State or Other Jurisdiction of Incorporation or Organization | I.R.S. Employer Identification No. | |||||||||||||
Address of Principal Executive Offices | Zip Code |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
☒ | Accelerated filer | ☐ | ||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
Emerging growth company |
PAGE | ||||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
June 30, 2022 | December 31, 2021 | |||||||||||||
(unaudited) | ||||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Restricted cash | ||||||||||||||
Investments | ||||||||||||||
Accounts receivable, net | ||||||||||||||
Contract assets, current portion, net | ||||||||||||||
Prepaid expenses and other current assets | ||||||||||||||
Deferred solution and other costs, current portion | ||||||||||||||
Deferred implementation costs, current portion | ||||||||||||||
Total current assets | ||||||||||||||
Property and equipment, net | ||||||||||||||
Right of use assets | ||||||||||||||
Deferred solution and other costs, net of current portion | ||||||||||||||
Deferred implementation costs, net of current portion | ||||||||||||||
Intangible assets, net | ||||||||||||||
Goodwill | ||||||||||||||
Contract assets, net of current portion and allowance | ||||||||||||||
Other long-term assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
Liabilities and stockholders' equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | $ | ||||||||||||
Accrued liabilities | ||||||||||||||
Accrued compensation | ||||||||||||||
Convertible notes, current portion | ||||||||||||||
Deferred revenues, current portion | ||||||||||||||
Lease liabilities, current portion | ||||||||||||||
Total current liabilities | ||||||||||||||
Convertible notes, net of current portion | ||||||||||||||
Deferred revenues, net of current portion | ||||||||||||||
Lease liabilities, net of current portion | ||||||||||||||
Other long-term liabilities | ||||||||||||||
Total liabilities | ||||||||||||||
Commitments and contingencies (Note 6) | ||||||||||||||
Stockholders' equity: | ||||||||||||||
Preferred stock: $ | ||||||||||||||
Common stock: $ | ||||||||||||||
Additional paid-in capital | ||||||||||||||
Accumulated other comprehensive loss | ( | ( | ||||||||||||
Accumulated deficit | ( | ( | ||||||||||||
Total stockholders' equity | ||||||||||||||
Total liabilities and stockholders' equity | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Cost of revenues | ||||||||||||||||||||||||||
Gross profit | ||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Sales and marketing | ||||||||||||||||||||||||||
Research and development | ||||||||||||||||||||||||||
General and administrative | ||||||||||||||||||||||||||
Acquisition related costs | ||||||||||||||||||||||||||
Amortization of acquired intangibles | ||||||||||||||||||||||||||
Unoccupied lease charges | ||||||||||||||||||||||||||
Total operating expenses | ||||||||||||||||||||||||||
Loss from operations | ( | ( | ( | ( | ||||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||
Interest and other income | ||||||||||||||||||||||||||
Interest and other expense | ( | ( | ( | ( | ||||||||||||||||||||||
Loss on extinguishment of debt | ( | ( | ||||||||||||||||||||||||
Total other income (expense), net | ( | ( | ( | ( | ||||||||||||||||||||||
Loss before income taxes | ( | ( | ( | ( | ||||||||||||||||||||||
Provision for income taxes | ( | ( | ( | ( | ||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Other comprehensive gain (loss): | ||||||||||||||||||||||||||
Unrealized gain (loss) on available-for-sale investments | ( | ( | ( | |||||||||||||||||||||||
Foreign currency translation adjustment | ( | ( | ( | ( | ||||||||||||||||||||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Net loss per common share, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||||||||
Basic and diluted |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Total stockholders' equity, beginning balances | $ | $ | $ | $ | ||||||||||||||||||||||
Common stock and additional paid-in capital: | ||||||||||||||||||||||||||
Beginning balances | ||||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||
Exercise of stock options | ||||||||||||||||||||||||||
Issuance of common stock under ESPP | ||||||||||||||||||||||||||
Shares acquired to settle the exercise of stock options | ( | ( | ||||||||||||||||||||||||
— | — | ( | — | |||||||||||||||||||||||
Equity component of early extinguishment of convertible notes | ( | ( | ||||||||||||||||||||||||
Settlement of convertible note hedges | ||||||||||||||||||||||||||
Settlement of warrants | ( | ( | ||||||||||||||||||||||||
Ending balances | ||||||||||||||||||||||||||
Accumulated deficit: | ||||||||||||||||||||||||||
Beginning balances | ( | ( | ( | ( | ||||||||||||||||||||||
— | — | — | ||||||||||||||||||||||||
Net loss | ( | ( | ( | ( | ||||||||||||||||||||||
Ending balances | ( | ( | ( | ( | ||||||||||||||||||||||
Accumulated other comprehensive income (loss): | ||||||||||||||||||||||||||
Beginning balances | ( | ( | ( | ( | ||||||||||||||||||||||
Other comprehensive income (loss) | ( | ( | ( | ( | ||||||||||||||||||||||
Ending balances | ( | ( | ( | ( | ||||||||||||||||||||||
Total stockholders' equity, ending balances | $ | $ | $ | $ | ||||||||||||||||||||||
Common stock (in shares): | ||||||||||||||||||||||||||
Beginning balances | ||||||||||||||||||||||||||
Shares acquired to settle the exercise of stock options | ( | ( | ||||||||||||||||||||||||
Exercise of stock options | ||||||||||||||||||||||||||
Issuance of common stock under ESPP | ||||||||||||||||||||||||||
Shares issued for the vesting of restricted stock awards | ||||||||||||||||||||||||||
Ending balances |
Six Months Ended June 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net loss | $ | ( | $ | ( | ||||||||||
Adjustments to reconcile net loss to net cash from operating activities: | ||||||||||||||
Amortization of deferred implementation, solution and other costs | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Amortization of debt issuance costs | ||||||||||||||
Amortization of debt discount | ||||||||||||||
Amortization of premiums on investments | ||||||||||||||
Stock-based compensation expense | ||||||||||||||
Realized gain (loss) on sale of marketable securities | ||||||||||||||
Deferred income taxes | ||||||||||||||
Allowance for credit losses | ( | |||||||||||||
Allowance for sales credits | ||||||||||||||
Loss on disposal of long-lived assets | ||||||||||||||
Loss on extinguishment of debt | ||||||||||||||
Unoccupied lease charges | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Accounts receivable, net | ( | |||||||||||||
Prepaid expenses and other current assets | ( | |||||||||||||
Deferred solution and other costs | ( | ( | ||||||||||||
Deferred implementation costs | ( | ( | ||||||||||||
Contract assets, net | ( | ( | ||||||||||||
Other long-term assets | ||||||||||||||
Accounts payable | ||||||||||||||
Accrued liabilities | ( | ( | ||||||||||||
Deferred revenues | ( | |||||||||||||
Deferred rent and other long-term liabilities | ( | ( | ||||||||||||
Net cash provided by (used in) operating activities | ( | |||||||||||||
Cash flows from investing activities: | ||||||||||||||
Purchases of investments | ( | ( | ||||||||||||
Maturities of investments | ||||||||||||||
Purchases of property and equipment | ( | ( | ||||||||||||
Business combinations, net of cash acquired | ( | |||||||||||||
Capitalized software development costs | ( | ( | ||||||||||||
Net cash used in investing activities | ( | ( | ||||||||||||
Cash flows from financing activities: | ||||||||||||||
Payments for repurchases of convertible notes | ( | |||||||||||||
Proceeds from bond hedges related to convertible notes | ||||||||||||||
Payments for warrants related to convertible notes | ( | |||||||||||||
Proceeds from exercise of stock options and ESPP | ||||||||||||||
Net cash provided by (used in) financing activities | ( | |||||||||||||
Net decrease in cash, cash equivalents, and restricted cash | ( | ( | ||||||||||||
Cash, cash equivalents, and restricted cash, beginning of period | ||||||||||||||
Cash, cash equivalents, and restricted cash, end of period | $ | $ | ||||||||||||
Supplemental disclosures of cash flow information: | ||||||||||||||
Cash paid for taxes, net of refund | $ | $ | ||||||||||||
Cash paid for interest | $ | $ | ||||||||||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||||||||
Shares acquired to settle the exercise of stock options | $ | $ | ( | |||||||||||
Property and equipment acquired and included in accounts payable and accrued liabilities | $ | $ | ||||||||||||
Property and equipment acquired through tenant improvement allowance | $ | $ | ||||||||||||
Data center assets acquired under deferred payment arrangements or financing arrangements | $ | $ |
Computer hardware and equipment | ||||||||
Purchased software and licenses | ||||||||
Furniture and fixtures | ||||||||
Leasehold improvements | Lesser of estimated useful life or lease term |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Subscription | $ | $ | $ | $ | ||||||||||||||||||||||
Transactional | ||||||||||||||||||||||||||
Services and Other | ||||||||||||||||||||||||||
Total Revenues | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Numerator: | ||||||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Denominator: | ||||||||||||||||||||||||||
Weighted-average common shares outstanding, basic and diluted | ||||||||||||||||||||||||||
Net loss per common share, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( |
As of June 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
Stock options, restricted stock units, and market stock units | ||||||||||||||
Shares issuable pursuant to the ESPP | ||||||||||||||
Shares related to convertible notes | ||||||||||||||
Shares subject to warrants related to the issuance of the 2023 Notes | ||||||||||||||
Fair Value Measurements Using: | ||||||||||||||||||||||||||
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level I) | Significant Other Observable Inputs (Level II) | Significant Unobservable Inputs (Level III) | |||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Cash Equivalents: | ||||||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
Certificates of deposit | ||||||||||||||||||||||||||
$ | $ | $ | $ | |||||||||||||||||||||||
Investments: | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level I) | Significant Other Observable Inputs (Level II) | Significant Unobservable Inputs (Level III) | ||||||||||||||||||||||
Corporate bonds and commercial paper | $ | $ | $ | $ | ||||||||||||||||||||||
Certificates of deposit | ||||||||||||||||||||||||||
U.S. government securities | ||||||||||||||||||||||||||
$ | $ | $ | $ | |||||||||||||||||||||||
Fair Value Measurements Using: | ||||||||||||||||||||||||||
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level I) | Significant Other Observable Inputs (Level II) | Significant Unobservable Inputs (Level III) | |||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Cash Equivalents: | ||||||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
Certificates of deposit | ||||||||||||||||||||||||||
$ | $ | $ | $ | |||||||||||||||||||||||
Investments: | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level I) | Significant Other Observable Inputs (Level II) | Significant Unobservable Inputs (Level III) | ||||||||||||||||||||||
Corporate bonds and commercial paper | $ | $ | $ | $ | ||||||||||||||||||||||
Certificates of deposit | ||||||||||||||||||||||||||
U.S. government securities | ||||||||||||||||||||||||||
$ | $ | $ | $ | |||||||||||||||||||||||
Cash Equivalents: | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
Certificates of deposit | ||||||||||||||||||||||||||
$ | $ | $ | $ | |||||||||||||||||||||||
Investments: | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||
Corporate bonds and commercial paper | $ | $ | $ | ( | $ | |||||||||||||||||||||
Certificates of deposit | ||||||||||||||||||||||||||
U.S. government securities | ( | |||||||||||||||||||||||||
$ | $ | $ | ( | $ |
Cash Equivalents: | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
Certificates of deposit | ||||||||||||||||||||||||||
$ | $ | $ | $ | |||||||||||||||||||||||
Investments: | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||
Corporate bonds and commercial paper | $ | $ | $ | ( | $ | |||||||||||||||||||||
Certificates of deposit | ||||||||||||||||||||||||||
U.S. government securities | ( | |||||||||||||||||||||||||
$ | $ | $ | ( | $ |
June 30, 2022 | December 31, 2021 | |||||||||||||
Due within one year or less | $ | $ | ||||||||||||
Due after one year through five years | ||||||||||||||
$ | $ |
Adjusted Cost | Gross Unrealized Loss | Fair Value | ||||||||||||||||||
U.S. government securities | $ | $ | ( | $ | ||||||||||||||||
Corporate bonds and commercial paper | ( | |||||||||||||||||||
$ | $ | ( | $ |
Adjusted Cost | Gross Unrealized Loss | Fair Value | ||||||||||||||||||
U.S. government securities | $ | $ | ( | $ | ||||||||||||||||
Corporate bonds and commercial paper | ( | |||||||||||||||||||
$ | $ | ( | $ |
As of June 30, 2022 | As of December 31, 2021 | |||||||||||||||||||||||||||||||||||||
Gross Amount | Accumulated Amortization | Net Carrying Amount | Gross Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||||||
Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
Non-compete agreements | ( | ( | ||||||||||||||||||||||||||||||||||||
Trademarks | ( | ( | ||||||||||||||||||||||||||||||||||||
Acquired technology | ( | ( | ||||||||||||||||||||||||||||||||||||
Capitalized software development costs | ( | ( | ||||||||||||||||||||||||||||||||||||
$ | $ | ( | $ | $ | $ | ( | $ |
Amortization | ||||||||
Year Ended December 31, | ||||||||
2022 (July 1 to December 31) | $ | |||||||
2023 | ||||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
Thereafter | ||||||||
Total amortization | $ |
Operating Leases | ||||||||
Year Ended December 31, | ||||||||
2022 (July 1 to December 31) | $ | |||||||
2023 | ||||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
Thereafter | ||||||||
Total lease payments | $ | |||||||
Less: present value discount | ( | |||||||
Present value of lease liabilities | $ |
Contractual Commitments | ||||||||
Year Ended December 31, | ||||||||
2022 (July 1 to December 31) | $ | |||||||
2023 | ||||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
Thereafter | ||||||||
Total commitments | $ |
Month Issued | Maturity Date (1) | Original Principal | Interest Rate per Annum | Conversion Rate for Each $1,000 Principal (2) | Initial Conversion Price per Share | |||||||||||||||||||||||||||||||||
2023 Notes | February 15, 2018 | February 15, 2023 | $ | % | $ | 17.4292 | $ | |||||||||||||||||||||||||||||||
2026 Notes | June 1, 2019 | June 1, 2026 | $ | % | $ | 11.2851 | $ | |||||||||||||||||||||||||||||||
2025 Notes | November 15, 2020 | November 15, 2025 | $ | % | $ | 7.1355 | $ |
As of June 30, 2022 | As of December 31, 2021 | ||||||||||||||||||||||||||||||||||
2023 Notes | 2026 Notes | 2025 Notes | 2023 Notes | 2026 Notes | 2025 Notes | ||||||||||||||||||||||||||||||
Liability component: | |||||||||||||||||||||||||||||||||||
Principal | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Unamortized debt discount (1) | ( | ( | ( | ||||||||||||||||||||||||||||||||
Unamortized debt issuance costs (1) | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
Net carrying amount | |||||||||||||||||||||||||||||||||||
Equity component: | |||||||||||||||||||||||||||||||||||
Net carrying amount (1) | $ | $ | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Contractual interest expense | $ | $ | $ | $ | ||||||||||||||||||||||
Amortization of debt issuance costs (1) | ||||||||||||||||||||||||||
Amortization of debt discount (1) | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Cost of revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Sales and marketing | ||||||||||||||||||||||||||
Research and development | ||||||||||||||||||||||||||
General and administrative | ||||||||||||||||||||||||||
Total stock-based compensation expense | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
GAAP revenue | $ | 140,309 | $ | 123,573 | $ | 274,380 | $ | 240,093 | ||||||||||||||||||
Deferred revenue reduction from purchase accounting | 169 | 595 | 411 | 1,123 | ||||||||||||||||||||||
Total Non-GAAP revenue | $ | 140,478 | $ | 124,168 | $ | 274,791 | $ | 241,216 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
GAAP operating loss | $ | (23,784) | $ | (19,943) | $ | (45,183) | $ | (37,456) | ||||||||||||||||||
Deferred revenue reduction from purchase accounting | 169 | 595 | 411 | 1,123 | ||||||||||||||||||||||
Stock-based compensation | 17,517 | 13,627 | 31,536 | 26,722 | ||||||||||||||||||||||
Acquisition related costs | 527 | 1,294 | 530 | 2,260 | ||||||||||||||||||||||
Amortization of acquired technology | 5,603 | 5,604 | 11,207 | 10,761 | ||||||||||||||||||||||
Amortization of acquired intangibles | 4,422 | 4,563 | 8,844 | 8,982 | ||||||||||||||||||||||
Unoccupied lease charges | 129 | 812 | 537 | 812 | ||||||||||||||||||||||
Non-GAAP operating income | $ | 4,583 | $ | 6,552 | $ | 7,882 | $ | 13,204 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Reconciliation of net loss to adjusted EBITDA: | ||||||||||||||||||||||||||
Net loss | $ | (25,222) | $ | (30,127) | $ | (48,781) | $ | (55,782) | ||||||||||||||||||
Deferred revenue reduction from purchase accounting | 169 | 595 | 411 | 1,123 | ||||||||||||||||||||||
Stock-based compensation | 17,517 | 13,627 | 31,536 | 26,722 | ||||||||||||||||||||||
Acquisition related costs | 527 | 1,294 | 530 | 2,260 | ||||||||||||||||||||||
Depreciation and amortization | 15,027 | 13,586 | 29,946 | 26,498 | ||||||||||||||||||||||
Unoccupied lease charges | 129 | 812 | 537 | 812 | ||||||||||||||||||||||
Provision for income taxes | 340 | 178 | 1,704 | 313 | ||||||||||||||||||||||
Loss on extinguishment of debt | — | 1,513 | — | 1,513 | ||||||||||||||||||||||
Interest and other (income) expense, net | 1,176 | 8,388 | 1,838 | 16,295 | ||||||||||||||||||||||
Adjusted EBITDA | $ | 9,663 | $ | 9,866 | $ | 17,721 | $ | 19,754 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Revenues(1) | $ | 140,309 | $ | 123,573 | $ | 274,380 | $ | 240,093 | ||||||||||||||||||
Cost of revenues(2) | 77,421 | 68,233 | 151,093 | 131,552 | ||||||||||||||||||||||
Gross profit | 62,888 | 55,340 | 123,287 | 108,541 | ||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Sales and marketing | 26,477 | 20,587 | 51,743 | 40,403 | ||||||||||||||||||||||
Research and development | 31,832 | 29,429 | 62,963 | 56,224 | ||||||||||||||||||||||
General and administrative | 23,285 | 18,704 | 43,853 | 37,538 | ||||||||||||||||||||||
Acquisition related costs | 527 | 1,188 | 530 | 2,038 | ||||||||||||||||||||||
Amortization of acquired intangibles | 4,422 | 4,563 | 8,844 | 8,982 | ||||||||||||||||||||||
Unoccupied lease charges(3) | 129 | 812 | 537 | 812 | ||||||||||||||||||||||
Total operating expenses | 86,672 | 75,283 | 168,470 | 145,997 | ||||||||||||||||||||||
Loss from operations | (23,784) | (19,943) | (45,183) | (37,456) | ||||||||||||||||||||||
Total other income (expense), net | (1,098) | (10,006) | (1,894) | (18,013) | ||||||||||||||||||||||
Loss before income taxes | (24,882) | (29,949) | (47,077) | (55,469) | ||||||||||||||||||||||
Provision for income taxes | (340) | (178) | (1,704) | (313) | ||||||||||||||||||||||
Net loss | $ | (25,222) | $ | (30,127) | $ | (48,781) | $ | (55,782) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Revenues(1) | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||
Cost of revenues(2) | 55.2 | 55.2 | 55.1 | 54.8 | ||||||||||||||||||||||
Gross profit | 44.8 | 44.8 | 44.9 | 45.2 | ||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Sales and marketing | 18.9 | 16.7 | 18.9 | 16.8 | ||||||||||||||||||||||
Research and development | 22.7 | 23.8 | 22.9 | 23.4 | ||||||||||||||||||||||
General and administrative | 16.6 | 15.1 | 16.0 | 15.6 | ||||||||||||||||||||||
Acquisition related costs | 0.4 | 1.0 | 0.2 | 0.8 | ||||||||||||||||||||||
Amortization of acquired intangibles | 3.2 | 3.7 | 3.2 | 3.7 | ||||||||||||||||||||||
Unoccupied lease charges(3) | 0.1 | 0.7 | 0.2 | 0.3 | ||||||||||||||||||||||
Total operating expenses | 61.8 | 60.9 | 61.4 | 60.8 | ||||||||||||||||||||||
Loss from operations | (17.0) | (16.1) | (16.5) | (15.6) | ||||||||||||||||||||||
Total other income (expense), net | (0.8) | (8.1) | (0.7) | (7.5) | ||||||||||||||||||||||
Loss before income taxes | (17.7) | (24.2) | (17.2) | (23.1) | ||||||||||||||||||||||
Provision for income taxes | (0.2) | (0.1) | (0.6) | (0.1) | ||||||||||||||||||||||
Net loss | (18.0) | % | (24.4) | % | (17.8) | % | (23.2) | % |
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | (%) | 2022 | 2021 | $ | (%) | |||||||||||||||||||||||||||||||||||||||||||
Revenues | $ | 140,309 | $ | 123,573 | $ | 16,736 | 13.5 | % | $ | 274,380 | $ | 240,093 | $ | 34,287 | 14.3 | % |
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | (%) | 2022 | 2021 | $ | (%) | |||||||||||||||||||||||||||||||||||||||||||
Cost of revenues | $ | 77,421 | $ | 68,233 | $ | 9,188 | 13.5 | % | $ | 151,093 | $ | 131,552 | $ | 19,541 | 14.9 | % | ||||||||||||||||||||||||||||||||||
Percentage of revenues | 55.2 | % | 55.2 | % | 55.1 | % | 54.8 | % |
