COVER PAGE
COVER PAGE - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 31, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 1-11859 | |
Entity Registrant Name | PEGASYSTEMS INC. | |
Entity Incorporation, State or Country Code | MA | |
Entity Tax Identification Number | 04-2787865 | |
Entity Address, Address Line One | One Rogers Street | |
Entity Address, City or Town | Cambridge | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02142-1209 | |
City Area Code | 617 | |
Local Phone Number | 374-9600 | |
Title of 12(b) Security | Common Stock, $.01 par value per share | |
Trading Symbol | PEGA | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 79,332,662 | |
Amendment Flag | false | |
Entity Central Index Key | 0001013857 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 92,104 | $ 114,422 |
Marketable securities | 20,465 | 93,001 |
Total cash, cash equivalents, and marketable securities | 112,569 | 207,423 |
Accounts receivable | 123,268 | 180,872 |
Unbilled receivables | 172,090 | 172,656 |
Other current assets | 58,204 | 49,684 |
Total current assets | 466,131 | 610,635 |
Long-term unbilled receivables | 123,962 | 151,237 |
Goodwill | 78,862 | 72,858 |
Other long-term assets | 248,069 | 147,823 |
Total assets | 917,024 | 982,553 |
Current liabilities: | ||
Accounts payable | 15,435 | 16,487 |
Accrued expenses | 41,520 | 45,506 |
Accrued compensation and related expenses | 88,349 | 84,671 |
Deferred revenue | 159,849 | 185,145 |
Other current liabilities | 15,742 | 0 |
Total current liabilities | 320,895 | 331,809 |
Operating lease liabilities | 56,904 | 0 |
Other long-term liabilities | 10,393 | 29,213 |
Total liabilities | 388,192 | 361,022 |
Stockholders’ equity: | ||
Preferred stock, 1,000 shares authorized; none issued | 0 | 0 |
Common stock, 200,000 shares authorized; 79,324 and 78,526 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 793 | 785 |
Additional paid-in capital | 129,559 | 123,205 |
Retained earnings | 412,389 | 510,863 |
Accumulated other comprehensive (loss) | (13,909) | (13,322) |
Total stockholders’ equity | 528,832 | 621,531 |
Total liabilities and stockholders’ equity | $ 917,024 | $ 982,553 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 79,324,000 | 78,526,000 |
Common stock, shares outstanding (in shares) | 79,324,000 | 78,526,000 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue | ||||
Total revenue | $ 216,703 | $ 203,263 | $ 634,841 | $ 635,224 |
Total revenue | 216,703 | 203,263 | 634,841 | 635,224 |
Cost of revenue | ||||
Total cost of revenue | 80,898 | 74,423 | 232,415 | 223,854 |
Gross profit | 135,805 | 128,840 | 402,426 | 411,370 |
Operating expenses | ||||
Selling and marketing | 115,237 | 87,490 | 341,064 | 269,845 |
Research and development | 52,492 | 46,504 | 152,802 | 135,261 |
General and administrative | 14,843 | 12,104 | 41,693 | 38,749 |
Total operating expenses | 182,572 | 146,098 | 535,559 | 443,855 |
(Loss) from operations | (46,767) | (17,258) | (133,133) | (32,485) |
Foreign currency transaction (loss) gain | (1,970) | 399 | (3,577) | 558 |
Interest income, net | 556 | 683 | 1,823 | 2,076 |
Other income, net | 323 | 0 | 378 | 363 |
(Loss) before (benefit from) income taxes | (47,858) | (16,176) | (134,509) | (29,488) |
(Benefit from) income taxes | (17,520) | (8,589) | (43,158) | (23,692) |
Net (loss) | $ (30,338) | $ (7,587) | $ (91,351) | $ (5,796) |
(Loss) per share | ||||
Basic (in dollars per share) | $ (0.38) | $ (0.10) | $ (1.16) | $ (0.07) |
Diluted (in dollars per share) | $ (0.38) | $ (0.10) | $ (1.16) | $ (0.07) |
Weighted-average number of common shares outstanding | ||||
Basic (in shares) | 79,200 | 78,700 | 78,928 | 78,525 |
Diluted (in shares) | 79,200 | 78,700 | 78,928 | 78,525 |
Software license | ||||
Revenue | ||||
Total revenue | $ 58,005 | $ 52,342 | $ 165,543 | $ 184,899 |
Cost of revenue | ||||
Total cost of revenue | 676 | 1,255 | 2,982 | 3,772 |
Maintenance | ||||
Revenue | ||||
Total revenue | 70,371 | 66,017 | 207,406 | 196,448 |
Cost of revenue | ||||
Total cost of revenue | 6,688 | 6,079 | 19,315 | 18,035 |
