10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-37874

Everbridge, Inc.

(Exact name of registrant as specified in its charter)

Delaware	26-2919312
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
25 Corporate Drive, Suite 400 Burlington, Massachusetts	01803
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (818) 230-9700

Securities registered pursuant to Section 12(b) of the Securities Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	EVBG	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of August 3, 2021, the registrant had 38,385,479 shares of common stock issued and outstanding.

EVERBRIDGE, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION	3
Item 1.	Condensed Consolidated Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to the Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53
Item 4.	Controls and Procedures	54
PART II.	OTHER INFORMATION	56
Item 1.	Legal Proceedings	56
Item 1A.	Risk Factors	56
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58
Item 3.	Defaults Upon Senior Securities	59
Item 4.	Mine Safety Disclosures	59
Item 5.	Other Information	59
Item 6.	Exhibits	60
Signatures		61

2

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited).

EVERBRIDGE, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share data)

(unaudited)

	June 30, 2021			December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	559,851		$	467,171
Restricted cash		4,666			4,667
Accounts receivable, net		83,183			94,376
Prepaid expenses		13,301			11,774
Deferred costs and other current assets		21,348			20,464
Total current assets		682,349			598,452
Property and equipment, net		9,567			7,774
Capitalized software development costs, net		18,368			16,329
Goodwill		405,223			187,411
Intangible assets, net		216,723			113,762
Restricted cash		3,785			3,792
Prepaid expenses		1,795			1,943
Deferred costs and other assets		37,214			31,481
Total assets	$	1,375,024		$	960,944
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	10,964		$	9,698
Accrued payroll and employee related liabilities		26,860			27,674
Accrued expenses		10,235			7,246
Deferred revenue		196,481			165,389
Contingent consideration liabilities		18,775			10,619
Other current liabilities		14,376			15,602
Total current liabilities		277,691			236,228
Long-term liabilities:
Deferred revenue, noncurrent		13,509			4,738
Convertible senior notes		646,533			441,514
Deferred tax liabilities		14,022			10,065
Other long-term liabilities		17,940			16,094
Total liabilities		969,695			708,639
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $0.001, 10,000,000 shares authorized, no shares issued or outstanding    as of June 30, 2021 and December 31, 2020, respectively		—			—
Common stock, $0.001 par value, 100,000,000 shares authorized, 38,288,685 and 35,449,447    shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		38			35
Additional paid-in capital		752,773			542,776
Accumulated deficit		(348,926	)		(293,316	)
Accumulated other comprehensive income		1,444			2,810
Total stockholders’ equity		405,329			252,305
Total liabilities and stockholders’ equity	$	1,375,024		$	960,944

See accompanying notes to condensed consolidated financial statements.

3

EVERBRIDGE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenue	$	86,649		$	65,377		$	168,859		$	124,277
Cost of revenue		27,665			19,423			52,945			40,312
Gross profit		58,984			45,954			115,914			83,965
Operating expenses:
Sales and marketing		41,483			28,741			76,010			58,329
Research and development		20,251			14,937			38,330			29,109
General and administrative		24,664			16,799			47,226			32,710
Total operating expenses		86,398			60,477			161,566			120,148
Operating loss		(27,414	)		(14,523	)		(45,652	)		(36,183	)
Other expense, net:
Interest and investment income		100			235			233			1,808
Interest expense		(9,655	)		(5,998	)		(16,215	)		(11,920	)
Loss on extinguishment of convertible notes and capped call modification		(37	)		—			(2,925	)		—
Other expense, net		(602	)		(438	)		(651	)		(515	)
Total other expense, net		(10,194	)		(6,201	)		(19,558	)		(10,627	)
Loss before income taxes		(37,608	)		(20,724	)		(65,210	)		(46,810	)
Benefit from income taxes		3,787			1,504			9,600			2,205
Net loss	$	(33,821	)	$	(19,220	)	$	(55,610	)	$	(44,605	)
Net loss per share attributable to common stockholders:
Basic	$	(0.89	)	$	(0.56	)	$	(1.49	)	$	(1.30	)
Diluted	$	(0.89	)	$	(0.56	)	$	(1.49	)	$	(1.30	)
Weighted-average common shares outstanding:
Basic		38,014,107			34,402,704			37,204,958			34,238,887
Diluted		38,014,107			34,402,704			37,204,958			34,238,887

See accompanying notes to condensed consolidated financial statements.

4

EVERBRIDGE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Net loss	$	(33,821	)	$	(19,220	)	$	(55,610	)	$	(44,605	)
Other comprehensive income (loss):
Foreign currency translation adjustment, net of taxes		1,231			2,343			(1,366	)		(4,177	)
Total comprehensive loss	$	(32,590	)	$	(16,877	)	$	(56,976	)	$	(48,782	)

See accompanying notes to condensed consolidated financial statements.

5

EVERBRIDGE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)

	Common stock					Additional paid-in			Accumulated			Accumulated- other comprehensive
	Shares			Par value		capital			deficit			income			Total
Balance at December 31, 2020		35,449,447		$	35	$	542,776		$	(293,316	)	$	2,810		$	252,305
Issuance of common stock in connection with acquisition		162,820			—		23,032			—			—			23,032
Stock-based compensation		—			—		12,770			—			—			12,770
Vesting of restricted stock units and performance-based    restricted stock units		64,304			1		—			—			—			1
Restricted stock units and performance-based    restricted stock units withheld to settle employee    tax withholding liability		(11,649	)		—		(1,611	)		—			—			(1,611	)
Exercise of stock options		52,955			—		1,604			—			—			1,604
Issuance of shares under employee stock purchase plan		23,499			—		2,451			—			—			2,451
Equity component of convertible notes due 2026, net of    allocated issuance costs and taxes		—			—		99,000			—			—			99,000
Purchase of capped call hedge for the convertible notes due    2026, including issuance costs		—			—		(35,124	)		—			—			(35,124	)
Settlement of convertible notes due 2022		1,870,823			2		15,650			—			—			15,652
Termination and modification of capped call hedge for    convertible notes due 2022		—			—		10,886			—			—			10,886
Other comprehensive loss		—			—		—			—			(2,597	)		(2,597	)
Net loss		—			—		—			(21,789	)		—			(21,789	)
Balance at March 31, 2021		37,612,199			38		671,434			(315,105	)		213			356,580
Issuance of common stock in connection with acquisition		555,332			—		64,482			—			—			64,482
Issuance of common stock for contingent consideration		6,188			—		720			—			—			720
Stock-based compensation		—			—		15,635			—			—			15,635
Vesting of restricted stock units and performance-based    restricted stock units		65,364			—		—			—			—			—
Restricted stock units and performance-based    restricted stock units withheld to settle employee    tax withholding liability		(9,929	)		—		(1,233	)		—			—			(1,233	)
Exercise of stock options		22,898			—		559			—			—			559
Settlement of convertible notes due 2022		36,633			—		1,176			—			—			1,176
Other comprehensive income		—			—		—			—			1,231			1,231
Net loss		—			—		—			(33,821	)		—			(33,821	)
Balance at June 30, 2021		38,288,685		$	38	$	752,773		$	(348,926	)	$	1,444		$	405,329

6

	Common stock					Additional paid-in			Accumulated			Accumulated- other comprehensive
	Shares			Par value		capital			deficit			loss			Total
Balance at December 31, 2019		33,848,627		$	34	$	425,945		$	(199,920	)	$	(5,747	)	$	220,312
Issuance of common stock in connection with acquisitions		301,941					30,434			—			—			30,434
Stock-based compensation		—			—		10,368			—			—			10,368
Vesting of restricted stock units		44,606			—		—			—			—			—
Restricted stock units withheld to    settle employee tax withholding liability		(4,483	)		—		(400	)		—			—			(400	)
Exercise of stock options		126,374			—		2,989			—			—			2,989
Issuance of shares under employee stock purchase plan		30,943			—		1,710			—			—			1,710
Other comprehensive loss		—			—		—			—			(6,520	)		(6,520	)
Net loss		—			—		—			(25,385	)		—			(25,385	)
Balance at March 31, 2020		34,348,008			34		471,046			(225,305	)		(12,267	)		233,508
Issuance of common stock in connection with acquisition		38,425			—		5,074			—			—			5,074
Stock-based compensation		—			—		11,372			—			—			11,372
Vesting of restricted stock units		21,507			—		—			—			—			—
Restricted stock units withheld to    settle employee tax withholding liability		(3,980	)		—		(527	)		—			—			(527	)
Exercise of stock options		59,841			—		1,596			—			—			1,596
Other comprehensive income		—			—		—			—			2,343			2,343
Net loss		—			—		—			(19,220	)		—			(19,220	)
Balance at June 30, 2020		34,463,801		$	34	$	488,561		$	(244,525	)	$	(9,924	)	$	234,146

See accompanying notes to condensed consolidated financial statements.

7

EVERBRIDGE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended June 30,
	2021			2020
Cash flows from operating activities:
Net loss	$	(55,610	)	$	(44,605	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		23,854			13,976
Amortization of deferred costs		7,184			5,735
Deferred income taxes		(9,778	)		(3,014	)
Accretion of interest on debt		15,821			10,949
Loss on extinguishment of convertible notes and capped call modification		2,925			—
Provision for credit losses and sales reserve		1,905			1,387
Stock-based compensation		28,190			21,588
Other non-cash adjustments		(32	)		—
Changes in operating assets and liabilities:
Accounts receivable		19,312			3,341
Prepaid expenses		(922	)		(3,265	)
Deferred costs		(8,107	)		(6,943	)
Other assets		(850	)		(3,429	)
Accounts payable		(60	)		2,164
Accrued payroll and employee related liabilities		(5,320	)		(334	)
Accrued expenses		971			(593	)
Deferred revenue		(180	)		(2,722	)
Other liabilities		(4,632	)		2,696
Net cash provided by (used in) operating activities		14,671			(3,069	)
Cash flows from investing activities:
Capital expenditures		(2,128	)		(1,175	)
Payments for acquisition of business, net of acquired cash		(197,666	)		(44,265	)
Additions to capitalized software development costs		(6,082	)		(4,673	)
Net cash used in investing activities		(205,876	)		(50,113	)
Cash flows from financing activities:
Proceeds from issuance of convertible notes		375,000			—
Payments of debt issuance costs		(10,391	)		(131	)
Purchase of convertible notes capped call hedge		(35,100	)		—
Repurchase of convertible notes		(58,641	)		—
Proceeds from termination of convertible notes capped call hedge		10,650			—
Restricted stock units withheld to settle employee tax withholding liability		(2,843	)		(927	)
Proceeds from employee stock purchase plan		2,451			1,710
Proceeds from stock option exercises		2,163			4,585
Net cash provided by financing activities		283,289			5,237
Effect of exchange rates on cash, cash equivalents and restricted cash		588			(419	)
Net increase (decrease) in cash, cash equivalents and restricted cash		92,672			(48,364	)
Cash, cash equivalents and restricted cash—beginning of period		475,630			539,662
Cash, cash equivalents and restricted cash—end of period	$	568,302		$	491,298
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest	$	610		$	974
Taxes, net of refunds received		935			476
Supplemental disclosure of non-cash activities:
Common stock issued in connection with acquisitions		87,514			35,508
Deferred consideration in connection with acquisition		—			895
Purchase accounting payable, net		—			619
Contingent consideration in connection with acquisitions		9,135			4,220
Common stock issued in connection with contingent consideration		720			—
Common stock issued in connection with settlement of convertible notes		16,826			—
Debt issuance costs included in accrued expenses		250			—
Stock-based compensation capitalized for software development costs		215			152
Other non-cash activities		220			376

See accompanying notes to condensed consolidated financial statements.

8

EVERBRIDGE, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

(1) Business and Nature of Operations

Everbridge, Inc., a Delaware corporation (together with its wholly-owned subsidiaries, referred to as “Everbridge” or the “Company”), is a global software company that provides enterprise software applications that automate and accelerate organizations’ operational response to critical events in order to keep people safe and organizations running. The Company’s SaaS-based platform enables the Company’s customers to manage and mitigate critical events. The Company’s enterprise applications, such as Mass Notification, Safety Connection, Incident Management, IT Alerting, Visual Command Center, Public Warning, Community Engagement, Risk Center, Crisis Management, Secure Collaboration, and Control Center, automate numerous critical event management (“CEM”) processes. The Company generates revenue primarily from subscription fees to the Company’s enterprise applications. The Company has operations in the United States, United Kingdom, Norway, China, Netherlands, Canada, New Zealand, France, India, and other countries.

(2) Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The condensed consolidated balance sheet as of December 31, 2020, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by U.S. GAAP on an annual reporting basis.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss, statements of stockholders’ equity and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year 2021 or any future period.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Assets and liabilities which are subject to judgment and use of estimates include the determination of the period of benefit for deferred commissions, relative stand-alone selling price for identified performance obligations in our revenue transactions, allowances for credit losses, the fair value of assets acquired and liabilities assumed in business combinations, the fair value of contingent consideration, the recoverability of goodwill and long-lived assets, valuation allowances with respect to deferred tax assets, useful lives associated with property and equipment and intangible assets, contingencies, and the valuation and assumptions underlying stock-based compensation. On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. In addition, the Company engages valuation specialists to assist with management’s determination of the valuation of its fair values of assets acquired and liabilities assumed in business combinations, convertible senior notes, and certain market-based performance equity awards. There have been significant changes to the global economic situation as a consequence of the COVID-19 pandemic. The global outbreak continues to cause instability and volatility in multiple markets where the Company conducts business which could cause changes to estimates as a result of the financial circumstances. Such changes to estimates could potentially result in impacts that would be material to the consolidated financial statements, particularly with respect to the timing of revenue recognition resulting from potential implementation delays, evaluating the recoverability of long-lived assets with finite useful lives for impairment and estimates of credit losses for accounts receivables and contract assets. No impairments were recorded as of the balance sheet date; however, due to significant uncertainty surrounding the situation, management's judgment regarding this could change in the future. As of the date of issuance of these financial statements, the Company’s results of operations have not been significantly impacted by the COVID-19 pandemic; however, the Company continues to monitor the situation.

9

Concentrations of Credit and Business Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents and accounts receivable.

The Company maintains cash and cash equivalent balances at several banks. Accounts located in the United States are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. From time to time, balances may exceed amounts insured by the FDIC. The Company has not experienced any losses in such amounts.

The Company’s accounts receivable are generally unsecured and are derived from revenue earned from customers primarily located in the United States, Norway, Netherlands, Sweden and the United Kingdom and are generally denominated in U.S. Dollars, Norwegian Krone, Euro, Swedish Kronor or British Pounds. Each reporting period, the Company reevaluates each customer’s ability to satisfy credit obligations and maintains an allowance for credit risk based on the evaluations. No single customer comprised more than 10% of the Company’s total revenue for the three and six months ended June 30, 2021 and 2020. No single customer comprised more than 10% of the Company’s total accounts receivable as of June 30, 2021 and December 31, 2020.   

Cash and Cash Equivalents

The Company considers all highly liquid instruments with original maturities of three months or less at the date of purchase to be cash equivalents. Cash equivalents consist of funds deposited into money market funds. Cash and cash equivalents are recorded at cost, which approximates fair value.

Restricted Cash

The Company’s restricted cash balance primarily consists of cash held at a financial institution for collateral against performance on the Company’s customer contracts and certain other cash deposits for specific purposes.

Significant Accounting Policies

There have been no changes to the Company’s significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 26, 2021, that have had a material impact on the Company’s condensed consolidated financial statements and related notes.

Revenue Recognition

The Company derives its revenues primarily from subscription services and professional services. Revenues are recognized when control of services is transferred to the Company’s customers in an amount that reflects the consideration it expects to be entitled to in exchange for those services.

The Company determines revenue recognition through the following steps:

• Identification of the contract, or contracts, with a customer

• Identification of the performance obligations in the contract

• Determination of the transaction price

• Allocation of the transaction price to the performance obligations in the contract

• Recognition of revenue when, or as, the Company satisfies a performance obligation

Subscription Services Revenues

Subscription services revenues primarily consist of fees that provide customers access to one or more of the Company’s hosted applications for critical event management, with routine customer support. Revenue is generally recognized over time on a ratable basis over the contract term beginning on the date that the Company’s service is made available to the customer. All services are recognized using an output measure of progress looking at time elapsed as the contract generally provides the customer equal benefit throughout the contract period. The Company’s subscription contracts are generally two years or longer in length, billed annually in advance, and non-cancelable.

Professional Services Revenues

Professional services revenues primarily consist of fees for deployment and optimization services, as well as training. The majority of the Company’s consulting contracts revenue is recognized over time as the services are performed. For contracts billed on a fixed price basis, revenue is recognized over time based on the proportion performed.

10

Software License Revenues

On occasion the Company may sell software and related post contract support for on premises usage as well as professional services, hardware and hosting which is outside of the Company’s core business and is not a significant revenue stream for the Company. The Company’s on premises license transactions are generally perpetual in nature and are recognized at a point in time when made available to the customer for use. Significant judgment is required to determine the standalone selling prices for each distinct performance obligation in order to allocate the transaction price for purposes of revenue recognition. Making this judgment of estimating a standalone selling price involves consideration of overall pricing objectives, market conditions and other factors, including the value of our other similar contracts, the applications sold, customer demographics, geographic locations, and the number and types of users within the Company’s contracts. The significant judgment was primarily due to using such considerations to estimate the price that each distinct performance obligation would be sold for on a standalone basis because such performance obligations are typically sold together on a bundled basis. Changes in these estimates of standalone selling prices can have a material effect on the amount of revenue recognized from each distinct performance obligation.

Contracts with Multiple Performance Obligations

Most of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis for those performance obligations with stable observable prices and then the residual method applied for any performance obligation that has pricing which is highly variable. The Company determines the standalone selling prices based on the Company’s overall pricing objectives, taking into consideration market conditions and other factors, including the value of the Company’s contracts, pricing when certain services are sold on a standalone basis, the applications sold, customer demographics, geographic locations, and the volume of services and users.

Returns

The Company does not offer rights of return for its products and services in the normal course of business. 

Customer Acceptance

The Company’s contracts with customers generally do not include customer acceptance clauses.

Trade and Other Receivables

Trade and other receivables are primarily comprised of trade receivables that are recorded at the invoice amount, net of an allowance for credit risk, which is not material. Other receivables represent unbilled receivables related to subscription and professional services contracts, net of an allowance for credit losses, which is not material.

Deferred Costs

Sales commissions earned by the Company’s sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Subscription-related commissions costs are deferred and then amortized on a straight-line basis over a period of benefit that the Company has determined to be four years. Sales commissions attributable to professional services are expensed within twelve months of selling the service to the customer. The Company has determined the period of benefit by taking into consideration its customer contracts, its technology and other factors. Sales commissions attributed to renewals are not material and are not commensurate with initial and growth sales. Amortization of deferred commissions is included in sales and marketing expenses in the accompanying condensed consolidated statements of operations.

Deferred Revenue

Deferred revenue consists of amounts that have been invoiced and for which the Company has the right to bill, but that have not been recognized as revenue because the related goods or services have not been transferred. Deferred revenue that will be realized during the succeeding 12-month period is recorded as current, and the remaining deferred revenue is recorded as non-current.

In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined its contracts generally do not include a significant financing component. The primary purpose of the Company’s invoicing terms is to provide customers with simplified and predictable ways of purchasing the Company’s products and services, not to receive financing from its customers or to provide customers with financing. Examples include invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period.

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Recently Adopted Accounting Pronouncements

ASU 2020-01

In January 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-01, Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815. ASU 2020-01 addresses the accounting for the transition into and out of the equity method and measuring certain purchased options and forward contracts to acquire investments. Observable transactions that require a company to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with FASB Accounting Standards Codification (“ASC”) 321, Investments – Equity Securities, should be considered immediately before applying or upon discontinuing the equity method. Certain non-derivative forward contracts or purchased call options to acquire equity securities generally will be measured using the fair value principles of ASC 321 before settlement or exercise and consideration shall not be given to how entities will account for the resulting investments on eventual settlement or exercise. ASU 2020-01 is effective for the Company beginning in the first quarter of 2021 and early adoption is permitted. ASU 2020-01 should be applied prospectively. The adoption of this standard did not have an impact on the Company’s condensed consolidated financial statements.

Recently Issued Accounting Guidance Not Yet Adopted

ASU 2021-04

In May 2021, the FASB issued ASU 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): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. ASU 2021-04 requires accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after the modification or exchange based on the economic substance of the modification or exchange. The recognition of the modification depends on the nature of the transaction in which the equity-classified written call option is modified. If there is more than one element in a transaction (for example, if the modification involves both a debt modification and an equity issuance), then the guidance requires allocating the effect of the option modification to each element. ASU 2021-04 is effective for the Company beginning in the first quarter of 2022. ASU 2021-04 should be applied prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Company is currently assessing the impact this standard will have on the Company’s condensed consolidated financial statements.

ASU 2020-06

In August 2020, the FASB issued ASU 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number of accounting models for convertible instruments by eliminating two of the three models that require separate accounting for embedded conversion features, amends the requirements for a contract that is potentially settled in an entity’s own shares to be classified in equity, and amends certain guidance on the computation of earnings per share for convertible instruments and contracts on an entity’s own equity. ASU 2020-06 is effective for the Company beginning in the first quarter of 2022 and early adoption is permitted beginning in the first quarter of 2021. ASU 2020-06 may be applied using a modified or full retrospective transition method. The Company is currently assessing the impact this standard will have on the Company’s condensed consolidated financial statements.

Other accounting standard updates effective for interim and annual periods beginning after December 31, 2020 are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

(3) Accounts Receivable and Contract Assets, Net

Accounts receivable, net is as follows (in thousands):

	As of			As of
	June 30, 2021			December 31, 2020
Accounts receivable amortized cost	$	88,426		$	98,164
Allowance for credit losses		(5,243	)		(3,788	)
Net accounts receivable	$	83,183		$	94,376

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The following table summarizes the changes in the allowance for credit losses for accounts receivable (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Balance, beginning of period	$	(4,772	)	$	(1,753	)	$	(3,788	)	$	(1,125	)
Provision for expected credit losses		(405	)		(585	)		(1,417	)		(1,328	)
Write-offs, net		(66	)		81			(38	)		196
Balance, end of period	$	(5,243	)	$	(2,257	)	$	(5,243	)	$	(2,257	)

Contract assets, net is as follows (in thousands):

	As of			As of
	June 30, 2021			December 31, 2020
Contract asset amortized cost	$	4,235		$	2,560
Allowance for credit losses		(841	)		(398	)
Net contract asset	$	3,394		$	2,162

The following table summarizes the changes in the allowance for credit losses for contract assets (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Balance, beginning of period	$	(842	)	$	(25	)	$	(398	)	$	—
Provision for expected credit losses		(29	)		(3	)		(473	)		(28	)
Write-offs		30			—			30			—
Balance, end of period	$	(841	)	$	(28	)	$	(841	)	$	(28	)

Credit loss expense was $0.1 million and $0.4 million for the three months ended June 30, 2021 and 2020, respectively. Credit loss expense was $1.5 million and $1.1 million for the six months ended June 30, 2021 and 2020, respectively.   

The following table summarizes the changes in the sales reserve (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Balance, beginning of period	$	(149	)	$	(375	)	$	(175	)	$	(175	)
Additions		(259	)		—			(259	)		(200	)
Write-offs		8			—			34			—
Balance, end of period	$	(400	)	$	(375	)	$	(400	)	$	(375	)

(4) Property and Equipment, Net

Property and equipment consisted of the following (in thousands):

	Useful life		As of			As of
	in years		June 30, 2021			December 31, 2020
Furniture and equipment		5	$	2,165		$	2,041
Leasehold improvements (1)		9		6,241			4,944
System hardware		5		813			807
Office computers		3		7,323			6,547
Computer and system software		3		2,068			827
				18,610			15,166
Less accumulated depreciation and amortization				(9,043	)		(7,392	)
Property and equipment, net			$	9,567		$	7,774

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⁽¹⁾ Lesser of the lease term or the estimated useful lives of the improvements, which may be up to 9 years.

Depreciation and amortization expense for property and equipment was $0.9 million and $0.7 million for the three months ended June 30, 2021 and 2020, respectively. Depreciation and amortization expense for property and equipment was $1.7 million and $1.3 million for the six months ended June 30, 2021 and 2020, respectively. 

(5) Capitalized Software Development Costs, Net

Capitalized software development costs consisted of the following (in thousands):

	Gross carrying amount		Amortization period	Accumulated amortization			Net carrying amount
As of June 30, 2021	$	66,057	3 years	$	(47,689	)	$	18,368
As of December 31, 2020		59,761	3 years		(43,432	)		16,329

The Company capitalized software development costs of $6.1 million and $4.7 million for the six months ended June 30, 2021 and 2020, respectively.   

Amortization expense for capitalized software development costs was $2.2 million and $1.9 million for the three months ended June 30, 2021 and 2020, respectively. Amortization expense for capitalized software development costs was $4.3 million and $3.8 million for the six months ended June 30, 2021 and 2020, respectively. Amortization of capitalized software development costs is classified within cost of revenue in the condensed consolidated statements of operations.

The expected amortization of capitalized software development costs, as of June 30, 2021, for each of the following years is as follows (in thousands):

2021 (for the remaining six months)	$	4,779
2022		7,630
2023		4,985
2024		974
	$	18,368

(6) Fair Value Measurements

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value because of the short maturity of these items.

Certain assets, including long-lived assets, goodwill and intangible assets are also subject to measurement at fair value on a non-recurring basis if they are deemed to be impaired as a result of an impairment review. For the six months ended June 30, 2021 and year ended December 31, 2020, no impairments were identified.

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The following table summarizes the Company's financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy. Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands):

	As of June 30, 2021
	Quoted		Significant
	Prices in		Other		Significant
	Active		Observable		Unobservable
	Markets		Inputs		Inputs		Total Fair
	(Level 1)		(Level 2)		(Level 3)		Value
Assets:
Cash equivalents:
Money market funds	$	489,632	$	—	$	—	$	489,632
Total financial assets	$	489,632	$	—	$	—	$	489,632
Liabilities:
Contingent consideration	$	—	$	—	$	18,775	$	18,775
Derivative instruments - acquisition-related deferred    common stock consideration		—		922		—		922
Total financial liabilities	$	—	$	922	$	18,775	$	19,697
	As of December 31, 2020
	Quoted		Significant
	Prices in		Other		Significant
	Active		Observable		Unobservable
	Markets		Inputs		Inputs		Total Fair
	(Level 1)		(Level 2)		(Level 3)		Value
Assets:
Cash equivalents:
Money market funds	$	432,560	$	—	$	—	$	432,560
Total financial assets	$	432,560	$	—	$	—	$	432,560
Liabilities:
Contingent consideration	$	—	$	—	$	10,619	$	10,619
Derivative instruments - acquisition-related deferred    common stock consideration		—		1,011		—		1,011
Total financial liabilities	$	—	$	1,011	$	10,619	$	11,630

The Company classifies and discloses fair value measurements in one of the following three categories of fair value hierarchy:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities.

Level 2 - Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly.

Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The Company’s assets that are measured by management at fair value on a recurring basis are generally classified within Level 1 or Level 2 of the fair value hierarchy. The Company did not have any transfers into and out of Level 1 or Level 2 during the six months ended June 30, 2021.  

The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents. The fair value of the Company’s investments in certain money market funds is their face value and such instruments are classified as Level 1 and are included in cash and cash equivalents on the consolidated balance sheets.

On May 27, 2020, the Company entered into a Stock Purchase Agreement with Techwan SA (“Techwan”) pursuant to which the Company purchased all of the issued and outstanding shares of stock of Techwan (see Note 8). In accordance with the Stock Purchase Agreement, 6,779 shares of the Company’s common stock were reserved and are expected to be issued to the sellers in November 2021 subject to the provisions in the Stock Purchase Agreement. Management analyzed the liability for derivative accounting

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consideration under ASC 815, Derivatives and Hedging, and determined that the liability qualifies for derivative accounting. The derivative liability is not designated as a hedging instrument. In accordance with ASC 815, the Company recorded the acquisition-related deferred common stock consideration derivative liability, which is carried at fair value, in other long-term liabilities on the condensed consolidated balance sheet. The derivative liability will be marked-to-market each measurement period. The change in fair value during the three and six months ended June 30, 2021 of $0.1 million and $(0.1) million, respectively, was recorded as a component of other expense, net on the condensed consolidated statement of operations. The fair value is derived from the Company’s stock price. The acquisition-related deferred common stock consideration derivative liability will remain in effect until such time as the associated shares are issued and the resulting derivative liability will be transitioned from a liability to equity as of such date.

The following tables summarize the changes in Level 3 financial instruments (in thousands):

Fair value at December 31, 2019	$	—
Contingent consideration from Connexient acquisition		340
Contingent consideration from one2many acquisition		2,190
Fair value at March 31, 2020		2,530
Contingent consideration from Techwan acquisition		2,030
Adjustment for Connexient acquisition		(340	)
Foreign currency translation		72
Fair value at June 30, 2020	$	4,292

Fair value at December 31, 2020	$	10,619
Contingent consideration from RedSky acquisition		9,135
Adjustment for one2many acquisition		(690	)
Adjustment for SnapComms acquisition		732
Foreign currency translation		(465	)
Fair value at March 31, 2021		19,331
Adjustment for one2many acquisition		38
Adjustment for SnapComms acquisition		(23	)
Payment for SnapComms acquisition		(720	)
Foreign currency translation		149
Fair value at June 30, 2021	$	18,775

The valuation of the contingent consideration was derived using estimates of the probability of achievement within specified time periods based on projections of future revenue metrics per the terms of the applicable agreements. These include estimates of the Company’s assessment of the probability of meeting such results, with the probability-weighted earn-out using a Monte Carlo Simulation Model then discounted to estimate fair value. Fair value is estimated using the probability weighted cash flow estimate closer to the measurement date. The various operating performance measures included in these contingent consideration agreements primarily relate to product revenue. As these are unobservable inputs, the contingent consideration liabilities are included in Level 3 inputs.

During the three and six months ended June 30, 2021, as a result of assessing the probabilities of SnapComms Limited (“SnapComms”) meeting revenue metrics during the period of April 1, 2020 through March 31, 2021, the Company recognized a decrease in the fair value of SnapComms’ contingent consideration obligation in the amount of less than $0.1 million and an increase of $0.7 million, respectively. During the three months ended June 30, 2021, the Company issued 6,188 shares of the Company’s common stock to settle SnapComms’ contingent consideration liability.

During the three and six months ended June 30, 2021, as a result of assessing the probabilities of One2Many Group B.V. (“one2many”) meeting revenue metrics during the period of March 1, 2020 through February 28, 2021, the Company recognized an increase in the fair value of one2many’s contingent consideration obligation in the amount of less than $0.1 million and a decrease of $0.7 million, respectively. Subsequent to June 30, 2021, the Company paid €4.1 million in cash and issued 41,668 shares of the Company’s common stock to settle one2many’s contingent consideration liability.

The Company estimates the fair value of the convertible senior notes based on their last actively traded prices (Level 1) or market-observable inputs (Level 2).  As of June 30, 2021, the fair value of the 0% convertible senior notes due March 15, 2026 (the “2026 Notes”) was determined to be $383.4 million and the principal amount of the notes was $375.0 million. As of June 30, 2021 and December 31, 2020, the fair value of the 0.125% convertible senior notes due December 15, 2024 (the “2024 Notes”) was determined to be $616.5 million and $663.6 million, respectively, and the principal amount of the notes was $450.0 million for each period. As of June 30, 2021 and December 31, 2020, the fair value of the 1.50% convertible senior notes due November 1, 2022 (the “2022 Notes”) was determined to be $1.2 million and $265.5 million, respectively, and the principal amount of the notes was $0.3 million and $79.8 million, respectively.

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(7) Goodwill and Intangible Assets, Net

The following table displays the changes in the gross carrying amount of goodwill (in thousands):

Balance at December 31, 2020	$	187,411
Increase due to acquisition		219,345
Foreign currency translation		(1,533	)
Balance at June 30, 2021	$	405,223

There were no impairments recorded against goodwill during the six months ended June 30, 2021 and for the year ended December 31, 2020.

Intangible assets consisted of the following (in thousands):

				As of June 30, 2021
	Gross carrying amount		Weighted average life (years)	Accumulated amortization			Net carrying amount
Amortizable intangible assets:
Developed technology	$	42,581	3.40	$	(9,754	)	$	32,827
Tradenames		25,722	4.04		(9,404	)		16,318
Customer relationships		198,999	8.20		(31,421	)		167,578
Total intangible assets	$	267,302		$	(50,579	)	$	216,723

					As of December 31, 2020
	Gross carrying amount		Weighted average life (years)		Accumulated amortization			Net carrying amount
Amortizable intangible assets:
Developed technology	$	31,851		3.54	$	(5,322	)	$	26,529
Tradenames		15,360		3.52		(6,638	)		8,722
Customer relationships		100,590		7.41		(22,079	)		78,511
Total intangible assets	$	147,801			$	(34,039	)	$	113,762

Amortization expense for intangible assets was $10.0 million and $4.8 million for the three months ended June 30, 2021 and 2020, respectively. Amortization expense for intangible assets was $17.9 million and $8.9 million for the six months ended June 30, 2021 and 2020, respectively. The Company recorded amortization expense attributed to developed technology within cost of revenue of $5.6 million and $1.7 million for the six months ended June 30, 2021 and 2020, respectively. During the six months ended June 30, 2021, the Company retired $1.1 million of fully amortized intangible assets.

The expected amortization of the intangible assets, as of June 30, 2021, for each of the next five years and thereafter is as follows (in thousands):

2021 (for the remaining six months)	$	22,166
2022		41,275
2023		36,270
2024		31,509
2025		23,664
Thereafter		61,839
	$	216,723

(8) Business Combinations

The Company continually evaluates potential acquisitions that either strategically fit within the Company’s existing portfolio or expand the Company’s portfolio into new product lines or adjacent markets. The Company has completed a number of acquisitions that have been accounted for as business combinations under ASC 805, Business Combinations, and have resulted in the recognition of goodwill in the Company’s financial statements. This goodwill includes the know-how of the assembled workforce, the ability of the workforce to further improve technology and product offerings, customer relationships and the expected cash flows resulting from

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these efforts. Goodwill may also include expected synergies resulting from the complementary strategic fit these businesses bring to existing operations.

Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives and the expected future cash flows and related discount rates, can materially impact the Company’s results of operations. Significant inputs used for the model included the amount of cash flows, the expected period of the cash flows and the discount rates. Significant estimation was required by management in determining the fair value of the customer relationship intangible assets, deferred revenue and contingent consideration liabilities. The significant estimation is primarily due to the judgmental nature of the inputs to the valuation models used to measure the fair value of these intangible assets, deferred revenue and contingent consideration liabilities, as well as the sensitivity of the respective fair values to the underlying significant assumptions. The Company used the income approach to measure the fair value of these intangible assets, a discounted cash flow approach for deferred revenue and a Monte Carlo simulation model to measure the fair value of the contingent consideration liabilities. The significant assumptions used to estimate the fair value of the intangible assets, deferred revenue and contingent consideration liabilities included forecasted revenues from existing customers, existing customer attrition rates, estimated costs required to fulfill the deferred revenue obligation and forecasted revenues for the contingent consideration earnout period. When estimating the significant assumptions to be used in the valuation the Company includes a consideration of current industry information, market and economic trends, historical results of the acquired business, nature of the performance obligations associated with the deferred revenue and other relevant factors. These significant assumptions are forward-looking and could be affected by future economic and market conditions. The valuation of the contingent consideration was derived using estimates of the probability of achievement within specified time periods based on projections of future revenue metrics per the terms of the applicable agreements. These include estimates of the Company’s assessment of the probability of meeting such results, with the probability-weighted earn-out using a Monte Carlo Simulation Model then discounted to estimate fair value. Fair value is estimated using the probability weighted cash flow estimate closer to the measurement date. The various operating performance measures included in these contingent consideration agreements primarily relate to product revenue.   

The business acquisitions discussed below are included in the Company’s results of operations from their respective dates of acquisition.

2021 Acquisitions

During the six months ended June 30, 2021, the Company acquired Red Sky Technologies Inc and xMatters Holdings, Inc. These acquisitions were not material and neither the investment in the assets nor the results of operations of these acquisitions were significant to the Company’s consolidated financial position or results of operations, and thus pro forma information is not required to be presented.

xMatters Holdings, Inc.

On April 6, 2021, the Company and xMatters Holdings, Inc. (“xMatters”) signed a definitive agreement pursuant to which the Company agreed to purchase all of the issued and outstanding shares of stock of xMatters. This acquisition closed on May 7, 2021. The Company purchased all of the issued and outstanding shares of stock of xMatters for a base consideration of $242.3 million. The Company paid $177.8 million in cash and issued 555,332 newly issued shares of the Company’s common stock at closing. On the date of this acquisition, the average price of the Company’s common stock on the Nasdaq Global Market was $116.12 per share. The Company acquired xMatters for its service reliability platforms to enhance the Company’s CEM suite of solutions as well as market penetration and customer reach.

As the Company finalizes its estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments may be recorded during the measurement period (a period not to exceed 12 months). The initial accounting is incomplete as of June 30, 2021 for the acquired assets and liabilities as the Company is currently in the process of completing the assessment of valuation inputs and assumptions as well as completing the assessment of the tax attributes of the business combination. The finalization of the acquisition accounting valuation assessment may result in a change in the valuation of the deferred tax assets and liabilities, deferred revenue and intangible assets, along with the opening working capital accounts, which could have a material impact on the Company’s results of operations and financial position.  

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The following table summarizes the preliminary estimated fair value of the assets acquired and the liabilities assumed, which were recorded as of the acquisition date, as well as the aggregate consideration for the acquisition of xMatters made by the Company (in thousands):

	xMatters
Assets acquired
Accounts receivable	$	6,716
Property and equipment		1,458
Trade names		8,200
Acquired technology		8,390
Customer relationships		79,090
Goodwill		170,037
Other assets		5,433
Total assets acquired		279,324
Liabilities assumed
Accounts payable		1,164
Accrued expenses		5,501
Deferred revenue		34,421
Deferred tax liabilities		3,436
Other liabilities		5,055
Net assets acquired	$	229,747
Consideration paid
Cash paid, net of cash acquired	$	165,265
Fair value of common stock issued		64,482
Total	$	229,747

The weighted average useful life of all identified acquired intangible assets is 8.13 years. The average useful lives for acquired technologies, customer relationships and trade names are 3.0 years, 9.0 years and 5.0 years, respectively. Identifiable intangible assets with definite lives are amortized over the period of estimated benefit using the straight-line method. The straight-line method of amortization represents the Company’s best estimate of the period of expected cash flows of the identifiable intangible assets.

The goodwill balance is primarily attributed to the anticipated synergies from the acquisition and expanded market opportunities with respect to the integration of xMatters’ products with the Company's other solutions. The Company believes that the factors listed above in relation to the purchase of xMatters support the amount of goodwill recorded as a result of the purchase price paid for the acquisition, in relation to other acquired tangible and intangible assets. The resulting goodwill from the xMatters acquisition is not deductible for income tax purposes.

For the six months ended June 30, 2021, the Company incurred transaction costs of $1.5 million in connection with the xMatters acquisition, of which $0.6 million was expensed during the six months ended June 30, 2021 and included in general and administrative expenses.

Red Sky Technologies Inc.

On January 15, 2021, the Company entered into a Stock Purchase Agreement with Red Sky Technologies Inc. (“RedSky”) pursuant to which the Company purchased all of the issued and outstanding shares of stock of RedSky for a base consideration of $55.4 million, net of cash acquired. The Company paid $32.4 million in cash, net of cash acquired, and issued 162,820 newly issued shares of the Company’s common stock at closing. On the date of this acquisition, the average price of the Company’s common stock on the Nasdaq Global Market was $141.46 per share. In addition to the base purchase price, there is also a potential contingent payment of up to $30 million that can be earned by the sellers based on certain revenue targets through June 30, 2021. At the date of the acquisition, the Company preliminarily assessed the probability of RedSky meeting the revenue metrics through June 30, 2021 and recorded a $9.1 million preliminary fair value of contingent consideration as part of the purchase price allocation. The Company acquired RedSky for its E911 incident response solutions platform to enhance the Company’s CEM suite of solutions as well as market penetration and customer reach.

As the Company finalizes its estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments may be recorded during the measurement period (a period not to exceed 12 months). The initial accounting is incomplete as of June 30, 2021 for the acquired assets and liabilities as the Company is currently in the process of completing the assessment of valuation inputs and assumptions as well as completing the assessment of the tax attributes of the business combination. The finalization of the acquisition accounting valuation assessment may result in a change in the valuation of the deferred tax assets and liabilities, deferred revenue,

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contingent consideration and intangible assets, along with the opening working capital accounts, which could have a material impact on the Company’s results of operations and financial position.  

The following table summarizes the preliminary estimated fair value of the assets acquired and the liabilities assumed, which were recorded as of the acquisition date, as well as the aggregate consideration for the acquisition of RedSky made by the Company (in thousands):

	RedSky
Assets acquired
Accounts receivable	$	2,926
Other assets		242
Property and equipment		18
Trade names		2,230
Acquired technology		3,590
Customer relationships		20,200
Goodwill		49,308
Total assets acquired		78,514
Liabilities assumed
Accounts payable		233
Accrued expenses		773
Deferred revenue		5,866
Deferred tax liabilities		7,048
Other liabilities		26
Net assets acquired	$	64,568
Consideration paid
Cash paid, net of cash acquired	$	32,401
Fair value of common stock issued		23,032
Contingent consideration		9,135
Total	$	64,568

The weighted average useful life of all identified acquired intangible assets is 7.74 years. The average useful lives for acquired technologies, customer relationships and trade names are 3.0 years, 9.0 years and 4.0 years, respectively. Identifiable intangible assets with definite lives are amortized over the period of estimated benefit using the straight-line method. The straight-line method of amortization represents the Company’s best estimate of the period of expected cash flows of the identifiable intangible assets.

The goodwill balance is primarily attributed to the anticipated synergies from the acquisition and expanded market opportunities with respect to the integration of RedSky’s products with the Company's other solutions. The Company believes that the factors listed above in relation to the purchase of RedSky support the amount of goodwill recorded as a result of the purchase price paid for the acquisition, in relation to other acquired tangible and intangible assets. The resulting goodwill from the RedSky acquisition is not deductible for income tax purposes.

For the six months ended June 30, 2021, the Company incurred transaction costs of less than $0.1 million in connection with the RedSky acquisition, which were expensed as incurred and included in general and administrative expenses.

2020 Acquisitions

During the year ended December 31, 2020, the Company acquired Connexient, Inc., CNL Software Limited, One2Many Group B.V., Techwan SA and SnapComms Limited. These acquisitions were not material individually or on a consolidated basis. Additionally, neither the investment in the assets nor the results of operations of these acquisitions were significant to the Company’s consolidated financial position or results of operations, and thus pro forma information is not required to be presented.

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Connexient, Inc.

On February 7, 2020, the Company entered into a Stock Purchase Agreement with Connexient, Inc. (“Connexient”) pursuant to which the Company purchased all of the issued and outstanding shares of stock of Connexient for a base consideration of $20.2 million. The Company paid $11.5 million in cash at closing and paid the remaining purchase price with 96,611 newly issued shares of the Company’s common stock. On the date of this acquisition, the average price of the Company’s common stock on the Nasdaq Global Market was $93.32 per share. In addition to the base purchase price, there was also a potential contingent payment of up to $6.0 million that was eligible to be earned by the sellers based on fiscal year 2020 revenue metrics. At December 31, 2020, it was determined that Connexient would not meet the fiscal year 2020 revenue metric threshold. The Company acquired Connexient for its strategic technology assets to enhance the Company’s CEM suite of solutions to broaden support for Internet of Things (“IoT”) applications as well as market penetration and customer reach.

CNL Software Limited

On February 25, 2020, the Company entered into a Stock Purchase Agreement with CNL Software Limited (“CNL Software”) for a base consideration of approximately $35.7 million. The Company paid approximately $19.8 million in cash at closing and paid the remaining purchase price with 153,217 newly issued shares of the Company’s common stock. On the date of this acquisition, the average price of the Company’s common stock on the Nasdaq Global Market was $104.10 per share. The Company acquired CNL Software for its strategic technology assets to enhance the Company’s CEM suite of solutions to broaden support for IoT applications as well as market penetration and customer reach.

One2Many Group B.V.

On March 19, 2020, the Company entered into a Stock Purchase Agreement with One2Many Group B.V. pursuant to which the Company purchased all of the issued and outstanding shares of stock of one2many for a base consideration of $13.1 million. The Company paid $5.5 million in cash at closing, acquired purchase liabilities of $2.0 million and paid the remaining purchase price with 52,113 newly issued shares of the Company’s common stock. On the date of this acquisition, the average price of the Company’s common stock on the Nasdaq Global Market was $104.95 per share. In addition to the base purchase price, there was also a potential contingent payment of up to approximately $15.0 million that was eligible to be earned by the sellers based on revenue metrics during the period of March 1, 2020 through February 28, 2021. The potential contingent payment included an amount payable to the Company if a certain revenue threshold is not met during the period of March 1, 2020 through February 28, 2021. At the date of the acquisition, the Company preliminarily assessed the probabilities of one2many meeting the revenue metrics during the period of March 1, 2020 through February 28, 2021 and recorded a $2.2 million initial fair value of contingent consideration as part of the purchase price allocation. During the three and six months ended June 30, 2021, the Company recognized an increase in the fair value of one2many’s contingent consideration obligation in the amount of less than $0.1 million and a decrease of $0.7 million, respectively, in general and administrative expenses in the condensed consolidated statement of operations. Subsequent to June 30, 2021, the Company paid €4.1 million in cash and issued 41,668 shares of the Company’s common stock to settle one2many’s contingent consideration liability. The Company acquired one2many for its cell broadcast technology to enhance the Company’s public warning applications as well as market penetration and customer reach.

Techwan SA

On May 27, 2020, the Company entered into a Stock Purchase Agreement with Techwan SA pursuant to which the Company purchased all of the issued and outstanding shares of stock of Techwan for a base consideration of $15.5 million. The Company paid $9.4 million in cash at closing, acquired purchase liabilities of $0.1 million and paid the remaining purchase price with 38,425 newly issued shares of the Company’s common stock. In addition, in accordance with the Stock Purchase Agreement, 6,779 shares of the Company’s common stock were reserved and are expected to be issued to the sellers in November 2021 subject to the provisions in the Stock Purchase Agreement. On the date of this acquisition, the average price of the Company’s common stock on the Nasdaq Global Market was $132.05 per share. In addition to the base purchase price, there was also a potential contingent payment of up to approximately $7.0 million that was eligible to be earned by the sellers based on revenue metrics during the period of April 1, 2020 through March 31, 2021. At the date of the acquisition, the Company preliminarily assessed the probabilities of Techwan meeting the revenue metrics during the period of April 1, 2020 through March 31, 2021 and recorded a $2.0 million initial fair value of contingent consideration as part of the purchase price allocation. During the three months ended March 31, 2021, the Company determined that Techwan did not meet the revenue metrics during the period of April 1, 2020 through March 31, 2021. The Company acquired Techwan for its strategic technology assets to enhance the Company’s CEM suite of solutions as well as market penetration and customer reach.

21

The following table summarizes the estimated fair value of the assets acquired and the liabilities assumed, which were recorded as of the acquisition date, as well as the aggregate consideration for the acquisition of Techwan made by the Company (in thousands):

	Techwan
Assets acquired
Accounts receivable	$	921
Other current assets		235
Acquired technology		1,160
Trade names		580
Customer relationships		5,100
Goodwill		12,678
Other assets		254
Total assets acquired		20,928
Liabilities assumed
Accrued expenses		673
Deferred revenue		1,190
Deferred tax liabilities		838
Other current liabilities		927
Net assets acquired	$	17,300
Consideration paid
Cash consideration, net of cash acquired	$	9,301
Fair value of common stock issued		5,074
Acquisition-related deferred common stock consideration		895
Contingent consideration		2,030
Total	$	17,300

The weighted average useful life of all identified acquired intangible assets is 7.47 years. The average useful lives for acquired technologies, customer relationships and trade names are 3.0 years, 9.0 years and 3.0 years, respectively. Identifiable intangible assets with definite lives are amortized over the period of estimated benefit using the straight-line method. The straight-line method of amortization represents the Company’s best estimate of the period of expected cash flows of the identifiable intangible assets.

The goodwill balance is primarily attributed to the anticipated synergies from the acquisition and expanded market opportunities with respect to the integration of Techwan’s products with the Company's other solutions. The Company believes that the factors listed above in relation to the purchase of Techwan support the amount of goodwill recorded as a result of the purchase price paid for the acquisition, in relation to other acquired tangible and intangible assets. The resulting goodwill from the Techwan acquisition is not deductible for income tax purposes.

During the year ended December 31, 2020, the Company incurred transaction costs of $0.2 million in connection with the Techwan acquisition, which were expensed as incurred and included in general and administrative expenses.