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | (%) | 2022 | 2021 | $ | (%) | |||||||||||||||||||||||||||||||||||||||||||
Sales and marketing | $ | 26,477 | $ | 20,587 | $ | 5,890 | 28.6 | % | $ | 51,743 | $ | 40,403 | $ | 11,340 | 28.1 | % | ||||||||||||||||||||||||||||||||||
Percentage of revenues | 18.9 | % | 16.7 | % | 18.9 | % | 16.8 | % |
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | (%) | 2022 | 2021 | $ | (%) | |||||||||||||||||||||||||||||||||||||||||||
Research and development | $ | 31,832 | $ | 29,429 | $ | 2,403 | 8.2 | % | $ | 62,963 | $ | 56,224 | $ | 6,739 | 12.0 | % | ||||||||||||||||||||||||||||||||||
Percentage of revenues | 22.7 | % | 23.8 | % | 22.9 | % | 23.4 | % |
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | (%) | 2022 | 2021 | $ | (%) | |||||||||||||||||||||||||||||||||||||||||||
General and administrative | $ | 23,285 | $ | 18,704 | $ | 4,581 | 24.5 | % | $ | 43,853 | $ | 37,538 | $ | 6,315 | 16.8 | % | ||||||||||||||||||||||||||||||||||
Percentage of revenues | 16.6 | % | 15.1 | % | 16.0 | % | 15.6 | % |
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | (%) | 2022 | 2021 | $ | (%) | |||||||||||||||||||||||||||||||||||||||||||
Acquisition related costs | $ | 527 | $ | 1,188 | $ | (661) | (55.6) | % | $ | 530 | $ | 2,038 | $ | (1,508) | (74.0) | % | ||||||||||||||||||||||||||||||||||
Percentage of revenues | 0.4 | % | 1.0 | % | 0.2 | % | 0.8 | % |
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | (%) | 2022 | 2021 | $ | (%) | |||||||||||||||||||||||||||||||||||||||||||
Amortization of acquired intangibles | $ | 4,422 | $ | 4,563 | $ | (141) | (3.1) | % | $ | 8,844 | $ | 8,982 | $ | (138) | (1.5) | % | ||||||||||||||||||||||||||||||||||
Percentage of revenues | 3.2 | % | 3.7 | % | 3.2 | % | 3.7 | % |
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | (%) | 2022 | 2021 | $ | (%) | |||||||||||||||||||||||||||||||||||||||||||
Unoccupied lease charges | $ | 129 | $ | 812 | $ | (683) | (84.1) | % | $ | 537 | $ | 812 | $ | (275) | (33.9) | % | ||||||||||||||||||||||||||||||||||
Percentage of revenues | 0.1 | % | 0.7 | % | 0.2 | % | 0.3 | % |
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | (%) | 2022 | 2021 | $ | (%) | |||||||||||||||||||||||||||||||||||||||||||
Total other income (expense), net | $ | (1,098) | $ | (10,006) | $ | 8,908 | 89.0 | % | $ | (1,894) | $ | (18,013) | $ | 16,119 | 89.5 | % | ||||||||||||||||||||||||||||||||||
Percentage of revenues | (0.8) | % | (8.1) | % | (0.7) | % | (7.5) | % |
Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | $ | (%) | 2022 | 2021 | $ | (%) | |||||||||||||||||||||||||||||||||||||||||||
Provision for income taxes | $ | (340) | $ | (178) | $ | (162) | 91.0 | % | $ | (1,704) | $ | (313) | $ | (1,391) | 444.4 | % | ||||||||||||||||||||||||||||||||||
Percentage of revenues | (0.2) | % | (0.1) | % | (0.6) | % | (0.1) | % |
Six Months Ended June 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
Net cash provided by (used in): | ||||||||||||||
Operating activities | $ | (14,395) | $ | 6,009 | ||||||||||
Investing activities | (100,137) | (43,780) | ||||||||||||
Financing activities | 2,803 | (52,487) | ||||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | $ | (111,729) | $ | (90,258) |
Exhibit Number | Description of Document | |||||||
* | Fifth Amended and Restated Certificate of Incorporation of the Registrant (filed as Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 12, 2019). | |||||||
* | Amended and Restated Bylaws of the Registrant (filed as Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 12, 2019). | |||||||
** | Certification of Chief Executive Officer pursuant to Exchange Act Rule, 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
** | Certification of Chief Financial Officer pursuant to Exchange Act Rule, 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
# | Certification pursuant to 18 U.S.C. 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer. | |||||||
# | Certification pursuant to 18 U.S.C. 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Financial Officer. | |||||||
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. | ||||||
101.SCH | ** | XBRL Taxonomy Extension Schema Document. | ||||||
101.CAL | ** | XBRL Taxonomy Extension Calculation Linkbase Document. | ||||||
101.DEF | ** | XBRL Taxonomy Extension Definition Linkbase Document. | ||||||
101.LAB | ** | XBRL Taxonomy Extension Label Linkbase Document. | ||||||
101.PRE | ** | XBRL Taxonomy Extension Presentation Linkbase Document. | ||||||
104 | ** | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
Q2 HOLDINGS, INC. | ||||||||||||||
August 4, 2022 | By: | /s/ MATTHEW P. FLAKE Matthew P. Flake President and Chief Executive Officer (Principal Executive Officer) | ||||||||||||
August 4, 2022 | By: | /s/ DAVID J. MEHOK David J. Mehok Chief Financial Officer (Principal Financial and Accounting Officer) |
Date: August 4, 2022 | /s/ MATTHEW P. FLAKE | |||||||
Matthew P. Flake | ||||||||
President and Chief Executive Officer | ||||||||
(Principal Executive Officer) |
Date: August 4, 2022 | /s/ DAVID J. MEHOK | |||||||
David J. Mehok | ||||||||
Chief Financial Officer | ||||||||
(Principal Financial and Accounting Officer) |
Date: August 4, 2022 | /s/ MATTHEW P. FLAKE | |||||||
Matthew P. Flake | ||||||||
President and Chief Executive Officer | ||||||||
(Principal Executive Officer) |
Date: August 4, 2022 | /s/ DAVID J. MEHOK | |||||||
David J. Mehok | ||||||||
Chief Financial Officer | ||||||||
(Principal Financial and Accounting Officer) |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 57,313,000 | 56,928,000 |
Common stock, shares outstanding (in shares) | 57,313,000 | 56,928,000 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Income Statement [Abstract] | ||||
Revenues | $ 140,309 | $ 123,573 | $ 274,380 | $ 240,093 |
Cost of revenues | 77,421 | 68,233 | 151,093 | 131,552 |
Gross profit | 62,888 | 55,340 | 123,287 | 108,541 |
Operating expenses: | ||||
Sales and marketing | 26,477 | 20,587 | 51,743 | 40,403 |
Research and development | 31,832 | 29,429 | 62,963 | 56,224 |
General and administrative | 23,285 | 18,704 | 43,853 | 37,538 |
Acquisition related costs | 527 | 1,188 | 530 | 2,038 |
Amortization of acquired intangibles | 4,422 | 4,563 | 8,844 | 8,982 |
Unoccupied lease charges | 129 | 812 | 537 | 812 |
Total operating expenses | 86,672 | 75,283 | 168,470 | 145,997 |
Loss from operations | (23,784) | (19,943) | (45,183) | (37,456) |
Other income (expense): | ||||
Interest and other income | 564 | 212 | 1,479 | 391 |
Interest and other expense | (1,662) | (8,705) | (3,373) | (16,891) |
Loss on extinguishment of debt | 0 | (1,513) | 0 | (1,513) |
Total other income (expense), net | (1,098) | (10,006) | (1,894) | (18,013) |
Loss before income taxes | (24,882) | (29,949) | (47,077) | (55,469) |
Provision for income taxes | (340) | (178) | (1,704) | (313) |
Net loss | (25,222) | (30,127) | (48,781) | (55,782) |
Other comprehensive gain (loss): | ||||
Unrealized gain (loss) on available-for-sale investments | (544) | (14) | (1,617) | 5 |
Foreign currency translation adjustment | (724) | (37) | (814) | (35) |
Comprehensive loss | $ (26,490) | $ (30,178) | $ (51,212) | $ (55,812) |
Net loss per common share, basic (usd per share) | $ (0.44) | $ (0.53) | $ (0.85) | $ (0.99) |
Net loss per common share, diluted (usd per share) | $ (0.44) | $ (0.53) | $ (0.85) | $ (0.99) |
Weighted average common shares outstanding: | ||||
Weighted-average common shares outstanding, basic (in shares) | 57,234 | 56,360 | 57,125 | 56,081 |
Weighted-average common shares outstanding, diluted (in shares) | 57,234 | 56,360 | 57,125 | 56,081 |
Organization and Description of Business |
6 Months Ended |
---|---|
Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | Organization and Description of BusinessQ2 Holdings, Inc. and its wholly-owned subsidiaries, collectively the Company, is a leading provider of secure, cloud-based digital solutions that transform the ways in which traditional and emerging financial services providers engage with account holders and end users, or End Users. The Company sells its solutions to financial institutions, alternative finance companies, and financial technology companies. The Company's solutions enable customers to deliver robust suites of digital banking, lending, and banking-as-a-service, or BaaS, services that make it possible for account holders and End Users to transact and engage anytime, anywhere and on any device. The Company delivers its solutions to the substantial majority of its customers using a software-as-a-service, or SaaS, model under which its customers pay subscription fees for the use of the Company's solutions. The Company was incorporated in Delaware in March 2005 and is a holding company that owns 100% of the outstanding capital stock of Q2 Software, Inc. The Company's headquarters are located in Austin, Texas. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation These interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, and SEC, requirements for interim financial statements. The interim unaudited condensed consolidated financial statements include the accounts of Q2 Holdings, Inc. and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. In the Company's opinion, the accompanying interim unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, consisting of normal, recurring adjustments, necessary for a fair presentation. Certain information and disclosures normally included in the notes to the annual consolidated financial statements prepared in accordance with GAAP have been omitted from these interim unaudited condensed consolidated financial statements pursuant to the rules and regulations of the SEC. Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes for the fiscal year ended December 31, 2021, which are included in the Company's Annual Report on Form 10-K, filed with the SEC on February 16, 2022. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other period. Use of Estimates The preparation of the accompanying interim unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the interim unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses. Significant items subject to such estimates include: revenue recognition including determining the nature and timing of satisfaction of performance obligations, variable consideration, standalone selling price, and other revenue items requiring significant judgment; estimate of credit losses; stock-based compensation; the carrying value of goodwill; the fair value of acquired intangibles; the capitalization of software development costs; the useful lives of property and equipment and long-lived intangible assets; fair value of the conversion features of convertible notes; and, income taxes. In accordance with GAAP, management bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Management regularly evaluates its estimates and assumptions using historical experience and other factors; however, actual results could differ significantly from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments acquired with an original maturity of ninety days or less at the date of purchase to be cash equivalents. Cash equivalents are stated at cost or fair value based on the underlying security. Restricted Cash Restricted cash consists of deposits held as collateral for the Company's secured letters of credit or bank guarantees issued in place of security deposits for the Company's corporate headquarters and various other leases. Investments Investments typically include U.S. government securities, corporate bonds, commercial paper, certificates of deposit, money market funds and other equity investments. All debt investments are considered available for sale and are carried at fair value. Equity investments without a readily determinable fair value, where the Company has no influence over the operating and financial policies of the investee, are recorded at cost, less impairment and adjusted for subsequent observable price changes obtained from orderly transactions for identical or similar investments issued by the same investee. Adjustments resulting from impairment, fair value, or observable price changes are accounted for in the condensed consolidated statements of comprehensive loss. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, restricted cash, investments, accounts receivable and contract assets. The Company's cash and cash equivalents, restricted cash and investments are placed with high credit quality financial institutions and issuers, and at times may exceed federally-insured limits. The Company has not experienced any loss relating to cash and cash equivalents or restricted cash in these accounts. The Company provides credit, in the normal course of business, to a majority of its customers. The Company performs periodic credit evaluations of its customers' financial condition and generally does not require collateral. No individual customer accounted for 10% or more of revenues for each of the three and six months ended June 30, 2022 and 2021. No customers accounted for 10% or more of accounts receivable, net, as of June 30, 2022 and a single customer accounted for 14% of accounts receivable, net as of December 31, 2021. Contract Balances The timing of revenue recognition, billings and cash collections can result in billed accounts receivable, unbilled receivables, contract assets, and deferred revenues or contract liabilities. Billings scheduled to occur after the performance obligation has been satisfied and revenue recognition has occurred result in contract assets. Contract assets that are expected to be billed during the succeeding twelve-month period are recorded in contract assets, current portion, and the remaining portion is recorded in contract assets, net of current portion on the accompanying condensed consolidated balance sheets at the end of each reporting period. A contract liability results when the Company receives prepayments or deposits from customers in advance for implementation, maintenance and other services, as well as initial subscription fees. Customer prepayments are generally applied against invoices issued to customers when services are performed and billed. The Company recognizes contract liabilities as revenues when the services are performed, and the corresponding revenue recognition criteria are met. Contract liabilities that are expected to be recognized as revenues during the succeeding twelve-month period are recorded in deferred revenues, current portion, and the remaining portion is recorded in deferred revenues, net of current portion, on the accompanying condensed consolidated balance sheets at the end of each reporting period. The Company is exposed to credit losses primarily through sales of products and services. The Company assesses the collectability of outstanding contract assets on an ongoing basis and maintains a reserve which is included in the allowance for credit losses for contract assets deemed uncollectible. The Company analyzes the contract asset portfolio for significant risks by considering historical collection experience and forecasting future collectability to determine the amount of revenues that will ultimately be collected from its customers. Customer type (whether a customer is a financial institution or other digital solution provider) has been identified as the primary specific risk affecting the Company's contract assets, and the estimate for losses is analyzed quarterly and adjusted as necessary. Future collectability is contingent upon current and anticipated macroeconomic conditions that could impact the Company's customers such as unemployment, inflation and regulatory matters. Additionally, specific allowance amounts may be established to record the appropriate provision for customers that have a higher probability of default. The Company has provisioned $0.2 million and $0.02 million in expected losses for the six months ended June 30, 2022 and 2021, respectively, of which $0.4 million and zero has been written off and charged against the allowance at June 30, 2022 and 2021, respectively. The allowance for credit losses related to contract assets was $0.2 million and $0.3 million as of June 30, 2022 and December 31, 2021, respectively. Accounts Receivable Accounts receivable are stated at net realizable value, including both billed and unbilled receivables to customers. Unbilled receivable balances arise primarily when the Company provides services in advance of billing for those services. Generally, billing for revenues related to the number of End Users and the number of transactions processed by the customers' End Users that are included in the customers' minimum subscription fee occurs in the month the revenue is recognized, resulting in accounts receivable. Billing for revenues relating to the number of End Users and the number of transactions processed by the End Users that are in excess of the customers' minimum subscription fees are, generally, billed in the month following the month the revenues were earned, resulting in an unbilled receivable. Unbilled receivables of $5.7 million and $4.8 million were included in the accounts receivable balance as of June 30, 2022 and December 31, 2021, respectively. The Company assesses the collectability of outstanding accounts receivable on an ongoing basis and maintains an allowance for credit losses for accounts receivable deemed uncollectible. The Company analyzes the accounts receivable portfolio for significant risks and considers prior periods and forecasts future collectability to determine the amount of revenues that will ultimately be collected from its customers. This estimate is analyzed quarterly and adjusted as necessary. Identified risks pertaining to the Company's accounts receivable include the delinquency level and customer type. Future collectability is contingent upon current and anticipated macroeconomic conditions that could impact the Company's customers such as unemployment, inflation and regulation matters. Due to the short-term nature of such receivables, the estimate of the amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances and the financial condition of customers. Historically, the Company's collection experience has not varied significantly, and bad debt expenses have been insignificant. The Company has provisioned $0.5 million and $0.1 million for expected losses for the six months ended June 30, 2022 and 2021, respectively, and $0.4 million and $0.2 million has been written off and charged against the allowance as of June 30, 2022 and 2021, respectively. The allowance for credit losses related to accounts receivable was $0.7 million and $0.5 million as of June 30, 2022 and December 31, 2021, respectively. The Company maintains reserves for estimated sales credits issued to customers for billing disputes or other service-related reasons. These allowances are recorded as a reduction against current period revenues and accounts receivable. In estimating this allowance, the Company analyzes prior periods to determine the amounts of sales credits issued to customers compared to the revenues in the period that related to the original customer invoice. This estimate is analyzed semi-annually and adjusted as necessary. The Company also maintains specific reserves for anticipated contract concessions. The allowance for sales credits and specific reserves was $1.8 million and $1.9 million as of June 30, 2022 and December 31, 2021, respectively. Deferred Revenues Deferred revenues primarily consist of amounts that have been billed to or received from customers in advance of revenue recognition and prepayments received from customers in advance for implementation, maintenance and other services, as well as initial subscription fees. The Company recognizes deferred revenues as revenues when the services are performed and the corresponding revenue recognition criteria are met. Customer prepayments are generally applied against invoices issued to customers when services are performed and billed. The net decrease in the deferred revenue balance for the six months ended June 30, 2022 was primarily driven by the recognition of $206.2 million of revenue recognized from current year invoices and $68.1 million of revenue that was included in the deferred revenue balance as of December 31, 2021, partially offset by cash payments received or due in advance of satisfying the Company's performance obligations of $262.7 million for current year invoices and $3.8 million from the netting of contract assets and liabilities on a contract-by-contract basis. Amounts recognized from deferred revenues represent primarily revenue from the sale of subscription and implementation services. The Company's payment terms vary by the type and location of its customer and the products or services offered. The period of time between invoicing and when payment is due is not significant. For certain products or services and customer types, the Company requires payment before the products or services are delivered to the customer. On June 30, 2022, the Company had $1.37 billion of remaining performance obligations, which represents contracted revenue minimums that have not yet been recognized, including