202 | ||||||||
Total revenues | 1,933,026 | 1,390,513 | 1,005,480 | ||||||||
Cost of revenues (1): | |||||||||||
Subscription | 315,570 | 235,414 | 183,400 | ||||||||
Professional services and other | 184,202 | 163,268 | 146,013 | ||||||||
Total cost of revenues | 499,772 | 398,682 | 329,413 | ||||||||
Gross profit | 1,433,254 | 991,831 | 676,067 | ||||||||
Operating expenses (1): | |||||||||||
Sales and marketing | 946,617 | 700,464 | 498,439 | ||||||||
Research and development | 377,518 | 285,239 | 217,389 | ||||||||
General and administrative | 210,533 | 158,936 | 126,604 | ||||||||
Legal settlements (2) | — | 270,000 | — | ||||||||
Total operating expenses | 1,534,668 | 1,414,639 | 842,432 | ||||||||
Loss from operations | (101,414 | ) | (422,808 | ) | (166,365 | ) | |||||
Interest expense | (53,394 | ) | (33,278 | ) | (31,097 | ) | |||||
Interest income and other income (expense), net | 5,804 | 6,035 | 4,450 | ||||||||
Loss before income taxes | (149,004 | ) | (450,051 | ) | (193,012 | ) | |||||
Provision for income taxes | 126 | 1,753 | 5,414 | ||||||||
Net loss | $ | (149,130 | ) | $ | (451,804 | ) | $ | (198,426 | ) |
(1) | Stock-based compensation included in the statements of operations data above was as follows: |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(in thousands) | |||||||||||
Cost of revenues: | |||||||||||
Subscription | $ | 35,334 | $ | 28,420 | $ | 23,416 | |||||
Professional services and other | 27,475 | 26,442 | 23,265 | ||||||||
Sales and marketing | 170,527 | 131,571 | 102,349 | ||||||||
Research and development | 92,025 | 81,731 | 70,326 | ||||||||
General and administrative | 68,717 | 49,416 | 38,357 | ||||||||
Total stock-based compensation | $ | 394,078 | $ | 317,580 | $ | 257,713 |
(2) | For details regarding the legal settlements expenses of $270.0 million included in the year ended December 31, 2016, refer to Note 16 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. |
Year Ended December 31, | ||||||||
2017 | 2016 | 2015 | ||||||
Revenues: | ||||||||
Subscription | 90 | % | 88 | % | 84 | % | ||
Professional services and other | 10 | 12 | 16 | |||||
Total revenues | 100 | 100 | 100 | |||||
Cost of revenues (1): | ||||||||
Subscription | 16 | 17 | 18 | |||||
Professional services and other | 10 | 12 | 15 | |||||
Total cost of revenues | 26 | 29 | 33 | |||||
Gross profit | 74 | 71 | 67 | |||||
Operating expenses (1): | ||||||||
Sales and marketing | 49 | 50 | 50 | |||||
Research and development | 19 | 21 | 22 | |||||
General and administrative | 11 | 11 | 12 | |||||
Legal settlements (2) | — | 19 | — | |||||
Total operating expenses | 79 | 101 | 84 | |||||
Loss from operations | (5 | ) | (30 | ) | (17 | ) | ||
Interest expense | (3 | ) | (2 | ) | (3 | ) | ||
Interest income and other income (expense), net | — | — | 1 | |||||
Loss before income taxes | (8 | ) | (32 | ) | (19 | ) | ||
Provision for income taxes | — | — | 1 | |||||
Net loss | (8 | )% | (32 | )% | (20 | )% |
(1) | Stock-based compensation included in the statements of operations above as a percentage of revenues was as follows: |
Year Ended December 31, | ||||||||
2017 | 2016 | 2015 | ||||||
(in thousands) | ||||||||
Cost of revenues: | ||||||||
Subscription | 2 | % | 2 | % | 2 | % | ||
Professional services and other | 1 | 2 | 2 | |||||
Sales and marketing | 9 | 9 | 10 | |||||
Research and development | 5 | 6 | 8 | |||||
General and administrative | 3 | 4 | 4 | |||||
Total stock-based compensation | 20 | % | 23 | % | 26 | % |
(2) | For details regarding the legal settlements expenses of $270.0 million included in the year ended December 31, 2016, refer to Note 16 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. |
Year Ended December 31, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Revenues: | ||||||||||
Subscription | $ | 1,739,795 | $ | 1,221,639 | 42 | % | ||||
Professional services and other | 193,231 | 168,874 | 14 | % | ||||||
Total revenues | $ | 1,933,026 | $ | 1,390,513 | 39 | % | ||||
Percentage of revenues: | ||||||||||
Subscription | 90 | % | 88 | % | ||||||
Professional services and other | 10 | 12 | ||||||||
Total | 100 | % | 100 | % |
Year Ended December 31, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Service management products | $ | 1,526,382 | $ | 1,108,846 | 38 | % | ||||
ITOM products | 213,413 | 112,793 | 89 | % | ||||||
Total subscription revenues | $ | 1,739,795 | $ | 1,221,639 | 42 | % |
Year Ended December 31, | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Cost of revenues: | ||||||||||
Subscription | $ | 315,570 | $ | 235,414 | 34 | % | ||||
Professional services and other | 184,202 | 163,268 | 13 | % | ||||||
Total cost of revenues | $ | 499,772 | $ | 398,682 | 25 | % | ||||
Gross profit percentage: | ||||||||||
Subscription | 82 | % | 81 | % | ||||||
Professional services and other | 5 | % | 3 | % | ||||||
Total gross profit percentage | 74 | % | 71 | % | ||||||
Gross profit: | $ | 1,433,254 | $ | 991,831 | 45 | % | ||||
Headcount (at period end) | ||||||||||
Subscription | 936 | 729 | 28 | % | ||||||
Professional services and other | 562 | 496 | 13 | % | ||||||
Total headcount | 1,498 | 1,225 | 22 | % |
Year Ended December 31 | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Sales and marketing | $ | 946,617 | $ | 700,464 | 35 | % | ||||
Percentage of revenues | 49 | % | 50 | % | ||||||
Headcount (at period end) | 2,413 | 1,875 | 29 | % |
Year Ended December 31 | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Research and development | $ | 377,518 | $ | 285,239 | 32 | % | ||||
Percentage of revenues | 19 | % | 21 | % | ||||||
Headcount (at period end) | 1,419 | 1,054 | 35 | % |
Year Ended December 31 | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
General and administrative | $ | 210,533 | $ | 158,936 | 32 | % | ||||
Percentage of revenues | 11 | % | 11 | % | ||||||
Headcount (at period end) | 892 | 647 | 38 | % |
Year Ended December 31 | % Change | ||||||||
2017 | 2016 | ||||||||
(dollars in thousands) | |||||||||
Legal settlements | $ | — | $ | 270,000 | NM | ||||
Percentage of revenues | — | % | 19 | % |
Year Ended December 31 | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Cost of revenues: | ||||||||||
Subscription | $ | 35,334 | $ | 28,420 | 24 | % | ||||
Professional services and other | 27,475 | 26,442 | 4 | % | ||||||
Sales and marketing | 170,527 | 131,571 | 30 | % | ||||||
Research and development | 92,025 | 81,731 | 13 | % | ||||||
General and administrative | 68,717 | 49,416 | 39 | % | ||||||
Total stock-based compensation | $ | 394,078 | $ | 317,580 | 24 | % | ||||
Percentage of revenues | 20 | % | 23 | % |
Year Ended December 31 | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Interest expense | $ | (53,394 | ) | $ | (33,278 | ) | 60 | % | ||
Percentage of revenues | (3 | )% | (2 | )% |
Year Ended December 31 | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Interest income | $ | 16,677 | $ | 8,528 | 96 | % | ||||
Foreign currency exchange loss | (11,117 | ) | (2,248 | ) | NM | |||||
Other | 244 | (245 | ) | NM | ||||||
Interest income and other income (expense), net | $ | 5,804 | $ | 6,035 | (4 | )% | ||||
Percentage of revenues | — | % | — | % |
Year Ended December 31 | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Loss before income taxes | $ | (149,004 | ) | $ | (450,051 | ) | (67 | )% | ||
Provision for income taxes | 126 | 1,753 | (93 | )% | ||||||
Effective tax rate | — | % | — | % |
Year Ended December 31 | % Change | |||||||||
2017 | 2016 | |||||||||
(dollars in thousands) | ||||||||||
Net loss | $ | (149,130 | ) | $ | (451,804 | ) | (67 | )% | ||
Percentage of revenues | (8 | )% | (32 | )% |
Year Ended December 31, | % Change | |||||||||
2016 | 2015 | |||||||||
(dollars in thousands) | ||||||||||
Revenues: | ||||||||||
Subscription | $ | 1,221,639 | $ | 848,278 | 44 | % | ||||
Professional services and other | 168,874 | 157,202 | 7 | % | ||||||
Total revenues | $ | 1,390,513 | $ | 1,005,480 | 38 | % | ||||
Percentage of revenues: | ||||||||||
Subscription | 88 | % | 84 | % | ||||||
Professional services and other | 12 | 16 | ||||||||
Total | 100 | % | 100 | % |
Year Ended December 31, | % Change | |||||||||
2016 | 2015 | |||||||||
(dollars in thousands) | ||||||||||
Service management products | $ | 1,108,846 | $ | 783,603 | 42 | % | ||||
ITOM products | 112,793 | 64,675 | 74 | % | ||||||
Total subscription revenues | $ | 1,221,639 | $ | 848,278 | 44 | % |
Year Ended December 31, | % Change | |||||||||
2016 | 2015 | |||||||||
(dollars in thousands) | ||||||||||
Cost of revenues: | ||||||||||
Subscription | $ | 235,414 | $ | 183,400 | 28 | % | ||||
Professional services and other | 163,268 | 146,013 | 12 | % | ||||||
Total cost of revenues | $ | 398,682 | $ | 329,413 | 21 | % | ||||
Gross profit percentage: | ||||||||||
Subscription | 81 | % | 78 | % | ||||||
Professional services and other | 3 | % | 7 | % | ||||||
Total gross profit percentage | 71 | % | 67 | % | ||||||
Gross profit: | $ | 991,831 | $ | 676,067 | 47 | % | ||||
Headcount (at period end) | ||||||||||
Subscription | 729 | 579 | 26 | % | ||||||
Professional services and other | 496 | 486 | 2 | % | ||||||
Total headcount | 1,225 | 1,065 | 15 | % |
Year Ended December 31 | % Change | |||||||||
2016 | 2015 | |||||||||
(dollars in thousands) | ||||||||||
Sales and marketing | $ | 700,464 | $ | 498,439 | 41 | % | ||||
Percentage of revenues | 50 | % | 50 | % | ||||||
Headcount (at period end) | 1,875 | 1,416 | 32 | % |
Year Ended December 31 | % Change | |||||||||
2016 | 2015 | |||||||||
(dollars in thousands) | ||||||||||
Research and development | $ | 285,239 | $ | 217,389 | 31 | % | ||||
Percentage of revenues | 21 | % | 22 | % | ||||||
Headcount (at period end) | 1,054 | 756 | 39 | % |
Year Ended December 31 | % Change | |||||||||
2016 | 2015 | |||||||||
(dollars in thousands) | ||||||||||
General and administrative | $ | 158,936 | $ | 126,604 | 26 | % | ||||
Percentage of revenues | 11 | % | 12 | % | ||||||
Headcount (at period end) | 647 | 449 | 44 | % |
Year Ended December 31 | % Change | ||||||||
2016 | 2015 | ||||||||
(dollars in thousands) | |||||||||
Legal settlements | $ | 270,000 | $ | — | NM | ||||
Percentage of revenues | 19 | % | NM |
Year Ended December 31 | % Change | |||||||||
2016 | 2015 | |||||||||
(dollars in thousands) | ||||||||||
Cost of revenues: | ||||||||||
Subscription | $ | 28,420 | $ | 23,416 | 21 | % | ||||
Professional services and other | 26,442 | 23,265 | 14 | % | ||||||
Sales and marketing | 131,571 | 102,349 | 29 | % | ||||||
Research and development | 81,731 | 70,326 | 16 | % | ||||||
General and administrative | 49,416 | 38,357 | 29 | % | ||||||
Total stock-based compensation | $ | 317,580 | $ | 257,713 | 23 | % | ||||
Percentage of revenues | 23 | % | 26 | % |
Year Ended December 31 | % Change | |||||||||
2016 | 2015 | |||||||||
(dollars in thousands) | ||||||||||
Interest expense | $ | (33,278 | ) | $ | (31,097 | ) | 7 | % | ||
Percentage of revenues | (2 | )% | (3 | )% |
Year Ended December 31 | % Change | |||||||||
2016 | 2015 | |||||||||
(dollars in thousands) | ||||||||||
Interest income | $ | 8,528 | $ | 4,858 | 76 | % | ||||
Foreign currency exchange gain (loss) | (2,248 | ) | 51 | NM | ||||||
Other | (245 | ) | (459 | ) | (47 | )% | ||||
Interest income and other income (expense), net | $ | 6,035 | $ | 4,450 | 36 | % | ||||
Percentage of revenues | — | % | 1 | % |
Year Ended December 31 | % Change | |||||||||
2016 | 2015 | |||||||||
(dollars in thousands) | ||||||||||
Loss before income taxes | $ | (450,051 | ) | $ | (193,012 | ) | 133 | % | ||
Provision for income taxes | 1,753 | 5,414 | (68 | )% | ||||||
Effective tax rate | — | % | (3 | )% |
Year Ended December 31 | % Change | |||||||||
2016 | 2015 | |||||||||
(dollars in thousands) | ||||||||||
Net loss | $ | (451,804 | ) | $ | (198,426 | ) | 128 | % | ||
Percentage of revenues | (32 | )% | (20 | )% |
For the Three Months Ended | |||||||||||||||||||||||||||||||
Dec 31, 2017 | Sep 30, 2017 | June 30, 2017 | March 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | June 30, 2016 | March 31, 2016 | ||||||||||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||
Subscription | $ | 497,232 | $ | 455,421 | $ | 411,007 | $ | 376,135 | $ | 344,604 | $ | 318,934 | $ | 290,679 | $ | 267,422 | |||||||||||||||
Professional services and other | 49,138 | 42,749 | 60,696 | 40,648 | 41,062 | 38,722 | 50,633 | 38,457 | |||||||||||||||||||||||
Total revenues | 546,370 | 498,170 | 471,703 | 416,783 | 385,666 | 357,656 | 341,312 | 305,879 | |||||||||||||||||||||||
Cost of revenues: | |||||||||||||||||||||||||||||||
Subscription | 87,524 | 81,878 | 75,793 | 70,375 | 64,707 | 61,566 | 56,360 | 52,781 | |||||||||||||||||||||||
Professional services and other | 46,836 | 45,402 | 45,892 | 46,072 | 40,229 | 41,271 | 40,289 | 41,479 | |||||||||||||||||||||||
Total cost of revenues | 134,360 | 127,280 | 121,685 | 116,447 | 104,936 | 102,837 | 96,649 | 94,260 | |||||||||||||||||||||||
Gross profit | 412,010 | 370,890 | 350,018 | 300,336 | 280,730 | 254,819 | 244,663 | 211,619 | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||
Sales and marketing | 260,292 | 227,015 | 247,224 | 212,086 | 188,857 | 166,491 | 186,506 | 158,610 | |||||||||||||||||||||||
Research and development | 104,559 | 98,465 | 90,005 | 84,489 | 73,933 | 75,018 | 70,364 | 65,924 | |||||||||||||||||||||||
General and administrative | 60,291 | 52,465 | 51,526 | 46,251 | 41,543 | 40,085 | 36,071 | 41,237 | |||||||||||||||||||||||
Legal settlements (1) | — | — | — | — | — | — | — | 270,000 | |||||||||||||||||||||||
Total operating expenses | 425,142 | 377,945 | 388,755 | 342,826 | 304,333 | 281,594 | 292,941 | 535,771 | |||||||||||||||||||||||
Loss from operations | (13,132 | ) | (7,055 | ) | (38,737 | ) | (42,490 | ) | (23,603 | ) | (26,775 | ) | (48,278 | ) | (324,152 | ) | |||||||||||||||
Interest expense | (16,813 | ) | (16,566 | ) | (11,337 | ) | (8,678 | ) | (8,532 | ) | (8,389 | ) | (8,248 | ) | (8,109 | ) | |||||||||||||||
Interest income and other income (expense), net | 5,065 | 853 | (7,830 | ) | 7,716 | 1,290 | 1,783 | 2,260 | 702 | ||||||||||||||||||||||
Loss before income taxes | (24,880 | ) | (22,768 | ) | (57,904 | ) | (43,452 | ) | (30,845 | ) | (33,381 | ) | (54,266 | ) | (331,559 | ) | |||||||||||||||
Provision for (benefit from) income taxes | 2,927 | 1,420 | (1,431 | ) | (2,790 | ) | 1,744 | 2,877 | (4,641 | ) | 1,773 | ||||||||||||||||||||
Net loss | $ | (27,807 | ) | $ | (24,188 | ) | $ | (56,473 | ) | $ | (40,662 | ) | $ | (32,589 | ) | $ | (36,258 | ) | $ | (49,625 | ) | $ | (333,332 | ) | |||||||
Net loss per share - basic and diluted | $ | (0.16 | ) | $ | (0.14 | ) | $ | (0.33 | ) | $ | (0.24 | ) | $ | (0.20 | ) | $ | (0.22 | ) | $ | (0.30 | ) | $ | (2.06 | ) |
(1) | For details regarding the legal settlements expenses of $270.0 million included in the three months ended March 31, 2016, refer to Note 16 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(dollars in thousands) | |||||||||||
Net cash provided by operating activities | $ | 642,825 | $ | 159,921 | $ | 317,754 | |||||
Net cash used in investing activities (1) | (883,948 | ) | (108,238 | ) | (231,521 | ) | |||||
Net cash provided by (used in) financing activities | 538,892 | (55,752 | ) | 80,330 | |||||||
Net increase (decrease) in cash, cash equivalents and restricted cash net of foreign currency effect | 325,897 | (10,854 | ) | 160,050 |
(1) | During the year ended December 31, 2017, we adopted Accounting Standards Update 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” 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. We have adopted changes to the consolidated statements of cash flows on a retrospective basis. The impact of the adoption for the years ended December 31, 2016 and 2015 is not material. |
Payments Due by Period | |||||||||||||||||||
Total | Less Than 1 Year | 1 – 3 Years | 3 – 5 Years | More Than 5 Years | |||||||||||||||
(in thousands) | |||||||||||||||||||
Operating leases (1) | $ | 353,859 | $ | 44,713 | $ | 96,204 | $ | 88,828 | $ | 124,114 | |||||||||
Purchase obligations (2) | 80,974 | 31,394 | 34,434 | 11,053 | 4,093 | ||||||||||||||
Principal amount payable on our convertible senior notes (3) | 1,357,494 | 574,994 | — | 782,500 | — | ||||||||||||||
Other | 3,923 | 574 | 1,148 | 1,148 | 1,053 | ||||||||||||||
Total contractual obligations | $ | 1,796,250 | $ | 651,675 | $ | 131,786 | $ | 883,529 | $ | 129,260 |
(1) | Consists of future non-cancelable minimum rental payments under operating leases for some of our offices and data centers. |
(2) | 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 to be held in 2019 and 2020. If we were to cancel these contractual commitments as of December 31, 2017, we would have been obligated to pay cancellation penalties of approximately $13.9 million in aggregate. |
(3) | For additional information regarding our convertible senior notes, refer to Note 9 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. |
ITEM 7A. | QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 8. | CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Page | |
Consolidated Financial Statements | |
December 31, | |||||||
2017 | 2016 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 726,495 | $ | 401,238 | |||
Short-term investments | 1,052,803 | 498,124 | |||||
Accounts receivable, net | 434,895 | 322,757 | |||||
Current portion of deferred commissions | 118,690 | 76,780 | |||||
Prepaid expenses and other current assets | 77,681 | 43,636 | |||||
Total current assets | 2,410,564 | 1,342,535 | |||||
Deferred commissions, less current portion | 85,530 | 61,990 | |||||
Long-term investments | 391,442 | 262,658 | |||||
Property and equipment, net | 245,124 | 181,620 | |||||
Intangible assets, net | 86,916 | 65,854 | |||||
Goodwill | 128,728 | 82,534 | |||||
Other assets | 49,600 | 36,576 | |||||
Total assets | $ | 3,397,904 | $ | 2,033,767 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 32,109 | $ | 38,080 | |||
Accrued expenses and other current liabilities | 244,605 | 171,636 | |||||
Current portion of deferred revenue | 1,280,499 | 861,782 | |||||
Current portion of convertible senior notes, net | 543,418 | — | |||||
Total current liabilities | 2,100,631 | 1,071,498 | |||||
Deferred revenue, less current portion | 39,884 | 33,319 | |||||
Convertible senior notes, net | 630,018 | 507,812 | |||||
Other long-term liabilities | 43,239 | 34,177 | |||||
Total liabilities | 2,813,772 | 1,646,806 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding | — | — | |||||
Common stock $0.001 par value; 600,000,000 shares authorized; 174,275,864 and 167,430,773 shares issued and outstanding at December 31, 2017 and 2016, respectively | 174 | 167 | |||||
Additional paid-in capital | 1,731,367 | 1,405,317 | |||||
Accumulated other comprehensive loss | (889 | ) | (21,133 | ) | |||
Accumulated deficit | (1,146,520 | ) | (997,390 | ) | |||
Total stockholders’ equity | 584,132 | 386,961 | |||||
Total liabilities and stockholders’ equity | $ | 3,397,904 | $ | 2,033,767 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Revenues: | |||||||||||
Subscription | $ | 1,739,795 | $ | 1,221,639 | $ | 848,278 | |||||
Professional services and other | 193,231 | 168,874 | 157,202 | ||||||||
Total revenues | 1,933,026 | 1,390,513 | 1,005,480 | ||||||||
Cost of revenues (1): | |||||||||||
Subscription | 315,570 | 235,414 | 183,400 | ||||||||
Professional services and other | 184,202 | 163,268 | 146,013 | ||||||||
Total cost of revenues | 499,772 | 398,682 | 329,413 | ||||||||
Gross profit | 1,433,254 | 991,831 | 676,067 | ||||||||
Operating expenses (1): | |||||||||||
Sales and marketing | 946,617 | 700,464 | 498,439 | ||||||||
Research and development | 377,518 | 285,239 | 217,389 | ||||||||
General and administrative | 210,533 | 158,936 | 126,604 | ||||||||
Legal settlements | — | 270,000 | — | ||||||||
Total operating expenses | 1,534,668 | 1,414,639 | 842,432 | ||||||||
Loss from operations | (101,414 | ) | (422,808 | ) | (166,365 | ) | |||||
Interest expense | (53,394 | ) | (33,278 | ) | (31,097 | ) | |||||
Interest income and other income (expense), net | 5,804 | 6,035 | 4,450 | ||||||||
Loss before income taxes | (149,004 | ) | (450,051 | ) | (193,012 | ) | |||||
Provision for income taxes | 126 | 1,753 | 5,414 | ||||||||
Net loss | $ | (149,130 | ) | $ | (451,804 | ) | $ | (198,426 | ) | ||
Net loss per share - basic and diluted | $ | (0.87 | ) | $ | (2.75 | ) | $ | (1.27 | ) | ||
Weighted-average shares used to compute net loss per share - basic and diluted | 171,175,577 | 164,533,823 | 155,706,643 | ||||||||
Other comprehensive income (loss): | |||||||||||
Foreign currency translation adjustments | $ | 14,867 | $ | (4,839 | ) | $ | (3,177 | ) | |||
Unrealized gains (losses) on investments, net of tax | 5,377 | 588 | (1,592 | ) | |||||||
Other comprehensive income (loss) | 20,244 | (4,251 | ) | (4,769 | ) | ||||||
Comprehensive loss | $ | (128,886 | ) | $ | (456,055 | ) | $ | (203,195 | ) |
(1) | Includes stock-based compensation as follows: |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Cost of revenues: | |||||||||||
Subscription | $ | 35,334 | $ | 28,420 | $ | 23,416 | |||||
Professional services and other | 27,475 | 26,442 | 23,265 | ||||||||
Sales and marketing | 170,527 | 131,571 | 102,349 | ||||||||
Research and development | 92,025 | 81,731 | 70,326 | ||||||||
General and administrative | 68,717 | 49,416 | 38,357 |
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | ||||||||||||||||||
Shares | Amount | |||||||||||||||||||||
Balance at December 31, 2014 | 149,509,092 | $ | 150 | $ | 799,221 | $ | (358,583 | ) | $ | (12,113 | ) | $ | 428,675 | |||||||||
Common stock issued under employee stock plans | 11,276,672 | 10 | 93,338 | — | — | 93,348 | ||||||||||||||||
Tax benefit from employee stock plans | — | — | 2,663 | — | — | 2,663 | ||||||||||||||||
Taxes paid related to net share settlement of equity awards | — | — | (12,795 | ) | — | — | (12,795 | ) | ||||||||||||||
Vesting of early exercised stock options | — | — | 44 | — | — | 44 | ||||||||||||||||
Stock-based compensation | — | — | 258,074 | — | — | 258,074 | ||||||||||||||||
Other comprehensive loss, net | — | — | (4,769 | ) | (4,769 | ) | ||||||||||||||||
Net loss | — | (198,426 | ) | — | (198,426 | ) | ||||||||||||||||
Balance at December 31, 2015 | 160,785,764 | $ | 160 | $ | 1,140,545 | $ | (557,009 | ) | $ | (16,882 | ) | $ | 566,814 | |||||||||
Cumulative effect adjustment for ASU 2016-09 adoption | — | — | — | 11,423 | — | 11,423 | ||||||||||||||||
Common stock issued under employee stock plans | 6,645,009 | 7 | 66,361 | — | — | 66,368 | ||||||||||||||||
Taxes paid related to net share settlement of equity awards | — | — | (119,914 | ) | — | — | (119,914 | ) | ||||||||||||||
Stock-based compensation | — | — | 318,325 | — | — | 318,325 | ||||||||||||||||
Other comprehensive loss, net | — | — | — | — | (4,251 | ) | (4,251 | ) | ||||||||||||||
Net loss | — | — | — | (451,804 | ) | — | (451,804 | ) | ||||||||||||||
Balance at December 31, 2016 | 167,430,773 | $ | 167 | $ | 1,405,317 | $ | (997,390 | ) | $ | (21,133 | ) | $ | 386,961 | |||||||||
Common stock issued under employee stock plans | 7,385,897 | 7 | 82,552 | — | — | 82,559 | ||||||||||||||||
Repurchases and retirement of common stock | (540,806 | ) | — | (55,000 | ) | — | — | (55,000 | ) | |||||||||||||
Taxes paid related to net share settlement of equity awards | — | — | (182,127 | ) | — | — | (182,127 | ) | ||||||||||||||
Stock-based compensation | — | — | 394,680 | — | — | 394,680 | ||||||||||||||||
Equity component of the convertible notes, net | — | — | 159,891 | — | — | 159,891 | ||||||||||||||||
Purchase of convertible note hedge | — | — | (128,017 | ) | — | — | (128,017 | ) | ||||||||||||||
Issuance of warrants | — | — | 54,071 | — | — | 54,071 | ||||||||||||||||
Other comprehensive loss, net | — | — | — | — | 20,244 | 20,244 | ||||||||||||||||
Net loss | — | — | — | (149,130 | ) | — | (149,130 | ) | ||||||||||||||
Balance at December 31, 2017 | 174,275,864 | $ | 174 | $ | 1,731,367 | $ | (1,146,520 | ) | $ | (889 | ) | $ | 584,132 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (149,130 | ) | $ | (451,804 | ) | $ | (198,426 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 113,875 | 83,082 | 60,356 | ||||||||
Amortization of premiums on investments | 3,092 | 4,725 | 7,064 | ||||||||
Amortization of deferred commissions | 115,262 | 81,217 | 65,541 | ||||||||
Amortization of debt discount and issuance costs | 53,394 | 33,278 | 31,097 | ||||||||
Stock-based compensation | 394,078 | 317,580 | 257,713 | ||||||||
Deferred income tax | (9,078 | ) | (3,424 | ) | (1,282 | ) | |||||
Other | (3,997 | ) | (962 | ) | (6,223 | ) | |||||
Changes in operating assets and liabilities, net of effect of business combinations: | |||||||||||
Accounts receivable | (98,432 | ) | (125,106 | ) | (50,855 | ) | |||||
Deferred commissions | (174,503 | ) | (136,459 | ) | (80,142 | ) | |||||
Prepaid expenses and other assets | (46,138 | ) | (21,500 | ) | (10,961 | ) | |||||
Accounts payable | (5,504 | ) | (3,554 | ) | 14,785 | ||||||
Deferred revenue | 381,562 | 300,167 | 195,900 | ||||||||
Accrued expenses and other liabilities | 68,344 | 82,681 | 33,187 | ||||||||
Net cash provided by operating activities | 642,825 | 159,921 | 317,754 | ||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | (150,510 | ) | (105,562 | ) | (87,481 | ) | |||||
Business combinations, net of cash and restricted cash acquired | (58,203 | ) | (34,297 | ) | (1,100 | ) | |||||
Purchases of other intangibles | (6,670 | ) | (18,750 | ) | (1,750 | ) | |||||
Purchases of investments | (1,189,511 | ) | (518,664 | ) | (712,782 | ) | |||||
Purchases of strategic investments | (4,750 | ) | (500 | ) | (10,500 | ) | |||||
Sales of investments | 85,106 | 297,998 | 277,045 | ||||||||
Maturities of investments | 440,590 | 271,537 | 305,047 | ||||||||
Net cash used in investing activities(1) | (883,948 | ) | (108,238 | ) | (231,521 | ) | |||||
Cash flows from financing activities: | |||||||||||
Net proceeds from borrowings on convertible senior notes | 772,127 | — | — | ||||||||
Principal payments on convertible senior notes | (4 | ) | — | — | |||||||
Proceeds from issuance of warrants | 54,071 | — | — | ||||||||