Services | ||||
Revenue | ||||
Total revenue | 88,327 | 84,904 | 261,892 | 253,877 |
Cost of revenue | ||||
Total cost of revenue | $ 73,534 | $ 67,089 | $ 210,118 | $ 202,047 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) | $ (30,338) | $ (7,587) | $ (91,351) | $ (5,796) |
Other comprehensive (loss), net of tax | ||||
Unrealized (loss) gain on available-for-sale marketable securities | (216) | (162) | 396 | (277) |
Foreign currency translation adjustments | (2,201) | (1,934) | (983) | (4,898) |
Total other comprehensive (loss), net of tax | (2,417) | (2,096) | (587) | (5,175) |
Comprehensive (loss) | $ (32,755) | $ (9,683) | $ (91,938) | $ (10,971) |
UNAUDITED CONDENSED CONSOLIDA_5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income |
Balance, beginning of period (in shares) at Dec. 31, 2017 | 78,081,000 | ||||
Balance, beginning of period at Dec. 31, 2017 | $ 655,870 | $ 781 | $ 152,097 | $ 509,697 | $ (6,705) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Repurchase of common stock (in shares) | (101,000) | ||||
Repurchase of common stock | (5,689) | $ (1) | (5,688) | ||
Issuance of common stock for share-based compensation plans (in shares) | 566,000 | ||||
Issuance of common stock for share-based compensation plans | (15,551) | $ 5 | (15,556) | ||
Stock-based compensation | 15,109 | 15,109 | |||
Cash dividends declared ($0.12 per share) | (2,355) | (2,355) | |||
Other comprehensive income (loss) | 4,262 | 4,262 | |||
Net income (loss) | 12,200 | 12,200 | |||
Balance, end of period (in shares) at Mar. 31, 2018 | 78,546,000 | ||||
Balance, end of period at Mar. 31, 2018 | 663,846 | $ 785 | 145,962 | 519,542 | (2,443) |
Balance, beginning of period (in shares) at Dec. 31, 2017 | 78,081,000 | ||||
Balance, beginning of period at Dec. 31, 2017 | 655,870 | $ 781 | 152,097 | 509,697 | (6,705) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Other comprehensive income (loss) | (5,175) | ||||
Net income (loss) | (5,796) | ||||
Balance, end of period (in shares) at Sep. 30, 2018 | 78,816,000 | ||||
Balance, end of period at Sep. 30, 2018 | 620,855 | $ 788 | 135,132 | 496,815 | (11,880) |
Balance, beginning of period (in shares) at Mar. 31, 2018 | 78,546,000 | ||||
Balance, beginning of period at Mar. 31, 2018 | 663,846 | $ 785 | 145,962 | 519,542 | (2,443) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Repurchase of common stock (in shares) | (171,000) | ||||
Repurchase of common stock | (10,181) | $ (2) | (10,179) | ||
Issuance of common stock for share-based compensation plans (in shares) | 358,000 | ||||
Issuance of common stock for share-based compensation plans | (11,391) | $ 4 | (11,395) | ||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 15,000 | ||||
Issuance of common stock under Employee Stock Purchase Plan | 849 | 849 | |||
Stock-based compensation | 16,163 | 16,163 | |||
Cash dividends declared ($0.12 per share) | (2,364) | (2,364) | |||
Other comprehensive income (loss) | (7,341) | (7,341) | |||
Net income (loss) | (10,409) | (10,409) | |||
Balance, end of period (in shares) at Jun. 30, 2018 | 78,748,000 | ||||
Balance, end of period at Jun. 30, 2018 | 639,172 | $ 787 | 141,400 | 506,769 | (9,784) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Repurchase of common stock (in shares) | (242,000) | ||||
Repurchase of common stock | (14,279) | $ (2) | (14,277) | ||
Issuance of common stock for share-based compensation plans (in shares) | 310,000 | ||||
Issuance of common stock for share-based compensation plans | (8,396) | $ 3 | (8,399) | ||
Stock-based compensation | 16,408 | 16,408 | |||
Cash dividends declared ($0.12 per share) | (2,367) | (2,367) | |||
Other comprehensive income (loss) | (2,096) | (2,096) | |||
Net income (loss) | (7,587) | (7,587) | |||
Balance, end of period (in shares) at Sep. 30, 2018 | 78,816,000 | ||||
Balance, end of period at Sep. 30, 2018 | $ 620,855 | $ 788 | 135,132 | 496,815 | (11,880) |
Balance, beginning of period (in shares) at Dec. 31, 2018 | 78,526,000 | 78,526,000 | |||