amounts that will be invoiced and recognized as revenue in future periods. The Company expects to recognize approximately 49% of its remaining performance obligations as revenue in the next 24 months, an additional 40% in the next 25 to 48 months, and the balance thereafter. Deferred Implementation Costs The Company capitalizes certain personnel and other costs, such as employee salaries, stock-based compensation, benefits and the associated payroll taxes that are direct and incremental to the implementation of its solutions. The Company analyzes implementation costs that may be capitalized to assess their recoverability, and only capitalizes costs that it anticipates being recoverable through the terms of the associated contract. The Company begins amortizing the deferred implementation costs for an implementation to cost of revenues once the revenue recognition criteria have been met, and the Company amortizes those deferred implementation costs ratably over the expected period of customer benefit. The Company has determined this period to be the estimated life of the technology for new contracts, which is estimated to be to seven years, and over the term of the agreement for other contracts. The Company determined the period of benefit by considering factors such as historically high renewal rates with similar customers and contracts, initial contract length, an expectation that there will still be a demand for the product at the end of its term, and the significant costs to switch to a competitor's product, all of which are governed by the estimated useful life of the technology. The Company monitors deferred implementation costs for impairment and records impairment when customers terminate or allow services to lapse, due to contract modifications, and/or from other assessments as needed. Any impairment losses identified are recognized in the form of an expense acceleration with the applicable amount recorded to deferred implementation costs, current portion and/or deferred implementation costs, net of current portion on the consolidated balance sheet and in cost of revenues in the consolidated statements of comprehensive loss. The portion of deferred implementation costs expected to be amortized during the succeeding twelve-month period is recorded in current assets as deferred implementation costs, current portion, and the remainder is recorded in long-term assets as deferred implementation costs, net of current portion on the condensed consolidated balance sheets. The Company capitalized implementation costs in the amount of $3.5 million and $3.4 million during the three months ended June 30, 2022 and 2021, respectively, and recognized $2.9 million and $2.4 million of amortization during the three months ended June 30, 2022 and 2021, respectively. The Company capitalized implementation costs in the amount of $6.8 million during each of the six months ended June 30, 2022 and 2021 and recognized $5.7 million and $5.2 million of amortization during the six months ended June 30, 2022 and 2021, respectively. Amortization expense is included in cost of revenues in the accompanying condensed consolidated statements of comprehensive loss. Deferred Solution and Other Costs The Company capitalizes sales commissions and other third-party costs such as third-party licenses and maintenance related to its customer agreements. The Company capitalizes sales commissions because the commission expenses are considered incremental and recoverable costs of obtaining a contract with a customer. The Company capitalizes commissions and bonuses for those involved in the sale, including direct employees and team members which are incremental to the sale and their associated management, as these are incremental to the sale. Substantially all commissions are paid in a single payment once the contract has been executed and the initial deposit has been received from the customer. The Company begins amortizing deferred solution and other costs for a particular customer agreement once the revenue recognition criteria are met and amortizes those deferred costs over the expected period of customer benefit. The Company has determined this period to be the estimated life of the technology for new contracts, which is estimated to be to seven years, and over the term of the agreement for other contracts. The Company determined the period of benefit by considering factors such as historically high renewal rates with similar customers and contracts, initial contract length, an expectation that there will still be a demand for the product at the end of its term, and the significant costs to switch to a competitor's product, all of which are governed by the estimated useful life of the technology. The Company analyzes capitalized solution and other costs to assess their recoverability. The portion of capitalized costs expected to be amortized during the succeeding twelve-month period is recorded in current assets as deferred solution and other costs, current portion, and the remainder is recorded in long-term assets as deferred solution and other costs, net of current portion. The Company capitalized $3.6 million and $3.2 million in deferred commissions costs during the three months ended June 30, 2022 and 2021, respectively, and recognized $2.5 million and $3.1 million of amortization during the three months ended June 30, 2022 and 2021, respectively. The Company capitalized $8.0 million and $6.3 million during the six months ended June 30, 2022 and 2021, respectively, and recognized $5.4 million and $6.4 million of amortization during the six months ended June 30, 2022 and 2021, respectively. Amortization expense is included in sales and marketing expenses in the accompanying condensed consolidated statements of comprehensive loss. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is calculated on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the related assets. Maintenance and repairs that do not extend the life of or improve an asset are expensed in the period incurred. The estimated useful lives of property and equipment are as follows:
Purchase Price Allocation, Intangible Assets, and Goodwill The purchase price allocation for business combinations and asset acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values. The Company determines whether substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the single asset or group of assets, as applicable, is not a business. If it is not met, the Company determines whether the single asset or group of assets, as applicable, meets the definition of a business. In connection with the Company's business combinations, the Company recorded certain intangible assets, including acquired technology, customer relationships, trademarks, and non-compete agreements. Amounts allocated to the acquired intangible assets are amortized on a straight-line basis over the estimated useful lives. The Company periodically reviews the estimated useful lives and fair values of its identifiable intangible assets, taking into consideration any events or circumstances which might result in a diminished fair value or revised useful life. The excess purchase price over the fair value of assets acquired is recorded as goodwill. The Company tests goodwill for impairment annually in October, or whenever events or changes in circumstances indicate an impairment may have occurred. Because the Company operates as a single reporting unit, the impairment test is performed at the consolidated entity level by comparing the estimated fair value of the Company to the carrying value of the Company. The Company estimates the fair value of the reporting unit using a "step one" analysis using a fair-value-based approach based on the market capitalization or a discounted cash flow analysis of projected future results to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Determining the fair value of goodwill is subjective in nature and often involves the use of estimates and assumptions including, without limitation, use of estimates of future prices and volumes for the Company's products, capital needs, economic trends and other factors which are inherently difficult to forecast. If actual results, or the plans and estimates used in future impairment analyses are lower than the original estimates used to assess the recoverability of these assets, the Company could incur impairment charges in a future period. Revenues Revenues are recognized when control of the promised goods or services is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services over the term of the agreement, generally when the Company's solutions are implemented and made available to the customers. The promised consideration may include fixed amounts, variable amounts or both. Revenues are recognized net of sales credits and allowances. Revenue-generating activities are directly related to the sale, implementation and support of the Company's solutions within a single operating segment. The Company derives the majority of its revenues from subscription fees for the use of its solutions hosted in either the Company's data centers or cloud-based hosting services, transactional revenue from bill-pay solutions and revenues for customer support and implementation services related to the Company's solutions. The following table disaggregates the Company's revenue by major source:
Subscription Revenues The Company's software solutions are available for use as hosted application arrangements under subscription fee agreements without licensing rights to the software. Subscription fees from these applications, including contractual periodic price increases, are recognized over time on a ratable basis over the customer agreement term beginning on the date the Company's solution is made available to the customer. Amounts that have been invoiced are recorded in accounts receivable and deferred revenues or revenues, depending on whether the revenue recognition criteria have been met. Periodic price increases are estimated at contract inception where appropriate and result in contract assets as revenue recognition may exceed the amount billed early in the contract. Additional fees for monthly usage above the levels included in the standard subscription fee are recognized as revenue in the month when the usage amounts are determined and reported. A small portion of the Company's customers host and manage the Company's solutions on-premises or in third-party data centers under term license and maintenance agreements. Term licenses sold with maintenance entitle the customer to technical support, upgrades and updates to the software on a when-and-if-available basis. The Company recognizes software license revenue once the customer obtains control of the license, which generally occurs at the start of each license term. The Company recognizes the remaining arrangement consideration for maintenance revenue over time on a ratable basis over the term of the software license. Revenues from term licenses and maintenance agreements were not significant in the periods presented. Transactional Revenues The Company generates the majority of its transactional revenues based on the number of bill-pay transactions that End Users initiate on its digital banking platform. The Company also generates a smaller portion of its transactional revenues from fees generated when End Users utilize debit cards integrated with its Q2 CorePro API or Q2 Biller Direct products. The Company recognizes revenue for bill-pay transaction services in the month incurred based on actual or estimated transactions. Services and Other Revenues Implementation services are required for new digital banking and lending platform and other standalone contracts, and there is a significant level of integration and configuration for each customer. The Company's revenue for upfront implementation services is billed upfront and generally recognized over time on a ratable basis over the customer agreement term for its hosted application agreements. Upfront implementation services for on-premises agreements are recognized at commencement date. Under certain circumstances, the Company partners with third-party professional system integrators to support the installation and configuration process for certain products, and therefore, the Company has determined that these services qualify as a separate performance obligation in certain markets and geographies, and the implementation services for these agreements are recognized over time as services are performed. Professional services revenues, which primarily consist of training, advisory services, core conversion services, web design, and other general professional services, are generally billed and recognized when delivered. Premier Services revenue is generated from select established customer relationships where the Company has engaged with the customer for more tailored, premium professional services, or Premier Services, resulting in a deeper and ongoing level of engagement with them. Other also includes certain debit card related pass-through fees that are not directly tied to card utilization. Certain out-of-pocket expenses billed to customers are recorded as revenues rather than an offset to the related expense. Significant Judgments Performance Obligations and Standalone Selling Price A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of accounting. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. The Company has contracts with customers that often include multiple performance obligations, usually including multiple subscription and implementation services. For these contracts, the Company accounts for individual performance obligations that are separately identifiable by allocating the contract's total transaction price to each performance obligation in an amount based on the relative standalone selling price, or SSP, of each distinct good or service in the contract. In determining whether implementation services are distinct from subscription services, the Company considered various factors including the significant level of integration, interdependency, and interrelation between the implementation and subscription service, as well as the inability of the customer's personnel or other service providers to perform significant portions of the services. The Company has concluded that the implementation services included in contracts with multiple performance obligations across the majority of its markets and product offerings are not distinct and, as a result, the Company defers any arrangement fees for implementation services and recognizes such amounts over time on a ratable basis as one performance obligation with the underlying subscription revenue for the initial agreement term of the hosted application agreements. The Company has concluded that for certain aspects of its lending platform the implementation services included in contracts with multiple performance obligations are distinct and, as a result, the Company recognizes implementation fees on such arrangements over time as services are performed. The majority of the Company's revenue recognized at a particular point in time is for usage revenue, on-premise software licenses and certain professional services. These services are recognized at the point in time in which the customer obtains control of the asset, which is generally upon completion of the service or the point the customer obtained control of the software. Judgment is required to determine the SSP for each distinct performance obligation. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The primary method used to estimate SSP is the adjusted market assessment approach, which considers the Company's overall pricing objectives, market conditions and other factors, including the value of the Company's contracts, its discounting practices, the size and volume of its transactions, customer characteristics, price lists, go-to-market strategy, historical standalone sales and agreement prices, and the number and types of users within its contracts. Variable Consideration The Company recognizes usage revenue related to bill-pay transactions that End Users initiate on its digital banking platform and interchange fees that End Users generate using the Company's solutions. Judgment is required to determine the accounting for these types of revenue. The Company considers various factors including the degree to which usage is interdependent or interrelated to past services, costs to the Company per user over the contract, and contractual price per user changes and their relationship to market terms, forecasted data, and the Company's cost to fulfill the obligation. The Company has concluded that its usage revenue relates specifically to the transfer of the service to the customer and is consistent with the allocation objective of Topic 606 when considering all of the performance obligations and payment terms in the contract. Therefore, the Company recognizes usage revenue on a monthly or quarterly basis in accordance with the agreement, as determined and reported. This allocation reflects the amount the Company expects to receive for the services for the given period. The Company sometimes provides credits or incentives to its customers. Known and estimable credits and incentives represent a form of variable consideration, which are estimated at contract inception and generally result in reductions to revenues recognized for a particular contract. These estimates are updated at the end of each reporting period as additional information becomes available. The Company believes that there will not be significant changes to its estimates of variable consideration as of June 30, 2022. Other Considerations The Company evaluates whether it is the principal (i.e., reports revenues on a gross basis) or agent (i.e., reports revenues on a net basis) with respect to the vendor reseller agreements pursuant to which the Company resells certain third-party solutions along with the Company's solutions. Generally, the Company reports revenues from these types of contracts on a gross basis, meaning the amounts billed to customers are recorded as revenues, and expenses incurred are recorded as cost of revenues. Where the Company is the principal, it first obtains control of the inputs to the specific good or service and directs their use to create the combined output. The Company's control is evidenced by its involvement in the integration of the good or service on its platform before it is transferred to its customers and is further supported by the Company being primarily responsible to its customers and having a level of discretion in establishing pricing. Revenues provided from agreements in which the Company is an agent are insignificant. Cost of Revenues Cost of revenues are comprised primarily of salaries and other personnel-related costs, including employee benefits, bonuses and stock-based compensation, for employees providing services to the Company's customers. This includes the costs of the Company's personnel performing implementation, customer support, data center and customer training activities. Cost of revenues also includes the direct costs of bill-pay and other third-party intellectual property included in the Company's solutions, the amortization of deferred solution and services costs, the amortization of capitalized software development costs, co-location facility costs and depreciation of the Company's data center assets, debit card related pass-through fees, cloud-based hosting services, an allocation of general overhead costs and referral fees. Direct costs of third-party intellectual property include amounts paid for third-party licenses and related maintenance that are incorporated into the Company's software and the amortization of acquired technology from the Company's recent acquisitions, with the costs amortized to cost of revenues over the useful lives of the purchased assets. The Company capitalizes certain personnel costs directly related to the implementation of its solutions to the extent those costs are recoverable from future revenues. The Company amortizes the costs for an implementation once revenue recognition commences, and the Company amortizes those implementation costs to cost of revenues over the expected period of customer benefit, which has been determined to be the estimated life of the technology. Other costs not directly recoverable from future revenues are expensed in the period incurred. Software Development Costs During the application development stage, the Company capitalizes certain development costs associated with internal use software and the Company's SaaS platform. Software development costs include salaries and other personnel-related costs for those employees who are directly associated with and who devote time to developing the Company's software solutions, including employee benefits, stock-based compensation and bonuses attributed to programmers, software engineers, quality control teams and third-party development costs. Capitalized software development costs are computed on an individual product basis. The Company also capitalizes certain costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional features and functionality. Capitalization ceases