Purchases of convertible note hedges | (128,017 | ) | — | — | |||||||
Repurchases and retirement of common stock | (55,000 | ) | — | — | |||||||
Proceeds from employee stock plans | 82,567 | 66,378 | 93,348 | ||||||||
Taxes paid related to net share settlement of equity awards | (181,938 | ) | (119,907 | ) | (12,795 | ) | |||||
Payments on financing obligations | (4,914 | ) | (2,223 | ) | (223 | ) | |||||
Net cash provided by (used in) financing activities | 538,892 | (55,752 | ) | 80,330 | |||||||
Foreign currency effect on cash, cash equivalents and restricted cash(1) | 28,128 | (6,785 | ) | (6,513 | ) | ||||||
Net increase (decrease) in cash, cash equivalents and restricted cash(1) | 325,897 | (10,854 | ) | 160,050 | |||||||
Cash, cash equivalents and restricted cash at beginning of period(1) | 401,932 | 412,786 | 252,736 | ||||||||
Cash, cash equivalents and restricted cash at end of period(1) | $ | 727,829 | $ | 401,932 | $ | 412,786 | |||||
Cash, cash equivalents and restricted cash at end of period: | |||||||||||
Cash and cash equivalents | $ | 726,495 | $ | 401,238 | $ | 412,305 | |||||
Current portion of restricted cash included in prepaid expenses and other current assets | 1,301 | 694 | 481 | ||||||||
Non-current portion of restricted cash included in other assets | 33 | — | — | ||||||||
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows | $ | 727,829 | $ | 401,932 | $ | 412,786 | |||||
Supplemental disclosures of other cash flow information: | |||||||||||
Income taxes paid, net of refunds | $ | 7,899 | $ | 4,338 | $ | 3,630 | |||||
Non-cash investing and financing activities: | |||||||||||
Property and equipment included in accounts payable and accrued expenses | $ | 15,007 | $ | 15,381 | $ | 14,427 | |||||
Intangible assets included in accrued expenses and other liabilities | $ | 6,750 | $ | — | $ | — | |||||
Financing obligations for purchases of other intangibles | $ | — | $ | 6,210 | $ | — |
(1) | During the year ended December 31, 2017, we adopted Accounting Standards Update 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” 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. We have adopted changes to the consolidated statements of cash flows on a retrospective basis. The impact of the adoption for the years ended December 31, 2016 and 2015 is not material. |
Building | 39 years | |
Computer equipment and software | 3—5 years | |
Furniture and fixtures | 3—7 years | |
Leasehold and other improvements | shorter of the lease term or estimated useful life |
Balance at Beginning of Year | Additions (Deductions): Charged to Operations | Additions (Deductions): Charged to Deferred Revenue | Less: Write-offs | Balance at End of Year | ||||||||||||
Year ended December 31, 2017 | ||||||||||||||||
Allowance for doubtful accounts | $ | 2,323 | 1,688 | 194 | 1,090 | $ | 3,115 | |||||||||
Year ended December 31, 2016 | ||||||||||||||||
Allowance for doubtful accounts | $ | 1,179 | 2,219 | (391 | ) | 684 | $ | 2,323 | ||||||||
Year ended December 31, 2015 | ||||||||||||||||
Allowance for doubtful accounts | $ | 809 | 841 | (70 | ) | 401 | $ | 1,179 |
Year Ended December 31, | |||||||||||||||
2017 | 2016 | ||||||||||||||
As Reported | As Adjusted | As Reported | As Adjusted | ||||||||||||
Revenues: | |||||||||||||||
Subscription and software | $ | 1,739,795 | $ | 1,739,500 | $ | 1,221,639 | $ | 1,234,070 | |||||||
Professional services and other | 193,231 | 178,994 | 168,874 | 156,915 | |||||||||||
Total revenues | 1,933,026 | 1,918,494 | 1,390,513 | 1,390,985 | |||||||||||
Cost of revenues: | |||||||||||||||
Professional services and other | 184,202 | 184,292 | 163,268 | 163,581 | |||||||||||
Total cost of revenues | 499,772 | 499,862 | 398,682 | 398,995 | |||||||||||
Gross profit | 1,433,254 | 1,418,632 | 991,831 | 991,990 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing | 946,617 | 894,977 | 700,464 | 659,983 | |||||||||||
Total operating expenses | 1,534,668 | 1,483,028 | 1,414,639 | 1,374,158 | |||||||||||
Loss from operations | (101,414 | ) | (64,396 | ) | (422,808 | ) | (382,168 | ) | |||||||
Interest income and other income (expense), net | 5,804 | 4,384 | 6,035 | 5,027 | |||||||||||
Loss before income taxes | (149,004 | ) | (113,406 | ) | (450,051 | ) | (410,419 | ) | |||||||
Provision for income taxes | 126 | 3,440 | 1,753 | 3,830 | |||||||||||
Net loss | $ | (149,130 | ) | $ | (116,846 | ) | $ | (451,804 | ) | $ | (414,249 | ) | |||
Net loss per share - basic and diluted | $ | (0.87 | ) | $ | (0.68 | ) | $ | (2.75 | ) | $ | (2.52 | ) | |||
Weighted-average shares used to compute net loss per share - basic and diluted | 171,175,577 | 171,175,577 | 164,533,823 | 164,533,823 |
Year Ended December 31, 2017 | |||||||
As Reported | As Adjusted | ||||||
Assets | |||||||
Accounts receivable, net | $ | 434,895 | $ | 437,051 | |||
Current portion of deferred commissions | 118,690 | 109,643 | |||||
Prepaid expenses and other current assets | 77,681 | 95,959 | |||||
Deferred commissions, less current portion | 85,530 | 224,252 | |||||
Other assets | 49,600 | 51,832 | |||||
Liabilities | |||||||
Accrued expenses and other current liabilities | 244,605 | 253,257 | |||||
Current portion of deferred revenue | 1,280,499 | 1,210,695 | |||||
Deferred revenue, less current portion | 39,884 | 36,120 | |||||
Other long-term liabilities | 43,239 | 65,884 | |||||
Stockholder's equity | |||||||
Accumulated other comprehensive (loss) income | (889 | ) | 5,767 | ||||
Accumulated deficit | (1,146,520 | ) | (958,564 | ) |
December 31, 2017 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Available-for-sale securities: | |||||||||||||||
Commercial paper | $ | 258,348 | $ | 1 | $ | (5 | ) | $ | 258,344 | ||||||
Corporate notes and bonds | 1,006,302 | 26 | (3,084 | ) | 1,003,244 | ||||||||||
Certificates of deposit | 33,084 | — | — | 33,084 | |||||||||||
U.S. government agency securities | 129,494 | — | (638 | ) | 128,856 | ||||||||||
Marketable equity securities | 10,000 | 10,717 | — | 20,717 | |||||||||||
Total available-for-sale securities | $ | 1,437,228 | $ | 10,744 | $ | (3,727 | ) | $ | 1,444,245 |
December 31, 2016 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Available-for-sale securities: | |||||||||||||||
Commercial paper | $ | 56,839 | $ | — | $ | — | $ | 56,839 | |||||||
Corporate notes and bonds | 628,054 | 91 | (1,590 | ) | 626,555 | ||||||||||
Certificates of deposit | 35,355 | — | — | 35,355 | |||||||||||
U.S. government agency securities | 42,088 | 7 | (62 | ) | 42,033 | ||||||||||
Total available-for-sale securities | $ | 762,336 | $ | 98 | $ | (1,652 | ) | $ | 760,782 |
December 31, 2017 | |||
Due in one year or less | $ | 1,032,086 | |
Due in one year through two years | 391,442 | ||
Total | $ | 1,423,528 |
December 31, 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 | ||||||||||||||||||
Commercial paper | $ | 14,809 | $ | (5 | ) | $ | — | $ | — | $ | 14,809 | $ | (5 | ) | |||||||||
Corporate notes and bonds | 819,113 | (2,703 | ) | 141,874 | (381 | ) | 960,987 | (3,084 | ) | ||||||||||||||
U.S. government agency securities | 106,301 | (593 | ) | 22,555 | (45 | ) | 128,856 | (638 | ) | ||||||||||||||
Total | $ | 940,223 | $ | (3,301 | ) | $ | 164,429 | $ | (426 | ) | $ | 1,104,652 | $ | (3,727 | ) |
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 | $ | 492,503 | $ | (1,530 | ) | $ | 47,940 | $ | (60 | ) | $ | 540,443 | $ | (1,590 | ) | ||||||||
U.S. government agency securities | 30,033 | (62 | ) | — | — | 30,033 | (62 | ) | |||||||||||||||
Total | $ | 522,536 | $ | (1,592 | ) | $ | 47,940 | $ | (60 | ) | $ | 570,476 | $ | (1,652 | ) |
Level 1 | Level 2 | Total | |||||||||
Cash equivalents: | |||||||||||
Money market funds | $ | 282,507 | $ | — | $ | 282,507 | |||||
Commercial paper | — | 100,456 | 100,456 | ||||||||
Corporate notes and bonds | — | 50,437 | 50,437 | ||||||||
Short-term investments: | |||||||||||
Commercial paper | — | 258,344 | 258,344 | ||||||||
Corporate notes and bonds | — | 688,316 | 688,316 | ||||||||
Certificates of deposit | — | 17,950 | 17,950 | ||||||||
U.S. government agency securities | — | 67,476 | 67,476 | ||||||||
Marketable equity securities | 20,717 | — | 20,717 | ||||||||
Long-term investments: | |||||||||||
Corporate notes and bonds | — | 314,928 | 314,928 | ||||||||
Certificates of deposit | — | 15,134 | 15,134 | ||||||||
U.S. government agency securities | — | 61,380 | 61,380 | ||||||||
Total | $ | 303,224 | $ | 1,574,421 | $ | 1,877,645 |
Level 1 | Level 2 | Total | |||||||||
Cash equivalents: | |||||||||||
Money market funds | $ | 165,627 | $ | — | $ | 165,627 | |||||
Short-term investments: | |||||||||||
Commercial paper | — | 56,839 | 56,839 | ||||||||
Corporate notes and bonds | — | 388,429 | 388,429 | ||||||||
Certificates of deposit | — | 35,355 | 35,355 | ||||||||
U.S. government agency securities | — | 17,501 | 17,501 | ||||||||
Long-term investments: | |||||||||||
Corporate notes and bonds | — | 238,125 | 238,125 | ||||||||
U.S. government agency securities | — | 24,533 | 24,533 | ||||||||
Total | $ | 165,627 | $ | 760,782 | $ | 926,409 |
Purchase Price Allocation (in thousands) | Useful Life (in years) | ||||
Net tangible assets acquired | $ | 675 | |||
Intangible assets: | |||||
Developed technology | 15,600 | 5 | |||
Goodwill | 19,386 | ||||
Net deferred tax liabilities (1) | (3,341 | ) | |||
Total purchase price | $ | 32,320 |
(1) | Deferred tax liabilities, net primarily relates to purchased identifiable intangible assets and is shown net of deferred tax assets. |
Purchase Price Allocation (in thousands) | Useful Life (in years) | ||||
Net tangible assets acquired | $ | 37 | |||
Intangible assets: | |||||
Developed technology | 6,400 | 5 | |||
Goodwill | 11,159 | ||||
Net deferred tax liabilities (1) | (2,561 | ) | |||
Total purchase price | $ | 15,035 |
(1) | Deferred tax liabilities, net primarily relates to purchased identifiable intangible assets and is shown net of deferred tax assets. |
Purchase Price Allocation (in thousands) | Useful Life (in years) | ||||
Intangible assets: | |||||
Developed technology | $ | 8,100 | 6 | ||
Customer contracts and related relationships | 500 | 1.5 | |||
Goodwill | 15,258 | ||||
Net tangible liabilities acquired | (1,339 | ) | |||
Net deferred tax liabilities (1) | (2,890 | ) | |||
Total purchase price | $ | 19,629 |
(1) | Deferred tax liabilities, net primarily relates to purchased identifiable intangible assets and is shown net of deferred tax assets. |
Purchase Price Allocation (in thousands) | Useful Life (in years) | ||||
Net tangible assets acquired | $ | 140 | |||
Intangible assets: | |||||
Developed technology | 4,700 | 5 | |||
Customer contracts and related relationships | 200 | 1.5 | |||
Goodwill | 11,437 | ||||
Net deferred tax liabilities (1) | (2,015 | ) | |||
Total purchase price | $ | 14,462 |
(1) | Deferred tax liabilities, net primarily relates to purchased identifiable intangible assets and is shown net of deferred tax assets. |
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
(Unaudited) | |||||||
Revenue | $ | 1,937,374 | $ | 1,397,600 | |||
Net loss | $ | (153,218 | ) | $ | (467,578 | ) | |
Weighted-average shares used to compute net loss per share - basic and diluted | 171,175,577 | 164,533,823 | |||||
Net loss per share - basic and diluted | $ | (0.90 | ) | $ | (2.84 | ) |
Carrying Amount | |||||||
Balance as of December 31, 2015 | $ | 55,669 | |||||
Goodwill acquired | 26,695 | ||||||
Foreign currency translation adjustments | 170 | ||||||
Balance as of December 31, 2016 | 82,534 | ||||||
Goodwill acquired | 39,668 | ||||||
Foreign currency translation adjustments | 6,526 | ||||||
Balance as of December 31, 2017 | $ | 128,728 |
December 31, 2017 | |||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||
Developed technology | $ | 102,349 | $ | (43,382 | ) | $ | 58,967 | ||||
Patents | 31,030 | (3,239 | ) | 27,791 | |||||||
Other | 1,575 | (1,417 | ) | 158 | |||||||
Total intangible assets | $ | 134,954 | $ | (48,038 | ) | $ | 86,916 |
December 31, 2016 | |||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||
Developed technology | $ | 79,206 | $ | (30,858 | ) | $ | 48,348 | ||||
Patents | 17,610 | (867 | ) | 16,743 | |||||||
Other | 1,775 | (1,012 | ) | 763 | |||||||
Total intangible assets | $ | 98,591 | $ | (32,737 | ) | $ | 65,854 |
Years Ending December 31, | |||||||
2018 | $ | 22,772 | |||||
2019 | 22,691 | ||||||
2020 | 12,736 | ||||||
2021 | 10,805 | ||||||
2022 | 6,974 | ||||||
Thereafter | 10,938 | ||||||
Total future amortization expense | $ | 86,916 |
December 31, | |||||||
2017 | 2016 | ||||||
Computer equipment | $ | 326,378 | $ | 222,648 | |||
Computer software | 46,413 | 32,132 | |||||
Leasehold and other improvements | 56,232 | 37,095 | |||||
Furniture and fixtures | 38,789 | 31,574 | |||||
Building | 7,084 | 6,379 | |||||
Construction in progress | 5,341 | 2,535 | |||||
480,237 | 332,363 | ||||||
Less: Accumulated depreciation | (235,113 | ) | (150,743 | ) | |||
Total property and equipment, net | $ | 245,124 | $ | 181,620 |
December 31, | |||||||
2017 | 2016 | ||||||
Taxes payable | $ | 25,617 | $ | 19,472 | |||
Bonuses and commissions | 84,972 | 67,259 | |||||
Accrued compensation | 45,428 | 30,816 | |||||
Other employee related liabilities | 44,284 | 28,812 | |||||
Other | 44,304 | 25,277 | |||||
Total accrued expenses and other current liabilities | $ | 244,605 | $ | 171,636 |
Convertible Date | Initial Conversion Price per Share | Initial Conversion Rate per $1,000 Par Value | Initial Number of Shares | |||||||
2022 Notes | February 1, 2022 | $ | 134.75 | 7.42 shares | 5,806,936 | |||||
2018 Notes | July 1, 2018 | $ | 73.88 | 13.54 shares | 7,783,023 |
• | during any calendar quarter (and only during such calendar quarter) if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the applicable conversion price on each applicable trading day; or |
• | during the five-business day period after any five-consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of the Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the applicable conversion rate on each such trading day; or |
• | upon the occurrence of specified corporate events. |
December 31, 2017 | December 31, 2016 | ||||||
Liability component: | |||||||
Principal: | |||||||
2022 Notes | $ | 782,500 | $ | — | |||
2018 Notes | 574,994 | 575,000 | |||||
Less: debt issuance cost and debt discount, net of amortization | |||||||
2022 Notes | (152,482 | ) | — | ||||
2018 Notes | (31,576 | ) | (67,188 | ) | |||
Net carrying amount | $ | 1,173,436 | $ | 507,812 |
2022 Notes | 2018 Notes | ||||||
Equity component recorded at issuance: | |||||||
Note | $ | 162,039 | $ | 155,319 | |||
Issuance cost | (2,148 | ) | (3,257 | ) | |||
Net amount recorded in equity | $ | 159,891 | $ | 152,062 |
December 31, 2017 | December 31, 2016 | ||||||
2022 Notes | $ | 897,778 | N/A | ||||
2018 Notes | $ | 1,015,554 | $ | 681,375 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Amortization of debt issuance cost | |||||||||||
2022 Notes | $ | 860 | $ | — | $ | — | |||||
2018 Notes | 1,911 | 1,785 | 1,668 | ||||||||
Amortization of debt discount | |||||||||||
2022 Notes | 16,921 | — | — | ||||||||
2018 Notes | 33,702 | 31,493 | 29,429 | ||||||||
Total | $ | 53,394 | $ | 33,278 | $ | 31,097 | |||||
Effective interest rate of the liability component | |||||||||||
2022 Notes | 4.75% | ||||||||||
2018 Notes | 6.50% |
Purchase | Shares | |||||
(in thousands) | ||||||
2022 Note Hedge | $ | 128,017 | 5,806,936 | |||
2018 Note Hedge | $ | 135,815 | 7,783,023 |
Proceeds | Shares | Strike Price | First Expiration Date | |||||||||
(in thousands) | ||||||||||||
2022 Warrants | $ | 54,071 | 5,806,936 | $ | 203.40 | September 2022 | ||||||
2018 Warrants | $ | 84,525 | 7,783,023 | $ | 107.46 | February 2019 |
December 31, | |||||||
2017 | 2016 | ||||||
Foreign currency translation adjustment | $ | (4,410 | ) | $ | (19,277 | ) | |
Net unrealized gain (loss) on investments, net of tax | 3,521 | (1,856 | ) | ||||
Accumulated other comprehensive loss | $ | (889 | ) | $ | (21,133 | ) |
December 31, 2017 | ||||
Stock plans: | ||||
Options outstanding | 3,369,732 | |||
RSUs (1) | 11,403,341 | |||
Stock awards available for future grants: | ||||
2012 Equity Incentive Plan (2) | 25,813,848 | |||
2012 Employee Stock Purchase Plan (2) | 9,581,944 | |||
Total reserved shares of common stock for future issuance | 50,168,865 |
(1) | Represents the number of shares issuable upon settlement of outstanding RSUs and performance RSUs, assuming 100% of the target number of shares for performance RSUs, as discussed under the section entitled “RSUs” in Note 12. |
(2) | 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, 2015 | 8,255,554 | $ | 16.65 | |||||||||
Granted | 617,985 | 71.17 | ||||||||||
Exercised | (2,587,173 | ) | 13.36 | $ | 157,774 | |||||||
Canceled | (467,931 | ) | 58.01 | |||||||||
Outstanding at December 31, 2016 | 5,818,435 | 20.57 | ||||||||||
Granted | 616,720 | 86.33 | ||||||||||
Exercised | (2,970,914 | ) | 12.44 | $ | 277,670 | |||||||
Canceled | (94,509 | ) | 68.88 | |||||||||
Outstanding at December 31, 2017 | 3,369,732 | $ | 38.43 | 5.62 | $ | 309,892 | ||||||
Vested and expected to vest as of December 31, 2017 | 3,283,791 | $ | 37.62 | 5.54 | $ | 304,651 | ||||||
Vested and exercisable as of December 31, 2017 | 2,426,777 | $ | 21.96 | 4.38 | $ | 263,144 |
Number of Shares | Weighted Average Grant Date Fair Value (Per Share) | Aggregate Intrinsic Value (in thousands) | ||||||||
Outstanding at December 31, 2015 | 12,417,805 | $ | 63.38 | |||||||
Granted | 6,870,285 | 61.22 | ||||||||
Vested | (5,213,662 | ) | 59.95 | $ | 354,320 | |||||
Forfeited | (1,852,146 | ) | 63.18 | |||||||
Outstanding at December 31, 2016 | 12,222,282 | 63.66 | ||||||||
Granted | 6,320,457 | 95.70 | ||||||||
Vested | (5,502,004 | ) | 60.79 | $ | 573,861 | |||||
Forfeited | (1,637,394 | ) | 72.69 | |||||||
Outstanding at December 31, 2017 | 11,403,341 | $ | 81.50 | $ | 1,486,882 | |||||
Expected to vest as of December 31, 2017 | 10,191,316 | $ | 1,328,846 |
Year Ended December 31, | ||||||||
2017 | 2016 | 2015 | ||||||
Stock Options: | ||||||||
Expected volatility | 39% - 42% | 41% - 42% | 41% - 46% | |||||
Expected term (in years) | 4.89 | 4.89 - 5.60 | 5.50 - 6.08 | |||||
Risk-free interest rate | 1.78% - 2.47% | 1.18% - 1.87% | 1.48% - 1.94% | |||||
Dividend yield | — | % | — | % | — | % |
Year Ended December 31, | ||||||||
2017 | 2016 | 2015 | ||||||
ESPP: | ||||||||
Expected volatility | 28% - 49% | 31% - 49% | 31% - 49% | |||||
Expected term (in years) | 0.50 | 0.50 | 0.50 | |||||
Risk-free interest rate | 0.40% - 1.15% | 0.17% - 0.47% | 0.05% - 0.17% | |||||
Dividend yield | — | % | — | % | — | % |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Numerator: | |||||||||||
Net loss | $ | (149,130 | ) | $ | (451,804 | ) | $ | (198,426 | ) | ||
Denominator: | |||||||||||
Weighted-average shares outstanding - basic and diluted | 171,175,577 | 164,533,823 | 155,706,643 | ||||||||
Net loss per share - basic and diluted | $ | (0.87 | ) | $ | (2.75 | ) | $ | (1.27 | ) |
Year Ended December 31, | ||||||||
2017 | 2016 | 2015 | ||||||
Common stock options | 3,369,732 | 5,818,435 | 8,255,554 | |||||
Restricted stock units | 11,403,341 | 12,222,282 | 12,417,805 | |||||
ESPP obligations | 361,688 | 366,529 | 254,728 | |||||
2018 Notes | 7,782,946 | 7,783,023 | 7,783,023 | |||||
2018 Warrants | 7,783,023 | 7,783,023 | 7,783,023 | |||||
2022 Notes | 5,806,933 | — | — | |||||
2022 Warrants | 5,806,933 | — | — | |||||
Total potentially dilutive securities | 42,314,596 | 33,973,292 | 36,494,133 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Current provision: | |||||||||||
Federal | $ | (445 | ) | $ | (55 | ) | $ | 682 | |||
State | 137 | 135 | 211 | ||||||||
Foreign | 9,512 | 5,097 | 6,125 | ||||||||
9,204 | 5,177 | 7,018 | |||||||||
Deferred provision: | |||||||||||
Federal | (5,934 | ) | (4,462 | ) | — | ||||||
State | (886 | ) | (746 | ) | — | ||||||
Foreign | (2,258 | ) | 1,784 | (1,604 | ) | ||||||
(9,078 | ) | (3,424 | ) | (1,604 | ) | ||||||
Provision for income taxes | $ | 126 | $ | 1,753 | $ | 5,414 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
United States | $ | (80,636 | ) | $ | (432,631 | ) | $ | (150,593 | ) | ||
Foreign | (68,368 | ) | (17,420 | ) | (42,419 | ) | |||||
Total | $ | (149,004 | ) | $ | (450,051 | ) | $ | (193,012 | ) |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Tax computed at U.S. federal statutory rate | $ | (50,661 | ) | $ | (153,017 | ) | $ | (65,624 | ) | ||
State taxes, net of federal benefit | 64 | 37 | 53 | ||||||||
Tax rate differential for international subsidiaries | 29,312 | 10,910 | 18,681 | ||||||||
Stock-based compensation | (116,953 | ) | (27,133 | ) | 13,597 | ||||||
Tax credits | (21,038 | ) | (16,452 | ) | (11,961 | ) | |||||
Other | 7,337 | 7,850 | 2,865 | ||||||||
Valuation allowance | 152,065 | 179,558 | 47,803 | ||||||||
Provision for income taxes | $ | 126 | $ | 1,753 | $ | 5,414 |
December 31, | |||||||
2017 | 2016 | ||||||
Deferred tax assets: | |||||||
Net operating loss carryforwards | $ | 518,620 | $ | 640,312 | |||
Accrued expenses | 10,613 | 10,424 | |||||
Credit carryforwards | 75,879 | 50,559 | |||||
Stock-based compensation | 35,782 | 46,530 | |||||
Note hedge | 35,181 | 20,520 | |||||
Other | 14,771 | 13,733 | |||||
Total deferred tax assets | 690,846 | 782,078 | |||||
Less valuation allowance | (614,177 | ) | (728,870 | ) | |||
76,669 | 53,208 | ||||||
Deferred tax liabilities: | |||||||
Depreciation and amortization | (20,708 | ) | (18,914 | ) | |||
Convertible notes | (43,616 | ) | (23,605 | ) | |||
Other | (1,759 | ) | — | ||||
Net deferred tax assets | $ | 10,586 | $ | 10,689 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Balance, beginning period | $ | 18,440 | $ | 11,737 | $ | 9,158 | |||||
Tax positions taken in prior period: | |||||||||||
Gross increases | 398 | 1,122 | 2 | ||||||||
Gross decreases | — | (50 | ) | (1,017 | ) | ||||||
Tax positions taken in current period: | |||||||||||
Gross increases | 8,810 | 5,673 | 3,768 | ||||||||
Gross decreases | — | — | (73 | ) | |||||||
Lapse of statute of limitations | — | (42 | ) | (101 | ) | ||||||
Balance, end of period | $ | 27,648 | $ | 18,440 | $ | 11,737 |
Operating Leases | Purchase Obligations (1) | Other | Total | ||||||||||||
Years Ending December 31, | |||||||||||||||
2018 | $ | 44,713 | $ | 31,394 | $ | 574 | $ | 76,681 | |||||||
2019 | 47,986 | 22,698 | 574 | 71,258 | |||||||||||
2020 | 48,218 | 11,736 | 574 | 60,528 | |||||||||||
2021 | 45,590 | 7,248 | 574 | 53,412 | |||||||||||
2022 | 43,238 | 3,805 | 574 | 47,617 | |||||||||||
Thereafter | 124,114 | 4,093 | 1,053 | 129,260 | |||||||||||
Total | $ | 353,859 | $ | 80,974 | $ | 3,923 | $ | 438,756 |
(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 to be held in 2019 and 2020. If we were to cancel these contractual commitments as of December 31, 2017, we would have been obligated to pay cancellation penalties of approximately $13.9 million in aggregate. |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Revenues by geography | |||||||||||
North America (1) | $ | 1,299,950 | $ | 946,956 | $ | 702,985 | |||||
EMEA (2) | 478,686 | 339,341 | 233,378 | ||||||||
Asia Pacific and other | 154,390 | 104,216 | 69,117 | ||||||||
Total revenues | $ | 1,933,026 | $ | 1,390,513 | $ | 1,005,480 |
December 31, | |||||||
2017 | 2016 | ||||||
Property and equipment, net: | |||||||
North America (3) | $ | 164,040 | $ | 132,671 | |||
EMEA (2) | 50,028 | 37,449 | |||||
Asia Pacific and other | 31,056 | 11,500 | |||||
Total property and equipment, net | $ | 245,124 | $ | 181,620 |
(1) | Revenues attributed to the United States were approximately 94% of North America revenues for the years ended December 31, 2017, and 95% for the year ended December 31, 2016 and 2015. |
(2) | Europe, the Middle East and Africa (EMEA) |
(3) | Property and equipment, net attributed to the United States were approximately 89% and 92% of property and equipment, net attributable to North America for the years ended December 31, 2017 and 2016, respectively. |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Service management products | $ | 1,526,382 | $ | 1,108,846 | $ | 783,603 | |||||
ITOM products | 213,413 | 112,793 | 64,675 | ||||||||
Total subscription revenues | $ | 1,739,795 | $ | 1,221,639 | $ | 848,278 |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINACIAL DISCLOSURE |
ITEM 9A. | CONTROLS AND PROCEDURES |
ITEM 9B. | OTHER INFORMATION |
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
ITEM 11. | EXECUTIVE COMPENSATION |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE |
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
ITEM 16. | FORM 10-K SUMMARY |
Exhibit Number | Description of Document | Incorporated by Reference | Filed Herewith | ||||||||
Form | File No. | Exhibit | Filing Date | ||||||||
10-Q | 001-35580 | 3.1 | 8/10/2012 | ||||||||
8-K | 001-35580 | 3.1 | 10/25/2017 | ||||||||
S-1/A | 333-180486 | 4.1 | 6/19/2012 | ||||||||
8-K | 001-35580 | 4.1 | 11/13/2013 | ||||||||
8-K | 001-35580 | 4.1 | 5/30/2017 | ||||||||
10-K | 001-35580 | 10.1 | 2/27/2015 | ||||||||
S-1 | 333-180486 | 10.2 | 3/30/2012 | ||||||||
X | |||||||||||
10-Q | 001-35580 | 10.3 | 8/8/2017 | ||||||||
10-Q | 001-35580 | 10.4 | 8/8/2017 | ||||||||
10-K | 001-35580 | 10.4 | 3/8/2013 | ||||||||
10-Q | 001-35580 | 10.5 | 8/8/2017 | ||||||||
S-1 | 333-180486 | 10.5 | 3/30/2012 | ||||||||
10-Q | 001-35580 | 10.1 | 8/7/2014 | ||||||||
S-1 | 333-180486 | 10.6 | 3/30/2012 | ||||||||
10-Q | 001-35580 | 10.2 | 11/5/2014 | ||||||||
10-Q | 001-35580 | 10.2 | 8/8/2017 |
Exhibit Number | Description of Document | Incorporated by Reference | Filed Herewith | ||||||||
Form | File No. | Exhibit | Filing Date | ||||||||
S-1 | 333-180486 | 10.7 | 3/30/2012 | ||||||||
10-Q | 001-35580 | 10.1 | 11/5/2014 | ||||||||
10-Q | 001-35580 | 10.1 | 8/8/2017 | ||||||||
8-K | 001-35580 | 10.1 | 2/27/2017 | ||||||||
10-Q | 001-35580 | 10.1 | 11/6/2017 | ||||||||
S-1/A | 333-184674 | 10.12 | 11/9/2012 | ||||||||
8-K | 001-35580 | 10.1 | 12/15/2014 | ||||||||
8-K | 001-32224 | 99.1 | 11/13/2013 | ||||||||
8-K | 001-35580 | 99.1 | 5/30/2017 | ||||||||
8-K | 001-32224 | 99.2 | 11/13/2013 | ||||||||