SnapComms Limited

On August 4, 2020, the Company entered into a Stock Purchase Agreement with SnapComms Limited pursuant to which the Company purchased all of the issued and outstanding shares of stock of SnapComms for a base consideration of $34.4 million. The Company paid $13.6 million in cash and issued 121,858 newly issued shares of the Company’s common stock at closing. On the date of this acquisition, the average price of the Company’s common stock on the Nasdaq Global Market was $145.13 per share. In August 2021, the Company paid deferred consideration of approximately New Zealand $2.5 million in cash and issued 12,390 shares of the Company’s common stock. In addition to the base purchase price, there was also a potential contingent payment of up to approximately $5.0 million that was eligible to be earned by the sellers based on revenue metrics during the period of April 1, 2020 through March 31, 2021. At the date of the acquisition, the Company preliminarily assessed the probability of SnapComms meeting the revenue metrics during the period of April 1, 2020 through March 31, 2021 and recorded a $2.0 million initial fair value of contingent consideration as part of the purchase price allocation. During the three and six months ended June 30, 2021, the Company recognized a decrease in the fair value of SnapComms’ contingent consideration obligation in the amount of less than $0.1 million and an increase of $0.7 million, respectively, recognized in general and administrative expenses in the consolidated statements of operations. During the three months ended June 30, 2021, the Company issued 6,188 shares of the Company’s common stock to settle SnapComms’ contingent consideration liability. The Company acquired SnapComms for its internal communications software to enhance the Company’s CEM suite of solutions as well as market penetration and customer reach.

22

As the Company finalizes its estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments may be recorded during the measurement period (a period not to exceed 12 months). The initial accounting is incomplete as of June 30, 2021 for the acquired assets and liabilities as the Company is currently in the process of completing the assessment of the tax attributes of the business combination. The finalization of the acquisition accounting valuation assessment may result in a change in the valuation of the deferred tax assets and liabilities which could have a material impact on the Company’s results of operations and financial position.  

The following table summarizes the preliminary estimated fair value of the assets acquired and the liabilities assumed, which were recorded as of the acquisition date, as well as the aggregate consideration for the acquisition of SnapComms made by the Company (in thousands):

	SnapComms
Assets acquired
Accounts receivable	$	1,808
Other current assets		283
Property and equipment		118
Acquired technology		2,300
Trade names		960
Customer relationships		13,300
Goodwill		22,629
Other assets		943
Total assets acquired		42,341
Liabilities assumed
Accrued expenses		503
Deferred revenue		3,165
Deferred tax liabilities		4,960
Other liabilities		742
Net assets acquired	$	32,971
Consideration paid
Cash consideration, net of cash acquired	$	10,090
Fair value of common stock issued		17,685
Acquisition-related deferred consideration		3,149
Contingent consideration		2,047
Total	$	32,971

The weighted average useful life of all identified acquired intangible assets is 7.82 years. The average useful lives for acquired technologies, customer relationships and trade names are 3.0 years, 9.0 years and 3.0 years, respectively. Identifiable intangible assets with definite lives are amortized over the period of estimated benefit using the straight-line method. The straight-line method of amortization represents the Company’s best estimate of the period of expected cash flows of the identifiable intangible assets.

The goodwill balance is primarily attributed to the anticipated synergies from the acquisition and expanded market opportunities with respect to the integration of SnapComms’ products with the Company's other solutions. The Company believes that the factors listed above in relation to the purchase of SnapComms support the amount of goodwill recorded as a result of the purchase price paid for the acquisition, in relation to other acquired tangible and intangible assets. The resulting goodwill from the SnapComms acquisition is not deductible for income tax purposes.

During the year ended December 31, 2020, the Company incurred transaction costs of $0.1 million in connection with the SnapComms acquisition, which were expensed as incurred and included in general and administrative expenses.

(9) Convertible Senior Notes

0% Convertible Senior Notes Due 2026

In March 2021, the Company issued $375.0 million aggregate principal amount of

23

0% convertible senior notes due 2026, including $50.0 million aggregate principal amount of 2026 Notes issued upon the initial purchasers’ exercise in full of their option to purchase additional 2026 Notes. The 2026 Notes will mature on March 15, 2026, unless earlier redeemed or repurchased by the Company or converted by the holders pursuant to their terms. The Company will pay special interest, if any, at the Company’s election as the sole remedy relating to the failure to comply with certain reporting obligations and under certain circumstances.

The 2026 Notes are governed by an Indenture between the Company, as issuer, and U.S. Bank National Association, as trustee (the “2026 Notes Indenture”). The 2026 Notes are unsecured and rank: senior in right of payment to the Company’s indebtedness that is expressly subordinated in right of payment to the 2026 Notes; equal in right of payment to the Company’s existing and future indebtedness that is not so subordinated, including its 1.50% convertible senior notes due 2022 (see 1.50% Convertible Senior Notes Due 2022 below) and 0.125% convertible senior notes due 2024 (see 0.125% Convertible Senior Notes Due 2024 below); 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 structurally junior to all existing and future indebtedness and other liabilities incurred by the Company’s subsidiaries.

Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election.

The 2026 Notes have an initial conversion rate of 5.5341 shares of common stock per $1,000 principal amount of 2026 Notes. This represents an initial effective conversion price of approximately $180.70 per share of common stock and approximately 2.1 million shares issuable upon conversion. Throughout the term of the 2026 Notes, the conversion rate may be adjusted upon the occurrence of certain events. Holders of the 2026 Notes will not receive any cash payment representing accrued and unpaid special interest, if any, upon conversion of a 2026 Note, except in limited circumstances. Accrued but unpaid special interest, if any, will be deemed to be paid by cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock paid or delivered, as the case may be, to the holder upon conversion of a 2026 Note.

Holders may convert all or a portion of their 2026 Notes prior to the close of business on the business day immediately preceding December 15, 2025, in multiples of $1,000 principal amount, only under the following circumstances:

• during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during 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 five business day period after any ten consecutive trading day period (the “2026 Notes Measurement Period”), in which the “trading price” (as the term is defined in the 2026 Notes Indenture) per $1,000 principal amount of notes for each trading day of such 2026 Notes 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;

• if the Company calls such notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the notes called (or deemed called) for redemption; or

• upon the occurrence of specified corporate events.

On or after December 15, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2026 Notes at the conversion rate at any time regardless of whether the conditions set forth above have been met.

As of June 30, 2021, the 2026 Notes are not yet convertible. The 2026 Notes are classified as long-term on the condensed consolidated balance sheet as of June 30, 2021 as it is the Company’s intent to settle all of the debt at maturity or to settle in shares if exercised by the debt holder prior to maturity.

The 2026 Notes are not redeemable by the Company prior to March 20, 2024. The Company may redeem for cash all or any portion of the 2026 Notes, at its option, on or after March 20, 2024 if the last reported sale price of the Company's common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date.

24

Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its 2026 Notes to be approximately 7.25%, assuming no conversion option. Assumptions used in the estimate represent what market participants would use in pricing the equity component, including market interest rates, credit standing, and yield curves, all of which are defined as Level 2 observable inputs. The estimated implied interest rate was applied to the 2026 Notes, which resulted in a fair value of the liability component of $269.6 million upon issuance, calculated as the present value of implied future payments based on the $375.0 million aggregate principal amount. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, is amortized to interest expense over the term of the 2026 Notes. The $105.4 million difference between the aggregate principal amount of $375.0 million and the estimated fair value of the liability component was recorded in additional paid-in capital as the 2026 Notes were not considered redeemable.

Significant judgment is required in determining the liability component of the related convertible senior notes as well as the balance sheet classification of the elements of the convertible senior notes. The Company accounted for the convertible senior notes and the partial extinguishment of the 2022 Notes, discussed below, as separate liability and equity components, determining the fair value of the respective liability components based on an estimate of the fair value of a similar liability without a conversion option and assigning the residual value to the equity component.

The Company estimated the fair value of the liability component of the convertible senior notes using a discounted cash flow model with a risk adjusted yield for similar debt instruments, absent any embedded conversion feature. In estimating the risk adjusted yield, the Company utilized both an income and market approach. For the income approach, the Company used a convertible bond pricing model, which included several assumptions including volatility and the risk-free rate. For the market approach, the Company performed an evaluation of issuances of convertible debt securities issued by other comparable companies. Additionally, a detailed analysis of the terms of the convertible senior notes transactions was required to determine existence of any derivatives that may require separate mark-to-market accounting under applicable accounting guidance.

In accounting for the transaction costs related to the issuance of the 2026 Notes, the Company allocated the total amount incurred to the liability and equity components based on their estimated relative fair values. Transaction costs attributable to the liability component, totaling $7.6 million, are being amortized to expense over the term of the 2026 Notes, and transaction costs attributable to the equity component, totaling $3.0 million, were netted with the equity component in shareholders’ equity.

The 2026 Notes consist of the following (in thousands):

	As of
	June 30, 2021
Liability component:
Principal	$	375,000
Less: debt discount, net of amortization		(107,122	)
Net carrying amount	$	267,878
Equity component (1)		99,000

⁽¹⁾ Recorded in the consolidated balance sheet within additional paid-in capital, net of $3.0 million transaction costs in equity and net of $3.4 million for taxes.

The following table sets forth total interest expense recognized related to the 2026 Notes (in thousands):

	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
Amortization of debt discount and transaction costs	$	4,798	$	5,854

The fair value of the 2026 Notes, which was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, quoted price of the 2026 Notes in an over-the-counter market (Level 2), and carrying value of debt instruments (carrying value excludes the equity component of the Company’s 2026 Notes classified in equity) was as follows (in thousands):

	As of June 30, 2021
	Fair Value		Carrying Value
2026 Notes	$	383,400	$	267,878

25

In connection with the issuance of the 2026 Notes, the Company entered into capped call transactions with certain counterparties affiliated with the initial purchasers and other financial institutions. The capped call transactions are expected to reduce potential dilution of earnings per share upon conversion of the 2026 Notes. Under the capped call transactions, the Company purchased capped call options that in the aggregate relate to the total number of shares of the Company’s common stock underlying the 2026 Notes, with an initial strike price of approximately $180.70 per share, which corresponds to the initial conversion price of the 2026 Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the 2026 Notes, and with a cap price of approximately $258.14. The cost of the purchased capped calls of $35.1 million was recorded to shareholders’ equity and will not be re-measured.

Based on the closing price of the Company’s common stock of $136.08 on June 30, 2021, the if-converted value of the 2026 Notes was less than their respective principal amounts.

0.125% Convertible Senior Notes Due 2024

In December 2019, the Company issued $450.0 million aggregate principal amount of 0.125% convertible senior notes due 2024, including $75.0 million aggregate principal amount of 2024 Notes issued upon the initial purchasers’ exercise in full of their option to purchase additional 2024 Notes. The 2024 Notes will mature on December 15, 2024, unless earlier redeemed or repurchased by the Company or converted by the holders pursuant to their terms. Interest is payable semiannually in arrears on June 15 and December 15 of each year, commencing on June 15, 2020.

The 2024 Notes are governed by an Indenture between the Company, as issuer, and U.S. Bank National Association, as trustee (the “2024 Notes Indenture”). The 2024 Notes are unsecured and rank: senior in right of payment to the Company’s indebtedness that is expressly subordinated in right of payment to the 2024 Notes; equal in right of payment to the Company’s existing and future indebtedness that is not so subordinated, including its 2026 Notes and 2022 Notes; 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 structurally junior to all existing and future indebtedness and other liabilities incurred by the Company’s subsidiaries.

Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election.

The 2024 Notes have an initial conversion rate of 8.8999 shares of common stock per $1,000 principal amount of 2024 Notes. This represents an initial effective conversion price of approximately $112.36 per share of common stock and approximately 4.0 million shares issuable upon conversion. Throughout the term of the 2024 Notes, the conversion rate may be adjusted upon the occurrence of certain events. Holders of the 2024 Notes will not receive any cash payment representing accrued and unpaid interest, if any, upon conversion of a 2024 Note, except in limited circumstances. Accrued but unpaid interest will be deemed to be paid by cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock paid or delivered, as the case may be, to the holder upon conversion of a 2024 Note.

Holders may convert all or a portion of their 2024 Notes prior to the close of business on the business day immediately preceding June 15, 2024, in multiples of $1,000 principal amount, only under the following circumstances:

• during any calendar quarter commencing after the calendar quarter ending on March 31, 2020 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during 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 five business day period after any ten consecutive trading day period (the “2024 Notes Measurement Period”), in which the “trading price” (as the term is defined in the 2024 Notes Indenture) per $1,000 principal amount of notes for each trading day of such 2024 Notes 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;

• if the Company calls such notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or

• upon the occurrence of specified corporate events.

On or after June 15, 2024 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2024 Notes at the conversion rate at any time regardless of whether the conditions set forth above have been met.

26

As of June 30, 2021, the 2024 Notes are not yet convertible. The 2024 Notes are classified as long-term on the condensed consolidated balance sheet as of June 30, 2021 and December 31, 2020 as it is the Company’s intent to settle all of the debt at maturity or to settle in shares if exercised by the debt holder prior to maturity.

The 2024 Notes are not redeemable by the Company prior to December 20, 2022. The Company may redeem for cash all or any portion of the 2024 Notes, at its option, on or after December 20, 2022 if the last reported sale price of the Company's common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2024 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its 2024 Notes to be approximately 5.16%, assuming no conversion option. Assumptions used in the estimate represent what market participants would use in pricing the equity component, including market interest rates, credit standing, and yield curves, all of which are defined as Level 2 observable inputs. The estimated implied interest rate was applied to the 2024 Notes, which resulted in a fair value of the liability component of $360.4 million upon issuance, calculated as the present value of implied future payments based on the $450.0 million aggregate principal amount. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, is amortized to interest expense over the term of the 2024 Notes. The $89.6 million difference between the aggregate principal amount of $450.0 million and the estimated fair value of the liability component was recorded in additional paid-in capital as the 2024 Notes were not considered redeemable.

Significant judgment is required in determining the liability component of the related convertible senior notes as well as the balance sheet classification of the elements of the convertible senior notes. The Company accounted for the convertible senior notes and the partial extinguishment of the 2022 Notes, discussed below, as separate liability and equity components, determining the fair value of the respective liability components based on an estimate of the fair value of a similar liability without a conversion option and assigning the residual value to the equity component.

The Company estimated the fair value of the liability component of the convertible senior notes using a discounted cash flow model with a risk adjusted yield for similar debt instruments, absent any embedded conversion feature. In estimating the risk adjusted yield, the Company utilized both an income and market approach. For the income approach, the Company used a convertible bond pricing model, which included several assumptions including volatility and the risk-free rate. For the market approach, the Company performed an evaluation of issuances of convertible debt securities issued by other comparable companies. Additionally, a detailed analysis of the terms of the convertible senior notes transactions was required to determine existence of any derivatives that may require separate mark-to-market accounting under applicable accounting guidance.

In accounting for the transaction costs related to the issuance of the 2024 Notes, the Company allocated the total amount incurred to the liability and equity components based on their estimated relative fair values. Transaction costs attributable to the liability component, totaling $10.2 million, are being amortized to expense over the term of the 2024 Notes, and transaction costs attributable to the equity component, totaling $2.6 million, were netted with the equity component in shareholders’ equity.

The 2024 Notes consist of the following (in thousands):

	As of			As of
	June 30, 2021			December 31, 2020
Liability component:
Principal	$	450,000		$	450,000
Less: debt discount, net of amortization		(71,627	)		(80,968	)
Net carrying amount	$	378,373		$	369,032
Equity component (1)		86,133			86,133

⁽¹⁾

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Recorded in the consolidated balance sheet within additional paid-in capital, net of $2.6 million transaction costs in equity and net of $0.9 million for taxes.

The following table sets forth total interest expense recognized related to the 2024 Notes (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
0.125% coupon	$	140	$	140	$	281	$	281
Amortization of debt discount and transaction costs		4,702		4,466		9,341		8,872
	$	4,842	$	4,606	$	9,622	$	9,153

The fair value of the 2024 Notes, which was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, quoted price of the 2024 Notes in an over-the-counter market (Level 2), and carrying value of debt instruments (carrying value excludes the equity component of the Company’s 2024 Notes classified in equity) were as follows (in thousands):

	As of June 30, 2021				As of December 31, 2020
	Fair Value		Carrying Value		Fair Value		Carrying Value
2024 Notes	$	616,500	$	378,373	$	663,615	$	369,032

In connection with the issuance of the 2024 Notes, the Company entered into capped call transactions with certain counterparties affiliated with the initial purchasers and other financial institutions. The capped call transactions are expected to reduce potential dilution of earnings per share upon conversion of the 2024 Notes. Under the capped call transactions, the Company purchased capped call options that in the aggregate relate to the total number of shares of the Company’s common stock underlying the 2024 Notes, with an initial strike price of approximately $112.36 per share, which corresponds to the initial conversion price of the 2024 Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the 2024 Notes, and with a cap price of approximately $166.46. The cost of the purchased capped calls of $44.9 million was recorded to shareholders’ equity and will not be re-measured.

Based on the closing price of the Company’s common stock of $136.08 on June 30, 2021, the if-converted value of the 2024 Notes was more than their respective principal amounts.

1.50% Convertible Senior Notes Due 2022

In November 2017, the Company issued $115.0 million aggregate principal amount of 1.50% convertible senior notes due 2022 including $15.0 million aggregate principal amount of 2022 Notes issued upon the initial purchasers’ exercise in full of their option to purchase additional 2022 Notes. The 2022 Notes will mature on November 1, 2022, unless earlier redeemed or repurchased by the Company or converted by the holders pursuant to their terms. Interest is payable semiannually in arrears on May 1 and November 1 of each year, commencing on May 1, 2018.

The 2022 Notes are governed by an Indenture between the Company, as issuer, and U.S. Bank, National Association, as trustee (the “2022 Notes Indenture”). The 2022 Notes are unsecured and rank: senior in right of payment to the Company’s future indebtedness that is expressly subordinated in right of payment to the 2022 Notes; equal in right of payment to the Company’s existing and future indebtedness that is not so subordinated, including the Company’s 2026 Notes and 2024 Notes; effectively subordinated 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 structurally subordinated to all existing and future indebtedness and other liabilities incurred by the Company’s subsidiaries.

Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election. The Company’s current intention is to settle the conversion in shares of common stock if a conversion were to occur.

The 2022 Notes have an initial conversion rate of 29.6626 shares of common stock per $1,000 principal amount of 2022 Notes. This represents an initial effective conversion price of approximately $33.71 per share of common stock and initially approximately 3.4 million shares issuable upon conversion. Throughout the term of the 2022 Notes, the conversion rate may be adjusted upon the occurrence of certain events. Holders of the 2022 Notes will not receive any cash payment representing accrued and unpaid interest, if any, upon conversion of a 2022 Note, except in limited circumstances. Accrued but unpaid interest will be deemed to be paid by cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock paid or delivered, as the case may be, to the holder upon conversion of a 2022 Note.

28

Holders may convert all or a portion of their 2022 Notes prior to the close of business on the business day immediately preceding May 1, 2022, in multiples of $1,000 principal amount, only under the following circumstances:

• during any calendar quarter commencing after the calendar quarter ending on March 31, 2018 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

• during the five business day period after any five consecutive trading day period (the “2022 Notes Measurement Period”), in which the “trading price” (as the term is defined in the 2022  Notes Indenture) per $1,000 principal amount of notes for each trading day of such 2022 Notes Measurement Period was less than 98% of the product of the last reported sale price of the Company’s common stock on such trading day and the conversion rate on each such trading day;

• if the Company calls any or all of the notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the maturity date; or

• upon the occurrence of specified corporate events.

On or after May 1, 2022, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2022 Notes at the conversion rate at any time regardless of whether the conditions set forth above have been met.

The 2022 Notes were not redeemable by the Company prior to November 6, 2020. The Company may redeem for cash all or any portion of the 2022 Notes, at its option, on or after November 6, 2020 if the last reported sale price of the Company's common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2022 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The Company has not provided notice to exercise its option to redeem the 2022 Notes.

Based on the market price of the Company’s common stock during the 30 trading days preceding June 30, 2018, the 2022 Notes were convertible at the option of the debt holder as of September 30, 2018 and continue to be convertible at the option of the debt holder as of June 30, 2021.

In connection with the issuance of the 2024 Notes in December 2019, the Company paid $57.8 million to repurchase $23.0 million aggregate principal amount of the 2022 Notes. The Company determined the fair value of the liability portion being extinguished immediately prior to extinguishment. Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its 2022 Notes to be approximately 4.64%. The fair value of such liability portion was then deducted from the amount of consideration transferred and allocated to the liability component. The difference between the fair value of the liability and its carrying value, inclusive of any unamortized debt issue costs, was recognized as an extinguishment loss in the amount of $1.4 million in loss on extinguishment of convertible notes on the consolidated statement of operations and comprehensive loss during the year ended December 31, 2019. The remaining consideration was allocated to the reacquisition of the equity component and recognized as a reduction of additional paid-in capital on the consolidated balance sheet in the amount of $36.7 million. The Company also partially terminated capped call options entered into in connection with the 2022 Notes during fiscal year 2019 and received $5.8 million recorded to additional paid-in capital on the consolidated balance sheet.

During the year ended December 31, 2020, the Company issued 362,029 shares upon the conversion of approximately $12.2 million in aggregate principal amount of the 2022 Notes and recognized $11.4 million in additional paid-in capital on the condensed consolidated balance sheet related to shares issued. The Company determined the fair value of the liability portion being extinguished immediately prior to extinguishment. Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its 2022 Notes ranged from approximately 4.64% to 5.13%. The fair value of such liability portion was then deducted from the amount of consideration transferred and allocated to the liability component. The difference between the fair value of the liability and its carrying value, inclusive of any unamortized debt issue costs, was recognized as an extinguishment loss in the amount of $0.4 million in loss on extinguishment of convertible notes on the consolidated statements of operations and comprehensive loss during the year ended December 31, 2020.

During the six months ended June 30, 2021, the Company issued 618,462 shares upon the conversion of approximately $20.9 million in aggregate principal amount of the 2022 Notes and recognized $19.5 million in additional paid-in capital on the condensed

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consolidated balance sheet related to shares issued. The Company determined the fair value of the liability portion being extinguished immediately prior to extinguishment. Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its 2022 Notes ranged from approximately 4.87% to 5.13%. The fair value of such liability portion was then deducted from the amount of consideration transferred and allocated to the liability component. The difference between the fair value of the liability and its carrying value, inclusive of any unamortized debt issue costs, was recognized as an extinguishment loss in the amount of $0.1 million and $0.5 million, respectively, in loss on extinguishment of convertible notes and capped call modification on the condensed consolidated statement of operations during the three and six months ended June 30, 2021.

In connection with the issuance of the 2026 Notes in March 2021, the Company paid approximately $58.6 million in cash and issued 1,288,994 shares of common stock to repurchase approximately $58.6 million aggregate principal amount of the 2022 Notes. The Company determined the fair value of the liability portion being extinguished immediately prior to extinguishment. Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its 2022 Notes to be approximately 4.87%. The fair value of such liability portion was then deducted from the amount of consideration transferred and allocated to the liability component. The difference between the fair value of the liability and its carrying value, inclusive of any unamortized debt issue costs, was recognized as an extinguishment loss in the amount of $2.2 million in loss on extinguishment of convertible notes and capped call modification on the condensed consolidated statement of operations during the three months ended March 31, 2021. The remaining consideration was allocated to the reacquisition of the equity component and recognized as a reduction of additional paid-in capital on the consolidated balance sheet in the amount of $2.7 million. The Company also partially terminated capped call options entered into in connection with the 2022 Notes in March 2021 and received $10.6 million recorded to additional paid-in capital on the condensed consolidated balance sheet and modified a capped call option agreement entered into in connection with the 2022 Notes and recognized modification expense of $0.2 million in loss on extinguishment of convertible notes and capped call modification on the condensed consolidated statement of operations and additional paid-in capital on the condensed consolidated balance sheet.

The 2022 Notes are classified as long-term on the consolidated balance sheet as of June 30, 2021 and December 31, 2020. The Company may repurchase the 2022 Notes prior to maturity and intends to settle in shares if exercised by the debt holder prior to maturity.

Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its 2022 Notes at the time of issuance to be approximately 6.93%, assuming no conversion option. Assumptions used in the estimate represent what market participants would use in pricing the equity component, including market interest rates, credit standing, and yield curves, all of which are defined as Level 2 observable inputs. The estimated implied interest rate was applied to the 2022 Notes, which resulted in a fair value of the liability component of $92.1 million upon issuance, calculated as the present value of implied future payments based on the $115.0 million aggregate principal amount. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, is amortized to interest expense over the term of the 2022 Notes. The $22.9 million difference between the aggregate principal amount of $115.0 million and the estimated fair value of the liability component was recorded in additional paid-in capital as the 2022 Notes were not considered redeemable.

In accounting for the transaction costs related to the issuance of the 2022 Notes, the Company allocated the total amount incurred to the liability and equity components based on their estimated relative fair values. Transaction costs attributable to the liability component on the remaining outstanding notes as of the issuance date, of less than $0.1 million, are being amortized to expense over the term of the 2022 Notes, and transaction costs attributable to the equity component as of the issuance date, totaling $0.8 million, were netted with the equity component in shareholders’ equity.

The 2022 Notes consist of the following (in thousands):

	As of			As of
	June 30, 2021			December 31, 2020
Liability component:
Principal	$	303		$	79,795
Less: debt discount, net of amortization		(21	)		(7,313	)
Net carrying amount	$	282		$	72,482
Equity component (1)		(39,301	)		(21,318	)

⁽¹⁾ Recorded in the consolidated balance sheet within additional paid-in capital, net of $0.8 million transaction costs in equity. Additional paid-in capital also includes $2.7 million and $36.7 million, respectively, market premium representing the excess of the total consideration delivered over the fair value of the liability recognized related to the $58.6 million and $23.0 million, respectively, principal balance extinguishment of the 2022 Notes in March 2021 and December 2019.

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The following table sets forth total interest expense recognized related to the 2022 Notes (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
1.50% coupon	$	2	$	345	$	108	$	690
Amortization of debt discount and transaction costs		8		1,047		626		2,077
	$	10	$	1,392	$	734	$	2,767

The fair value of the 2022 Notes, which was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, quoted price of the 2022 Notes in an over-the-counter market (Level 2), and carrying value of debt instruments (carrying value excludes the equity component of the Company’s convertible notes classified in equity) were as follows (in thousands):

	As of June 30, 2021				As of December 31, 2020
	Fair Value		Carrying Value		Fair Value		Carrying Value
2022 Notes	$	1,224	$	282	$	265,488	$	72,482

In connection with the issuance of the 2022 Notes, the Company entered into capped call transactions with certain counterparties affiliated with the initial purchasers and others. The capped call transactions are expected to reduce potential dilution of earnings per share upon conversion of the 2022 Notes. Under the capped call transactions, the Company purchased capped call options that in the aggregate relate to the total number of shares of the Company’s common stock underlying the 2022 Notes, with an initial strike price of approximately $33.71 per share, which corresponds to the initial conversion price of the 2022 Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the 2022 Notes, and have a cap price of approximately $47.20. The cost of the purchased capped calls of $12.9 million was recorded to shareholders’ equity and will not be re-measured. During the three months ended March 31, 2021, the Company amended one of the capped call agreements to reduce the cap price to $46.68 and recognized modification expense of $0.2 million in loss on extinguishment of convertible notes and capped call modification on the condensed consolidated statement of operations.

Based on the closing price of the Company’s common stock of $136.08 on June 30, 2021, the if-converted value of the 2022 Notes was more than their respective principal amounts.

The following table summarizes the Company’s debt obligations at June 30, 2021 (in thousands):

	Remainder of 2021		2022-2023		2024-2025		Thereafter		Total
Debt obligations	$	—	$	303	$	450,000	$	375,000	$	825,303

Debt obligations include the principal amount of the 2026 Notes, 2024 Notes and 2022 Notes but exclude interest payments to be made under the 2026 Notes, 2024 Notes and 2022 Notes. Although the 2026 Notes, 2024 Notes and 2022 Notes mature in 2026, 2024 and 2022, respectively, they can be converted into cash and shares of our common stock prior to maturity if certain conditions are met. Any conversion prior to maturity can result in repayments of the principal amounts sooner than the scheduled repayments as indicated in the table. The 2026 Notes, 2024 Notes and 2022 Notes balance excludes debt discount capitalized on the balance sheet.

(10) Stockholders’ Equity

Preferred Stock

As of June 30, 2021, the Company had authorized 10,000,000 shares of preferred stock, par value $0.001, of which no shares were outstanding.

Common Stock

As of June 30, 2021, the Company had authorized 100,000,000 shares of common stock, par value $0.001. Holders of common stock are entitled to one vote per share. At June 30, 2021 and December 31, 2020, there were 38,288,685 and 35,449,447 shares of common stock issued and outstanding, respectively.

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(11) Stock Plans and Stock-Based Compensation

The Company’s 2016 Equity Incentive Plan (“2016 Plan”) became effective on September 15, 2016. The 2016 Plan provides for the grant of incentive stock options, non-qualified stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights and performance share awards to employees, directors and consultants of the Company. The number of shares of common stock reserved for issuance under the 2016 Plan will automatically increase on January 1 of each year by 3% of the number of shares of the Company’s capital stock outstanding on the immediately preceding December 31, or such lesser number of shares as determined by the Company’s board of directors.

2016 Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan (the “2016 ESPP”) became effective on September 15, 2016. The number of shares reserved for issuance under the 2016 ESPP will automatically increase on January 1 of each year by the lesser of 200,000 shares of the Company’s common stock, 1% of the number of shares of the Company’s common stock outstanding on the immediately preceding December 31, or such lesser number of shares as determined by the Company’s board of directors.

The 2016 ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount of up to 15% through payroll deductions of their eligible compensation, subject to any plan limitations. The 2016 ESPP provides for separate six-month offering periods beginning each March and September of each fiscal year.

On each purchase date, eligible employees will purchase the Company’s stock at a price per share equal to 85% of the lesser of (i) the fair market value of the Company’s common stock on the offering date or (ii) the fair market value of the Company’s common stock on the purchase date.

For the six months ended June 30, 2021 and 2020, 23,499 and 30,943 shares of common stock were purchased under the 2016 ESPP, respectively. The Company recorded stock-based compensation expense of $0.4 million and $0.3 million for the three months ended June 30, 2021 and 2020, respectively. The Company recorded stock-based compensation expense of $0.9 million and $0.6 million for the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, unrecognized compensation cost related to the 2016 ESPP was $0.3 million which will be amortized over a weighted-average period of 0.21 years.  

The fair value of shares issuable under the 2016 ESPP is determined using the Black-Scholes option pricing model with the following weighted average assumptions: 

	Six Months Ended June 30,
	2021		2020
Employee Stock Purchase Plan:
Expected term (in years) (1)		0.50		0.50
Expected volatility (2)	60%		55%
Risk-free interest rate (3)	0.06%		0.29%
Dividend rate (4)	0%		0%

⁽¹⁾ The expected term represents the contractual term of the 2016 ESPP;

⁽²⁾ The expected volatility of the Company’s common stock on the date of grant is based on the weighted average of the Company’s historical volatility as a public company, the implied volatility of publicly-traded options on the Company’s common stock and the volatilities of publicly traded peer companies that are reasonably comparable to the Company’s own operations;

⁽³⁾ The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the expected term of the grant; and

⁽⁴⁾ The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on the Company’s common stock.

Stock Options

Stock option awards are granted with an exercise price equal to the fair market value of the Company’s common stock at the date of grant based on the closing market price of its common stock as reported on The Nasdaq Global Market. The option awards generally vest over four years and are exercisable any time after vesting. The stock options expire ten years after the date of grant.

There were no stock options granted during the six months ended June 30, 2021 and 2020. The Company recorded stock-based compensation expense of $0.4 million and $1.0 million for the three months ended June 30, 2021 and 2020, respectively, attributed to stock options. The Company recorded stock-based compensation expense of $0.8 million and $1.9 million for the six months ended June 30, 2021 and 2020, respectively, attributed to stock options.    

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The total intrinsic value of options exercised for the six months ended June 30, 2021 and 2020 was $8.6 million and $15.4 million, respectively. This intrinsic value represents the difference between the fair market value of the Company’s common stock on the date of exercise and the exercise price of each option. Based on the fair market value of the Company’s common stock at June 30, 2021 and 2020, the total intrinsic value of all outstanding options was $22.2 million and $59.4 million, respectively.

Total unrecognized compensation cost related to nonvested stock options was approximately $0.5 million as of June 30, 2021 and is expected to be recognized over a weighted average period of 0.6 years. The amount of cash received from the exercise of stock options during the six months ended June 30, 2021 and 2020 was $2.2 million and $4.6 million, respectively.

The following table summarizes the Company’s stock option activity:

	Stock options outstanding			Weighted average exercise price
Outstanding at December 31, 2020		279,021		$	25.55
Exercised		(75,853	)		28.55
Forfeited		(4,369	)		33.32
Outstanding at June 30, 2021		198,799			24.23

Stock options outstanding, vested and expected to vest and exercisable are as follows:

	As of June 30, 2021
	Number of shares		Remaining contractual life (years)		Weighted- average exercise price
Outstanding		198,799		5.66	$	24.23
Vested and expected to vest		198,391		5.66		24.20
Exercisable		153,906		5.39		20.98

Vested and nonvested stock option activity was as follows:

	Vested				Nonvested
	Options outstanding		Weighted average exercise price		Options outstanding		Weighted average exercise price
Outstanding at June 30, 2021		153,906	$	20.98		44,893	$	35.38

Restricted Stock Units

During the six months ended June 30, 2021, the Company granted 284,849 restricted stock units (“RSUs”) to members of its senior management and certain other employees pursuant to the 2016 Plan. There were 81,625 RSUs that vested during the six months ended June 30, 2021. The Company accounts for RSUs issued to employees at fair value, based on the market price of the Company’s common stock on the date of grant. The weighted-average grant date fair values of RSUs granted during the six months ended June 30, 2021 and 2020 were $121.67 and $109.31, respectively. The fair values of RSUs that vested during the six months ended June 30, 2021 and 2020, were $6.8 million and $4.0 million, respectively. During the three months ended June 30, 2021 and 2020, the Company recorded $7.4 million and $4.8 million, respectively, of stock-based compensation related to the RSUs. During the six months ended June 30, 2021 and 2020, the Company recorded $13.3 million and $9.3 million, respectively, of stock-based compensation related to the RSUs.

As of June 30, 2021, there was $65.2 million of unrecognized compensation expense related to unvested RSUs which is expected to be recognized over a weighted-average period of approximately 2.46 years. For RSUs subject to graded vesting, the Company recognizes compensation cost on a straight-line basis over the service period for the entire award.

Performance-Based Restricted Stock Units

During the six months ended June 30, 2021, the Company granted 288,292 performance-based restricted stock units (“PSUs”) to members of its management pursuant to the 2016 Plan. There were 48,043 PSUs that vested during the six months ended June 30, 2021. The PSUs generally vest based on the Company achieving certain revenue growth thresholds which ranged from 20% to 40% compounded annual growth for grants through 2020 and 15% to 35% compounded annual growth for grants starting in 2021 over a measurement period of two years for the first 50% of PSUs and three years for the remaining PSUs. The vesting of the PSUs is subject to the employee’s continued employment with the Company through the date of achievement. During the six months ended June 30,

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2021, the share price of the Company’s common stock on the date of issuance of the PSUs ranged from $118.04 to $146.69 per share. The fair value is based on the value of the Company’s common stock at the date of issuance and the probability of achieving the performance metric. The Company has assessed the probability of achievement of the award at 100% based on past performance of achievement of the performance metric. Compensation cost is adjusted in future periods for subsequent changes in the expected outcome of the performance related conditions. The weighted-average grant date fair values of PSUs granted during the six months ended June 30, 2021 and 2020 were $121.80 and $108.57, respectively. During the three months ended June 30, 2021 and 2020, the Company recognized $7.3 million and $5.2 million, respectively, of stock compensation expense in connection with the PSU awards. During the six months ended June 30, 2021 and 2020, the Company recognized $13.2 million and $9.8 million, respectively, of stock compensation expense in connection with the PSU awards.

As of June 30, 2021, there was $50.6 million of unrecognized compensation expense related to unvested PSUs which is expected to be recognized over a weighted-average period of approximately 1.95 years. Compensation cost is recognized under the accelerated method and is adjusted in future periods for subsequent changes in the expected outcome of the performance related conditions.

The following table summarizes the Company’s RSU and PSU activity:

	Number of Shares
Outstanding at December 31, 2020		1,420,541
Granted		573,141
Vested		(129,668	)
Forfeited		(73,644	)
Outstanding at June 30, 2021		1,790,370

Stock-Based Compensation Expense

The Company recorded the total stock-based compensation expense as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Cost of revenue	$	819	$	703	$	1,818	$	1,311
Sales and marketing		5,579		3,917		9,321		7,525
Research and development		2,562		2,298		4,590		4,172
General and administrative		6,545		4,360		12,461		8,580
Total	$	15,505	$	11,278	$	28,190	$	21,588

Stock-based compensation expense is recognized over the award’s expected vesting schedule, which is reduced for forfeitures.

(12) Basic and Diluted Net Loss per Share

Basic net loss per common share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potential dilutive shares of common stock. Basic and diluted net loss per share of common stock were the same for all periods presented as the impact of all potentially dilutive securities outstanding was anti-dilutive. The Company uses the if converted method for convertible senior notes for calculating any potential dilutive effect on diluted loss per share.

The following common equivalent shares were excluded from the diluted net loss per share calculation because their inclusion would have been anti-dilutive:

	As of June 30,
	2021		2020
Convertible senior notes		6,089,230		6,733,914
Stock-based compensation grants		1,989,169		2,018,888
Total		8,078,399		8,752,802

In connection with the issuance of the 2026 Notes in March 2021, the Company paid $35.1 million to enter into capped call option agreements to reduce the potential dilution to holders of the Company’s common stock upon conversion of the 2026 Notes. In connection with the issuance of the 2024 Notes in December 2019, the Company paid $44.9 million to enter into capped call option agreements to reduce the potential dilution to holders of the Company’s common stock upon conversion of the 2024 Notes. In connection with the issuance of the 2022 Notes in November 2017, the Company paid $12.9 million to enter into capped call option

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agreements to reduce the potential dilution to holders of the Company’s common stock upon conversion of the 2022 Notes. In March 2021 and December 2019, the Company partially terminated capped call options related to the 2022 Notes and received $10.6 million and $5.8 million and, respectively. In March 2021, the Company also modified a capped call agreement entered into in connection with the 2022 Notes and recognized modification expense of $0.2 million in loss on extinguishment of convertible notes and capped call modification on the condensed consolidated statement of operations. The capped call option agreements are excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is antidilutive.

Reserve for Unissued Shares of Common Stock

The Company is required to reserve and keep available out of its authorized but unissued shares of common stock such number of shares sufficient for the exercise of all shares granted and available for grant under the Company’s 2008 Equity Incentive Plan, 2016 Plan and 2016 ESPP. The amount of such shares of the Company’s common stock reserved for these purposes at June 30, 2021 was 5.9 million shares. Additionally, the Company is required to reserve and keep available out of its authorized but unissued shares of common stock shares that become issuable pursuant to the terms of the 2026 Notes, 2024 Notes and 2022 Notes.

(13) Income Taxes

The Company is subject to income tax in the United States as well as other tax jurisdictions in which it conducts business. Earnings from non-U.S. activities are subject to local country income tax. The Company does not provide for U.S. deferred income taxes on the undistributed earnings of its foreign subsidiaries as such earnings are reinvested indefinitely.

The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual tax rate changes, the Company makes a cumulative adjustment in that quarter. The Company’s quarterly tax provision, and its quarterly estimate of its annual effective tax rate, are subject to significant volatility due to several factors, including the Company’s ability to accurately predict its pre-tax income and loss in multiple jurisdictions.

For the three months ended June 30, 2021 and 2020, the Company recorded a benefit from income taxes of $3.8 million and $1.5 million, respectively, resulting in an effective benefit tax rate of 10.07% and 7.26%, respectively. For the six months ended June 30, 2021 and 2020, the Company recorded a benefit from income taxes of $9.6 million and $2.2 million, respectively, resulting in an effective benefit tax rate of 14.72% and 4.71%, respectively. During six months ended June 30, 2021, there were deferred tax liabilities recognized in connection with the preliminary purchase price accounting for the Company’s completed acquisitions. Certain of such deferred tax liabilities will be a source of future taxable income to realize a portion of Company’s deferred tax assets, which resulted in a discrete tax benefit of approximately $7.6 million related to U.S. acquired entities being recognized during the six months ended June 30, 2021.

As of June 30, 2021, the Company had gross tax-effected unrecognized tax provision of $1.6 million which, if recognized, would favorably impact the effective tax rate. The Company’s existing tax positions will continue to generate an increase in unrecognized tax benefits in subsequent periods. The Company’s policy is to record interest and penalties related to unrecognized tax benefits as income tax expense. During the three and six months ended June 30, 2021 and 2020, the amounts recorded related to the accrual of interest and penalties were immaterial in each period.   

In response to the COVID-19 pandemic, the United States passed the Coronavirus Aid, Relief, and Economic Security ("CARES") Act in March 2020 and the United States enacted the American Rescue Plan Act of 2021 in March 2021. These Acts include various income and payroll tax measures. Neither the income tax nor payroll tax measures had a material impact on our financial statements.

(14) Segment information

The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”), who is the Company’s chief executive officer, in deciding how to allocate resources and assess the Company’s financial and operational performance. While the Company has applications that address multiple use cases, the Company’s applications generally operate on and leverage a single technology platform and are deployed and sold in an identical way. In addition, the Company’s CODM evaluates the Company’s financial information and resources and assesses the performance of these resources on a consolidated basis. As a result, the Company has determined that the Company’s business operates in a single operating segment. Since the Company operates as one operating segment, all required financial segment information can be found in the consolidated financial statements.

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(15) Revenue Recognition

The following table disaggregates the Company’s revenue by geography which provides information as to the major source of revenue (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
Primary Geographic Markets	2021		2020		2021		2020
United States	$	62,290	$	51,017	$	119,755	$	97,966
International		24,359		14,360		49,104		26,311
Total	$	86,649	$	65,377	$	168,859	$	124,277

The following table presents the Company’s revenues disaggregated by revenue source (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Subscription services	$	79,652	$	59,506	$	150,084	$	113,317
Professional services		6,459		4,653		12,399		9,134
Software licenses and other		538		1,218		6,376		1,826
Total	$	86,649	$	65,377	$	168,859	$	124,277

Contract Assets

The Company does not have material amounts of contract assets since revenue is recognized as control of goods is transferred or as services are performed. There are a small number of professional services that may occur over a period of time, but that period of time is generally very short in duration. Any contract assets that may arise are recorded in other assets in the Company’s condensed consolidated balance sheet net of an allowance for credit losses.  

Contract Liabilities

The Company’s contract liabilities consist of advance payments and deferred revenue. The Company’s contract liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. The Company classifies advance payments and deferred revenue as current or noncurrent based on the timing of when it expects to recognize revenue. Generally, all contract liabilities are expected to be recognized within one year and are included in deferred revenue in the Company’s condensed consolidated balance sheet. The noncurrent portion of deferred revenue is included and separately disclosed in the Company’s condensed consolidated balance sheet.

Deferred Costs

Current deferred costs, which primarily consist of deferred sales commissions, were $13.7 million and $14.5 million as of June 30, 2021 and December 31, 2020, respectively. Noncurrent deferred costs, which primarily consist of deferred sales commissions, were $17.6 million and $15.9 million as of June 30, 2021 and December 31, 2020, respectively. During the three months ended June 30, 2021 and 2020, amortization expense for the deferred costs was $3.5 million and $2.8 million, respectively. During the six months ended June 30, 2021 and 2020, amortization expense for the deferred costs was $7.2 million and $5.7 million, respectively. There was no impairment loss in relation to the costs capitalized for the six months ended June 30, 2021 and the year ended December 31, 2020, respectively.

Deferred Revenue

During the three months ended June 30, 2021 and 2020, $67.0 million and $51.2 million, respectively, of subscription services, license and other revenue was recognized and was included in the deferred revenue balances at the beginning of the respective period. During the six months ended June 30, 2021 and 2020, $106.1 million and $83.0 million, respectively, of subscription services, license and other revenue was recognized and was included in the deferred revenue balances at the beginning of the respective period.

During the three months ended June 30, 2021 and 2020, $3.6 million and $3.9 million, respectively, of professional services revenue was recognized and was included in the deferred revenue balances at the beginning of the respective period. During the six months ended June 30, 2021 and 2020, $7.5 million and $5.4 million, respectively, of professional services revenue was recognized and was included in the deferred revenue balances at the beginning of the respective period.

As of June 30, 2021, approximately $412.3 million of revenue is expected to be recognized from remaining performance obligations for subscription and other contracts. The Company expects to recognize revenue on approximately $250.7 million of these remaining performance obligations over the next 12 months, with the balance recognized thereafter.      

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As of June 30, 2021, approximately $11.6 million of revenue is expected to be recognized from remaining performance obligations for professional services contracts. The Company expects to recognize revenue on approximately $10.0 million of these remaining performance obligations over the next 12 months, with the balance recognized thereafter.

(16) Leases

The Company’s leases relate primarily to office facilities that expire on various dates from 2021 through 2029. The terms of the Company's non-cancelable operating lease arrangements typically contain fixed lease payment which increases over the term of the lease at fixed rates, rent holidays and provide for additional renewal periods. Lease expense is recognized over the term of the lease on a straight-line basis. All of the Company’s leases are classified as operating leases. The Company has determined that periods covered by options to extend the Company’s leases are excluded from the lease term as the Company is not reasonably certain the Company will exercise such options.

The Company records its right-of-use (“ROU”) asset within other assets (long term) and its operating lease liabilities within other current and long-term liabilities.

Additional information related to the Company’s leases is as follows (in thousands, except lease term and discount rate):

	As of			As of
	June 30, 2021			December 31, 2020
Balance sheet information
ROU assets	$	18,700		$	15,045
Lease liabilities, current	$	5,715		$	4,259
Lease liabilities, non-current		16,363			14,403
Total lease liabilities	$	22,078		$	18,662
Supplemental data
Weighted average remaining lease term	4.49 years			4.57 years
Weighted average discount rate		6.23	%		7.00	%

	Six Months Ended June 30,
	2021		2020
Cash paid for amounts included in lease liabilities	$	3,017	$	2,330
ROU assets obtained in exchange for new lease obligations		5,729		4,853

Maturities of lease liabilities as of June 30, 2021 were as follows (in thousands):

Year ending December 31,
2021 (for the remaining six months)	$	3,494
2022		6,715
2023		6,029
2024		3,341
2025		1,647
Thereafter		4,220
Total undiscounted lease payments		25,446
Less: imputed interest		(3,368	)
Total lease liabilities	$	22,078

The following table presents components of lease expense (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Operating lease expense	$	1,466		$	1,276		$	2,769		$	2,425
Short-term lease expense(1)		225			337			391			552
		1,691			1,613			3,160			2,977
Less: Sublease income		(15	)		(92	)		(15	)		(138	)
Total lease expense	$	1,676		$	1,521		$	3,145		$	2,839

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⁽¹⁾ Short-term lease expense includes all leases with lease terms ranging from less than one month to one year.

As of June 30, 2021, the Company does not have any leases that have not yet commenced that create significant rights and obligations.

(17) Commitments and Contingencies

Litigation

From time to time the Company may become involved in legal proceedings or be subject to claims arising in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on its business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact because of defense and settlement costs, diversion of management resources and other factors.

Employee Contracts

The Company has entered into employment contracts with certain of the Company’s executive officers which provide for at-will employment. However, under the provisions of the contracts, the Company would incur severance obligations of up to twelve months of the executive’s annual base salary for certain events, such as involuntary terminations.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (i) our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and (ii) our audited consolidated financial statements and the related notes and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended December 31, 2020 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 26, 2021. This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are often identified by the use of words such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would” or the negative or plural of these words or similar expressions or variations. Such forward-looking statements include, but are not limited to, statements with respect to our outlook; the impact of new accounting standards; our ability to service our debt; our business strategy, including with respect to potential acquisitions; plans and objectives of future operations; the length and severity of the COVID-19 pandemic and its impact on the global economy and our financial results; and our future financial and business performance. The events described in these forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors”, set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020, Part II, Item 1A of this Quarterly Report on Form 10-Q and in our other SEC filings. You should not rely upon forward-looking statements as predictions of future events. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Overview

Everbridge is a global software company that provides enterprise software applications that automate and accelerate organizations’ operational response to critical events in order to keep people safe and organizations running. During public safety threats including shooter situations, terrorist attacks or severe weather conditions, as well as critical business events such as IT outages, cyber-attacks or other incidents such as product recalls or supply-chain interruptions, global customers rely on our Critical Event Management platform to quickly and reliably aggregate and assess threat data, locate people at risk and responders able to assist, automate the execution of pre-defined communications processes and track progress on executing response plans. Our customers use our platform to identify and assess hundreds of different types of threats to their organizations, people, assets or brand. Our solutions enable organizations to deliver intelligent, contextual messages to, and receive verification of delivery from, hundreds of millions of recipients, across multiple communications modalities such as voice, SMS and e-mail, in over 200 countries and territories, in several languages and dialects – all simultaneously. Our Critical Event Management platform is comprised of a comprehensive set of software applications that address the full spectrum of tasks an organization has to perform to manage a critical event, including Mass Notification, Safety Connection, Incident Management, IT Alerting, Visual Command Center, Public Warning, Community Engagement, Risk Center, Crisis Management, Secure Collaboration, and Control Center. We believe that our broad suite of integrated, enterprise applications delivered via a single global platform is a significant competitive advantage in the market for Critical Event Management solutions, which we refer to generally as CEM.