Balance, beginning of period at Dec. 31, 2018 | $ 621,531 | $ 785 | 123,205 | 510,863 | (13,322) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Repurchase of common stock (in shares) | (144,000) | ||||
Repurchase of common stock | (7,587) | $ (1) | (7,586) | ||
Issuance of common stock for share-based compensation plans (in shares) | 514,000 | ||||
Issuance of common stock for share-based compensation plans | (14,838) | $ 5 | (14,843) | ||
Stock-based compensation | 18,406 | 18,406 | |||
Cash dividends declared ($0.12 per share) | (2,367) | (2,367) | |||
Other comprehensive income (loss) | 2,001 | 2,001 | |||
Net income (loss) | (28,717) | (28,717) | |||
Balance, end of period (in shares) at Mar. 31, 2019 | 78,896,000 | ||||
Balance, end of period at Mar. 31, 2019 | $ 588,429 | $ 789 | 119,182 | 479,779 | (11,321) |
Balance, beginning of period (in shares) at Dec. 31, 2018 | 78,526,000 | 78,526,000 | |||
Balance, beginning of period at Dec. 31, 2018 | $ 621,531 | $ 785 | 123,205 | 510,863 | (13,322) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Other comprehensive income (loss) | (587) | ||||
Net income (loss) | $ (91,351) | ||||
Balance, end of period (in shares) at Sep. 30, 2019 | 79,324,000 | 79,324,000 | |||
Balance, end of period at Sep. 30, 2019 | $ 528,832 | $ 793 | 129,559 | 412,389 | (13,909) |
Balance, beginning of period (in shares) at Mar. 31, 2019 | 78,896,000 | ||||
Balance, beginning of period at Mar. 31, 2019 | 588,429 | $ 789 | 119,182 | 479,779 | (11,321) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Repurchase of common stock (in shares) | (88,000) | ||||
Repurchase of common stock | (6,302) | $ (1) | (6,301) | ||
Issuance of common stock for share-based compensation plans (in shares) | 320,000 | ||||
Issuance of common stock for share-based compensation plans | (11,214) | $ 3 | (11,217) | ||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 16,000 | ||||
Issuance of common stock under Employee Stock Purchase Plan | 1,103 | 1,103 | |||
Stock-based compensation | 20,113 | 20,113 | |||
Cash dividends declared ($0.12 per share) | (2,375) | (2,375) | |||
Other comprehensive income (loss) | (171) | (171) | |||
Net income (loss) | (32,296) | (32,296) | |||
Balance, end of period (in shares) at Jun. 30, 2019 | 79,144,000 | ||||
Balance, end of period at Jun. 30, 2019 | 557,287 | $ 791 | 122,880 | 445,108 | (11,492) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Repurchase of common stock (in shares) | (88,000) | ||||
Repurchase of common stock | (6,397) | $ (1) | (6,396) | ||
Issuance of common stock for share-based compensation plans (in shares) | 268,000 | ||||
Issuance of common stock for share-based compensation plans | (8,801) | $ 3 | (8,804) | ||
Stock-based compensation | 21,879 | 21,879 | |||
Cash dividends declared ($0.12 per share) | (2,381) | (2,381) | |||
Other comprehensive income (loss) | (2,417) | (2,417) | |||
Net income (loss) | $ (30,338) | (30,338) | |||
Balance, end of period (in shares) at Sep. 30, 2019 | 79,324,000 | 79,324,000 | |||
Balance, end of period at Sep. 30, 2019 | $ 528,832 | $ 793 | $ 129,559 | $ 412,389 | $ (13,909) |
UNAUDITED CONDENSED CONSOLIDA_6
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | |
Statement of Stockholders' Equity [Abstract] | ||||||
Dividend declared (in dollars per share) | $ 0.12 | $ 0.12 | $ 0.12 | $ 0.12 | $ 0.12 | $ 0.12 |
UNAUDITED CONDENSED CONSOLIDA_7
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Operating activities | ||
Net (loss) | $ (91,351) | $ (5,796) |
Adjustments to reconcile net (loss) to cash (used in) provided by operating activities | ||
Stock-based compensation | 60,242 | 47,573 |
Amortization and depreciation | 50,622 | 31,742 |
Deferred income taxes | (40,531) | (1,388) |
Foreign currency transaction loss (gain) | 3,577 | (558) |
Other non-cash | (363) | (1,377) |
Change in operating assets and liabilities, net | 4,342 | (3,108) |
Cash (used in) provided by operating activities | (13,462) | 67,088 |
Investing activities | ||
Purchases of investments | (11,182) | (68,177) |
Proceeds from maturities and called investments | 13,066 | 26,456 |