for products, upgrades and enhancements when released or made available. Internal-use software is amortized to cost of revenues over the products' estimated economic lives, which are expected to be to five years. The costs related to software development are included in intangible assets, net on the condensed consolidated balance sheets. Costs incurred in the preliminary stages of development and maintenance costs are expensed as incurred. The Company capitalized software development costs in the amount of $5.2 million and $1.5 million during the three months ended June 30, 2022 and 2021, respectively, and $9.5 million and $2.3 million during the six months ended June 30, 2022 and 2021, respectively. The Company recognized $0.6 million and $0.3 million of amortization for the three months ended June 30, 2022 and 2021, respectively, and $1.0 million and $0.5 million of amortization for the six months ended June 30, 2022 and 2021, respectively. Research and Development Costs Research and development costs include salaries and other personnel-related costs, including employee benefits, bonuses and stock-based compensation, third-party contractor expenses, third-party consultants, software development tools, an allocation of facilities and depreciation expenses and other related expenses incurred in developing new solutions and upgrading and enhancing existing solutions. Certain research and development costs that are related to the Company's software development, which include salaries and other personnel-related costs, including employee benefits, stock-based compensation expense and bonuses attributed to programmers, software engineers and quality control teams working on the Company's software solutions, are capitalized and are included in intangible assets, net on the condensed consolidated balance sheets. Advertising All advertising costs of the Company are generally expensed the first time the advertising takes place. Advertising costs were $1.0 million and $0.5 million for the three months ended June 30, 2022 and 2021, respectively, and $2.2 million and $0.6 million for the six months ended June 30, 2022 and 2021, respectively. The Company entered into a long-term stadium sponsorship agreement in 2020, and beginning in the second quarter of 2021, payments under this arrangement are deferred and expensed as advertising costs on a straight-line basis over the term of the arrangement. Sales Tax The Company presents sales taxes and other taxes collected from customers and remitted to governmental authorities on a net basis and, as such, excludes them from revenues. Comprehensive Loss Comprehensive loss includes net loss as well as other changes in stockholders' equity that result from transactions and economic events other than those with stockholders. Other comprehensive loss consists of net loss, unrealized gains and losses on available-for-sale investments, and foreign currency translation adjustments. Stock-Based Compensation Stock options, restricted stock units, and market stock units awarded to employees, directors, and consultants are measured at fair value at each grant date. The Company does not use a forfeiture rate to recognize compensation expense. Generally, options vest 25% on the one-year anniversary of the grant date with the balance vesting monthly over the following 36 months, and restricted stock unit awards vest in four annual installments of 25% each. Market stock units are performance-based awards that vest based on the Company's stockholder return relative to the total stockholder return of the Russell 2000 Index, or Index. Market stock units granted prior to fiscal 2021 vest over a three-year period on the anniversary of the date of grant, generally with anywhere from zero to up to one-third of the target shares of the Company's common stock subject to each market stock unit award eligible to be earned after the first and second years and anywhere from zero to up to 200% of the full target number of shares subject to each market stock unit award eligible to be earned after the completion of the three-year performance period (less any shares earned for years one and two) based on the average price of the Company's common stock relative to the Index during the performance period. Beginning in March 2021, newly granted market stock units vest over a two-year and three-year period, each running from approximately the date of grant, with anywhere from zero to up to one-third of the target shares of the Company's common stock subject to each market stock unit award eligible to be earned after completion of the two-year performance period and anywhere from zero to up to 200% of the full target number of shares subject to each market stock unit award eligible to be earned after the completion of the three-year performance period (less any shares earned for the two-year performance period) based on the average price of the Company's common stock relative to the Index during the performance period. From time to time, the Company may make grants of restricted stock units or market stock units with vesting formulas that vary from those described above. The Company values stock options using the Black-Scholes option-pricing model, which requires the input of subjective assumptions, including the risk-free interest rate, expected life, expected stock price volatility and dividend yield. The risk-free interest rate assumption is based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the expected term of the Company's employee stock options. The expected life represents the time the stock options are expected to be outstanding and is based on the simplified method. Under the simplified method, the expected life of an option is presumed to be the mid-point between the vesting date and end of the contractual term. The Company used the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. Expected volatility is based on historical volatilities for publicly traded stock of comparable companies over the estimated expected life of the stock options. The Company assumes no dividend yield because it does not expect to pay dividends in the near future, which is consistent with the Company's history of not paying dividends. The Company recognizes compensation expense ratably over the requisite service period of the stock option award. The Company values restricted stock units at the closing market price on the date of grant and recognizes compensation expense ratably over the requisite service period of the restricted stock unit award. The Company estimates the fair value of market stock units on the date of grant using a Monte Carlo simulation model. The determination of fair value of the market stock units is affected by the Company's stock price and a number of assumptions including the expected volatility and the risk-free interest rate. The Company's expected volatility at the date of grant was based on the historical volatilities of its stock and peer firms' stocks and the Index over the performance period. The Company assumes no dividend yield and recognizes compensation expense ratably over the performance period of the market stock unit award. The Company recognizes compensation expense using the graded attribution method on a straight-line basis over the performance period for each market stock unit award. Effective January 3, 2022, the Company implemented its Employee Stock Purchase Plan, or ESPP, previously approved by the Company's board of directors and stockholders in March 2014. The ESPP generally permits domestic employees who meet certain criteria to purchase the Company's common stock through payroll deductions during six month offering periods. As is permitted under the ESPP, the initial offering period in fiscal 2022 extended for four months from February 1, 2022 through May 31, 2022, with the subsequent offering period extending from June 1, 2022 through November 30, 2022. For the remainder of fiscal 2022 and for all subsequent years, unless otherwise determined by the compensation committee of the board of directors, there will be additional six-month offering periods commencing on each of June 1 and December 1. In accordance with the guidance in ASC 718-50 - Compensation - Stock Compensation, the ability to purchase shares of the Company's common stock for 85% of the lower of the price on the first day of the offering period or the last day of the offering period represents an option and, therefore, the ESPP is a compensatory plan. Accordingly, stock-based compensation expense is determined based on the grant date fair value as estimated by applying the Black-Scholes option-pricing model and is recognized straight-line over the withholding period. The Company recognizes compensation expense ratably over the requisite service period. Convertible Senior Notes In February 2018, the Company issued $230.0 million principal amount of convertible senior notes due in February 2023, or the 2023 Notes. In June 2019, the Company issued $316.3 million principal amount of convertible senior notes due in June 2026, or the 2026 Notes. In November 2020, the Company issued $350.0 million principal amount of convertible senior notes due in November 2025, or the 2025 Notes. This was achieved by exchanging $181.9 million principal amount of the 2023 Notes for $210.7 million principal amount of the 2025 Notes and issuing an additional $139.3 million of new notes. In May 2021, the Company repurchased $37.1 million principal amount of the 2023 Notes. As of June 30, 2022, the aggregate principal amount outstanding related to the 2023 Notes was $10.9 million. When accounting for the issuance of convertible notes, prior to the adoption of ASU 2020-06, the Company separated each of the convertible notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value, as of the date of issuance, of a similar debt without the conversion feature. The carrying amount of the equity component representing the conversion feature was determined by deducting the fair value of the liability components from the total initial proceeds. The difference between the par amount of the convertible notes and the carrying amount of the liability component represented debt discounts that were amortized to interest expense over the respective terms of the convertible notes at effective interest rates of 5.88%, 5.38% and 5.00% for the 2023 Notes, 2026 Notes and 2025 Notes, respectively. The equity components were not remeasured as long as they continued to meet the conditions for equity classification. In accounting for the issuance costs related to its convertible notes, the Company allocated the total amount of issuance costs incurred to liability and equity components based on their relative values. Issuance costs attributable to the liability components were amortized to interest expense over the respective terms of the convertible notes using the effective interest rate method. The issuance costs attributable to the equity components were netted against the respective equity components in additional paid-in capital. Upon adoption of ASU 2020-06 on January 1, 2022, the Company reversed the separation of the liability and equity components and accounted for the Notes wholly as debt. The Company also reversed the amortization of the debt discount with the cumulative adjustment to retained earnings on the adoption date. As such, the debt is no longer recorded at a discount and issuance costs are amortized on a straight-line basis, which approximates the effective interest rate method. Refer to the "Recent Accounting Pronouncements" section below for more detail on the adoption impacts. Leases The Company determines if a contract contains a lease for accounting purposes at the inception of the arrangement. The Company has elected to apply the practical expedient which allows the Company to account for lease and non-lease components of a contract as a single leasing arrangement. In addition, the Company has elected the practical expedients related to lease classification and the short-term lease exemption, whereby leases with initial terms of one year or less are not capitalized and instead expensed generally on a straight-line basis over the lease term. The Company is primarily a lessee with a lease portfolio comprised mainly of real estate and equipment leases. As of June 30, 2022, the Company had no finance leases. Operating lease assets are included on the Company's condensed consolidated balance sheets in non-current assets as a right-of-use, or ROU, asset, and represent the Company's right to use an underlying asset for the lease term. Operating lease liabilities are included on the Company's condensed consolidated balance sheets in lease liabilities, current portion, for the portion that is due within 12 months and in lease liabilities, net of current portion, for the portion that is due beyond 12 months of the financial statement date and represent the Company's obligation to make lease payments. ROU assets and lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term using an appropriate discount rate. If an implicit rate is not readily determined by the Company's leases, the Company utilizes the incremental borrowing rate based on the available information at the commencement date to determine the lease payments. The depreciable lives of the underlying leased assets are generally limited to the expected lease term inclusive of any optional lease renewals where the Company concludes at the inception of the lease that the Company is reasonably certain of exercising those options. The ROU asset calculation may also include any initial direct costs paid and is reduced by any lease incentives provided by the lessor. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Income Taxes Deferred income taxes are provided for the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases and operating loss carryforwards and credits using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. The Company assesses the likelihood that deferred tax assets will be realized and recognizes a valuation allowance if it is more likely than not that some portion of the deferred tax assets will not be realized. This assessment requires judgment as to the likelihood and amounts of future taxable income by tax jurisdiction. To date, the Company has provided a valuation allowance against most of its deferred tax assets as it believes the objective and verifiable evidence of its historical pretax net losses outweighs any positive evidence of its forecasted future results. The Company will continue to monitor the positive and negative evidence, and it will adjust the valuation allowance as sufficient objective positive evidence becomes available. The Company evaluates its uncertain tax positions based on a determination of whether and how much of a tax benefit or expense taken by the Company in its tax filings or positions is more likely than not to be realized. The Company believes it has accrued adequate reserves related to its uncertain tax positions; however, ultimate determination of the Company's liability is subject to audit by taxing authorities in the ordinary course of business. The Company records interest and penalties associated with any uncertain tax positions as a component of income tax expense. Basic and Diluted Net Loss per Common Share The following table sets forth the computations of net loss per share for the periods listed:
Due to net losses for the three and six months ended June 30, 2022 and 2021, basic and diluted loss per share were the same, as the effect of all potentially dilutive securities would have been anti-dilutive. The following table sets forth the anti-dilutive common share equivalents for the periods listed:
Under the modified retrospective method of adoption of ASU 2020-06, the dilutive impact of the convertible senior notes was calculated using the if-converted method for the six months ended June 30, 2022. The Company's convertible senior notes were calculated using the treasury stock method for the six months ended June 30, 2021. Refer to discussion within "Recent Accounting Pronouncements" below for further details. The exercise rights of the Warrants issued in connection with the 2023 Notes will have a dilutive impact on net income per share of common stock under the treasury-stock method when the average market price per share of the Company's common stock for a given period exceeds the conversion price of $78.75 per share. However, since the Company is in a net loss position, there was no dilutive effect on net loss per share of the Company's common stock during any period presented. Recent Accounting Pronouncements In August 2020, the FASB issued ASU No. 2020-06, "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40)" which simplifies the accounting for convertible debt instruments by eliminating the requirement to separate embedded conversion features from the host contract when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. In addition, the guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The Company adopted the new guidance effective January 1, 2022, using the modified retrospective approach. The impact resulted in an increase to the convertible notes balance of $114.4 million to reflect the full principal amount of the convertible notes outstanding net of issuance costs, a reduction to the additional paid in capital balance of $157.0 million to remove the equity component separately recorded for the conversion features associated with the convertible notes, and an increase to the beginning balance of accumulated deficit of $42.6 million. As a result of the adoption, non-cash interest expense was lower for the three and six months ended June 30, 2022 and will be lower for the remaining term of the outstanding convertible notes. The adoption had no impact on the Company's condensed consolidated statement of cash flows. Additionally, ASU 2020-06 eliminates the treasury stock method and instead requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share when instruments may be settled in cash or shares. The required use of the if-converted method did not impact the diluted net loss per share as the Company was in a net loss position. The prior period condensed consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods. In May 2021, the FASB issued ASU No. 2021-04, "Earnings Per Share (Topic 260), Debt - Modifications and Extinguishments (Subtopic 470-50), Compensation - Stock Compensation (Topic 718), and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40)" which clarifies and reduces diversity in the accounting for modifications or exchanges of freestanding equity classified written call options that remain equity classified after modification or exchange. The ASU provides a principles-based framework to determine whether an issuer should recognize the modification or exchange as an adjustment to equity or an expense. The Company has adopted the provisions of the new standard effective January 1, 2022. There was no impact on the Company's condensed consolidated financial statements as of the adoption date. In October 2021, the FASB issued ASU No. 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers" which clarifies and reduces diversity in the accounting related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. The Company has early adopted the provisions of the new standard effective January 1, 2022. There was no impact on the Company's condensed consolidated financial statements as of the adoption date.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The carrying values of the Company's financial instruments, principally cash equivalents, investments, accounts receivable, restricted cash and accounts payable, approximated their fair values due to the short period of time to maturity or repayment. Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The current accounting guidance for fair value measurements defines a three-level valuation hierarchy for disclosures as follows: •Level I—Unadjusted quoted prices in active markets for identical assets or liabilities; •Level II—Inputs other than quoted prices included within Level I that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data; and •Level III—Unobservable inputs that are supported by little or no market activity, which requires the Company to develop its own assumptions. The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following table details the fair value hierarchy of the Company's financial assets measured at fair value on a recurring basis as of June 30, 2022:
The following table details the fair value hierarchy of the Company's financial assets measured at fair value on a recurring basis as of December 31, 2021:
The Company determines the fair value of the vast majority of its debt investment holdings based on pricing from its pricing vendors. The valuation techniques used to measure the fair value of financial instruments having Level II inputs were derived from non-binding consensus prices that are corroborated by observable market data or quoted market prices for similar instruments. Such market prices may be quoted prices in active markets for identical assets (Level I inputs) or pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level II inputs).