Our customer base has grown from 867 customers at the end of 2011 to more than 5,800 customers as of June 30, 2021. Our customers are based in 70 countries and include eight of the 10 largest U.S. cities, nine of the 10 largest U.S.-based investment banks, 47 of the 50 busiest North American airports, nine of the 10 largest global consulting firms, eight of the 10 largest global automakers, nine of the 10 largest U.S.-based health care providers, and seven of the 10 largest technology companies in the world. We provide our applications to customers of varying sizes, including enterprises, small businesses, non-profit organizations, educational institutions and governmental agencies. Our customers span a wide variety of industries including technology, energy, financial services, healthcare and life sciences, manufacturing, media and entertainment, retail, higher education and professional services.

We sell all of our critical event management applications on a subscription basis. We generally enter into contracts that range from one to three years in length, with an average contract duration of 1.8 years as of June 30, 2021, and generally bill and collect payment annually in advance. We derive most of our revenue from subscriptions to applications. Over 91% of the revenue that we recognized in each of the eight most recently completed quarters was generated from contracts entered into in prior quarters or renewals of those contracts; the balance of the revenue that we recognized in each such quarter was generated from contracts entered into with new customers or new contracts, other than renewals, entered into with existing customers in such quarter. We derived approximately 50% of our revenue in 2020 from sales of our Mass Notification application. Our pricing model is based on the number of applications subscribed to and, per application, the number of people, locations and things connected to our platform as well as the volume of communications. We also offer premium services including data feeds for social media, threat intelligence and weather. We generate additional revenue by expanding the number of applications that our customers subscribe to and the number of contacts and devices connected to our platform.

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We generated revenue of $86.6 million and $65.4 million for the three months ended June 30, 2021 and 2020, respectively, representing a period-over-period increase of 33%. We generated revenue of $168.9 million and $124.3 million for the six months ended June 30, 2021 and 2020, respectively, representing a period-over-period increase of 36%. We had net losses of $33.8 million and $19.2 million for the three months ended June 30, 2021 and 2020, respectively. We had net losses of $55.6 million and $44.6 million for the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021 and 2020, 25% and 26% of our customers, respectively, were located outside of the United States. These customers generated 28% and 22% of our total revenue for the three months ended June 30, 2021 and 2020, respectively, and 29% and 21% of our total revenue for the six months ended June 30, 2021 and 2020, respectively.

We have focused on rapidly growing our business and believe that the future growth of our business is dependent on many factors, including our ability to increase the functionality of our platform and applications, expand our customer base, accelerate adoption of our applications beyond Mass Notification within our existing customer base and expand our international presence. Our future growth will also depend on the growth in the market for critical event management solutions and our ability to effectively compete. In order to further penetrate the market for critical event management solutions and capitalize on what we believe to be a significant opportunity, we intend to continue to invest in research and development, build-out our data center infrastructure and services capabilities and hire additional sales representatives, both domestically and internationally, to drive sales to new customers and incremental sales of new applications to existing customers. Nevertheless, we expect to continue to incur losses in the near term and, if we are unable to achieve our growth objectives, we may not be able to achieve profitability.

Recent Developments

On April 6, 2021, we signed a definitive agreement with xMatters Holdings, Inc. (“xMatters”) pursuant to which we agreed to purchase all of the issued and outstanding shares of stock of xMatters. This acquisition closed on May 7, 2021. We purchased all of the issued and outstanding shares of stock of xMatters for a base consideration of $242.3 million. We paid $177.8 million in cash and issued 555,332 newly issued shares of our common stock at closing. On the date of this acquisition, the average price of our common stock on the Nasdaq Global Market was $116.12 per share. We acquired xMatters for its service reliability platforms to enhance our CEM suite of solutions as well as market penetration and customer reach.

Impacts of COVID-19 to Our Business

During the six months ended June 30, 2021, financial results and operations for our Americas and international geographies were not significantly impacted by the COVID-19 pandemic. We are taking a variety of measures to ensure the availability and functioning of our critical infrastructure, to promote the safety and security of our employees and to support the communities in which we operate. These measures include requiring remote working arrangements for employees where practicable, among other modifications. We are following evolving public and private sector policies and initiatives to reduce the transmission of COVID-19, such as the imposition of travel restrictions, the promotion of social distancing and the adoption of work-from-home arrangements. All of these policies and initiatives have been and may continue to impact our operations. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required or that we determine are in the best interests of our employees, customers, suppliers and stockholders. Due to the speed with which the situation is developing, we are not able at this time to estimate the future impact of COVID-19 on our financial results and operations, but the impact could be material for the remainder of fiscal year 2021 and could be material during any future period affected either directly or indirectly by this pandemic. Due to our primarily subscription-based business model, the effect of the coronavirus may not be fully reflected in our results of operations until future periods, if at all. See Part I-Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on February 26, 2021, for information on risks associated with pandemics in general and COVID-19 specifically. The extent of the future impact of COVID-19 on our operational and financial performance will depend on certain developments, including new information which may emerge concerning the duration and severity of the outbreak, impact of vaccinations and virus variants, international actions taken or which may be taken in the future to contain and treat it, impact on our customers and our sales cycles, and impact on our employees, all of which are highly uncertain and cannot be predicted.

During 2020, (1) we launched COVID-19 Shield, a new set of coronavirus protection solutions designed to protect the safety of employees and customers, maintain business operations, safeguard supply chains, and reduce costs and liabilities stemming from the impact of the global coronavirus pandemic; (2) we launched COVID-19 Return to Work, a software solution designed to help businesses and governments navigate the complexity of operating during the next phase of the COVID-19 pandemic and prepare to bring back the workforce and reopen society; (3) we launched COVID-19 Shield: Contact Tracing, a solution for corporate, government and healthcare organizations to supplement or complement existing manual contact tracing efforts; (4) we launched Control Center, a physical security information management software platform, which includes features designed to help organizations return to work by integrating and managing data and analytics from video cameras, thermal cameras, badge access and other building systems, and by automating the response to help organizations ensure the safety and protection of employees, as well as compliance with social distancing and personal protective equipment policies; and (5) we announced COVID-19 Shield: Vaccine Distribution, an extension to our CEM platform offering risk insights, logistics awareness and vaccine appointment management. These new products were built off of our existing platforms.

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Presentation of Financial Statements

Our consolidated financial statements include the accounts of our wholly-owned subsidiaries. Business acquisitions are included in our consolidated financial statements from the date of the acquisition. Our purchase accounting resulted in all assets and liabilities of acquired businesses being recorded at their estimated fair values on the acquisition dates. All intercompany balances and transactions have been eliminated in consolidation.

We report our financial results as one operating segment. Our operating results are regularly reviewed on a consolidated basis by our chief executive officer, who is our chief operating decision maker, principally to make strategic decisions regarding how we allocate our resources and to assess our consolidated operating performance.

Components of Results of Operations

Revenue

We derive substantially all of our revenue from the sale of subscriptions to our critical event management and enterprise safety applications.

We generally bill and collect payment for our subscriptions annually in advance. All revenue billed in advance of services being delivered is recorded in deferred revenue. The initial subscription period typically ranges from one to three years. We offer varying levels of customer support based on customer needs and the complexity of their businesses, including the level of usage by a customer in terms of minutes or the amount of data used to transmit the notifications. Our pricing model is based on the number of applications subscribed to and, per application, the number of people, locations and things connected to our platform as well as the volume of communications. We also offer premium services including data feeds for social media, threat intelligence and weather. We generate additional revenue by expanding the number of premium features and applications that our customers subscribe to and the number of contacts connected to our platform.

We also sell professional services, which primarily consist of fees for deployment and optimization services as well as training. In addition, on occasion we may sell our software and related post contract support for on premises usage which is outside of our core business and is not a significant revenue stream for us.

Cost of Revenue

Cost of revenue includes expenses related to the fulfillment of our subscription services, consisting primarily of employee-related expenses for data center operations and customer support, including salaries, bonuses, benefits and stock-based compensation expense. Cost of revenue also includes hosting costs, messaging costs and depreciation and amortization. As we add data center capacity and support personnel in advance of anticipated growth, our cost of revenue will increase and, if anticipated revenue growth does not occur, our gross profit will be adversely affected.

Operating Expenses

Operating expenses consist of sales and marketing, research and development and general and administrative expenses. Salaries, bonuses, stock-based compensation expense and other personnel costs are the most significant components of each of these expense categories. We include stock-based compensation expense incurred in connection with the grant of stock options, restricted stock units, performance-based restricted stock units and our employee stock purchase plan within the applicable operating expense category based on the equity award recipient’s functional area.

Sales and Marketing

Sales and marketing expense primarily consists of employee-related expenses for sales, marketing and public relations employees, including salaries, bonuses, commissions, benefits and stock-based compensation expense. Sales and marketing expense also includes trade show, market research, advertising and other related external marketing expense as well as office and software related costs to support sales. We defer certain sales commissions related to acquiring new customers or services and amortize these expenses ratably over the period of benefit that we have determined to be four years. Sales commissions attributable to professional services are expensed within twelve months of selling the service to the customer. We plan to continue to expand our sales and marketing functions to grow our customer base and increase sales to existing customers. This growth will include adding sales personnel and expanding our marketing activities to continue to generate additional leads and build brand awareness. In the near term, we expect our sales and marketing expense to increase on an absolute dollar basis as we hire new sales representatives in the United States and worldwide and grow our marketing staff.

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Research and Development

Research and development expense primarily consists of employee-related expenses for research and development staff, including salaries, bonuses, benefits and stock-based compensation expense. Research and development expense also includes the cost of certain third-party services, office related costs to support research and development activities, software subscriptions and hosting costs. We capitalize certain software development costs that are attributable to developing new applications and adding incremental functionality to our platform and amortize these costs over the estimated life of the new application or incremental functionality, which is generally three years. We focus our research and development efforts on improving our applications, developing new applications and delivering new functionality. In the near term, we expect our research and development expense to increase on an absolute dollar basis as we continue to increase the functionality of our platform and applications.

General and Administrative

General and administrative expense primarily consists of employee-related expenses for administrative, legal, finance and human resource personnel, including salaries, bonuses, benefits and stock-based compensation expense. General and administrative expense also includes professional fees, insurance premiums, corporate expenses, transaction-related costs, office-related expenses, facility costs, depreciation and amortization and software license costs. In the near term, we expect our general and administrative expense to increase on an absolute dollar basis as we continue to incur the costs associated with being a publicly traded company.

Interest and Investment Income

Interest income consists of interest earned on our cash balances held at financial institutions. Investment income consist of interest earned on our short-term investments which consist of U.S. treasuries, U.S. government agency obligations and money market funds.

Interest Expense

Interest expense consists of interest on our outstanding debt obligations including amortization of debt discounts and offering costs.

Loss on Extinguishment of Convertible Notes and Capped Call Modification

Loss on extinguishment of convertible notes and capped call modification relates to the partial extinguishment of our 1.50% convertible senior notes due 2022 (the “2022 Notes”) and modification of a 2022 Notes capped call agreement.

Other Expense, Net

Other expense, net consists primarily of realized foreign currency gains and losses.

Results of Operations

The following tables set forth our results of operations for the periods presented and as a percentage of our total revenue for those periods. The period-to-period comparison of our historical results is not necessarily indicative of the results that may be expected in the future (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenue	$	86,649		$	65,377		$	168,859		$	124,277
Cost of revenue(1)		27,665			19,423			52,945			40,312
Gross profit		58,984			45,954			115,914			83,965
Operating expenses:
Sales and marketing(1)		41,483			28,741			76,010			58,329
Research and development(1)		20,251			14,937			38,330			29,109
General and administrative(1)		24,664			16,799			47,226			32,710
Total operating expenses		86,398			60,477			161,566			120,148
Operating loss		(27,414	)		(14,523	)		(45,652	)		(36,183	)
Other expense, net		(10,194	)		(6,201	)		(19,558	)		(10,627	)
Loss before income taxes		(37,608	)		(20,724	)		(65,210	)		(46,810	)
Benefit from income taxes		3,787			1,504			9,600			2,205
Net loss	$	(33,821	)	$	(19,220	)	$	(55,610	)	$	(44,605	)

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⁽¹⁾ Includes stock-based compensation expense and depreciation and amortization of acquired intangible assets as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Stock-based compensation expense
Cost of revenue	$	819	$	703	$	1,818	$	1,311
Sales and marketing		5,579		3,917		9,321		7,525
Research and development		2,562		2,298		4,590		4,172
General and administrative		6,545		4,360		12,461		8,580
Total	$	15,505	$	11,278	$	28,190	$	21,588

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Depreciation and amortization expense
Cost of revenue	$	5,242	$	2,866	$	10,094	$	5,531
Sales and marketing		243		234		474		467
Research and development		180		149		356		280
General and administrative		7,346		4,071		12,930		7,698
Total	$	13,011	$	7,320	$	23,854	$	13,976

The following table sets forth our condensed consolidated statements of operations as a percentage of revenue ⁽¹⁾:

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenue		100	%		100	%		100	%		100	%
Cost of revenue		32	%		30	%		31	%		32	%
Gross profit		68	%		70	%		69	%		68	%
Operating expenses:
Sales and marketing		48	%		44	%		45	%		47	%
Research and development		23	%		23	%		23	%		23	%
General and administrative		28	%		26	%		28	%		26	%
Total operating expenses		100	%		93	%		96	%		97	%
Operating loss		(32	)%		(22	)%		(27	)%		(29	)%
Other expense, net		(12	)%		(9	)%		(12	)%		(9	)%
Loss before income taxes		(43	)%		(32	)%		(39	)%		(38	)%
Benefit from income taxes		4	%		2	%		6	%		2	%
Net loss		(39	)%		(29	)%		(33	)%		(36	)%

⁽¹⁾ Columns may not add up to 100% due to rounding.

Comparison of the Three Months Ended June 30, 2021 and 2020

Revenue

	Three Months Ended June 30,				Change
(dollars in thousands)	2021		2020		$		%
Revenue	$	86,649	$	65,377	$	21,272		32.5	%

Revenue increased by $21.3 million for the three months ended June 30, 2021 compared to the same period in 2020. The increase was due to a $21.3 million increase in sales of our products driven by expansion of our customer base from 5,340 customers as of June 30, 2020 to 5,890 customers as of June 30, 2021, including increased sales to larger organizations with greater numbers of contacts and locations.

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Cost of Revenue

	Three Months Ended June 30,						Change
(dollars in thousands)	2021			2020			$		%
Cost of revenue	$	27,665		$	19,423		$	8,242		42.4	%
Gross margin %		68	%		70	%

Cost of revenue increased by $8.2 million for the three months ended June 30, 2021 compared to the same period in 2020. The increase was primarily due to a $4.1 million increase in employee-related costs associated with our increased headcount from 270 employees as of June 30, 2020 to 410 employees as of June 30, 2021, a $2.4 million increase in depreciation and amortization expense attributed to our fixed assets, acquired intangibles and capitalized software and a $1.7 million increase in hosting, software and messaging costs.

Gross margin percentage decreased due to our continued investment in personnel to support our growth.

Operating Expenses

Sales and Marketing Expense

	Three Months Ended June 30,						Change
(dollars in thousands)	2021			2020			$		%
Sales and marketing	$	41,483		$	28,741		$	12,742		44.3	%
% of revenue		48	%		44	%

Sales and marketing expense increased by $12.7 million for the three months ended June 30, 2021 compared to the same period in 2020. The increase was primarily due to a $10.1 million increase in employee-related costs, which includes stock-based compensation, associated with our increased headcount from 422 employees as of June 30, 2020 to 599 employees as of June 30, 2021. The remaining increase was principally the result of a $1.9 million increase in advertising-related costs and trade show expenses, as well as a $0.4 million increase in software expenses and a $0.3 million increase in office related expenses to support the sales team.

Research and Development Expense

	Three Months Ended June 30,						Change
(dollars in thousands)	2021			2020			$		%
Research and development	$	20,251		$	14,937		$	5,314		35.6	%
% of revenue		23	%		23	%

Research and development expense increased by $5.3 million for the three months ended June 30, 2021 compared to the same period in 2020. The increase was primarily due to a $5.2 million increase in employee-related costs, which includes stock-based compensation, associated with our increased headcount from 277 employees as of June 30, 2020 to 472 employees as of June 30, 2021, a $0.4 million increase in professional services, as well as a $0.3 million increase in office related expenses and a $0.3 million increase in hosting and software related costs to support research and development activities. A total of $2.4 million of internally developed software costs during the three months ended June 30, 2020 and $3.3 million of internally developed software costs during the three months ended June 30, 2021 were capitalized, resulting in a $0.9 million offset to the increase in the second quarter of 2021.

General and Administrative Expense

	Three Months Ended June 30,						Change
(dollars in thousands)	2021			2020			$		%
General and administrative	$	24,664		$	16,799		$	7,865		46.8	%
% of revenue		28	%		26	%

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General and administrative expense increased by $7.9 million for the three months ended June 30, 2021 compared to the same period in 2020. The increase was primarily due to a $3.8 million increase in employee-related costs, which includes stock-based compensation, associated with our increased headcount from 137 employees as of June 30, 2020 to 194 employees as of June 30, 2021, a $3.3 million increase in depreciation and amortization, a $1.1 million increase in professional services and office related expenses to support the administrative team, partially offset by a $0.3 million decrease in credit loss expense.  

Other Expense, Net

	Three Months Ended June 30,						Change
(dollars in thousands)	2021			2020			$			%
Other expense, net	$	(10,194	)	$	(6,201	)	$	(3,993	)		(64.4	)%
% of revenue		(12	)%		(9	)%

Other expense, net increased by $4.0 million for the three months ended June 30, 2021 compared to the same period in 2020 primarily due to a $3.6 million increase in interest expense related to our convertible senior notes, a decrease of $0.1 million of interest income due to lower interest rates on our investment balances and a $0.3 million increase in other expenses.

Income Taxes

	Three Months Ended June 30,						Change
(dollars in thousands)	2021			2020			$		%
Benefit from income taxes	$	3,787		$	1,504		$	2,283		151.8	%
% of revenue		4	%		2	%

A portion of the losses incurred during the three months ended June 30, 2021 are expected to be realized in some jurisdictions during the year or recognized as a deferred tax asset as of December 31, 2021. Losses incurred for other operating jurisdictions required a valuation allowance. An income tax benefit of $3.8 million was recorded during the three months ended June 30, 2021 attributed to a discrete tax benefit related to acquired deferred tax liabilities which provided support for releasing a portion of our U.S. valuation allowance during the three months ended June 30, 2021. The change in income tax benefit of $2.3 million for the three months ended June 30, 2021 as compared to the same period in 2020 was related to the change in valuation allowance for the current quarter acquired deferred tax liabilities and the realization of non-U.S. losses against deferred tax liabilities established for prior acquisitions.  

Comparison of the Six Months Ended June 30, 2021 and 2020

Revenue

	Six Months Ended June 30,				Change
(dollars in thousands)	2021		2020		$		%
Revenue	$	168,859	$	124,277	$	44,582		35.9	%

Revenue increased by $44.6 million for six months ended June 30, 2021 compared to the same period in 2020. The increase was due to a $44.6 million increase in sales of our products driven by expansion of our customer base from 5,340 customers as of June 30, 2020 to 5,890 customers as of June 30, 2021, including increased sales to larger organizations with greater numbers of contacts and locations.

Cost of Revenue

	Six Months Ended June 30,						Change
(dollars in thousands)	2021			2020			$		%
Cost of revenue	$	52,945		$	40,312		$	12,633		31.3	%
Gross margin %		69	%		68	%

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Cost of revenue increased by $12.6 million for the six months ended June 30, 2021 compared to the same period in 2020. The increase was primarily due to a $7.2 million increase in employee-related costs associated with our increased headcount from 270 employees as of June 30, 2020 to 410 employees as of June 30, 2021, a $4.6 million increase in depreciation and amortization expense attributed to our fixed assets, acquired intangibles and capitalized software and a $0.8 million increase in hosting, software and messaging costs.

Gross margin percentage increased due to revenue growth outpacing the increase in cost.

Operating Expenses

Sales and Marketing Expense

	Six Months Ended June 30,						Change
(dollars in thousands)	2021			2020			$		%
Sales and marketing	$	76,010		$	58,329		$	17,681		30.3	%
% of revenue		45	%		47	%

Sales and marketing expense increased by $17.7 million for the six months ended June 30, 2021 compared to the same period in 2020. The increase was primarily due to a $13.8 million increase in employee-related costs, which includes stock-based compensation, associated with our increased headcount from 422 employees as of June 30, 2020 to 599 employees as of June 30, 2021. The remaining increase was principally the result of a $2.6 million increase in advertising-related costs and trade show expenses, as well as a $0.8 million increase in software expenses and a $0.5 million increase in office related expenses to support the sales team.

Research and Development Expense

	Six Months Ended June 30,						Change
(dollars in thousands)	2021			2020			$		%
Research and development	$	38,330		$	29,109		$	9,221		31.7	%
% of revenue		23	%		23	%

Research and development expense increased by $9.2 million for the six months ended June 30, 2021 compared to the same period in 2020. The increase was primarily due to an $8.3 million increase in employee-related costs, which includes stock-based compensation, associated with our increased headcount from 277 employees as of June 30, 2020 to 472 employees as of June 30, 2021, a $1.1 million increase in professional services, as well as a $0.5 million increase in office related expenses and a $0.5 million increase in hosting and software related costs to support research and development activities. A total of $4.2 million of internally developed software costs during the six months ended June 30, 2020 and $5.4 million of internally developed software costs during the six months ended June 30, 2021 were capitalized, resulting in a $1.2 million offset to the increase in the first half of 2021.

General and Administrative Expense

	Six Months Ended June 30,						Change
(dollars in thousands)	2021			2020			$		%
General and administrative	$	47,226		$	32,710		$	14,516		44.4	%
% of revenue		28	%		26	%

General and administrative expense increased by $14.5 million for the six months ended June 30, 2021 compared to the same period in 2020. The increase was primarily due to a $6.3 million increase in employee-related costs, which includes stock-based compensation, associated with our increased headcount from 137 employees as of June 30, 2020 to 194 employees as of June 30, 2021, a $5.2 million increase in depreciation and amortization, a $2.5 million increase in professional services and office related expenses to support the administrative team, a $0.4 million increase in credit loss expense and a $0.1 million increase in our contingent consideration obligation.  

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Other Expense, Net

	Six Months Ended June 30,						Change
(dollars in thousands)	2021			2020			$			%
Other expense, net	$	(19,558	)	$	(10,627	)	$	(8,931	)		(84.0	)%
% of revenue		(12	)%		(9	)%

Other expense, net increased by $8.9 million for the six months ended June 30, 2021 compared to the same period in 2020 primarily due to a $4.3 million increase in interest expense related to our convertible senior notes, a $2.9 million loss on extinguishment of convertible notes and capped call modification, a decrease of $1.6 million of interest income due to lower interest rates on our investment balances and a $0.1 million increase in other expenses.

Income Taxes

	Six Months Ended June 30,						Change
(dollars in thousands)	2021			2020			$		%
Benefit from income taxes	$	9,600		$	2,205		$	7,395		335.4	%
% of revenue		6	%		2	%

A portion of the losses incurred during the six months ended June 30, 2021 are expected to be realized in some jurisdictions during the year or recognized as a deferred tax asset as of December 31, 2021. Losses incurred for other operating jurisdictions required a valuation allowance. An income tax benefit of $9.6 million was recorded during the six months ended June 30, 2021 attributed to a discrete tax benefit related to acquired deferred tax liabilities which provided support for releasing a portion of our U.S. valuation allowance during the six months ended June 30, 2021. The change in income tax benefit of $7.4 million for the six months ended June 30, 2021 as compared to the same period in 2020 was related to the change in valuation allowance for the current quarter acquired deferred tax liabilities and the realization of non-U.S. losses against deferred tax liabilities established for prior acquisitions.

Other Metrics

We regularly monitor a number of financial and operating metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. Our other business metrics may be calculated in a manner different than similar other business metrics used by other companies (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021		2020
Adjusted EBITDA	$	515		$	3,637		$	5,798	$	(1,134	)
Adjusted gross profit		62,781			47,586			123,314		86,944
Free cash flow		(9,040	)		(7,190	)		6,461		(8,917	)

• Adjusted EBITDA. Adjusted EBITDA represents our net loss before interest and investment (income) expense, net, (benefit from) provision for income taxes, depreciation and amortization expense, loss on extinguishment of convertible notes and capped call modification, change in fair value of contingent consideration and stock-based compensation expense. We do not consider these items to be indicative of our core operating performance. The items that are non-cash include depreciation and amortization expense, loss on extinguishment of convertible notes and capped call modification, change in fair value of contingent consideration and stock-based compensation expense. Adjusted EBITDA is a measure used by management to understand and evaluate our core operating performance and trends and to generate future operating plans, make strategic decisions regarding the allocation of capital and invest in initiatives that are focused on cultivating new markets for our solutions. In particular, the exclusion of certain expenses in calculating adjusted EBITDA facilitates comparisons of our operating performance on a period-to-period basis. Adjusted EBITDA is not a measure calculated in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). We believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. Nevertheless, use of adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. Some of these limitations are: (1) although depreciation and amortization are non-cash charges, the capitalized software that is amortized will need to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

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(2) adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; (3) adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation; (4) adjusted EBITDA does not reflect tax payments or receipts that may represent a reduction or increase in cash available to us; and (5) other companies, including companies in our industry, may calculate adjusted EBITDA or similarly titled measures differently, which reduces the usefulness of the metric as a comparative measure. Because of these and other limitations, you should consider adjusted EBITDA alongside our other GAAP-based financial performance measures, net loss and our other GAAP financial results. The following table presents a reconciliation of adjusted EBITDA to net loss, the most directly comparable GAAP measure, for each of the periods indicated (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Net loss	$	(33,821	)	$	(19,220	)	$	(55,610	)	$	(44,605	)
Interest and investment expense, net		9,555			5,763			15,982			10,112
Benefit from income taxes		(3,787	)		(1,504	)		(9,600	)		(2,205	)
Depreciation and amortization		13,011			7,320			23,854			13,976
Loss on extinguishment of convertible notes and capped call modification		37			—			2,925			—
Change in fair value of contingent consideration		15			—			57			—
Stock-based compensation		15,505			11,278			28,190			21,588
Adjusted EBITDA	$	515		$	3,637		$	5,798		$	(1,134	)

• Adjusted Gross Profit. Adjusted gross profit represents gross profit plus amortization of acquired intangibles and stock-based compensation. Adjusted gross profit is a measure used by management to understand and evaluate our core operating performance and trends and to generate future operating plans. The exclusion of stock-based compensation expense and amortization of acquired intangibles facilitates comparisons of our operating performance on a period-to-period basis. In the near term, we expect these expenses to continue to negatively impact our gross profit. Adjusted gross profit is not a measure calculated in accordance with GAAP. We believe that adjusted gross profit provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. Nevertheless, our use of adjusted gross profit has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. You should consider adjusted gross profit alongside our other GAAP-based financial performance measures, gross profit and our other GAAP financial results. The following table presents a reconciliation of adjusted gross profit to gross profit, the most directly comparable GAAP measure, for each of the periods indicated (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Gross profit	$	58,984	$	45,954	$	115,914	$	83,965
Amortization of acquired intangibles		2,978		929		5,582		1,668
Stock-based compensation		819		703		1,818		1,311
Adjusted gross profit	$	62,781	$	47,586	$	123,314	$	86,944

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• Free Cash Flow. Free cash flow represents net cash from operating activities minus capital expenditures and capitalized software development costs. Free cash flow is a measure used by management to understand and evaluate our core operating performance and trends and to generate future operating plans. The exclusion of capital expenditures and amounts capitalized for internally-developed software facilitates comparisons of our operating performance on a period-to-period basis and excludes items that we do not consider to be indicative of our core operating performance. Free cash flow is not a measure calculated in accordance with GAAP. We believe that free cash flow provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. Nevertheless, our use of free cash flow has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. You should consider free cash flow alongside our other GAAP-based financial performance measures, net cash provided by operating activities, and our other GAAP financial results. The following table presents a reconciliation of free cash flow to net cash for operating activities, the most directly comparable GAAP measure, for each of the periods indicated (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Net cash provided by (used in) operating activities	$	(5,137	)	$	(3,870	)	$	14,671		$	(3,069	)
Capital expenditures		(316	)		(651	)		(2,128	)		(1,175	)
Capitalized software development costs		(3,587	)		(2,669	)		(6,082	)		(4,673	)
Free cash flow	$	(9,040	)	$	(7,190	)	$	6,461		$	(8,917	)

Additional Supplemental Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we provide investors with certain additional supplemental non-GAAP financial measures, including non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP sales and marketing expense, non-GAAP research and development expense, non-GAAP general and administrative expense, non-GAAP total operating expenses, non-GAAP operating income (loss) and non-GAAP net income (loss), which we collectively refer to as non-GAAP financial measures. These non-GAAP financial measures exclude all or a combination of the following (as reflected in the following reconciliation tables): stock-based compensation expense, amortization of acquired intangibles, change in fair value of contingent consideration, accretion of interest on convertible senior notes and loss on extinguishment of convertible notes and capped call modification and the tax impact of such adjustments. The tax impact of such adjustments was determined by recalculating the estimated annual effective tax rate utilizing non-GAAP pre-tax income estimated for the year and then applying the recalculated estimated annual effective tax rate to year-to-date non-GAAP income. The tax impact was considered immaterial for fiscal year 2020 and quarters within fiscal year 2020; however, the prior period tax impact presentation has been recast to align with our 2021 reporting presentation. The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision making. While our non-GAAP financial measures are an important tool for financial and operational decision making and for evaluating our own operating results over different periods of time, you should consider our non-GAAP financial measures alongside our GAAP financial results.

We exclude stock-based compensation expense which can vary based on plan design, share price, share price volatility, and the expected lives of equity instruments granted. We believe that providing non-GAAP financial measures that exclude stock-based compensation expense allow for more meaningful comparisons between our operating results from period to period because stock-based compensation expense does not represent a cash expenditure. We believe that excluding the impact of amortization of acquired intangibles allows for more meaningful comparisons between operating results from period to period as the intangibles are valued at the time of acquisition and are amortized over a period of several years after the acquisition. We believe that excluding the change in fair value of contingent consideration allows for more meaningful comparisons between operating results from period to period as it is non-operating in nature. We believe that excluding the impact of accretion of interest on convertible senior notes allows for more meaningful comparisons between operating results from period to period as accretion of interest on convertible senior notes relates to interest cost for the time value of money and are non-operating in nature. We believe that excluding loss on extinguishment of convertible notes and capped call modification allows for more meaningful comparisons between operating results from period to period as losses on the extinguishment of convertible notes and capped call modifications are non-operating in nature. We do not engage in the repurchase of convertible notes on a regular basis or in the ordinary course of business. Accordingly, we believe that excluding these expenses provides investors and management with greater visibility of the underlying performance of our business operations, facilitates comparison of our results with other periods and may also facilitate comparison with the results of other companies in our industry.

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There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact upon our reported financial results. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in our business and an important part of the compensation provided to our employees.

The following table reconciles our GAAP to non-GAAP financial measures (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Cost of revenue	$	27,665		$	19,423		$	52,945		$	40,312
Amortization of acquired intangibles		(2,978	)		(929	)		(5,582	)		(1,668	)
Stock-based compensation		(819	)		(703	)		(1,818	)		(1,311	)
Non-GAAP cost of revenue	$	23,868		$	17,791		$	45,545		$	37,333
Gross profit	$	58,984		$	45,954		$	115,914		$	83,965
Amortization of acquired intangibles		2,978			929			5,582			1,668
Stock-based compensation		819			703			1,818			1,311
Non-GAAP gross profit	$	62,781		$	47,586		$	123,314		$	86,944
Non-GAAP gross margin		72.5	%		72.8	%		73.0	%		70.0	%
Sales and marketing	$	41,483		$	28,741		$	76,010		$	58,329
Stock-based compensation		(5,579	)		(3,917	)		(9,321	)		(7,525	)
Non-GAAP sales and marketing	$	35,904		$	24,824		$	66,689		$	50,804
Research and development	$	20,251		$	14,937		$	38,330		$	29,109
Stock-based compensation		(2,562	)		(2,298	)		(4,590	)		(4,172	)
Non-GAAP research and development	$	17,689		$	12,639		$	33,740		$	24,937
General and administrative	$	24,664		$	16,799		$	47,226		$	32,710
Amortization of acquired intangibles		(6,998	)		(3,798	)		(12,253	)		(7,205	)
Change in fair value of contingent consideration		(15	)		—			(57	)		—
Stock-based compensation		(6,545	)		(4,360	)		(12,461	)		(8,580	)
Non-GAAP general and administrative	$	11,106		$	8,641		$	22,455		$	16,925
Total operating expenses	$	86,398		$	60,477		$	161,566		$	120,148
Amortization of acquired intangibles		(6,998	)		(3,798	)		(12,253	)		(7,205	)
Change in fair value of contingent consideration		(15	)		—			(57	)		—
Stock-based compensation		(14,686	)		(10,575	)		(26,372	)		(20,277	)
Non-GAAP operating expenses	$	64,699		$	46,104		$	122,884		$	92,666
Operating loss	$	(27,414	)	$	(14,523	)	$	(45,652	)	$	(36,183	)
Amortization of acquired intangibles		9,976			4,727			17,835			8,873
Change in fair value of contingent consideration		15			—			57			—
Stock-based compensation		15,505			11,278			28,190			21,588
Non-GAAP operating income (loss)	$	(1,918	)	$	1,482		$	430		$	(5,722	)
Net loss	$	(33,821	)	$	(19,220	)	$	(55,610	)	$	(44,605	)
Amortization of acquired intangibles		9,976			4,727			17,835			8,873
Change in fair value of contingent consideration		15			—			57			—
Stock-based compensation		15,505			11,278			28,190			21,588
Accretion of interest on convertible senior notes		9,508			5,513			15,821			10,949
Loss on extinguishment of convertible notes and capped call modification		37			—			2,925			—
Income tax adjustments		291			(1,130	)		255			(1,105	)
Non-GAAP net income (loss)	$	1,511		$	1,168		$	9,473		$	(4,300	)

Liquidity and Capital Resources

To date, we have financed our operations primarily through cash from sales to our customers, along with equity issuances and debt financing arrangements. Our principal source of liquidity is cash and cash equivalents totaling $559.9 million as of June 30, 2021. We have generated significant losses since inception and expect to continue to generate losses for the foreseeable future.

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We believe that our cash and cash equivalent balances and the cash flows generated by our operations will be sufficient to satisfy our anticipated cash needs for working capital and capital expenditures for at least the next 12 months. However, our belief may prove to be incorrect, and we could utilize our available financial resources sooner than we currently expect. We believe that our financial resources will allow us to manage the anticipated impact of COVID-19 on our business operations for the foreseeable future, which could include delays in payments from our customers. The challenges posed by COVID-19 on our business could evolve rapidly. We will continue to evaluate our financial position in light of future developments, particularly those relating to COVID-19. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth in the section of Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020 and this Quarterly Report on Form 10-Q titled “Risk Factors.” We cannot assure you that we will be able to raise additional capital on acceptable terms or at all. In addition, if we fail to meet our operating plan during the next 12 months, our liquidity could be adversely affected.

Cash Flows

The following table summarizes our cash flows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Cash, cash equivalents and restricted cash at beginning of period	$	743,207		$	506,496		$	475,630		$	539,662
Cash provided by (used in) operating activities		(5,137	)		(3,870	)		14,671			(3,069	)
Cash used in investing activities		(169,168	)		(12,644	)		(205,876	)		(50,113	)
Cash provided by (used in) financing activities		(1,503	)		1,069			283,289			5,237
Effects of exchange rates on cash		903			247			588			(419	)
Cash, cash equivalents and restricted cash at end of period	$	568,302		$	491,298		$	568,302		$	491,298

Uses of Funds

Our historical uses of cash have primarily consisted of cash used for operating activities, such as expansion of our sales and marketing operations, research and development activities and other working capital needs.

Operating Activities

Our net loss and cash flows provided by or used in operating activities are significantly influenced by our investments in headcount and infrastructure to support our growth, marketing and sponsorship expenses, and our ability to bill and collect in a timely manner. Our net loss has been significantly greater than our use of cash for operating activities due to the inclusion of non-cash expenses and charges.

Operating activities generated $14.7 million in cash in the six months ended June 30, 2021, primarily as a result of an increase in non-cash operating expenses of $70.1 million and increase of $0.2 million in cash provided by operating assets and liabilities which was offset by our net loss of $55.6 million. Specifically, we recognized non-cash charges aggregating to $28.2 million for stock-based compensation, $23.9 million for depreciation and amortization of intangible assets, capitalized software development costs and property and equipment, $15.8 million related to the accretion of interest on our convertible senior notes, $7.2 million for amortization of deferred commissions, $2.9 million loss on extinguishment of convertible notes and capped call modification, $1.9 million for provision for credit losses, offset by $9.8 million for deferred income taxes. The net change in operating assets and liabilities of $0.2 million reflected a $19.3 million decrease in accounts receivable and a $1.0 million increase in accrued expenses. These amounts were offset by an $8.1 million increase in deferred cost, a $5.3 million decrease in accrued payroll and employee related liabilities, a $4.6 million decrease in other liabilities, a $0.9 million increase in prepaid expenses, a $0.9 million increase in other assets, a $0.2 million decrease in deferred revenue and a $0.1 million decrease in accounts payable.

Operating activities used $3.1 million in cash in the six months ended June 30, 2020, primarily as a result of our net loss of $44.6 million as well as $9.1 million in cash used by operating assets and liabilities, which was offset by an increase in non-cash operating expenses of $50.6 million. Specifically, we recognized non-cash charges aggregating to $21.6 million for stock-based compensation, $14.0 million for depreciation and amortization of intangible assets, capitalized software development costs and property and equipment, $10.9 million related to the accretion of interest on our convertible senior notes, $5.7 million for amortization of deferred commissions, and $1.4 million for provision for credit losses, offset by $3.0 million decrease in deferred income taxes. The net change in operating assets and liabilities of $9.1 million reflected a $6.9 million increase in deferred cost, a $3.4 million increase in other assets, a $3.3 million increase in prepaid expenses for upfront payments made for prepaid software and insurance, a $2.7 million decrease in deferred revenue, a $0.6 million decrease in accrued expenses as a result of timing of payments made to vendors, and a $0.3 million decrease in accrued employee related expenses due to timing of payments to employees. These amounts were offset by a $3.3 million decrease in accounts receivable, a $2.7 million increase in other liabilities, and a $2.2 million net increase in accounts payable.

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Investing Activities

Our investing activities consist primarily of capital expenditures for capitalized software development costs, business acquisitions, property and equipment expenses and purchase and sales of short-term investments.

Investing activities used $205.9 million in cash in the six months ended June 30, 2021, which consists of $197.7 million of cash paid for the acquisitions of xMatters and Red Sky Technologies Inc. (“RedSky”), a $6.1 million investment in software development, and $2.1 million in purchases of property and equipment.

Investing activities used $50.1 million in cash in the six months ended June 30, 2020, which consists of $44.3 million of cash paid for the acquisitions of Connexient, Inc. (“Connexient”), CNL Software Limited (“CNL Software”), One2Many Group B.V. (“one2many”) and Techwan SA (“Techwan”), a $4.7 million investment in software development, and $1.2 million in purchases of property and equipment.

Financing Activities

Cash generated by financing activities includes proceeds from the issuance of 0% convertible senior notes due March 15, 2026 (the “2026 Notes”), proceeds from the partial termination of the 2022 Notes capped call hedge, proceeds from the exercise of employee stock options and contributions to our employee stock purchase plan. Cash used in financing activities includes payments for debt and offering issuance costs, repurchases of 2022 Notes and employee withholding liabilities from restricted stock units.

Financing activities provided $283.3 million of cash in the six months ended June 30, 2021, which reflects proceeds of $329.5 million from our 2026 Notes offering after deducting debt issuance cost and the cost for the capped call transactions entered into in connection with the 2026 Note offering, $2.5 million from the issuance of stock under our employee stock purchase plan and $2.2 million from the exercise of stock options. These amounts were offset by a $48.0 million payment for the repurchase of 2022 Notes offset by cash received for the partial termination of the 2022 Notes capped call options and a $2.8 million payment for employee withholding taxes related to the issuance of restricted stock units.

Financing activities provided $5.2 million of cash in the six months ended June 30, 2020, which reflects proceeds of $4.6 million from the exercise of stock options and $1.7 million from the issuance of stock under our employee stock purchase plan. These amounts were offset by a $0.9 million payment for employee withholding taxes related to the issuance of restricted stock units and cash payments of $0.1 million for other financing activities.

Critical Accounting Policies

Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates. The future effects of the COVID-19 pandemic on our results of operations, cash flows, and financial position are unclear; however, we believe we have used reasonable estimates and assumptions in preparing the condensed consolidated financial statements.

There have been no changes to our critical accounting policies and estimates described in the Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021, that have had a material impact on our condensed consolidated financial statements and related notes.

Recently Issued Accounting Pronouncements

See Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a summary of recently issued and adopted accounting pronouncements.

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Contractual Obligations and Commitments

As of June 30, 2021, other than our contractual debt and operating lease obligations there were no material changes in our commitments under contractual obligations except for scheduled payments from the ongoing business, as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. The following table summarizes our commitments to settle contractual obligations as of June 30, 2021 (in thousands):

	Remainder of 2021		2022-2023		2024-2025		Thereafter		Total
Debt obligations(1)	$	—	$	303	$	450,000	$	375,000	$	825,303
Operating leases(2)		3,494		12,744		4,988		4,220		25,446
	$	3,494	$	13,047	$	454,988	$	379,220	$	850,749

(1) Debt obligations include the principal amount of the 2026 Notes, 0.125% convertible senior notes due December 15, 2024 (the “2024 Notes”) and 2022 Notes but exclude interest payments to be made under the 2026 Notes, 2024 Notes and 2022 Notes. Although the 2026 Notes, 2024 Notes and 2022 Notes mature in 2026, 2024 and 2022, respectively, they can be converted into cash and shares of our common stock prior to maturity if certain conditions are met. Any conversion prior to maturity can result in repayments of the principal amounts sooner than the scheduled repayments as indicated in the table. The 2026 Notes, 2024 Notes and 2022 Notes balance excludes debt discount capitalized on our balance sheet. Please see Note 9 of the notes to our consolidated financial statements for more information on the terms of the 2026 Notes, 2024 Notes and 2022 Notes.

(2) Operating leases include total future minimum rent payments under non-cancelable operating lease agreements as described in Note 16 of our consolidated financial statements.

The commitment amounts are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions and the approximate timing of the actions under the contracts. The commitment amounts do not include obligations under agreements that we can cancel without a significant penalty.

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We do not engage in off-balance sheet financing arrangements. In addition, we do not engage in trading activities involving non-exchange traded contracts.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates and foreign exchange rates as well as, to a lesser extent, inflation.

Interest Rate Risk

Our investment portfolio is exposed to market risk from changes in interest rates. The fair market value of fixed rate securities may be adversely impacted by fluctuations in interest rates while income earned on floating rate securities may decline as a result of decreases in interest rates. Under our current policies, we do not use interest rate derivative instruments to manage exposure to interest rate changes. We attempt to ensure the safety and preservation of our invested principal funds by limiting default risk, market risk and reinvestment risk. We mitigate default risk by investing in investment grade securities. We have historically maintained a relatively short average maturity for our investment portfolio, and we believe a hypothetical 100 basis point adverse move in interest rates along the entire interest rate yield curve would not change the fair value of our interest sensitive financial instruments by a material amount. In addition, if a 100 basis point change in overall interest rates were to occur in 2021, our interest income would not change significantly in relation to amounts we would expect to earn, based on our cash, cash equivalents, and investments as of June 30, 2021.

Changes in interest rates may also impact gains or losses from the conversion of our outstanding convertible senior notes. In March 2021, we issued $375 million in aggregate principal amount of our 2026 Notes. In December 2019, we issued $450 million in aggregate principal amount of our 2024 Notes. In November 2017, we issued $115 million in aggregate principal amount of our 2022 Notes, of which $303 thousand remain outstanding. The 2026 Notes, 2024 Notes and 2022 Notes are convertible under certain circumstances, including trading price conditions related to our common stock, and upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock. In the second quarter of 2018, the trading price of our common stock reached a price for a sustained period at 130% above the conversion price of $33.71, resulting in the 2022 Notes becoming convertible at the option of the holder during the third quarter of 2018. The 2022 Notes were still convertible at the option

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of the holder at June 30, 2021. During the six months ended June 30, 2021, we issued 1,907,456 shares upon the extinguishment of approximately $79.5 million in aggregate principal amount of the 2022 Notes. The 2026 Notes and 2024 Notes were not convertible at June 30, 2021. Upon conversion, we are required to record a gain or loss for the difference between the fair value of the debt to be extinguished and its corresponding net carrying value. The fair value of the debt to be extinguished depends on our then-current incremental borrowing rate. If our incremental borrowing rate at the time of conversion is higher or lower than the implied interest rate of the 2026 Notes, 2024 Notes and 2022 Notes, we will record a gain or loss in our consolidated statement of operations during the period in which the 2026 Notes, 2024 Notes and 2022 Notes are extinguished. An incremental borrowing rate that is a hypothetical 100 basis points lower than the implicit interest rate upon conversion of the 2026 Notes, 2024 Notes and 2022 Notes would result in a loss of approximately $8.3 million.

We are exposed to interest rate risk in the ordinary course of our business. Our cash, cash equivalents and investments include cash in readily available checking and money market accounts and marketable securities. These securities are not dependent on interest rate fluctuations that may cause the principal amount of these assets to fluctuate.

We had cash and cash equivalents of $559.9 million as of June 30, 2021, which consisted of bank deposits and money market funds. To date, fluctuations in interest income have not been significant.

We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.

Foreign Currency Exchange Risk

We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than our functional currency, the U.S. dollar, principally British Pounds, Euro, Norwegian Krone, Swedish Kronor and other foreign currencies. Movements in foreign currencies in which we transact business could significantly affect future net earnings. We do not currently engage in any hedging activity to reduce our potential exposure to currency fluctuations, although we may choose to do so in the future. A hypothetical 10% change in foreign exchange rates during any of the periods presented would not have had a material impact on our consolidated financial statements. As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in foreign currency rate.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of such date, our disclosure controls and procedures were effective at a reasonable assurance level.

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Changes in Internal Control

There were no changes in our internal control over financial reporting identified in management's evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. In response to the COVID-19 pandemic, our employees began working from home starting in March 2020. Management is continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact to their design and operating effectiveness.

Inherent Limitations on Effectiveness of Controls

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors.

We operate in a rapidly changing environment that involves a number of risks, which could materially affect our business, financial condition or future results, some of which are beyond our control. Except as set forth below, during the six months ended June 30, 2021, there have been no material changes in our risk factors from those disclosed in Part I-Item 1A under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on February 26, 2021. 

We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which would cause our stock price to decline.

We have provided and may continue to provide guidance about our business, future operating results and other business metrics. In developing this guidance, our management must make certain assumptions and judgments about our future performance. Some of those key assumptions relate to the impact of the COVID-19 pandemic, the anticipated contributions from the acquisitions of xMatters, RedSky, Connexient, CNL Software, one2many, Techwan, and SnapComms Limited (“SnapComms”), and the associated economic uncertainty on our business and the timing and scope of economic activity globally, which are inherently difficult to predict. This guidance, which consists of forward-looking statements, is qualified by, and subject to, such assumptions, estimates and expectations as provided, and the other information contained in or referred to in the factors described in this Quarterly Report on Form 10-Q and our other current and periodic reports filed with the Securities and Exchange Commission. While presented with numerical specificity, this guidance is necessarily speculative in nature, and is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and are based upon specific assumptions with respect to future business decisions or economic conditions, some of which may change. It can be expected that some or all of the assumptions, estimates and expectations of the guidance furnished by us will not materialize or will vary significantly from actual results. Accordingly, our guidance is only an estimate of what management believes is realizable as of the date of release of such guidance. Furthermore, analysts and investors may develop and publish their own projections of our business, which may form a consensus about our future performance. Our business results may vary significantly from such guidance or that consensus due to a number of factors, many of which are outside of our control, including due to the global economic uncertainty and financial market conditions caused by the COVID-19 pandemic, and which could adversely affect our operations and operating results. If we make downward revisions of our previously announced guidance, or if our publicly announced guidance of future operating results fails to meet expectations of securities analysts, investors or other interested parties, the price of our common stock would decline.

Conversion of the 2026 Notes, 2024 Notes and 2022 Notes will dilute the ownership interest of existing stockholders, including holders who had previously converted their Notes, or may otherwise depress the price of our common stock.