8-K | 001-35580 | 99.2 | 5/30/2017 | ||||||||
8-K | 001-32224 | 99.3 | 11/13/2013 | ||||||||
8-K | 001-35580 | 99.1 | 6/22/2017 | ||||||||
8-K | 001-32224 | 99.4 | 11/13/2013 | ||||||||
8-K | 001-35580 | 99.2 | 6/22/2017 | ||||||||
10-Q | 001-35580 | 10.1 | 8/3/2016 | ||||||||
X | |||||||||||
X | |||||||||||
X | |||||||||||
X |
Exhibit Number | Description of Document | Incorporated by Reference | Filed Herewith | ||||||||
Form | File No. | Exhibit | Filing Date | ||||||||
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. | |||
By: | /s/ John J. Donahoe | ||
John J. Donahoe President and Chief Executive Officer |
Signature | Title | Date | ||
/s/ John J. Donahoe | President, Chief Executive Officer and Director (Principal Executive Officer) | February 28, 2018 | ||
John J. Donahoe | ||||
/s/ Michael P. Scarpelli | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | February 28, 2018 | ||
Michael P. Scarpelli | ||||
/s/ Frank Slootman | Chairman of the Board of Directors | February 28, 2018 | ||
Frank Slootman | ||||
/s/ Susan L. Bostrom | Director | February 28, 2018 | ||
Susan L. Bostrom | ||||
/s/ Jonathan C. Chadwick | Director | February 28, 2018 | ||
Jonathan C. Chadwick | ||||
/s/ Paul E. Chamberlain | Director | February 28, 2018 | ||
Paul E. Chamberlain | ||||
/s/ Ronald E.F. Codd | Director | February 28, 2018 | ||
Ronald E. F. Codd | ||||
/s/ Frederic B. Luddy | Director | February 28, 2018 | ||
Frederic B. Luddy | ||||
/s/ Jeffrey A. Miller | Director | February 28, 2018 | ||
Jeffrey A. Miller | ||||
/s/ Anita M. Sands | Director | February 28, 2018 | ||
Anita M. Sands | ||||
Name of Subsidiary | Jurisdiction of Incorporation or Organization | |
ServiceNow Australia Pty Ltd | Australia | |
ServiceNow GmbH | Austria | |
ServiceNow Belgium BVBA | Belgium | |
SN Europe C.V. | Bermuda | |
ServiceNow Brasil Gerenciamento de Servicos Ltda | Brazil | |
ServiceNow Canada Inc. | Canada | |
Brightpoint Security, Inc. | Delaware | |
DxContinuum, Inc. | Delaware | |
ITapp Inc. | Delaware | |
Qlue, Inc. | Delaware | |
ServiceNow Delaware LLC | Delaware | |
SkyGiraffe Inc. | Delaware | |
ServiceNow Denmark ApS | Denmark | |
ServiceNow Finland Oy | Finland | |
ServiceNow France SAS | France | |
Service-now.com GmbH | Germany | |
ServiceNow Hong Kong Limited | Hong Kong | |
ServiceNow Software Development India Private Limited | India | |
ITapp Software Private Limited | India | |
ServiceNow Ireland Limited | Ireland | |
Service Now A.B Israel 2012 Ltd | Israel | |
SkyGiraffe Ltd | Israel | |
ServiceNow Italy S.R.L. | Italy | |
ServiceNow Japan K.K. | Japan | |
ServiceNow Operations Mexico S DE RL DE CV | Mexico | |
ServiceNow Nederland B.V. | Netherlands | |
ServiceNow Norway AS | Norway | |
ServiceNow Poland Sp. Z o.o. | Poland | |
ServiceNow Portugal, Unipessoal LDA | Portugal | |
ServiceNow Pte. Ltd. | Singapore | |
ServiceNow South Africa (Pty) Ltd | South Africa | |
ServiceNow Spain SL | Spain | |
ServiceNow Sweden AB | Sweden | |
ServiceNow Switzerland GmbH | Switzerland | |
ServiceNow Turkey Bilisim Sanayi Ve Ticaret Limited Sirketi | Turkey | |
ServiceNow UK Limited | United Kingdom |
1. | I have reviewed this annual report on Form 10-K 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: February 28, 2018 | |
/s/ John J. Donahoe | |
John J. Donahoe President and Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this annual report on Form 10-K 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: February 28, 2018 | |
/s/ Michael P. Scarpelli | |
Michael P. Scarpelli Chief Financial Officer (Principal Financial and Accounting Officer) |
• | the Annual Report on Form 10-K of the Company for the period ended December 31, 2017 (the "Report") 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 at the dates and for the periods presented therein. |
Date: February 28, 2018 | |
/s/ John J. Donahoe | |
John J. Donahoe President and Chief Executive Officer (Principal Executive Officer) |
• | the Annual Report on Form 10-K of the Company for the period ended December 31, 2017 (the "Report") 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 at the dates and for the periods presented therein. |
Date: February 28, 2018 | |
/s/ Michael P. Scarpelli | |
Michael P. Scarpelli Chief Financial Officer (Principal Financial and Accounting Officer) |
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Document and Entity Information - USD ($) shares in Millions, $ in Billions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Jan. 31, 2018 |
Jun. 30, 2017 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | SERVICENOW, INC. | ||
Trading Symbol | NOW | ||
Entity Central Index Key | 0001373715 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2017 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Common Stock, Shares Outstanding | 174.7 | ||
Entity Public Float | $ 12.6 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Preferred stock , par value (in USD per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 600,000,000 | 600,000,000 |
Common stock, shares, issued (in shares) | 174,275,864 | 167,430,773 |
Common stock, shares, outstanding (in shares) | 174,275,864 | 167,430,773 |
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
||||
Revenues: | ||||||
Subscription | $ 1,739,795 | $ 1,221,639 | $ 848,278 | |||
Professional services and other | 193,231 | 168,874 | 157,202 | |||
Total revenues | 1,933,026 | 1,390,513 | 1,005,480 | |||
Cost of revenues: | ||||||
Subscription | [1] | 315,570 | 235,414 | 183,400 | ||
Professional services and other | [1] | 184,202 | 163,268 | 146,013 | ||
Total cost of revenues | [1] | 499,772 | 398,682 | 329,413 | ||
Gross profit | 1,433,254 | 991,831 | 676,067 | |||
Operating expenses: | ||||||
Sales and marketing | [1] | 946,617 | 700,464 | 498,439 | ||
Research and development | [1] | 377,518 | 285,239 | 217,389 | ||
General and administrative | [1] | 210,533 | 158,936 | 126,604 | ||
Legal settlements | 0 | 270,000 | 0 | |||
Total operating expenses | [1] | 1,534,668 | 1,414,639 | 842,432 | ||
Loss from operations | (101,414) | (422,808) | (166,365) | |||
Interest expense | (53,394) | (33,278) | (31,097) | |||
Interest income and other income (expense), net | 5,804 | 6,035 | 4,450 | |||
Loss before income taxes | (149,004) | (450,051) | (193,012) | |||
Provision for income taxes | 126 | 1,753 | 5,414 | |||
Net loss | $ (149,130) | $ (451,804) | $ (198,426) | |||
Net loss per share - basic and diluted (in USD per share) | $ (0.87) | $ (2.75) | $ (1.27) | |||
Weighted-average shares used to compute net loss per share - basic and diluted | 171,175,577 | 164,533,823 | 155,706,643 | |||
Other comprehensive income (loss): | ||||||
Foreign currency translation adjustments | $ 14,867 | $ (4,839) | $ (3,177) | |||
Unrealized gains (losses) on investments, net of tax | 5,377 | 588 | (1,592) | |||
Other comprehensive income (loss) | 20,244 | (4,251) | (4,769) | |||
Comprehensive loss | $ (128,886) | $ (456,055) | $ (203,195) | |||
|
Consolidated Statements of Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Cost of revenues: subscription | |||
Stock-based compensation | $ 35,334 | $ 28,420 | $ 23,416 |
Cost of revenues: professional services and other | |||
Stock-based compensation | 27,475 | 26,442 | 23,265 |
Sales and marketing | |||
Stock-based compensation | 170,527 | 131,571 | 102,349 |
Research and development | |||
Stock-based compensation | 92,025 | 81,731 | 70,326 |
General and administrative | |||
Stock-based compensation | $ 68,717 | $ 49,416 | $ 38,357 |
Description of the Business |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Business | Description of the Business ServiceNow is a leading provider of enterprise cloud computing solutions that define, structure, manage and automate services for global enterprises. We help our customers improve service quality and reduce costs while scaling and automating their businesses. We typically deliver our software via the Internet as a service, through an easy-to-use, consumer product-like interface, which means it can be easily configured and rapidly deployed. In a minority of cases, we deploy our software on-premises at a customer data center to support a customer's unique regulatory or security requirements. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (U.S. GAAP), and include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. 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 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, and legal contingencies. Actual results could differ from those estimates. Segments We define the term “chief operating decision maker” to be our Chief Executive Officer. Our chief operating decision maker allocates resources and assesses financial performance based upon discrete financial information at the consolidated level. Accordingly, we have determined that we operate as a single operating and reportable segment. Foreign Currency Translation and Transactions The functional currencies for our foreign subsidiaries are primarily their local currencies. Assets and liabilities of the wholly-owned foreign subsidiaries are translated into U.S. Dollars at exchange rates in effect at each period end. Amounts classified in stockholders’ equity are translated at historical exchange rates. Revenues and expenses are translated at the average exchange rates during the period. The resulting translation adjustments are recorded in accumulated other comprehensive loss as a component of stockholders’ equity. Foreign currency transaction gains and losses are included in interest income and other income (expense), net within the consolidated statements of comprehensive loss, and have not been material for all periods presented. Allocation of Overhead Costs Overhead costs associated with office facilities, IT and certain depreciation related to infrastructure that is not dedicated for customer use or research and development use are allocated to cost of revenues and operating expenses based on headcount. Revenue Recognition We derive our revenues from two sources: (i) subscriptions and (ii) professional services and other. Subscription revenues are primarily comprised of subscription fees that give customers access to the ordered subscription service, related support and updates to the subscribed service during the subscription term. Our contracts typically do not give the customer the right to take possession of the software supporting the services. Professional services and other revenues consist of fees associated with services provided to customers for process design, implementation, configuration and optimization of our products. Professional services and other revenues also include customer training and registration and sponsorship fees for our annual Knowledge user conference and other user forums. We commence revenue recognition when all of the following conditions are met: •There is persuasive evidence of an arrangement; •The service has been provided to the customer; •The collection of related fees is reasonably assured; and •The amount of fees to be paid by the customer is fixed or determinable. Our arrangements are generally non-cancelable and do not contain refund-type provisions. We recognize subscription revenues ratably over the contract term beginning on the commencement date of each contract, the date we make our services available to our customers. Once our services are available to customers, we record amounts due in accounts receivable and in deferred revenue. To the extent we bill customers in advance of the contract commencement date, the accounts receivable and corresponding deferred revenue amounts are netted to zero on our consolidated balance sheets, unless such amounts have been paid as of the balance sheet date. Professional services revenues on our time-and materials arrangements are recognized as the services are delivered. Professional services revenues associated with fixed fee arrangements are recognized using a proportional performance model. In instances where certain milestones are required to be met before revenues are recognized, we defer professional services revenues and the associated costs until milestone criteria have been met. We have multiple element arrangements comprised of subscription fees and professional services. To qualify as a separate unit of accounting, the delivered item must have value to the customer on a standalone basis. We have concluded that our subscription service and professional services, including implementation and configuration services, have standalone value. The total arrangement consideration for a multiple element arrangement is allocated to the identifiable separate units of accounting based on a relative selling price hierarchy. We determined the relative selling price for a deliverable based on its vendor-specific objective evidence (VSOE) of selling price or third-party evidence (TPE) of selling price if VSOE does not exist. If neither VSOE nor TPE of selling price exists for a deliverable, the selling price is determined using the best estimate of selling price (BESP). We determine the BESP for each deliverable primarily by considering the historical selling price of these deliverables in similar transactions as well as other factors, including, but not limited to, market competition, review of stand-alone sales and current pricing practices. In determining the appropriate pricing structure, we consider the extent of competitive pricing of similar products and marketing analysis. In limited circumstances, we grant certain customers the right to deploy our subscription service on the customers’ own servers. These arrangements are subject to software revenue recognition guidance since the customer deploys our software. As we never sell the non-software elements separately from the software elements, we have determined that we do not have sufficient VSOE of fair value for all undelivered non-software elements. Consequently, we defer all revenue and related costs under the arrangement until the last element in the transaction has been delivered or starts to be delivered. Once the delivery of the last element has commenced, we recognize the entire fee and related costs from the arrangement ratably over the remaining period of the arrangement. Deferred revenue consists primarily of payments received in advance of revenue recognition for our subscriptions and professional services and other revenues and is recognized as the revenue recognition criteria are met. Deferred Commissions Deferred commissions are the incremental selling costs that are directly associated with our customer contracts and consist of sales commissions paid to our direct sales force and referral fees paid to independent third-parties. The majority of commissions and referral fees are deferred and amortized on a straight-line basis over the terms of the related customer contracts. We include amortization of deferred commissions in sales and marketing expense in the consolidated statements of comprehensive loss. Fair Value Measurements We apply fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized in the financial statements on a non-recurring basis or disclosed at fair value in the financial statements on a recurring basis. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We use a fair value hierarchy that is based on three levels of inputs, of which the first two are considered observable and the last unobservable. The three levels of the fair value hierarchy are as follows: Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access; Level 2—Inputs other than Level 1 that are directly or indirectly observable, such as quoted prices for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities, such as interest rates, yield curves and foreign currency spot rates; and Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with original or remaining maturities of three months or less when purchased. Cash and cash equivalents are stated at fair value. Investments Investments consist of commercial paper, corporate notes and bonds, certificates of deposit and U.S. government and agency securities. We classify investments as available-for-sale at the time of purchase and reevaluate such classification as of each balance sheet date. All investments are recorded at estimated fair value. Unrealized gains and losses for available-for-sale securities are included in accumulated other comprehensive income (loss), a component of stockholders’ equity. We evaluate our investments to assess whether those with unrealized loss positions are other than temporarily impaired. We consider impairments to be other than temporary if they are related to deterioration in credit risk or if it is likely we will sell the securities before the recovery of their cost basis. Realized gains and losses and declines in value judged to be other than temporary are determined based on the specific identification method and are reported in interest income and other income (expense), net in the consolidated statements of comprehensive loss. 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 (loss). We report our investments in non-marketable equity securities in privately-held companies, in which we do not have a controlling interest or significant influence, at cost or fair value when an event or circumstance indicates an other-than-temporary decline in value has occurred. We include these strategic investments in “Other assets” on the consolidated balance sheets. Accounts Receivable We record trade accounts receivable at the net invoice value and such receivables are non-interest bearing. We consider receivables past due based on the contractual payment terms. We review our exposure to accounts receivable and reserve for specific amounts if collectability is no longer reasonably assured. Property and Equipment Property and equipment, net, are stated at cost, subject to review of impairment, and depreciated using the straight-line method over the estimated useful lives of the assets as follows:
When assets are sold, or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in cost of revenues or operating expenses depending on whether the asset sold is being used in our provision of services to our customers. Repairs and maintenance expenses are charged to our statements of comprehensive loss as incurred. Capitalized Software Development Costs Software development costs for software to be sold, leased, or otherwise marketed are expensed as incurred until the establishment of technological feasibility, at which time those costs are capitalized until the product is available for general release to customers and amortized over the estimated life of the product. Technological feasibility is established upon the completion of a working prototype that has been certified as having no critical bugs and is a release candidate. To date, costs and time incurred between the establishment of technological feasibility and product release have not been significant, and all software development costs have been charged to research and development expense in our consolidated statements of comprehensive loss. Costs incurred to develop our internal administration, finance and accounting systems are capitalized during the application development stage and generally amortized over the software’s estimated useful life of three to five years. Leases Leases are reviewed and classified as capital or operating at their inception. Some of our lease agreements contain rent escalation, rent holidays, lease incentives and renewal options. Rent escalation and rent holidays are included in the determination of rent expenses to be recorded over the lease term. Unless determined to be landlord assets, lease incentives to pay for our costs or assets are recognized as a reduction of rent expense on a straight-line basis over the term of the lease. Renewals are not assumed in the determination of the lease term unless they are deemed to be reasonably assured at the inception of the lease. We begin recognizing rent expense on the date that we obtain the legal right to use and control the leased space. The difference between rent payments and straight-line rent expense is recorded as deferred rent in the consolidated balance sheets. Deferred rent that will be recognized during the ensuing 12-month period is recorded as the current portion of deferred rent included in “Accrued expenses and other current liabilities” and the remainder is recorded as long term deferred rent included in “Other long-term liabilities”. Goodwill, Intangible Assets and Other Long Lived Assets Goodwill represents the excess of the purchase price in a business combination over the fair value of the net tangible and intangible assets acquired. We evaluate and test the recoverability of goodwill for impairment at least annually, during the fourth quarter, or more frequently if circumstances indicate that goodwill may not be recoverable. We perform the impairment testing by first assessing qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of its reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we perform a goodwill impairment test. To calculate any potential impairment, we compare the fair value of a reporting unit with its carrying amount, including goodwill. Any excess of the carrying amount of the reporting unit's goodwill over its fair value is recognized as an impairment loss, and the carrying value of goodwill is written down. For purposes of goodwill impairment testing, we have one reporting unit. We periodically review the carrying amounts of long-lived assets, such as property and equipment, and purchased intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. We measure the recoverability of these assets by comparing the carrying amount of each asset to the future undiscounted cash flows we expect the asset to generate. If we consider any of these assets to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair value. In addition, we periodically evaluate the estimated remaining useful lives of long-lived assets to determine whether events or changes in circumstances warrant a revision to the remaining period of depreciation or amortization. Our intangible assets are amortized over their useful lives ranging from 18 months to ten years. Advertising Costs Advertising costs, excluding costs related to our annual Knowledge user conference and other user forums, are expensed as incurred and are included in sales and marketing expense. These costs for the years ended December 31, 2017, 2016 and 2015 were $57.3 million, $42.1 million and $26.0 million, respectively. Costs related to our annual Knowledge user conference and other user forums are deferred and expensed when the respective events occur. Legal Contingencies From time to time, we are a party to litigation and other legal proceedings in the ordinary course of business. We accrue for loss contingencies when we can reasonably estimate the amount of loss or range of loss and when, based on the advice of counsel, it is probable that we will incur the loss. Because of uncertainties related to these matters, we base our estimate on the information available at the time of our assessment. As additional information becomes available, we reassess our potential liability and may revise our estimate. Stock-based Compensation We recognize compensation expense related to stock options and restricted stock units (RSUs) on a straight-line basis over the requisite service period, which is generally the vesting term of four years. For RSUs granted with a performance condition, the expenses are recognized on a graded vesting basis over the vesting period, after assessing the probability of achieving requisite performance criteria. This has the impact of greater stock-based compensation expense during the initial years of the vesting period as stock-based compensation cost is recognized over the requisite service period for each separately vesting tranche of the award as though the award were, in substance, multiple awards. We recognize compensation expense related to shares issued pursuant to the employee stock purchase plan (ESPP) on a straight-line basis over the offering period. We estimate the fair value of options using the Black-Scholes options pricing model and fair value of RSUs using the fair value of our common stock on the date of grant. We recognize compensation expense net of estimated forfeiture activity, which is based on historical forfeiture rates. In some instances, shares are issued on the vesting dates net of the minimum statutory tax withholding requirements to be paid by us on behalf of our employees. In these instances, we record the liability for withholding amounts to be paid by us as a reduction to additional paid-in capital when paid, and include these payments as a reduction of cash flows from financing activities. 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 common shares 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 common shares, which are comprised of outstanding common stock options, RSUs, ESPP obligations, convertible senior notes and warrants. The dilutive potential common shares 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 common share in periods in which the effect would be antidilutive. Concentration of Credit Risk and Significant Customers Financial instruments potentially exposing us to credit risk consist primarily of cash, cash equivalents, investments and accounts receivable. We hold cash at financial institutions that management believes are high credit, quality financial institutions and invest in securities with a minimum rating of BBB by Standard & Poor's, Baa2 by Moody's, or BBB by Fitch. We are also exposed to credit risk under the convertible note hedge transactions that may result from counterparties' non-performance. Credit risk arising from accounts receivable is mitigated due to our large number of customers and their dispersion across various industries and geographies. As of December 31, 2017 and 2016, there were no customers that represented more than 10% of our accounts receivable balance. There were no customers that individually exceeded 10% of our revenues in any of the periods presented. For purposes of assessing concentration of credit risk and significant customers, a group of customers under common control or customers that are affiliates of each other are regarded as a single customer. We review the composition of the accounts receivable balance, historical write-off experience and the potential risk of loss associated with delinquent accounts to determine if an allowance for doubtful accounts is necessary. Individual accounts receivable are written off when we become aware of a specific customer’s inability to meet its financial obligation, and all collection efforts are exhausted. The following table presents the changes in the allowance for doubtful accounts (in thousands):