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Cash, Cash Equivalents and Investments |
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Cash and Cash Equivalents [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, Cash Equivalents and Investments | Cash, Cash Equivalents and Investments The Company's cash, cash equivalents and investments as of June 30, 2022 and December 31, 2021 consisted primarily of cash, U.S. government securities, corporate bonds, commercial paper, certificates of deposit, money market funds and other equity investments. The Company classifies its debt investments as available-for-sale at the time of purchase and reevaluates such classification as of each balance sheet date. All debt investments are recorded at estimated fair value. Unrealized gains and losses on available-for-sale investments are included in accumulated other comprehensive income (loss), a component of stockholders' equity. If the Company does not expect to recover the entire amortized cost basis of the available-for-sale debt security, it considers the available-for-sale debt security to be impaired. For individual debt securities classified as available-for-sale and deemed impaired, the Company assesses whether such decline has resulted from a credit loss or other factors. Impairment relating to credit losses is recorded through a reserve, limited to the amount that the fair value is less than the amortized cost basis. Impairment deemed to be non-credit related is reported in other income (expense), net in the condensed consolidated statements of comprehensive loss. Realized gains and losses are determined based on the specific identification method and are reported in other income (expense), net in the condensed consolidated statements of comprehensive loss. Interest, amortization of premiums and accretion of discount on all debt investments classified as available-for-sale are also included as a component of other income (expense), net in the condensed consolidated statements of comprehensive loss. Based on the Company's assessment, no impairments for credit losses were recognized during each of the three months ended June 30, 2022 or 2021. In 2022, the Company invested in a private financial technology investment fund, classified as an equity investment. This equity investment had a carrying amount of $0.2 million as of June 30, 2022. An impairment charge to current earnings is recorded when the cost of the investment exceeds its fair value and this condition is determined to be other-than-temporary. As of June 30, 2022, the Company determined there were no other-than-temporary impairments on its equity investment. As of June 30, 2022 and December 31, 2021, the Company's cash was $99.2 million and $126.9 million, respectively. A summary of the Company's cash equivalents and investments that are carried at fair value as of June 30, 2022 is as follows:
A summary of the Company's cash equivalents and investments that are carried at fair value as of December 31, 2021 is as follows:
Investments may be sold or may settle at any time, without significant penalty, for use in current operations or for other purposes, even if they have not yet reached maturity. As a result, the Company classifies its investments, including investments with maturities beyond twelve months, as current assets in the accompanying condensed consolidated balance sheets. The following table summarizes the estimated fair value of the Company's debt investments, designated as available-for-sale and classified by the contractual maturity date of the investments as of the dates shown:
The Company has certain available-for-sale debt investments in a gross unrealized loss position, all of which have been in such position for less than twelve months. The Company regularly reviews its debt investments for impairment resulting from credit loss using both qualitative and quantitative criteria, as necessary, based on the composition of the portfolio at period end. The Company considers factors such as the length of time and extent to which the market value has been less than the cost, the financial position and near-term prospects of the issuer and its intent to sell, or whether it is more likely than not the Company will be required to sell the investment before recovery of the investment's amortized-cost basis. If the Company determines that impairment exists in one of these investments, the respective investment would be written down to fair value. For debt securities, the portion of the write-down related to credit loss would be recognized in other income, net in the condensed consolidated statements of comprehensive loss if the intent of the Company was to sell the investment before recovery. If the Company did not intend to sell, the portion of the write-down related to credit loss would be recorded to a reserve. Any portion not related to credit loss would be included in accumulated other comprehensive income (loss) in the condensed consolidated statements of comprehensive loss. Because the Company does not intend to sell any investments which have an unrealized loss position at this time, and it is not more likely than not that the Company will be required to sell the investment before recovery of its amortized cost basis, which may be maturity, the reserve for available-for-sale debt securities was zero as of June 30, 2022 and December 31, 2021. The following table shows the fair values and the gross unrealized losses of these available-for-sale debt investments aggregated by investment category as of June 30, 2022:
The following table shows the fair values and the gross unrealized losses of these available-for-sale debt investments aggregated by investment category as of December 31, 2021:
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets The carrying amount of goodwill was $512.9 million at each of June 30, 2022 and December 31, 2021. On April 1, 2021, the Company's wholly-owned subsidiary, Q2 Software, Inc. acquired all of the outstanding equity interests of ClickSWITCH Holdings Inc, or ClickSWITCH, a privately-owned provider of digital account switching solutions. As such, the Company added $50.6 million of goodwill from the ClickSWITCH acquisition. The annual impairment test was performed as of October 31, 2021 and no impairment of goodwill was identified, nor has any impairment of goodwill been recorded to date. Intangible assets at June 30, 2022 and December 31, 2021 were as follows:
The Company recorded intangible assets primarily from various prior business combinations. Intangible assets are amortized on a straight-line basis over their estimated useful lives, which range from to ten years. Amortization expense included in cost of revenues in the condensed consolidated statements of comprehensive loss was $5.6 million for each of the three months ended June 30, 2022 and 2021, and $11.2 million and $10.8 million for the six months ended June 30, 2022 and 2021, respectively. Amortization expense included in operating expenses in the condensed consolidated statements of comprehensive loss was $4.4 million and $4.6 million for the three months ended June 30, 2022 and 2021, respectively, and $8.8 million and $9.0 million for the six months ended June 30, 2022 and 2021, respectively. The Company amortized $0.6 million and $0.3 million of capitalized software development costs for the three months ended June 30, 2022 and 2021, respectively, and $1.0 million and $0.5 million for the six months ended June 30, 2022 and 2021, respectively. The estimated future amortization expense related to intangible assets as of June 30, 2022 was as follows:
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Operating Lease Commitments The Company leases office space under non-cancellable operating leases for its corporate headquarters in Austin, Texas in two adjacent buildings under separate lease agreements. Pursuant to the first of which the Company leases office space with an initial term that expires on April 30, 2028, with the option to extend the lease for an additional ten-year term, and pursuant to the second of which the Company leases office space with lease terms of approximately ten years, with the options to extend the leases on the second building. The Company also leases office space in U.S. cities located in Nebraska, Iowa, Georgia, North Carolina, California, Texas and Minnesota. Internationally, the Company leases offices in India, Australia and the United Kingdom. During the three and six months ended June 30, 2022, through the Company's regular assessment process, additional unoccupied lease charges of $0.1 million and $0.5 million, respectively, were recorded for facilities in Texas, North Carolina and Georgia for the related contractual lease payments and fees, less anticipated sublease income. During the three and six months ended June 30, 2021, through the Company's regular assessment process, the Company recorded an unoccupied lease charge of $0.8 million for facilities in Georgia and Texas for the related contractual lease payments and fees, less sublease income. The lease liabilities related to the subleases that are expected to be paid during the succeeding twelve-month period of $1.0 million are recorded in accrued liabilities, and the remaining portion of the associated liability of $1.5 million is recorded in other long-term liabilities on the accompanying condensed consolidated balance sheet at June 30, 2022. The Company believes its current facilities will be adequate for its needs for the foreseeable future. Rent expense under operating leases was $2.0 million and $1.7 million for the three months ended June 30, 2022 and 2021, respectively, and $4.0 million and $3.3 million for the six months ended June 30, 2022 and 2021, respectively. Future minimum payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year at June 30, 2022 were as follows:
Contractual Commitments The Company has non-cancelable contractual commitments related to the 2023 Notes, 2025 Notes and the 2026 Notes as well as the related interest. The interest on the 2023 Notes is payable semi-annually on February 15 and August 15 of each year. The interest on the 2025 Notes is payable semi-annually on May 15 and November 15 of each year. The interest on the 2026 Notes is payable semi-annually on June 1 and December 1 of each year. The Company also has non-cancelable contractual commitments for certain third-party products, co-location fees and other product costs. Several of these purchase commitments for third-party products contain both a contractual minimum obligation and a variable obligation based upon usage or other factors which can change on a monthly basis. The estimated amounts for usage and other factors are not included within the table below. In 2020, the Company entered into a long-term stadium sponsorship agreement, beginning in 2021 and ending in 2028, which grants the Company exclusive naming rights, sponsorship, signage, advertising and other promotional rights and benefits. The advertising expense for these rights is amortized on a straight-line basis and recorded in sales and marketing expense in the consolidated statements of comprehensive loss. The prepaid commitment balance, net of amortization, is included in prepaid expenses and other current assets in the consolidated balance sheets. Future minimum contractual commitments that have initial or remaining non-cancelable terms in excess of one year at June 30, 2022 were as follows:
Legal Proceedings From time to time, the Company may become involved in legal proceedings arising in the ordinary course of its business. The Company is not presently a party to any legal proceedings that, if determined adversely to the Company, would have a material adverse effect on the Company. Gain Contingencies From time to time the Company may realize a gain contingency, however, recognition will not occur until cash is received. During the three months ended March 31, 2022, the Company received a favorable settlement of an ordinary course dispute and recognized a gain of $0.7 million included in interest and other income in the accompanying condensed consolidated statements of comprehensive loss. Loss Contingencies In the ordinary course of business, the Company is subject to loss contingencies that cover a range of matters. An estimated loss from a loss contingency, such as a legal proceeding or claim, is accrued if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
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Convertible Senior Notes |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Senior Notes | Convertible Senior Notes The following table presents details of the Company's convertible senior notes, which are further discussed below (original principal in thousands):
(1) Unless earlier converted or repurchased in accordance with their terms prior to such date (2) Subject to adjustment upon the occurrence of certain specified events As further defined and described below, the 2023 Notes, 2026 Notes and the 2025 Notes are collectively referred to as the Notes. In February 2018, the Company issued $230.0 million principal amount of convertible senior notes due in February 2023, or the 2023 Notes. Interest is payable semi-annually on February 15 and August 15 of each year, commencing on August 15, 2018. In November 2020, the Company exchanged $181.9 million in aggregate principal amount of the 2023 Notes for $210.7 million in aggregate principal of 2025 Notes and 1.3 million shares of common stock. The Company did not receive any cash proceeds from the exchange. In exchange for issuing 2025 Notes pursuant to the exchange transaction, the Company received and cancelled the exchanged 2023 Notes. As of the exchange date, the carrying value of the 2023 Notes, net of unamortized debt discount and issuance costs, was $42.9 million. The partial exchange of the 2023 Notes resulted in an $8.9 million loss on early debt extinguishment in fiscal year 2020, of which $2.0 million consisted of unamortized debt issuance costs. In May 2021, the Company repurchased $37.1 million in aggregate principal amount of the 2023 Notes for $63.7 million in cash. As of the repurchase date, the carrying value of the notes, net of unamortized debt discount and issuance costs, was $10.0 million. The partial repurchase of the 2023 Notes resulted in a $1.5 million loss on early debt extinguishment in fiscal year 2021, of which $0.3 million consisted of unamortized debt issuance costs. The Company may repurchase additional 2023 Notes and/or its 2025 Notes and 2026 Notes from time to time through open market purchases, block trades, and/or privately negotiated transactions, in compliance with applicable securities laws and other legal requirements. The timing, volume, and nature of the repurchases will be determined by the Company based on the capital needs of the business, market conditions, applicable legal requirements, and other factors. In June 2019, the Company issued $316.3 million principal amount of convertible senior notes due in June 2026, or the 2026 Notes. Interest is payable semi-annually on June 1 and December 1 of each year, commencing on December 1, 2019. In November 2020, the Company issued $350.0 million principal amount of convertible senior notes due in November 2025, or the 2025 Notes. This was achieved by exchanging $181.9 million principal amount of the 2023 Notes for $210.7 million principal amount of the 2025 Notes and issuing an additional $139.3 million of new notes. Interest is payable semi-annually on May 15 and November 15 of each year, commencing on May 15, 2021. The Notes are the Company's senior unsecured obligations and rank senior in right of payment to any of the Company's indebtedness that is expressly subordinated in right of payment to the Notes, rank equally in right of payment with any of the Company's indebtedness that is not so subordinated, are effectively junior in right of payment to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally junior to all indebtedness and other liabilities (including trade payables) of the Company's current and future subsidiaries. On or after June 5, 2023 or November 20, 2023 for the 2026 Notes and 2025 Notes, respectively, the Company may redeem for cash all or any portion of the 2026 or 2025 Notes, at the Company's option if the last reported sale price of the Company's common stock has been at least 130% of the conversion price in effect for at least 20 trading days (whether or not consecutive) during any 30-consecutive trading-day period. If the Company calls any or all of the 2026 or 2025 Notes for redemption, holders may convert all or any portion of their 2026 or 2025 Notes at any time prior to the close of business on the scheduled trading day prior to the redemption date, even if the 2026 or 2025 Notes are not otherwise convertible at such time. After that time, the right to convert such 2026 or 2025 Notes will expire, unless the Company defaults in the payment of the redemption price, in which case a holder of 2026 or 2025 Notes may convert all or any portion of its 2026 or 2025 Notes until the redemption price has been paid or duly provided for. On or after November 15, 2022, March 1, 2026 or August 15, 2025 for the 2023 Notes, 2026 Notes and 2025 Notes, respectively, holders may convert all or any portion of their Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date, regardless of the succeeding conditions described herein. Upon conversion, the Company will pay or deliver cash, shares of its common stock or a combination of cash and shares of its common stock, at its election, as described in the indenture governing the Notes. Holders may convert their Notes at their option at any time prior to the close of business on the business day immediately preceding November 15, 2022, March 1, 2026 or August 15, 2025 for the 2023 Notes, 2026 Notes and 2025 Notes, respectively, only under the following circumstances: •during any calendar quarter commencing after the calendar quarter ending on June 30, 2018, September 30, 2019 or March 30, 2021 (and only during such calendar quarter), for the 2023 Notes, 2026 Notes and 2025 Notes, respectively, if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; •during the consecutive business day period after any five consecutive trading day 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 the Company's common stock and the conversion rate on each such trading day; or •upon the occurrence of specified corporate events. If a fundamental change (as defined in the relevant indenture governing each of the Notes) occurs prior to the maturity date, holders of each of the Notes may require the Company to repurchase all or a portion of their notes for cash at a repurchase price equal to 100% of the principal amount of the Notes, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. For more than 20 trading days during the 30 consecutive trading days ended December 31, 2021, the last reported sale price of the Company's common stock exceeded 130% of the conversion price of the 2023 Notes. As a result, the 2023 Notes became convertible at the option of the holders on January 1, 2022 and remained convertible through March 31, 2022. Of the initial 2023 Notes outstanding, 22 notes, with a principal amount of $1,000 each, have been converted since original issuance of the 2023 Notes through the date of this filing. As of June 30, 2022, the 2023 Notes, 2026 Notes and 2025 Notes were not convertible. Prior to the adoption of ASU 2020-06 and in accordance with accounting guidance for cash conversion features, the Company valued the liability component for the Notes at the estimated fair value, as of the date of issuance, of a similar debt without the conversion feature. The liability component of the Notes was recorded in long-term debt. The Company recorded the difference between the initial proceeds of the convertible debt and the fair value of the conversion feature to additional paid-in capital as the carrying amount of the equity component. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, was amortized to interest expense at an effective interest rate of 5.88%, 5.38% and 5.00% for the 2023 Notes, 2026 Notes and 2025 Notes, respectively. Upon adoption of ASU 2020-06 on January 1, 2022, the Company reversed the separation of the liability and equity components and accounted for the Notes wholly as debt. The Company also reversed the debt discount, with a cumulative adjustment to retained earnings on the adoption date. In accounting for the transaction costs for the Notes, prior to the adoption of ASU 2020-06, the Company allocated the costs incurred to the liability and equity components in proportion to the allocation of the proceeds from issuance to the liability and equity components. Issuance costs attributable to the liability component were amortized to expense over the expected life of the Notes using the effective interest method. The liability issuance costs originally totaled $5.3 million, $6.4 million and $5.4 million for the 2023 Notes, 2026 Notes, and 2025 Notes, respectively. Issuance costs attributable to the equity component related to the conversion feature were netted with the equity component. The equity issuance costs originally totaled $1.5 million, $2.9 million and $1.5 million for the 2023 Notes, 2026 Notes and 2025 Notes, respectively. Upon the adoption of ASU 2020-06, the Company reversed the separation of the liability and equity components and accounted for the entire amount as debt issuance costs that will be amortized on a straight-line basis, which approximates the effective interest method, to interest expense over the expected life of the Notes. Refer to Note 2, "Summary of Significant Accounting Policies" for further details on the impact of adoption. The 2023 Notes, 2026 Notes and 2025 Notes consist of the following:
____________________________________________________________________________ (1) See Note 2, "Summary of Significant Accounting Policies" for more information regarding the effect of adoption of ASU 2020-06 The following table sets forth total interest expense recognized related to the 2023, 2026 and 2025 Notes:
____________________________________________________________________________ (1) See Note 2, "Summary of Significant Accounting Policies" for more information regarding the effect of adoption of ASU 2020-06 As of June 30, 2022, the remaining period over which the debt issuance costs will be amortized for the 2023 Notes, 2026 Notes and 2025 Notes was 0.6 years, 3.9 years and 3.4 years, respectively. As of June 30, 2022, the if-converted value of the 2023 Notes, 2026 Notes and 2025 Notes did not exceed the principal amount. The if-converted values were determined based on the closing price of the Company's stock on June 30, 2022. Bond Hedges and Warrants Transactions Concurrent with the February 2018 convertible note offering, the Company entered into separate convertible notes bond hedges, or Bond Hedges, and Warrants transactions. The Bond Hedges are generally expected to reduce potential dilution to the Company's common stock upon conversion of the 2023 Notes. The Bond Hedges are call options that give the Company the option to purchase, subject to anti-dilution adjustments substantially identical to those in the 2023 Notes, approximately 0.9 million shares of its common stock for $57.38 per share, exercisable upon conversion of the 2023 Notes and expires in February 2023. The total cost of the Bond Hedges transactions was $41.7 million. In November 2020, and in connection with the partial exchange of the 2023 Notes, the Company terminated Bond Hedges corresponding to approximately 0.7 million shares for cash proceeds of $171.7 million. In May 2021, and in connection with the partial repurchase of the 2023 Notes, the Company terminated Bond Hedges corresponding to approximately 0.1 million shares for cash proceeds of $26.3 million. The proceeds were recorded as an increase to additional paid-in capital in the consolidated balance sheets. As of June 30, 2022, there remained outstanding Bond Hedges giving the Company the option to repurchase approximately 0.1 million shares. Under the February 2018 Warrant transactions, the Company issued warrants to acquire, subject to anti-dilution adjustments, up to approximately 4.0 million shares over 80 scheduled trading days beginning on May 15, 2023 at an exercise price of $78.75 per share. If the Warrants are not exercised on their exercise dates, they will expire. Pursuant to the Warrants, if the average market value per share of the Company's common stock for the reporting period, as measured under the Warrants, exceeds the exercise price of the Warrants of $78.75, the Warrants will have a dilutive effect on the Company's earnings per share, assuming the Company is profitable. The Company received $22.4 million in cash proceeds from the sale of the Warrants. In November 2020, and in connection with the partial exchange of the 2023 Notes, the Company terminated Warrants corresponding to approximately 3.2 million shares for total cash payments of $137.5 million. In May 2021, and in connection with the partial repurchase of the 2023 Notes, the Company terminated Warrants corresponding to approximately 0.6 million shares for total cash payments of $19.7 million. The termination payment was recorded as a decrease to additional paid-in capital in the consolidated balance sheets. As of June 30, 2022, there remained outstanding Warrants to acquire up to approximately 0.2 million shares. The Bond Hedges and the Warrants are separate transactions, in each case, entered into by the Company with counterparties, and are not part of the terms of the 2023 Notes and will not affect any holders' rights under the 2023 Notes. The holders of the 2023 Notes will not have any rights with respect to the Bond Hedges or Warrants transactions. The Bond Hedges and Warrants do not meet the criteria for derivative accounting as they are indexed to the Company's stock. The amounts paid for the Bond Hedges and the proceeds received from the sale of the Warrants have been included as a net reduction to additional paid-in capital. Capped Call Transactions In connection with the issuance of the 2026 Notes and 2025 Notes, the Company entered into two separate capped call transactions with one or more counterparties, or the Capped Calls. The Capped Calls associated with the 2026 Notes have an initial strike price of $88.6124 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2026 Notes. The Capped Calls associated with the 2025 Notes have an initial strike price of $140.1443 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2025 Notes. The Capped Calls associated with the 2026 Notes have an initial cap price of $139.00 per share. The Capped Calls associated with the 2025 Notes have an initial cap price of $211.54 per share. The Capped Calls are expected to offset the potential dilution to the common stock upon any conversion of the 2026 Notes or 2025 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the 2026 Notes or 2025 Notes in the event the market price per share of common stock is greater than the strike price of the Capped Call, with such offset subject to a cap. If, however, the market price per share of the common stock exceeds the cap price of the Capped Calls, there would be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that the then-market price per share of the common stock exceeds the cap price. As the Capped Calls are considered indexed to the Company's stock and are considered equity classified, they are recorded in stockholders' equity on the consolidated balance sheet and are not accounted for as derivatives. The cost of $40.8 million incurred in connection with the Capped Calls associated with the 2026 Notes was recorded as a reduction to additional paid-in capital. The cost of $39.8 million incurred in connection with the Capped Calls associated with the 2025 Notes was recorded as a reduction to additional paid-in capital.