In March 2021, we issued the 2026 Notes, which will mature on March 15, 2026, unless earlier redeemed or repurchased by us or converted by the holder pursuant to their terms. In December 2019, we issued the 2024 Notes, which will mature on December 15, 2024, unless earlier redeemed or repurchased by us or converted by the holder pursuant to their terms. In November 2017, we issued the 2022 Notes, which will mature on November 1, 2022, unless earlier redeemed or repurchased by us or converted by the holder pursuant to their terms. The conversion of some or all of the convertible 2026 Notes, 2024 Notes and 2022 Notes will dilute the ownership interests of existing stockholders to the extent we deliver shares upon conversion of any of the 2026 Notes, 2024 Notes and 2022 Notes. Based on the market price of our common stock during the 30 trading days preceding June 30, 2018, the 2022 Notes were convertible at the option of the debt holder as of September 30, 2018 and continue to be convertible at the option of the debt holder as of June 30, 2021. During 2020, we issued 362,029 shares upon the conversion of approximately $12.2 million in aggregate principal amount of the 2022 Notes. During the six months ended June 30, 2021, we issued cash and 1,907,456 shares of our common stock to holders of our 2022 Notes upon settlement of conversion and repurchase of an aggregate principal amount of approximately $79.5 million of such notes. The 2026 Notes and 2024 Notes were not convertible during the six months ended June 30, 2021. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the 2026 Notes, 2024 Notes and 2022 Notes may encourage short selling by market participants because the conversion of the 2026 Notes, 2024 Notes and 2022 Notes could be used to satisfy short positions, or anticipated conversion of the 2026 Notes, 2024 Notes and 2022 Notes into shares of our common stock could depress the price of our common stock.

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The capped call transactions entered into when we issued the convertible notes may affect the value of our common stock.

In connection with the issuances of the 2026 Notes, 2024 Notes and 2022 Notes, we entered into capped call transactions with the respective option counterparties. The capped call transactions are expected generally to reduce the potential dilution upon conversion of the 2026 Notes, 2024 Notes and 2022 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2026 Notes, 2024 Notes and 2022 Notes, as the case may be, with such reduction and/or offset subject to a cap. In connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates entered into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the 2026 Notes, 2024 Notes and 2022 Notes. The option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the 2026 Notes, 2024 Notes and 2022 Notes (and are likely to do so during any observation period related to a conversion of 2026 Notes, 2024 Notes and 2022 Notes). This activity could cause or avoid an increase or a decrease in the market price of our common stock.

We issued convertible notes that have rights senior to our common stock.

In March 2021, we issued the 2026 Notes, which will mature on March 15, 2026, unless earlier redeemed or repurchased by us or converted by the holder pursuant to their terms. In December 2019, we issued the 2024 Notes, which will mature on December 15, 2024, unless earlier redeemed or repurchased by us or converted by the holder pursuant to their terms. In November 2017, we issued the 2022 Notes, which will mature on November 1, 2022, unless earlier redeemed or repurchased by us or converted by the holder pursuant to their terms. In connection with the issuance of the 2024 Notes, we paid $57.8 million to repurchase $23.0 million in aggregate principal amount of the 2022 Notes. During 2020, we issued 362,029 shares upon the conversion of approximately $12.2 million in aggregate principal amount of the 2022 Notes. During the six months ended June 30, 2021, we issued cash and 1,907,456 shares of our common stock to holders of our 2022 Notes upon settlement of conversion and repurchase of an aggregate principal amount of approximately $79.5 million of such notes.

The 2026 Notes, 2024 Notes and 2022 Notes rank senior in right of payment to our common stock and any of our indebtedness that is expressly subordinated in right of payment to the 2026 Notes, 2024 Notes and 2022 Notes; equal in right of payment to any of our liabilities that are not so subordinated (including to the 2024 Notes and 2022 Notes, in the case of the 2026 Notes, to the 2026 Notes and 2022 Notes, in the case of the 2024 Notes, and to the 2026 Notes and 2024 Notes, in the case of the 2022 Notes); effectively junior in right of payment to any of our secured indebtedness, to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries. In the event of our bankruptcy, liquidation, reorganization or other winding up, our assets that secure debt ranking senior or equal in right of payment to the 2026 Notes, 2024 Notes and 2022 Notes will be available to pay obligations on the 2026 Notes, 2024 Notes and 2022 Notes only after the secured debt has been repaid in full from these assets, and our assets will be available to pay common stockholders only after all debt obligations have been repaid. There may not be sufficient assets remaining to pay amounts due on any or all of the 2026 Notes, 2024 Notes and 2022 Notes then outstanding or any or all shares of our common stock then outstanding.

Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.

Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including the 2026 Notes, 2024 Notes and 2022 Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

As of June 30, 2021, we had $825 million (undiscounted) principal amount of indebtedness under the 2026 Notes, 2024 Notes and 2022 Notes. Our indebtedness may:

• limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general business purposes;

• limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general business purposes;

• require us to use a substantial portion of our cash flow from operations to make debt service payments;

• limit our flexibility to plan for, or react to, changes in our business and industry;

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• place us at a competitive disadvantage compared to our less leveraged competitors; and

• increase our vulnerability to the impact of adverse economic and industry conditions.

In addition, any future indebtedness that we may incur may contain financial and other restrictive covenants that limit our ability to operate our business, raise capital or make payments under our other indebtedness. If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full.

The accounting method for convertible debt securities that may be settled in cash, such as the 2026 Notes, 2024 Notes and 2022 Notes, could have a material effect on our reported financial results.

In May 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement), which has subsequently been codified as Accounting Standards Codification (“ASC”) 470-20, Debt with Conversion and Other Options. Under ASC 470-20, an entity must separately account for the liability and equity components of the convertible debt instruments (such as the 2026 Notes, 2024 Notes and 2022 Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The effect of ASC 470-20 on the accounting for the 2026 Notes, 2024 Notes and 2022 Notes is that the equity component is required to be included in the additional paid-in capital section of stockholders’ equity on our consolidated balance sheet, and the value of the equity component was treated as original issue discount for purposes of accounting for the debt component of the 2026 Notes, 2024 Notes and 2022 Notes. As a result, we recorded a greater amount of non-cash interest expense in current periods presented as a result of the amortization of the discounted carrying value of the 2026 Notes, 2024 Notes and 2022 Notes to their face amount over the term of the 2026 Notes, 2024 Notes and 2022 Notes. We reported lower net income in our financial results because ASC 470-20 requires interest to include both the current period’s amortization of the debt discount and the instrument’s coupon interest, which could adversely affect our reported or future financial results, the trading price of our common stock and the trading price of the 2026 Notes, 2024 Notes and 2022 Notes. In August 2020, the FASB issued Accounting Standards Update 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. See Note 2 of the notes to condensed consolidated financial statements for more information.

The conditional conversion feature of the 2026 Notes, 2024 Notes and 2022 Notes, may adversely affect our financial condition and operating results.

In the event the conditional conversion feature of the 2026 Notes, 2024 Notes or the 2022 Notes is triggered, holders of the 2026 Notes, 2024 Notes or the 2022 Notes, as the case may be, will be entitled to convert the 2026 Notes, 2024 Notes or the 2022 Notes at any time during specified periods at their option. Based on the market price of our common stock during the 30 trading days preceding June 30, 2018, the 2022 Notes were convertible at the option of the debt holder as of September 30, 2018 and continue to be convertible at the option of the debt holder as of June 30, 2021. The 2026 Notes and 2024 Notes were not convertible during the six months ended June 30, 2021, but will be convertible under certain circumstances. If one or more holders elect to convert their 2022 Notes, 2024 Notes or 2026 Notes, as the case may be, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their 2026 Notes, 2024 Notes or 2022 Notes, as the case may be, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 2026 Notes, 2024 Notes or 2022 Notes, as applicable, as a current rather than long-term liability, which would result in a material reduction of our net working capital. 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) Recent Sales of Unregistered Equity Securities

On May 7, 2021, we issued 555,332 shares of our common stock to various persons and entities as partial consideration for our purchase of xMatters Holdings, Inc. The offer, sale and issuance of these shares was deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering. The recipients of the shares acquired them for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to these shares. The recipients were all accredited investors within the meaning of Rule 501 of Regulation D under the Securities Act and had adequate access to information about us. No underwriters or placement agents were involved in this transaction.

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On May 25, 2021, we issued 6,188 shares of our common stock to various persons as consideration for SnapComms Limited’s contingent consideration liability. In addition, on August 4, 2021, we issued 12,390 shares of our common stock to various persons for SnapComms Limited’s deferred purchase price consideration. The offer, sale and issuance of these shares was deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering. The recipients of the shares acquired them for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to these shares. The recipients were all accredited investors within the meaning of Rule 501 of Regulation D under the Securities Act and had adequate access to information about us. No underwriters or placement agents were involved in this transaction.

During the three months ended June 30, 2021, we issued 36,633 shares of our common stock to holders of our 1.50% convertible senior notes due 2022 upon settlement of conversion and repurchase of an aggregate principal amount of approximately $1.2 million of such notes. For further information, see Note 9, Convertible Senior Notes, of the notes to condensed consolidated financial statements. These shares of our common stock were issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended.

On July 9, 2021, we issued 41,668 shares of our common stock to various persons and entities as consideration for One2Many Group B.V.’s contingent consideration liability. The offer, sale and issuance of these shares was deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering. The recipients of the shares acquired them for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to these shares. The recipients were all accredited investors within the meaning of Rule 501 of Regulation D under the Securities Act and had adequate access to information about us. No underwriters or placement agents were involved in this transaction.

(b) Use of Proceeds

None

(c) Issuer Purchase of Equity Securities

None

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures.

Not applicable

Item 5. Other Information.

None

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Item 6. Exhibits.

			Incorporated by Reference
Exhibit No.	Exhibit Description	Filed Herewith	Form	File No.	Exhibit	Filing Date
3.1	Sixth Amended and Restated Certificate of Incorporation of Everbridge, Inc.	X
3.2	Second Amended and Restated Bylaws of Everbridge, Inc.	X
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	X
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	X
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.	X
101.SCH	Inline XBRL Taxonomy Extension Schema Document	X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	X
104	Cover Page Interactive Data File - the cover page interactive data is embedded within the Inline XBRL document or included within the Exhibit 101 attachments.	X

* This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Everbridge, Inc.
Date: August 9, 2021	By:	/s/ David Meredith
		David Meredith
		Chief Executive Officer
Date: August 9, 2021	By:	/s/ Patrick Brickley
		Patrick Brickley
		Senior Vice President and Chief Financial Officer

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EX-3.1

Exhibit 3.1

SIXTH AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

EVERBRIDGE, INC.

Everbridge, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of the Delaware does hereby certify that:

ONE: The original name of this corporation was 3n Global, Inc. and the date of filing the original Certificate of Incorporation of this corporation with the Secretary of State of the State of Delaware (the “ Secretary ”) was January 22, 2008.

TWO: The FIFTH Amended and Restated Certificate of Incorporation of this corporation, as filed with the Secretary on September 21, 2016, is hereby amended and restated to read as follows:

I.

The name of this corporation is EVERBRIDGE, INC. (the “Corporation”).

II.

The address of the registered office of this Corporation in the State of Delaware is 251 Little Falls Drive, City of Wilmington, New Castle County, Delaware 19808, and the name of the registered agent of this Corporation in the State of Delaware at such address is Corporation Service Company.

III.

The purpose of this Corporation is to engage in any lawful act or activity for which a corporation may be organized under the Delaware General Corporation Law (“ DGCL ”).

IV.

A. This Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock ” and “ Preferred Stock .” The total number of shares which the Corporation is authorized to issue is one hundred ten million (110,000,000) shares. One hundred million (100,000,000) shares shall be Common Stock, each having a par value of one-tenth of one cent ($0.001) and ten million (10,000,000) shares shall be Preferred Stock, each having a par value of one-tenth of one cent ($0.001).

B. The Preferred Stock may be issued from time to time in one or more series. The Board of Directors of the Corporation (the “ Board of Directors ”) is hereby expressly authorized to provide for the issue of all of any of the shares of the Preferred Stock in one or more series, and to fix the number of shares and to determine or alter for each such series, such voting powers, full or limited, or no voting powers, and such designation, preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such shares and as may be permitted by the DGCL. The Board of Directors is also expressly authorized to increase or decrease the number of shares of any series subsequent to the issuance of shares of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall be decreased in accordance with the foregoing sentence, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of the stock of the Corporation entitled to vote thereon, without a separate vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such holders is required pursuant to the terms of any certificate of designation filed with respect to any series of Preferred Stock.

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C. Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly submitted to the stockholders of the Corporation for their vote;  provided, however , that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Sixth Amended and Restated Certificate of Incorporation (including any certificate of designation filed with respect to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon by law or pursuant to this Sixth Amended and Restated Certificate of Incorporation (including any certificate of designation filed with respect to any series of Preferred Stock).

V.

For the management of the business and for the conduct of the affairs of the Corporation, and in further definition, limitation and regulation of the powers of the Corporation, of its directors and of its stockholders or any class thereof, as the case may be, it is further provided that:

A. MANAGEMENT OF BUSINESS.

The management of the business and the conduct of the affairs of the Corporation shall be vested in its Board of Directors. The number of directors which shall constitute the Board of Directors shall be fixed exclusively by resolutions adopted by a majority of the authorized number of directors constituting the Board of Directors.

B. BOARD OF DIRECTORS

Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, each director whether elected at an annual meeting of stockholders or elected in the interim to fill vacancies and newly created directorships, shall be elected for a term expiring at the next annual meeting of stockholders following their election. In addition, notwithstanding the length of term of any director elected at an annual meeting of stockholders prior to the date of filing of the Sixth Amended and Restated Certificate of Incorporation, or elected in the interim to fill vacancies or newly created directorships, each such director shall serve a term expiring at the next annual meeting of stockholders following the date of filing of the Sixth Amended and Restated Certificate of Incorporation.    

Notwithstanding the foregoing provisions of this section, each director shall serve until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

C. REMOVAL OF DIRECTORS.

Subject to the rights of any series of Preferred Stock to elect additional directors under specified circumstances, and subject to any limitations imposed by law the Board of Directors and any individual director may be removed with or without cause by the affirmative vote of the holders of a majority of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally at an election of directors.

D. VACANCIES.

Subject to any limitations imposed by applicable law and subject to the rights of the holders of any series of Preferred Stock, any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other causes and any newly created directorships resulting from any increase in the number of directors, shall, unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by the stockholders and except as otherwise provided by applicable law, be filled only by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board of Directors, and not by the stockholders. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director’s successor shall have been elected and qualified.

E. BYLAW AMENDMENTS.

1. The Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of the Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the

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authorized number of directors. The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation; provided, however,  that, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by this Sixth Amended and Restated Certificate of Incorporation, such action by stockholders shall require the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.

2. The directors of the Corporation need not be elected by written ballot unless the Bylaws so provide.

3. No action shall be taken by the stockholders of the Corporation except at an annual or special meeting of stockholders called in accordance with the Bylaws, and no action shall be taken by the stockholders by written consent or electronic transmission.

4. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws of the Corporation.

VI.

A. The liability of the directors for monetary damages shall be eliminated to the fullest extent under applicable law.

B. To the fullest extent permitted by applicable law, the Corporation is authorized to provide indemnification of (and advancement of expenses to) directors, officers and agents of the Corporation (and any other persons to which applicable law permits the Corporation to provide indemnification) through Bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise in excess of the indemnification and advancement otherwise permitted by such applicable law. If applicable law is amended after approval by the stockholders of this Article VI to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director to the Corporation shall be eliminated or limited to the fullest extent permitted by applicable law as so amended.

C. Any repeal or modification of this Article VI shall only be prospective and shall not affect the rights or protections or increase the liability of any director under this Article VI in effect at the time of the alleged occurrence of any act or omission to act giving rise to liability or indemnification.

VII.

Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (A) any derivative action or proceeding brought on behalf of the Corporation; (B) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders; (C) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation arising pursuant to any provision of the DGCL, this Sixth Amended and Restated Certificate of Incorporation or the Bylaws of the Corporation; or (D) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation governed by the internal affairs doctrine.

VIII.

A. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Sixth Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, except as provided in paragraph B. of this Article VIII, and all rights conferred upon the stockholders herein are granted subject to this reservation.

B. Notwithstanding any other provisions of this Sixth Amended and Restated Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the Corporation required by law or by this Sixth Amended and Restated Certificate of Incorporation or any certificate of designation filed with respect to a series of Preferred Stock, the affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal Articles V, VI, VII and VIII .

* * * *

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THREE: This Sixth Amended and Restated Certificate of Incorporation has been duly approved by the Board of Directors of the Corporation.

FOUR: This Sixth Amended and Restated Certificate of Incorporation was approved by the holders of the requisite number of shares of said Corporation in accordance with Section 228 of the DGCL. This Sixth Amended and Restated Certificate of Incorporation has been duly adopted in accordance with the provisions of Sections 242 and 245 of the DGCL by the stockholders of the Corporation.

IN WITNESS WHEREOF, Everbridge, Inc. has caused this Sixth Amended and Restated Certificate of Incorporation to be signed by its President and Chief Executive Officer this 9^th day of August, 2021

EVERBRIDGE, INC.
By:	/s/ David Meredith
	David Meredith President and Chief Executive Officer

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EX-3.2

EXHIBIT 3.2

SECOND AMENDED AND RESTATED BYLAWS

OF

EVERBRIDGE, INC.

(A DELAWARE CORPORATION)

Table of Contents

		Page
ARTICLE I	OFFICES	1
Section 1.	Registered Office	1
Section 2.	Other Offices	1
ARTICLE II	CORPORATE SEAL	1
Section 3.	Corporate Seal	1
ARTICLE III	STOCKHOLDERS’ MEETINGS	1
Section 4.	Place Of Meetings	1
Section 5.	Annual Meetings	1
Section 6.	Special Meetings	4
Section 7.	Notice Of Meetings	4
Section 8.	Quorum	4
Section 9.	Adjournment And Notice Of Adjourned Meetings	5
Section 10.	Voting Rights	5
Section 11.	Joint Owners Of Stock	5
Section 12.	List Of Stockholders	5
Section 13.	Action Without Meeting	5
Section 14.	Organization	5
ARTICLE IV	DIRECTORS	6
Section 15.	Number And Term Of Office	6
Section 16.	Powers	6
Section 17.	Term of Office	6
Section 18.	Vacancies	6
Section 19.	Resignation	6
Section 20.	Removal	7
Section 21.	Meetings	7
Section 22.	Quorum And Voting	7
Section 23.	Action Without Meeting	8
Section 24.	Fees And Compensation	8
Section 25.	Committees	8
Section 26.	Duties of Chairperson of the Board of Directors and Lead Independent Director	8
Section 27.	Organization	9

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		Page
ARTICLE V	OFFICERS	9
Section 28.	Officers Designated	9
Section 29.	Tenure And Duties Of Officers	9
Section 30.	Delegation Of Authority	10
Section 31.	Resignations	10
Section 32.	Removal	10
ARTICLE VI	EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE CORPORATION	11
Section 33.	Execution Of Corporate Instruments	11
Section 34.	Voting Of Securities Owned By The Corporation	11
ARTICLE VII	SHARES OF STOCK	11
Section 35.	Form And Execution Of Certificates	11
Section 36.	Lost Certificates	11
Section 37.	Transfers	11
Section 38.	Fixing Record Dates	11
Section 39.	Registered Stockholders	12
ARTICLE VIII	OTHER SECURITIES OF THE CORPORATION	12
Section 40.	Execution Of Other Securities	12
ARTICLE IX	DIVIDENDS	12
Section 41.	Declaration Of Dividends	12
Section 42.	Dividend Reserve	12
ARTICLE X	FISCAL YEAR	13
Section 43.	Fiscal Year	13
ARTICLE XI	INDEMNIFICATION	13
Section 44.	Indemnification of Directors, Executive Officers, Other Officers, Employees and Other Agents	13
ARTICLE XII	NOTICES	15
Section 45.	Notices	15
ARTICLE XIII	AMENDMENTS	16
Section 46.	Amendments	16
ARTICLE XIV	LOANS TO OFFICERS	16
Section 47.	Loans To Officers	16

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SECOND AMENDED AND RESTATED BYLAWS

OF

EVERBRIDGE, INC.

(A DELAWARE CORPORATION)

ARTICLE I

OFFICES

Section 1. Registered Office. The registered office of the corporation in the State of Delaware shall be in the City of Wilmington, County of New Castle.

Section 2. Other Offices. The corporation shall also have and maintain an office or principal place of business at such place as may be fixed by the Board of Directors, and may also have offices at such other places, both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require.

ARTICLE II

CORPORATE SEAL

Section 3. Corporate Seal. The Board of Directors may adopt a corporate seal. The corporate seal shall consist of a die bearing the name of the corporation and the inscription, “Corporate Seal-Delaware.” Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

ARTICLE III

STOCKHOLDERS’ MEETINGS

Section 4. Place Of Meetings. Meetings of the stockholders of the corporation may be held at such place, either within or without the State of Delaware, as may be determined from time to time by the Board of Directors. The Board of Directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as provided under the Delaware General Corporation Law (“ DGCL ”).

Section 5. Annual Meetings.

(a) The annual meeting of the stockholders of the corporation, for the purpose of election of directors and for such other business as may properly come before it, shall be held on such date and at such time as may be designated from time to time by the Board of Directors. Nominations of persons for election to the Board of Directors of the corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders: (i) pursuant to the corporation’s notice of meeting of stockholders (with respect to business other than nominations); (ii) brought specifically by or at the direction of the Board of Directors; or (iii) by any stockholder of the corporation who was a stockholder of record at the time of giving the stockholder’s notice provided for in Section 5(b) below, who is entitled to vote at the meeting and who complied with the notice procedures set forth in Section 5. For the avoidance of doubt, clause (iii) above shall be the exclusive means for a stockholder to make nominations and submit other business (other than matters properly included in the corporation’s notice of meeting of stockholders and proxy statement under Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the “ 1934 Act ”)) before an annual meeting of stockholders.

(b) At an annual meeting of the stockholders, only such business shall be conducted as is a proper matter for stockholder action under Delaware law and as shall have been properly brought before the meeting.

(i) For nominations for the election to the Board of Directors to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of Section 5(a) of these Bylaws, the stockholder must deliver written notice to the Secretary at the

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principal executive offices of the corporation on a timely basis as set forth in Section 5(b)(iii) and must update and supplement such written notice on a timely basis as set forth in Section 5(c). Such stockholder’s notice shall set forth: (A) as to each nominee such stockholder proposes to nominate at the meeting: (1) the name, age, business address and residence address of such nominee, (2) the principal occupation or employment of such nominee, (3) the class and number of shares of each class of capital stock of the corporation which are owned of record and beneficially by such nominee, (4) the date or dates on which such shares were acquired and the investment intent of such acquisition, (5) a statement whether such nominee, if elected, intends to tender, promptly following such person’s failure to receive the required vote for election or re-election at the next meeting at which such person would face election or re-election, an irrevocable resignation effective upon acceptance of such resignation by the Board of Directors, and (6) such other information concerning such nominee as would be required to be disclosed in a proxy statement soliciting proxies for the election of such nominee as a director in an election contest (even if an election contest is not involved), or that is otherwise required to be disclosed pursuant to Section 14 of the 1934 Act and the rules and regulations promulgated thereunder (including such person’s written consent to being named as a nominee and to serving as a director if elected); and (B) the information required by Section 5(b)(iv). The corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as an independent director of the corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such proposed nominee.

(ii) Other than proposals sought to be included in the corporation’s proxy materials pursuant to Rule 14(a)-8 under the 1934 Act, for business other than nominations for the election to the Board of Directors to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of Section 5(a) of these Bylaws, the stockholder must deliver written notice to the Secretary at the principal executive offices of the corporation on a timely basis as set forth in Section 5(b)(iii), and must update and supplement such written notice on a timely basis as set forth in Section 5(c). Such stockholder’s notice shall set forth: (A) as to each matter such stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting, and any material interest (including any anticipated benefit of such business to any Proponent (as defined below) other than solely as a result of its ownership of the corporation’s capital stock, that is material to any Proponent individually, or to the Proponents in the aggregate) in such business of any Proponent; and (B) the information required by Section 5(b)(iv).

(iii) To be timely, the written notice required by Section 5(b)(i) or 5(b)(ii) must be received by the Secretary at the principal executive offices of the corporation not later than the close of business on the ninetieth (90 ^th ) day nor earlier than the close of business on the one hundred twentieth (120 ^th ) day prior to the first anniversary of the preceding year’s annual meeting;  provided, however,  that, subject to the last sentence of this Section 5(b)(iii), in the event that the date of the annual meeting is advanced more than thirty (30) days prior to or delayed by more than thirty (30) days after the anniversary of the preceding year’s annual meeting, notice by the stockholder to be timely must be so received not earlier than the close of business on the one hundred twentieth (120 ^th ) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90 ^th ) day prior to such annual meeting or the tenth (10 ^th ) day following the day on which public announcement of the date of such meeting is first made. In no event shall an adjournment or a postponement of an annual meeting for which notice has been given, or the public announcement thereof has been made, commence a new time period for the giving of a stockholder’s notice as described above.

(iv) The written notice required by Section 5(b)(i) or 5(b)(ii) shall also set forth, as of the date of the notice and as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (each, a “ Proponent ” and collectively, the “ Proponents ”): (A) the name and address of each Proponent, as they appear on the corporation’s books; (B) the class, series and number of shares of the corporation that are owned beneficially and of record by each Proponent; (C) a description of any agreement, arrangement or understanding (whether oral or in writing) with respect to such nomination or proposal between or among any Proponent and any of its affiliates or associates, and any others (including their names) acting in concert, or otherwise under the agreement, arrangement or understanding, with any of the foregoing; (D) a representation that the Proponents are holders of record or beneficial owners, as the case may be, of shares of the corporation entitled to vote at the meeting and intend to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice (with respect to a notice under Section 5(b)(i)) or to propose the business that is specified in the notice (with respect to a notice under Section 5(b)(ii)); (E) a representation as to whether the Proponents intend to deliver a proxy statement and form of proxy to holders of a sufficient number of holders of the corporation’s voting shares to elect such nominee or nominees (with respect to a notice under Section 5(b)(i)) or to carry such proposal (with respect to a notice under Section 5(b)(ii)); (F) to the extent known by any Proponent, the name and address of any other stockholder supporting the proposal on the date of such stockholder’s notice; and (G) a description of all Derivative Transactions (as defined below) by each Proponent during the previous twelve (12) month period, including the date of the transactions and the class, series and number of securities involved in, and the material economic terms of, such Derivative Transactions.  For purposes of Sections 5 and 6, a “Derivative Transaction” means any agreement, arrangement, interest or understanding entered into by, or on behalf or for the benefit of, any Proponent or any of its affiliates or associates, whether record or beneficial:

(w) the value of which is derived in whole or in part from the value of any class or series of shares or other securities of the corporation,

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(x) which otherwise provides any direct or indirect opportunity to gain or share in any gain derived from a change in the value of securities of the corporation,

(y) the effect or intent of which is to mitigate loss, manage risk or benefit of security value or price changes, or

(z) which provides the right to vote or increase or decrease the voting power of, such Proponent, or any of its affiliates or associates, with respect to any securities of the corporation,

which agreement, arrangement, interest or understanding may include, without limitation, any option, warrant, debt position, note, bond, convertible security, swap, stock appreciation right, short position, profit interest, hedge, right to dividends, voting agreement, performance-related fee or arrangement to borrow or lend shares (whether or not subject to payment, settlement, exercise or conversion in any such class or series), and any proportionate interest of such Proponent in the securities of the corporation held by any general or limited partnership, or any limited liability company, of which such Proponent is, directly or indirectly, a general partner or managing member.

(c) A stockholder providing written notice required by Section 5(b)(i) or (ii) shall update and supplement such notice in writing, if necessary, so that the information provided or required to be provided in such notice is true and correct in all material respects as of (i) the record date for the meeting and (ii) the date that is five (5) business days prior to the meeting and, in the event of any adjournment or postponement thereof, five (5) business days prior to such adjourned or postponed meeting. In the case of an update and supplement pursuant to clause (i) of this Section 5(c), such update and supplement shall be received by the Secretary at the principal executive offices of the corporation not later than five (5) business days after the record date for the meeting. In the case of an update and supplement pursuant to clause (ii) of this Section 5(c), such update and supplement shall be received by the Secretary at the principal executive offices of the corporation not later than two (2) business days prior to the date for the meeting, and, in the event of any adjournment or postponement thereof, two (2) business days prior to such adjourned or postponed meeting.

(d) Notwithstanding anything in Section 5(b)(iii) to the contrary, in the event that the number of directors in an Expiring Class is increased and there is no public announcement of the appointment of a director to such class, or, if no appointment was made, of the vacancy in such class, made by the corporation at least ten (10) days before the last day a stockholder may deliver a notice of nomination in accordance with Section 5(b)(iii), a stockholder’s notice required by this Section 5 and which complies with the requirements in Section 5(b)(i), other than the timing requirements in Section 5(b)(iii), shall also be considered timely, but only with respect to nominees for any new positions in such Expiring Class created by such increase, if it shall be received by the Secretary at the principal executive offices of the corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the corporation. For purposes of this section, an “ Expiring Class ” shall mean a class of directors whose term shall expire at the next annual meeting of stockholders.

(e) A person shall not be eligible for election or re-election as a director unless the person is nominated either in accordance with clause (ii) of Section 5(a), or in accordance with clause (iii) of Section 5(a). Except as otherwise required by law, the chairperson of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made, or proposed, as the case may be, in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, or the Proponent does not act in accordance with the representations in Sections 5(b)(iv)(D) and 5(b)(iv)(E), to declare that such proposal or nomination shall not be presented for stockholder action at the meeting and shall be disregarded, notwithstanding that proxies in respect of such nominations or such business may have been solicited or received.

(f) Notwithstanding the foregoing provisions of this Section 5, in order to include information with respect to a stockholder proposal in the proxy statement and form of proxy for a stockholders’ meeting, a stockholder must also comply with all applicable requirements of the 1934 Act and the rules and regulations thereunder. Nothing in these Bylaws shall be deemed to affect any rights of stockholders to request inclusion of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 under the 1934 Act;  provided, however,  that any references in these Bylaws to the 1934 Act or the rules and regulations thereunder are not intended to and shall not limit the requirements applicable to proposals and/or nominations to be considered pursuant to Section 5(a)(iii) of these Bylaws.

(g) For purposes of Sections 5 and 6,

(i) “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the 1934 Act; and

(ii) “affiliates” and “associates” shall have the meanings set forth in Rule 405 under the Securities Act of 1933, as

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amended (the “ 1933 Act ”).

Section 6. Special Meetings.

(a) Special meetings of the stockholders of the corporation may be called, for any purpose as is a proper matter for stockholder action under Delaware law, by (i) the Chairperson of the Board of Directors, (ii) the Chief Executive Officer, or (iii) the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board of Directors for adoption).

(b) The Board of Directors shall determine the time and place, if any, of such special meeting. Upon determination of the time and place, if any, of the meeting, the Secretary shall cause a notice of meeting to be given to the stockholders entitled to vote, in accordance with the provisions of Section 7 of these Bylaws. No business may be transacted at such special meeting otherwise than specified in the notice of meeting.

(c) Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the corporation who is a stockholder of record at the time of giving notice provided for in this paragraph, who shall be entitled to vote at the meeting and who delivers written notice to the Secretary of the corporation setting forth the information required by Section 5(b)(i). In the event the corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder of record may nominate a person or persons (as the case may be), for election to such position(s) as specified in the corporation’s notice of meeting, if written notice setting forth the information required by Section 5(b)(i) of these Bylaws shall be received by the Secretary at the principal executive offices of the corporation not later than the close of business on the later of the ninetieth (90 ^th ) day prior to such meeting or the tenth (10 ^th ) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. The stockholder shall also update and supplement such information as required under Section 5(c). In no event shall an adjournment or a postponement of a special meeting for which notice has been given, or the public announcement thereof has been made, commence a new time period for the giving of a stockholder’s notice as described above.

(d) Notwithstanding the foregoing provisions of this Section 6, a stockholder must also comply with all applicable requirements of the 1934 Act and the rules and regulations thereunder with respect to matters set forth in this Section 6. Nothing in these Bylaws shall be deemed to affect any rights of stockholders to request inclusion of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 under the 1934 Act;  provided, however,  that any references in these Bylaws to the 1934 Act or the rules and regulations thereunder are not intended to and shall not limit the requirements applicable to nominations for the election to the Board of Directors to be considered pursuant to Section 6(c) of these Bylaws.

Section 7. Notice Of Meetings. Except as otherwise provided by law, notice, given in writing or by electronic transmission, of each meeting of stockholders shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting, such notice to specify the place, if any, date and hour, in the case of special meetings, the purpose or purposes of the meeting, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at any such meeting. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the corporation. Notice of the time, place, if any, and purpose of any meeting of stockholders may be waived in writing, signed by the person entitled to notice thereof, or by electronic transmission by such person, either before or after such meeting, and will be waived by any stockholder by his attendance thereat in person, by remote communication, if applicable, or by proxy, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Any stockholder so waiving notice of such meeting shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given.

Section 8. Quorum. At all meetings of stockholders, except where otherwise provided by statute or by the Certificate of Incorporation, or by these Bylaws, the presence, in person, by remote communication, if applicable, or by proxy duly authorized, of the holders of a majority of the outstanding shares of stock entitled to vote shall constitute a quorum for the transaction of business. In the absence of a quorum, any meeting of stockholders may be adjourned, from time to time, either by the chairperson of the meeting or by vote of the holders of a majority of the shares represented thereat, but no other business shall be transacted at such meeting. The stockholders present at a duly called or convened meeting, at which a quorum is present, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Except as otherwise provided by statute or by applicable stock exchange rules, or by the Certificate of Incorporation or these Bylaws, in all matters other than the election of directors, the affirmative vote of the majority of shares present in person, by remote communication, if applicable, or

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represented by proxy at the meeting and entitled to vote generally on the subject matter shall be the act of the stockholders. Except as otherwise provided by statute, the Certificate of Incorporation or these Bylaws, directors shall be elected by a plurality of the votes of the shares present in person, by remote communication, if applicable, or represented by proxy at the meeting and entitled to vote generally on the election of directors. Where a separate vote by a class or classes or series is required, except where otherwise provided by the statute or by the Certificate of Incorporation or these Bylaws, a majority of the outstanding shares of such class or classes or series, present in person, by remote communication, if applicable, or represented by proxy duly authorized, shall constitute a quorum entitled to take action with respect to that vote on that matter. Except where otherwise provided by statute or by the Certificate of Incorporation or these Bylaws, the affirmative vote of the majority (plurality, in the case of the election of directors) of shares of such class or classes or series present in person, by remote communication, if applicable, or represented by proxy at the meeting shall be the act of such class or classes or series.

Section 9. Adjournment And Notice Of Adjourned Meetings. Any meeting of stockholders, whether annual or special, may be adjourned from time to time either by the chairperson of the meeting or by the vote of a majority of the shares present in person, by remote communication, if applicable, or represented by proxy at the meeting. When a meeting is adjourned to another time or place, if any, notice need not be given of the adjourned meeting if the time and place, if any, thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 10. Voting Rights. For the purpose of determining those stockholders entitled to vote at any meeting of the stockholders, except as otherwise provided by law, only persons in whose names shares stand on the stock records of the corporation on the record date, as provided in Section 12 of these Bylaws, shall be entitled to vote at any meeting of stockholders. Every person entitled to vote shall have the right to do so either in person, by remote communication, if applicable, or by an agent or agents authorized by a proxy granted in accordance with Delaware law. An agent so appointed need not be a stockholder. No proxy shall be voted after three (3) years from its date of creation unless the proxy provides for a longer period.

Section 11. Joint Owners Of Stock. If shares or other securities having voting power stand of record in the names of two (2) or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety, or otherwise, or if two (2) or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect: (a) if only one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the majority so voting binds all; (c) if more than one (1) votes, but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionally, or may apply to the Delaware Court of Chancery for relief as provided in the DGCL, Section 217(b). If the instrument filed with the Secretary shows that any such tenancy is held in unequal interests, a majority or even-split for the purpose of subsection (c) shall be a majority or even-split in interest.

Section 12. List Of Stockholders. The Secretary shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (b) during ordinary business hours, at the principal place of business of the corporation. In the event that the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that such information is available only to stockholders of the corporation. The list shall be open to examination of any stockholder during the time of the meeting as provided by law.

Section 13. Action Without Meeting. No action shall be taken by the stockholders except at an annual or special meeting of stockholders called in accordance with these Bylaws, and no action shall be taken by the stockholders by written consent or by electronic transmission.

Section 14. Organization.

(a) At every meeting of stockholders, the Chairperson of the Board of Directors, or, if a Chairperson has not been appointed or is absent, the Chief Executive Officer, or if no Chief Executive Officer is then serving or is absent, the President, or, if the President is absent, a chairperson of the meeting chosen by a majority in interest of the stockholders entitled to vote, present in person or by proxy, shall act as chairperson. The Chairperson of the Board may appoint the Chief Executive Officer as chairperson of the meeting. The Secretary, or, in his or her absence, an Assistant Secretary or other officer or other person directed to do so by the chairperson of the meeting, shall act as secretary of the meeting.

(b) The Board of Directors of the corporation shall be entitled to make such rules or regulations for the conduct of

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meetings of stockholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Directors, if any, the chairperson of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairperson, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in such meeting to stockholders of record of the corporation and their duly authorized and constituted proxies and such other persons as the chairperson shall permit, restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants and regulation of the opening and closing of the polls for balloting on matters which are to be voted on by ballot. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting. Unless and to the extent determined by the Board of Directors or the chairperson of the meeting, meetings of stockholders shall not be required to be held in accordance with rules of parliamentary procedure.

ARTICLE IV

DIRECTORS

Section 15. Number. The authorized number of directors of the corporation shall be fixed in accordance with the Certificate of Incorporation. Directors need not be stockholders unless so required by the Certificate of Incorporation. If for any cause, the directors shall not have been elected at an annual meeting, they may be elected as soon thereafter as convenient at a special meeting of the stockholders called for that purpose in the manner provided in these Bylaws.

Section 16. Powers. The powers of the corporation shall be exercised, its business conducted and its property controlled by the Board of Directors, except as may be otherwise provided by statute or by the Certificate of Incorporation.

Section 17. Term Of Office.

Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, each director whether elected at an annual meeting of stockholders or elected in the interim to fill vacancies and newly created directorships, shall be elected for a term expiring at the next annual meeting of stockholders following their election. In addition, notwithstanding the length of term of any director elected at an annual meeting of stockholders prior to the effective date of these Bylaws, or elected in the interim to fill vacancies or newly created directorships, each such director shall serve a term expiring at the next annual meeting of stockholders.

Notwithstanding the foregoing provisions of this Section 17, each director shall serve until his successor is duly elected and qualified or until his earlier death, resignation or removal. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

Section 18. Vacancies.

Unless otherwise provided in the Certificate of Incorporation, and subject to the rights of the holders of any series of Preferred Stock or as otherwise provided by applicable law, any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other causes and any newly created directorships resulting from any increase in the number of directors shall, unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by stockholders, be filled only by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board of Directors, or by a sole remaining director, and not by the stockholders,  provided, however , that whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the Certificate of Incorporation, vacancies and newly created directorships of such class or classes or series shall, unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by stockholders, be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected, and not by the stockholders. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director’s successor shall have been elected and qualified. A vacancy in the Board of Directors shall be deemed to exist under this Bylaw in the case of the death, removal or resignation of any director.

Section 19. Resignation. Any director may resign at any time by delivering his or her notice in writing or by electronic transmission to the Secretary, such resignation to specify whether it will be effective at a particular time. If no such specification is made, the Secretary, in his or her discretion, may either (a) require confirmation from the director prior to deeming the resignation

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effective, in which case the resignation will be deemed effective upon receipt of such confirmation, or (b) deem the resignation effective at the time of delivery of the resignation to the Secretary. When one or more directors shall resign from the Board of Directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office for the unexpired portion of the term of the director whose place shall be vacated and until his successor shall have been duly elected and qualified.

Section 20. Removal. Subject to the rights of any series of Preferred Stock to elect additional directors under specified circumstances, and subject to any limitations imposed by law, the Board of Directors and any individual director may be removed with or without cause by the affirmative vote of the holders of a majority of the voting power of all then outstanding shares of capital stock of the corporation entitled to vote generally at an election of directors.

Section 21. Meetings.

(a) Regular Meetings. Unless otherwise restricted by the Certificate of Incorporation, regular meetings of the Board of Directors may be held at any time or date and at any place within or without the State of Delaware which has been designated by the Board of Directors and publicized among all directors, either orally or in writing, by telephone, including a voice-messaging system or other system designed to record and communicate messages, facsimile, telegraph or telex, or by electronic mail or other electronic means. No further notice shall be required for regular meetings of the Board of Directors.

(b) Special Meetings. Unless otherwise restricted by the Certificate of Incorporation, special meetings of the Board of Directors may be held at any time and place within or without the State of Delaware whenever called by the Chairperson of the Board, the Chief Executive Officer or a majority of the total number of authorized directors.

(c) Meetings by Electronic Communications Equipment. Any member of the Board of Directors, or of any committee thereof, may participate in a meeting by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence in person at such meeting.

(d) Notice of Special Meetings. Notice of the time and place of all special meetings of the Board of Directors shall be orally or in writing, by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, facsimile, telegraph or telex, or by electronic mail or other electronic means, during normal business hours, at least twenty-four (24) hours before the date and time of the meeting. If notice is sent by US mail, it shall be sent by first class mail, charges prepaid, at least three (3) days before the date of the meeting. Notice of any meeting may be waived in writing, or by electronic transmission, at any time before or after the meeting and will be waived by any director by attendance thereat, except when the director attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

(e) Waiver of Notice. The transaction of all business at any meeting of the Board of Directors, or any committee thereof, however called or noticed, or wherever held, shall be as valid as though it had been transacted at a meeting duly held after regular call and notice, if a quorum be present and if, either before or after the meeting, each of the directors not present who did not receive notice shall sign a written waiver of notice or shall waive notice by electronic transmission. All such waivers shall be filed with the corporate records or made a part of the minutes of the meeting.

Section 22. Quorum And Voting.

(a) Unless the Certificate of Incorporation requires a greater number, and except with respect to questions related to indemnification arising under Section 44 for which a quorum shall be one-third of the exact number of directors fixed from time to time, a quorum of the Board of Directors shall consist of a majority of the exact number of directors fixed from time to time by the Board of Directors in accordance with the Certificate of Incorporation;  provided, however,  at any meeting whether a quorum be present or otherwise, a majority of the directors present may adjourn from time to time until the time fixed for the next regular meeting of the Board of Directors, without notice other than by announcement at the meeting.

(b) At each meeting of the Board of Directors at which a quorum is present, all questions and business shall be determined by the affirmative vote of a majority of the directors present, unless a different vote be required by law, the Certificate of Incorporation or these Bylaws.

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Section 23. Action Without Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and such writing or writings or transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

Section 24. Fees And Compensation. Directors shall be entitled to such compensation for their services as may be approved by the Board of Directors, including, if so approved, by resolution of the Board of Directors, a fixed sum and expenses of attendance, if any, for attendance at each regular or special meeting of the Board of Directors and at any meeting of a committee of the Board of Directors. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee, or otherwise and receiving compensation therefor.

Section 25. Committees.

(a) Executive Committee. The Board of Directors may appoint an Executive Committee to consist of one (1) or more members of the Board of Directors. The Executive Committee, to the extent permitted by law and provided in the resolution of the Board of Directors shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to (i) approving or adopting, or recommending to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopting, amending or repealing any Bylaw of the corporation.

(b) Other Committees. The Board of Directors may, from time to time, appoint such other committees as may be permitted by law. Such other committees appointed by the Board of Directors shall consist of one (1) or more members of the Board of Directors and shall have such powers and perform such duties as may be prescribed by the resolution or resolutions creating such committees, but in no event shall any such committee have the powers denied to the Executive Committee in these Bylaws.

(c) Term. The Board of Directors, subject to any requirements of any outstanding series of Preferred Stock and the provisions of subsections (a) or (b) of this Section 25, may at any time increase or decrease the number of members of a committee or terminate the existence of a committee. The membership of a committee member shall terminate on the date of his death or voluntary resignation from the committee or from the Board of Directors. The Board of Directors may at any time for any reason remove any individual committee member and the Board of Directors may fill any committee vacancy created by death, resignation, removal or increase in the number of members of the committee. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee, and, in addition, in the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

(d) Meetings. Unless the Board of Directors shall otherwise provide, regular meetings of the Executive Committee or any other committee appointed pursuant to this Section 25 shall be held at such times and places as are determined by the Board of Directors, or by any such committee, and when notice thereof has been given to each member of such committee, no further notice of such regular meetings need be given thereafter. Special meetings of any such committee may be held at any place which has been determined from time to time by such committee, and may be called by any director who is a member of such committee, upon notice to the members of such committee of the time and place of such special meeting given in the manner provided for the giving of notice to members of the Board of Directors of the time and place of special meetings of the Board of Directors. Notice of any special meeting of any committee may be waived in writing or by electronic transmission at any time before or after the meeting and will be waived by any director by attendance thereat, except when the director attends such special meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Unless otherwise provided by the Board of Directors in the resolutions authorizing the creation of the committee, a majority of the authorized number of members of any such committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of such committee.

Section 26. Duties of Chairperson of the Board of Directors and Lead Independent Director.

(a) The Chairperson of the Board of Directors, if appointed and when present, shall preside at all meetings of the stockholders and the Board of Directors. The Chairperson of the Board of Directors shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers, as the Board of Directors shall designate from time to

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time.

(b) The Chairperson of the Board of Directors, or if the Chairperson is not an independent director, one of the independent directors, may be designated by the Board of Directors as lead independent director to serve until replaced by the Board of Directors (“Lead Independent Director”). The Lead Independent Director will: with the Chairperson of the Board of Directors, establish the agenda for regular Board meetings and serve as chairperson of Board of Directors meetings in the absence of the Chairperson of the Board of Directors; establish the agenda for meetings of the independent directors; coordinate with the committee chairs regarding meeting agendas and informational requirements; preside over meetings of the independent directors; preside over any portions of meetings of the Board of Directors at which the evaluation or compensation of the Chief Executive Officer is presented or discussed; preside over any portions of meetings of the Board of Directors at which the performance of the Board of Directors is presented or discussed; and perform such other duties as may be established or delegated by the Chairperson of the Board of Directors.

Section 27. Organization. At every meeting of the directors, the Chairperson of the Board of Directors, or, if a Chairperson has not been appointed or is absent, the Lead Independent Director, or if the Lead Independent Director has not been appointed or is absent, the Chief Executive Officer (if a director), or, if a Chief Executive Officer is absent, the President (if a director), or if the President is absent, the most senior Vice President (if a director), or, in the absence of any such person, a chairperson of the meeting chosen by a majority of the directors present, shall preside over the meeting. The Secretary, or in his absence, any Assistant Secretary or other officer, director or other person directed to do so by the person presiding over the meeting, shall act as secretary of the meeting.

ARTICLE V

OFFICERS

Section 28. Officers Designated. The officers of the corporation shall include, if and when designated by the Board of Directors, the Chief Executive Officer, the President, one or more Vice Presidents, the Secretary, the Chief Financial Officer and the Treasurer. The Board of Directors may also appoint one or more Assistant Secretaries and Assistant Treasurers and such other officers and agents with such powers and duties as it shall deem necessary. The Board of Directors may assign such additional titles to one or more of the officers as it shall deem appropriate. Any one person may hold any number of offices of the corporation at any one time unless specifically prohibited therefrom by law. The salaries and other compensation of the officers of the corporation shall be fixed by or in the manner designated by the Board of Directors.

Section 29. Tenure And Duties Of Officers.

(a) General. All officers shall hold office at the pleasure of the Board of Directors and until their successors shall have been duly elected and qualified, unless sooner removed. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board of Directors. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors.

(b) Duties of Chief Executive Officer. The Chief Executive Officer shall preside at all meetings of the stockholders and at all meetings of the Board of Directors (if a director), unless the Chairperson of the Board of Directors or the Lead Independent Director has been appointed and is present. Unless an officer has been appointed Chief Executive Officer of the corporation, the President shall be the chief executive officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the corporation. To the extent that a Chief Executive Officer has been appointed and no President has been appointed, all references in these Bylaws to the President shall be deemed references to the Chief Executive Officer. The Chief Executive Officer shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers, as the Board of Directors shall designate from time to time.

(c) Duties of President. The President shall preside at all meetings of the stockholders and at all meetings of the Board of Directors (if a director), unless the Chairperson of the Board of Directors, the Lead Independent Director or the Chief Executive Officer has been appointed and is present. Unless another officer has been appointed Chief Executive Officer of the corporation, the President shall be the chief executive officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the corporation. The President shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers, as the Board of Directors shall designate from time to time.

(d) Duties of Vice Presidents. A Vice President may assume and perform the duties of the President in the absence or

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disability of the President or whenever the office of President is vacant. A Vice President shall perform other duties commonly incident to their office and shall also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer, or, if the Chief Executive Officer has not been appointed or is absent, the President shall designate from time to time.