Warranties and Indemnification Our cloud computing solutions are typically warranted to perform in material conformance with their specifications. We include service level commitments to our customers that permit those customers to receive credits in the event we fail to meet those service levels. We establish an accrual based on an evaluation of the known service disruptions. Service level credit accrual charges are recorded against revenue and were not material for all periods presented. We have also agreed to indemnify our directors, executive officers and certain other officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by us, arising out of that person’s services as a director or officer of our company or that person’s services provided to any other company or enterprise at our request. We maintain director and officer insurance coverage that may enable us to recover a portion of any future amounts paid. The fair values of these obligations are not material as of each balance sheet date. Our agreements include provisions indemnifying customers against intellectual property and other third-party claims. We have not incurred any costs as a result of such indemnification obligations and have not recorded any liabilities related to such obligations in the consolidated financial statements. Income Taxes We use the asset and liability method of accounting for income taxes, in which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be reversed. We recognize the effect on deferred tax assets and liabilities of a change in tax rates within the provision for income taxes as income and expense in the period that includes the enactment date. A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. In determining the need for a valuation allowance, we consider future growth, forecasted earnings, future taxable income, the mix of earnings in the jurisdictions in which we operate, historical earnings, taxable income in prior years, if carryback is permitted under the law, carryforward periods and prudent and feasible tax planning strategies. Our tax positions are subject to income tax audits by multiple tax jurisdictions throughout the world. We recognize the tax benefit of an uncertain tax position only if it is more likely than not the position is sustainable upon examination by the taxing authority, based on the technical merits. We measure the tax benefit recognized as the largest amount of benefit which is more likely than not to be realized upon settlement with the taxing authority. We recognize interest accrued and penalties related to unrecognized tax benefits in our tax provision. We calculate the current and deferred income tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed in subsequent years and record adjustments based on filed income tax returns when identified. The amount of income taxes paid is subject to examination by U.S. federal, state and foreign tax authorities. The estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, facts and circumstances existing at that time. To the extent the assessment of such tax position changes, we record the change in estimate in the period in which we make the determination. New Accounting Pronouncements Adopted in 2017 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 early adopted this new guidance effective October 1, 2017 and the adoption did not 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 early adopted this new guidance effective October 1, 2017 and the adoption did not 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 early adopted this new guidance effective October 1, 2017, and performed our annual impairment assessment in the fourth quarter of 2017 under this new guidance. The adoption of this new guidance did not 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. We early adopted this new guidance effective October 1, 2017 and the adoption did not have a material impact on our consolidated financial statements. 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 early adopted ASU 2016-18 effective October 1, 2017 and have reclassified our consolidated statements of cash flow for each of the periods presented. The adoption did not have a material impact to our statements of cash flows. 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 early adopted ASU 2016-15 effective October 1, 2017 and applied this new standard in the cash flow presentation for the settlement of early conversion requests received for our 0% convertible senior notes due November 1, 2018 (2018 Notes). We currently expect to settle the remaining principal amount of our 2018 Notes 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. New Accounting Pronouncements Pending Adoption In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income (GILTI) provisions of the Tax Cuts and Jobs Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements and have not yet made a provisional estimate as we have not yet completed our assessment or elected an accounting policy to either recognize deferred taxes for basis differences expected to reverse as GILTI or to record GILTI as period costs if and when incurred. 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. The impact upon the adoption of this standard on our consolidated financial statements will not be material. 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 in excess of $300 million as of December 31, 2017. However, we do not anticipate that the adoption of this standard will have a material impact on our consolidated statements of comprehensive loss because 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, which results in greater variability in our 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. We 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. We expect to reclassify $10.7 million of unrealized gains on our marketable equity securities as of December 31, 2017 to the accumulated deficit on our consolidated balance sheet effective January 1, 2018. Revenue from Contracts with Customers In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” Topic 606 supersedes the prior revenue recognition standard (Topic 605). Under the Topic 606 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. Topic 606 also includes Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers, which requires the deferral of incremental costs of obtaining a contract with a customer. 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 will adopt the standard using the full retrospective method to restate each prior reporting period presented. In preparation for adoption of the standard on January 1, 2018, we have implemented internal controls and key system functionality to enable the preparation of financial information and have reached conclusions on key accounting assessments related to the standard. The most significant impacts of the standard relate to the timing of revenue recognition related to our on-premises offerings, in which we grant customers the right to deploy our software on the customer’s own servers without significant penalty, the accounting for incremental costs to obtain a contract and the classification of proceeds for Knowledge and other user forums as a reduction in sales and marketing expenses instead of professional services and other revenues. Under the Topic 606 standard, for our on-premises offerings, the requirement to have vendor specific objective evidence (VSOE) for undelivered elements is eliminated. As a result, we will recognize as subscription revenues 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 subscription revenues have not been billed, the revenue will be recorded as “unbilled receivables” and reported under “prepaid expenses and other current assets” for short-term unbilled receivables and “other assets” for long-term unbilled receivables on our consolidated balance sheets. In addition, refundable amounts associated with customer contracts will be recorded as “customer deposits” and presented under “accrued expenses and other current liabilities” on our consolidated balance sheets. 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, which is generally 12 to 36 months, for both our on-premises offerings and our cloud-based subscription offerings. Under Topic 606, 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. On initial contracts, only the portion equivalent to a renewal commission will be amortized over the contract term, while the portion incremental to a renewal commission will primarily be amortized over a period of benefit that we have determined to be approximately five years. On renewal contracts, these costs will be amortized over the renewal term. Additionally, for our on-premises offerings, consistent with the recognition of subscription revenue for on-premises offerings as described above, a portion of the commission cost will be expensed upfront when the on-premises offering is made available. The direct effect on income taxes resulting from the above-mentioned changes to revenues and commission expenses would result in additional income tax expense being recorded in each of the prior reporting periods that have been restated. The indirect effect of Topic 606 on income taxes associated with intercompany adjustments will be recorded in the first quarter of 2018. Impact on statements of operations The table below provides specified line items from our consolidated statements of operations on (i) an actual basis and (ii) as adjusted to reflect the impact that the adoption of Topic 606 would have had on such line items if such adoption had been effective for the applicable periods (in thousands, except share and per share data):
Impact on balance sheets The table below provides specified line items from our consolidated balance sheets on (i) an actual basis and (ii) as adjusted to reflect the impact that the adoption of Topic 606 would have had on such line items if such adoption had been effective as of the applicable date (in thousands):
Impact on statements of cash flows While there will be material changes within individual line items included as part of cash provided by (used in) operating activities, we do not expect the adoption of the Topic 606 standard to have a material impact on net cash provided by (used in) operating, financing, or investing activities in our consolidated cash flows statements. Impact on footnote disclosures In future periods, Topic 606 will also require us to disclose in the notes to our consolidated financial statements the amount and timing of revenues expected to be recognized from remaining performance obligations under customer contracts. |
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 consolidated balance sheets (in thousands):
As of December 31, 2017, the contractual maturities of our investment securities, excluding marketable equity securities and those securities classified within cash and cash equivalents on the consolidated balance sheets, did not exceed 24 months. The fair values of available-for-sale investment securities, by remaining contractual maturity, are as follows (in thousands):
The following table shows the fair values and the gross unrealized losses of these 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 consolidated balance sheets (in thousands):
As of December 31, 2017, we had a total of 405 available-for-sale securities, excluding those securities classified within cash and cash equivalents on the consolidated balance sheet in an unrealized loss position. 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 As of December 31, 2017 and 2016, the total amount of debt and equity investments in privately-held companies included in other assets on our consolidated balance sheets was $5.8 million and $11.0 million, respectively. During the year ended December 31, 2017, we reclassified $10.0 million of non-marketable equity securities (at cost) to short-term investments on our consolidated balance sheets due to an initial public offering by the investee, and recorded an unrealized gain of $10.7 million within other comprehensive income (loss) in our consolidated statements of comprehensive loss. We also acquired an additional $4.8 million in strategic investments during the year ended December 31, 2017. The fair value of our debt investments in privately-held companies included within our strategic investments is $1.5 million and $0.5 million as of December 31, 2017 and 2016, respectively. These investments are recorded at fair value using significant unobservable inputs or data in an inactive market and the valuation requires our judgment due to the absence of quoted prices in active markets and inherent lack of liquidity and are categorized accordingly as Level 3 in the fair value hierarchy. We have not recorded any impairment charges for any of our investments in privately-held companies. |
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 as of December 31, 2017 (in thousands):
The following table presents our fair value hierarchy for our assets measured at fair value on a recurring basis as of December 31, 2016 (in thousands):
We determine the fair value of our security holdings based on pricing from our service provider 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. See Note 3 for the fair value measurement of our debt investments in privately-held companies and Note 9 for the fair value measurement of our convertible senior notes, which are not included in the table above. |
Business Combinations |
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Business Combinations | Business Combinations 2017 Business Combinations SkyGiraffe On October 31, 2017, we completed the acquisition of a privately-held company, SkyGiraffe Ltd. (SkyGiraffe), by acquiring all issued and outstanding common shares of SkyGiraffe for approximately $32.3 million in an all-cash transaction to enhance the consumer product-like mobile experience 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:
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:
Other 2017 Business Combinations We also completed the acquisitions of Qlue, Inc. and Digital Telepathy, Inc. (Telepathy) during the year ended December 31, 2017 for approximately $11.6 million in cash, and have included the results of operations of these companies in our 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 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. For all of our 2017 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 resulting from these business combinations represents the synergies expected from expanded market opportunities when integrating the acquired technologies with our offerings. Aggregate acquisition-related costs associated with our 2017 business combinations of $2.4 million for the year ended December 31, 2017 are included in general and administrative expenses in our consolidated statement 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 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 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 our 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. Acquisition-related costs of $1.0 million are included in general and administrative expenses in our 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 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 years ended December 31, 2017 and 2016, as if these acquisitions had occurred on January 1, 2016 (in thousands, except share and per share data):
The pro forma results as presented above are based on estimates and assumptions, which we believe are reasonable. They are not necessarily indicative of our consolidated results of operations in future periods or the results that actually would have been realized had we been a combined company during the periods presented. The pro forma results include adjustments primarily related to amortization of acquired intangible assets and acquisition-related costs. |
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):
Apart from the business combinations described in Note 5, we acquired $13.4 million and $25.0 million of intangible assets in patents and technology acquisitions during the years ended December 31, 2017 and December 31, 2016, respectively. Weighted-average useful life for the patents and technology acquired during the year ended December 31, 2017 is approximately ten years. Weighted average useful life for the patents and technology acquired during the year ended December 31, 2016 is approximately nine years and five years, respectively. Amortization expense for intangible assets was approximately $19.7 million, $15.1 million and $11.8 million for the years ended December 31, 2017, 2016 and 2015, respectively. The following table presents the estimated future amortization expense related to intangible assets held at December 31, 2017 (in thousands):
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Property and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and Equipment Property and equipment, net consists of the following (in thousands):
Construction in progress consists primarily of leasehold improvements and in-process software development costs. Depreciation expense was $93.2 million, $67.8 million and $48.5 million for the years ended December 31, 2017, 2016 and 2015, respectively. |
Accrued Expenses and Other Current Liabilities |
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Accrued Liabilities, Current [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 In May and June 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, the 2018 Notes first became convertible at the holders’ option beginning on July 1, 2017 and continue to be convertible at the holders' option through March 31, 2018. During the year ended December 31, 2017, we paid cash to settle an immaterial principal amount of the 2018 Notes. Based on additional conversion requests we have received through the filing date, we expect to settle in cash an aggregate of $37.3 million in principal amount of the 2018 Notes during the first quarter of 2018 and $7.3 million in principal amount of the 2018 Notes during the second quarter of 2018. We may receive additional conversion requests that require settlement in the second quarter or the remainder of the year 2018. As we have the option to settle the principal amount in shares and we are less than 12 months away from the maturity date, we have classified the net carrying amount of our 2018 Notes as a current 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 December 31, 2017. We consider the fair value of the Notes at December 31, 2017 to be a Level 2 measurement. The estimated fair values of the Notes at December 31, 2017 and December 31, 2016 based on the closing trading price per $100 of the Notes were as follows (in thousands):
As of December 31, 2017, the remaining life of the 2022 Notes and 2018 Notes are 53 months and 10 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. As of December 31, 2017, 7,782,946 shares remain subject to the 2018 Note Hedge due to early conversions that have occurred during the year ended December 31, 2017. Warrants
Separately, we entered into warrant transactions with certain investment banks, whereby we sold warrants to acquire, subject to adjustment, the number of shares of our common stock shown in the table above (the 2022 Warrants and 2018 Warrants, respectively, and collectively, the Warrants). If the average market value per share of our common stock for the reporting period, as measured under the Warrants, exceeds the strike price of the respective Warrants, such Warrants would have a dilutive effect on our earnings per share to the extent we report net income. According to the terms of each of the Warrants, the Warrants will be automatically exercised over a 60 trading day period beginning on the first expiration date of the respective Warrants as set forth above. The Warrants are separate transactions and are not remeasured through earnings each reporting period. The Warrants are not part of the Notes or Note Hedges, and have been accounted for as part of additional paid-in capital. |
Accumulated Other Comprehensive Loss |
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Statement of Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss consist of the following (in thousands):
Reclassification adjustments out of accumulated other comprehensive loss into net loss were immaterial for all periods presented. |
Stockholders' Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders' Equity Common Stock We are authorized to issue a total of 600,000,000 shares of common stock as of December 31, 2017. Holders of our common stock are not entitled to receive dividends unless declared by our board of directors. As of December 31, 2017, we had 174,275,864 shares of common stock outstanding and had reserved shares of common stock for future issuance as follows:
During the years ended December 31, 2017 and 2016, we issued a total of 7,385,897 shares and 6,645,009 shares, respectively, from stock option exercises, vesting of RSUs, net of employee payroll taxes and purchases from ESPP. In May 2017, we repurchased and retired 540,806 shares of our common stock for approximately $55.0 million, or $101.70 per share, from certain purchasers of the 2022 Notes in connection with the 2022 Notes offering. We had no similar repurchases or retirements of common stock during the year ended December 31, 2016. Preferred Stock Our board of directors has the authority, without further action by stockholders, to issue up to 10,000,000 shares of preferred stock in one or more series. Our board of directors may designate the rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preference and number of shares constituting any series or the designation of any series. The issuance of preferred stock could have the effect of restricting dividends on our common stock, diluting the voting power of our common stock, impairing the liquidation rights of our common stock, or delaying or preventing a change in control. At December 31, 2017 and 2016, no shares of preferred stock were outstanding. |
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, 2018, 8,713,793 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, 2018, 1,742,758 shares of common stock were automatically added to the 2012 ESPP pursuant to the provision described in the preceding sentence. Stock Options Stock options are exercisable at a price equal to the market value of the underlying shares of common stock on the date of the grant as determined by our board of directors or, for those stock options issued subsequent to our IPO, the closing price of our common stock as reported on the New York Stock Exchange on the date of grant. Stock options granted under our 2005 Plan and the 2012 Plan to new employees generally vest 25% one year from the date the requisite service period begins and continue to vest monthly for each month of continued employment over the remaining three years. Options granted generally are exercisable for a period of up to ten years. A summary of stock option activity was 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 total intrinsic value of the options exercised was $523.1 million for the year ended December 31, 2015. The weighted-average grant date fair value per share of options granted was $37.57, $28.01 and $32.64 for the years ended December 31, 2017, 2016 and 2015, respectively. The total fair value of shares vested was $11.8 million, $17.0 million and $34.5 million for the years ended December 31, 2017, 2016 and 2015, respectively. Included in the number of options granted during the year ended December 31, 2017 are 396,720 options with both service and market-based criteria, which were granted to our new President and Chief Executive Officer, who started his employment with us during the year. 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 December 31, 2017, total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock options was approximately $23.7 million. The weighted-average remaining vesting period of unvested stock options at December 31, 2017 was 3.16 years. RSUs A summary of RSU activity was as follows:
RSUs granted under the 2005 Plan and the 2012 Plan to employees generally vest over a four-year period. The total intrinsic value of the RSUs vested was $254.7 million for the year ended December 31, 2015. Included in the RSU activity table above are shares with both service and performance-based vesting criteria that were granted to certain executives. The number of shares eligible to vest for these performance RSUs will depend upon achievement of a performance metric and are considered as eligible to vest when approved by the compensation committee in January of the year following the grant. The ultimate number of shares eligible to vest for performance RSUs range from 0% to 180% of the target number of shares depending on achievement relative to the performance metric over the applicable period. The shares granted in each year will primarily vest in four quarterly increments from August of the following year contingent on the continuous employment of each executive. The number of RSUs granted in each year in the table above reflects the shares that could be eligible to vest at 100% of target for performance RSUs in each applicable period and includes adjustments for over or under achievement for performance RSUs granted in the prior year. We recognized $40.5 million, $36.1 million, and $30.8 million of stock-based compensation expense, net of actual and estimated forfeitures, associated with performance RSUs on a graded vesting basis during the year ended December 31, 2017, 2016, and 2015, respectively. As of December 31, 2017, total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested RSUs was approximately $671.0 million and the weighted-average remaining vesting period was 2.77 years. |