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Stock-Based Compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation In March 2014, the Company's board of directors approved the 2014 Equity Incentive Plan, or 2014 Plan, under which stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units and other cash-based or stock-based awards may be granted to employees, consultants and directors. Shares of common stock that are issued and available for issuance under the 2014 Plan consist of authorized, but unissued or reacquired shares of common stock or any combination thereof. As of December 31, 2021, a total of 15,823 shares had been reserved for issuance under the 2014 Plan. The 2014 Plan contains a provision that automatically increases the shares available for issuance under the plan on January 1 of each year subsequent to the 2014 Plan's adoption through 2024, by an amount equal to the smaller of (a) 4.5% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or (b) an amount determined by the Company's board of directors. On January 1, 2022, 2,562 shares were added to the 2014 Plan in accordance with the annual automatic increase provision of the 2014 Plan. In addition, the 2014 Plan reserve is automatically increased to include any shares issuable upon expiration or termination of options granted under the Company's 2007 Stock Plan, or 2007 Plan, for options that expire or terminate without having been exercised. For the six months ended June 30, 2022, no shares have been transferred to the 2014 Plan from the 2007 Plan, and as of June 30, 2022, a total of 18,385 shares were allocated for issuance under the 2014 Plan. As of June 30, 2022, options to purchase a total of 2,706 shares of common stock have been granted under the 2014 Plan, 8,381 shares have been reserved under the 2014 Plan for the vesting of restricted stock units and market stock units, 1,622 shares have been returned to the 2014 Plan as a result of termination of options that expired or terminated without having been exercised and restricted stock awards that terminated prior to the awards vesting, and 8,920 shares of common stock remain available for future issuance under the 2014 Plan. In March 2014, the Company also adopted the ESPP. The plan was implemented starting January 3, 2022, pursuant to which certain participating domestic employees are able to purchase shares of the Company's common stock at a 15% discount of the lower of the market price at the beginning or end of the offering period. The Board provided for a share reserve with respect to the ESPP of 800 shares. The ESPP contains a provision that automatically increases the shares available for issuance under the plan on January 1 of each year through 2024, by an amount equal to the smaller of (a) 500 shares, (b) 1% of the number of shares issued and outstanding on the immediately preceding December 31, or (c) such other amount as may be determined by the Company's board of directors. The Company has reserved 800 shares of common stock for future issuance under the ESPP. The ESPP's initial four-month purchase period began in February 2022. During the three months ended June 30, 2022, the Company issued 57 shares under the ESPP. As of June 30, 2022, 743 shares remain authorized and available for issuance under the ESPP. In July 2007, the Company adopted the 2007 Plan under which options or stock purchase rights may be granted to employees, consultants and directors. Upon the completion of the Company's initial public offering, or IPO, in March 2014, the board of directors terminated the 2007 Plan in connection with the IPO and all shares that were available for future issuance under the 2007 Plan at such time were transferred to the 2014 Plan. The 2007 Plan will continue to govern the terms and conditions of all outstanding equity awards granted under the 2007 Plan. As of June 30, 2022, no shares remain available for future issuance under the 2007 Plan. Stock-based compensation expense was recorded in the following cost and expense categories in the Company's condensed consolidated statements of comprehensive loss:
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Income Taxes |
6 Months Ended |
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Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes In accordance with applicable accounting guidance, the income tax expense for the six months ended June 30, 2022 is based on the estimated annual effective tax rate for fiscal year 2022. The Company's provision for income taxes is based on estimated effective tax rates derived from an estimate of annual consolidated earnings before taxes, adjusted for nondeductible expenses, other permanent items, valuation allowances, and any applicable income tax credits. The Company's provision for income taxes reflected an effective tax rate of approximately (1.4)% and (0.6)% for the three months ended June 30, 2022 and 2021, respectively, and (3.6)% and (0.6)% for the six months ended June 30, 2022 and 2021, respectively. For the three and six months ended June 30, 2022 and 2021, the Company's effective tax rate was lower than the U.S. federal statutory rate primarily due to its valuation allowance offsetting the benefits of losses. Current income tax expenses and benefits consist primarily of state income tax expense, deferred income tax expense relating to the tax amortization of recently acquired goodwill and income tax expense from foreign operations. To date, the Company has provided a valuation allowance against most of its deferred tax assets as it believes the objective and verifiable evidence of its historical pretax net losses outweighs any positive evidence of its forecasted future results. The Company will continue to monitor the positive and negative evidence, and it will adjust the valuation allowance as sufficient objective positive evidence becomes available. As of June 30, 2022, the Company had $3.2 million in uncertain tax positions representing a $0.6 million increase, including an insignificant amount of accrued interest, from the balance at December 31, 2021. Of this amount, $0.6 million resulted in an income tax expense during the six months ended June 30, 2022. Operating losses generated in years prior to 2017 remain open to adjustment until the statute of limitations closes for the tax year in which the net operating losses are utilized. The Company's tax years 2018 through 2021 generally remain open to examination by the major taxing jurisdictions to which the Company is subject. The Company is currently under audit by the State of Texas.
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Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | These interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, and SEC, requirements for interim financial statements. The interim unaudited condensed consolidated financial statements include the accounts of Q2 Holdings, Inc. and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
Principles of Consolidation | In the Company's opinion, the accompanying interim unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, consisting of normal, recurring adjustments, necessary for a fair presentation. Certain information and disclosures normally included in the notes to the annual consolidated financial statements prepared in accordance with GAAP have been omitted from these interim unaudited condensed consolidated financial statements pursuant to the rules and regulations of the SEC. Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes for the fiscal year ended December 31, 2021, which are included in the Company's Annual Report on Form 10-K, filed with the SEC on February 16, 2022. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other period. |
Use of Estimates | The preparation of the accompanying interim unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the interim unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses. Significant items subject to such estimates include: revenue recognition including determining the nature and timing of satisfaction of performance obligations, variable consideration, standalone selling price, and other revenue items requiring significant judgment; estimate of credit losses; stock-based compensation; the carrying value of goodwill; the fair value of acquired intangibles; the capitalization of software development costs; the useful lives of property and equipment and long-lived intangible assets; fair value of the conversion features of convertible notes; and, income taxes. In accordance with GAAP, management bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Management regularly evaluates its estimates and assumptions using historical experience and other factors; however, actual results could differ significantly from those estimates. |
Cash and Cash Equivalents | The Company considers all highly liquid investments acquired with an original maturity of ninety days or less at the date of purchase to be cash equivalents. Cash equivalents are stated at cost or fair value based on the underlying security. |
Restricted Cash | Restricted cash consists of deposits held as collateral for the Company's secured letters of credit or bank guarantees issued in place of security deposits for the Company's corporate headquarters and various other leases. |
Investments | Investments typically include U.S. government securities, corporate bonds, commercial paper, certificates of deposit, money market funds and other equity investments. All debt investments are considered available for sale and are carried at fair value. Equity investments without a readily determinable fair value, where the Company has no influence over the operating and financial policies of the investee, are recorded at cost, less impairment and adjusted for subsequent observable price changes obtained from orderly transactions for identical or similar investments issued by the same investee. Adjustments resulting from impairment, fair value, or observable price changes are accounted for in the condensed consolidated statements of comprehensive loss. |
Concentration of Credit Risk | Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, restricted cash, investments, accounts receivable and contract assets. The Company's cash and cash equivalents, restricted cash and investments are placed with high credit quality financial institutions and issuers, and at times may exceed federally-insured limits. The Company has not experienced any loss relating to cash and cash equivalents or restricted cash in these accounts. The Company provides credit, in the normal course of business, to a majority of its customers. The Company performs periodic credit evaluations of its customers' financial condition and generally does not require collateral. |
Contract Balances | The timing of revenue recognition, billings and cash collections can result in billed accounts receivable, unbilled receivables, contract assets, and deferred revenues or contract liabilities. Billings scheduled to occur after the performance obligation has been satisfied and revenue recognition has occurred result in contract assets. Contract assets that are expected to be billed during the succeeding twelve-month period are recorded in contract assets, current portion, and the remaining portion is recorded in contract assets, net of current portion on the accompanying condensed consolidated balance sheets at the end of each reporting period. A contract liability results when the Company receives prepayments or deposits from customers in advance for implementation, maintenance and other services, as well as initial subscription fees. Customer prepayments are generally applied against invoices issued to customers when services are performed and billed. The Company recognizes contract liabilities as revenues when the services are performed, and the corresponding revenue recognition criteria are met. Contract liabilities that are expected to be recognized as revenues during the succeeding twelve-month period are recorded in deferred revenues, current portion, and the remaining portion is recorded in deferred revenues, net of current portion, on the accompanying condensed consolidated balance sheets at the end of each reporting period.The Company is exposed to credit losses primarily through sales of products and services. The Company assesses the collectability of outstanding contract assets on an ongoing basis and maintains a reserve which is included in the allowance for credit losses for contract assets deemed uncollectible. The Company analyzes the contract asset portfolio for significant risks by considering historical collection experience and forecasting future collectability to determine the amount of revenues that will ultimately be collected from its customers. Customer type (whether a customer is a financial institution or other digital solution provider) has been identified as the primary specific risk affecting the Company's contract assets, and the estimate for losses is analyzed quarterly and adjusted as necessary. Future collectability is contingent upon current and anticipated macroeconomic conditions that could impact the Company's customers such as unemployment, inflation and regulatory matters. Additionally, specific allowance amounts may be established to record the appropriate provision for customers that have a higher probability of default. |
Accounts Receivable | Accounts receivable are stated at net realizable value, including both billed and unbilled receivables to customers. Unbilled receivable balances arise primarily when the Company provides services in advance of billing for those services. Generally, billing for revenues related to the number of End Users and the number of transactions processed by the customers' End Users that are included in the customers' minimum subscription fee occurs in the month the revenue is recognized, resulting in accounts receivable. Billing for revenues relating to the number of End Users and the number of transactions processed by the End Users that are in excess of the customers' minimum subscription fees are, generally, billed in the month following the month the revenues were earned, resulting in an unbilled receivable.The Company assesses the collectability of outstanding accounts receivable on an ongoing basis and maintains an allowance for credit losses for accounts receivable deemed uncollectible. The Company analyzes the accounts receivable portfolio for significant risks and considers prior periods and forecasts future collectability to determine the amount of revenues that will ultimately be collected from its customers. This estimate is analyzed quarterly and adjusted as necessary. Identified risks pertaining to the Company's accounts receivable include the delinquency level and customer type. Future collectability is contingent upon current and anticipated macroeconomic conditions that could impact the Company's customers such as unemployment, inflation and regulation matters. Due to the short-term nature of such receivables, the estimate of the amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances and the financial condition of customers. Historically, the Company's collection experience has not varied significantly, and bad debt expenses have been insignificant.The Company maintains reserves for estimated sales credits issued to customers for billing disputes or other service-related reasons. These allowances are recorded as a reduction against current period revenues and accounts receivable. In estimating this allowance, the Company analyzes prior periods to determine the amounts of sales credits issued to customers compared to the revenues in the period that related to the original customer invoice. |
Deferred Revenues | Deferred revenues primarily consist of amounts that have been billed to or received from customers in advance of revenue recognition and prepayments received from customers in advance for implementation, maintenance and other services, as well as initial subscription fees. The Company recognizes deferred revenues as revenues when the services are performed and the corresponding revenue recognition criteria are met. Customer prepayments are generally applied against invoices issued to customers when services are performed and billed.The Company's payment terms vary by the type and location of its customer and the products or services offered. The period of time between invoicing and when payment is due is not significant. For certain products or services and customer types, the Company requires payment before the products or services are delivered to the customer. |
Deferred Implementation Costs | The Company capitalizes certain personnel and other costs, such as employee salaries, stock-based compensation, benefits and the associated payroll taxes that are direct and incremental to the implementation of its solutions. The Company analyzes implementation costs that may be capitalized to assess their recoverability, and only capitalizes costs that it anticipates being recoverable through the terms of the associated contract. The Company begins amortizing the deferred implementation costs for an implementation to cost of revenues once the revenue recognition criteria have been met, and the Company amortizes those deferred implementation costs ratably over the expected period of customer benefit. The Company has determined this period to be the estimated life of the technology for new contracts, which is estimated to be to seven years, and over the term of the agreement for other contracts. The Company determined the period of benefit by considering factors such as historically high renewal rates with similar customers and contracts, initial contract length, an expectation that there will still be a demand for the product at the end of its term, and the significant costs to switch to a competitor's product, all of which are governed by the estimated useful life of the technology. The Company monitors deferred implementation costs for impairment and records impairment when customers terminate or allow services to lapse, due to contract modifications, and/or from other assessments as needed. Any impairment losses identified are recognized in the form of an expense acceleration with the applicable amount recorded to deferred implementation costs, current portion and/or deferred implementation costs, net of current portion on the consolidated balance sheet and in cost of revenues in the consolidated statements of comprehensive loss.The portion of deferred implementation costs expected to be amortized during the succeeding twelve-month period is recorded in current assets as deferred implementation costs, current portion, and the remainder is recorded in long-term assets as deferred implementation costs, net of current portion on the condensed consolidated balance sheets.Amortization expense is included in cost of revenues in the accompanying condensed consolidated statements of comprehensive loss. |
Deferred Solution and Other Costs | The Company capitalizes sales commissions and other third-party costs such as third-party licenses and maintenance related to its customer agreements. The Company capitalizes sales commissions because the commission expenses are considered incremental and recoverable costs of obtaining a contract with a customer. The Company capitalizes commissions and bonuses for those involved in the sale, including direct employees and team members which are incremental to the sale and their associated management, as these are incremental to the sale. Substantially all commissions are paid in a single payment once the contract has been executed and the initial deposit has been received from the customer. The Company begins amortizing deferred solution and other costs for a particular customer agreement once the revenue recognition criteria are met and amortizes those deferred costs over the expected period of customer benefit. The Company has determined this period to be the estimated life of the technology for new contracts, which is estimated to be | to seven years, and over the term of the agreement for other contracts. The Company determined the period of benefit by considering factors such as historically high renewal rates with similar customers and contracts, initial contract length, an expectation that there will still be a demand for the product at the end of its term, and the significant costs to switch to a competitor's product, all of which are governed by the estimated useful life of the technology.The Company analyzes capitalized solution and other costs to assess their recoverability. The portion of capitalized costs expected to be amortized during the succeeding twelve-month period is recorded in current assets as deferred solution and other costs, current portion, and the remainder is recorded in long-term assets as deferred solution and other costs, net of current portion.Amortization expense is included in sales and marketing expenses in the accompanying condensed consolidated statements of comprehensive loss.