(e) Duties of Secretary. The Secretary shall attend all meetings of the stockholders and of the Board of Directors and shall record all acts and proceedings thereof in the minute book of the corporation. The Secretary shall give notice in conformity with these Bylaws of all meetings of the stockholders and of all meetings of the Board of Directors and any committee thereof requiring notice. The Secretary shall perform all other duties provided for in these Bylaws and other duties commonly incident to the office and shall also perform such other duties and have such other powers, as the Board of Directors shall designate from time to time. The Chief Executive Officer, or if no Chief Executive Officer is then serving, the President may direct any Assistant Secretary or other officer to assume and perform the duties of the Secretary in the absence or disability of the Secretary, and each Assistant Secretary shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer, or if no Chief Executive Officer is then serving, the President shall designate from time to time.

(f) Duties of Chief Financial Officer. The Chief Financial Officer shall keep or cause to be kept the books of account of the corporation in a thorough and proper manner and shall render statements of the financial affairs of the corporation in such form and as often as required by the Board of Directors or the Chief Executive Officer, or if no Chief Executive Officer is then serving, the President. The Chief Financial Officer, subject to the order of the Board of Directors, shall have the custody of all funds and securities of the corporation. The Chief Financial Officer shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer, or if no Chief Executive Officer is then serving, the President shall designate from time to time. To the extent that a Chief Financial Officer has been appointed and no Treasurer has been appointed, all references in these Bylaws to the Treasurer shall be deemed references to the Chief Financial Officer. The President may direct the Treasurer, if any, or any Assistant Treasurer, or the controller or any assistant controller to assume and perform the duties of the Chief Financial Officer in the absence or disability of the Chief Financial Officer, and each Treasurer and Assistant Treasurer and each controller and assistant controller shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer, or if no Chief Executive Officer is then serving, the President shall designate from time to time.

(g) Duties of Treasurer. Unless another officer has been appointed Chief Financial Officer of the corporation, the Treasurer shall be the chief financial officer of the corporation and shall keep or cause to be kept the books of account of the corporation in a thorough and proper manner and shall render statements of the financial affairs of the corporation in such form and as often as required by the Board of Directors or the Chief Executive Officer, or if no Chief Executive Officer is then serving, the President, and, subject to the order of the Board of Directors, shall have the custody of all funds and securities of the corporation. The Treasurer shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer, or if no Chief Executive Officer is then serving, the President and Chief Financial Officer (if not Treasurer) shall designate from time to time.

Section 30. Delegation Of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officer or agent, notwithstanding any provision hereof.

Section 31. Resignations. Any officer may resign at any time by giving notice in writing or by electronic transmission to the Board of Directors or to the Chief Executive Officer, or if no Chief Executive Officer is then serving, the President or to the Secretary. Any such resignation shall be effective when received by the person or persons to whom such notice is given, unless a later time is specified therein, in which event the resignation shall become effective at such later time. Unless otherwise specified in such notice, the acceptance of any such resignation shall not be necessary to make it effective. Any resignation shall be without prejudice to the rights, if any, of the corporation under any contract with the resigning officer.

Section 32. Removal. Any officer may be removed from office at any time, either with or without cause, by the affirmative vote of a majority of the directors in office at the time, or by the unanimous written consent of the directors in office at the time, or by any committee or by the Chief Executive Officer or by other superior officers upon whom such power of removal may have been conferred by the Board of Directors.

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ARTICLE VI

EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE CORPORATION

Section 33. Execution Of Corporate Instruments. The Board of Directors may, in its discretion, determine the method and designate the signatory officer or officers, or other person or persons, to execute on behalf of the corporation any corporate instrument or document, or to sign on behalf of the corporation the corporate name without limitation, or to enter into contracts on behalf of the corporation, except where otherwise provided by law or these Bylaws, and such execution or signature shall be binding upon the corporation.

All checks and drafts drawn on banks or other depositaries on funds to the credit of the corporation or in special accounts of the corporation shall be signed by such person or persons as the Board of Directors shall authorize so to do.

Unless authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

Section 34. Voting Of Securities Owned By The Corporation. All stock and other securities of other corporations owned or held by the corporation for itself, or for other parties in any capacity, shall be voted, and all proxies with respect thereto shall be executed, by the person authorized so to do by resolution of the Board of Directors, or, in the absence of such authorization, by the Chairperson of the Board of Directors, the Chief Executive Officer, the President, or any Vice President.

ARTICLE VII

SHARES OF STOCK

Section 35. Form And Execution Of Certificates. The shares of the corporation shall be represented by certificates, or shall be uncertificated if so provided by resolution or resolutions of the Board of Directors. Certificates for the shares of stock, if any, shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock in the corporation represented by certificate shall be entitled to have a certificate signed by or in the name of the corporation by the Chairperson of the Board of Directors, or the President or any Vice President and by the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary, certifying the number of shares owned by him in the corporation. Any or all of the signatures on the certificate may be facsimiles. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued with the same effect as if he were such officer, transfer agent, or registrar at the date of issue.

Section 36. Lost Certificates. A new certificate or certificates shall be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. The corporation may require, as a condition precedent to the issuance of a new certificate or certificates, the owner of such lost, stolen, or destroyed certificate or certificates, or the owner’s legal representative, to agree to indemnify the corporation in such manner as it shall require or to give the corporation a surety bond in such form and amount as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen, or destroyed.

Section 37. Transfers.

(a) Transfers of record of shares of stock of the corporation shall be made only upon its books by the holders thereof, in person or by attorney duly authorized, and, in the case of stock represented by certificate, upon the surrender of a properly endorsed certificate or certificates for a like number of shares.

(b) The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.

Section 38. Fixing Record Dates.

(a) In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of

11

stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall, subject to applicable law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting;  provided, however,  that the Board of Directors may fix a new record date for the adjourned meeting.

(b) In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

Section 39. Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

ARTICLE VIII

OTHER SECURITIES OF THE CORPORATION

Section 40. Execution Of Other Securities. All bonds, debentures and other corporate securities of the corporation, other than stock certificates (covered in Section 35), may be signed by the Chairperson of the Board of Directors, the President or any Vice President, or such other person as may be authorized by the Board of Directors, and the corporate seal impressed thereon or a facsimile of such seal imprinted thereon and attested by the signature of the Secretary or an Assistant Secretary, or the Chief Financial Officer or Treasurer or an Assistant Treasurer;  provided, however,  that where any such bond, debenture or other corporate security shall be authenticated by the manual signature, or where permissible facsimile signature, of a trustee under an indenture pursuant to which such bond, debenture or other corporate security shall be issued, the signatures of the persons signing and attesting the corporate seal on such bond, debenture or other corporate security may be the imprinted facsimile of the signatures of such persons. Interest coupons appertaining to any such bond, debenture or other corporate security, authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the corporation or such other person as may be authorized by the Board of Directors, or bear imprinted thereon the facsimile signature of such person. In case any officer who shall have signed or attested any bond, debenture or other corporate security, or whose facsimile signature shall appear thereon or on any such interest coupon, shall have ceased to be such officer before the bond, debenture or other corporate security so signed or attested shall have been delivered, such bond, debenture or other corporate security nevertheless may be adopted by the corporation and issued and delivered as though the person who signed the same or whose facsimile signature shall have been used thereon had not ceased to be such officer of the corporation.

ARTICLE IX

DIVIDENDS

Section 41. Declaration Of Dividends. Dividends upon the capital stock of the corporation, subject to the provisions of the Certificate of Incorporation and applicable law, if any, may be declared by the Board of Directors pursuant to law at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation and applicable law.

Section 42. Dividend Reserve. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the Board of Directors shall think conducive to the interests of the corporation, and the Board of Directors

12

may modify or abolish any such reserve in the manner in which it was created.

ARTICLE X

FISCAL YEAR

Section 43. Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.

ARTICLE XI

INDEMNIFICATION

Section 44. Indemnification of Directors, Executive Officers, Other Officers, Employees and Other Agents.

(a) Directors and executive officers. The corporation shall indemnify its directors and executive officers (for the purposes of this Article XI, “ executive officers ” shall have the meaning defined in Rule 3b-7 promulgated under the 1934 Act) to the extent not prohibited by the DGCL or any other applicable law;  provided, however,  that the corporation may modify the extent of such indemnification by individual contracts with its directors and executive officers; and,  provided, further, that the corporation shall not be required to indemnify any director or executive officer in connection with any proceeding (or part thereof) initiated by such person unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by the Board of Directors of the corporation, (iii) such indemnification is provided by the corporation, in its sole discretion, pursuant to the powers vested in the corporation under the DGCL or any other applicable law or (iv) such indemnification is required to be made under subsection (d).

(b) Other Officers, Employees and Other Agents. The corporation shall have power to indemnify its other officers, employees and other agents as set forth in the DGCL or any other applicable law. The Board of Directors shall have the power to delegate the determination of whether indemnification shall be given to any such person except executive officers to such officers or other persons as the Board of Directors shall determine.

(c) Expenses. The corporation shall advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or executive officer, of the corporation, or is or was serving at the request of the corporation as a director or executive officer of another corporation, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefor, all expenses incurred by any director or executive officer in connection with such proceeding provided, however, that if the DGCL requires, an advancement of expenses incurred by a director or executive officer in his or her capacity as a director or executive officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the corporation of an undertaking (hereinafter an “ undertaking ”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “ final adjudication ”) that such indemnitee is not entitled to be indemnified for such expenses under this section or otherwise.

Notwithstanding the foregoing, unless otherwise determined pursuant to paragraph (e) of this section, no advance shall be made by the corporation to an executive officer of the corporation (except by reason of the fact that such executive officer is or was a director of the corporation in which event this paragraph shall not apply) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made (i) by a majority vote of directors who were not parties to the proceeding, even if not a quorum, or (ii) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or such directors so direct, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the corporation.

(d) Enforcement. Without the necessity of entering into an express contract, all rights to indemnification and advances to directors and executive officers under this Bylaw shall be deemed to be contractual rights and be effective to the same extent and as if provided for in a contract between the corporation and the director or executive officer. Any right to indemnification or advances granted by this section to a director or executive officer shall be enforceable by or on behalf of the person holding such right in any

13

court of competent jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is made within ninety (90) days of request therefor. To the extent permitted by law, the claimant in such enforcement action, if successful in whole or in part, shall be entitled to be paid also the expense of prosecuting the claim. In connection with any claim for indemnification, the corporation shall be entitled to raise as a defense to any such action that the claimant has not met the standards of conduct that make it permissible under the DGCL or any other applicable law for the corporation to indemnify the claimant for the amount claimed. In connection with any claim by an executive officer of the corporation (except in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such executive officer is or was a director of the corporation) for advances, the corporation shall be entitled to raise a defense as to any such action clear and convincing evidence that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the corporation, or with respect to any criminal action or proceeding that such person acted without reasonable cause to believe that his conduct was lawful. Neither the failure of the corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the DGCL or any other applicable law, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct. In any suit brought by a director or executive officer to enforce a right to indemnification or to an advancement of expenses hereunder, the burden of proving that the director or executive officer is not entitled to be indemnified, or to such advancement of expenses, under this section or otherwise shall be on the corporation.

(e) Non-Exclusivity of Rights. The rights conferred on any person by this Bylaw shall not be exclusive of any other right which such person may have or hereafter acquire under any applicable statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office. The corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advances, to the fullest extent not prohibited by the DGCL, or by any other applicable law.

(f) Survival of Rights. The rights conferred on any person by this Bylaw shall continue as to a person who has ceased to be a director or executive officer or officer, employee or other agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

(g) Insurance. To the fullest extent permitted by the DGCL or any other applicable law, the corporation, upon approval by the Board of Directors, may purchase insurance on behalf of any person required or permitted to be indemnified pursuant to this section.

(h) Amendments. Any repeal or modification of this section shall only be prospective and shall not affect the rights under this Bylaw in effect at the time of the alleged occurrence of any action or omission to act that is the cause of any proceeding against any agent of the corporation.

(i) Saving Clause. If this Bylaw or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the corporation shall nevertheless indemnify each director and executive officer to the full extent not prohibited by any applicable portion of this section that shall not have been invalidated, or by any other applicable law. If this section shall be invalid due to the application of the indemnification provisions of another jurisdiction, then the corporation shall indemnify each director and executive officer to the full extent under any other applicable law.

(j) Certain Definitions. For the purposes of this Bylaw, the following definitions shall apply:

(i) The term “proceeding” shall be broadly construed and shall include, without limitation, the investigation, preparation, prosecution, defense, settlement, arbitration and appeal of, and the giving of testimony in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative.

(ii) The term “expenses” shall be broadly construed and shall include, without limitation, court costs, attorneys’ fees, witness fees, fines, amounts paid in settlement or judgment and any other costs and expenses of any nature or kind incurred in connection with any proceeding.

(iii) The term the “corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director,

14

officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this section with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.

(iv) References to a “director,” “executive officer,” “officer,” “ employee ,” or “ agent ” of the corporation shall include, without limitation, situations where such person is serving at the request of the corporation as, respectively, a director, executive officer, officer, employee, trustee or agent of another corporation, partnership, joint venture, trust or other enterprise.

(v) References to “other enterprises” shall include employee benefit plans; references to “ fines ” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “ serving at the request of the corporation ” shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “ not opposed to the best interests of the corporation ” as referred to in this section.

ARTICLE XII

NOTICES

Section 45. Notices.

(a) Notice To Stockholders. Written notice to stockholders of stockholder meetings shall be given as provided in Section 7 herein. Without limiting the manner by which notice may otherwise be given effectively to stockholders under any agreement or contract with such stockholder, and except as otherwise required by law, written notice to stockholders for purposes other than stockholder meetings may be sent by US mail or nationally recognized overnight courier, or by facsimile, telegraph or telex or by electronic mail or other electronic means.

(b) Notice To Directors. Any notice required to be given to any director may be given by the method stated in subsection (a), as otherwise provided in these Bylaws with notice other than one which is delivered personally to be sent to such address as such director shall have filed in writing with the Secretary, or, in the absence of such filing, to the last known address of such director.

(c) Affidavit Of Mailing. An affidavit of mailing, executed by a duly authorized and competent employee of the corporation or its transfer agent appointed with respect to the class of stock affected, or other agent, specifying the name and address or the names and addresses of the stockholder or stockholders, or director or directors, to whom any such notice or notices was or were given, and the time and method of giving the same, shall in the absence of fraud, be prima facie evidence of the facts therein contained.

(d) Methods of Notice. It shall not be necessary that the same method of giving notice be employed in respect of all recipients of notice, but one permissible method may be employed in respect of any one or more, and any other permissible method or methods may be employed in respect of any other or others.

(e) Notice To Person With Whom Communication Is Unlawful. Whenever notice is required to be given, under any provision of law or of the Certificate of Incorporation or Bylaws of the corporation, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the corporation is such as to require the filing of a certificate under any provision of the DGCL, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.

(f) Notice to Stockholders Sharing an Address. Except as otherwise prohibited under DGCL, any notice given under the provisions of DGCL, the Certificate of Incorporation or the Bylaws shall be effective if given by a single written notice to stockholders who share an address if consented to by the stockholders at that address to whom such notice is given. Such consent shall

15

have been deemed to have been given if such stockholder fails to object in writing to the corporation within sixty (60) days of having been given notice by the corporation of its intention to send the single notice. Any consent shall be revocable by the stockholder by written notice to the corporation.

ARTICLE XIII

AMENDMENTS

Section 46.Amendments. Subject to the limitations set forth in Section 44(h) of these Bylaws or the provisions of the Certificate of Incorporation, the Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the corporation. Any adoption, amendment or repeal of the Bylaws of the corporation by the Board of Directors shall require the approval of a majority of the authorized number of directors. The stockholders also shall have power to adopt, amend or repeal the Bylaws of the corporation;  provided, however,  that, in addition to any vote of the holders of any class or series of stock of the corporation required by law or by the Certificate of Incorporation, such action by stockholders shall require the affirmative vote of the holders of  a majority of the voting power of all of the then-outstanding shares of the capital stock of the corporation entitled to vote generally in the election of directors, voting together as a single class.

ARTICLE XIV

LOANS TO OFFICERS

Section 47. Loans To Officers. Except as otherwise prohibited by applicable law, the corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiaries, including any officer or employee who is a director of the corporation or its subsidiaries, whenever, in the judgment of the Board of Directors, such loan, guarantee or assistance may reasonably be expected to benefit the corporation. The loan, guarantee or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in these Bylaws shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, David Meredith, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Everbridge, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2021	By:	/s/ David Meredith
		Name: David Meredith
		Title: Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Patrick Brickley, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Everbridge, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2021	By:	/s/ Patrick Brickley
		Name: Patrick Brickley
		Title: Senior Vice President and Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), I, David Meredith, Chief Executive Officer of Everbridge, Inc., do hereby certify that, to the best of my knowledge, the Quarterly Report on Form 10-Q of Everbridge, Inc. for the quarter ended June 30, 2021 (the “Report”):

(1) fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of Everbridge, Inc. for the period presented herein.

Date: August 9, 2021	By:	/s/ David Meredith
		Name: David Meredith
		Title: Chief Executive Officer (Principal Executive Officer)

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Everbridge, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

EX-32.2

Exhibit 32.2

CERTIFICATION

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), I, Patrick Brickley, Senior Vice President and Chief Financial Officer of Everbridge, Inc., do hereby certify that, to the best of my knowledge, the Quarterly Report on Form 10-Q of Everbridge, Inc. for the quarter ended June 30, 2021 (the “Report”):

(1) fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of Everbridge, Inc. for the period presented herein.

Date: August 9, 2021	By:	/s/ Patrick Brickley
		Name: Patrick Brickley
		Title: Senior Vice President and Chief Financial Officer (Principal Financial Officer)

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Everbridge, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2021	Aug. 03, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Entity Registrant Name	Everbridge, Inc.
Entity Central Index Key	0001437352
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		38,385,479
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity File Number	001-37874
Entity Tax Identification Number	26-2919312
Entity Address, Address Line One	25 Corporate Drive
Entity Address, Address Line Two	Suite 400
Entity Address, City or Town	Burlington
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	01803
City Area Code	818
Local Phone Number	230-9700
Document Quarterly Report	true
Document Transition Report	false
Entity Incorporation, State or Country Code	DE
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	EVBG
Security Exchange Name	NASDAQ

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 559,851	$ 467,171
Restricted cash	4,666	4,667
Accounts receivable, net	83,183	94,376
Prepaid expenses	13,301	11,774
Deferred costs and other current assets	21,348	20,464
Total current assets	682,349	598,452
Property and equipment, net	9,567	7,774
Capitalized software development costs, net	18,368	16,329
Goodwill	405,223	187,411
Intangible assets, net	216,723	113,762
Restricted cash	3,785	3,792
Prepaid expenses	1,795	1,943
Deferred costs and other assets	37,214	31,481
Total assets	1,375,024	960,944
Current liabilities:
Accounts payable	10,964	9,698
Accrued payroll and employee related liabilities	26,860	27,674
Accrued expenses	10,235	7,246
Deferred revenue	196,481	165,389
Contingent consideration liabilities	18,775	10,619
Other current liabilities	14,376	15,602
Total current liabilities	277,691	236,228
Long-term liabilities:
Deferred revenue, noncurrent	13,509	4,738
Convertible senior notes	646,533	441,514
Deferred tax liabilities	14,022	10,065
Other long-term liabilities	17,940	16,094
Total liabilities	969,695	708,639
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $0.001, 10,000,000 shares authorized, no shares issued or outstanding as of June 30, 2021 and December 31, 2020, respectively
Common stock, $0.001 par value, 100,000,000 shares authorized, 38,288,685 and 35,449,447 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively	38	35
Additional paid-in capital	752,773	542,776
Accumulated deficit	(348,926)	(293,316)
Accumulated other comprehensive income	1,444	2,810
Total stockholders’ equity	405,329	252,305
Total liabilities and stockholders’ equity	$ 1,375,024	$ 960,944

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	38,288,685	35,449,447
Common stock, shares outstanding	38,288,685	35,449,447

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Statement [Abstract]
Revenue	$ 86,649	$ 65,377	$ 168,859	$ 124,277
Cost of revenue	27,665	19,423	52,945	40,312
Gross profit	58,984	45,954	115,914	83,965
Operating expenses:
Sales and marketing	41,483	28,741	76,010	58,329
Research and development	20,251	14,937	38,330	29,109
General and administrative	24,664	16,799	47,226	32,710
Total operating expenses	86,398	60,477	161,566	120,148
Operating loss	(27,414)	(14,523)	(45,652)	(36,183)
Other expense, net:
Interest and investment income	100	235	233	1,808
Interest expense	(9,655)	(5,998)	(16,215)	(11,920)
Loss on extinguishment of convertible notes and capped call modification	(37)		(2,925)
Other expense, net	(602)	(438)	(651)	(515)
Total other expense, net	(10,194)	(6,201)	(19,558)	(10,627)
Loss before income taxes	(37,608)	(20,724)	(65,210)	(46,810)
Benefit from income taxes	3,787	1,504	9,600	2,205
Net loss	$ (33,821)	$ (19,220)	$ (55,610)	$ (44,605)
Net loss per share attributable to common stockholders:
Basic	$ (0.89)	$ (0.56)	$ (1.49)	$ (1.30)
Diluted	$ (0.89)	$ (0.56)	$ (1.49)	$ (1.30)
Weighted-average common shares outstanding:
Basic	38,014,107	34,402,704	37,204,958	34,238,887
Diluted	38,014,107	34,402,704	37,204,958	34,238,887

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Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Statement Of Income And Comprehensive Income [Abstract]
Net loss	$ (33,821)	$ (19,220)	$ (55,610)	$ (44,605)
Other comprehensive income (loss):
Foreign currency translation adjustment, net of taxes	1,231	2,343	(1,366)	(4,177)
Total comprehensive loss	$ (32,590)	$ (16,877)	$ (56,976)	$ (48,782)

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Condensed Consolidated Statements of Stockholders' Equity (unaudited) - USD ($) $ in Thousands	Total	Convertible Senior Notes Due 2026	Convertible Senior Notes Due 2022	Common Stock	Common Stock Convertible Senior Notes Due 2022	Additional Paid-in Capital	Additional Paid-in Capital Convertible Senior Notes Due 2026	Additional Paid-in Capital Convertible Senior Notes Due 2022	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)
Balance at Dec. 31, 2019	$ 220,312			$ 34		$ 425,945			$ (199,920)	$ (5,747)
Beginning Balance, shares at Dec. 31, 2019				33,848,627
Issuance of common stock in connection with acquisition	30,434					30,434
Issuance of common stock in connection with acquisition, shares				301,941
Stock-based compensation	10,368					10,368
Vesting of restricted stock units and performance-based restricted stock units, shares				44,606
Restricted stock units and performance-based restricted stock units withheld to settle employee tax withholding liability	(400)					(400)
Restricted stock units and performance-based restricted stock units withheld to settle employee tax withholding liability, shares				(4,483)
Exercise of stock options	2,989					2,989
Exercise of stock options, shares				126,374
Issuance of shares under employee stock purchase plan	1,710					1,710
Issuance of shares under employee stock purchase plan, shares				30,943
Other comprehensive loss	(6,520)									(6,520)
Net loss	(25,385)								(25,385)
Balance at Mar. 31, 2020	233,508			$ 34		471,046			(225,305)	(12,267)
Ending Balance, shares at Mar. 31, 2020				34,348,008
Balance at Dec. 31, 2019	220,312			$ 34		425,945			(199,920)	(5,747)
Beginning Balance, shares at Dec. 31, 2019				33,848,627
Net loss	(44,605)
Balance at Jun. 30, 2020	234,146			$ 34		488,561			(244,525)	(9,924)
Ending Balance, shares at Jun. 30, 2020				34,463,801
Balance at Mar. 31, 2020	233,508			$ 34		471,046			(225,305)	(12,267)
Beginning Balance, shares at Mar. 31, 2020				34,348,008
Issuance of common stock in connection with acquisition	5,074					5,074
Issuance of common stock in connection with acquisition, shares				38,425
Stock-based compensation	11,372					11,372
Vesting of restricted stock units and performance-based restricted stock units, shares				21,507
Restricted stock units and performance-based restricted stock units withheld to settle employee tax withholding liability	(527)					(527)
Restricted stock units and performance-based restricted stock units withheld to settle employee tax withholding liability, shares				(3,980)
Exercise of stock options	1,596					1,596
Exercise of stock options, shares				59,841
Other comprehensive loss	2,343									2,343
Net loss	(19,220)								(19,220)
Balance at Jun. 30, 2020	234,146			$ 34		488,561			(244,525)	(9,924)
Ending Balance, shares at Jun. 30, 2020				34,463,801
Balance at Dec. 31, 2020	252,305			$ 35		542,776			(293,316)	2,810
Beginning Balance, shares at Dec. 31, 2020				35,449,447
Issuance of common stock in connection with acquisition	23,032					23,032
Issuance of common stock in connection with acquisition, shares				162,820
Stock-based compensation	12,770					12,770
Vesting of restricted stock units and performance-based restricted stock units	1			$ 1
Vesting of restricted stock units and performance-based restricted stock units, shares				64,304
Restricted stock units and performance-based restricted stock units withheld to settle employee tax withholding liability	(1,611)					(1,611)
Restricted stock units and performance-based restricted stock units withheld to settle employee tax withholding liability, shares				(11,649)
Exercise of stock options	1,604					1,604
Exercise of stock options, shares				52,955
Issuance of shares under employee stock purchase plan	2,451					2,451
Issuance of shares under employee stock purchase plan, shares				23,499
Equity component of convertible notes due 2026, net of allocated issuance costs and taxes		$ 99,000					$ 99,000
Purchase of capped call hedge for the convertible notes due 2026, including issuance costs		$ (35,124)					$ (35,124)
Settlement of convertible notes due 2022			$ 15,652		$ 2			$ 15,650
Settlement of convertible notes due 2022, shares					1,870,823
Termination and modification of capped call hedge for convertible notes due 2022			10,886					10,886
Other comprehensive loss	(2,597)									(2,597)
Net loss	(21,789)								(21,789)
Balance at Mar. 31, 2021	356,580			$ 38		671,434			(315,105)	213
Ending Balance, shares at Mar. 31, 2021				37,612,199
Balance at Dec. 31, 2020	$ 252,305			$ 35		542,776			(293,316)	2,810
Beginning Balance, shares at Dec. 31, 2020				35,449,447
Exercise of stock options, shares	75,853
Net loss	$ (55,610)
Balance at Jun. 30, 2021	405,329			$ 38		752,773			(348,926)	1,444
Ending Balance, shares at Jun. 30, 2021				38,288,685
Balance at Mar. 31, 2021	356,580			$ 38		671,434			(315,105)	213
Beginning Balance, shares at Mar. 31, 2021				37,612,199
Issuance of common stock in connection with acquisition	64,482					64,482
Issuance of common stock in connection with acquisition, shares				555,332
Issuance of common stock for contingent consideration	720					720
Issuance of common stock for contingent consideration, shares				6,188
Stock-based compensation	15,635					15,635
Vesting of restricted stock units and performance-based restricted stock units, shares				65,364
Restricted stock units and performance-based restricted stock units withheld to settle employee tax withholding liability	(1,233)					(1,233)
Restricted stock units and performance-based restricted stock units withheld to settle employee tax withholding liability, shares				(9,929)
Exercise of stock options	559					559
Exercise of stock options, shares				22,898
Settlement of convertible notes due 2022			$ 1,176					$ 1,176
Settlement of convertible notes due 2022, shares					36,633
Other comprehensive loss	1,231									1,231
Net loss	(33,821)								(33,821)
Balance at Jun. 30, 2021	$ 405,329			$ 38		$ 752,773			$ (348,926)	$ 1,444
Ending Balance, shares at Jun. 30, 2021				38,288,685

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Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Cash flows from operating activities:
Net loss	$ (55,610)	$ (44,605)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	23,854	13,976
Amortization of deferred costs	7,184	5,735
Deferred income taxes	(9,778)	(3,014)
Accretion of interest on debt	15,821	10,949
Loss on extinguishment of convertible notes and capped call modification	2,925
Provision for credit losses and sales reserve	1,905	1,387
Stock-based compensation	28,190	21,588
Other non-cash adjustments	(32)
Changes in operating assets and liabilities:
Accounts receivable	19,312	3,341
Prepaid expenses	(922)	(3,265)
Deferred costs	(8,107)	(6,943)
Other assets	(850)	(3,429)
Accounts payable	(60)	2,164
Accrued payroll and employee related liabilities	(5,320)	(334)
Accrued expenses	971	(593)
Deferred revenue	(180)	(2,722)
Other liabilities	(4,632)	2,696
Net cash provided by (used in) operating activities	14,671	(3,069)
Cash flows from investing activities:
Capital expenditures	(2,128)	(1,175)
Payments for acquisition of business, net of acquired cash	(197,666)	(44,265)
Additions to capitalized software development costs	(6,082)	(4,673)
Net cash used in investing activities	(205,876)	(50,113)
Cash flows from financing activities:
Proceeds from issuance of convertible notes	375,000
Payments of debt issuance costs	(10,391)	(131)
Purchase of convertible notes capped call hedge	(35,100)
Repurchase of convertible notes	(58,641)
Proceeds from termination of convertible notes capped call hedge	10,650
Restricted stock units withheld to settle employee tax withholding liability	(2,843)	(927)
Proceeds from employee stock purchase plan	2,451	1,710
Proceeds from stock option exercises	2,163	4,585
Net cash provided by financing activities	283,289	5,237
Effect of exchange rates on cash, cash equivalents and restricted cash	588	(419)
Net increase (decrease) in cash, cash equivalents and restricted cash	92,672	(48,364)
Cash, cash equivalents and restricted cash—beginning of period	475,630	539,662
Cash, cash equivalents and restricted cash—end of period	568,302	491,298
Supplemental disclosures of cash flow information:
Interest	610	974
Taxes, net of refunds received	935	476
Supplemental disclosure of non-cash activities:
Common stock issued in connection with acquisitions	87,514	35,508
Deferred consideration in connection with acquisition		895
Purchase accounting payable, net		619
Contingent consideration in connection with acquisitions	9,135	4,220
Common stock issued in connection with contingent consideration	720
Common stock issued in connection with settlement of convertible notes	16,826
Debt issuance costs included in accrued expenses	250
Stock-based compensation capitalized for software development costs	215	152
Other non-cash activities	$ 220	$ 376

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Business and Nature of Operations

6 Months Ended

Jun. 30, 2021

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Business and Nature of Operations

(1) Business and Nature of Operations

Everbridge, Inc., a Delaware corporation (together with its wholly-owned subsidiaries, referred to as “Everbridge” or the “Company”), is a global software company that provides enterprise software applications that automate and accelerate organizations’ operational response to critical events in order to keep people safe and organizations running. The Company’s SaaS-based platform enables the Company’s customers to manage and mitigate critical events. The Company’s enterprise applications, such as Mass Notification, Safety Connection, Incident Management, IT Alerting, Visual Command Center, Public Warning, Community Engagement, Risk Center, Crisis Management, Secure Collaboration, and Control Center, automate numerous critical event management (“CEM”) processes. The Company generates revenue primarily from subscription fees to the Company’s enterprise applications. The Company has operations in the United States, United Kingdom, Norway, China, Netherlands, Canada, New Zealand, France, India, and other countries.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

(2) Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The condensed consolidated balance sheet as of December 31, 2020, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by U.S. GAAP on an annual reporting basis.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss, statements of stockholders’ equity and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year 2021 or any future period.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Assets and liabilities which are subject to judgment and use of estimates include the determination of the period of benefit for deferred commissions, relative stand-alone selling price for identified performance obligations in our revenue transactions, allowances for credit losses, the fair value of assets acquired and liabilities assumed in business combinations, the fair value of contingent consideration, the recoverability of goodwill and long-lived assets, valuation allowances with respect to deferred tax assets, useful lives associated with property and equipment and intangible assets, contingencies, and the valuation and assumptions underlying stock-based compensation. On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. In addition, the Company engages valuation specialists to assist with management’s determination of the valuation of its fair values of assets acquired and liabilities assumed in business combinations, convertible senior notes, and certain market-based performance equity awards. There have been significant changes to the global economic situation as a consequence of the COVID-19 pandemic. The global outbreak continues to cause instability and volatility in multiple markets where the Company conducts business which could cause changes to estimates as a result of the financial circumstances. Such changes to estimates could potentially result in impacts that would be material to the consolidated financial statements, particularly with respect to the timing of revenue recognition resulting from potential implementation delays, evaluating the recoverability of long-lived assets with finite useful lives for impairment and estimates of credit losses for accounts receivables and contract assets. No impairments were recorded as of the balance sheet date; however, due to significant uncertainty surrounding the situation, management's judgment regarding this could change in the future. As of the date of issuance of these financial statements, the Company’s results of operations have not been significantly impacted by the COVID-19 pandemic; however, the Company continues to monitor the situation.

Concentrations of Credit and Business Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents and accounts receivable.

The Company maintains cash and cash equivalent balances at several banks. Accounts located in the United States are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. From time to time, balances may exceed amounts insured by the FDIC. The Company has not experienced any losses in such amounts.

The Company’s accounts receivable are generally unsecured and are derived from revenue earned from customers primarily located in the United States, Norway, Netherlands, Sweden and the United Kingdom and are generally denominated in U.S. Dollars, Norwegian Krone, Euro, Swedish Kronor or British Pounds. Each reporting period, the Company reevaluates each customer’s ability to satisfy credit obligations and maintains an allowance for credit risk based on the evaluations. No single customer comprised more than 10% of the Company’s total revenue for the three and six months ended June 30, 2021 and 2020. No single customer comprised more than 10% of the Company’s total accounts receivable as of June 30, 2021 and December 31, 2020.   

Cash and Cash Equivalents

The Company considers all highly liquid instruments with original maturities of three months or less at the date of purchase to be cash equivalents. Cash equivalents consist of funds deposited into money market funds. Cash and cash equivalents are recorded at cost, which approximates fair value.

Restricted Cash

The Company’s restricted cash balance primarily consists of cash held at a financial institution for collateral against performance on the Company’s customer contracts and certain other cash deposits for specific purposes.

Significant Accounting Policies

There have been no changes to the Company’s significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 26, 2021, that have had a material impact on the Company’s condensed consolidated financial statements and related notes.

Revenue Recognition

The Company derives its revenues primarily from subscription services and professional services. Revenues are recognized when control of services is transferred to the Company’s customers in an amount that reflects the consideration it expects to be entitled to in exchange for those services.

The Company determines revenue recognition through the following steps:

• Identification of the contract, or contracts, with a customer

• Identification of the performance obligations in the contract

• Determination of the transaction price

• Allocation of the transaction price to the performance obligations in the contract

• Recognition of revenue when, or as, the Company satisfies a performance obligation

Subscription Services Revenues

Subscription services revenues primarily consist of fees that provide customers access to one or more of the Company’s hosted applications for critical event management, with routine customer support. Revenue is generally recognized over time on a ratable basis over the contract term beginning on the date that the Company’s service is made available to the customer. All services are recognized using an output measure of progress looking at time elapsed as the contract generally provides the customer equal benefit throughout the contract period. The Company’s subscription contracts are generally two years or longer in length, billed annually in advance, and non-cancelable.

Professional Services Revenues

Professional services revenues primarily consist of fees for deployment and optimization services, as well as training. The majority of the Company’s consulting contracts revenue is recognized over time as the services are performed. For contracts billed on a fixed price basis, revenue is recognized over time based on the proportion performed.

Software License Revenues

On occasion the Company may sell software and related post contract support for on premises usage as well as professional services, hardware and hosting which is outside of the Company’s core business and is not a significant revenue stream for the Company. The Company’s on premises license transactions are generally perpetual in nature and are recognized at a point in time when made available to the customer for use. Significant judgment is required to determine the standalone selling prices for each distinct performance obligation in order to allocate the transaction price for purposes of revenue recognition. Making this judgment of estimating a standalone selling price involves consideration of overall pricing objectives, market conditions and other factors, including the value of our other similar contracts, the applications sold, customer demographics, geographic locations, and the number and types of users within the Company’s contracts. The significant judgment was primarily due to using such considerations to estimate the price that each distinct performance obligation would be sold for on a standalone basis because such performance obligations are typically sold together on a bundled basis. Changes in these estimates of standalone selling prices can have a material effect on the amount of revenue recognized from each distinct performance obligation.

Contracts with Multiple Performance Obligations

Most of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis for those performance obligations with stable observable prices and then the residual method applied for any performance obligation that has pricing which is highly variable. The Company determines the standalone selling prices based on the Company’s overall pricing objectives, taking into consideration market conditions and other factors, including the value of the Company’s contracts, pricing when certain services are sold on a standalone basis, the applications sold, customer demographics, geographic locations, and the volume of services and users.

Returns

The Company does not offer rights of return for its products and services in the normal course of business. 

Customer Acceptance

The Company’s contracts with customers generally do not include customer acceptance clauses.

Trade and Other Receivables

Trade and other receivables are primarily comprised of trade receivables that are recorded at the invoice amount, net of an allowance for credit risk, which is not material. Other receivables represent unbilled receivables related to subscription and professional services contracts, net of an allowance for credit losses, which is not material.

Deferred Costs

Sales commissions earned by the Company’s sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Subscription-related commissions costs are deferred and then amortized on a straight-line basis over a period of benefit that the Company has determined to be four years. Sales commissions attributable to professional services are expensed within twelve months of selling the service to the customer. The Company has determined the period of benefit by taking into consideration its customer contracts, its technology and other factors. Sales commissions attributed to renewals are not material and are not commensurate with initial and growth sales. Amortization of deferred commissions is included in sales and marketing expenses in the accompanying condensed consolidated statements of operations.

Deferred Revenue

Deferred revenue consists of amounts that have been invoiced and for which the Company has the right to bill, but that have not been recognized as revenue because the related goods or services have not been transferred. Deferred revenue that will be realized during the succeeding 12-month period is recorded as current, and the remaining deferred revenue is recorded as non-current.

In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined its contracts generally do not include a significant financing component. The primary purpose of the Company’s invoicing terms is to provide customers with simplified and predictable ways of purchasing the Company’s products and services, not to receive financing from its customers or to provide customers with financing. Examples include invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period.

Recently Adopted Accounting Pronouncements

ASU 2020-01

In January 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-01, Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815. ASU 2020-01 addresses the accounting for the transition into and out of the equity method and measuring certain purchased options and forward contracts to acquire investments. Observable transactions that require a company to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with FASB Accounting Standards Codification (“ASC”) 321, Investments – Equity Securities, should be considered immediately before applying or upon discontinuing the equity method. Certain non-derivative forward contracts or purchased call options to acquire equity securities generally will be measured using the fair value principles of ASC 321 before settlement or exercise and consideration shall not be given to how entities will account for the resulting investments on eventual settlement or exercise. ASU 2020-01 is effective for the Company beginning in the first quarter of 2021 and early adoption is permitted. ASU 2020-01 should be applied prospectively. The adoption of this standard did not have an impact on the Company’s condensed consolidated financial statements.

Recently Issued Accounting Guidance Not Yet Adopted

ASU 2021-04

In May 2021, the FASB issued ASU 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): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. ASU 2021-04 requires accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after the modification or exchange based on the economic substance of the modification or exchange. The recognition of the modification depends on the nature of the transaction in which the equity-classified written call option is modified. If there is more than one element in a transaction (for example, if the modification involves both a debt modification and an equity issuance), then the guidance requires allocating the effect of the option modification to each element. ASU 2021-04 is effective for the Company beginning in the first quarter of 2022. ASU 2021-04 should be applied prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Company is currently assessing the impact this standard will have on the Company’s condensed consolidated financial statements.

ASU 2020-06

In August 2020, the FASB issued ASU 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number of accounting models for convertible instruments by eliminating two of the three models that require separate accounting for embedded conversion features, amends the requirements for a contract that is potentially settled in an entity’s own shares to be classified in equity, and amends certain guidance on the computation of earnings per share for convertible instruments and contracts on an entity’s own equity. ASU 2020-06 is effective for the Company beginning in the first quarter of 2022 and early adoption is permitted beginning in the first quarter of 2021. ASU 2020-06 may be applied using a modified or full retrospective transition method. The Company is currently assessing the impact this standard will have on the Company’s condensed consolidated financial statements.

Other accounting standard updates effective for interim and annual periods beginning after December 31, 2020 are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

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Accounts Receivable and Contract Assets, Net

6 Months Ended

Jun. 30, 2021

Accounts Receivable Net [Abstract]

Accounts Receivable and Contract Assets, Net

(3) Accounts Receivable and Contract Assets, Net

Accounts receivable, net is as follows (in thousands):

	As of			As of
	June 30, 2021			December 31, 2020
Accounts receivable amortized cost	$	88,426		$	98,164
Allowance for credit losses		(5,243	)		(3,788	)
Net accounts receivable	$	83,183		$	94,376

The following table summarizes the changes in the allowance for credit losses for accounts receivable (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Balance, beginning of period	$	(4,772	)	$	(1,753	)	$	(3,788	)	$	(1,125	)
Provision for expected credit losses		(405	)		(585	)		(1,417	)		(1,328	)
Write-offs, net		(66	)		81			(38	)		196
Balance, end of period	$	(5,243	)	$	(2,257	)	$	(5,243	)	$	(2,257	)

Contract assets, net is as follows (in thousands):

	As of			As of
	June 30, 2021			December 31, 2020
Contract asset amortized cost	$	4,235		$	2,560
Allowance for credit losses		(841	)		(398	)
Net contract asset	$	3,394		$	2,162

The following table summarizes the changes in the allowance for credit losses for contract assets (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Balance, beginning of period	$	(842	)	$	(25	)	$	(398	)	$	—
Provision for expected credit losses		(29	)		(3	)		(473	)		(28	)
Write-offs		30			—			30			—
Balance, end of period	$	(841	)	$	(28	)	$	(841	)	$	(28	)

Credit loss expense was $0.1 million and $0.4 million for the three months ended June 30, 2021 and 2020, respectively. Credit loss expense was $1.5 million and $1.1 million for the six months ended June 30, 2021 and 2020, respectively.   

The following table summarizes the changes in the sales reserve (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Balance, beginning of period	$	(149	)	$	(375	)	$	(175	)	$	(175	)
Additions		(259	)		—			(259	)		(200	)
Write-offs		8			—			34			—
Balance, end of period	$	(400	)	$	(375	)	$	(400	)	$	(375	)

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Property and Equipment, Net

6 Months Ended

Jun. 30, 2021

Property Plant And Equipment [Abstract]

Property and Equipment, Net

(4) Property and Equipment, Net

Property and equipment consisted of the following (in thousands):

	Useful life		As of			As of
	in years		June 30, 2021			December 31, 2020
Furniture and equipment		5	$	2,165		$	2,041
Leasehold improvements (1)		9		6,241			4,944
System hardware		5		813			807
Office computers		3		7,323			6,547
Computer and system software		3		2,068			827
				18,610			15,166
Less accumulated depreciation and amortization				(9,043	)		(7,392	)
Property and equipment, net			$	9,567		$	7,774

⁽¹⁾ Lesser of the lease term or the estimated useful lives of the improvements, which may be up to 9 years.

Depreciation and amortization expense for property and equipment was $0.9 million and $0.7 million for the three months ended June 30, 2021 and 2020, respectively. Depreciation and amortization expense for property and equipment was $1.7 million and $1.3 million for the six months ended June 30, 2021 and 2020, respectively. 

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Capitalized Software Development Costs, Net

6 Months Ended

Jun. 30, 2021

Research And Development [Abstract]

Capitalized Software Development Costs, Net

(5) Capitalized Software Development Costs, Net

Capitalized software development costs consisted of the following (in thousands):

	Gross carrying amount		Amortization period	Accumulated amortization			Net carrying amount
As of June 30, 2021	$	66,057	3 years	$	(47,689	)	$	18,368
As of December 31, 2020		59,761	3 years		(43,432	)		16,329

The Company capitalized software development costs of $6.1 million and $4.7 million for the six months ended June 30, 2021 and 2020, respectively.   

Amortization expense for capitalized software development costs was $2.2 million and $1.9 million for the three months ended June 30, 2021 and 2020, respectively. Amortization expense for capitalized software development costs was $4.3 million and $3.8 million for the six months ended June 30, 2021 and 2020, respectively. Amortization of capitalized software development costs is classified within cost of revenue in the condensed consolidated statements of operations.

The expected amortization of capitalized software development costs, as of June 30, 2021, for each of the following years is as follows (in thousands):

2021 (for the remaining six months)	$	4,779
2022		7,630
2023		4,985
2024		974
	$	18,368

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Fair Value Measurements

6 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

(6) Fair Value Measurements

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value because of the short maturity of these items.

Certain assets, including long-lived assets, goodwill and intangible assets are also subject to measurement at fair value on a non-recurring basis if they are deemed to be impaired as a result of an impairment review. For the six months ended June 30, 2021 and year ended December 31, 2020, no impairments were identified.

The following table summarizes the Company's financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy. Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands):

	As of June 30, 2021
	Quoted		Significant
	Prices in		Other		Significant
	Active		Observable		Unobservable
	Markets		Inputs		Inputs		Total Fair
	(Level 1)		(Level 2)		(Level 3)		Value
Assets:
Cash equivalents:
Money market funds	$	489,632	$	—	$	—	$	489,632
Total financial assets	$	489,632	$	—	$	—	$	489,632
Liabilities:
Contingent consideration	$	—	$	—	$	18,775	$	18,775
Derivative instruments - acquisition-related deferred    common stock consideration		—		922		—		922
Total financial liabilities	$	—	$	922	$	18,775	$	19,697
	As of December 31, 2020
	Quoted		Significant
	Prices in		Other		Significant
	Active		Observable		Unobservable
	Markets		Inputs		Inputs		Total Fair
	(Level 1)		(Level 2)		(Level 3)		Value
Assets:
Cash equivalents:
Money market funds	$	432,560	$	—	$	—	$	432,560
Total financial assets	$	432,560	$	—	$	—	$	432,560
Liabilities:
Contingent consideration	$	—	$	—	$	10,619	$	10,619
Derivative instruments - acquisition-related deferred    common stock consideration		—		1,011		—		1,011
Total financial liabilities	$	—	$	1,011	$	10,619	$	11,630

The Company classifies and discloses fair value measurements in one of the following three categories of fair value hierarchy:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities.

Level 2 - Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly.

Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The Company’s assets that are measured by management at fair value on a recurring basis are generally classified within Level 1 or Level 2 of the fair value hierarchy. The Company did not have any transfers into and out of Level 1 or Level 2 during the six months ended June 30, 2021.  

The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents. The fair value of the Company’s investments in certain money market funds is their face value and such instruments are classified as Level 1 and are included in cash and cash equivalents on the consolidated balance sheets.

On May 27, 2020, the Company entered into a Stock Purchase Agreement with Techwan SA (“Techwan”) pursuant to which the Company purchased all of the issued and outstanding shares of stock of Techwan (see Note 8). In accordance with the Stock Purchase Agreement, 6,779 shares of the Company’s common stock were reserved and are expected to be issued to the sellers in November 2021 subject to the provisions in the Stock Purchase Agreement. Management analyzed the liability for derivative accounting

consideration under ASC 815, Derivatives and Hedging, and determined that the liability qualifies for derivative accounting. The derivative liability is not designated as a hedging instrument. In accordance with ASC 815, the Company recorded the acquisition-related deferred common stock consideration derivative liability, which is carried at fair value, in other long-term liabilities on the condensed consolidated balance sheet. The derivative liability will be marked-to-market each measurement period. The change in fair value during the three and six months ended June 30, 2021 of $0.1 million and $(0.1) million, respectively, was recorded as a component of other expense, net on the condensed consolidated statement of operations. The fair value is derived from the Company’s stock price. The acquisition-related deferred common stock consideration derivative liability will remain in effect until such time as the associated shares are issued and the resulting derivative liability will be transitioned from a liability to equity as of such date.

The following tables summarize the changes in Level 3 financial instruments (in thousands):

Fair value at December 31, 2019	$	—
Contingent consideration from Connexient acquisition		340
Contingent consideration from one2many acquisition		2,190
Fair value at March 31, 2020		2,530
Contingent consideration from Techwan acquisition		2,030
Adjustment for Connexient acquisition		(340	)
Foreign currency translation		72
Fair value at June 30, 2020	$	4,292

Fair value at December 31, 2020	$	10,619
Contingent consideration from RedSky acquisition		9,135
Adjustment for one2many acquisition		(690	)
Adjustment for SnapComms acquisition		732
Foreign currency translation		(465	)
Fair value at March 31, 2021		19,331
Adjustment for one2many acquisition		38
Adjustment for SnapComms acquisition		(23	)
Payment for SnapComms acquisition		(720	)
Foreign currency translation		149
Fair value at June 30, 2021	$	18,775

The valuation of the contingent consideration was derived using estimates of the probability of achievement within specified time periods based on projections of future revenue metrics per the terms of the applicable agreements. These include estimates of the Company’s assessment of the probability of meeting such results, with the probability-weighted earn-out using a Monte Carlo Simulation Model then discounted to estimate fair value. Fair value is estimated using the probability weighted cash flow estimate closer to the measurement date. The various operating performance measures included in these contingent consideration agreements primarily relate to product revenue. As these are unobservable inputs, the contingent consideration liabilities are included in Level 3 inputs.