Stock-Based Compensation |
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Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation We use the Black-Scholes options pricing model to estimate the fair value of our stock option grants. This model incorporates various assumptions including expected volatility, expected term, risk-free interest rates and expected dividend yields. The following assumptions were used for each respective period to calculate our stock-based compensation for each stock option grant on the date of the grant:
The following assumptions were used to calculate our stock-based compensation for each stock purchase right granted under the 2012 ESPP:
Expected volatility. Prior to the third quarter of 2015, we used the historic volatility of publicly traded peer companies as an estimate for expected volatility. In considering peer companies, characteristics such as industry, stage of development, size and financial leverage are considered. Beginning in the third quarter of 2015, we began to include our own historical volatility in addition to publicly traded peers to calculate our expected volatility for a period similar to our expected term. We intend to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own common stock share price becomes available. Expected term. Prior to the third quarter of 2015, we used the simplified method for calculating the expected term of options as described in the SEC's Staff Accounting Bulletin No. 107, Share-Based Payment. The simplified method calculates the expected term as the mid-point between the vesting date and the contractual expiration date of the award. Beginning in the third quarter of 2015, we determined the expected term based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior, because we now believe there is sufficient historical information to derive a reasonable estimate. We estimate the expected term for ESPP using the purchase period. Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the stock-based award. Expected dividend yield. Our expected dividend yield is zero, as we have not and do not currently intend to declare dividends in the foreseeable future. |
Net Loss Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share | Net Loss Per Share The following tables present the calculation of basic and diluted net loss per share attributable to common stockholders (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 |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The provision for income taxes consists of the following (in thousands):
The components of loss before provision for income taxes by U.S. and foreign jurisdictions were as follows (in thousands):
The effective income tax rate differs from the federal statutory income tax rate applied to the loss before provision for income taxes due to the following (in thousands):
Significant components of our deferred tax assets are shown below (in thousands). A valuation allowance has been recognized to offset our deferred tax assets, as necessary, by the amount of any tax benefits that, based on evidence, are not expected to be realized.
On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the Tax Act) was enacted into law and significantly changed how the U.S. imposes income tax on multinational corporations. Changes include, but are not limited to, a reduction of the corporate income tax rate from 35% to 21%, a transition tax on accumulated foreign earnings and a transition from a worldwide to a territorial tax system. We are required to recognize the effect of the Tax Act in the period of enactment, such as remeasuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. The provisional amount related to the remeasurement of certain deferred tax assets and liabilities, based on the rates at which they are expected to reverse in the future, was $264.4 million and is offset by our valuation allowance. We have a cumulative deficit in foreign earnings. Accordingly, we estimated the transition tax did not have a material effect on our tax expense as of December 31, 2017. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows us to record provisional amounts during a measurement period not to extend more than one year beyond the Tax Act enactment date. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation are expected over the next 12 months, we consider the accounting for deferred tax remeasurements, the impact of the transition of U.S. international taxation from a worldwide tax system to a territorial system and other provisions to be incomplete due to the forthcoming guidance and our ongoing analysis. We expect to complete our analysis within the measurement period in accordance with SAB 118. As of December 31, 2017, we had U.S. federal net operating loss and federal tax credit carryforwards of approximately $2.1 billion and $56.6 million, respectively. The federal net operating loss carryforwards and federal tax credits will begin to expire in 2024 if not utilized. In addition, we had state net operating loss and state tax credit carryforwards of approximately $1.2 billion and $48.0 million, respectively. The state net operating loss will begin to expire in 2018 if not utilized, and the tax effected amount due to expire in 2018 is immaterial. State tax credits can be carried forward indefinitely. Utilization of our net operating loss and credit carryforwards may be subject to annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss and tax credit carryforwards before utilization. We maintain a full valuation allowance against our U.S. deferred tax assets as of December 31, 2017. We regularly assess the need for a valuation allowance against our deferred tax assets. In making that assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. Due to cumulative losses over recent years and based on all available evidence, we have determined that it is more likely than not that net deferred tax assets in the United States will not be realized. We have determined that $10.6 million related to deferred tax assets in certain foreign jurisdictions are realizable since the foreign entities have cumulative income and expected future income. We remeasured the U.S. non-current assets and liabilities at the applicable tax rate of 21% in accordance with the Tax Act. The valuation allowance decreased $114.7 million during the year ended December 31, 2017. This change is primarily attributable to a decrease in the deferred tax balance of $264.4 million due to the reduction in the U.S. income tax rate, offset by increases in deferred tax assets primarily related to net operating losses. We will continue to assess the likelihood of realization of the deferred tax assets in each of the applicable jurisdictions in future periods and will adjust the valuation allowance accordingly. Prior to the enactment of the Tax Act, we considered earnings from foreign operations to be indefinitely reinvested outside of the United States. We are currently evaluating whether to change our indefinite reinvestment assertion in light of the Tax Act and consider that assessment to be incomplete as permitted under guidance issued by the SEC. We expect to reach a final determination within the measurement period in accordance with SAB 118 as described above. A reconciliation of the beginning and ending balance of total unrecognized tax benefits is as follows (in thousands):
As of December 31, 2017, we had gross unrecognized tax benefits of approximately $27.6 million, of which $4.8 million would impact the effective tax rate, if recognized. We recognize accrued interest and penalties related to unrecognized tax benefits as income tax expense. Accrued interest and penalties included in our liability related to unrecognized tax benefits were $0.5 million and $0.4 million at December 31, 2017 and 2016, respectively. The amount of unrecognized tax benefits could be reduced upon expiration of the applicable statutes of limitations. The potential reduction in unrecognized tax benefits during the next 12 months is not expected to be material. Interest and penalties accrued on these uncertain tax positions will be released upon the expiration of the statutes of limitations and these amounts are also not material. We are subject to taxation in the United States and foreign jurisdictions. As of December 31, 2017, our tax years 2004 to 2016 remain subject to examination in most jurisdictions. There are differing interpretations of tax laws and regulations, and as a result, disputes may arise with tax authorities involving issues of the timing and amount of deductions and allocations of income among various tax jurisdictions. We periodically evaluate our exposures associated with our tax filing positions. We believe that adequate amounts have been reserved for any adjustments that may ultimately result from these examinations, and we do not anticipate a significant impact to our gross unrecognized tax benefits within the next 12 months related to these years. Although the timing of the resolution, settlement, and closure of any audit is highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits could significantly change in the next 12 months. However, given the number of years that remain subject to examination, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits. |
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. Rent expense associated with office space leases was $39.7 million, $34.2 million and $22.0 million for the years ended December 31, 2017, 2016 and 2015, respectively. Payments for data center square footage as well as data center capacity for certain data centers, are primarily included in cost of revenues. These costs were $22.5 million, $17.3 million and $13.7 million for the years ended December 31, 2017, 2016 and 2015, respectively. Future minimum payments under our non-cancelable operating leases and other contractual commitments as of December 31, 2017 are presented in the table below (in thousands):
In December 2014, we entered into a lease agreement for 328,867 square feet of space, located in Santa Clara, California. The lease commenced in August 2015 for an initial term of 12 years, with two options to renew the lease for additional terms of five years each. Rent is paid on a monthly basis and will increase incrementally over the term of the lease. Total future minimum payments under this operating lease as of December 31, 2017 was $131.8 million, which is included in the table above. In January 2017, we entered into a lease agreement related to an expansion and lease term extension of our existing San Diego office facility. Rent is paid on a monthly basis and will increase incrementally over the term of the lease. Total future minimum payments under this operating lease as of December 31, 2017 was $46.2 million, which is included in the table above. 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 convertible senior 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 as discussed below and 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, and 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. These settlements are considered multiple element arrangements for accounting purposes. We evaluated the accounting treatment of these settlements by identifying each element of the arrangements, which included amongst other elements, a release of past infringement claims and a covenant not to sue for a specified term of years. The primary benefit we received from the arrangements was the settlement and termination of all existing litigation, the avoidance of future litigation expenses and the avoidance of future management and customer disruptions. We determined that none of the elements of the settlement agreements have identifiable future benefits that would be capitalized as an asset. Accordingly, we recorded charges for aggregate legal settlements of $270.0 million in our consolidated statement of comprehensive loss for the year ended December 31, 2016. The charge covers the fulfillment by us of all financial obligations under both the BMC Settlement and HPE Settlement with no remaining financial obligations under either settlement. |
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):
Our service management products include our platform, ITSM, ITBM, customer service management, HR service delivery and security operations, which have similar features and functions, and are generally priced on a per user basis. Our ITOM products, which improve visibility, availability and agility of enterprise services, are generally priced on a per node basis. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions We have entered into indemnification agreements with each of our directors, executive officers and certain other officers. These agreements require us to indemnify such individuals, to the fullest extent permitted by Delaware law, for certain liabilities to which they may become subject as a result of their affiliation with us. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation | Principles of Consolidation The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (U.S. GAAP), and include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation. |
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Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. 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 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, and legal contingencies. Actual results could differ from those estimates. |
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Segments | Segments We define the term “chief operating decision maker” to be our Chief Executive Officer. Our chief operating decision maker allocates resources and assesses financial performance based upon discrete financial information at the consolidated level. Accordingly, we have determined that we operate as a single operating and reportable segment. |
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Foreign Currency Translation and Transactions | Foreign Currency Translation and Transactions The functional currencies for our foreign subsidiaries are primarily their local currencies. Assets and liabilities of the wholly-owned foreign subsidiaries are translated into U.S. Dollars at exchange rates in effect at each period end. Amounts classified in stockholders’ equity are translated at historical exchange rates. Revenues and expenses are translated at the average exchange rates during the period. The resulting translation adjustments are recorded in accumulated other comprehensive loss as a component of stockholders’ equity. Foreign currency transaction gains and losses are included in interest income and other income (expense), net within the consolidated statements of comprehensive loss, and have not been material for all periods presented. |
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Allocation of Overhead Costs | Allocation of Overhead Costs Overhead costs associated with office facilities, IT and certain depreciation related to infrastructure that is not dedicated for customer use or research and development use are allocated to cost of revenues and operating expenses based on headcount. |
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Revenue Recognition | Revenue Recognition We derive our revenues from two sources: (i) subscriptions and (ii) professional services and other. Subscription revenues are primarily comprised of subscription fees that give customers access to the ordered subscription service, related support and updates to the subscribed service during the subscription term. Our contracts typically do not give the customer the right to take possession of the software supporting the services. Professional services and other revenues consist of fees associated with services provided to customers for process design, implementation, configuration and optimization of our products. Professional services and other revenues also include customer training and registration and sponsorship fees for our annual Knowledge user conference and other user forums. We commence revenue recognition when all of the following conditions are met: •There is persuasive evidence of an arrangement; •The service has been provided to the customer; •The collection of related fees is reasonably assured; and •The amount of fees to be paid by the customer is fixed or determinable. Our arrangements are generally non-cancelable and do not contain refund-type provisions. We recognize subscription revenues ratably over the contract term beginning on the commencement date of each contract, the date we make our services available to our customers. Once our services are available to customers, we record amounts due in accounts receivable and in deferred revenue. To the extent we bill customers in advance of the contract commencement date, the accounts receivable and corresponding deferred revenue amounts are netted to zero on our consolidated balance sheets, unless such amounts have been paid as of the balance sheet date. Professional services revenues on our time-and materials arrangements are recognized as the services are delivered. Professional services revenues associated with fixed fee arrangements are recognized using a proportional performance model. In instances where certain milestones are required to be met before revenues are recognized, we defer professional services revenues and the associated costs until milestone criteria have been met. We have multiple element arrangements comprised of subscription fees and professional services. To qualify as a separate unit of accounting, the delivered item must have value to the customer on a standalone basis. We have concluded that our subscription service and professional services, including implementation and configuration services, have standalone value. The total arrangement consideration for a multiple element arrangement is allocated to the identifiable separate units of accounting based on a relative selling price hierarchy. We determined the relative selling price for a deliverable based on its vendor-specific objective evidence (VSOE) of selling price or third-party evidence (TPE) of selling price if VSOE does not exist. If neither VSOE nor TPE of selling price exists for a deliverable, the selling price is determined using the best estimate of selling price (BESP). We determine the BESP for each deliverable primarily by considering the historical selling price of these deliverables in similar transactions as well as other factors, including, but not limited to, market competition, review of stand-alone sales and current pricing practices. In determining the appropriate pricing structure, we consider the extent of competitive pricing of similar products and marketing analysis. In limited circumstances, we grant certain customers the right to deploy our subscription service on the customers’ own servers. These arrangements are subject to software revenue recognition guidance since the customer deploys our software. As we never sell the non-software elements separately from the software elements, we have determined that we do not have sufficient VSOE of fair value for all undelivered non-software elements. Consequently, we defer all revenue and related costs under the arrangement until the last element in the transaction has been delivered or starts to be delivered. Once the delivery of the last element has commenced, we recognize the entire fee and related costs from the arrangement ratably over the remaining period of the arrangement. Deferred revenue consists primarily of payments received in advance of revenue recognition for our subscriptions and professional services and other revenues and is recognized as the revenue recognition criteria are met. |
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Deferred Commissions | Deferred Commissions Deferred commissions are the incremental selling costs that are directly associated with our customer contracts and consist of sales commissions paid to our direct sales force and referral fees paid to independent third-parties. The majority of commissions and referral fees are deferred and amortized on a straight-line basis over the terms of the related customer contracts. We include amortization of deferred commissions in sales and marketing expense in the consolidated statements of comprehensive loss. |
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Fair Value Measurements | Fair Value Measurements We apply fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized in the financial statements on a non-recurring basis or disclosed at fair value in the financial statements on a recurring basis. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We use a fair value hierarchy that is based on three levels of inputs, of which the first two are considered observable and the last unobservable. The three levels of the fair value hierarchy are as follows: Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access; Level 2—Inputs other than Level 1 that are directly or indirectly observable, such as quoted prices for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities, such as interest rates, yield curves and foreign currency spot rates; and Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. |
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Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with original or remaining maturities of three months or less when purchased. Cash and cash equivalents are stated at fair value. |
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Investments | Investments Investments consist of commercial paper, corporate notes and bonds, certificates of deposit and U.S. government and agency securities. We classify investments as available-for-sale at the time of purchase and reevaluate such classification as of each balance sheet date. All investments are recorded at estimated fair value. Unrealized gains and losses for available-for-sale securities are included in accumulated other comprehensive income (loss), a component of stockholders’ equity. We evaluate our investments to assess whether those with unrealized loss positions are other than temporarily impaired. We consider impairments to be other than temporary if they are related to deterioration in credit risk or if it is likely we will sell the securities before the recovery of their cost basis. Realized gains and losses and declines in value judged to be other than temporary are determined based on the specific identification method and are reported in interest income and other income (expense), net in the consolidated statements of comprehensive loss. |
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Strategic Investments | 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 (loss). We report our investments in non-marketable equity securities in privately-held companies, in which we do not have a controlling interest or significant influence, at cost or fair value when an event or circumstance indicates an other-than-temporary decline in value has occurred. We include these strategic investments in “Other assets” on the consolidated balance sheets. |
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Accounts Receivable | Accounts Receivable We record trade accounts receivable at the net invoice value and such receivables are non-interest bearing. We consider receivables past due based on the contractual payment terms. We review our exposure to accounts receivable and reserve for specific amounts if collectability is no longer reasonably assured. |
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Property and Equipment | Property and Equipment Property and equipment, net, are stated at cost, subject to review of impairment, and depreciated using the straight-line method over the estimated useful lives of the assets as follows:
When assets are sold, or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in cost of revenues or operating expenses depending on whether the asset sold is being used in our provision of services to our customers. Repairs and maintenance expenses are charged to our statements of comprehensive loss as incurred. |
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Capitalized Software Development Costs | Capitalized Software Development Costs Software development costs for software to be sold, leased, or otherwise marketed are expensed as incurred until the establishment of technological feasibility, at which time those costs are capitalized until the product is available for general release to customers and amortized over the estimated life of the product. Technological feasibility is established upon the completion of a working prototype that has been certified as having no critical bugs and is a release candidate. To date, costs and time incurred between the establishment of technological feasibility and product release have not been significant, and all software development costs have been charged to research and development expense in our consolidated statements of comprehensive loss. Costs incurred to develop our internal administration, finance and accounting systems are capitalized during the application development stage and generally amortized over the software’s estimated useful life of three to five years. |
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Leases | Leases Leases are reviewed and classified as capital or operating at their inception. Some of our lease agreements contain rent escalation, rent holidays, lease incentives and renewal options. Rent escalation and rent holidays are included in the determination of rent expenses to be recorded over the lease term. Unless determined to be landlord assets, lease incentives to pay for our costs or assets are recognized as a reduction of rent expense on a straight-line basis over the term of the lease. Renewals are not assumed in the determination of the lease term unless they are deemed to be reasonably assured at the inception of the lease. We begin recognizing rent expense on the date that we obtain the legal right to use and control the leased space. The difference between rent payments and straight-line rent expense is recorded as deferred rent in the consolidated balance sheets. Deferred rent that will be recognized during the ensuing 12-month period is recorded as the current portion of deferred rent included in “Accrued expenses and other current liabilities” and the remainder is recorded as long term deferred rent included in “Other long-term liabilities”. |