Property and Equipment | Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is calculated on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the related assets. Maintenance and repairs that do not extend the life of or improve an asset are expensed in the period incurred. |
Purchase Price Allocation, Intangible Assets, and Goodwill | The purchase price allocation for business combinations and asset acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values. The Company determines whether substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the single asset or group of assets, as applicable, is not a business. If it is not met, the Company determines whether the single asset or group of assets, as applicable, meets the definition of a business. In connection with the Company's business combinations, the Company recorded certain intangible assets, including acquired technology, customer relationships, trademarks, and non-compete agreements. Amounts allocated to the acquired intangible assets are amortized on a straight-line basis over the estimated useful lives. The Company periodically reviews the estimated useful lives and fair values of its identifiable intangible assets, taking into consideration any events or circumstances which might result in a diminished fair value or revised useful life. The excess purchase price over the fair value of assets acquired is recorded as goodwill. The Company tests goodwill for impairment annually in October, or whenever events or changes in circumstances indicate an impairment may have occurred. Because the Company operates as a single reporting unit, the impairment test is performed at the consolidated entity level by comparing the estimated fair value of the Company to the carrying value of the Company. The Company estimates the fair value of the reporting unit using a "step one" analysis using a fair-value-based approach based on the market capitalization or a discounted cash flow analysis of projected future results to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Determining the fair value of goodwill is subjective in nature and often involves the use of estimates and assumptions including, without limitation, use of estimates of future prices and volumes for the Company's products, capital needs, economic trends and other factors which are inherently difficult to forecast. If actual results, or the plans and estimates used in future impairment analyses are lower than the original estimates used to assess the recoverability of these assets, the Company could incur impairment charges in a future period.
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Revenues and Cost of Revenues | Revenues are recognized when control of the promised goods or services is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services over the term of the agreement, generally when the Company's solutions are implemented and made available to the customers. The promised consideration may include fixed amounts, variable amounts or both. Revenues are recognized net of sales credits and allowances. Revenue-generating activities are directly related to the sale, implementation and support of the Company's solutions within a single operating segment. The Company derives the majority of its revenues from subscription fees for the use of its solutions hosted in either the Company's data centers or cloud-based hosting services, transactional revenue from bill-pay solutions and revenues for customer support and implementation services related to the Company's solutions. Subscription Revenues The Company's software solutions are available for use as hosted application arrangements under subscription fee agreements without licensing rights to the software. Subscription fees from these applications, including contractual periodic price increases, are recognized over time on a ratable basis over the customer agreement term beginning on the date the Company's solution is made available to the customer. Amounts that have been invoiced are recorded in accounts receivable and deferred revenues or revenues, depending on whether the revenue recognition criteria have been met. Periodic price increases are estimated at contract inception where appropriate and result in contract assets as revenue recognition may exceed the amount billed early in the contract. Additional fees for monthly usage above the levels included in the standard subscription fee are recognized as revenue in the month when the usage amounts are determined and reported. A small portion of the Company's customers host and manage the Company's solutions on-premises or in third-party data centers under term license and maintenance agreements. Term licenses sold with maintenance entitle the customer to technical support, upgrades and updates to the software on a when-and-if-available basis. The Company recognizes software license revenue once the customer obtains control of the license, which generally occurs at the start of each license term. The Company recognizes the remaining arrangement consideration for maintenance revenue over time on a ratable basis over the term of the software license. Revenues from term licenses and maintenance agreements were not significant in the periods presented. Transactional Revenues The Company generates the majority of its transactional revenues based on the number of bill-pay transactions that End Users initiate on its digital banking platform. The Company also generates a smaller portion of its transactional revenues from fees generated when End Users utilize debit cards integrated with its Q2 CorePro API or Q2 Biller Direct products. The Company recognizes revenue for bill-pay transaction services in the month incurred based on actual or estimated transactions. Services and Other Revenues Implementation services are required for new digital banking and lending platform and other standalone contracts, and there is a significant level of integration and configuration for each customer. The Company's revenue for upfront implementation services is billed upfront and generally recognized over time on a ratable basis over the customer agreement term for its hosted application agreements. Upfront implementation services for on-premises agreements are recognized at commencement date. Under certain circumstances, the Company partners with third-party professional system integrators to support the installation and configuration process for certain products, and therefore, the Company has determined that these services qualify as a separate performance obligation in certain markets and geographies, and the implementation services for these agreements are recognized over time as services are performed. Professional services revenues, which primarily consist of training, advisory services, core conversion services, web design, and other general professional services, are generally billed and recognized when delivered. Premier Services revenue is generated from select established customer relationships where the Company has engaged with the customer for more tailored, premium professional services, or Premier Services, resulting in a deeper and ongoing level of engagement with them. Other also includes certain debit card related pass-through fees that are not directly tied to card utilization. Certain out-of-pocket expenses billed to customers are recorded as revenues rather than an offset to the related expense. Significant Judgments Performance Obligations and Standalone Selling Price A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of accounting. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. The Company has contracts with customers that often include multiple performance obligations, usually including multiple subscription and implementation services. For these contracts, the Company accounts for individual performance obligations that are separately identifiable by allocating the contract's total transaction price to each performance obligation in an amount based on the relative standalone selling price, or SSP, of each distinct good or service in the contract. In determining whether implementation services are distinct from subscription services, the Company considered various factors including the significant level of integration, interdependency, and interrelation between the implementation and subscription service, as well as the inability of the customer's personnel or other service providers to perform significant portions of the services. The Company has concluded that the implementation services included in contracts with multiple performance obligations across the majority of its markets and product offerings are not distinct and, as a result, the Company defers any arrangement fees for implementation services and recognizes such amounts over time on a ratable basis as one performance obligation with the underlying subscription revenue for the initial agreement term of the hosted application agreements. The Company has concluded that for certain aspects of its lending platform the implementation services included in contracts with multiple performance obligations are distinct and, as a result, the Company recognizes implementation fees on such arrangements over time as services are performed. The majority of the Company's revenue recognized at a particular point in time is for usage revenue, on-premise software licenses and certain professional services. These services are recognized at the point in time in which the customer obtains control of the asset, which is generally upon completion of the service or the point the customer obtained control of the software. Judgment is required to determine the SSP for each distinct performance obligation. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The primary method used to estimate SSP is the adjusted market assessment approach, which considers the Company's overall pricing objectives, market conditions and other factors, including the value of the Company's contracts, its discounting practices, the size and volume of its transactions, customer characteristics, price lists, go-to-market strategy, historical standalone sales and agreement prices, and the number and types of users within its contracts. Variable Consideration The Company recognizes usage revenue related to bill-pay transactions that End Users initiate on its digital banking platform and interchange fees that End Users generate using the Company's solutions. Judgment is required to determine the accounting for these types of revenue. The Company considers various factors including the degree to which usage is interdependent or interrelated to past services, costs to the Company per user over the contract, and contractual price per user changes and their relationship to market terms, forecasted data, and the Company's cost to fulfill the obligation. The Company has concluded that its usage revenue relates specifically to the transfer of the service to the customer and is consistent with the allocation objective of Topic 606 when considering all of the performance obligations and payment terms in the contract. Therefore, the Company recognizes usage revenue on a monthly or quarterly basis in accordance with the agreement, as determined and reported. This allocation reflects the amount the Company expects to receive for the services for the given period. The Company sometimes provides credits or incentives to its customers. Known and estimable credits and incentives represent a form of variable consideration, which are estimated at contract inception and generally result in reductions to revenues recognized for a particular contract. These estimates are updated at the end of each reporting period as additional information becomes available. The Company believes that there will not be significant changes to its estimates of variable consideration as of June 30, 2022. Other Considerations The Company evaluates whether it is the principal (i.e., reports revenues on a gross basis) or agent (i.e., reports revenues on a net basis) with respect to the vendor reseller agreements pursuant to which the Company resells certain third-party solutions along with the Company's solutions. Generally, the Company reports revenues from these types of contracts on a gross basis, meaning the amounts billed to customers are recorded as revenues, and expenses incurred are recorded as cost of revenues. Where the Company is the principal, it first obtains control of the inputs to the specific good or service and directs their use to create the combined output. The Company's control is evidenced by its involvement in the integration of the good or service on its platform before it is transferred to its customers and is further supported by the Company being primarily responsible to its customers and having a level of discretion in establishing pricing. Revenues provided from agreements in which the Company is an agent are insignificant. Cost of Revenues Cost of revenues are comprised primarily of salaries and other personnel-related costs, including employee benefits, bonuses and stock-based compensation, for employees providing services to the Company's customers. This includes the costs of the Company's personnel performing implementation, customer support, data center and customer training activities. Cost of revenues also includes the direct costs of bill-pay and other third-party intellectual property included in the Company's solutions, the amortization of deferred solution and services costs, the amortization of capitalized software development costs, co-location facility costs and depreciation of the Company's data center assets, debit card related pass-through fees, cloud-based hosting services, an allocation of general overhead costs and referral fees. Direct costs of third-party intellectual property include amounts paid for third-party licenses and related maintenance that are incorporated into the Company's software and the amortization of acquired technology from the Company's recent acquisitions, with the costs amortized to cost of revenues over the useful lives of the purchased assets. The Company capitalizes certain personnel costs directly related to the implementation of its solutions to the extent those costs are recoverable from future revenues. The Company amortizes the costs for an implementation once revenue recognition commences, and the Company amortizes those implementation costs to cost of revenues over the expected period of customer benefit, which has been determined to be the estimated life of the technology. Other costs not directly recoverable from future revenues are expensed in the period incurred.
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Software Development Costs | Software development costs include salaries and other personnel-related costs for those employees who are directly associated with and who devote time to developing the Company's software solutions, including employee benefits, stock-based compensation and bonuses attributed to programmers, software engineers, quality control teams and third-party development costs. Capitalized software development costs are computed on an individual product basis. The Company also capitalizes certain costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional features and functionality. Capitalization ceases for products, upgrades and enhancements when released or made available. Internal-use software is amortized to cost of revenues over the products' estimated economic lives, which are expected to be | to five years. The costs related to software development are included in intangible assets, net on the condensed consolidated balance sheets. Costs incurred in the preliminary stages of development and maintenance costs are expensed as incurred.
Research and Development Costs | Research and development costs include salaries and other personnel-related costs, including employee benefits, bonuses and stock-based compensation, third-party contractor expenses, third-party consultants, software development tools, an allocation of facilities and depreciation expenses and other related expenses incurred in developing new solutions and upgrading and enhancing existing solutions. Certain research and development costs that are related to the Company's software development, which include salaries and other personnel-related costs, including employee benefits, stock-based compensation expense and bonuses attributed to programmers, software engineers and quality control teams working on the Company's software solutions, are capitalized and are included in intangible assets, net on the condensed consolidated balance sheets.
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Advertising | All advertising costs of the Company are generally expensed the first time the advertising takes place. payments under this arrangement are deferred and expensed as advertising costs on a straight-line basis over the term of the arrangement. |
Sales Tax | The Company presents sales taxes and other taxes collected from customers and remitted to governmental authorities on a net basis and, as such, excludes them from revenues. |
Comprehensive Loss | Comprehensive loss includes net loss as well as other changes in stockholders' equity that result from transactions and economic events other than those with stockholders. Other comprehensive loss consists of net loss, unrealized gains and losses on available-for-sale investments, and foreign currency translation adjustments. |
Stock-Based Compensation | Stock options, restricted stock units, and market stock units awarded to employees, directors, and consultants are measured at fair value at each grant date. The Company does not use a forfeiture rate to recognize compensation expense. Generally, options vest 25% on the one-year anniversary of the grant date with the balance vesting monthly over the following 36 months, and restricted stock unit awards vest in four annual installments of 25% each. Market stock units are performance-based awards that vest based on the Company's stockholder return relative to the total stockholder return of the Russell 2000 Index, or Index. Market stock units granted prior to fiscal 2021 vest over a three-year period on the anniversary of the date of grant, generally with anywhere from zero to up to one-third of the target shares of the Company's common stock subject to each market stock unit award eligible to be earned after the first and second years and anywhere from zero to up to 200% of the full target number of shares subject to each market stock unit award eligible to be earned after the completion of the three-year performance period (less any shares earned for years one and two) based on the average price of the Company's common stock relative to the Index during the performance period. Beginning in March 2021, newly granted market stock units vest over a two-year and three-year period, each running from approximately the date of grant, with anywhere from zero to up to one-third of the target shares of the Company's common stock subject to each market stock unit award eligible to be earned after completion of the two-year performance period and anywhere from zero to up to 200% of the full target number of shares subject to each market stock unit award eligible to be earned after the completion of the three-year performance period (less any shares earned for the two-year performance period) based on the average price of the Company's common stock relative to the Index during the performance period. From time to time, the Company may make grants of restricted stock units or market stock units with vesting formulas that vary from those described above. The Company values stock options using the Black-Scholes option-pricing model, which requires the input of subjective assumptions, including the risk-free interest rate, expected life, expected stock price volatility and dividend yield. The risk-free interest rate assumption is based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the expected term of the Company's employee stock options. The expected life represents the time the stock options are expected to be outstanding and is based on the simplified method. Under the simplified method, the expected life of an option is presumed to be the mid-point between the vesting date and end of the contractual term. The Company used the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. Expected volatility is based on historical volatilities for publicly traded stock of comparable companies over the estimated expected life of the stock options. The Company assumes no dividend yield because it does not expect to pay dividends in the near future, which is consistent with the Company's history of not paying dividends. The Company recognizes compensation expense ratably over the requisite service period of the stock option award. The Company values restricted stock units at the closing market price on the date of grant and recognizes compensation expense ratably over the requisite service period of the restricted stock unit award. The Company estimates the fair value of market stock units on the date of grant using a Monte Carlo simulation model. The determination of fair value of the market stock units is affected by the Company's stock price and a number of assumptions including the expected volatility and the risk-free interest rate. The Company's expected volatility at the date of grant was based on the historical volatilities of its stock and peer firms' stocks and the Index over the performance period. The Company assumes no dividend yield and recognizes compensation expense ratably over the performance period of the market stock unit award. The Company recognizes compensation expense using the graded attribution method on a straight-line basis over the performance period for each market stock unit award. Effective January 3, 2022, the Company implemented its Employee Stock Purchase Plan, or ESPP, previously approved by the Company's board of directors and stockholders in March 2014. The ESPP generally permits domestic employees who meet certain criteria to purchase the Company's common stock through payroll deductions during six month offering periods. As is permitted under the ESPP, the initial offering period in fiscal 2022 extended for four months from February 1, 2022 through May 31, 2022, with the subsequent offering period extending from June 1, 2022 through November 30, 2022. For the remainder of fiscal 2022 and for all subsequent years, unless otherwise determined by the compensation committee of the board of directors, there will be additional six-month offering periods commencing on each of June 1 and December 1. In accordance with the guidance in ASC 718-50 - Compensation - Stock Compensation, the ability to purchase shares of the Company's common stock for 85% of the lower of the price on the first day of the offering period or the last day of the offering period represents an option and, therefore, the ESPP is a compensatory plan. Accordingly, stock-based compensation expense is determined based on the grant date fair value as estimated by applying the Black-Scholes option-pricing model and is recognized straight-line over the withholding period. The Company recognizes compensation expense ratably over the requisite service period.
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Convertible Senior Notes | When accounting for the issuance of convertible notes, prior to the adoption of ASU 2020-06, the Company separated each of the convertible notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value, as of the date of issuance, of a similar debt without the conversion feature. The carrying amount of the equity component representing the conversion feature was determined by deducting the fair value of the liability components from the total initial proceeds. The difference between the par amount of the convertible notes and the carrying amount of the liability component represented debt discounts that were amortized to interest expense over the respective terms of the convertible notes at effective interest rates of 5.88%, 5.38% and 5.00% for the 2023 Notes, 2026 Notes and 2025 Notes, respectively. The equity components were not remeasured as long as they continued to meet the conditions for equity classification. In accounting for the issuance costs related to its convertible notes, the Company allocated the total amount of issuance costs incurred to liability and equity components based on their relative values. Issuance costs attributable to the liability components were amortized to interest expense over the respective terms of the convertible notes using the effective interest rate method. The issuance costs attributable to the equity components were netted against the respective equity components in additional paid-in capital. Upon adoption of ASU 2020-06 on January 1, 2022, the Company reversed the separation of the liability and equity components and accounted for the Notes wholly as debt. The Company also reversed the amortization of the debt discount with the cumulative adjustment to retained earnings on the adoption date. As such, the debt is no longer recorded at a discount and issuance costs are amortized on a straight-line basis, which approximates the effective interest rate method. Refer to the "Recent Accounting Pronouncements" section below for more detail on the adoption impacts.
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Leases | The Company determines if a contract contains a lease for accounting purposes at the inception of the arrangement. The Company has elected to apply the practical expedient which allows the Company to account for lease and non-lease components of a contract as a single leasing arrangement. In addition, the Company has elected the practical expedients related to lease classification and the short-term lease exemption, whereby leases with initial terms of one year or less are not capitalized and instead expensed generally on a straight-line basis over the lease term. The Company is primarily a lessee with a lease portfolio comprised mainly of real estate and equipment leases. As of June 30, 2022, the Company had no finance leases. Operating lease assets are included on the Company's condensed consolidated balance sheets in non-current assets as a right-of-use, or ROU, asset, and represent the Company's right to use an underlying asset for the lease term. Operating lease liabilities are included on the Company's condensed consolidated balance sheets in lease liabilities, current portion, for the portion that is due within 12 months and in lease liabilities, net of current portion, for the portion that is due beyond 12 months of the financial statement date and represent the Company's obligation to make lease payments. ROU assets and lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term using an appropriate discount rate. If an implicit rate is not readily determined by the Company's leases, the Company utilizes the incremental borrowing rate based on the available information at the commencement date to determine the lease payments. The depreciable lives of the underlying leased assets are generally limited to the expected lease term inclusive of any optional lease renewals where the Company concludes at the inception of the lease that the Company is reasonably certain of exercising those options. The ROU asset calculation may also include any initial direct costs paid and is reduced by any lease incentives provided by the lessor. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.