During the three and six months ended June 30, 2021, as a result of assessing the probabilities of SnapComms Limited (“SnapComms”) meeting revenue metrics during the period of April 1, 2020 through March 31, 2021, the Company recognized a decrease in the fair value of SnapComms’ contingent consideration obligation in the amount of less than $0.1 million and an increase of $0.7 million, respectively. During the three months ended June 30, 2021, the Company issued 6,188 shares of the Company’s common stock to settle SnapComms’ contingent consideration liability.

During the three and six months ended June 30, 2021, as a result of assessing the probabilities of One2Many Group B.V. (“one2many”) meeting revenue metrics during the period of March 1, 2020 through February 28, 2021, the Company recognized an increase in the fair value of one2many’s contingent consideration obligation in the amount of less than $0.1 million and a decrease of $0.7 million, respectively. Subsequent to June 30, 2021, the Company paid €4.1 million in cash and issued 41,668 shares of the Company’s common stock to settle one2many’s contingent consideration liability.

The Company estimates the fair value of the convertible senior notes based on their last actively traded prices (Level 1) or market-observable inputs (Level 2).  As of June 30, 2021, the fair value of the 0% convertible senior notes due March 15, 2026 (the “2026 Notes”) was determined to be $383.4 million and the principal amount of the notes was $375.0 million. As of June 30, 2021 and December 31, 2020, the fair value of the 0.125% convertible senior notes due December 15, 2024 (the “2024 Notes”) was determined to be $616.5 million and $663.6 million, respectively, and the principal amount of the notes was $450.0 million for each period. As of June 30, 2021 and December 31, 2020, the fair value of the 1.50% convertible senior notes due November 1, 2022 (the “2022 Notes”) was determined to be $1.2 million and $265.5 million, respectively, and the principal amount of the notes was $0.3 million and $79.8 million, respectively.

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Goodwill and Intangible Assets, Net

6 Months Ended

Jun. 30, 2021

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets, Net

(7) Goodwill and Intangible Assets, Net

The following table displays the changes in the gross carrying amount of goodwill (in thousands):

Balance at December 31, 2020	$	187,411
Increase due to acquisition		219,345
Foreign currency translation		(1,533	)
Balance at June 30, 2021	$	405,223

There were no impairments recorded against goodwill during the six months ended June 30, 2021 and for the year ended December 31, 2020.

Intangible assets consisted of the following (in thousands):

				As of June 30, 2021
	Gross carrying amount		Weighted average life (years)	Accumulated amortization			Net carrying amount
Amortizable intangible assets:
Developed technology	$	42,581	3.40	$	(9,754	)	$	32,827
Tradenames		25,722	4.04		(9,404	)		16,318
Customer relationships		198,999	8.20		(31,421	)		167,578
Total intangible assets	$	267,302		$	(50,579	)	$	216,723

					As of December 31, 2020
	Gross carrying amount		Weighted average life (years)		Accumulated amortization			Net carrying amount
Amortizable intangible assets:
Developed technology	$	31,851		3.54	$	(5,322	)	$	26,529
Tradenames		15,360		3.52		(6,638	)		8,722
Customer relationships		100,590		7.41		(22,079	)		78,511
Total intangible assets	$	147,801			$	(34,039	)	$	113,762

Amortization expense for intangible assets was $10.0 million and $4.8 million for the three months ended June 30, 2021 and 2020, respectively. Amortization expense for intangible assets was $17.9 million and $8.9 million for the six months ended June 30, 2021 and 2020, respectively. The Company recorded amortization expense attributed to developed technology within cost of revenue of $5.6 million and $1.7 million for the six months ended June 30, 2021 and 2020, respectively. During the six months ended June 30, 2021, the Company retired $1.1 million of fully amortized intangible assets.

The expected amortization of the intangible assets, as of June 30, 2021, for each of the next five years and thereafter is as follows (in thousands):

2021 (for the remaining six months)	$	22,166
2022		41,275
2023		36,270
2024		31,509
2025		23,664
Thereafter		61,839
	$	216,723

XML

Business Combinations

6 Months Ended

Jun. 30, 2021

Business Combinations [Abstract]

Business Combinations

(8) Business Combinations

The Company continually evaluates potential acquisitions that either strategically fit within the Company’s existing portfolio or expand the Company’s portfolio into new product lines or adjacent markets. The Company has completed a number of acquisitions that have been accounted for as business combinations under ASC 805, Business Combinations, and have resulted in the recognition of goodwill in the Company’s financial statements. This goodwill includes the know-how of the assembled workforce, the ability of the workforce to further improve technology and product offerings, customer relationships and the expected cash flows resulting from

these efforts. Goodwill may also include expected synergies resulting from the complementary strategic fit these businesses bring to existing operations.

Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives and the expected future cash flows and related discount rates, can materially impact the Company’s results of operations. Significant inputs used for the model included the amount of cash flows, the expected period of the cash flows and the discount rates. Significant estimation was required by management in determining the fair value of the customer relationship intangible assets, deferred revenue and contingent consideration liabilities. The significant estimation is primarily due to the judgmental nature of the inputs to the valuation models used to measure the fair value of these intangible assets, deferred revenue and contingent consideration liabilities, as well as the sensitivity of the respective fair values to the underlying significant assumptions. The Company used the income approach to measure the fair value of these intangible assets, a discounted cash flow approach for deferred revenue and a Monte Carlo simulation model to measure the fair value of the contingent consideration liabilities. The significant assumptions used to estimate the fair value of the intangible assets, deferred revenue and contingent consideration liabilities included forecasted revenues from existing customers, existing customer attrition rates, estimated costs required to fulfill the deferred revenue obligation and forecasted revenues for the contingent consideration earnout period. When estimating the significant assumptions to be used in the valuation the Company includes a consideration of current industry information, market and economic trends, historical results of the acquired business, nature of the performance obligations associated with the deferred revenue and other relevant factors. These significant assumptions are forward-looking and could be affected by future economic and market conditions. The valuation of the contingent consideration was derived using estimates of the probability of achievement within specified time periods based on projections of future revenue metrics per the terms of the applicable agreements. These include estimates of the Company’s assessment of the probability of meeting such results, with the probability-weighted earn-out using a Monte Carlo Simulation Model then discounted to estimate fair value. Fair value is estimated using the probability weighted cash flow estimate closer to the measurement date. The various operating performance measures included in these contingent consideration agreements primarily relate to product revenue.   

The business acquisitions discussed below are included in the Company’s results of operations from their respective dates of acquisition.

2021 Acquisitions

During the six months ended June 30, 2021, the Company acquired Red Sky Technologies Inc and xMatters Holdings, Inc. These acquisitions were not material and neither the investment in the assets nor the results of operations of these acquisitions were significant to the Company’s consolidated financial position or results of operations, and thus pro forma information is not required to be presented.

xMatters Holdings, Inc.

On April 6, 2021, the Company and xMatters Holdings, Inc. (“xMatters”) signed a definitive agreement pursuant to which the Company agreed to purchase all of the issued and outstanding shares of stock of xMatters. This acquisition closed on May 7, 2021. The Company purchased all of the issued and outstanding shares of stock of xMatters for a base consideration of $242.3 million. The Company paid $177.8 million in cash and issued 555,332 newly issued shares of the Company’s common stock at closing. On the date of this acquisition, the average price of the Company’s common stock on the Nasdaq Global Market was $116.12 per share. The Company acquired xMatters for its service reliability platforms to enhance the Company’s CEM suite of solutions as well as market penetration and customer reach.

As the Company finalizes its estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments may be recorded during the measurement period (a period not to exceed 12 months). The initial accounting is incomplete as of June 30, 2021 for the acquired assets and liabilities as the Company is currently in the process of completing the assessment of valuation inputs and assumptions as well as completing the assessment of the tax attributes of the business combination. The finalization of the acquisition accounting valuation assessment may result in a change in the valuation of the deferred tax assets and liabilities, deferred revenue and intangible assets, along with the opening working capital accounts, which could have a material impact on the Company’s results of operations and financial position.  

The following table summarizes the preliminary estimated fair value of the assets acquired and the liabilities assumed, which were recorded as of the acquisition date, as well as the aggregate consideration for the acquisition of xMatters made by the Company (in thousands):

	xMatters
Assets acquired
Accounts receivable	$	6,716
Property and equipment		1,458
Trade names		8,200
Acquired technology		8,390
Customer relationships		79,090
Goodwill		170,037
Other assets		5,433
Total assets acquired		279,324
Liabilities assumed
Accounts payable		1,164
Accrued expenses		5,501
Deferred revenue		34,421
Deferred tax liabilities		3,436
Other liabilities		5,055
Net assets acquired	$	229,747
Consideration paid
Cash paid, net of cash acquired	$	165,265
Fair value of common stock issued		64,482
Total	$	229,747

The weighted average useful life of all identified acquired intangible assets is 8.13 years. The average useful lives for acquired technologies, customer relationships and trade names are 3.0 years, 9.0 years and 5.0 years, respectively. Identifiable intangible assets with definite lives are amortized over the period of estimated benefit using the straight-line method. The straight-line method of amortization represents the Company’s best estimate of the period of expected cash flows of the identifiable intangible assets.

The goodwill balance is primarily attributed to the anticipated synergies from the acquisition and expanded market opportunities with respect to the integration of xMatters’ products with the Company's other solutions. The Company believes that the factors listed above in relation to the purchase of xMatters support the amount of goodwill recorded as a result of the purchase price paid for the acquisition, in relation to other acquired tangible and intangible assets. The resulting goodwill from the xMatters acquisition is not deductible for income tax purposes.

For the six months ended June 30, 2021, the Company incurred transaction costs of $1.5 million in connection with the xMatters acquisition, of which $0.6 million was expensed during the six months ended June 30, 2021 and included in general and administrative expenses.

Red Sky Technologies Inc.

On January 15, 2021, the Company entered into a Stock Purchase Agreement with Red Sky Technologies Inc. (“RedSky”) pursuant to which the Company purchased all of the issued and outstanding shares of stock of RedSky for a base consideration of $55.4 million, net of cash acquired. The Company paid $32.4 million in cash, net of cash acquired, and issued 162,820 newly issued shares of the Company’s common stock at closing. On the date of this acquisition, the average price of the Company’s common stock on the Nasdaq Global Market was $141.46 per share. In addition to the base purchase price, there is also a potential contingent payment of up to $30 million that can be earned by the sellers based on certain revenue targets through June 30, 2021. At the date of the acquisition, the Company preliminarily assessed the probability of RedSky meeting the revenue metrics through June 30, 2021 and recorded a $9.1 million preliminary fair value of contingent consideration as part of the purchase price allocation. The Company acquired RedSky for its E911 incident response solutions platform to enhance the Company’s CEM suite of solutions as well as market penetration and customer reach.

As the Company finalizes its estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments may be recorded during the measurement period (a period not to exceed 12 months). The initial accounting is incomplete as of June 30, 2021 for the acquired assets and liabilities as the Company is currently in the process of completing the assessment of valuation inputs and assumptions as well as completing the assessment of the tax attributes of the business combination. The finalization of the acquisition accounting valuation assessment may result in a change in the valuation of the deferred tax assets and liabilities, deferred revenue,

contingent consideration and intangible assets, along with the opening working capital accounts, which could have a material impact on the Company’s results of operations and financial position.  

The following table summarizes the preliminary estimated fair value of the assets acquired and the liabilities assumed, which were recorded as of the acquisition date, as well as the aggregate consideration for the acquisition of RedSky made by the Company (in thousands):

	RedSky
Assets acquired
Accounts receivable	$	2,926
Other assets		242
Property and equipment		18
Trade names		2,230
Acquired technology		3,590
Customer relationships		20,200
Goodwill		49,308
Total assets acquired		78,514
Liabilities assumed
Accounts payable		233
Accrued expenses		773
Deferred revenue		5,866
Deferred tax liabilities		7,048
Other liabilities		26
Net assets acquired	$	64,568
Consideration paid
Cash paid, net of cash acquired	$	32,401
Fair value of common stock issued		23,032
Contingent consideration		9,135
Total	$	64,568

The weighted average useful life of all identified acquired intangible assets is 7.74 years. The average useful lives for acquired technologies, customer relationships and trade names are 3.0 years, 9.0 years and 4.0 years, respectively. Identifiable intangible assets with definite lives are amortized over the period of estimated benefit using the straight-line method. The straight-line method of amortization represents the Company’s best estimate of the period of expected cash flows of the identifiable intangible assets.

The goodwill balance is primarily attributed to the anticipated synergies from the acquisition and expanded market opportunities with respect to the integration of RedSky’s products with the Company's other solutions. The Company believes that the factors listed above in relation to the purchase of RedSky support the amount of goodwill recorded as a result of the purchase price paid for the acquisition, in relation to other acquired tangible and intangible assets. The resulting goodwill from the RedSky acquisition is not deductible for income tax purposes.

For the six months ended June 30, 2021, the Company incurred transaction costs of less than $0.1 million in connection with the RedSky acquisition, which were expensed as incurred and included in general and administrative expenses.

2020 Acquisitions

During the year ended December 31, 2020, the Company acquired Connexient, Inc., CNL Software Limited, One2Many Group B.V., Techwan SA and SnapComms Limited. These acquisitions were not material individually or on a consolidated basis. Additionally, neither the investment in the assets nor the results of operations of these acquisitions were significant to the Company’s consolidated financial position or results of operations, and thus pro forma information is not required to be presented.

Connexient, Inc.

On February 7, 2020, the Company entered into a Stock Purchase Agreement with Connexient, Inc. (“Connexient”) pursuant to which the Company purchased all of the issued and outstanding shares of stock of Connexient for a base consideration of $20.2 million. The Company paid $11.5 million in cash at closing and paid the remaining purchase price with 96,611 newly issued shares of the Company’s common stock. On the date of this acquisition, the average price of the Company’s common stock on the Nasdaq Global Market was $93.32 per share. In addition to the base purchase price, there was also a potential contingent payment of up to $6.0 million that was eligible to be earned by the sellers based on fiscal year 2020 revenue metrics. At December 31, 2020, it was determined that Connexient would not meet the fiscal year 2020 revenue metric threshold. The Company acquired Connexient for its strategic technology assets to enhance the Company’s CEM suite of solutions to broaden support for Internet of Things (“IoT”) applications as well as market penetration and customer reach.

CNL Software Limited

On February 25, 2020, the Company entered into a Stock Purchase Agreement with CNL Software Limited (“CNL Software”) for a base consideration of approximately $35.7 million. The Company paid approximately $19.8 million in cash at closing and paid the remaining purchase price with 153,217 newly issued shares of the Company’s common stock. On the date of this acquisition, the average price of the Company’s common stock on the Nasdaq Global Market was $104.10 per share. The Company acquired CNL Software for its strategic technology assets to enhance the Company’s CEM suite of solutions to broaden support for IoT applications as well as market penetration and customer reach.

One2Many Group B.V.

On March 19, 2020, the Company entered into a Stock Purchase Agreement with One2Many Group B.V. pursuant to which the Company purchased all of the issued and outstanding shares of stock of one2many for a base consideration of $13.1 million. The Company paid $5.5 million in cash at closing, acquired purchase liabilities of $2.0 million and paid the remaining purchase price with 52,113 newly issued shares of the Company’s common stock. On the date of this acquisition, the average price of the Company’s common stock on the Nasdaq Global Market was $104.95 per share. In addition to the base purchase price, there was also a potential contingent payment of up to approximately $15.0 million that was eligible to be earned by the sellers based on revenue metrics during the period of March 1, 2020 through February 28, 2021. The potential contingent payment included an amount payable to the Company if a certain revenue threshold is not met during the period of March 1, 2020 through February 28, 2021. At the date of the acquisition, the Company preliminarily assessed the probabilities of one2many meeting the revenue metrics during the period of March 1, 2020 through February 28, 2021 and recorded a $2.2 million initial fair value of contingent consideration as part of the purchase price allocation. During the three and six months ended June 30, 2021, the Company recognized an increase in the fair value of one2many’s contingent consideration obligation in the amount of less than $0.1 million and a decrease of $0.7 million, respectively, in general and administrative expenses in the condensed consolidated statement of operations. Subsequent to June 30, 2021, the Company paid €4.1 million in cash and issued 41,668 shares of the Company’s common stock to settle one2many’s contingent consideration liability. The Company acquired one2many for its cell broadcast technology to enhance the Company’s public warning applications as well as market penetration and customer reach.

Techwan SA

On May 27, 2020, the Company entered into a Stock Purchase Agreement with Techwan SA pursuant to which the Company purchased all of the issued and outstanding shares of stock of Techwan for a base consideration of $15.5 million. The Company paid $9.4 million in cash at closing, acquired purchase liabilities of $0.1 million and paid the remaining purchase price with 38,425 newly issued shares of the Company’s common stock. In addition, in accordance with the Stock Purchase Agreement, 6,779 shares of the Company’s common stock were reserved and are expected to be issued to the sellers in November 2021 subject to the provisions in the Stock Purchase Agreement. On the date of this acquisition, the average price of the Company’s common stock on the Nasdaq Global Market was $132.05 per share. In addition to the base purchase price, there was also a potential contingent payment of up to approximately $7.0 million that was eligible to be earned by the sellers based on revenue metrics during the period of April 1, 2020 through March 31, 2021. At the date of the acquisition, the Company preliminarily assessed the probabilities of Techwan meeting the revenue metrics during the period of April 1, 2020 through March 31, 2021 and recorded a $2.0 million initial fair value of contingent consideration as part of the purchase price allocation. During the three months ended March 31, 2021, the Company determined that Techwan did not meet the revenue metrics during the period of April 1, 2020 through March 31, 2021. The Company acquired Techwan for its strategic technology assets to enhance the Company’s CEM suite of solutions as well as market penetration and customer reach.

The following table summarizes the estimated fair value of the assets acquired and the liabilities assumed, which were recorded as of the acquisition date, as well as the aggregate consideration for the acquisition of Techwan made by the Company (in thousands):

	Techwan
Assets acquired
Accounts receivable	$	921
Other current assets		235
Acquired technology		1,160
Trade names		580
Customer relationships		5,100
Goodwill		12,678
Other assets		254
Total assets acquired		20,928
Liabilities assumed
Accrued expenses		673
Deferred revenue		1,190
Deferred tax liabilities		838
Other current liabilities		927
Net assets acquired	$	17,300
Consideration paid
Cash consideration, net of cash acquired	$	9,301
Fair value of common stock issued		5,074
Acquisition-related deferred common stock consideration		895
Contingent consideration		2,030
Total	$	17,300

The weighted average useful life of all identified acquired intangible assets is 7.47 years. The average useful lives for acquired technologies, customer relationships and trade names are 3.0 years, 9.0 years and 3.0 years, respectively. Identifiable intangible assets with definite lives are amortized over the period of estimated benefit using the straight-line method. The straight-line method of amortization represents the Company’s best estimate of the period of expected cash flows of the identifiable intangible assets.

The goodwill balance is primarily attributed to the anticipated synergies from the acquisition and expanded market opportunities with respect to the integration of Techwan’s products with the Company's other solutions. The Company believes that the factors listed above in relation to the purchase of Techwan support the amount of goodwill recorded as a result of the purchase price paid for the acquisition, in relation to other acquired tangible and intangible assets. The resulting goodwill from the Techwan acquisition is not deductible for income tax purposes.

During the year ended December 31, 2020, the Company incurred transaction costs of $0.2 million in connection with the Techwan acquisition, which were expensed as incurred and included in general and administrative expenses.

SnapComms Limited

On August 4, 2020, the Company entered into a Stock Purchase Agreement with SnapComms Limited pursuant to which the Company purchased all of the issued and outstanding shares of stock of SnapComms for a base consideration of $34.4 million. The Company paid $13.6 million in cash and issued 121,858 newly issued shares of the Company’s common stock at closing. On the date of this acquisition, the average price of the Company’s common stock on the Nasdaq Global Market was $145.13 per share. In August 2021, the Company paid deferred consideration of approximately New Zealand $2.5 million in cash and issued 12,390 shares of the Company’s common stock. In addition to the base purchase price, there was also a potential contingent payment of up to approximately $5.0 million that was eligible to be earned by the sellers based on revenue metrics during the period of April 1, 2020 through March 31, 2021. At the date of the acquisition, the Company preliminarily assessed the probability of SnapComms meeting the revenue metrics during the period of April 1, 2020 through March 31, 2021 and recorded a $2.0 million initial fair value of contingent consideration as part of the purchase price allocation. During the three and six months ended June 30, 2021, the Company recognized a decrease in the fair value of SnapComms’ contingent consideration obligation in the amount of less than $0.1 million and an increase of $0.7 million, respectively, recognized in general and administrative expenses in the consolidated statements of operations. During the three months ended June 30, 2021, the Company issued 6,188 shares of the Company’s common stock to settle SnapComms’ contingent consideration liability. The Company acquired SnapComms for its internal communications software to enhance the Company’s CEM suite of solutions as well as market penetration and customer reach.

As the Company finalizes its estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments may be recorded during the measurement period (a period not to exceed 12 months). The initial accounting is incomplete as of June 30, 2021 for the acquired assets and liabilities as the Company is currently in the process of completing the assessment of the tax attributes of the business combination. The finalization of the acquisition accounting valuation assessment may result in a change in the valuation of the deferred tax assets and liabilities which could have a material impact on the Company’s results of operations and financial position.  

The following table summarizes the preliminary estimated fair value of the assets acquired and the liabilities assumed, which were recorded as of the acquisition date, as well as the aggregate consideration for the acquisition of SnapComms made by the Company (in thousands):

	SnapComms
Assets acquired
Accounts receivable	$	1,808
Other current assets		283
Property and equipment		118
Acquired technology		2,300
Trade names		960
Customer relationships		13,300
Goodwill		22,629
Other assets		943
Total assets acquired		42,341
Liabilities assumed
Accrued expenses		503
Deferred revenue		3,165
Deferred tax liabilities		4,960
Other liabilities		742
Net assets acquired	$	32,971
Consideration paid
Cash consideration, net of cash acquired	$	10,090
Fair value of common stock issued		17,685
Acquisition-related deferred consideration		3,149
Contingent consideration		2,047
Total	$	32,971

The weighted average useful life of all identified acquired intangible assets is 7.82 years. The average useful lives for acquired technologies, customer relationships and trade names are 3.0 years, 9.0 years and 3.0 years, respectively. Identifiable intangible assets with definite lives are amortized over the period of estimated benefit using the straight-line method. The straight-line method of amortization represents the Company’s best estimate of the period of expected cash flows of the identifiable intangible assets.

The goodwill balance is primarily attributed to the anticipated synergies from the acquisition and expanded market opportunities with respect to the integration of SnapComms’ products with the Company's other solutions. The Company believes that the factors listed above in relation to the purchase of SnapComms support the amount of goodwill recorded as a result of the purchase price paid for the acquisition, in relation to other acquired tangible and intangible assets. The resulting goodwill from the SnapComms acquisition is not deductible for income tax purposes.

During the year ended December 31, 2020, the Company incurred transaction costs of $0.1 million in connection with the SnapComms acquisition, which were expensed as incurred and included in general and administrative expenses.

XML

Convertible Senior Notes

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Convertible Senior Notes

(9) Convertible Senior Notes

0% Convertible Senior Notes Due 2026

In March 2021, the Company issued $375.0 million aggregate principal amount of

0% convertible senior notes due 2026, including $50.0 million aggregate principal amount of 2026 Notes issued upon the initial purchasers’ exercise in full of their option to purchase additional 2026 Notes. The 2026 Notes will mature on March 15, 2026, unless earlier redeemed or repurchased by the Company or converted by the holders pursuant to their terms. The Company will pay special interest, if any, at the Company’s election as the sole remedy relating to the failure to comply with certain reporting obligations and under certain circumstances.

The 2026 Notes are governed by an Indenture between the Company, as issuer, and U.S. Bank National Association, as trustee (the “2026 Notes Indenture”). The 2026 Notes are unsecured and rank: senior in right of payment to the Company’s indebtedness that is expressly subordinated in right of payment to the 2026 Notes; equal in right of payment to the Company’s existing and future indebtedness that is not so subordinated, including its 1.50% convertible senior notes due 2022 (see 1.50% Convertible Senior Notes Due 2022 below) and 0.125% convertible senior notes due 2024 (see 0.125% Convertible Senior Notes Due 2024 below); 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 structurally junior to all existing and future indebtedness and other liabilities incurred by the Company’s subsidiaries.

Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election.

The 2026 Notes have an initial conversion rate of 5.5341 shares of common stock per $1,000 principal amount of 2026 Notes. This represents an initial effective conversion price of approximately $180.70 per share of common stock and approximately 2.1 million shares issuable upon conversion. Throughout the term of the 2026 Notes, the conversion rate may be adjusted upon the occurrence of certain events. Holders of the 2026 Notes will not receive any cash payment representing accrued and unpaid special interest, if any, upon conversion of a 2026 Note, except in limited circumstances. Accrued but unpaid special interest, if any, will be deemed to be paid by cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock paid or delivered, as the case may be, to the holder upon conversion of a 2026 Note.

Holders may convert all or a portion of their 2026 Notes prior to the close of business on the business day immediately preceding December 15, 2025, in multiples of $1,000 principal amount, only under the following circumstances:

• during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during 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 five business day period after any ten consecutive trading day period (the “2026 Notes Measurement Period”), in which the “trading price” (as the term is defined in the 2026 Notes Indenture) per $1,000 principal amount of notes for each trading day of such 2026 Notes 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;

• if the Company calls such notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the notes called (or deemed called) for redemption; or

• upon the occurrence of specified corporate events.

On or after December 15, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2026 Notes at the conversion rate at any time regardless of whether the conditions set forth above have been met.

As of June 30, 2021, the 2026 Notes are not yet convertible. The 2026 Notes are classified as long-term on the condensed consolidated balance sheet as of June 30, 2021 as it is the Company’s intent to settle all of the debt at maturity or to settle in shares if exercised by the debt holder prior to maturity.

The 2026 Notes are not redeemable by the Company prior to March 20, 2024. The Company may redeem for cash all or any portion of the 2026 Notes, at its option, on or after March 20, 2024 if the last reported sale price of the Company's common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date.

Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its 2026 Notes to be approximately 7.25%, assuming no conversion option. Assumptions used in the estimate represent what market participants would use in pricing the equity component, including market interest rates, credit standing, and yield curves, all of which are defined as Level 2 observable inputs. The estimated implied interest rate was applied to the 2026 Notes, which resulted in a fair value of the liability component of $269.6 million upon issuance, calculated as the present value of implied future payments based on the $375.0 million aggregate principal amount. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, is amortized to interest expense over the term of the 2026 Notes. The $105.4 million difference between the aggregate principal amount of $375.0 million and the estimated fair value of the liability component was recorded in additional paid-in capital as the 2026 Notes were not considered redeemable.

Significant judgment is required in determining the liability component of the related convertible senior notes as well as the balance sheet classification of the elements of the convertible senior notes. The Company accounted for the convertible senior notes and the partial extinguishment of the 2022 Notes, discussed below, as separate liability and equity components, determining the fair value of the respective liability components based on an estimate of the fair value of a similar liability without a conversion option and assigning the residual value to the equity component.

The Company estimated the fair value of the liability component of the convertible senior notes using a discounted cash flow model with a risk adjusted yield for similar debt instruments, absent any embedded conversion feature. In estimating the risk adjusted yield, the Company utilized both an income and market approach. For the income approach, the Company used a convertible bond pricing model, which included several assumptions including volatility and the risk-free rate. For the market approach, the Company performed an evaluation of issuances of convertible debt securities issued by other comparable companies. Additionally, a detailed analysis of the terms of the convertible senior notes transactions was required to determine existence of any derivatives that may require separate mark-to-market accounting under applicable accounting guidance.

In accounting for the transaction costs related to the issuance of the 2026 Notes, the Company allocated the total amount incurred to the liability and equity components based on their estimated relative fair values. Transaction costs attributable to the liability component, totaling $7.6 million, are being amortized to expense over the term of the 2026 Notes, and transaction costs attributable to the equity component, totaling $3.0 million, were netted with the equity component in shareholders’ equity.

The 2026 Notes consist of the following (in thousands):

	As of
	June 30, 2021
Liability component:
Principal	$	375,000
Less: debt discount, net of amortization		(107,122	)
Net carrying amount	$	267,878
Equity component (1)		99,000

⁽¹⁾ Recorded in the consolidated balance sheet within additional paid-in capital, net of $3.0 million transaction costs in equity and net of $3.4 million for taxes.

The following table sets forth total interest expense recognized related to the 2026 Notes (in thousands):

	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
Amortization of debt discount and transaction costs	$	4,798	$	5,854

The fair value of the 2026 Notes, which was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, quoted price of the 2026 Notes in an over-the-counter market (Level 2), and carrying value of debt instruments (carrying value excludes the equity component of the Company’s 2026 Notes classified in equity) was as follows (in thousands):

	As of June 30, 2021
	Fair Value		Carrying Value
2026 Notes	$	383,400	$	267,878

In connection with the issuance of the 2026 Notes, the Company entered into capped call transactions with certain counterparties affiliated with the initial purchasers and other financial institutions. The capped call transactions are expected to reduce potential dilution of earnings per share upon conversion of the 2026 Notes. Under the capped call transactions, the Company purchased capped call options that in the aggregate relate to the total number of shares of the Company’s common stock underlying the 2026 Notes, with an initial strike price of approximately $180.70 per share, which corresponds to the initial conversion price of the 2026 Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the 2026 Notes, and with a cap price of approximately $258.14. The cost of the purchased capped calls of $35.1 million was recorded to shareholders’ equity and will not be re-measured.

Based on the closing price of the Company’s common stock of $136.08 on June 30, 2021, the if-converted value of the 2026 Notes was less than their respective principal amounts.

0.125% Convertible Senior Notes Due 2024

In December 2019, the Company issued $450.0 million aggregate principal amount of 0.125% convertible senior notes due 2024, including $75.0 million aggregate principal amount of 2024 Notes issued upon the initial purchasers’ exercise in full of their option to purchase additional 2024 Notes. The 2024 Notes will mature on December 15, 2024, unless earlier redeemed or repurchased by the Company or converted by the holders pursuant to their terms. Interest is payable semiannually in arrears on June 15 and December 15 of each year, commencing on June 15, 2020.

The 2024 Notes are governed by an Indenture between the Company, as issuer, and U.S. Bank National Association, as trustee (the “2024 Notes Indenture”). The 2024 Notes are unsecured and rank: senior in right of payment to the Company’s indebtedness that is expressly subordinated in right of payment to the 2024 Notes; equal in right of payment to the Company’s existing and future indebtedness that is not so subordinated, including its 2026 Notes and 2022 Notes; 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 structurally junior to all existing and future indebtedness and other liabilities incurred by the Company’s subsidiaries.

Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election.

The 2024 Notes have an initial conversion rate of 8.8999 shares of common stock per $1,000 principal amount of 2024 Notes. This represents an initial effective conversion price of approximately $112.36 per share of common stock and approximately 4.0 million shares issuable upon conversion. Throughout the term of the 2024 Notes, the conversion rate may be adjusted upon the occurrence of certain events. Holders of the 2024 Notes will not receive any cash payment representing accrued and unpaid interest, if any, upon conversion of a 2024 Note, except in limited circumstances. Accrued but unpaid interest will be deemed to be paid by cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock paid or delivered, as the case may be, to the holder upon conversion of a 2024 Note.

Holders may convert all or a portion of their 2024 Notes prior to the close of business on the business day immediately preceding June 15, 2024, in multiples of $1,000 principal amount, only under the following circumstances:

• during any calendar quarter commencing after the calendar quarter ending on March 31, 2020 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during 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 five business day period after any ten consecutive trading day period (the “2024 Notes Measurement Period”), in which the “trading price” (as the term is defined in the 2024 Notes Indenture) per $1,000 principal amount of notes for each trading day of such 2024 Notes 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;

• if the Company calls such notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or

• upon the occurrence of specified corporate events.

On or after June 15, 2024 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2024 Notes at the conversion rate at any time regardless of whether the conditions set forth above have been met.

As of June 30, 2021, the 2024 Notes are not yet convertible. The 2024 Notes are classified as long-term on the condensed consolidated balance sheet as of June 30, 2021 and December 31, 2020 as it is the Company’s intent to settle all of the debt at maturity or to settle in shares if exercised by the debt holder prior to maturity.

The 2024 Notes are not redeemable by the Company prior to December 20, 2022. The Company may redeem for cash all or any portion of the 2024 Notes, at its option, on or after December 20, 2022 if the last reported sale price of the Company's common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2024 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its 2024 Notes to be approximately 5.16%, assuming no conversion option. Assumptions used in the estimate represent what market participants would use in pricing the equity component, including market interest rates, credit standing, and yield curves, all of which are defined as Level 2 observable inputs. The estimated implied interest rate was applied to the 2024 Notes, which resulted in a fair value of the liability component of $360.4 million upon issuance, calculated as the present value of implied future payments based on the $450.0 million aggregate principal amount. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, is amortized to interest expense over the term of the 2024 Notes. The $89.6 million difference between the aggregate principal amount of $450.0 million and the estimated fair value of the liability component was recorded in additional paid-in capital as the 2024 Notes were not considered redeemable.

Significant judgment is required in determining the liability component of the related convertible senior notes as well as the balance sheet classification of the elements of the convertible senior notes. The Company accounted for the convertible senior notes and the partial extinguishment of the 2022 Notes, discussed below, as separate liability and equity components, determining the fair value of the respective liability components based on an estimate of the fair value of a similar liability without a conversion option and assigning the residual value to the equity component.

The Company estimated the fair value of the liability component of the convertible senior notes using a discounted cash flow model with a risk adjusted yield for similar debt instruments, absent any embedded conversion feature. In estimating the risk adjusted yield, the Company utilized both an income and market approach. For the income approach, the Company used a convertible bond pricing model, which included several assumptions including volatility and the risk-free rate. For the market approach, the Company performed an evaluation of issuances of convertible debt securities issued by other comparable companies. Additionally, a detailed analysis of the terms of the convertible senior notes transactions was required to determine existence of any derivatives that may require separate mark-to-market accounting under applicable accounting guidance.

In accounting for the transaction costs related to the issuance of the 2024 Notes, the Company allocated the total amount incurred to the liability and equity components based on their estimated relative fair values. Transaction costs attributable to the liability component, totaling $10.2 million, are being amortized to expense over the term of the 2024 Notes, and transaction costs attributable to the equity component, totaling $2.6 million, were netted with the equity component in shareholders’ equity.

The 2024 Notes consist of the following (in thousands):

	As of			As of
	June 30, 2021			December 31, 2020
Liability component:
Principal	$	450,000		$	450,000
Less: debt discount, net of amortization		(71,627	)		(80,968	)
Net carrying amount	$	378,373		$	369,032
Equity component (1)		86,133			86,133

⁽¹⁾

Recorded in the consolidated balance sheet within additional paid-in capital, net of $2.6 million transaction costs in equity and net of $0.9 million for taxes.

The following table sets forth total interest expense recognized related to the 2024 Notes (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
0.125% coupon	$	140	$	140	$	281	$	281
Amortization of debt discount and transaction costs		4,702		4,466		9,341		8,872
	$	4,842	$	4,606	$	9,622	$	9,153

The fair value of the 2024 Notes, which was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, quoted price of the 2024 Notes in an over-the-counter market (Level 2), and carrying value of debt instruments (carrying value excludes the equity component of the Company’s 2024 Notes classified in equity) were as follows (in thousands):

	As of June 30, 2021				As of December 31, 2020
	Fair Value		Carrying Value		Fair Value		Carrying Value
2024 Notes	$	616,500	$	378,373	$	663,615	$	369,032

In connection with the issuance of the 2024 Notes, the Company entered into capped call transactions with certain counterparties affiliated with the initial purchasers and other financial institutions. The capped call transactions are expected to reduce potential dilution of earnings per share upon conversion of the 2024 Notes. Under the capped call transactions, the Company purchased capped call options that in the aggregate relate to the total number of shares of the Company’s common stock underlying the 2024 Notes, with an initial strike price of approximately $112.36 per share, which corresponds to the initial conversion price of the 2024 Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the 2024 Notes, and with a cap price of approximately $166.46. The cost of the purchased capped calls of $44.9 million was recorded to shareholders’ equity and will not be re-measured.

Based on the closing price of the Company’s common stock of $136.08 on June 30, 2021, the if-converted value of the 2024 Notes was more than their respective principal amounts.

1.50% Convertible Senior Notes Due 2022

In November 2017, the Company issued $115.0 million aggregate principal amount of 1.50% convertible senior notes due 2022 including $15.0 million aggregate principal amount of 2022 Notes issued upon the initial purchasers’ exercise in full of their option to purchase additional 2022 Notes. The 2022 Notes will mature on November 1, 2022, unless earlier redeemed or repurchased by the Company or converted by the holders pursuant to their terms. Interest is payable semiannually in arrears on May 1 and November 1 of each year, commencing on May 1, 2018.

The 2022 Notes are governed by an Indenture between the Company, as issuer, and U.S. Bank, National Association, as trustee (the “2022 Notes Indenture”). The 2022 Notes are unsecured and rank: senior in right of payment to the Company’s future indebtedness that is expressly subordinated in right of payment to the 2022 Notes; equal in right of payment to the Company’s existing and future indebtedness that is not so subordinated, including the Company’s 2026 Notes and 2024 Notes; effectively subordinated 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 structurally subordinated to all existing and future indebtedness and other liabilities incurred by the Company’s subsidiaries.

Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election. The Company’s current intention is to settle the conversion in shares of common stock if a conversion were to occur.

The 2022 Notes have an initial conversion rate of 29.6626 shares of common stock per $1,000 principal amount of 2022 Notes. This represents an initial effective conversion price of approximately $33.71 per share of common stock and initially approximately 3.4 million shares issuable upon conversion. Throughout the term of the 2022 Notes, the conversion rate may be adjusted upon the occurrence of certain events. Holders of the 2022 Notes will not receive any cash payment representing accrued and unpaid interest, if any, upon conversion of a 2022 Note, except in limited circumstances. Accrued but unpaid interest will be deemed to be paid by cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock paid or delivered, as the case may be, to the holder upon conversion of a 2022 Note.

Holders may convert all or a portion of their 2022 Notes prior to the close of business on the business day immediately preceding May 1, 2022, in multiples of $1,000 principal amount, only under the following circumstances:

• during any calendar quarter commencing after the calendar quarter ending on March 31, 2018 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

• during the five business day period after any five consecutive trading day period (the “2022 Notes Measurement Period”), in which the “trading price” (as the term is defined in the 2022  Notes Indenture) per $1,000 principal amount of notes for each trading day of such 2022 Notes Measurement Period was less than 98% of the product of the last reported sale price of the Company’s common stock on such trading day and the conversion rate on each such trading day;

• if the Company calls any or all of the notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the maturity date; or

• upon the occurrence of specified corporate events.

On or after May 1, 2022, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2022 Notes at the conversion rate at any time regardless of whether the conditions set forth above have been met.

The 2022 Notes were not redeemable by the Company prior to November 6, 2020. The Company may redeem for cash all or any portion of the 2022 Notes, at its option, on or after November 6, 2020 if the last reported sale price of the Company's common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2022 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The Company has not provided notice to exercise its option to redeem the 2022 Notes.

Based on the market price of the Company’s common stock during the 30 trading days preceding June 30, 2018, the 2022 Notes were convertible at the option of the debt holder as of September 30, 2018 and continue to be convertible at the option of the debt holder as of June 30, 2021.

In connection with the issuance of the 2024 Notes in December 2019, the Company paid $57.8 million to repurchase $23.0 million aggregate principal amount of the 2022 Notes. The Company determined the fair value of the liability portion being extinguished immediately prior to extinguishment. Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its 2022 Notes to be approximately 4.64%. The fair value of such liability portion was then deducted from the amount of consideration transferred and allocated to the liability component. The difference between the fair value of the liability and its carrying value, inclusive of any unamortized debt issue costs, was recognized as an extinguishment loss in the amount of $1.4 million in loss on extinguishment of convertible notes on the consolidated statement of operations and comprehensive loss during the year ended December 31, 2019. The remaining consideration was allocated to the reacquisition of the equity component and recognized as a reduction of additional paid-in capital on the consolidated balance sheet in the amount of $36.7 million. The Company also partially terminated capped call options entered into in connection with the 2022 Notes during fiscal year 2019 and received $5.8 million recorded to additional paid-in capital on the consolidated balance sheet.

During the year ended December 31, 2020, the Company issued 362,029 shares upon the conversion of approximately $12.2 million in aggregate principal amount of the 2022 Notes and recognized $11.4 million in additional paid-in capital on the condensed consolidated balance sheet related to shares issued. The Company determined the fair value of the liability portion being extinguished immediately prior to extinguishment. Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its 2022 Notes ranged from approximately 4.64% to 5.13%. The fair value of such liability portion was then deducted from the amount of consideration transferred and allocated to the liability component. The difference between the fair value of the liability and its carrying value, inclusive of any unamortized debt issue costs, was recognized as an extinguishment loss in the amount of $0.4 million in loss on extinguishment of convertible notes on the consolidated statements of operations and comprehensive loss during the year ended December 31, 2020.

During the six months ended June 30, 2021, the Company issued 618,462 shares upon the conversion of approximately $20.9 million in aggregate principal amount of the 2022 Notes and recognized $19.5 million in additional paid-in capital on the condensed

consolidated balance sheet related to shares issued. The Company determined the fair value of the liability portion being extinguished immediately prior to extinguishment. Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its 2022 Notes ranged from approximately 4.87% to 5.13%. The fair value of such liability portion was then deducted from the amount of consideration transferred and allocated to the liability component. The difference between the fair value of the liability and its carrying value, inclusive of any unamortized debt issue costs, was recognized as an extinguishment loss in the amount of $0.1 million and $0.5 million, respectively, in loss on extinguishment of convertible notes and capped call modification on the condensed consolidated statement of operations during the three and six months ended June 30, 2021.

In connection with the issuance of the 2026 Notes in March 2021, the Company paid approximately $58.6 million in cash and issued 1,288,994 shares of common stock to repurchase approximately $58.6 million aggregate principal amount of the 2022 Notes. The Company determined the fair value of the liability portion being extinguished immediately prior to extinguishment. Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its 2022 Notes to be approximately 4.87%. The fair value of such liability portion was then deducted from the amount of consideration transferred and allocated to the liability component. The difference between the fair value of the liability and its carrying value, inclusive of any unamortized debt issue costs, was recognized as an extinguishment loss in the amount of $2.2 million in loss on extinguishment of convertible notes and capped call modification on the condensed consolidated statement of operations during the three months ended March 31, 2021. The remaining consideration was allocated to the reacquisition of the equity component and recognized as a reduction of additional paid-in capital on the consolidated balance sheet in the amount of $2.7 million. The Company also partially terminated capped call options entered into in connection with the 2022 Notes in March 2021 and received $10.6 million recorded to additional paid-in capital on the condensed consolidated balance sheet and modified a capped call option agreement entered into in connection with the 2022 Notes and recognized modification expense of $0.2 million in loss on extinguishment of convertible notes and capped call modification on the condensed consolidated statement of operations and additional paid-in capital on the condensed consolidated balance sheet.

The 2022 Notes are classified as long-term on the consolidated balance sheet as of June 30, 2021 and December 31, 2020. The Company may repurchase the 2022 Notes prior to maturity and intends to settle in shares if exercised by the debt holder prior to maturity.

Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its 2022 Notes at the time of issuance to be approximately 6.93%, assuming no conversion option. Assumptions used in the estimate represent what market participants would use in pricing the equity component, including market interest rates, credit standing, and yield curves, all of which are defined as Level 2 observable inputs. The estimated implied interest rate was applied to the 2022 Notes, which resulted in a fair value of the liability component of $92.1 million upon issuance, calculated as the present value of implied future payments based on the $115.0 million aggregate principal amount. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, is amortized to interest expense over the term of the 2022 Notes. The $22.9 million difference between the aggregate principal amount of $115.0 million and the estimated fair value of the liability component was recorded in additional paid-in capital as the 2022 Notes were not considered redeemable.

In accounting for the transaction costs related to the issuance of the 2022 Notes, the Company allocated the total amount incurred to the liability and equity components based on their estimated relative fair values. Transaction costs attributable to the liability component on the remaining outstanding notes as of the issuance date, of less than $0.1 million, are being amortized to expense over the term of the 2022 Notes, and transaction costs attributable to the equity component as of the issuance date, totaling $0.8 million, were netted with the equity component in shareholders’ equity.

The 2022 Notes consist of the following (in thousands):

	As of			As of
	June 30, 2021			December 31, 2020
Liability component:
Principal	$	303		$	79,795
Less: debt discount, net of amortization		(21	)		(7,313	)
Net carrying amount	$	282		$	72,482
Equity component (1)		(39,301	)		(21,318	)

⁽¹⁾ Recorded in the consolidated balance sheet within additional paid-in capital, net of $0.8 million transaction costs in equity. Additional paid-in capital also includes $2.7 million and $36.7 million, respectively, market premium representing the excess of the total consideration delivered over the fair value of the liability recognized related to the $58.6 million and $23.0 million, respectively, principal balance extinguishment of the 2022 Notes in March 2021 and December 2019.

The following table sets forth total interest expense recognized related to the 2022 Notes (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
1.50% coupon	$	2	$	345	$	108	$	690
Amortization of debt discount and transaction costs		8		1,047		626		2,077
	$	10	$	1,392	$	734	$	2,767

The fair value of the 2022 Notes, which was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, quoted price of the 2022 Notes in an over-the-counter market (Level 2), and carrying value of debt instruments (carrying value excludes the equity component of the Company’s convertible notes classified in equity) were as follows (in thousands):

	As of June 30, 2021				As of December 31, 2020
	Fair Value		Carrying Value		Fair Value		Carrying Value
2022 Notes	$	1,224	$	282	$	265,488	$	72,482

In connection with the issuance of the 2022 Notes, the Company entered into capped call transactions with certain counterparties affiliated with the initial purchasers and others. The capped call transactions are expected to reduce potential dilution of earnings per share upon conversion of the 2022 Notes. Under the capped call transactions, the Company purchased capped call options that in the aggregate relate to the total number of shares of the Company’s common stock underlying the 2022 Notes, with an initial strike price of approximately $33.71 per share, which corresponds to the initial conversion price of the 2022 Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the 2022 Notes, and have a cap price of approximately $47.20. The cost of the purchased capped calls of $12.9 million was recorded to shareholders’ equity and will not be re-measured. During the three months ended March 31, 2021, the Company amended one of the capped call agreements to reduce the cap price to $46.68 and recognized modification expense of $0.2 million in loss on extinguishment of convertible notes and capped call modification on the condensed consolidated statement of operations.

Based on the closing price of the Company’s common stock of $136.08 on June 30, 2021, the if-converted value of the 2022 Notes was more than their respective principal amounts.

The following table summarizes the Company’s debt obligations at June 30, 2021 (in thousands):

	Remainder of 2021		2022-2023		2024-2025		Thereafter		Total
Debt obligations	$	—	$	303	$	450,000	$	375,000	$	825,303

Debt obligations include the principal amount of the 2026 Notes, 2024 Notes and 2022 Notes but exclude interest payments to be made under the 2026 Notes, 2024 Notes and 2022 Notes. Although the 2026 Notes, 2024 Notes and 2022 Notes mature in 2026, 2024 and 2022, respectively, they can be converted into cash and shares of our common stock prior to maturity if certain conditions are met. Any conversion prior to maturity can result in repayments of the principal amounts sooner than the scheduled repayments as indicated in the table. The 2026 Notes, 2024 Notes and 2022 Notes balance excludes debt discount capitalized on the balance sheet.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2021

Equity [Abstract]

Stockholders' Equity

(10) Stockholders’ Equity

Preferred Stock

As of June 30, 2021, the Company had authorized 10,000,000 shares of preferred stock, par value $0.001, of which no shares were outstanding.

Common Stock

As of June 30, 2021, the Company had authorized 100,000,000 shares of common stock, par value $0.001. Holders of common stock are entitled to one vote per share. At June 30, 2021 and December 31, 2020, there were 38,288,685 and 35,449,447 shares of common stock issued and outstanding, respectively.

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Stock Plans and Stock-Based Compensation

6 Months Ended

Jun. 30, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Plans and Stock-Based Compensation

(11) Stock Plans and Stock-Based Compensation

The Company’s 2016 Equity Incentive Plan (“2016 Plan”) became effective on September 15, 2016. The 2016 Plan provides for the grant of incentive stock options, non-qualified stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights and performance share awards to employees, directors and consultants of the Company. The number of shares of common stock reserved for issuance under the 2016 Plan will automatically increase on January 1 of each year by 3% of the number of shares of the Company’s capital stock outstanding on the immediately preceding December 31, or such lesser number of shares as determined by the Company’s board of directors.

2016 Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan (the “2016 ESPP”) became effective on September 15, 2016. The number of shares reserved for issuance under the 2016 ESPP will automatically increase on January 1 of each year by the lesser of 200,000 shares of the Company’s common stock, 1% of the number of shares of the Company’s common stock outstanding on the immediately preceding December 31, or such lesser number of shares as determined by the Company’s board of directors.

The 2016 ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount of up to 15% through payroll deductions of their eligible compensation, subject to any plan limitations. The 2016 ESPP provides for separate six-month offering periods beginning each March and September of each fiscal year.

On each purchase date, eligible employees will purchase the Company’s stock at a price per share equal to 85% of the lesser of (i) the fair market value of the Company’s common stock on the offering date or (ii) the fair market value of the Company’s common stock on the purchase date.