Sales of investments | 68,937 | 0 |
Payments for acquisitions, net of cash acquired | (10,934) | 0 |
Investment in property and equipment | (6,439) | (7,874) |
Cash provided by (used in) investing activities | 53,448 | (49,595) |
Financing activities | ||
Dividend payments to shareholders | (7,105) | (7,067) |
Common stock repurchases | (54,836) | (64,597) |
Cash (used in) financing activities | (61,941) | (71,664) |
Effect of exchange rate changes on cash and cash equivalents | (363) | (1,913) |
Net (decrease) in cash and cash equivalents | (22,318) | (56,084) |
Cash and cash equivalents, beginning of period | 114,422 | 162,279 |
Cash and cash equivalents, end of period | $ 92,104 | $ 106,195 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Pegasystems Inc. (together with its subsidiaries, “the Company”) has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all the information required by accounting principles generally accepted in the United States of America (“U.S.”) for complete financial statements and should be read in conjunction with the Company’s audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2018 . In the opinion of management, the Company has prepared the accompanying unaudited condensed consolidated financial statements on the same basis as its audited financial statements, and these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year 2019 . |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS Leases On January 1, 2019, the Company adopted Accounting Standards Codification 842 “Leases” (“ASC 842”) using the modified retrospective method, reflecting any cumulative effect as an adjustment to equity. Results for reporting periods beginning on or after January 1, 2019 are presented under ASC 842, while prior period amounts were not adjusted and continue to be reported in accordance with the Company’s historical accounting under ASC 840 “Leases”. The Company elected the permitted practical expedients to not reassess the following related to leases that commenced before the effective date of ASC 842: (i) whether any expired or existing contracts contain leases; (ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. Upon adoption, the Company recorded right of use assets of $41.8 million and lease liabilities of $54.2 million . The difference between the value of the right of use assets and lease liabilities is due to the reclassification of existing deferred rent, prepaid rent, and unamortized lease incentives as of January 1, 2019. See Note 9. “Leases” for additional information. Financial instruments In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires measurement and recognition of expected credit losses for financial assets measured at amortized cost, including accounts receivable, upon initial recognition of that financial asset using a forward-looking expected loss model, rather than an incurred loss model. Credit losses relating to available-for-sale debt securities should be recorded through an allowance for credit losses when the fair value is below the amortized cost of the asset, removing the concept of “other-than-temporary” impairments. The effective date for the Company will be January 1, 2020, with early adoption permitted. The Company does not expect the adoption of this standard will have a material effect on its financial position or results of operations. |
MARKETABLE SECURITIES
MARKETABLE SECURITIES | 9 Months Ended |
Sep. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
MARKETABLE SECURITIES | MARKETABLE SECURITIES September 30, 2019 (in thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value Municipal bonds $ 10,680 $ 69 $ — $ 10,749 Corporate bonds 9,611 105 — 9,716 $ 20,291 $ 174 $ — $ 20,465 December 31, 2018 (in thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value Municipal bonds $ 44,802 $ 13 $ (110 ) $ 44,705 Corporate bonds 48,499 23 (226 ) 48,296 $ 93,301 $ 36 $ (336 ) $ 93,001 As of September 30, 2019 , maturities of marketable securities ranged from May 2020 to August 2022 , with a weighted-average remaining maturity of approximately 1.5 years . |