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Income Taxes | Deferred income taxes are provided for the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases and operating loss carryforwards and credits using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. The Company assesses the likelihood that deferred tax assets will be realized and recognizes a valuation allowance if it is more likely than not that some portion of the deferred tax assets will not be realized. This assessment requires judgment as to the likelihood and amounts of future taxable income by tax jurisdiction. To date, the Company has provided a valuation allowance against most of its deferred tax assets as it believes the objective and verifiable evidence of its historical pretax net losses outweighs any positive evidence of its forecasted future results. The Company will continue to monitor the positive and negative evidence, and it will adjust the valuation allowance as sufficient objective positive evidence becomes available. The Company evaluates its uncertain tax positions based on a determination of whether and how much of a tax benefit or expense taken by the Company in its tax filings or positions is more likely than not to be realized. The Company believes it has accrued adequate reserves related to its uncertain tax positions; however, ultimate determination of the Company's liability is subject to audit by taxing authorities in the ordinary course of business. The Company records interest and penalties associated with any uncertain tax positions as a component of income tax expense.
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Basic and Diluted Net Loss per Common Share | Under the modified retrospective method of adoption of ASU 2020-06, the dilutive impact of the convertible senior notes was calculated using the if-converted method for the six months ended June 30, 2022. The Company's convertible senior notes were calculated using the treasury stock method for the six months ended June 30, 2021. Refer to discussion within "Recent Accounting Pronouncements" below for further details. The exercise rights of the Warrants issued in connection with the 2023 Notes will have a dilutive impact on net income per share of common stock under the treasury-stock method when the average market price per share of the Company's common stock for a given period exceeds the conversion price of $78.75 per share. However, since the Company is in a net loss position, there was no dilutive effect on net loss per share of the Company's common stock during any period presented. |
Recent Accounting Pronouncements | In August 2020, the FASB issued ASU No. 2020-06, "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40)" which simplifies the accounting for convertible debt instruments by eliminating the requirement to separate embedded conversion features from the host contract when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. In addition, the guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The Company adopted the new guidance effective January 1, 2022, using the modified retrospective approach. The impact resulted in an increase to the convertible notes balance of $114.4 million to reflect the full principal amount of the convertible notes outstanding net of issuance costs, a reduction to the additional paid in capital balance of $157.0 million to remove the equity component separately recorded for the conversion features associated with the convertible notes, and an increase to the beginning balance of accumulated deficit of $42.6 million. As a result of the adoption, non-cash interest expense was lower for the three and six months ended June 30, 2022 and will be lower for the remaining term of the outstanding convertible notes. The adoption had no impact on the Company's condensed consolidated statement of cash flows. Additionally, ASU 2020-06 eliminates the treasury stock method and instead requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share when instruments may be settled in cash or shares. The required use of the if-converted method did not impact the diluted net loss per share as the Company was in a net loss position. The prior period condensed consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods. In May 2021, the FASB issued ASU No. 2021-04, "Earnings Per Share (Topic 260), Debt - Modifications and Extinguishments (Subtopic 470-50), Compensation - Stock Compensation (Topic 718), and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40)" which clarifies and reduces diversity in the accounting for modifications or exchanges of freestanding equity classified written call options that remain equity classified after modification or exchange. The ASU provides a principles-based framework to determine whether an issuer should recognize the modification or exchange as an adjustment to equity or an expense. The Company has adopted the provisions of the new standard effective January 1, 2022. There was no impact on the Company's condensed consolidated financial statements as of the adoption date. In October 2021, the FASB issued ASU No. 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers" which clarifies and reduces diversity in the accounting related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. The Company has early adopted the provisions of the new standard effective January 1, 2022. There was no impact on the Company's condensed consolidated financial statements as of the adoption date.
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Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Useful Lives of Property and Equipment | The estimated useful lives of property and equipment are as follows:
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Schedule of Disaggregation of Revenue by Major Source | The following table disaggregates the Company's revenue by major source:
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Schedule of Net Loss Per Share, Basic and Diluted | The following table sets forth the computations of net loss per share for the periods listed:
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Schedule of Antidilutive Securities Excluded from Computation of Loss Per Share | The following table sets forth the anti-dilutive common share equivalents for the periods listed:
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Assets Measured on Recurring Basis | The following table details the fair value hierarchy of the Company's financial assets measured at fair value on a recurring basis as of June 30, 2022:
The following table details the fair value hierarchy of the Company's financial assets measured at fair value on a recurring basis as of December 31, 2021:
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Cash, Cash Equivalents and Investments (Tables) |
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Cash, Cash Equivalents and Investments | A summary of the Company's cash equivalents and investments that are carried at fair value as of June 30, 2022 is as follows:
A summary of the Company's cash equivalents and investments that are carried at fair value as of December 31, 2021 is as follows:
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Schedule of Investments Classified by Contractual Maturity Date | The following table summarizes the estimated fair value of the Company's debt investments, designated as available-for-sale and classified by the contractual maturity date of the investments as of the dates shown:
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Schedule of Fair Values and Gross Unrealized Losses for Available-For-Sale Securities | The following table shows the fair values and the gross unrealized losses of these available-for-sale debt investments aggregated by investment category as of June 30, 2022:
The following table shows the fair values and the gross unrealized losses of these available-for-sale debt investments aggregated by investment category as of December 31, 2021:
|
Goodwill and Intangible Assets (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets | Intangible assets at June 30, 2022 and December 31, 2021 were as follows:
|
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated future amortization expense related to intangible assets as of June 30, 2022 was as follows:
|
Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Payments Required Under Operating Leases | Future minimum payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year at June 30, 2022 were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Contractual Commitments | Future minimum contractual commitments that have initial or remaining non-cancelable terms in excess of one year at June 30, 2022 were as follows:
|
Convertible Senior Notes (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Convertible Notes | The following table presents details of the Company's convertible senior notes, which are further discussed below (original principal in thousands):
(1) Unless earlier converted or repurchased in accordance with their terms prior to such date (2) Subject to adjustment upon the occurrence of certain specified events The 2023 Notes, 2026 Notes and 2025 Notes consist of the following:
____________________________________________________________________________ (1) See Note 2, "Summary of Significant Accounting Policies" for more information regarding the effect of adoption of ASU 2020-06
|
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Summary of Interest Expense | The following table sets forth total interest expense recognized related to the 2023, 2026 and 2025 Notes:
____________________________________________________________________________ (1) See Note 2, "Summary of Significant Accounting Policies" for more information regarding the effect of adoption of ASU 2020-06
|
Stock-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation Expense Recorded in the Consolidated Statements of Comprehensive Loss | Stock-based compensation expense was recorded in the following cost and expense categories in the Company's condensed consolidated statements of comprehensive loss:
|
Organization and Description of Business (Details) |
Jun. 30, 2022 |
---|---|
Q2 Software, Inc. | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Wholly owned subsidiary, ownership percentage (in percent) | 100.00% |
Summary of Significant Accounting Policies -Concentration of Credit Risk (Details) |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
One Customer | Accounts Receivable | Customer Concentration Risk | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Concentration risk | 14.00% |
Summary of Significant Accounting Policies - Contract Balances and Accounts Receivable (Details) - USD ($) |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
Accounting Policies [Abstract] | |||
Provision for expected credit losses, contract balances | $ 200,000 | $ 20,000.00 | |
Writeoffs, contract balances | 400,000 | 0 | |
Allowance for credit loss, contract balances | 200,000 | $ 300,000 | |
Unbilled receivables | 5,700,000 | 4,800,000 | |
Provision for expected credit losses, accounts receivable | 500,000 | 100,000 | |
Writeoffs, accounts receivable | 400,000 | $ 200,000 | |
Allowance reserve | 700,000 | 500,000 | |
Allowance for credit losses, sales credits | $ 1,800,000 | $ 1,900,000 |
Summary of Significant Accounting Policies - Schedule of Useful Lives of Property and Equipment (Details) |
6 Months Ended |
---|---|
Jun. 30, 2022 | |
Computer hardware and equipment | Minimum | |
Intangible Assets, Net [Line Items] | |
Estimated useful life (in years) | 3 years |
Computer hardware and equipment | Maximum | |
Intangible Assets, Net [Line Items] | |
Estimated useful life (in years) | 5 years |
Purchased software and licenses | Minimum | |
Intangible Assets, Net [Line Items] | |
Estimated useful life (in years) | 3 years |
Purchased software and licenses | Maximum | |
Intangible Assets, Net [Line Items] | |
Estimated useful life (in years) | 5 years |
Furniture and fixtures | |
Intangible Assets, Net [Line Items] | |
Estimated useful life (in years) | 7 years |
Summary of Significant Accounting Policies - Disaggregation of Revenues by Major Source (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Disaggregation of Revenue [Line Items] | ||||
Total Revenues | $ 140,309 | $ 123,573 | $ 274,380 | $ 240,093 |
Subscription | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenues | 100,782 | 89,150 | 197,366 | 174,221 |
Transactional | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenues | 17,735 | 17,710 | 34,784 | 33,993 |
Services and Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenues | $ 21,792 | $ 16,713 | $ 42,230 | $ 31,879 |
Summary of Significant Accounting Policies - Software Development Cost (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Minimum | ||||
Intangible Assets, Net [Line Items] | ||||
Estimated useful life (in years) | 2 years | |||
Maximum | ||||
Intangible Assets, Net [Line Items] | ||||
Estimated useful life (in years) | 10 years | |||
Capitalized software development costs | ||||
Intangible Assets, Net [Line Items] | ||||
Capitalized costs | $ 5.2 | $ 1.5 | $ 9.5 | $ 2.3 |
Capitalized software development costs | ||||
Intangible Assets, Net [Line Items] | ||||
Amortization of capitalized software development costs | $ 0.6 | $ 0.3 | $ 1.0 | $ 0.5 |
Capitalized software development costs | Minimum | ||||
Intangible Assets, Net [Line Items] | ||||
Estimated useful life (in years) | 3 years | |||
Capitalized software development costs | Maximum | ||||
Intangible Assets, Net [Line Items] | ||||
Estimated useful life (in years) | 5 years |
Summary of Significant Accounting Policies - Advertising (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Accounting Policies [Abstract] | ||||
Advertising costs | $ 1.0 | $ 0.5 | $ 2.2 | $ 0.6 |
Summary of Significant Accounting Policies - Convertible Senior Notes (Details) - Convertible Debt - USD ($) |
1 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Nov. 30, 2020 |
Jun. 30, 2022 |
May 31, 2021 |
Nov. 15, 2020 |
Jun. 30, 2019 |
Jun. 01, 2019 |
Feb. 28, 2018 |
Feb. 15, 2018 |
|
Convertible Senior Notes Due February 2023 | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | $ 10,900,000 | $ 230,000,000 | $ 230,000,000 | |||||
Extinguishment of debt | $ 181,900,000 | |||||||
Repurchased principal amount | $ 37,100,000 | |||||||
Effective interest rate (in percent) | 5.88% | |||||||
Convertible Senior Notes Due June 2026 | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | $ 316,300,000 | $ 316,250,000 | ||||||
Effective interest rate (in percent) | 5.38% | |||||||
Convertible Notes Due 2025 | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | 350,000,000 | $ 350,000,000 | ||||||
Principal amount received | 210,700,000 | |||||||
Principal amount, additional | $ 139,300,000 | |||||||
Effective interest rate (in percent) | 5.00% |
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Jan. 01, 2022 |
Dec. 31, 2021 |
---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Convertible notes, net of current portion | $ 656,469 | $ 551,598 | |
Additional paid-in capital | 943,607 | 1,064,358 | |
Accumulated deficit | $ 500,108 | $ 493,933 | |
Accounting Standards Update 2020-06 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Convertible notes, net of current portion | $ 114,400 | ||
Additional paid-in capital | 157,000 | ||
Accumulated deficit | $ 42,600 |
Cash, Cash Equivalents and Investments - Narrative (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
Cash and Cash Equivalents [Line Items] | |||
Impairment for credit losses | $ 0 | $ 0 | |
Equity method investments | 200,000 | ||
Cash and cash equivalents | 211,127,000 | $ 322,848,000 | |
Available for sale debt securities allowance for credit loss | 0 | 0 | |
Cash | |||
Cash and Cash Equivalents [Line Items] | |||
Cash and cash equivalents | $ 99,200,000 | $ 126,900,000 |
Cash, Cash Equivalents and Investments - Schedule of Contractual Maturities (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Cash and Cash Equivalents [Abstract] | ||
Due within one year or less | $ 149,256 | $ 63,935 |
Due after one year through five years | 38,741 | 40,943 |
Total | $ 187,997 | $ 104,878 |
Cash, Cash Equivalents and Investments - Fair Values and Gross Unrealized Loss of Available-For-Sale Investments (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Debt Securities, Available-for-sale [Line Items] | ||
Adjusted Cost | $ 176,719 | $ 90,158 |
Gross Unrealized Loss | (1,841) | (226) |
Fair Value | 174,878 | 89,932 |
U.S. government securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Adjusted Cost | 121,271 | 48,658 |
Gross Unrealized Loss | (1,287) | (160) |
Fair Value | 119,984 | 48,498 |
Corporate bonds and commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Adjusted Cost | 55,448 | 41,500 |
Gross Unrealized Loss | (554) | (66) |
Fair Value | $ 54,894 | $ 41,434 |
Goodwill and Intangible Assets - Schedule of Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2022 (July 1 to December 31) | $ 21,699 | |
2023 | 42,867 | |
2024 | 37,757 | |
2025 | 25,517 | |
2026 | 18,949 | |
Thereafter | 4,108 | |
Net Carrying Amount | $ 150,897 | $ 162,461 |
Commitments and Contingencies - Narrative (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2022
USD ($)
|
Mar. 31, 2022
USD ($)
|
Jun. 30, 2021
USD ($)
|
Jun. 30, 2022
USD ($)
building
|
Jun. 30, 2021
USD ($)
|
Dec. 31, 2021
USD ($)
|
|
Other Commitments [Line Items] | ||||||
Number of buildings occupied | building | 2 | |||||
Unoccupied lease charges | $ 129 | $ 812 | $ 537 | $ 812 | ||
Restructured lease liability, current | 9,330 | 9,330 | $ 9,001 | |||
Restructured lease liability, non-current | 56,646 | 56,646 | $ 61,374 | |||
Rent expense | $ 2,000 | 1,700 | $ 4,000 | 3,300 | ||
Gain contingencies | $ 700 | |||||
Lease One | ||||||
Other Commitments [Line Items] | ||||||
Lease renewal term (in years) | 10 years | 10 years | ||||
Lease Two | ||||||
Other Commitments [Line Items] | ||||||
Lease term (in years) | 10 years | 10 years | ||||
Facilities | ||||||
Other Commitments [Line Items] | ||||||
Unoccupied lease charges | $ 100 | $ 800 | $ 500 | $ 800 | ||
Restructured lease liability, current | 1,000 | 1,000 | ||||
Restructured lease liability, non-current | $ 1,500 | $ 1,500 |
Commitments and Contingencies - Schedule of Minimum Payments Required Under Operating Leases (Details) $ in Thousands |
Jun. 30, 2022
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2022 (July 1 to December 31) | $ 6,479 |
2023 | 12,275 |
2024 | 11,146 |
2025 | 10,203 |
2026 | 9,167 |
Thereafter | 17,559 |
Total lease payments | 66,829 |
Less: present value discount | (853) |
Present value of lease liabilities | $ 65,976 |
Commitments and Contingencies - Contractual Commitments (Details) $ in Thousands |
Jun. 30, 2022
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2022 (July 1 to December 31) | $ 18,392 |
2023 | 45,662 |
2024 | 18,316 |
2025 | 359,109 |
2026 | 320,936 |
Thereafter | 7,000 |
Total commitments | $ 769,415 |
Convertible Senior Notes - Schedule of Interest Expense Related to 2023, 2026, 2025 Notes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Debt Instrument [Line Items] | ||||
Amortization of debt issuance costs | $ 1,367 | $ 1,045 | ||
Amortization of debt discount | 0 | 13,054 | ||
Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Contractual interest expense | $ 722 | $ 764 | 1,446 | 1,556 |
Amortization of debt issuance costs | 691 | 540 | 1,367 | 1,045 |
Amortization of debt discount | 0 | 6,553 | 0 | 13,054 |
Total | $ 1,413 | $ 7,857 | $ 2,813 | $ 15,655 |
Convertible Senior Notes - Capped Call Transactions (Details) $ / shares in Units, $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2022
USD ($)
cappedCallTransaction
$ / shares
| |
Debt Instrument [Line Items] | |
Number of capped call transactions | cappedCallTransaction | 2 |
Convertible Senior Notes Due June 2026 | Convertible Debt | |
Debt Instrument [Line Items] | |
Initial strike price (in usd per share) | $ 88.6124 |
Initial cap price (in usd per share) | $ 139.00 |
Cost incurred in connection with capped calls | $ | $ 40.8 |
Convertible Notes Due 2025 | Convertible Debt | |
Debt Instrument [Line Items] | |
Initial strike price (in usd per share) | $ 140.1443 |
Initial cap price (in usd per share) | $ 211.54 |
Cost incurred in connection with capped calls | $ | $ 39.8 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | (1.40%) | (0.60%) | (3.60%) | (0.60%) |
Unrecognized tax benefits | $ 3.2 | $ 3.2 | ||
Unrecognized tax benefits, increase resulting from prior period tax positions | 0.6 | |||
Previous unrecognized tax benefit realized | $ 0.6 |
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