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Goodwill, Intangible Assets and Other Long Lived Assets | Goodwill, Intangible Assets and Other Long Lived Assets Goodwill represents the excess of the purchase price in a business combination over the fair value of the net tangible and intangible assets acquired. We evaluate and test the recoverability of goodwill for impairment at least annually, during the fourth quarter, or more frequently if circumstances indicate that goodwill may not be recoverable. We perform the impairment testing by first assessing qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of its reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we perform a goodwill impairment test. To calculate any potential impairment, we compare the fair value of a reporting unit with its carrying amount, including goodwill. Any excess of the carrying amount of the reporting unit's goodwill over its fair value is recognized as an impairment loss, and the carrying value of goodwill is written down. For purposes of goodwill impairment testing, we have one reporting unit. We periodically review the carrying amounts of long-lived assets, such as property and equipment, and purchased intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. We measure the recoverability of these assets by comparing the carrying amount of each asset to the future undiscounted cash flows we expect the asset to generate. If we consider any of these assets to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair value. In addition, we periodically evaluate the estimated remaining useful lives of long-lived assets to determine whether events or changes in circumstances warrant a revision to the remaining period of depreciation or amortization. Our intangible assets are amortized over their useful lives ranging from 18 months to ten years. |
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Advertising Costs | Advertising Costs Advertising costs, excluding costs related to our annual Knowledge user conference and other user forums, are expensed as incurred and are included in sales and marketing expense. These costs for the years ended December 31, 2017, 2016 and 2015 were $57.3 million, $42.1 million and $26.0 million, respectively. Costs related to our annual Knowledge user conference and other user forums are deferred and expensed when the respective events occur. |
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Legal Contingencies | Legal Contingencies From time to time, we are a party to litigation and other legal proceedings in the ordinary course of business. We accrue for loss contingencies when we can reasonably estimate the amount of loss or range of loss and when, based on the advice of counsel, it is probable that we will incur the loss. Because of uncertainties related to these matters, we base our estimate on the information available at the time of our assessment. As additional information becomes available, we reassess our potential liability and may revise our estimate. |
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Stock-based Compensation | Stock-based Compensation We recognize compensation expense related to stock options and restricted stock units (RSUs) on a straight-line basis over the requisite service period, which is generally the vesting term of four years. For RSUs granted with a performance condition, the expenses are recognized on a graded vesting basis over the vesting period, after assessing the probability of achieving requisite performance criteria. This has the impact of greater stock-based compensation expense during the initial years of the vesting period as stock-based compensation cost is recognized over the requisite service period for each separately vesting tranche of the award as though the award were, in substance, multiple awards. We recognize compensation expense related to shares issued pursuant to the employee stock purchase plan (ESPP) on a straight-line basis over the offering period. We estimate the fair value of options using the Black-Scholes options pricing model and fair value of RSUs using the fair value of our common stock on the date of grant. We recognize compensation expense net of estimated forfeiture activity, which is based on historical forfeiture rates. In some instances, shares are issued on the vesting dates net of the minimum statutory tax withholding requirements to be paid by us on behalf of our employees. In these instances, we record the liability for withholding amounts to be paid by us as a reduction to additional paid-in capital when paid, and include these payments as a reduction of cash flows from financing activities. |
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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 common shares 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 common shares, which are comprised of outstanding common stock options, RSUs, ESPP obligations, convertible senior notes and warrants. The dilutive potential common shares 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 common share in periods in which the effect would be antidilutive. |
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Concentration of Credit Risk and Significant Customers | Concentration of Credit Risk and Significant Customers Financial instruments potentially exposing us to credit risk consist primarily of cash, cash equivalents, investments and accounts receivable. We hold cash at financial institutions that management believes are high credit, quality financial institutions and invest in securities with a minimum rating of BBB by Standard & Poor's, Baa2 by Moody's, or BBB by Fitch. We are also exposed to credit risk under the convertible note hedge transactions that may result from counterparties' non-performance. Credit risk arising from accounts receivable is mitigated due to our large number of customers and their dispersion across various industries and geographies. As of December 31, 2017 and 2016, there were no customers that represented more than 10% of our accounts receivable balance. There were no customers that individually exceeded 10% of our revenues in any of the periods presented. For purposes of assessing concentration of credit risk and significant customers, a group of customers under common control or customers that are affiliates of each other are regarded as a single customer. We review the composition of the accounts receivable balance, historical write-off experience and the potential risk of loss associated with delinquent accounts to determine if an allowance for doubtful accounts is necessary. Individual accounts receivable are written off when we become aware of a specific customer’s inability to meet its financial obligation, and all collection efforts are exhausted. The following table presents the changes in the allowance for doubtful accounts (in thousands):
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Warranties and Indemnification | Warranties and Indemnification Our cloud computing solutions are typically warranted to perform in material conformance with their specifications. We include service level commitments to our customers that permit those customers to receive credits in the event we fail to meet those service levels. We establish an accrual based on an evaluation of the known service disruptions. Service level credit accrual charges are recorded against revenue and were not material for all periods presented. We have also agreed to indemnify our directors, executive officers and certain other officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by us, arising out of that person’s services as a director or officer of our company or that person’s services provided to any other company or enterprise at our request. We maintain director and officer insurance coverage that may enable us to recover a portion of any future amounts paid. The fair values of these obligations are not material as of each balance sheet date. Our agreements include provisions indemnifying customers against intellectual property and other third-party claims. We have not incurred any costs as a result of such indemnification obligations and have not recorded any liabilities related to such obligations in the consolidated financial statements. |
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Income Taxes | Income Taxes We use the asset and liability method of accounting for income taxes, in which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be reversed. We recognize the effect on deferred tax assets and liabilities of a change in tax rates within the provision for income taxes as income and expense in the period that includes the enactment date. A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. In determining the need for a valuation allowance, we consider future growth, forecasted earnings, future taxable income, the mix of earnings in the jurisdictions in which we operate, historical earnings, taxable income in prior years, if carryback is permitted under the law, carryforward periods and prudent and feasible tax planning strategies. Our tax positions are subject to income tax audits by multiple tax jurisdictions throughout the world. We recognize the tax benefit of an uncertain tax position only if it is more likely than not the position is sustainable upon examination by the taxing authority, based on the technical merits. We measure the tax benefit recognized as the largest amount of benefit which is more likely than not to be realized upon settlement with the taxing authority. We recognize interest accrued and penalties related to unrecognized tax benefits in our tax provision. We calculate the current and deferred income tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed in subsequent years and record adjustments based on filed income tax returns when identified. The amount of income taxes paid is subject to examination by U.S. federal, state and foreign tax authorities. The estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, facts and circumstances existing at that time. To the extent the assessment of such tax position changes, we record the change in estimate in the period in which we make the determination. |
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Recent Accounting Pronouncements | New Accounting Pronouncements Adopted in 2017 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 early adopted this new guidance effective October 1, 2017 and the adoption did not 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 early adopted this new guidance effective October 1, 2017 and the adoption did not 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 early adopted this new guidance effective October 1, 2017, and performed our annual impairment assessment in the fourth quarter of 2017 under this new guidance. The adoption of this new guidance did not 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. We early adopted this new guidance effective October 1, 2017 and the adoption did not have a material impact on our consolidated financial statements. 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 early adopted ASU 2016-18 effective October 1, 2017 and have reclassified our consolidated statements of cash flow for each of the periods presented. The adoption did not have a material impact to our statements of cash flows. 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 early adopted ASU 2016-15 effective October 1, 2017 and applied this new standard in the cash flow presentation for the settlement of early conversion requests received for our 0% convertible senior notes due November 1, 2018 (2018 Notes). We currently expect to settle the remaining principal amount of our 2018 Notes 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. New Accounting Pronouncements Pending Adoption In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income (GILTI) provisions of the Tax Cuts and Jobs Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements and have not yet made a provisional estimate as we have not yet completed our assessment or elected an accounting policy to either recognize deferred taxes for basis differences expected to reverse as GILTI or to record GILTI as period costs if and when incurred. 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. The impact upon the adoption of this standard on our consolidated financial statements will not be material. 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 in excess of $300 million as of December 31, 2017. However, we do not anticipate that the adoption of this standard will have a material impact on our consolidated statements of comprehensive loss because 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, which results in greater variability in our 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. We 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. We expect to reclassify $10.7 million of unrealized gains on our marketable equity securities as of December 31, 2017 to the accumulated deficit on our consolidated balance sheet effective January 1, 2018. Revenue from Contracts with Customers In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” Topic 606 supersedes the prior revenue recognition standard (Topic 605). Under the Topic 606 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. Topic 606 also includes Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers, which requires the deferral of incremental costs of obtaining a contract with a customer. 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 will adopt the standard using the full retrospective method to restate each prior reporting period presented. In preparation for adoption of the standard on January 1, 2018, we have implemented internal controls and key system functionality to enable the preparation of financial information and have reached conclusions on key accounting assessments related to the standard. The most significant impacts of the standard relate to the timing of revenue recognition related to our on-premises offerings, in which we grant customers the right to deploy our software on the customer’s own servers without significant penalty, the accounting for incremental costs to obtain a contract and the classification of proceeds for Knowledge and other user forums as a reduction in sales and marketing expenses instead of professional services and other revenues. Under the Topic 606 standard, for our on-premises offerings, the requirement to have vendor specific objective evidence (VSOE) for undelivered elements is eliminated. As a result, we will recognize as subscription revenues 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 subscription revenues have not been billed, the revenue will be recorded as “unbilled receivables” and reported under “prepaid expenses and other current assets” for short-term unbilled receivables and “other assets” for long-term unbilled receivables on our consolidated balance sheets. In addition, refundable amounts associated with customer contracts will be recorded as “customer deposits” and presented under “accrued expenses and other current liabilities” on our consolidated balance sheets. 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, which is generally 12 to 36 months, for both our on-premises offerings and our cloud-based subscription offerings. Under Topic 606, 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. On initial contracts, only the portion equivalent to a renewal commission will be amortized over the contract term, while the portion incremental to a renewal commission will primarily be amortized over a period of benefit that we have determined to be approximately five years. On renewal contracts, these costs will be amortized over the renewal term. Additionally, for our on-premises offerings, consistent with the recognition of subscription revenue for on-premises offerings as described above, a portion of the commission cost will be expensed upfront when the on-premises offering is made available. The direct effect on income taxes resulting from the above-mentioned changes to revenues and commission expenses would result in additional income tax expense being recorded in each of the prior reporting periods that have been restated. The indirect effect of Topic 606 on income taxes associated with intercompany adjustments will be recorded in the first quarter of 2018. Impact on statements of operations The table below provides specified line items from our consolidated statements of operations on (i) an actual basis and (ii) as adjusted to reflect the impact that the adoption of Topic 606 would have had on such line items if such adoption had been effective for the applicable periods (in thousands, except share and per share data):
Impact on balance sheets The table below provides specified line items from our consolidated balance sheets on (i) an actual basis and (ii) as adjusted to reflect the impact that the adoption of Topic 606 would have had on such line items if such adoption had been effective as of the applicable date (in thousands):
Impact on statements of cash flows While there will be material changes within individual line items included as part of cash provided by (used in) operating activities, we do not expect the adoption of the Topic 606 standard to have a material impact on net cash provided by (used in) operating, financing, or investing activities in our consolidated cash flows statements. Impact on footnote disclosures In future periods, Topic 606 will also require us to disclose in the notes to our consolidated financial statements the amount and timing of revenues expected to be recognized from remaining performance obligations under customer contracts. |
Summary of Significant Accounting Policies (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Property and Equipment Useful Life | Property and equipment, net, are stated at cost, subject to review of impairment, and depreciated using the straight-line method over the estimated useful lives of the assets as follows:
Property and equipment, net consists of the following (in thousands):
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Changes in Allowance for Doubtful Accounts | The following table presents the changes in the allowance for doubtful accounts (in thousands):
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Schedule of New Accounting Pronouncements and Changes in Accounting Principals | The table below provides specified line items from our consolidated balance sheets on (i) an actual basis and (ii) as adjusted to reflect the impact that the adoption of Topic 606 would have had on such line items if such adoption had been effective as of the applicable date (in thousands):
The table below provides specified line items from our consolidated statements of operations on (i) an actual basis and (ii) as adjusted to reflect the impact that the adoption of Topic 606 would have had on such line items if such adoption had been effective for the applicable periods (in thousands, except share and per share data):
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Investments (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 consolidated balance sheets (in thousands):
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Investments Classified by Contractual Maturity Date | The fair values of available-for-sale investment 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 these 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 consolidated balance sheets (in thousands):
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Fair Value Measurements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 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 as of December 31, 2017 (in thousands):
The following table presents our fair value hierarchy for our assets measured at fair value on a recurring basis as of December 31, 2016 (in thousands):
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Business Combinations (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition, Pro Forma 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 years ended December 31, 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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SkyGiraffe Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Purchase Price Allocation | 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:
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DxContinuum, Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Purchase Price Allocation | 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:
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BrightPoint Security | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Purchase Price Allocation | 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:
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ITapp | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Purchase Price Allocation | 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:
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Goodwill and Intangible Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 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):
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Expected Future Amortization Expense Related to Intangible Assets | The following table presents the estimated future amortization expense related to intangible assets held at December 31, 2017 (in thousands):
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Property and Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Property and Equipment, Net | Property and equipment, net, are stated at cost, subject to review of impairment, and depreciated using the straight-line method over the estimated useful lives of the assets as follows:
Property and equipment, net consists of the following (in thousands):
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Accrued Expenses and Other Current Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities, Current [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) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Notes Payable [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Debt | The Notes consisted of the following (in thousands):
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Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | The estimated fair values of the Notes at December 31, 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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Interest Income and Interest Expense Disclosure | The following table sets forth total interest expense recognized related to the Notes (in thousands):
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Schedule Of Note Hedge Transactions |
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Schedule of Warrants |
|
Accumulated Other Comprehensive Loss (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statement of Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss | The components of accumulated other comprehensive loss consist of the following (in thousands):
|
Stockholders' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock Outstanding and Reserved Shares of Common Stock for Future Issuance | As of December 31, 2017, we had 174,275,864 shares of common stock outstanding and had reserved shares of common stock for future issuance as follows:
|
Equity Awards (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Information About Outstanding And Vested Stock Options | A summary of stock option activity was as follows:
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Restricted Stock Unit Table | A summary of RSU activity was as follows:
|
Stock-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Weighted-average Fair Value per Share of Options Granted | The following assumptions were used for each respective period to calculate our stock-based compensation for each stock option grant on the date of the grant:
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Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions | The following assumptions were used to calculate our stock-based compensation for each stock purchase right granted under the 2012 ESPP:
|
Net Loss Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Calculation of Basic and Diluted Net Income (Loss) Per Share | The following tables present the calculation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share data):
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Summary 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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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Provision for Income Taxes | The provision for income taxes consists of the following (in thousands):
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Components of Loss From Continuing Operations Before Income Taxes | The components of loss before provision for income taxes by U.S. and foreign jurisdictions were as follows (in thousands):
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Reconciliation of Federal Income Tax Rate | The effective income tax rate differs from the federal statutory income tax rate applied to the loss before provision for income taxes due to the following (in thousands):
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Reconciliation of Deferred Tax Assets and Liabilities | Significant components of our deferred tax assets are shown below (in thousands). A valuation allowance has been recognized to offset our deferred tax assets, as necessary, by the amount of any tax benefits that, based on evidence, are not expected to be realized.