For the six months ended June 30, 2021 and 2020, 23,499 and 30,943 shares of common stock were purchased under the 2016 ESPP, respectively. The Company recorded stock-based compensation expense of $0.4 million and $0.3 million for the three months ended June 30, 2021 and 2020, respectively. The Company recorded stock-based compensation expense of $0.9 million and $0.6 million for the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, unrecognized compensation cost related to the 2016 ESPP was $0.3 million which will be amortized over a weighted-average period of 0.21 years.  

The fair value of shares issuable under the 2016 ESPP is determined using the Black-Scholes option pricing model with the following weighted average assumptions: 

	Six Months Ended June 30,
	2021		2020
Employee Stock Purchase Plan:
Expected term (in years) (1)		0.50		0.50
Expected volatility (2)	60%		55%
Risk-free interest rate (3)	0.06%		0.29%
Dividend rate (4)	0%		0%

⁽¹⁾ The expected term represents the contractual term of the 2016 ESPP;

⁽²⁾ The expected volatility of the Company’s common stock on the date of grant is based on the weighted average of the Company’s historical volatility as a public company, the implied volatility of publicly-traded options on the Company’s common stock and the volatilities of publicly traded peer companies that are reasonably comparable to the Company’s own operations;

⁽³⁾ The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the expected term of the grant; and

⁽⁴⁾ The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on the Company’s common stock.

Stock Options

Stock option awards are granted with an exercise price equal to the fair market value of the Company’s common stock at the date of grant based on the closing market price of its common stock as reported on The Nasdaq Global Market. The option awards generally vest over four years and are exercisable any time after vesting. The stock options expire ten years after the date of grant.

There were no stock options granted during the six months ended June 30, 2021 and 2020. The Company recorded stock-based compensation expense of $0.4 million and $1.0 million for the three months ended June 30, 2021 and 2020, respectively, attributed to stock options. The Company recorded stock-based compensation expense of $0.8 million and $1.9 million for the six months ended June 30, 2021 and 2020, respectively, attributed to stock options.    

The total intrinsic value of options exercised for the six months ended June 30, 2021 and 2020 was $8.6 million and $15.4 million, respectively. This intrinsic value represents the difference between the fair market value of the Company’s common stock on the date of exercise and the exercise price of each option. Based on the fair market value of the Company’s common stock at June 30, 2021 and 2020, the total intrinsic value of all outstanding options was $22.2 million and $59.4 million, respectively.

Total unrecognized compensation cost related to nonvested stock options was approximately $0.5 million as of June 30, 2021 and is expected to be recognized over a weighted average period of 0.6 years. The amount of cash received from the exercise of stock options during the six months ended June 30, 2021 and 2020 was $2.2 million and $4.6 million, respectively.

The following table summarizes the Company’s stock option activity:

	Stock options outstanding			Weighted average exercise price
Outstanding at December 31, 2020		279,021		$	25.55
Exercised		(75,853	)		28.55
Forfeited		(4,369	)		33.32
Outstanding at June 30, 2021		198,799			24.23

Stock options outstanding, vested and expected to vest and exercisable are as follows:

	As of June 30, 2021
	Number of shares		Remaining contractual life (years)		Weighted- average exercise price
Outstanding		198,799		5.66	$	24.23
Vested and expected to vest		198,391		5.66		24.20
Exercisable		153,906		5.39		20.98

Vested and nonvested stock option activity was as follows:

	Vested				Nonvested
	Options outstanding		Weighted average exercise price		Options outstanding		Weighted average exercise price
Outstanding at June 30, 2021		153,906	$	20.98		44,893	$	35.38

Restricted Stock Units

During the six months ended June 30, 2021, the Company granted 284,849 restricted stock units (“RSUs”) to members of its senior management and certain other employees pursuant to the 2016 Plan. There were 81,625 RSUs that vested during the six months ended June 30, 2021. The Company accounts for RSUs issued to employees at fair value, based on the market price of the Company’s common stock on the date of grant. The weighted-average grant date fair values of RSUs granted during the six months ended June 30, 2021 and 2020 were $121.67 and $109.31, respectively. The fair values of RSUs that vested during the six months ended June 30, 2021 and 2020, were $6.8 million and $4.0 million, respectively. During the three months ended June 30, 2021 and 2020, the Company recorded $7.4 million and $4.8 million, respectively, of stock-based compensation related to the RSUs. During the six months ended June 30, 2021 and 2020, the Company recorded $13.3 million and $9.3 million, respectively, of stock-based compensation related to the RSUs.

As of June 30, 2021, there was $65.2 million of unrecognized compensation expense related to unvested RSUs which is expected to be recognized over a weighted-average period of approximately 2.46 years. For RSUs subject to graded vesting, the Company recognizes compensation cost on a straight-line basis over the service period for the entire award.

Performance-Based Restricted Stock Units

During the six months ended June 30, 2021, the Company granted 288,292 performance-based restricted stock units (“PSUs”) to members of its management pursuant to the 2016 Plan. There were 48,043 PSUs that vested during the six months ended June 30, 2021. The PSUs generally vest based on the Company achieving certain revenue growth thresholds which ranged from 20% to 40% compounded annual growth for grants through 2020 and 15% to 35% compounded annual growth for grants starting in 2021 over a measurement period of two years for the first 50% of PSUs and three years for the remaining PSUs. The vesting of the PSUs is subject to the employee’s continued employment with the Company through the date of achievement. During the six months ended June 30,

2021, the share price of the Company’s common stock on the date of issuance of the PSUs ranged from $118.04 to $146.69 per share. The fair value is based on the value of the Company’s common stock at the date of issuance and the probability of achieving the performance metric. The Company has assessed the probability of achievement of the award at 100% based on past performance of achievement of the performance metric. Compensation cost is adjusted in future periods for subsequent changes in the expected outcome of the performance related conditions. The weighted-average grant date fair values of PSUs granted during the six months ended June 30, 2021 and 2020 were $121.80 and $108.57, respectively. During the three months ended June 30, 2021 and 2020, the Company recognized $7.3 million and $5.2 million, respectively, of stock compensation expense in connection with the PSU awards. During the six months ended June 30, 2021 and 2020, the Company recognized $13.2 million and $9.8 million, respectively, of stock compensation expense in connection with the PSU awards.

As of June 30, 2021, there was $50.6 million of unrecognized compensation expense related to unvested PSUs which is expected to be recognized over a weighted-average period of approximately 1.95 years. Compensation cost is recognized under the accelerated method and is adjusted in future periods for subsequent changes in the expected outcome of the performance related conditions.

The following table summarizes the Company’s RSU and PSU activity:

	Number of Shares
Outstanding at December 31, 2020		1,420,541
Granted		573,141
Vested		(129,668	)
Forfeited		(73,644	)
Outstanding at June 30, 2021		1,790,370

Stock-Based Compensation Expense

The Company recorded the total stock-based compensation expense as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Cost of revenue	$	819	$	703	$	1,818	$	1,311
Sales and marketing		5,579		3,917		9,321		7,525
Research and development		2,562		2,298		4,590		4,172
General and administrative		6,545		4,360		12,461		8,580
Total	$	15,505	$	11,278	$	28,190	$	21,588

Stock-based compensation expense is recognized over the award’s expected vesting schedule, which is reduced for forfeitures.

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Basic and Diluted Net Loss Per Share

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Basic and Diluted Net Loss Per Share

(12) Basic and Diluted Net Loss per Share

Basic net loss per common share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potential dilutive shares of common stock. Basic and diluted net loss per share of common stock were the same for all periods presented as the impact of all potentially dilutive securities outstanding was anti-dilutive. The Company uses the if converted method for convertible senior notes for calculating any potential dilutive effect on diluted loss per share.

The following common equivalent shares were excluded from the diluted net loss per share calculation because their inclusion would have been anti-dilutive:

	As of June 30,
	2021		2020
Convertible senior notes		6,089,230		6,733,914
Stock-based compensation grants		1,989,169		2,018,888
Total		8,078,399		8,752,802

In connection with the issuance of the 2026 Notes in March 2021, the Company paid $35.1 million to enter into capped call option agreements to reduce the potential dilution to holders of the Company’s common stock upon conversion of the 2026 Notes. In connection with the issuance of the 2024 Notes in December 2019, the Company paid $44.9 million to enter into capped call option agreements to reduce the potential dilution to holders of the Company’s common stock upon conversion of the 2024 Notes. In connection with the issuance of the 2022 Notes in November 2017, the Company paid $12.9 million to enter into capped call option

agreements to reduce the potential dilution to holders of the Company’s common stock upon conversion of the 2022 Notes. In March 2021 and December 2019, the Company partially terminated capped call options related to the 2022 Notes and received $10.6 million and $5.8 million and, respectively. In March 2021, the Company also modified a capped call agreement entered into in connection with the 2022 Notes and recognized modification expense of $0.2 million in loss on extinguishment of convertible notes and capped call modification on the condensed consolidated statement of operations. The capped call option agreements are excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is antidilutive.

Reserve for Unissued Shares of Common Stock

The Company is required to reserve and keep available out of its authorized but unissued shares of common stock such number of shares sufficient for the exercise of all shares granted and available for grant under the Company’s 2008 Equity Incentive Plan, 2016 Plan and 2016 ESPP. The amount of such shares of the Company’s common stock reserved for these purposes at June 30, 2021 was 5.9 million shares. Additionally, the Company is required to reserve and keep available out of its authorized but unissued shares of common stock shares that become issuable pursuant to the terms of the 2026 Notes, 2024 Notes and 2022 Notes.

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Income Taxes

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

(13) Income Taxes

The Company is subject to income tax in the United States as well as other tax jurisdictions in which it conducts business. Earnings from non-U.S. activities are subject to local country income tax. The Company does not provide for U.S. deferred income taxes on the undistributed earnings of its foreign subsidiaries as such earnings are reinvested indefinitely.

The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual tax rate changes, the Company makes a cumulative adjustment in that quarter. The Company’s quarterly tax provision, and its quarterly estimate of its annual effective tax rate, are subject to significant volatility due to several factors, including the Company’s ability to accurately predict its pre-tax income and loss in multiple jurisdictions.

For the three months ended June 30, 2021 and 2020, the Company recorded a benefit from income taxes of $3.8 million and $1.5 million, respectively, resulting in an effective benefit tax rate of 10.07% and 7.26%, respectively. For the six months ended June 30, 2021 and 2020, the Company recorded a benefit from income taxes of $9.6 million and $2.2 million, respectively, resulting in an effective benefit tax rate of 14.72% and 4.71%, respectively. During six months ended June 30, 2021, there were deferred tax liabilities recognized in connection with the preliminary purchase price accounting for the Company’s completed acquisitions. Certain of such deferred tax liabilities will be a source of future taxable income to realize a portion of Company’s deferred tax assets, which resulted in a discrete tax benefit of approximately $7.6 million related to U.S. acquired entities being recognized during the six months ended June 30, 2021.

As of June 30, 2021, the Company had gross tax-effected unrecognized tax provision of $1.6 million which, if recognized, would favorably impact the effective tax rate. The Company’s existing tax positions will continue to generate an increase in unrecognized tax benefits in subsequent periods. The Company’s policy is to record interest and penalties related to unrecognized tax benefits as income tax expense. During the three and six months ended June 30, 2021 and 2020, the amounts recorded related to the accrual of interest and penalties were immaterial in each period.   

In response to the COVID-19 pandemic, the United States passed the Coronavirus Aid, Relief, and Economic Security ("CARES") Act in March 2020 and the United States enacted the American Rescue Plan Act of 2021 in March 2021. These Acts include various income and payroll tax measures. Neither the income tax nor payroll tax measures had a material impact on our financial statements.

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Segment Information

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Segment Information

(14) Segment information

The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”), who is the Company’s chief executive officer, in deciding how to allocate resources and assess the Company’s financial and operational performance. While the Company has applications that address multiple use cases, the Company’s applications generally operate on and leverage a single technology platform and are deployed and sold in an identical way. In addition, the Company’s CODM evaluates the Company’s financial information and resources and assesses the performance of these resources on a consolidated basis. As a result, the Company has determined that the Company’s business operates in a single operating segment. Since the Company operates as one operating segment, all required financial segment information can be found in the consolidated financial statements.

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Revenue Recognition

6 Months Ended

Jun. 30, 2021

Revenue From Contract With Customer [Abstract]

Revenue Recognition

(15) Revenue Recognition

The following table disaggregates the Company’s revenue by geography which provides information as to the major source of revenue (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
Primary Geographic Markets	2021		2020		2021		2020
United States	$	62,290	$	51,017	$	119,755	$	97,966
International		24,359		14,360		49,104		26,311
Total	$	86,649	$	65,377	$	168,859	$	124,277

The following table presents the Company’s revenues disaggregated by revenue source (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Subscription services	$	79,652	$	59,506	$	150,084	$	113,317
Professional services		6,459		4,653		12,399		9,134
Software licenses and other		538		1,218		6,376		1,826
Total	$	86,649	$	65,377	$	168,859	$	124,277

Contract Assets

The Company does not have material amounts of contract assets since revenue is recognized as control of goods is transferred or as services are performed. There are a small number of professional services that may occur over a period of time, but that period of time is generally very short in duration. Any contract assets that may arise are recorded in other assets in the Company’s condensed consolidated balance sheet net of an allowance for credit losses.  

Contract Liabilities

The Company’s contract liabilities consist of advance payments and deferred revenue. The Company’s contract liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. The Company classifies advance payments and deferred revenue as current or noncurrent based on the timing of when it expects to recognize revenue. Generally, all contract liabilities are expected to be recognized within one year and are included in deferred revenue in the Company’s condensed consolidated balance sheet. The noncurrent portion of deferred revenue is included and separately disclosed in the Company’s condensed consolidated balance sheet.

Deferred Costs

Current deferred costs, which primarily consist of deferred sales commissions, were $13.7 million and $14.5 million as of June 30, 2021 and December 31, 2020, respectively. Noncurrent deferred costs, which primarily consist of deferred sales commissions, were $17.6 million and $15.9 million as of June 30, 2021 and December 31, 2020, respectively. During the three months ended June 30, 2021 and 2020, amortization expense for the deferred costs was $3.5 million and $2.8 million, respectively. During the six months ended June 30, 2021 and 2020, amortization expense for the deferred costs was $7.2 million and $5.7 million, respectively. There was no impairment loss in relation to the costs capitalized for the six months ended June 30, 2021 and the year ended December 31, 2020, respectively.

Deferred Revenue

During the three months ended June 30, 2021 and 2020, $67.0 million and $51.2 million, respectively, of subscription services, license and other revenue was recognized and was included in the deferred revenue balances at the beginning of the respective period. During the six months ended June 30, 2021 and 2020, $106.1 million and $83.0 million, respectively, of subscription services, license and other revenue was recognized and was included in the deferred revenue balances at the beginning of the respective period.

During the three months ended June 30, 2021 and 2020, $3.6 million and $3.9 million, respectively, of professional services revenue was recognized and was included in the deferred revenue balances at the beginning of the respective period. During the six months ended June 30, 2021 and 2020, $7.5 million and $5.4 million, respectively, of professional services revenue was recognized and was included in the deferred revenue balances at the beginning of the respective period.

As of June 30, 2021, approximately $412.3 million of revenue is expected to be recognized from remaining performance obligations for subscription and other contracts. The Company expects to recognize revenue on approximately $250.7 million of these remaining performance obligations over the next 12 months, with the balance recognized thereafter.      

As of June 30, 2021, approximately $11.6 million of revenue is expected to be recognized from remaining performance obligations for professional services contracts. The Company expects to recognize revenue on approximately $10.0 million of these remaining performance obligations over the next 12 months, with the balance recognized thereafter.

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Leases

6 Months Ended

Jun. 30, 2021

Leases [Abstract]

Leases

(16) Leases

The Company’s leases relate primarily to office facilities that expire on various dates from 2021 through 2029. The terms of the Company's non-cancelable operating lease arrangements typically contain fixed lease payment which increases over the term of the lease at fixed rates, rent holidays and provide for additional renewal periods. Lease expense is recognized over the term of the lease on a straight-line basis. All of the Company’s leases are classified as operating leases. The Company has determined that periods covered by options to extend the Company’s leases are excluded from the lease term as the Company is not reasonably certain the Company will exercise such options.

The Company records its right-of-use (“ROU”) asset within other assets (long term) and its operating lease liabilities within other current and long-term liabilities.

Additional information related to the Company’s leases is as follows (in thousands, except lease term and discount rate):

	As of			As of
	June 30, 2021			December 31, 2020
Balance sheet information
ROU assets	$	18,700		$	15,045
Lease liabilities, current	$	5,715		$	4,259
Lease liabilities, non-current		16,363			14,403
Total lease liabilities	$	22,078		$	18,662
Supplemental data
Weighted average remaining lease term	4.49 years			4.57 years
Weighted average discount rate		6.23	%		7.00	%

	Six Months Ended June 30,
	2021		2020
Cash paid for amounts included in lease liabilities	$	3,017	$	2,330
ROU assets obtained in exchange for new lease obligations		5,729		4,853

Maturities of lease liabilities as of June 30, 2021 were as follows (in thousands):

Year ending December 31,
2021 (for the remaining six months)	$	3,494
2022		6,715
2023		6,029
2024		3,341
2025		1,647
Thereafter		4,220
Total undiscounted lease payments		25,446
Less: imputed interest		(3,368	)
Total lease liabilities	$	22,078

The following table presents components of lease expense (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Operating lease expense	$	1,466		$	1,276		$	2,769		$	2,425
Short-term lease expense(1)		225			337			391			552
		1,691			1,613			3,160			2,977
Less: Sublease income		(15	)		(92	)		(15	)		(138	)
Total lease expense	$	1,676		$	1,521		$	3,145		$	2,839

⁽¹⁾ Short-term lease expense includes all leases with lease terms ranging from less than one month to one year.

As of June 30, 2021, the Company does not have any leases that have not yet commenced that create significant rights and obligations.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2021

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

(17) Commitments and Contingencies

Litigation

From time to time the Company may become involved in legal proceedings or be subject to claims arising in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on its business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact because of defense and settlement costs, diversion of management resources and other factors.

Employee Contracts

The Company has entered into employment contracts with certain of the Company’s executive officers which provide for at-will employment. However, under the provisions of the contracts, the Company would incur severance obligations of up to twelve months of the executive’s annual base salary for certain events, such as involuntary terminations.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The condensed consolidated balance sheet as of December 31, 2020, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by U.S. GAAP on an annual reporting basis.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss, statements of stockholders’ equity and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year 2021 or any future period.

Principles of Consolidation

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Assets and liabilities which are subject to judgment and use of estimates include the determination of the period of benefit for deferred commissions, relative stand-alone selling price for identified performance obligations in our revenue transactions, allowances for credit losses, the fair value of assets acquired and liabilities assumed in business combinations, the fair value of contingent consideration, the recoverability of goodwill and long-lived assets, valuation allowances with respect to deferred tax assets, useful lives associated with property and equipment and intangible assets, contingencies, and the valuation and assumptions underlying stock-based compensation. On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. In addition, the Company engages valuation specialists to assist with management’s determination of the valuation of its fair values of assets acquired and liabilities assumed in business combinations, convertible senior notes, and certain market-based performance equity awards. There have been significant changes to the global economic situation as a consequence of the COVID-19 pandemic. The global outbreak continues to cause instability and volatility in multiple markets where the Company conducts business which could cause changes to estimates as a result of the financial circumstances. Such changes to estimates could potentially result in impacts that would be material to the consolidated financial statements, particularly with respect to the timing of revenue recognition resulting from potential implementation delays, evaluating the recoverability of long-lived assets with finite useful lives for impairment and estimates of credit losses for accounts receivables and contract assets. No impairments were recorded as of the balance sheet date; however, due to significant uncertainty surrounding the situation, management's judgment regarding this could change in the future. As of the date of issuance of these financial statements, the Company’s results of operations have not been significantly impacted by the COVID-19 pandemic; however, the Company continues to monitor the situation.

Concentrations of Credit and Business Risk

Concentrations of Credit and Business Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents and accounts receivable.

The Company maintains cash and cash equivalent balances at several banks. Accounts located in the United States are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. From time to time, balances may exceed amounts insured by the FDIC. The Company has not experienced any losses in such amounts.

The Company’s accounts receivable are generally unsecured and are derived from revenue earned from customers primarily located in the United States, Norway, Netherlands, Sweden and the United Kingdom and are generally denominated in U.S. Dollars, Norwegian Krone, Euro, Swedish Kronor or British Pounds. Each reporting period, the Company reevaluates each customer’s ability to satisfy credit obligations and maintains an allowance for credit risk based on the evaluations. No single customer comprised more than 10% of the Company’s total revenue for the three and six months ended June 30, 2021 and 2020. No single customer comprised more than 10% of the Company’s total accounts receivable as of June 30, 2021 and December 31, 2020.   

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid instruments with original maturities of three months or less at the date of purchase to be cash equivalents. Cash equivalents consist of funds deposited into money market funds. Cash and cash equivalents are recorded at cost, which approximates fair value.

Restricted Cash

Restricted Cash

The Company’s restricted cash balance primarily consists of cash held at a financial institution for collateral against performance on the Company’s customer contracts and certain other cash deposits for specific purposes.

Significant Accounting Policies

Significant Accounting Policies

There have been no changes to the Company’s significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 26, 2021, that have had a material impact on the Company’s condensed consolidated financial statements and related notes.

Revenue Recognition

Revenue Recognition

The Company derives its revenues primarily from subscription services and professional services. Revenues are recognized when control of services is transferred to the Company’s customers in an amount that reflects the consideration it expects to be entitled to in exchange for those services.

The Company determines revenue recognition through the following steps:

• Identification of the contract, or contracts, with a customer

• Identification of the performance obligations in the contract

• Determination of the transaction price

• Allocation of the transaction price to the performance obligations in the contract

• Recognition of revenue when, or as, the Company satisfies a performance obligation

Subscription Services Revenues

Subscription services revenues primarily consist of fees that provide customers access to one or more of the Company’s hosted applications for critical event management, with routine customer support. Revenue is generally recognized over time on a ratable basis over the contract term beginning on the date that the Company’s service is made available to the customer. All services are recognized using an output measure of progress looking at time elapsed as the contract generally provides the customer equal benefit throughout the contract period. The Company’s subscription contracts are generally two years or longer in length, billed annually in advance, and non-cancelable.

Professional Services Revenues

Professional services revenues primarily consist of fees for deployment and optimization services, as well as training. The majority of the Company’s consulting contracts revenue is recognized over time as the services are performed. For contracts billed on a fixed price basis, revenue is recognized over time based on the proportion performed.

Software License Revenues

On occasion the Company may sell software and related post contract support for on premises usage as well as professional services, hardware and hosting which is outside of the Company’s core business and is not a significant revenue stream for the Company. The Company’s on premises license transactions are generally perpetual in nature and are recognized at a point in time when made available to the customer for use. Significant judgment is required to determine the standalone selling prices for each distinct performance obligation in order to allocate the transaction price for purposes of revenue recognition. Making this judgment of estimating a standalone selling price involves consideration of overall pricing objectives, market conditions and other factors, including the value of our other similar contracts, the applications sold, customer demographics, geographic locations, and the number and types of users within the Company’s contracts. The significant judgment was primarily due to using such considerations to estimate the price that each distinct performance obligation would be sold for on a standalone basis because such performance obligations are typically sold together on a bundled basis. Changes in these estimates of standalone selling prices can have a material effect on the amount of revenue recognized from each distinct performance obligation.

Contracts with Multiple Performance Obligations

Most of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis for those performance obligations with stable observable prices and then the residual method applied for any performance obligation that has pricing which is highly variable. The Company determines the standalone selling prices based on the Company’s overall pricing objectives, taking into consideration market conditions and other factors, including the value of the Company’s contracts, pricing when certain services are sold on a standalone basis, the applications sold, customer demographics, geographic locations, and the volume of services and users.

Returns

The Company does not offer rights of return for its products and services in the normal course of business. 

Customer Acceptance

The Company’s contracts with customers generally do not include customer acceptance clauses.

Trade and Other Receivables

Trade and Other Receivables

Trade and other receivables are primarily comprised of trade receivables that are recorded at the invoice amount, net of an allowance for credit risk, which is not material. Other receivables represent unbilled receivables related to subscription and professional services contracts, net of an allowance for credit losses, which is not material.

Deferred Costs

Deferred Costs

Sales commissions earned by the Company’s sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Subscription-related commissions costs are deferred and then amortized on a straight-line basis over a period of benefit that the Company has determined to be four years. Sales commissions attributable to professional services are expensed within twelve months of selling the service to the customer. The Company has determined the period of benefit by taking into consideration its customer contracts, its technology and other factors. Sales commissions attributed to renewals are not material and are not commensurate with initial and growth sales. Amortization of deferred commissions is included in sales and marketing expenses in the accompanying condensed consolidated statements of operations.

Deferred Revenue

Deferred Revenue

Deferred revenue consists of amounts that have been invoiced and for which the Company has the right to bill, but that have not been recognized as revenue because the related goods or services have not been transferred. Deferred revenue that will be realized during the succeeding 12-month period is recorded as current, and the remaining deferred revenue is recorded as non-current.

In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined its contracts generally do not include a significant financing component. The primary purpose of the Company’s invoicing terms is to provide customers with simplified and predictable ways of purchasing the Company’s products and services, not to receive financing from its customers or to provide customers with financing. Examples include invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

ASU 2020-01

In January 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-01, Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815. ASU 2020-01 addresses the accounting for the transition into and out of the equity method and measuring certain purchased options and forward contracts to acquire investments. Observable transactions that require a company to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with FASB Accounting Standards Codification (“ASC”) 321, Investments – Equity Securities, should be considered immediately before applying or upon discontinuing the equity method. Certain non-derivative forward contracts or purchased call options to acquire equity securities generally will be measured using the fair value principles of ASC 321 before settlement or exercise and consideration shall not be given to how entities will account for the resulting investments on eventual settlement or exercise. ASU 2020-01 is effective for the Company beginning in the first quarter of 2021 and early adoption is permitted. ASU 2020-01 should be applied prospectively. The adoption of this standard did not have an impact on the Company’s condensed consolidated financial statements.

Recently Issued Accounting Guidance Not Yet Adopted

ASU 2021-04

In May 2021, the FASB issued ASU 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): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. ASU 2021-04 requires accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after the modification or exchange based on the economic substance of the modification or exchange. The recognition of the modification depends on the nature of the transaction in which the equity-classified written call option is modified. If there is more than one element in a transaction (for example, if the modification involves both a debt modification and an equity issuance), then the guidance requires allocating the effect of the option modification to each element. ASU 2021-04 is effective for the Company beginning in the first quarter of 2022. ASU 2021-04 should be applied prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Company is currently assessing the impact this standard will have on the Company’s condensed consolidated financial statements.

ASU 2020-06

In August 2020, the FASB issued ASU 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number of accounting models for convertible instruments by eliminating two of the three models that require separate accounting for embedded conversion features, amends the requirements for a contract that is potentially settled in an entity’s own shares to be classified in equity, and amends certain guidance on the computation of earnings per share for convertible instruments and contracts on an entity’s own equity. ASU 2020-06 is effective for the Company beginning in the first quarter of 2022 and early adoption is permitted beginning in the first quarter of 2021. ASU 2020-06 may be applied using a modified or full retrospective transition method. The Company is currently assessing the impact this standard will have on the Company’s condensed consolidated financial statements.

Other accounting standard updates effective for interim and annual periods beginning after December 31, 2020 are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

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Accounts Receivable and Contract Assets, Net (Tables)

6 Months Ended

Jun. 30, 2021

Accounts Receivable Net [Abstract]

Schedule of Accounts Receivable Net

Accounts receivable, net is as follows (in thousands):

	As of			As of
	June 30, 2021			December 31, 2020
Accounts receivable amortized cost	$	88,426		$	98,164
Allowance for credit losses		(5,243	)		(3,788	)
Net accounts receivable	$	83,183		$	94,376

Schedule of Changes in Allowance for Credit Losses for Accounts Receivable

The following table summarizes the changes in the allowance for credit losses for accounts receivable (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Balance, beginning of period	$	(4,772	)	$	(1,753	)	$	(3,788	)	$	(1,125	)
Provision for expected credit losses		(405	)		(585	)		(1,417	)		(1,328	)
Write-offs, net		(66	)		81			(38	)		196
Balance, end of period	$	(5,243	)	$	(2,257	)	$	(5,243	)	$	(2,257	)

Schedule of Contract Assets, Net

Contract assets, net is as follows (in thousands):

	As of			As of
	June 30, 2021			December 31, 2020
Contract asset amortized cost	$	4,235		$	2,560
Allowance for credit losses		(841	)		(398	)
Net contract asset	$	3,394		$	2,162

Schedule of Changes in Allowance for Credit Losses for Contract Assets

The following table summarizes the changes in the allowance for credit losses for contract assets (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Balance, beginning of period	$	(842	)	$	(25	)	$	(398	)	$	—
Provision for expected credit losses		(29	)		(3	)		(473	)		(28	)
Write-offs		30			—			30			—
Balance, end of period	$	(841	)	$	(28	)	$	(841	)	$	(28	)

Schedule of Changes in Sales Reserve

The following table summarizes the changes in the sales reserve (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Balance, beginning of period	$	(149	)	$	(375	)	$	(175	)	$	(175	)
Additions		(259	)		—			(259	)		(200	)
Write-offs		8			—			34			—
Balance, end of period	$	(400	)	$	(375	)	$	(400	)	$	(375	)

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Property and Equipment, Net (Tables)

6 Months Ended

Jun. 30, 2021

Property Plant And Equipment [Abstract]

Schedule of Property and Equipment, Net

Property and equipment consisted of the following (in thousands):

	Useful life		As of			As of
	in years		June 30, 2021			December 31, 2020
Furniture and equipment		5	$	2,165		$	2,041
Leasehold improvements (1)		9		6,241			4,944
System hardware		5		813			807
Office computers		3		7,323			6,547
Computer and system software		3		2,068			827
				18,610			15,166
Less accumulated depreciation and amortization				(9,043	)		(7,392	)
Property and equipment, net			$	9,567		$	7,774

⁽¹⁾ Lesser of the lease term or the estimated useful lives of the improvements, which may be up to 9 years.

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Capitalized Software Development Costs, Net (Tables)

6 Months Ended

Jun. 30, 2021

Research And Development [Abstract]

Summary of Capitalized Software Development Costs, Net

Capitalized software development costs consisted of the following (in thousands):

	Gross carrying amount		Amortization period	Accumulated amortization			Net carrying amount
As of June 30, 2021	$	66,057	3 years	$	(47,689	)	$	18,368
As of December 31, 2020		59,761	3 years		(43,432	)		16,329

Schedule of Expected Amortization of Capitalized Software Development Costs

The expected amortization of capitalized software development costs, as of June 30, 2021, for each of the following years is as follows (in thousands):

2021 (for the remaining six months)	$	4,779
2022		7,630
2023		4,985
2024		974
	$	18,368

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table summarizes the Company's financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy. Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands):

	As of June 30, 2021
	Quoted		Significant
	Prices in		Other		Significant
	Active		Observable		Unobservable
	Markets		Inputs		Inputs		Total Fair
	(Level 1)		(Level 2)		(Level 3)		Value
Assets:
Cash equivalents:
Money market funds	$	489,632	$	—	$	—	$	489,632
Total financial assets	$	489,632	$	—	$	—	$	489,632
Liabilities:
Contingent consideration	$	—	$	—	$	18,775	$	18,775
Derivative instruments - acquisition-related deferred    common stock consideration		—		922		—		922
Total financial liabilities	$	—	$	922	$	18,775	$	19,697
	As of December 31, 2020
	Quoted		Significant
	Prices in		Other		Significant
	Active		Observable		Unobservable
	Markets		Inputs		Inputs		Total Fair
	(Level 1)		(Level 2)		(Level 3)		Value
Assets:
Cash equivalents:
Money market funds	$	432,560	$	—	$	—	$	432,560
Total financial assets	$	432,560	$	—	$	—	$	432,560
Liabilities:
Contingent consideration	$	—	$	—	$	10,619	$	10,619
Derivative instruments - acquisition-related deferred    common stock consideration		—		1,011		—		1,011
Total financial liabilities	$	—	$	1,011	$	10,619	$	11,630

Summary of Changes in Level 3 Financial Instruments

The following tables summarize the changes in Level 3 financial instruments (in thousands):

Fair value at December 31, 2019	$	—
Contingent consideration from Connexient acquisition		340
Contingent consideration from one2many acquisition		2,190
Fair value at March 31, 2020		2,530
Contingent consideration from Techwan acquisition		2,030
Adjustment for Connexient acquisition		(340	)
Foreign currency translation		72
Fair value at June 30, 2020	$	4,292

Fair value at December 31, 2020	$	10,619
Contingent consideration from RedSky acquisition		9,135
Adjustment for one2many acquisition		(690	)
Adjustment for SnapComms acquisition		732
Foreign currency translation		(465	)
Fair value at March 31, 2021		19,331
Adjustment for one2many acquisition		38
Adjustment for SnapComms acquisition		(23	)
Payment for SnapComms acquisition		(720	)
Foreign currency translation		149
Fair value at June 30, 2021	$	18,775

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Goodwill and Intangible Assets, Net (Tables)

6 Months Ended

Jun. 30, 2021

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Changes in Gross Carrying Amount of Goodwill

The following table displays the changes in the gross carrying amount of goodwill (in thousands):

Balance at December 31, 2020	$	187,411
Increase due to acquisition		219,345
Foreign currency translation		(1,533	)
Balance at June 30, 2021	$	405,223

Schedule of Intangible Assets

Intangible assets consisted of the following (in thousands):

				As of June 30, 2021
	Gross carrying amount		Weighted average life (years)	Accumulated amortization			Net carrying amount
Amortizable intangible assets:
Developed technology	$	42,581	3.40	$	(9,754	)	$	32,827
Tradenames		25,722	4.04		(9,404	)		16,318
Customer relationships		198,999	8.20		(31,421	)		167,578
Total intangible assets	$	267,302		$	(50,579	)	$	216,723

					As of December 31, 2020
	Gross carrying amount		Weighted average life (years)		Accumulated amortization			Net carrying amount
Amortizable intangible assets:
Developed technology	$	31,851		3.54	$	(5,322	)	$	26,529
Tradenames		15,360		3.52		(6,638	)		8,722
Customer relationships		100,590		7.41		(22,079	)		78,511
Total intangible assets	$	147,801			$	(34,039	)	$	113,762

Schedule of Expected Amortization of Intangible Assets

The expected amortization of the intangible assets, as of June 30, 2021, for each of the next five years and thereafter is as follows (in thousands):

2021 (for the remaining six months)	$	22,166
2022		41,275
2023		36,270
2024		31,509
2025		23,664
Thereafter		61,839
	$	216,723

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Business Combinations (Tables)

6 Months Ended

Jun. 30, 2021

xMatters Holdings, Inc

Summary of Allocation of Purchase Consideration and Estimated Values of Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary estimated fair value of the assets acquired and the liabilities assumed, which were recorded as of the acquisition date, as well as the aggregate consideration for the acquisition of xMatters made by the Company (in thousands):

	xMatters
Assets acquired
Accounts receivable	$	6,716
Property and equipment		1,458
Trade names		8,200
Acquired technology		8,390
Customer relationships		79,090
Goodwill		170,037
Other assets		5,433
Total assets acquired		279,324
Liabilities assumed
Accounts payable		1,164
Accrued expenses		5,501
Deferred revenue		34,421
Deferred tax liabilities		3,436
Other liabilities		5,055
Net assets acquired	$	229,747
Consideration paid
Cash paid, net of cash acquired	$	165,265
Fair value of common stock issued		64,482
Total	$	229,747

Red Sky Technologies Inc.

Summary of Allocation of Purchase Consideration and Estimated Values of Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary estimated fair value of the assets acquired and the liabilities assumed, which were recorded as of the acquisition date, as well as the aggregate consideration for the acquisition of RedSky made by the Company (in thousands):

	RedSky
Assets acquired
Accounts receivable	$	2,926
Other assets		242
Property and equipment		18
Trade names		2,230
Acquired technology		3,590
Customer relationships		20,200
Goodwill		49,308
Total assets acquired		78,514
Liabilities assumed
Accounts payable		233
Accrued expenses		773
Deferred revenue		5,866
Deferred tax liabilities		7,048
Other liabilities		26
Net assets acquired	$	64,568
Consideration paid
Cash paid, net of cash acquired	$	32,401
Fair value of common stock issued		23,032
Contingent consideration		9,135
Total	$	64,568

Techwan SA

Summary of Allocation of Purchase Consideration and Estimated Values of Assets Acquired and Liabilities Assumed

The following table summarizes the estimated fair value of the assets acquired and the liabilities assumed, which were recorded as of the acquisition date, as well as the aggregate consideration for the acquisition of Techwan made by the Company (in thousands):

	Techwan
Assets acquired
Accounts receivable	$	921
Other current assets		235
Acquired technology		1,160
Trade names		580
Customer relationships		5,100
Goodwill		12,678
Other assets		254
Total assets acquired		20,928
Liabilities assumed
Accrued expenses		673
Deferred revenue		1,190
Deferred tax liabilities		838
Other current liabilities		927
Net assets acquired	$	17,300
Consideration paid
Cash consideration, net of cash acquired	$	9,301
Fair value of common stock issued		5,074
Acquisition-related deferred common stock consideration		895
Contingent consideration		2,030
Total	$	17,300

SnapComms Limited

Summary of Allocation of Purchase Consideration and Estimated Values of Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary estimated fair value of the assets acquired and the liabilities assumed, which were recorded as of the acquisition date, as well as the aggregate consideration for the acquisition of SnapComms made by the Company (in thousands):

	SnapComms
Assets acquired
Accounts receivable	$	1,808
Other current assets		283
Property and equipment		118
Acquired technology		2,300
Trade names		960
Customer relationships		13,300
Goodwill		22,629
Other assets		943
Total assets acquired		42,341
Liabilities assumed
Accrued expenses		503
Deferred revenue		3,165
Deferred tax liabilities		4,960
Other liabilities		742
Net assets acquired	$	32,971
Consideration paid
Cash consideration, net of cash acquired	$	10,090
Fair value of common stock issued		17,685
Acquisition-related deferred consideration		3,149
Contingent consideration		2,047
Total	$	32,971

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Convertible Senior Notes (Tables)

6 Months Ended

Jun. 30, 2021

Summary of Debt Obligations

The following table summarizes the Company’s debt obligations at June 30, 2021 (in thousands):

	Remainder of 2021		2022-2023		2024-2025		Thereafter		Total
Debt obligations	$	—	$	303	$	450,000	$	375,000	$	825,303

0% Convertible Senior Notes Due 2026

Schedule of Components of Convertible Senior Notes

The 2026 Notes consist of the following (in thousands):

	As of
	June 30, 2021
Liability component:
Principal	$	375,000
Less: debt discount, net of amortization		(107,122	)
Net carrying amount	$	267,878
Equity component (1)		99,000

⁽¹⁾ Recorded in the consolidated balance sheet within additional paid-in capital, net of $3.0 million transaction costs in equity and net of $3.4 million for taxes.

Summary of Total Interest Expense Recognized Related To Convertible Senior Notes

The following table sets forth total interest expense recognized related to the 2026 Notes (in thousands):

	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
Amortization of debt discount and transaction costs	$	4,798	$	5,854

Summary of Fair Value and Carrying Value of Convertible Senior Notes

The fair value of the 2026 Notes, which was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, quoted price of the 2026 Notes in an over-the-counter market (Level 2), and carrying value of debt instruments (carrying value excludes the equity component of the Company’s 2026 Notes classified in equity) was as follows (in thousands):

	As of June 30, 2021
	Fair Value		Carrying Value
2026 Notes	$	383,400	$	267,878

0.125% Convertible Senior Notes Due 2024

Schedule of Components of Convertible Senior Notes

The 2024 Notes consist of the following (in thousands):

	As of			As of
	June 30, 2021			December 31, 2020
Liability component:
Principal	$	450,000		$	450,000
Less: debt discount, net of amortization		(71,627	)		(80,968	)
Net carrying amount	$	378,373		$	369,032
Equity component (1)		86,133			86,133

⁽¹⁾

Recorded in the consolidated balance sheet within additional paid-in capital, net of $2.6 million transaction costs in equity and net of $0.9 million for taxes.

Summary of Total Interest Expense Recognized Related To Convertible Senior Notes

The following table sets forth total interest expense recognized related to the 2024 Notes (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
0.125% coupon	$	140	$	140	$	281	$	281
Amortization of debt discount and transaction costs		4,702		4,466		9,341		8,872
	$	4,842	$	4,606	$	9,622	$	9,153

Summary of Fair Value and Carrying Value of Convertible Senior Notes

The fair value of the 2024 Notes, which was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, quoted price of the 2024 Notes in an over-the-counter market (Level 2), and carrying value of debt instruments (carrying value excludes the equity component of the Company’s 2024 Notes classified in equity) were as follows (in thousands):

	As of June 30, 2021				As of December 31, 2020
	Fair Value		Carrying Value		Fair Value		Carrying Value
2024 Notes	$	616,500	$	378,373	$	663,615	$	369,032

1.50% Convertible Senior Notes Due 2022

Schedule of Components of Convertible Senior Notes

The 2022 Notes consist of the following (in thousands):

	As of			As of
	June 30, 2021			December 31, 2020
Liability component:
Principal	$	303		$	79,795
Less: debt discount, net of amortization		(21	)		(7,313	)
Net carrying amount	$	282		$	72,482
Equity component (1)		(39,301	)		(21,318	)

⁽¹⁾ Recorded in the consolidated balance sheet within additional paid-in capital, net of $0.8 million transaction costs in equity. Additional paid-in capital also includes $2.7 million and $36.7 million, respectively, market premium representing the excess of the total consideration delivered over the fair value of the liability recognized related to the $58.6 million and $23.0 million, respectively, principal balance extinguishment of the 2022 Notes in March 2021 and December 2019.

Summary of Total Interest Expense Recognized Related To Convertible Senior Notes

The following table sets forth total interest expense recognized related to the 2022 Notes (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
1.50% coupon	$	2	$	345	$	108	$	690
Amortization of debt discount and transaction costs		8		1,047		626		2,077
	$	10	$	1,392	$	734	$	2,767

Summary of Fair Value and Carrying Value of Convertible Senior Notes

The fair value of the 2022 Notes, which was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, quoted price of the 2022 Notes in an over-the-counter market (Level 2), and carrying value of debt instruments (carrying value excludes the equity component of the Company’s convertible notes classified in equity) were as follows (in thousands):

	As of June 30, 2021				As of December 31, 2020
	Fair Value		Carrying Value		Fair Value		Carrying Value
2022 Notes	$	1,224	$	282	$	265,488	$	72,482

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Stock Plans and Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Schedule of Assumptions Used in Determining Fair Value of Shares Issuable

The fair value of shares issuable under the 2016 ESPP is determined using the Black-Scholes option pricing model with the following weighted average assumptions: 

	Six Months Ended June 30,
	2021		2020
Employee Stock Purchase Plan:
Expected term (in years) (1)		0.50		0.50
Expected volatility (2)	60%		55%
Risk-free interest rate (3)	0.06%		0.29%
Dividend rate (4)	0%		0%

⁽¹⁾ The expected term represents the contractual term of the 2016 ESPP;

⁽²⁾ The expected volatility of the Company’s common stock on the date of grant is based on the weighted average of the Company’s historical volatility as a public company, the implied volatility of publicly-traded options on the Company’s common stock and the volatilities of publicly traded peer companies that are reasonably comparable to the Company’s own operations;

⁽³⁾ The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the expected term of the grant; and

⁽⁴⁾ The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on the Company’s common stock.

Schedule of Stock Option Activity

The following table summarizes the Company’s stock option activity:

	Stock options outstanding			Weighted average exercise price
Outstanding at December 31, 2020		279,021		$	25.55
Exercised		(75,853	)		28.55
Forfeited		(4,369	)		33.32
Outstanding at June 30, 2021		198,799			24.23

Schedule of Stock Options Outstanding, Vested and Expected to Vest and Exercisable

Stock options outstanding, vested and expected to vest and exercisable are as follows:

	As of June 30, 2021
	Number of shares		Remaining contractual life (years)		Weighted- average exercise price
Outstanding		198,799		5.66	$	24.23
Vested and expected to vest		198,391		5.66		24.20
Exercisable		153,906		5.39		20.98

Schedule of Vested and Nonvested Stock Option Activity

Vested and nonvested stock option activity was as follows:

	Vested				Nonvested
	Options outstanding		Weighted average exercise price		Options outstanding		Weighted average exercise price
Outstanding at June 30, 2021		153,906	$	20.98		44,893	$	35.38

Summary of RSU and PSU Activity

The following table summarizes the Company’s RSU and PSU activity:

	Number of Shares
Outstanding at December 31, 2020		1,420,541
Granted		573,141
Vested		(129,668	)
Forfeited		(73,644	)
Outstanding at June 30, 2021		1,790,370

Summary of Stock-Based Compensation Expense

The Company recorded the total stock-based compensation expense as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Cost of revenue	$	819	$	703	$	1,818	$	1,311
Sales and marketing		5,579		3,917		9,321		7,525
Research and development		2,562		2,298		4,590		4,172
General and administrative		6,545		4,360		12,461		8,580
Total	$	15,505	$	11,278	$	28,190	$	21,588

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Basic and Diluted Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Schedule of Common Equivalent Shares were Excluded from Diluted Net Loss Per Share Calculation because their Inclusion would have been Anti-Dilutive

The following common equivalent shares were excluded from the diluted net loss per share calculation because their inclusion would have been anti-dilutive:

	As of June 30,
	2021		2020
Convertible senior notes		6,089,230		6,733,914
Stock-based compensation grants		1,989,169		2,018,888
Total		8,078,399		8,752,802

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Revenue Recognition (Tables)

6 Months Ended

Jun. 30, 2021

Accounting Standards Update 2014-09

Disaggregation Of Revenue [Line Items]

Summary of Disaggregates Revenue

The following table disaggregates the Company’s revenue by geography which provides information as to the major source of revenue (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
Primary Geographic Markets	2021		2020		2021		2020
United States	$	62,290	$	51,017	$	119,755	$	97,966
International		24,359		14,360		49,104		26,311
Total	$	86,649	$	65,377	$	168,859	$	124,277

The following table presents the Company’s revenues disaggregated by revenue source (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Subscription services	$	79,652	$	59,506	$	150,084	$	113,317
Professional services		6,459		4,653		12,399		9,134
Software licenses and other		538		1,218		6,376		1,826
Total	$	86,649	$	65,377	$	168,859	$	124,277

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Leases (Tables)

6 Months Ended

Jun. 30, 2021

Leases [Abstract]

Summary of Additional Information Related to Leases

Additional information related to the Company’s leases is as follows (in thousands, except lease term and discount rate):

	As of			As of
	June 30, 2021			December 31, 2020
Balance sheet information
ROU assets	$	18,700		$	15,045
Lease liabilities, current	$	5,715		$	4,259
Lease liabilities, non-current		16,363			14,403
Total lease liabilities	$	22,078		$	18,662
Supplemental data
Weighted average remaining lease term	4.49 years			4.57 years
Weighted average discount rate		6.23	%		7.00	%

	Six Months Ended June 30,
	2021		2020
Cash paid for amounts included in lease liabilities	$	3,017	$	2,330
ROU assets obtained in exchange for new lease obligations		5,729		4,853

Schedule of Maturities of Lease Liabilities

Maturities of lease liabilities as of June 30, 2021 were as follows (in thousands):

Year ending December 31,
2021 (for the remaining six months)	$	3,494
2022		6,715
2023		6,029
2024		3,341
2025		1,647
Thereafter		4,220
Total undiscounted lease payments		25,446
Less: imputed interest		(3,368	)
Total lease liabilities	$	22,078

Schedule of Components of Lease Expense

The following table presents components of lease expense (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Operating lease expense	$	1,466		$	1,276		$	2,769		$	2,425
Short-term lease expense(1)		225			337			391			552
		1,691			1,613			3,160			2,977
Less: Sublease income		(15	)		(92	)		(15	)		(138	)
Total lease expense	$	1,676		$	1,521		$	3,145		$	2,839

⁽¹⁾ Short-term lease expense includes all leases with lease terms ranging from less than one month to one year.