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Reconciliation of Beginning and Ending Balance of Total Unrecognized Tax Benefits | A reconciliation of the beginning and ending balance of total unrecognized tax benefits is as follows (in thousands):
|
Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Minimum Payments Under Non-cancelable Operating Leases and Other Contractual Commitments | Future minimum payments under our non-cancelable operating leases and other contractual commitments as of December 31, 2017 are presented in the table below (in thousands):
|
Information about Geographic Areas and Products (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments, Geographical Areas [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues by Geographic Area, Based on Billing Location of Customer | Revenues by geographic area, based on the location of our users, were as follows for the periods presented (in thousands):
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Schedule of Long Lived Assets by Geographic Area |
Property and equipment, net by geographic area were as follows (in thousands):
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Schedule of Subscription Revenue by Products | Subscription revenues consist of the following (in thousands):
|
Summary of Significant Accounting Policies - Property and Equipment (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Building | |
Property and Equipment [Line Items] | |
Property and equipment, useful life (in years) | 39 years |
Minimum | Computer equipment and software | |
Property and Equipment [Line Items] | |
Property and equipment, useful life (in years) | 3 years |
Minimum | Furniture and fixtures | |
Property and Equipment [Line Items] | |
Property and equipment, useful life (in years) | 3 years |
Maximum | Computer equipment and software | |
Property and Equipment [Line Items] | |
Property and equipment, useful life (in years) | 5 years |
Maximum | Furniture and fixtures | |
Property and Equipment [Line Items] | |
Property and equipment, useful life (in years) | 7 years |
Summary of Significant Accounting Policies - Capitalized Software Development Costs (Details) - Computer software, intangible asset |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Minimum | |
Property and Equipment [Line Items] | |
Property and equipment, useful life (in years) | 3 years |
Maximum | |
Property and Equipment [Line Items] | |
Property and equipment, useful life (in years) | 5 years |
Summary of Significant Accounting Policies - Leases (Details) |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Deferred rent recognition period (in months) | 12 months |
Summary of Significant Accounting Policies - Goodwill, Intangible Assets and Other Long-Lived Assets (Details) |
12 Months Ended |
---|---|
Dec. 31, 2017
segment
| |
Property and Equipment [Line Items] | |
Number of reporting units | 1 |
Minimum | |
Property and Equipment [Line Items] | |
Intangible assets useful life | 18 months |
Maximum | |
Property and Equipment [Line Items] | |
Intangible assets useful life | 10 years |
Summary of Significant Accounting Policies - Advertising Costs (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Accounting Policies [Abstract] | |||
Advertising costs | $ 57.3 | $ 42.1 | $ 26.0 |
Summary of Significant Accounting Policies - Stock-based Compensation (Details) |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Stock options vesting period (in years) | 4 years |
Summary of Significant Accounting Policies - Concentration of Credit Risk and Significant Customers (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Changes in the allowance for doubtful accounts | |||
Balance at beginning of year | $ 2,323 | $ 1,179 | $ 809 |
Additions (deductions): charged to operations | 1,688 | 2,219 | 841 |
Additions (deductions): charged to deferred revenue | 194 | (391) | (70) |
Less: write-offs | 1,090 | 684 | 401 |
Balance at end of year | $ 3,115 | $ 2,323 | $ 1,179 |
Summary of Significant Accounting Policies - New Accounting Pronouncements Adopted in 2017 (Details) - USD ($) |
1 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Nov. 30, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Nov. 30, 2013 |
|
New Accounting Pronouncement, Early Adoption [Line Items] | |||||
Senior notes, debt discount classified as operating cash flow | $ 159,891,000 | ||||
2018 Notes | |||||
New Accounting Pronouncement, Early Adoption [Line Items] | |||||
Contractual interest rate, notes | 0.00% | ||||
Senior notes, remaining principal amount | $ 574,994,000 | $ 575,000,000 | $ 574,994,000 | ||
Effective interest rate of the liability component (in percent) | 6.50% | 6.50% | 6.50% | ||
2018 Notes | Scenario, Forecast | |||||
New Accounting Pronouncement, Early Adoption [Line Items] | |||||
Senior notes, debt discount classified as operating cash flow | $ 155,300,000 | ||||
Senior notes, debt discount classified as financing cash flow | $ 419,700,000 |
Summary of Significant Accounting Policies - New Accounting Pronouncements Pending Adoption (Details) - USD ($) $ in Thousands |
Jan. 01, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease commitments (in excess of) | $ 353,859 | ||
Cumulative effect adjustment | $ 11,423 | ||
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease commitments (in excess of) | $ 300,000 | ||
Accumulated Deficit | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cumulative effect adjustment | $ 11,423 | ||
Accumulated Deficit | Scenario, Forecast | Accounting Standards Update 2016-01 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cumulative effect adjustment | $ 10,700 | ||
Unrealized gains on marketable equity securities | Scenario, Forecast | Accounting Standards Update 2016-01 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cumulative effect adjustment | $ (10,700) |
Summary of Significant Accounting Policies - Revenue from Contracts with Customers (Details) |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Accounting Standards Update 2014-09 | Scenario, Forecast | ||
Item Effected [Line Items] | ||
Commissions, incremental amount, amortization period | 5 years | |
Minimum | ||
Item Effected [Line Items] | ||
Contract terms | 12 months | |
Maximum | ||
Item Effected [Line Items] | ||
Contract terms | 36 months |
Summary of Significant Accounting Policies - Impact on Statement of Operations (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Subscription | $ 1,739,795 | $ 1,221,639 | $ 848,278 | |||
Professional services and other | 193,231 | 168,874 | 157,202 | |||
Total revenues | 1,933,026 | 1,390,513 | 1,005,480 | |||
Professional services and other | [1] | 184,202 | 163,268 | 146,013 | ||
Total cost of revenues | [1] | 499,772 | 398,682 | 329,413 | ||
Gross profit | 1,433,254 | 991,831 | 676,067 | |||
Sales and marketing | [1] | 946,617 | 700,464 | 498,439 | ||
Total operating expenses | [1] | 1,534,668 | 1,414,639 | 842,432 | ||
Loss from operations | (101,414) | (422,808) | (166,365) | |||
Interest income and other income (expense), net | 5,804 | 6,035 | 4,450 | |||
Loss before income taxes | (149,004) | (450,051) | (193,012) | |||
Provision for income taxes | 126 | 1,753 | 5,414 | |||
Net loss | $ (149,130) | $ (451,804) | $ (198,426) | |||
Net loss per share - basic and diluted (in USD per share) | $ (0.87) | $ (2.75) | $ (1.27) | |||
Weighted-average shares used to compute net loss per share - basic and diluted | 171,175,577 | 164,533,823 | 155,706,643 | |||
Accounting Standards Update 2014-09 | As Adjusted | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Subscription | $ 1,739,500 | $ 1,234,070 | ||||
Professional services and other | 178,994 | 156,915 | ||||
Total revenues | 1,918,494 | 1,390,985 | ||||
Professional services and other | 184,292 | 163,581 | ||||
Total cost of revenues | 499,862 | 398,995 | ||||
Gross profit | 1,418,632 | 991,990 | ||||
Sales and marketing | 894,977 | 659,983 | ||||
Total operating expenses | 1,483,028 | 1,374,158 | ||||
Loss from operations | (64,396) | (382,168) | ||||
Interest income and other income (expense), net | 4,384 | 5,027 | ||||
Loss before income taxes | (113,406) | (410,419) | ||||
Provision for income taxes | 3,440 | 3,830 | ||||
Net loss | $ (116,846) | $ (414,249) | ||||
Net loss per share - basic and diluted (in USD per share) | $ (0.68) | $ (2.52) | ||||
Weighted-average shares used to compute net loss per share - basic and diluted | 171,175,577 | 164,533,823 | ||||
|
Summary of Significant Accounting Policies - Impact on Balance Sheets (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Accounts receivable, net | $ 434,895 | $ 322,757 |
Current portion of deferred commissions | 118,690 | 76,780 |
Prepaid expenses and other current assets | 77,681 | 43,636 |
Deferred commissions, less current portion | 85,530 | 61,990 |
Other assets | 49,600 | 36,576 |
Accrued expenses and other current liabilities | 244,605 | 171,636 |
Current portion of deferred revenue | 1,280,499 | 861,782 |
Deferred revenue, less current portion | 39,884 | 33,319 |
Other long-term liabilities | 43,239 | 34,177 |
Accumulated other comprehensive (loss) income | (889) | (21,133) |
Accumulated deficit | (1,146,520) | $ (997,390) |
Accounting Standards Update 2014-09 | As Adjusted | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Accounts receivable, net | 437,051 | |
Current portion of deferred commissions | 109,643 | |
Prepaid expenses and other current assets | 95,959 | |
Deferred commissions, less current portion | 224,252 | |
Other assets | 51,832 | |
Accrued expenses and other current liabilities | 253,257 | |
Current portion of deferred revenue | 1,210,695 | |
Deferred revenue, less current portion | 36,120 | |
Other long-term liabilities | 65,884 | |
Accumulated other comprehensive (loss) income | 5,767 | |
Accumulated deficit | $ (958,564) |
Investments - Summary of Investments (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | $ 1,437,228 | $ 762,336 |
Gross unrealized gains | 10,744 | 98 |
Gross unrealized losses | (3,727) | (1,652) |
Estimated fair value | 1,444,245 | 760,782 |
Commercial paper | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 258,348 | 56,839 |
Gross unrealized gains | 1 | 0 |
Gross unrealized losses | (5) | 0 |
Estimated fair value | 258,344 | 56,839 |
Corporate notes and bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 1,006,302 | 628,054 |
Gross unrealized gains | 26 | 91 |
Gross unrealized losses | (3,084) | (1,590) |
Estimated fair value | 1,003,244 | 626,555 |
Certificates of deposit | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 33,084 | 35,355 |
Gross unrealized gains | 0 | 0 |
Gross unrealized losses | 0 | 0 |
Estimated fair value | 33,084 | 35,355 |
U.S. government agency securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 129,494 | 42,088 |
Gross unrealized gains | 0 | 7 |
Gross unrealized losses | (638) | (62) |
Estimated fair value | 128,856 | $ 42,033 |
Marketable equity securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 10,000 | |
Gross unrealized gains | 10,717 | |
Gross unrealized losses | 0 | |
Estimated fair value | $ 20,717 |
Investments - Additional Information (Detail) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017
USD ($)
security
|
Dec. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contractual maturities term (maximum) | 24 months | ||
Due in one year or less | $ 1,032,086,000 | ||
Due in one year through two years | 391,442,000 | ||
Estimated fair value | $ 1,423,528,000 | ||
Number of available-for-sale securities in unrealized loss position | security | 405 | ||
Other-than-temporary impairments considered | $ 0 | ||
Debt and equity investments in privately-held companies included in other assets | 5,800,000 | $ 11,000,000 | |
Short-term investments | 1,437,228,000 | 762,336,000 | |
Purchases of strategic investments | 4,750,000 | 500,000 | $ 10,500,000 |
Fair Value, Inputs, Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Purchases of strategic investments | 4,800,000 | ||
Strategic investments, fair value | 1,500,000 | $ 500,000 | |
Marketable equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Short-term investments | 10,000,000 | ||
Unrealized gain | $ 10,700,000 |
Investments - Fair Values and Gross Unrealized Losses of Available-for-Sale Securities Aggregated by Investment Category (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, continuous unrealized loss position, less than twelve months, fair value | $ 940,223 | $ 522,536 |
Available-for-sale securities, continuous unrealized loss position, less than twelve months, gross unrealized losses | (3,301) | (1,592) |
Available-for-sale securities, continuous unrealized loss position, twelve months or longer, fair value | 164,429 | 47,940 |
Available-for-sale securities, continuous unrealized loss position, twelve months or longer, gross unrealized losses | (426) | (60) |
Fair value | 1,104,652 | 570,476 |
Gross unrealized losses | (3,727) | (1,652) |
Commercial paper | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, continuous unrealized loss position, less than twelve months, fair value | 14,809 | |
Available-for-sale securities, continuous unrealized loss position, less than twelve months, gross unrealized losses | (5) | |
Available-for-sale securities, continuous unrealized loss position, twelve months or longer, fair value | 0 | |
Available-for-sale securities, continuous unrealized loss position, twelve months or longer, gross unrealized losses | 0 | |
Fair value | 14,809 | |
Gross unrealized losses | (5) | |
Corporate notes and bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, continuous unrealized loss position, less than twelve months, fair value | 819,113 | 492,503 |
Available-for-sale securities, continuous unrealized loss position, less than twelve months, gross unrealized losses | (2,703) | (1,530) |
Available-for-sale securities, continuous unrealized loss position, twelve months or longer, fair value | 141,874 | 47,940 |
Available-for-sale securities, continuous unrealized loss position, twelve months or longer, gross unrealized losses | (381) | (60) |
Fair value | 960,987 | 540,443 |
Gross unrealized losses | (3,084) | (1,590) |
U.S. government agency securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, continuous unrealized loss position, less than twelve months, fair value | 106,301 | 30,033 |
Available-for-sale securities, continuous unrealized loss position, less than twelve months, gross unrealized losses | (593) | (62) |
Available-for-sale securities, continuous unrealized loss position, twelve months or longer, fair value | 22,555 | 0 |
Available-for-sale securities, continuous unrealized loss position, twelve months or longer, gross unrealized losses | (45) | 0 |
Fair value | 128,856 | 30,033 |
Gross unrealized losses | $ (638) | $ (62) |
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Total | $ 1,877,645 | $ 926,409 |
Cash equivalents | Money market funds | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Cash equivalents | 282,507 | 165,627 |
Cash equivalents | Commercial paper | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Cash equivalents | 100,456 | |
Cash equivalents | Corporate notes and bonds | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Cash equivalents | 50,437 | |
Short-term investments | Commercial paper | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 258,344 | 56,839 |
Short-term investments | Corporate notes and bonds | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 688,316 | 388,429 |
Short-term investments | Certificates of deposit | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 17,950 | 35,355 |
Short-term investments | U.S. government agency securities | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 67,476 | 17,501 |
Short-term investments | Marketable equity securities | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 20,717 | |
Long-term investments | Corporate notes and bonds | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 314,928 | 238,125 |
Long-term investments | Certificates of deposit | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 15,134 | |
Long-term investments | U.S. government agency securities | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 61,380 | 24,533 |
Level 1 | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Total | 303,224 | 165,627 |
Level 1 | Cash equivalents | Money market funds | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Cash equivalents | 282,507 | 165,627 |
Level 1 | Cash equivalents | Commercial paper | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Cash equivalents | 0 | |
Level 1 | Cash equivalents | Corporate notes and bonds | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Cash equivalents | 0 | |
Level 1 | Short-term investments | Commercial paper | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 0 | 0 |
Level 1 | Short-term investments | Corporate notes and bonds | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 0 | 0 |
Level 1 | Short-term investments | Certificates of deposit | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 0 | 0 |
Level 1 | Short-term investments | U.S. government agency securities | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 0 | 0 |
Level 1 | Short-term investments | Marketable equity securities | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 20,717 | |
Level 1 | Long-term investments | Corporate notes and bonds | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 0 | 0 |
Level 1 | Long-term investments | Certificates of deposit | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 0 | |
Level 1 | Long-term investments | U.S. government agency securities | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 0 | 0 |
Level 2 | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Total | 1,574,421 | 760,782 |
Level 2 | Cash equivalents | Money market funds | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Cash equivalents | 0 | 0 |
Level 2 | Cash equivalents | Commercial paper | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Cash equivalents | 100,456 | |
Level 2 | Cash equivalents | Corporate notes and bonds | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Cash equivalents | 50,437 | |
Level 2 | Short-term investments | Commercial paper | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 258,344 | 56,839 |
Level 2 | Short-term investments | Corporate notes and bonds | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 688,316 | 388,429 |
Level 2 | Short-term investments | Certificates of deposit | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 17,950 | 35,355 |
Level 2 | Short-term investments | U.S. government agency securities | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 67,476 | 17,501 |
Level 2 | Short-term investments | Marketable equity securities | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 0 | |
Level 2 | Long-term investments | Corporate notes and bonds | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 314,928 | 238,125 |
Level 2 | Long-term investments | Certificates of deposit | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | 15,134 | |
Level 2 | Long-term investments | U.S. government agency securities | ||
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items] | ||
Investments | $ 61,380 | $ 24,533 |
Business Combinations (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Oct. 31, 2017 |
Jan. 20, 2017 |
Jun. 03, 2016 |
Apr. 08, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Business Acquisition [Line Items] | |||||||
Goodwill | $ 128,728 | $ 82,534 | $ 55,669 | ||||
General and administrative | |||||||
Business Acquisition [Line Items] | |||||||
Business acquisition, transaction costs | 2,400 | $ 1,000 | |||||
SkyGiraffe Inc. | |||||||
Business Acquisition [Line Items] | |||||||
Payments to acquire businesses | $ 32,300 | ||||||
Goodwill | 19,386 | ||||||
Net deferred tax liabilities | $ (3,341) | ||||||
SkyGiraffe Inc. | Developed technology | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets useful life | 5 years | ||||||
Intangible assets | $ 15,600 | ||||||
DxContinuum, Inc. | |||||||
Business Acquisition [Line Items] | |||||||
Payments to acquire businesses | $ 15,000 | ||||||
Goodwill | 11,159 | ||||||
Net deferred tax liabilities | $ (2,561) | ||||||
DxContinuum, Inc. | Developed technology | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets useful life | 5 years | ||||||
Intangible assets | $ 6,400 | ||||||
Series of Individually Immaterial Business Acquisitions | |||||||
Business Acquisition [Line Items] | |||||||
Payments to acquire businesses | 11,600 | ||||||
Goodwill | 9,100 | ||||||
Net deferred tax liabilities | (1,100) | ||||||
Goodwill, tax deductible amount | 4,100 | ||||||
Series of Individually Immaterial Business Acquisitions | Developed technology | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets useful life | 5 years | ||||||
Intangible assets | 3,500 | ||||||
Digital Telapathy | |||||||
Business Acquisition [Line Items] | |||||||
Cash payments to acquire business | $ 5,000 | ||||||
BrightPoint Security | |||||||
Business Acquisition [Line Items] | |||||||
Payments to acquire businesses | $ 19,600 | ||||||
Goodwill | 15,258 | ||||||
Net deferred tax liabilities | $ (2,890) | ||||||
BrightPoint Security | Developed technology | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets useful life | 6 years | ||||||
Intangible assets | $ 8,100 | ||||||
ITapp | |||||||
Business Acquisition [Line Items] | |||||||
Payments to acquire businesses | $ 14,500 | ||||||
Goodwill | 11,437 | ||||||
Net deferred tax liabilities | $ (2,015) | ||||||
ITapp | Developed technology | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets useful life | 5 years | ||||||
Intangible assets | $ 4,700 |
Business Combinations - SkyGiraffe (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Business Acquisition [Line Items] | |||
Goodwill | $ 128,728 | $ 82,534 | $ 55,669 |
SkyGiraffe Inc. | |||
Business Acquisition [Line Items] | |||
Net tangible assets acquired | 675 | ||
Goodwill | 19,386 | ||
Net deferred tax liabilities | (3,341) | ||
Total purchase price | 32,320 | ||
SkyGiraffe Inc. | Developed technology | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 15,600 | ||
Intangible assets useful life | 5 years |
Business Combinations - DxContinuum (Details) - USD ($) $ in Thousands |
Jan. 20, 2017 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|---|
Business Acquisition [Line Items] | ||||
Goodwill | $ 128,728 | $ 82,534 | $ 55,669 | |
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 | |||
Developed technology | DxContinuum, Inc. | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 6,400 | |||
Intangible assets useful life | 5 years |
Business Combinations - BrightPoint Security (Details) - USD ($) $ in Thousands |
Jun. 03, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|---|
Business Acquisition [Line Items] | ||||
Goodwill | $ 128,728 | $ 82,534 | $ 55,669 | |
BrightPoint Security | ||||
Business Acquisition [Line Items] | ||||
Goodwill | $ 15,258 | |||
Net tangible liabilities acquired | (1,339) | |||
Net deferred tax liabilities | (2,890) | |||
Total purchase price | 19,629 | |||
Developed technology | BrightPoint Security | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 8,100 | |||
Intangible assets useful life | 6 years | |||
Customer contracts and related relationships | BrightPoint Security | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 500 | |||
Intangible assets useful life | 1 year 6 months |
Business Combinations - ITapp (Details) - USD ($) $ in Thousands |
Apr. 08, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|---|
Business Acquisition [Line Items] | ||||
Goodwill | $ 128,728 | $ 82,534 | $ 55,669 | |
ITapp | ||||
Business Acquisition [Line Items] | ||||
Net tangible assets acquired | $ 140 | |||
Goodwill | 11,437 | |||
Net deferred tax liabilities | (2,015) | |||
Total purchase price | 14,462 | |||
Customer contracts and related relationships | ITapp | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 200 | |||
Intangible assets useful life | 1 year 6 months | |||
Developed technology | ITapp | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 4,700 | |||
Intangible assets useful life | 5 years |
Business Combinations - Unaudited Pro Forma Financial Information (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Business Combinations [Abstract] | |||
Revenue | $ 1,937,374 | $ 1,397,600 | |
Net loss | $ (153,218) | $ (467,578) | |
Weighted-average shares used to compute net loss per share - basic and diluted | 171,175,577 | 164,533,823 | 155,706,643 |
Net loss per share - basic and diluted | $ (0.90) | $ (2.84) |
Goodwill and Intangible Assets - Schedule of Goodwill (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Goodwill [Roll Forward] | |||
Goodwill | $ 128,728 | $ 82,534 | $ 55,669 |
Goodwill acquired | 39,668 | 26,695 | |
Foreign currency translation adjustments | $ 6,526 | $ 170 |
- Schedule of Intangible Assets (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | $ 134,954 | $ 98,591 | |
Accumulated amortization | (48,038) | (32,737) | |
Intangible assets, net | 86,916 | 65,854 | |
Amortization expense | 19,700 | 15,100 | $ 11,800 |
Developed technology | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | 102,349 | 79,206 | |
Accumulated amortization | (43,382) | (30,858) | |
Intangible assets, net | $ 58,967 | $ 48,348 | |
Weighted average useful life (in years) | 10 years | 5 years | |
Patents | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | $ 31,030 | $ 17,610 | |
Accumulated amortization | (3,239) | (867) | |
Intangible assets, net | $ 27,791 | $ 16,743 | |
Weighted average useful life (in years) | 10 years | 9 years | |
Other | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Gross carrying amount | $ 1,575 | $ 1,775 | |
Accumulated amortization | (1,417) | (1,012) | |
Intangible assets, net | 158 | 763 | |
Intellectual Property | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets, net | $ 13,400 | $ 25,000 |
Goodwill and Intangible Assets - Schedule of Estimated Future Amortization of Intangible Assets (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2018 | $ 22,772 |
2019 | 22,691 |
2020 | 12,736 |
2021 | 10,805 |
2022 | 6,974 |
Thereafter | 10,938 |
Total future amortization expense | $ 86,916 |
Property and Equipment (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Property and Equipment [Line Items] | ||
Property and equipment, gross | $ 480,237 | $ 332,363 |
Less: accumulated depreciation | (235,113) | (150,743) |
Total property and equipment, net | 245,124 | 181,620 |
Computer equipment | ||
Property and Equipment [Line Items] | ||
Property and equipment, gross | 326,378 | 222,648 |
Computer software | ||
Property and Equipment [Line Items] | ||
Property and equipment, gross | 46,413 | 32,132 |
Leasehold improvements | ||
Property and Equipment [Line Items] | ||
Property and equipment, gross | 56,232 | 37,095 |
Furniture and fixtures | ||
Property and Equipment [Line Items] | ||
Property and equipment, gross | 38,789 | 31,574 |
Building | ||
Property and Equipment [Line Items] | ||
Property and equipment, gross | 7,084 | 6,379 |
Construction in progress | ||
Property and Equipment [Line Items] | ||
Property and equipment, gross | $ 5,341 | $ 2,535 |
Property and Equipment - Additional Information (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Property, Plant and Equipment [Abstract] | |||
Depreciation | $ 93.2 | $ 67.8 | $ 48.5 |
Accrued Expenses and Other Current Liabilities (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Accrued Liabilities, Current [Abstract] | ||
Taxes payable | $ 25,617 | $ 19,472 |
Bonuses and commissions | 84,972 | 67,259 |
Accrued compensation | 45,428 | 30,816 |
Other employee related liabilities | 44,284 | 28,812 |
Other | 44,304 | 25,277 |
Total accrued expenses and other current liabilities | $ 244,605 | $ 171,636 |
Convertible Senior Notes - Additional Information (Details) |
3 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2017
USD ($)
day
|
Dec. 31, 2017
USD ($)
day
trading_day
shares
|
Jun. 30, 2018
USD ($)
|
Mar. 31, 2018
USD ($)
|
Dec. 31, 2016
USD ($)
|
Nov. 30, 2013
USD ($)
|
|
Debt Conversion [Line Items] | ||||||
Percentage of purchase price of notes which should be paid upon fundamental change (percent) | 100.00% | |||||
Fair value measurement debt basis amount | $ 100 | $ 100 | ||||
Warrant exercise period | trading_day | 60 | |||||
Stock Price Trigger Measurement | ||||||
Debt Conversion [Line Items] | ||||||
Number of days out of 30 that common stock price exceeded conversion price, days | day | 20 | 20 | ||||
Number of consecutive trading days in a period | day | 30 | 30 | ||||
Threshold percentage of stock price trigger | 130.00% | 130.00% | ||||
Notes Price Trigger Measurement | ||||||
Debt Conversion [Line Items] | ||||||
Number of days out of 30 that common stock price exceeded conversion price, days | day | 5 | |||||
Number of consecutive trading days in a period | day | 5 | |||||
Threshold percentage of stock price trigger | 98.00% | |||||
Conversion of notes base conversion price | $ 1,000 | |||||
2022 Notes | ||||||
Debt Conversion [Line Items] | ||||||
Notes, par value | $ 782,500,000 | $ 782,500,000 | 0 | |||
Contractual interest rate, notes | 0.00% | |||||
Remaining life of the notes | 53 months | |||||
2018 Notes | ||||||
Debt Conversion [Line Items] | ||||||
Notes, par value | $ 574,994,000 | $ 575,000,000 | $ 574,994,000 | |||
Contractual interest rate, notes | 0.00% | |||||
Remaining life of the notes | 10 months | |||||
2018 Notes | Scenario, Forecast | ||||||
Debt Conversion [Line Items] | ||||||
Request for conversion of notes | $ 7,300,000 | $ 37,300,000 | ||||
2018 Note Hedge | ||||||
Debt Conversion [Line Items] | ||||||
Note hedge shares remaining (in shares) | shares | 7,782,946 |
Convertible Senior Notes - Schedule of Conversion (Details) |
1 Months Ended | 2 Months Ended |
---|---|---|
Nov. 30, 2013
shares
$ / shares
|
Jun. 30, 2017
shares
$ / shares
|
|
2022 Notes | ||
Debt Instrument [Line Items] | ||
Initial conversion price (in USD per share) | $ / shares | $ 134.75 | |
Conversion rate (in USD per share) | 0.00742 | |
Converted number of shares (in shares) | shares | 5,806,936 | |
2018 Notes | ||
Debt Instrument [Line Items] | ||
Initial conversion price (in USD per share) | $ / shares | $ 73.88 | |
Conversion rate (in USD per share) | 0.01354 | |
Converted number of shares (in shares) | shares | 7,783,023 |
Convertible Senior Notes - Schedule of Notes Payable (Details) - USD ($) |
Dec. 31, 2017 |
Jun. 30, 2017 |
Dec. 31, 2016 |
Nov. 30, 2013 |
---|---|---|---|---|
Debt Instrument [Line Items] | ||||
Net carrying amount | $ 1,173,436,000 | $ 507,812,000 | ||
2022 Notes | ||||
Debt Instrument [Line Items] | ||||
Notes, par value | 782,500,000 | $ 782,500,000 | 0 | |
Less: debt issuance cost and debt discount, net of amortization | (152,482,000) | 0 | ||
2018 Notes | ||||
Debt Instrument [Line Items] | ||||
Notes, par value | 574,994,000 | 575,000,000 | $ 574,994,000 | |
Less: debt issuance cost and debt discount, net of amortization | $ (31,576,000) | $ (67,188,000) |
Convertible Senior Notes - Equity Components (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Nov. 30, 2013 |
---|---|---|
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 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
2022 Notes | ||
Debt Instrument [Line Items] | ||
Fair value | $ 897,778 | |
2018 Notes | ||
Debt Instrument [Line Items] | ||
Fair value | $ 1,015,554 | $ 681,375 |
Convertible Senior Notes - Schedule of Interest Expense Recognized (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Debt Instrument [Line Items] | |||
Amortization of debt discount and issuance costs | $ 53,394 | $ 33,278 | $ 31,097 |
2022 Notes | |||
Debt Instrument [Line Items] | |||
Amortization of debt issuance cost | 860 | 0 | 0 |
Amortization of debt discount | $ 16,921 | $ 0 | $ 0 |
Effective interest rate of the liability component (in percent) | 4.75% | 4.75% | 4.75% |
2018 Notes | |||
Debt Instrument [Line Items] | |||
Amortization of debt issuance cost | $ 1,911 | $ 1,785 | $ 1,668 |
Amortization of debt discount | $ 33,702 | $ 31,493 | $ 29,429 |
Effective interest rate of the liability component (in percent) | 6.50% | 6.50% | 6.50% |
Convertible Senior Notes - Schedule of Note Hedges (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Debt Instrument [Line Items] | |||
Purchase | $ 128,017 | $ 0 | $ 0 |
2022 Note Hedge | |||
Debt Instrument [Line Items] | |||
Purchase | $ 128,017 | ||
Shares | 5,806,936 | ||
2018 Note Hedge | |||
Debt Instrument [Line Items] | |||
Purchase | $ 135,815 | ||
Shares | 7,783,023 |
Convertible Senior Notes - Schedule of Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Debt Instrument [Line Items] | |||
Proceeds | $ 54,071 | $ 0 | $ 0 |
2022 Warrants | |||
Debt Instrument [Line Items] | |||
Proceeds | $ 54,071 | ||
Shares | 5,806,936 | ||
Strike Price (in USD per share) | $ 203.40 | ||
2018 Warrants | |||
Debt Instrument [Line Items] | |||
Proceeds | $ 84,525 | ||
Shares | 7,783,023 | ||
Strike Price (in USD per share) | $ 107.46 |
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Comprehensive Income [Abstract] | ||
Foreign currency translation adjustment | $ (4,410) | $ (19,277) |
Net unrealized gain (loss) on investments, net of tax | 3,521 | (1,856) |
Accumulated other comprehensive loss | $ (889) | $ (21,133) |
Stockholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
May 31, 2017 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Stockholders' Equity | ||||
Shares of common stock, authorized (in shares) | 600,000,000 | 600,000,000 | ||
Shares of common stock, issued and sold (in shares) | 174,275,864 | 167,430,773 | ||
Repurchases and retirement of common stock (in shares) | 540,806 | 0 | ||
Repurchases and retirement of common stock | $ 55,000 | $ 55,000 | ||
Repurchases and retirement of common stock (in USD per share) | $ 101.70 | |||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | ||
Preferred stock, shares outstanding (in shares) | 0 | 0 | ||
Common Stock | ||||
Stockholders' Equity | ||||
Common stock issued under employee stock plans (in shares) | 7,385,897 | 6,645,009 | 11,276,672 | |
Repurchases and retirement of common stock (in shares) | 540,806 |
Stockholders' Equity - Outstanding and Reserved Shares of Common Stock for Future Issuance (Detail) - shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Class of Stock [Line Items] | |||
Options outstanding (in shares) | 3,369,732 | 5,818,435 | 8,255,554 |
Total reserved shares of common stock for future issuance (in shares) | 50,168,865 | ||
2012 Equity Incentive Plan | |||
Class of Stock [Line Items] | |||
Total reserved shares of common stock for future issuance (in shares) | 25,813,848 | ||
2012 Employee Stock Purchase Plan | |||
Class of Stock [Line Items] | |||
Total reserved shares of common stock for future issuance (in shares) | 9,581,944 | ||
Stock options | |||
Class of Stock [Line Items] | |||
Options outstanding (in shares) | 3,369,732 | ||
Restricted stock units | |||
Class of Stock [Line Items] | |||
RSUs (in shares) | 11,403,341 | 12,222,282 | 12,417,805 |
Performance target (in percent) | 100.00% |
Equity Awards - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Jan. 01, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total intrinsic value of options exercised | $ 277,670 | $ 157,774 | $ 523,100 | |
Weighted-average grant date fair value of options granted (in USD per share) | $ 37.57 | $ 28.01 | $ 32.64 | |
Fair value of stock options vested | $ 11,800 | $ 17,000 | $ 34,500 | |
Number of shares, granted (in shares) | 616,720 | 617,985 | ||
Total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock options | $ 23,700 | |||
Weighted-average remaining vesting period | 3 years 1 month 28 days | |||
Restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted-average remaining vesting period | 2 years 9 months 9 days | |||
Aggregate intrinsic value, vested | $ 573,861 | $ 354,320 | 254,700 | |
Compensation expense recognized, vesting term (in years) | 4 years | |||
Performance target (in percent) | 100.00% | |||
Unrecognized compensation expense expected to be recognized | $ 671,000 | |||
Performance shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Performance target (in percent) | 100.00% | |||
Allocated share-based compensation expense | $ 40,500 | $ 36,100 | $ 30,800 | |
Tranche one | Performance shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense recognized, vesting term (in years) | 3 months | |||
Tranche two | Performance shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense recognized, vesting term (in years) | 3 months | |||
Tranche three | Performance shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense recognized, vesting term (in years) | 3 months | |||
Tranche four | Performance shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense recognized, vesting term (in years) | 3 months | |||
Minimum | Performance shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Performance target (in percent) | 0.00% | |||
Maximum | Performance shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Performance target (in percent) | 180.00% | |||
President And Chief Executive Officer | Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares, granted (in shares) | 396,720 | |||
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% | |||
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% | |||
Common stock purchase price, percentage | 85.00% | |||
Offering period | 6 months | |||
2005 Stock Plan and 2012 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock options granted to new employees vest, percentage per annum | 25.00% | |||
Requisite service period to vest employment continuation period | 3 years | |||
Options granted, exercisable period | 10 years | |||
Subsequent event | 2012 Equity Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of additional shares authorized (in shares) | 8,713,793 | |||
Subsequent event | 2012 Employee Stock Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of additional shares authorized (in shares) | 1,742,758 |
Equity Awards - Summary of Stock Option Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Number of Shares | |||
Number of shares, outstanding, beginning balance (in shares) | 5,818,435 | 8,255,554 | |
Number of shares, granted (in shares) | 616,720 | 617,985 | |
Number of shares, exercised (in shares) | (2,970,914) | (2,587,173) | |
Number of shares, canceled (in shares) | (94,509) | (467,931) | |
Number of shares, outstanding, ending balance (in shares) | 3,369,732 | 5,818,435 | 8,255,554 |
Number of shares, vested and expected to vest (in shares) | 3,283,791 | ||
Number of shares, vested and exercisable (in shares) | 2,426,777 | ||
Weighted- Average Exercise Price | |||
Weighted-average exercise price, outstanding, beginning balance (in USD per share) | $ 20.57 | $ 16.65 | |
Weighted-average exercise price, granted (in USD per share) | 86.33 | 71.17 | |
Weighted-average exercise price, exercised (in USD per share) | 12.44 | 13.36 | |
Weighted-average exercise price, canceled (in USD per share) | 68.88 | 58.01 | |
Weighted-average exercise price, outstanding, ending balance (in USD per share) | 38.43 | $ 20.57 | $ 16.65 |
Weighted-average exercise price, vested and expected to vest (in USD per share) | 37.62 | ||
Weighted-average exercise price, vested and exercisable (in USD per share) | $ 21.96 | ||
Weighted-average remaining contractual life (in years) | 5 years 7 months 15 days | ||
Weighted-average remaining contractual term, vested and expected to vest (in years) | 5 years 6 months 16 days | ||
Weighted-average remaining contractual term, vested and exercisable (in years) | 4 years 4 months 18 days | ||
Total intrinsic value of options exercised | $ 277,670 | $ 157,774 | $ 523,100 |
Aggregate intrinsic value, outstanding | 309,892 | ||
Aggregate intrinsic value, vested and expected to vest | 304,651 | ||
Aggregate intrinsic value, vested and exercisable | $ 263,144 |
Equity Awards - Restricted Stock Unit Table (Details) - Restricted stock units - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Shares Outstanding | |||
Number of shares outstanding, beginning balance (in shares) | 12,222,282 | 12,417,805 | |
Number of shares, granted (in shares) | 6,320,457 | 6,870,285 | |
Number of shares, vested (in shares) | (5,502,004) | (5,213,662) | |
Number of shares, forfeited (in shares) | (1,637,394) | (1,852,146) | |
Number of shares outstanding, ending balance (in shares) | 11,403,341 | 12,222,282 | 12,417,805 |
Expected to vest (in shares) | 10,191,316 | ||
Weighted-Average Grant Date Fair Value | |||
Weighted-average grant date fair value, outstanding, beginning balance (in USD per share) | $ 63.66 | $ 63.38 | |
Weighted-average grant date fair value, granted (in USD per share) | 95.70 | 61.22 | |
Weighted-average grant date fair value, vested (in USD per share) | 60.79 | 59.95 | |
Weighted-average grant date fair value, repurchased (in USD per share) | 72.69 | 63.18 | |
Weighted-average grant date fair value, outstanding, ending balance (in USD per share) | $ 81.50 | $ 63.66 | $ 63.38 |
Aggregate intrinsic value, vested | $ 573,861 | $ 354,320 | $ 254,700 |
Aggregate intrinsic value, outstanding | 1,486,882 | ||
Aggregated intrinsic value, expected to vest | $ 1,328,846 |
Stock-Based Compensation (Detail) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Employee stock purchase plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility, minimum | 28.00% | 31.00% | 31.00% |
Expected volatility, maximum | 49.00% | 49.00% | 49.00% |
Expected term (in years) | 6 months | 6 months | 6 months |
Risk-free interest rate. minimum | 0.40% | 0.17% | 0.05% |
Risk-free interest rate, maximum | 1.15% | 0.47% | 0.17% |
Dividend yield (in percent) | 0.00% | 0.00% | 0.00% |
Common stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility, minimum | 39.00% | 41.00% | 41.00% |
Expected volatility, maximum | 42.00% | 42.00% | 46.00% |
Expected term (in years) | 4 years 10 months 21 days | ||
Risk-free interest rate. minimum | 1.78% | 1.18% | 1.48% |
Risk-free interest rate, maximum | 2.47% | 1.87% | 1.94% |
Dividend yield (in percent) | 0.00% | 0.00% | 0.00% |
Common stock options | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (in years) | 4 years 10 months 21 days | 5 years 6 months | |
Common stock options | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (in years) | 5 years 7 months 7 days | 6 years 29 days |
Net Loss Per Share - Calculation of Basic and Diluted Net Loss Per Share Attributable to Common Stockholders (Detail) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Numerator: | |||
Net loss | $ (149,130) | $ (451,804) | $ (198,426) |
Denominator: | |||
Weighted-average shares outstanding - basic and diluted (in shares) | 171,175,577 | 164,533,823 | 155,706,643 |
Net loss per share - basic and diluted (in USD per share) | $ (0.87) | $ (2.75) | $ (1.27) |
Net Loss Per Share - Summary of Potentially Dilutive Securities (Detail) - shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total potentially dilutive securities (in shares) | 42,314,596 | 33,973,292 | 36,494,133 |
Common stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total potentially dilutive securities (in shares) | 3,369,732 | 5,818,435 | 8,255,554 |
Restricted stock units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total potentially dilutive securities (in shares) | 11,403,341 | 12,222,282 | 12,417,805 |
ESPP obligations | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total potentially dilutive securities (in shares) | 361,688 | 366,529 | 254,728 |
2018 Notes | Convertible senior notes | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total potentially dilutive securities (in shares) | 7,782,946 | 7,783,023 | 7,783,023 |
2022 Notes | Convertible senior notes | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total potentially dilutive securities (in shares) | 5,806,933 | 0 | 0 |
2018 Warrants | Warrants | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total potentially dilutive securities (in shares) | 7,783,023 | 7,783,023 | 7,783,023 |
2022 Warrants | Warrants | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total potentially dilutive securities (in shares) | 5,806,933 | 0 | 0 |
Income Taxes - Components of Provision for Income Taxes (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Current provision: | |||
Federal | $ (445) | $ (55) | $ 682 |
State | 137 | 135 | 211 |
Foreign | 9,512 | 5,097 | 6,125 |
Total current provision | 9,204 | 5,177 | 7,018 |
Deferred provision: | |||
Federal | (5,934) | (4,462) | 0 |
State | (886) | (746) | 0 |
Foreign | (2,258) | 1,784 | (1,604) |
Total deferred provision | (9,078) | (3,424) | (1,604) |
Provision for income taxes | $ 126 | $ 1,753 | $ 5,414 |
Income Taxes - Components of Loss From Continuing Operations Before Income Taxes (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | |||
United States | $ (80,636) | $ (432,631) | $ (150,593) |
Foreign | (68,368) | (17,420) | (42,419) |
Loss before income taxes | $ (149,004) | $ (450,051) | $ (193,012) |
Income Taxes - Reconciliation of Federal Income Tax Rate (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | |||
Tax computed at U.S. federal statutory rate | $ (50,661) | $ (153,017) | $ (65,624) |
State taxes, net of federal benefit | 64 | 37 | 53 |
Tax rate differential for international subsidiaries | 29,312 | 10,910 | 18,681 |
Stock-based compensation | (116,953) | (27,133) | 13,597 |
Tax credits | (21,038) | (16,452) | (11,961) |
Other | 7,337 | 7,850 | 2,865 |
Valuation allowance | 152,065 | 179,558 | 47,803 |
Provision for income taxes | $ 126 | $ 1,753 | $ 5,414 |
Income Taxes - Reconciliation of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Deferred tax assets: | ||
Net operating loss carryforwards | $ 518,620 | $ 640,312 |
Accrued expenses | 10,613 | 10,424 |
Credit carryforwards | 75,879 | 50,559 |
Stock-based compensation | 35,782 | 46,530 |
Note hedge | 35,181 | 20,520 |
Other | 14,771 | 13,733 |
Total deferred tax assets | 690,846 | 782,078 |
Less valuation allowance | (614,177) | (728,870) |
Deferred tax assets net | 76,669 | 53,208 |
Deferred tax liabilities: | ||
Depreciation and amortization | (20,708) | (18,914) |
Convertible notes | (43,616) | (23,605) |
Other | (1,759) | 0 |
Net deferred tax assets | $ 10,586 | $ 10,689 |
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Taxes [Line Items] | ||||
Provisional amount related to remeasurement of deferred tax assets and liabilities due to tax reform | $ 264,400 | |||
Tax credit carryforwards | 2,100,000 | |||
Tax credit carryforwards | 75,879 | $ 50,559 | ||
Tax credit carryforwards | 1,200,000 | |||
Deferred tax assets, gross | 690,846 | 782,078 | ||
Valuation allowance comparison | 114,700 | |||
Total unrecognized tax benefit | 27,648 | 18,440 | $ 11,737 | $ 9,158 |
Unrecognized tax benefits that would impact effective tax rate | 4,800 | |||
Unrecognized tax benefits, income tax interest and penalties accrued | 500 | $ 400 | ||
Federal | ||||
Income Taxes [Line Items] | ||||
Tax credit carryforwards | 56,600 | |||
State | ||||
Income Taxes [Line Items] | ||||
Tax credit carryforwards | 48,000 | |||
Foreign Tax Authority | ||||
Income Taxes [Line Items] | ||||
Deferred tax assets, gross | $ 10,600 |
Income Taxes - Reconciliation of Beginning and Ending Balance of Total Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Reconciliation of beginning and ending balance of total unrecognized tax benefits | |||
Balance, beginning period | $ 18,440 | $ 11,737 | $ 9,158 |
Gross increases - tax positions in prior year | 398 | 1,122 | 2 |
Gross decreases - tax positions in prior period | 0 | (50) | (1,017) |
Gross increases - tax positions in current period | 8,810 | 5,673 | 3,768 |
Gross decreases - tax positions in current period | 0 | 0 | (73) |
Lapse of statute of limitations | 0 | (42) | (101) |
Balance, end of period | $ 27,648 | $ 18,440 | $ 11,737 |
Commitments and Contingencies - Additional Information (Detail) |
12 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Aug. 15, 2015 |
Dec. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
Jun. 30, 2017
USD ($)
|
Dec. 31, 2014
ft²
|
Nov. 30, 2013
USD ($)
|
|
Operating Leased Assets [Line Items] | |||||||
Rent expense | $ 39,700,000 | $ 34,200,000 | $ 22,000,000 | ||||
Rent payments | 353,859,000 | ||||||
Legal settlements | 0 | 270,000,000 | 0 | ||||
Santa Clara Office Lease Two | |||||||
Operating Leased Assets [Line Items] | |||||||
Area of building under lease (in sq. ft) | ft² | 328,867 | ||||||
Operating leases, term of contract | 12 years | ||||||
Rent payments | 131,800,000 | ||||||
Operating leases, renewal term | 5 years | ||||||
San Diego Office Lease | |||||||
Operating Leased Assets [Line Items] | |||||||
Rent payments | 46,200,000 | ||||||
Cost of sales | |||||||
Operating Leased Assets [Line Items] | |||||||
Service charges and operating lease expense | 22,500,000 | 17,300,000 | $ 13,700,000 | ||||
2022 Notes | |||||||
Operating Leased Assets [Line Items] | |||||||
Notes, par value | 782,500,000 | 0 | $ 782,500,000 | ||||
2018 Notes | |||||||
Operating Leased Assets [Line Items] | |||||||
Notes, par value | $ 574,994,000 | $ 575,000,000 | $ 574,994,000 |
Commitments and Contingencies - Annual Future Minimum Payments Under Operating Leases / Facility Exit Obligation (Detail) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Operating Leases | |
2018 | $ 44,713 |
2019 | 47,986 |
2020 | 48,218 |
2021 | 45,590 |
2022 | 43,238 |
Thereafter | 124,114 |
Operating leases, net of sublease income, total | 353,859 |
Purchase Obligations | |
2018 | 31,394 |
2019 | 22,698 |
2020 | 11,736 |
2021 | 7,248 |
2022 | 3,805 |
Thereafter | 4,093 |
Purchase obligation, total | 80,974 |
Other | |
2018 | 574 |
2019 | 574 |
2020 | 574 |
2021 | 574 |
2022 | 574 |
Thereafter | 1,053 |
Other commitment, total | 3,923 |
Total | |
2018 | 76,681 |
2019 | 71,258 |
2020 | 60,528 |
2021 | 53,412 |
2022 | 47,617 |
Thereafter | 129,260 |
Total minimum lease payments | 438,756 |
Operating leases, cancellation penalty | $ 13,900 |
Information about Geographic Areas and Products - Revenues by Geographic Area (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Segment Reporting Information [Line Items] | |||
Revenues | $ 1,933,026 | $ 1,390,513 | $ 1,005,480 |
Revenues by geography | |||
Percentage of U.S. revenues in North America | 94.00% | 95.00% | 95.00% |
North America | |||
Segment Reporting Information [Line Items] | |||
Revenues | $ 1,299,950 | $ 946,956 | $ 702,985 |
EMEA | |||
Segment Reporting Information [Line Items] | |||
Revenues | 478,686 | 339,341 | 233,378 |
Asia Pacific and other | |||
Segment Reporting Information [Line Items] | |||
Revenues | $ 154,390 | $ 104,216 | $ 69,117 |
Information about Geographic Areas and Products - Property and Equipment, Net by Geographic Area (Detail) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Property and equipment, net | $ 245,124 | $ 181,620 |
Property by geography | ||
Percentage of U.S. property and equipment in North America | 89.00% | 92.00% |
North America | ||
Segment Reporting Information [Line Items] | ||
Property and equipment, net | $ 164,040 | $ 132,671 |
EMEA | ||
Segment Reporting Information [Line Items] | ||
Property and equipment, net | 50,028 | 37,449 |
Asia Pacific and other | ||
Segment Reporting Information [Line Items] | ||
Property and equipment, net | $ 31,056 | $ 11,500 |
Information about Geographic Areas and Products - Subscription Revenues (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Segment Reporting Information [Line Items] | |||
Total subscription revenues | $ 1,739,795 | $ 1,221,639 | $ 848,278 |
Service management products | |||
Segment Reporting Information [Line Items] | |||
Total subscription revenues | 1,526,382 | 1,108,846 | 783,603 |
IT Operations Management Solutions | |||
Segment Reporting Information [Line Items] | |||
Total subscription revenues | $ 213,413 | $ 112,793 | $ 64,675 |
Label | Element | Value |
---|---|---|
Restricted Cash and Cash Equivalents, Current | us-gaap_RestrictedCashAndCashEquivalentsAtCarryingValue | $ 481,000 |
Restricted Cash and Cash Equivalents, Current | us-gaap_RestrictedCashAndCashEquivalentsAtCarryingValue | 694,000 |
Restricted Cash and Cash Equivalents, Current | us-gaap_RestrictedCashAndCashEquivalentsAtCarryingValue | 1,301,000 |
Restricted Cash and Cash Equivalents, Noncurrent | us-gaap_RestrictedCashAndCashEquivalentsNoncurrent | 0 |
Restricted Cash and Cash Equivalents, Noncurrent | us-gaap_RestrictedCashAndCashEquivalentsNoncurrent | 0 |
Restricted Cash and Cash Equivalents, Noncurrent | us-gaap_RestrictedCashAndCashEquivalentsNoncurrent | $ 33,000 |
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