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Summary of Significant Accounting Policies - Additional Information (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2021 USD ($) Customer	Jun. 30, 2020 Customer	Jun. 30, 2021 USD ($) Customer	Jun. 30, 2020 Customer	Dec. 31, 2020 Customer
Impairment charges | $			$ 0
Subscription contracts			The Company’s subscription contracts are generally two years or longer in length, billed annually in advance, and non-cancelable.
Deferred sales commission cost amortization period			4 years
Change in Accounting Principle, Accounting Standards Update, Adopted [true false]	true		true
Accounting Standards Update [Extensible List]			evbg:AccountingStandardsUpdate202001Member
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false]	true		true
Change in Accounting Principle, Accounting Standards Update, Transition Option Elected [Extensible List]			evbg:AccountingStandardsUpdate202001ProspectiveMember
Customer Concentration Risk | Revenue
Number of customers above 10% threshold | Customer	0	0	0	0
Customer Concentration Risk | Accounts Receivable
Number of customers above 10% threshold | Customer			0		0
Maximum
Cash and cash equivalent, FDIC insured amount | $	$ 250,000		$ 250,000

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Accounts Receivable and Contract Assets, Net - Schedule of Accounts Receivable, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019
Accounts Receivable Net [Abstract]
Accounts receivable amortized cost	$ 88,426		$ 98,164
Allowance for credit losses	(5,243)	$ (4,772)	(3,788)	$ (2,257)	$ (1,753)	$ (1,125)
Net accounts receivable	$ 83,183		$ 94,376

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Accounts Receivable and Contract Assets, Net - Schedule of Changes in Allowance for Credit Losses for Accounts Receivable (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Allowance For Credit Loss [Abstract]
Balance, beginning of period	$ (4,772)	$ (1,753)	$ (3,788)	$ (1,125)
Provision for expected credit losses	(405)	(585)	(1,417)	(1,328)
Write-offs, net	(66)	81	(38)	196
Balance, end of period	$ (5,243)	$ (2,257)	$ (5,243)	$ (2,257)

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Accounts Receivable and Contract Assets, Net - Schedule of Contract Assets, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Accounts Receivable Net [Abstract]
Contract asset amortized cost	$ 4,235	$ 2,560
Allowance for credit losses	(841)	(398)
Net contract asset	$ 3,394	$ 2,162

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Accounts Receivable and Contract Assets, Net - Schedule of Changes in Allowance for Credit Losses for Contract Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Allowance For Credit Loss [Abstract]
Balance, beginning of period	$ (842)	$ (25)	$ (398)
Provision for expected credit losses	(29)	(3)	(473)	$ (28)
Write-offs	30		30
Balance, end of period	$ (841)	$ (28)	$ (841)	$ (28)

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Accounts Receivable and Contract Assets, Net - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Accounts Notes And Loans Receivable [Line Items]
Credit loss expense	$ 405	$ 585	$ 1,417	$ 1,328
Receivable and Contract Assets
Accounts Notes And Loans Receivable [Line Items]
Credit loss expense	$ 100	$ 400	$ 1,500	$ 1,100

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Accounts Receivable and Contract Assets, Net - Schedule of Changes in Sales Reserve (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Accounts Receivable Net [Abstract]
Balance, beginning of period	$ (149)	$ (375)	$ (175)	$ (175)
Additions	(259)		(259)	(200)
Write-offs	8	0	34
Balance, end of period	$ (400)	$ (375)	$ (400)	$ (375)

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Property and Equipment, Net - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2021	Dec. 31, 2020
Property Plant And Equipment [Line Items]
Property and equipment, gross		$ 18,610	$ 15,166
Less accumulated depreciation and amortization		(9,043)	(7,392)
Property and equipment, net		9,567	7,774
Furniture and Equipment
Property Plant And Equipment [Line Items]
Property and equipment, gross		$ 2,165	2,041
Property and equipment, useful life in years		5 years
Leasehold Improvements
Property Plant And Equipment [Line Items]
Property and equipment, gross		$ 6,241	4,944
Property and equipment, useful life in years	[1]	9 years
Systems Hardware
Property Plant And Equipment [Line Items]
Property and equipment, gross		$ 813	807
Property and equipment, useful life in years		5 years
Office Computers
Property Plant And Equipment [Line Items]
Property and equipment, gross		$ 7,323	6,547
Property and equipment, useful life in years		3 years
Computer and System Software
Property Plant And Equipment [Line Items]
Property and equipment, gross		$ 2,068	$ 827
Property and equipment, useful life in years		3 years

[1] Lesser of the lease term or the estimated useful lives of the improvements, which may be up to 9 years.

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Property and Equipment, Net - Schedule of Property and Equipment (Parenthetical) (Details) - Leasehold Improvements	6 Months Ended
	Jun. 30, 2021
Property Plant And Equipment [Line Items]
Property and equipment, useful life in years	9 years	[1]
Maximum
Property Plant And Equipment [Line Items]
Lease term	9 years
Property and equipment, useful life in years	9 years

[1] Lesser of the lease term or the estimated useful lives of the improvements, which may be up to 9 years.

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Property and Equipment, Net - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Property Plant And Equipment [Abstract]
Depreciation and amortization expense	$ 0.9	$ 0.7	$ 1.7	$ 1.3

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Capitalized Software Development Costs, Net - Summary of Capitalized Software Development Costs, Net (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Capitalized Computer Software Net [Line Items]
Net carrying amount	$ 18,368	$ 16,329
Capitalized Software Development Costs
Capitalized Computer Software Net [Line Items]
Gross carrying amount	$ 66,057	$ 59,761
Amortization period	3 years	3 years
Accumulated amortization	$ (47,689)	$ (43,432)
Net carrying amount	$ 18,368	$ 16,329

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Capitalized Software Development Costs, Net - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Capitalized Computer Software Net [Abstract]
Capitalized software development costs			$ 6.1	$ 4.7
Capitalized software development costs, amortization expense	$ 2.2	$ 1.9	$ 4.3	$ 3.8

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Capitalized Software Development Costs, Net - Schedule of Expected Amortization of Capitalized Software Development Costs (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Capitalized Computer Software Net [Abstract]
2021 (for the remaining six months)	$ 4,779
2022	7,630
2023	4,985
2024	974
Net carrying amount	$ 18,368	$ 16,329

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Fair Value Measurements - Additional Information (Details) € in Millions		1 Months Ended		3 Months Ended	6 Months Ended	12 Months Ended
	Jul. 01, 2021 EUR (€) shares	Dec. 31, 2019 USD ($)	Nov. 30, 2017 USD ($)	Jun. 30, 2021 USD ($) shares	Jun. 30, 2021 USD ($) shares	Dec. 31, 2020 USD ($)	May 27, 2020 shares
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Asset impairment charges					$ 0
Fair value of assets transferred from level 1 to level 2				$ 0	0
Fair value of assets transferred from level 2 to level 1				0	0
Fair value of liabilities transferred from level 1 to level 2				0	0
Fair value of liabilities transferred from level 2 to level 1				$ 0	$ 0
Common stock reserved for future issuance | shares				5,900,000	5,900,000
0% Convertible Senior Notes Due March 15, 2026
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Fair value of convertible senior notes				$ 383,400,000	$ 383,400,000
Principal amount of notes				$ 375,000,000.0	$ 375,000,000.0
Debt instrument, interest rate				0.00%	0.00%
Debt instrument, maturity date					Mar. 15, 2026
0.125% Convertible Senior Notes Due 2024
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Fair value of convertible senior notes				$ 616,500,000	$ 616,500,000	$ 663,600,000
Principal amount of notes		$ 450,000,000.0		$ 450,000,000	$ 450,000,000	450,000,000
Debt instrument, interest rate		0.125%		0.125%	0.125%
Debt instrument, maturity date		Dec. 15, 2024			Dec. 15, 2024
1.50% Convertible Senior Notes Due 2022
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Fair value of convertible senior notes				$ 1,200,000	$ 1,200,000	265,500,000
Principal amount of notes			$ 115,000,000.0	$ 303,000	$ 303,000	79,795,000
Debt instrument, interest rate			1.50%	1.50%	1.50%
Debt instrument, maturity date			Nov. 01, 2022		Nov. 01, 2022
Techwan SA
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Common stock reserved for future issuance | shares							6,779
Techwan SA | Other Expense, Net
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Derivative liabilities, changes in fair value				$ 100,000	$ (100,000)
One2Many Group B.V.
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Increase (Decrease) in contingent consideration obligation					(700,000)
One2Many Group B.V. | Subsequent Event
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Cash paid net of cash acquired | €	€ 4.1
Issuance of common stock for contingent consideration | shares	41,668
One2Many Group B.V. | Maximum
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Increase (Decrease) in contingent consideration obligation				$ 100,000
SnapComms Limited
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Increase (Decrease) in contingent consideration obligation					700,000
Issuance of common stock for contingent consideration | shares				6,188
SnapComms Limited | Maximum
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Increase (Decrease) in contingent consideration obligation				$ (100,000)
Fair Value Measurements, Nonrecurring
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Asset impairment charges					$ 0	$ 0

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Fair Value Measurements - Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair Value Measurements, Recurring - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	$ 489,632	$ 432,560
Contingent consideration	18,775	10,619
Derivative instruments - acquisition-related deferred common stock consideration	922	1,011
Total financial liabilities	19,697	11,630
Money Market Funds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	489,632	432,560
Quoted Prices in Active Markets (Level 1)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	489,632	432,560
Quoted Prices in Active Markets (Level 1) | Money Market Funds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	489,632	432,560
Significant Other Observable Inputs (Level 2)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative instruments - acquisition-related deferred common stock consideration	922	1,011
Total financial liabilities	922	1,011
Significant Unobservable Inputs (Level 3)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Contingent consideration	18,775	10,619
Total financial liabilities	$ 18,775	$ 10,619

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Fair Value Measurements - Summary of Changes in Level 3 Financial Instruments (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Mar. 31, 2020
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Beginning balance, fair value	$ 19,331	$ 10,619	$ 2,530
Foreign currency translation	149	(465)	72
Ending balance, fair value	18,775	19,331	4,292	$ 2,530
Connexient
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Contingent consideration				340
Adjustment for acquisition			(340)
One2Many Group B.V.
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Contingent consideration				$ 2,190
Adjustment for acquisition	38	(690)
Techwan SA
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Contingent consideration			$ 2,030
Red Sky Technologies Inc.
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Contingent consideration		9,135
SnapComms Limited
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Payment for acquisition	(720)
Adjustment for acquisition	$ (23)	$ 732

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Goodwill and Intangible Assets, Net - Schedule of Changes in Gross Carrying Amount of Goodwill (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2021 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
Goodwill, beginning balance	$ 187,411
Increase due to acquisition	219,345
Foreign currency translation	(1,533)
Goodwill, ending balance	$ 405,223

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Goodwill and Intangible Assets, Net - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Intangible Assets And Goodwill [Line Items]
Impairment of goodwill			$ 0		$ 0
Amortization expense for intangible assets	$ 10,000,000.0	$ 4,800,000	17,900,000	$ 8,900,000
Intangible assets amortized costs retired			1,100,000
Developed Technology | Cost of Revenue
Intangible Assets And Goodwill [Line Items]
Amortization expense for intangible assets			$ 5,600,000	$ 1,700,000

XML

Goodwill and Intangible Assets, Net - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Finite Lived Intangible Assets [Line Items]
Gross carrying amount	$ 267,302	$ 147,801
Accumulated amortization	(50,579)	(34,039)
Net carrying amount	216,723	113,762
Developed Technology
Finite Lived Intangible Assets [Line Items]
Gross carrying amount	42,581	31,851
Accumulated amortization	(9,754)	(5,322)
Net carrying amount	$ 32,827	$ 26,529
Developed Technology | Weighted-Average
Finite Lived Intangible Assets [Line Items]
Weighted average life (years)	3 years 4 months 24 days	3 years 6 months 14 days
Tradenames
Finite Lived Intangible Assets [Line Items]
Gross carrying amount	$ 25,722	$ 15,360
Accumulated amortization	(9,404)	(6,638)
Net carrying amount	$ 16,318	$ 8,722
Tradenames | Weighted-Average
Finite Lived Intangible Assets [Line Items]
Weighted average life (years)	4 years 14 days	3 years 6 months 7 days
Customer Relationships
Finite Lived Intangible Assets [Line Items]
Gross carrying amount	$ 198,999	$ 100,590
Accumulated amortization	(31,421)	(22,079)
Net carrying amount	$ 167,578	$ 78,511
Customer Relationships | Weighted-Average
Finite Lived Intangible Assets [Line Items]
Weighted average life (years)	8 years 2 months 12 days	7 years 4 months 28 days

XML

Goodwill and Intangible Assets, Net - Schedule of Expected Amortization of Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Goodwill And Intangible Assets Disclosure [Abstract]
2021 (for the remaining six months)	$ 22,166
2022	41,275
2023	36,270
2024	31,509
2025	23,664
Thereafter	61,839
Net carrying amount	$ 216,723	$ 113,762

XML

Business Combinations - Additional Information (Details) $ / shares in Units, $ in Thousands, € in Millions, $ in Millions										3 Months Ended	6 Months Ended		12 Months Ended
	Aug. 09, 2021 NZD ($) shares	Jul. 01, 2021 EUR (€) shares	May 07, 2021 USD ($) $ / shares shares	Jan. 15, 2021 USD ($) $ / shares shares	Aug. 04, 2020 USD ($) $ / shares shares	May 27, 2020 USD ($) $ / shares shares	Mar. 19, 2020 USD ($) $ / shares shares	Feb. 25, 2020 USD ($) $ / shares shares	Feb. 07, 2020 USD ($) $ / shares shares	Jun. 30, 2021 USD ($) shares	Jun. 30, 2021 USD ($) shares	Jun. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)
Business Acquisition [Line Items]
Cash paid											$ 197,666	$ 44,265
Contingent consideration										$ 18,775	$ 18,775		$ 10,619
Common stock reserved for future issuance | shares										5,900,000	5,900,000
xMatters Holdings, Inc
Business Acquisition [Line Items]
Date of acquisition of business			May 07, 2021
Total purchase price			$ 242,300								$ 229,747
Cash paid			$ 177,800
Number of newly issued common stock | shares			555,332
Common stock price per share | $ / shares			$ 116.12
Weighted average useful life of identified acquired intangible assets											8 years 1 month 17 days
Cash paid											$ 165,265
xMatters Holdings, Inc | General and Administrative Expenses
Business Acquisition [Line Items]
Business acquisition transaction costs											1,500
Business acquisition expense											$ 600
xMatters Holdings, Inc | Acquired Technology
Business Acquisition [Line Items]
Weighted average useful life of identified acquired intangible assets											3 years
xMatters Holdings, Inc | Customer Relationships
Business Acquisition [Line Items]
Weighted average useful life of identified acquired intangible assets											9 years
xMatters Holdings, Inc | Trade Names
Business Acquisition [Line Items]
Weighted average useful life of identified acquired intangible assets											5 years
Red Sky Technologies Inc.
Business Acquisition [Line Items]
Date of acquisition of business				Jan. 15, 2021
Total purchase price				$ 55,400							$ 64,568
Number of newly issued common stock | shares				162,820
Common stock price per share | $ / shares				$ 141.46
Weighted average useful life of identified acquired intangible assets											7 years 8 months 26 days
Cash paid				$ 32,400							$ 32,401
Contingent payment				30,000
Contingent consideration				$ 9,135
Red Sky Technologies Inc. | Maximum | General and Administrative Expenses
Business Acquisition [Line Items]
Business acquisition transaction costs											$ 100
Red Sky Technologies Inc. | Acquired Technology
Business Acquisition [Line Items]
Weighted average useful life of identified acquired intangible assets											3 years
Red Sky Technologies Inc. | Customer Relationships
Business Acquisition [Line Items]
Weighted average useful life of identified acquired intangible assets											9 years
Red Sky Technologies Inc. | Trade Names
Business Acquisition [Line Items]
Weighted average useful life of identified acquired intangible assets											4 years
Connexient
Business Acquisition [Line Items]
Date of acquisition of business									Feb. 07, 2020
Total purchase price									$ 20,200
Cash paid									$ 11,500
Number of newly issued common stock | shares									96,611
Common stock price per share | $ / shares									$ 93.32
Contingent payment									$ 6,000
CNL Software Limited
Business Acquisition [Line Items]
Date of acquisition of business								Feb. 25, 2020
Total purchase price								$ 35,700
Cash paid								$ 19,800
Number of newly issued common stock | shares								153,217
Common stock price per share | $ / shares								$ 104.10
One2Many Group B.V.
Business Acquisition [Line Items]
Date of acquisition of business							Mar. 19, 2020
Total purchase price							$ 13,100
Cash paid							$ 5,500
Number of newly issued common stock | shares							52,113
Common stock price per share | $ / shares							$ 104.95
Contingent payment							$ 15,000
Contingent consideration							2,200
Purchase liabilities							$ 2,000
Change in fair value of contingent consideration obligation											$ (700)
One2Many Group B.V. | Subsequent Event
Business Acquisition [Line Items]
Cash paid net of cash acquired | €		€ 4.1
Issuance of common stock for contingent consideration | shares		41,668
One2Many Group B.V. | Maximum
Business Acquisition [Line Items]
Change in fair value of contingent consideration obligation										$ 100
One2Many Group B.V. | Maximum | General and Administrative Expenses
Business Acquisition [Line Items]
Change in fair value of contingent consideration obligation										$ 100	(700)
Techwan SA
Business Acquisition [Line Items]
Date of acquisition of business						May 27, 2020
Total purchase price						$ 15,500					$ 17,300
Cash paid						$ 9,400
Number of newly issued common stock | shares						38,425
Common stock price per share | $ / shares						$ 132.05
Weighted average useful life of identified acquired intangible assets											7 years 5 months 19 days
Cash paid											$ 9,301
Contingent payment						$ 7,000
Contingent consideration						2,030
Purchase liabilities						$ 100
Common stock reserved for future issuance | shares						6,779
Techwan SA | General and Administrative Expenses
Business Acquisition [Line Items]
Business acquisition transaction costs													200
Techwan SA | Acquired Technology
Business Acquisition [Line Items]
Weighted average useful life of identified acquired intangible assets											3 years
Techwan SA | Customer Relationships
Business Acquisition [Line Items]
Weighted average useful life of identified acquired intangible assets											9 years
Techwan SA | Trade Names
Business Acquisition [Line Items]
Weighted average useful life of identified acquired intangible assets											3 years
SnapComms Limited
Business Acquisition [Line Items]
Date of acquisition of business					Aug. 04, 2020
Total purchase price					$ 34,400						$ 32,971
Cash paid					$ 13,600
Number of newly issued common stock | shares					121,858
Common stock price per share | $ / shares					$ 145.13
Weighted average useful life of identified acquired intangible assets											7 years 9 months 25 days
Cash paid											$ 10,090
Contingent payment					$ 5,000
Contingent consideration					$ 2,047
Change in fair value of contingent consideration obligation											700
Issuance of common stock for contingent consideration | shares										6,188
SnapComms Limited | Subsequent Event
Business Acquisition [Line Items]
Cash paid	$ 2.5
Number of newly issued common stock | shares	12,390
SnapComms Limited | General and Administrative Expenses
Business Acquisition [Line Items]
Business acquisition transaction costs													$ 100
SnapComms Limited | Maximum
Business Acquisition [Line Items]
Change in fair value of contingent consideration obligation										$ (100)
SnapComms Limited | Maximum | General and Administrative Expenses
Business Acquisition [Line Items]
Change in fair value of contingent consideration obligation										$ (100)	$ 700
SnapComms Limited | Acquired Technology
Business Acquisition [Line Items]
Weighted average useful life of identified acquired intangible assets											3 years
SnapComms Limited | Customer Relationships
Business Acquisition [Line Items]
Weighted average useful life of identified acquired intangible assets											9 years
SnapComms Limited | Trade Names
Business Acquisition [Line Items]
Weighted average useful life of identified acquired intangible assets											3 years

XML

Business Combinations - Summary of Allocation of Purchase Consideration and Estimated Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands					6 Months Ended
	May 07, 2021	Jan. 15, 2021	Aug. 04, 2020	May 27, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Assets acquired
Goodwill					$ 405,223		$ 187,411
Consideration paid
Cash paid, net of cash acquired					197,666	$ 44,265
Contingent consideration					18,775		$ 10,619
xMatters Holdings, Inc
Assets acquired
Accounts receivable	$ 6,716
Other assets	5,433
Property and equipment	1,458
Goodwill	170,037
Total assets acquired	279,324
Liabilities assumed
Accounts payable	1,164
Accrued expenses	5,501
Deferred revenue	34,421
Deferred tax liabilities	3,436
Other liabilities	5,055
Net assets acquired	229,747
Consideration paid
Cash paid	177,800
Cash paid, net of cash acquired					165,265
Fair value of common stock issued	64,482
Total	242,300				229,747
xMatters Holdings, Inc | Acquired Technology
Assets acquired
Intangible assets other than goodwill	8,390
xMatters Holdings, Inc | Trade Names
Assets acquired
Intangible assets other than goodwill	8,200
xMatters Holdings, Inc | Customer Relationships
Assets acquired
Intangible assets other than goodwill	$ 79,090
Red Sky Technologies Inc.
Assets acquired
Accounts receivable		$ 2,926
Other assets		242
Property and equipment		18
Goodwill		49,308
Total assets acquired		78,514
Liabilities assumed
Accounts payable		233
Accrued expenses		773
Deferred revenue		5,866
Deferred tax liabilities		7,048
Other liabilities		26
Net assets acquired		64,568
Consideration paid
Cash paid, net of cash acquired		32,400			32,401
Fair value of common stock issued		23,032
Contingent consideration		9,135
Total		55,400			64,568
Red Sky Technologies Inc. | Acquired Technology
Assets acquired
Intangible assets other than goodwill		3,590
Red Sky Technologies Inc. | Trade Names
Assets acquired
Intangible assets other than goodwill		2,230
Red Sky Technologies Inc. | Customer Relationships
Assets acquired
Intangible assets other than goodwill		$ 20,200
Techwan SA
Assets acquired
Accounts receivable				$ 921
Other assets				254
Goodwill				12,678
Total assets acquired				20,928
Other current assets				235
Liabilities assumed
Accrued expenses				673
Deferred revenue				1,190
Deferred tax liabilities				838
Other current liabilities				927
Net assets acquired				17,300
Consideration paid
Cash paid				9,400
Cash paid, net of cash acquired					9,301
Fair value of common stock issued				5,074
Contingent consideration				2,030
Acquisition-related deferred common stock consideration				895
Total				15,500	17,300
Techwan SA | Acquired Technology
Assets acquired
Intangible assets other than goodwill				1,160
Techwan SA | Trade Names
Assets acquired
Intangible assets other than goodwill				580
Techwan SA | Customer Relationships
Assets acquired
Intangible assets other than goodwill				$ 5,100
SnapComms Limited
Assets acquired
Accounts receivable			$ 1,808
Other assets			943
Property and equipment			118
Goodwill			22,629
Total assets acquired			42,341
Other current assets			283
Liabilities assumed
Accrued expenses			503
Deferred revenue			3,165
Deferred tax liabilities			4,960
Other current liabilities			742
Net assets acquired			32,971
Consideration paid
Cash paid			13,600
Cash paid, net of cash acquired					10,090
Fair value of common stock issued			17,685
Contingent consideration			2,047
Acquisition-related deferred common stock consideration			3,149
Total			34,400		$ 32,971
SnapComms Limited | Acquired Technology
Assets acquired
Intangible assets other than goodwill			2,300
SnapComms Limited | Trade Names
Assets acquired
Intangible assets other than goodwill			960
SnapComms Limited | Customer Relationships
Assets acquired
Intangible assets other than goodwill			$ 13,300

XML

Convertible Senior Notes - Additional Information (Details)	1 Months Ended			3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 31, 2021 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares	Nov. 30, 2017 USD ($) $ / shares shares	Jun. 30, 2021 USD ($) $ / shares	Mar. 31, 2021 USD ($) $ / shares	Jun. 30, 2021 USD ($) d $ / shares shares	Jun. 30, 2018 d	Dec. 31, 2020 USD ($) shares	Dec. 31, 2019 USD ($) $ / shares
0% Convertible Senior Notes Due 2026
Debt Instrument [Line Items]
Aggregate principal amount	$ 375,000,000.0			$ 375,000,000	$ 375,000,000.0	$ 375,000,000
Debt instrument, interest rate	0.00%				0.00%
Debt instrument, maturity date	Mar. 15, 2026
Debt instrument, interest rate terms						The Company will pay special interest, if any, at the Company’s election as the sole remedy relating to the failure to comply with certain reporting obligations and under certain circumstances.
Debt Conversion, initial conversion rate | shares	5.5341
Principal amount per note used in conversion rate	$ 1,000				$ 1,000
Conversion price per share | $ / shares	$ 180.70				$ 180.70
Shares issuable upon conversion of debt | shares	2,100,000
Number of trading days | d						20
Number of consecutive trading days | d						30
Percentage of last reported sale price to conversion price on each applicable trading day						130.00%
Description of convertible notes at option of holders						On or after December 15, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2026 Notes at the conversion rate at any time regardless of whether the conditions set forth above have been met.
Redemption price, percentage						100.00%
Implied interest rate				7.25%		7.25%
Debt instrument, fair value				$ 269,600,000		$ 269,600,000
Difference between aggregate principal amount and estimated fair value of liability component recorded in additional paid-in capital						105,400,000
Transaction costs attributable to liability component				7,600,000		7,600,000
Transaction costs attributable to equity component				$ 3,000,000.0		$ 3,000,000.0
Initial strike price of capped call options | $ / shares						$ 180.70
Capped call options, cap price | $ / shares						$ 258.14
Cost of purchased capped call options	$ 35,100,000					$ 35,100,000
Share Price | $ / shares				$ 136.08		$ 136.08
Debt instrument, maturity year						2026
0% Convertible Senior Notes Due 2026 | Scenario One
Debt Instrument [Line Items]
Number of trading days | d						20
Number of consecutive trading days | d						30
Percentage of last reported sale price to conversion price on each applicable trading day						130.00%
0% Convertible Senior Notes Due 2026 | Scenario Two
Debt Instrument [Line Items]
Number of consecutive trading days | d						10
Percentage of last reported sale price to conversion price on each applicable trading day						98.00%
Notes measurement period						5 days
0.125% Convertible Senior Notes Due 2024
Debt Instrument [Line Items]
Aggregate principal amount		$ 450,000,000.0		$ 450,000,000		$ 450,000,000		$ 450,000,000	$ 450,000,000.0
Debt instrument, interest rate		0.125%		0.125%		0.125%			0.125%
Debt instrument, maturity date		Dec. 15, 2024				Dec. 15, 2024
Debt instrument, interest rate terms						Interest is payable semiannually in arrears on June 15 and December 15 of each year, commencing on June 15, 2020.
Debt Conversion, initial conversion rate | shares		8.8999
Principal amount per note used in conversion rate		$ 1,000							$ 1,000
Conversion price per share | $ / shares		$ 112.36							$ 112.36
Shares issuable upon conversion of debt | shares		4,000,000.0
Number of trading days | d						20
Number of consecutive trading days | d						30
Percentage of last reported sale price to conversion price on each applicable trading day						130.00%
Description of convertible notes at option of holders						On or after June 15, 2024 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2024 Notes at the conversion rate at any time regardless of whether the conditions set forth above have been met.
Redemption price, percentage						100.00%
Implied interest rate				5.16%		5.16%
Debt instrument, fair value				$ 360,400,000		$ 360,400,000
Difference between aggregate principal amount and estimated fair value of liability component recorded in additional paid-in capital						89,600,000
Transaction costs attributable to liability component				10,200,000		10,200,000
Transaction costs attributable to equity component				$ 2,600,000		$ 2,600,000
Initial strike price of capped call options | $ / shares						$ 112.36
Capped call options, cap price | $ / shares						$ 166.46
Cost of purchased capped call options		$ 44,900,000				$ 44,900,000
Share Price | $ / shares				$ 136.08		$ 136.08
Interest payment beginning/commencing date		Jun. 15, 2020
Debt instrument, maturity year						2024
0.125% Convertible Senior Notes Due 2024 | Scenario One
Debt Instrument [Line Items]
Number of trading days | d						20
Number of consecutive trading days | d						30
Percentage of last reported sale price to conversion price on each applicable trading day						130.00%
0.125% Convertible Senior Notes Due 2024 | Scenario Two
Debt Instrument [Line Items]
Number of consecutive trading days | d						10
Percentage of last reported sale price to conversion price on each applicable trading day						98.00%
Notes measurement period						5 days
1.50% Convertible Senior Notes Due 2022
Debt Instrument [Line Items]
Aggregate principal amount			$ 115,000,000.0	$ 303,000		$ 303,000		$ 79,795,000
Debt instrument, interest rate			1.50%	1.50%		1.50%
Debt instrument, maturity date			Nov. 01, 2022			Nov. 01, 2022
Debt instrument, interest rate terms						Interest is payable semiannually in arrears on May 1 and November 1 of each year, commencing on May 1, 2018
Debt Conversion, initial conversion rate | shares			29.6626
Principal amount per note used in conversion rate			$ 1,000
Conversion price per share | $ / shares			$ 33.71
Shares issuable upon conversion of debt | shares			3,400,000
Number of trading days | d						20	30
Number of consecutive trading days | d						30
Percentage of last reported sale price to conversion price on each applicable trading day						130.00%
Description of convertible notes at option of holders						On or after May 1, 2022, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2022 Notes at the conversion rate at any time regardless of whether the conditions set forth above have been met.
Redemption price, percentage						100.00%
Implied interest rate				6.93%		6.93%
Debt instrument, fair value				$ 92,100,000		$ 92,100,000
Difference between aggregate principal amount and estimated fair value of liability component recorded in additional paid-in capital						$ 22,900,000
Transaction costs attributable to equity component			$ 800,000
Initial strike price of capped call options | $ / shares						$ 33.71
Capped call options, cap price | $ / shares						47.20
Cost of purchased capped call options			$ 12,900,000
Share Price | $ / shares				$ 136.08		$ 136.08
Interest payment beginning/commencing date			May 01, 2018
Modification expense recognized					$ 200,000	$ 200,000
Amended reduce capped call options, cap price | $ / shares					$ 46.68
Debt instrument, maturity year						2022
1.50% Convertible Senior Notes Due 2022 | Maximum
Debt Instrument [Line Items]
Transaction costs attributable to liability component			$ 100,000
1.50% Convertible Senior Notes Due 2022 | Scenario One
Debt Instrument [Line Items]
Number of trading days | d						20
Number of consecutive trading days | d						30
Percentage of last reported sale price to conversion price on each applicable trading day						130.00%
1.50% Convertible Senior Notes Due 2022 | Scenario Two
Debt Instrument [Line Items]
Number of consecutive trading days | d						5
Percentage of last reported sale price to conversion price on each applicable trading day						98.00%
Notes measurement period						5 days
1.50% Convertible Senior Notes Due 2022 Repurchase
Debt Instrument [Line Items]
Debt Conversion, initial conversion rate | shares						618,462		362,029
Principal amount per note used in conversion rate				$ 20,900,000		$ 20,900,000		$ 12,200,000
Implied interest rate		4.64%							4.64%
Repayments of debt						58,600,000			$ 57,800,000
Repurchase of aggregate principal amount		$ 23,000,000.0		58,600,000		58,600,000			23,000,000.0
Loss on extinguishment of convertible notes	$ 2,200,000			$ 100,000		500,000		400,000	1,400,000
Remaining consideration allocated to reacquisition of equity component						2,700,000			36,700,000
Partially terminated capped call options						10,600,000			5,800,000
Additional paid-in capital related to shares issued						$ 19,500,000		$ 11,400,000
Issuance of common stock | shares						1,288,994
Implied interest rate	4.87%
Modification expense recognized						$ 200,000
1.50% Convertible Senior Notes Due 2022 Repurchase | Minimum
Debt Instrument [Line Items]
Implied interest rate				4.87%		4.87%		4.64%
1.50% Convertible Senior Notes Due 2022 Repurchase | Maximum
Debt Instrument [Line Items]
Implied interest rate				5.13%		5.13%		5.13%
Option to Purchase | 0% Convertible Senior Notes Due 2026
Debt Instrument [Line Items]
Aggregate principal amount	$ 50,000,000.0				$ 50,000,000.0
Option to Purchase | 0.125% Convertible Senior Notes Due 2024
Debt Instrument [Line Items]
Aggregate principal amount		$ 75,000,000.0							$ 75,000,000.0
Option to Purchase | 1.50% Convertible Senior Notes Due 2022
Debt Instrument [Line Items]
Aggregate principal amount			$ 15,000,000.0

XML

Convertible Senior Notes - Schedule of Components of Convertible Senior Notes (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Nov. 30, 2017
0% Convertible Senior Notes Due 2026
Liability component:
Principal	$ 375,000	$ 375,000
Less: debt discount, net of amortization	(107,122)
Net carrying amount	267,878
Equity component	99,000
0.125% Convertible Senior Notes Due 2024
Liability component:
Principal	450,000		$ 450,000	$ 450,000
Less: debt discount, net of amortization	(71,627)		(80,968)
Net carrying amount	378,373		369,032
Equity component	86,133		86,133
1.50% Convertible Senior Notes Due 2022
Liability component:
Principal	303		79,795		$ 115,000
Less: debt discount, net of amortization	(21)		(7,313)
Net carrying amount	282		72,482
Equity component	$ (39,301)		$ (21,318)

XML

Convertible Senior Notes - Schedule of Components of Convertible Senior Notes (Parenthetical) (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020	Dec. 31, 2019
0% Convertible Senior Notes Due 2026
Debt Instrument [Line Items]
Transaction costs in equity	$ 3.0
Tax of equity component	3.4
0.125% Convertible Senior Notes Due 2024
Debt Instrument [Line Items]
Transaction costs in equity	2.6
Tax of equity component	0.9
1.50% Convertible Senior Notes Due 2022
Debt Instrument [Line Items]
Transaction costs in equity	0.8
Debt instrument, market premium excess of fair value	2.7	$ 36.7
Principal balance outstanding	$ 58.6		$ 23.0

XML

Convertible Senior Notes - Summary of Total Interest Expense Recognized Related To Convertible Senior Notes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
0% Convertible Senior Notes Due 2026
Debt Instrument [Line Items]
Amortization of debt discount and transaction costs	$ 4,798		$ 5,854
0.125% Convertible Senior Notes Due 2024
Debt Instrument [Line Items]
Amortization of debt discount and transaction costs	4,702	$ 4,466	9,341	$ 8,872
Total interest expense	4,842	4,606	9,622	9,153
0.125% Convertible Senior Notes Due 2024 | 0.125% coupon
Debt Instrument [Line Items]
Interest expense	140	140	281	281
1.50% Convertible Senior Notes Due 2022
Debt Instrument [Line Items]
Amortization of debt discount and transaction costs	8	1,047	626	2,077
Total interest expense	10	1,392	734	2,767
1.50% Convertible Senior Notes Due 2022 | 1.50% Coupon
Debt Instrument [Line Items]
Interest expense	$ 2	$ 345	$ 108	$ 690

XML

Convertible Senior Notes - Summary of Fair Value and Carrying Value of Convertible Senior Notes (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
0% Convertible Senior Notes Due 2026 | Fair Value
Debt Instrument [Line Items]
Convertible senior notes	$ 383,400
0% Convertible Senior Notes Due 2026 | Carrying Value
Debt Instrument [Line Items]
Convertible senior notes	267,878
0.125% Convertible Senior Notes Due 2024 | Fair Value
Debt Instrument [Line Items]
Convertible senior notes	616,500	$ 663,615
0.125% Convertible Senior Notes Due 2024 | Carrying Value
Debt Instrument [Line Items]
Convertible senior notes	378,373	369,032
1.50% Convertible Senior Notes Due 2022 | Fair Value
Debt Instrument [Line Items]
Convertible senior notes	1,224	265,488
1.50% Convertible Senior Notes Due 2022 | Carrying Value
Debt Instrument [Line Items]
Convertible senior notes	$ 282	$ 72,482

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Convertible Senior Notes - Summary of Total Interest Expense Recognized Related To Convertible Senior Notes (Parenthetical) (Details)	Jun. 30, 2021	Dec. 31, 2019	Nov. 30, 2017
0.125% Convertible Senior Notes Due 2024
Debt Instrument [Line Items]
Debt instrument, interest rate	0.125%	0.125%
0.125% Convertible Senior Notes Due 2024 | 0.125% coupon
Debt Instrument [Line Items]
Debt instrument, interest rate	0.125%
1.50% Convertible Senior Notes Due 2022
Debt Instrument [Line Items]
Debt instrument, interest rate	1.50%		1.50%
1.50% Convertible Senior Notes Due 2022 | 1.50% Coupon
Debt Instrument [Line Items]
Debt instrument, interest rate	1.50%

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Convertible Senior Notes - Summary of Debt Obligations (Details) $ in Thousands	Jun. 30, 2021 USD ($)
Debt Disclosure [Abstract]
Debt obligations, 2022-2023	$ 303
Debt obligations, 2024-2025	450,000
Debt obligations, Thereafter	375,000
Debt obligations, Total	$ 825,303

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Stockholders' Equity - Additional Information (Details) - $ / shares	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Equity [Abstract]
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares outstanding	0	0
Common stock, shares authorized	100,000,000	100,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, voting rights	Holders of common stock are entitled to one vote per share
Common stock, shares issued	38,288,685	35,449,447
Common stock, shares outstanding	38,288,685	35,449,447

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Stock Plans and Stock-Based Compensation - Additional Information (Details)	Sep. 15, 2016
2016 Equity Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Automatic increase percentage	3.00%

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Stock Plans and Stock-Based Compensation - 2016 Employee Stock Purchase Plan - Additional Information (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Sep. 15, 2016	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense		$ 15,505	$ 11,278	$ 28,190	$ 21,588
2016 Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Purchase price as percentage of fair market value of common stock	85.00%
Shares purchased under the plan				23,499	30,943
Stock-based compensation expense		400	$ 300	$ 900	$ 600
Unrecognized compensation cost		$ 300		$ 300
Cost amortized weighted-average period				2 months 15 days
Maximum | 2016 Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Increase in number of shares reserved and available for issuance	200,000
Common Stock | 2016 Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Increase in number of shares reserved and available for issuance, percentage	1.00%
Common Stock | Maximum | 2016 Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Purchase price, discount percentage	15.00%

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Stock Plans and Stock-Based Compensation - Schedule of Assumptions Used in Determining Fair Value of Shares Issuable (Details) - 2016 Employee Stock Purchase Plan	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected term (in years)	6 months	6 months
Expected volatility	60.00%	55.00%
Risk-free interest rate	0.06%	0.29%
Dividend rate	0.00%	0.00%

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Stock Plans and Stock-Based Compensation - Schedule of Assumptions Used in Determining Fair Value of Shares Issuable (Parenthetical) (Details)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
2016 Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Dividend rate	0.00%	0.00%

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Stock Plans and Stock-Based Compensation - Stock Options - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 15,505	$ 11,278	$ 28,190	$ 21,588
Intrinsic value of options exercised			8,600	15,400
Intrinsic value of all outstanding options	22,200	59,400	22,200	59,400
Total unrecognized compensation cost	500		500
Proceeds from stock option exercises			$ 2,163	$ 4,585
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options vesting period			4 years
Stock options expiration period			10 years
Stock options granted			0	0
Stock-based compensation expense	$ 400	$ 1,000	$ 800	$ 1,900
Weighted-average amortization period			7 months 6 days

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Stock Plans and Stock-Based Compensation - Schedule of Stock Option Activity (Details)	6 Months Ended
	Jun. 30, 2021 $ / shares shares
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Stock options outstanding, Beginning Balance | shares	279,021
Stock options outstanding, Exercised | shares	(75,853)
Stock options outstanding, Forfeited | shares	(4,369)
Stock options outstanding, Ending Balance | shares	198,799
Weighted average exercise price, Beginning Balance | $ / shares	$ 25.55
Weighted average exercise price, Exercised | $ / shares	28.55
Weighted average exercise price, Forfeited | $ / shares	33.32
Weighted average exercise price, Ending Balance | $ / shares	$ 24.23

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Stock Plans and Stock-Based Compensation - Schedule of Stock Options Outstanding, Vested and Expected to Vest and Exercisable (Details) - $ / shares	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Outstanding, Number of shares	198,799	279,021
Outstanding, Remaining contractual life (years)	5 years 7 months 28 days
Outstanding, Weighted-average exercise price	$ 24.23	$ 25.55
Vested and expected to vest, Number of shares	198,391
Vested and expected to vest, Remaining contractual life (years)	5 years 7 months 28 days
Vested and expected to vest, Weighted-average exercise price	$ 24.20
Exercisable, Number of shares	153,906
Exercisable, Remaining contractual life (years)	5 years 4 months 20 days
Exercisable, Weighted-average exercise price	$ 20.98

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Stock Plans and Stock-Based Compensation - Schedule of Vested and Nonvested Stock Option Activity (Details)	6 Months Ended
	Jun. 30, 2021 $ / shares shares
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Options outstanding, Vested | shares	153,906
Weighted average exercise price, Vested | $ / shares	$ 20.98
Options outstanding, Nonvested | shares	44,893
Weighted average exercise price, Nonvested | $ / shares	$ 35.38

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Stock Plans and Stock-Based Compensation - Restricted Stock Units - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 15,505	$ 11,278	$ 28,190	$ 21,588
Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation, number of stock unit grants in period			284,849
Stock-based compensation expense	7,400	$ 4,800	$ 13,300	$ 9,300
Number of stock units vested			81,625
Weighted-average grant date fair values of units granted			$ 121.67	$ 109.31
Fair values of stock units			$ 6,800	$ 4,000
Unrecognized compensation expense	$ 65,200		$ 65,200
Weighted-average amortization period			2 years 5 months 15 days

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Stock Plans and Stock-Based Compensation - Performance-Based Restricted Stock Units - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 15,505	$ 11,278	$ 28,190	$ 21,588
Performance-Based Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation, number of stock unit grants in period			288,292
Stock-based compensation expense	7,300	$ 5,200	$ 13,200	$ 9,800
Award achievement probability percentage			100.00%
Weighted-average grant date fair values of units granted			$ 121.80	$ 108.57
Number of stock units vested			48,043
Unrecognized compensation expense	$ 50,600		$ 50,600
Weighted-average amortization period			1 year 11 months 12 days
Performance-Based Restricted Stock Units | Tranche One
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation, compounded annual growth measurement period			2 years
Share-based compensation, vesting stock percentage			50.00%
Performance-Based Restricted Stock Units | Tranche Two
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation, compounded annual growth measurement period			3 years
Performance-Based Restricted Stock Units | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation, thresholds percentage of revenue growth			20.00%		15.00%
Share price	$ 118.04		$ 118.04
Performance-Based Restricted Stock Units | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation, thresholds percentage of revenue growth			40.00%		35.00%
Share price	$ 146.69		$ 146.69

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Stock Plans and Stock-Based Compensation - Summary of RSU and PSU Activity (Details) - Restricted Stock Units and Performance-Based Restricted Stock Units	6 Months Ended
	Jun. 30, 2021 shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Shares, Outstanding, Beginning Balance	1,420,541
Number of Shares, Granted	573,141
Number of Shares, Vested	(129,668)
Number of Shares, Forfeited	(73,644)
Number of Shares, Outstanding, Ending Balance	1,790,370

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Stock Plans and Stock-Based Compensation - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 15,505	$ 11,278	$ 28,190	$ 21,588
Cost of Revenue
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	819	703	1,818	1,311
Sales and Marketing
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	5,579	3,917	9,321	7,525
Research and Development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	2,562	2,298	4,590	4,172
General and Administrative Expenses
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 6,545	$ 4,360	$ 12,461	$ 8,580

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Basic and Diluted Net Loss Per Share - Schedule of Common Equivalent Shares were Excluded from Diluted Net Loss Per Share Calculation because their Inclusion would have been Anti-Dilutive (Details) - shares	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from diluted net loss per share	8,078,399	8,752,802
Convertible Senior Notes
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from diluted net loss per share	6,089,230	6,733,914
Stock-Based Compensation Grants
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from diluted net loss per share	1,989,169	2,018,888

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Basic and Diluted Net Loss per Share - Additional Information (Details) - USD ($) shares in Millions, $ in Millions	1 Months Ended			3 Months Ended	6 Months Ended
	Mar. 31, 2021	Dec. 31, 2019	Nov. 30, 2017	Mar. 31, 2021	Jun. 30, 2021
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Amount of common stock reserved					5.9
0% Convertible Senior Notes Due 2026
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Payments to enter capped call options	$ 35.1				$ 35.1
Convertible debt Instrument, Issuance date, month and year	2021-03
0.125% Convertible Senior Notes Due 2024
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Payments to enter capped call options		$ 44.9			44.9
Convertible debt Instrument, Issuance date, month and year		2019-12
1.50% Convertible Senior Notes Due 2022
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Payments to enter capped call options			$ 12.9
Convertible debt Instrument, Issuance date, month and year			2017-11
Proceeds from capped call options	$ 10.6	$ 5.8
Modification expense recognized				$ 0.2	$ 0.2

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Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Tax Disclosure [Line Items]
Benefit from income taxes	$ (3,787)	$ (1,504)	$ (9,600)	$ (2,205)
Effective benefit income tax rate	10.07%	7.26%	14.72%	4.71%
Unrecognized tax provision that would favorably impact effective tax rate	$ 1,600		$ 1,600
US
Income Tax Disclosure [Line Items]
Discrete tax expense (benefit)			$ 7,600

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Segment Information - Additional Information (Details)	6 Months Ended
	Jun. 30, 2021 Segment
Segment Reporting [Abstract]
Number of operating segment	1

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Revenue Recognition - Summary of Revenues Disaggregated by Geography (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Disaggregation Of Revenue [Line Items]
Revenue	$ 86,649	$ 65,377	$ 168,859	$ 124,277
United States
Disaggregation Of Revenue [Line Items]
Revenue	62,290	51,017	119,755	97,966
International
Disaggregation Of Revenue [Line Items]
Revenue	$ 24,359	$ 14,360	$ 49,104	$ 26,311

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Revenue Recognition - Summary of Revenues Disaggregated by Revenue Source (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Disaggregation Of Revenue [Line Items]
Revenue	$ 86,649	$ 65,377	$ 168,859	$ 124,277
Subscription Services
Disaggregation Of Revenue [Line Items]
Revenue	79,652	59,506	150,084	113,317
Professional Services
Disaggregation Of Revenue [Line Items]
Revenue	6,459	4,653	12,399	9,134
Software Licenses and Other
Disaggregation Of Revenue [Line Items]
Revenue	$ 538	$ 1,218	$ 6,376	$ 1,826

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Revenue Recognition - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Disaggregation Of Revenue [Line Items]
Deferred sales commissions current	$ 13,700,000		$ 13,700,000		$ 14,500,000
Deferred sales commissions noncurrent	17,600,000		17,600,000		15,900,000
Amortization expense for the deferred costs	3,500,000		7,200,000	$ 5,700,000	2,800,000
Impairment loss related to costs capitalized			0		$ 0
Subscription Services, License and other
Disaggregation Of Revenue [Line Items]
Revenue recognized	67,000,000.0	$ 51,200,000	106,100,000	83,000,000.0
Professional Services
Disaggregation Of Revenue [Line Items]
Revenue recognized	3,600,000	$ 3,900,000	7,500,000	$ 5,400,000
Revenue remaining performance obligation	11,600,000		11,600,000
Subscription Services And License
Disaggregation Of Revenue [Line Items]
Revenue remaining performance obligation	$ 412,300,000		$ 412,300,000

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Revenue Recognition - Remaining Performance Obligations - Additional Information (Details 1) $ in Millions	Jun. 30, 2021 USD ($)
Subscription and Other Contracts | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-07-01
Disaggregation Of Revenue [Line Items]
Revenue remaining performance obligation	$ 250.7
Remaining performance obligation recognition period	12 months
Professional Services
Disaggregation Of Revenue [Line Items]
Revenue remaining performance obligation	$ 11.6
Professional Services | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-07-01
Disaggregation Of Revenue [Line Items]
Revenue remaining performance obligation	$ 10.0
Remaining performance obligation recognition period	12 months

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Leases - Additional Information (Details)	6 Months Ended
	Jun. 30, 2021
Leases [Abstract]
Lease expiration period start	2021
Lease expiration period end	2029
Option to extend	true
Operating lease, not yet commenced, description	As of June 30, 2021, the Company does not have any leases that have not yet commenced that create significant rights and obligations.

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Leases - Summary of Additional Information Related to Leases (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Balance sheet information
ROU assets	$ 18,700		$ 15,045
Lease liabilities, current	$ 5,715		$ 4,259
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Other current liabilities		Other current liabilities
Lease liabilities, non-current	$ 16,363		$ 14,403
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Other long-term liabilities		Other long-term liabilities
Total lease liabilities	$ 22,078		$ 18,662
Supplemental data
Weighted average remaining lease term	4 years 5 months 26 days		4 years 6 months 25 days
Weighted average discount rate	6.23%		7.00%
Cash paid for amounts included in lease liabilities	$ 3,017	$ 2,330
ROU assets obtained in exchange for new lease obligations	$ 5,729	$ 4,853

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Leases - Schedule of Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Operating Lease Liabilities Payments Due [Abstract]
2021 (for the remaining six months)	$ 3,494
2022	6,715
2023	6,029
2024	3,341
2025	1,647
Thereafter	4,220
Total undiscounted lease payments	25,446
Less: imputed interest	(3,368)
Total lease liabilities	$ 22,078	$ 18,662

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Leases - Schedule of Components of Lease Expense (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Lease Cost [Abstract]
Operating lease expense		$ 1,466	$ 1,276	$ 2,769	$ 2,425
Short-term lease expense	[1]	225	337	391	552
Total		1,691	1,613	3,160	2,977
Less: Sublease income		(15)	(92)	(15)	(138)
Total lease expense		$ 1,676	$ 1,521	$ 3,145	$ 2,839

[1] Short-term lease expense includes all leases with lease terms ranging from less than one month to one year.