RECEIVABLES, CONTRACT ASSETS, A
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE | 9 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE | RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE Receivables (in thousands) September 30, 2019 December 31, 2018 Accounts receivable $ 123,268 $ 180,872 Unbilled receivables 172,090 172,656 Long-term unbilled receivables 123,962 151,237 $ 419,320 $ 504,765 Unbilled receivables are client committed amounts for which revenue recognition precedes billing, and billing is solely subject to the passage of time. Unbilled receivables are expected to be billed in the future as follows : (Dollars in thousands) September 30, 2019 1 year or less $ 172,090 59 % 1-2 years 84,045 28 % 2-5 years 39,917 13 % $ 296,052 100 % Contract assets and deferred revenue (in thousands) September 30, 2019 December 31, 2018 Contract assets (1) $ 5,046 $ 3,711 Long-term contract assets (2) 2,381 2,543 $ 7,427 $ 6,254 (1) Included in other current assets. (2) Included in other long-term assets. (in thousands) September 30, 2019 December 31, 2018 Deferred revenue $ 159,849 $ 185,145 Long-term deferred revenue (1) 4,029 5,344 $ 163,878 $ 190,489 (1) Included in other long-term liabilities. Contract assets are client committed amounts for which revenue recognized exceeds the amount billed to the client and the right to payment is subject to conditions other than the passage of time, such as the completion of a related performance obligation. Deferred revenue consists of billings and payments received in advance of revenue recognition. Contract assets and deferred revenue are netted at the contract level for each reporting period. The change in deferred revenue in the nine months ended September 30, 2019 was primarily due to revenue recognized during the period that was included in deferred revenue at December 31, 2018 , partially offset by new billings in advance of revenue recognition. |
DEFERRED CONTRACT COSTS
DEFERRED CONTRACT COSTS | 9 Months Ended |
Sep. 30, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
DEFERRED CONTRACT COSTS | DEFERRED CONTRACT COSTS The Company recognizes an asset for the incremental costs of obtaining a client contract, which relate to sales commissions. The Company expects to benefit from those costs for more than one year, as the Company generally only pays sales commissions on the initial contract and not any subsequent contract renewals. As a result, there are no commensurate commissions paid on contract renewals. Deferred costs are amortized on a straight-line basis over the benefit period, which is on average 5 years . (in thousands) September 30, 2019 December 31, 2018 Deferred contract costs (1) $ 67,182 $ 64,367 (1) Included in other long-term assets. Three Months Ended Nine Months Ended (in thousands) 2019 2018 2019 2018 Amortization of deferred contract costs (1) $ 8,193 $ 4,208 $ 22,372 $ 11,806 (1) Included in selling and marketing expenses . |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill The change in the carrying amount of goodwill was: (in thousands) Nine Months Ended Balance as of January 1, $ 72,858 Acquisition (1) 6,179 Currency translation adjustments (175 ) Balance as of September 30, $ 78,862 (1) In May 2019, the Company acquired In the Chat Communications Inc., a privately-held software provider of digital customer service software, for $10.9 million , net of cash acquired. The Company also expects to issue up to approximately 15 thousand shares in retention-based bonus payments to a key employee upon the achievement of specified retention milestones. The principal assets and liabilities acquired as part of the business combination were additional goodwill and technology intangible assets of $6.2 million and $5.1 million . Intangibles Intangible assets are recorded at cost and amortized using the straight-line method over their estimated useful lives as follows: September 30, 2019 (in thousands) Useful Lives Cost Accumulated Net Book Value (1) Client-related 4-10 years $ 63,089 $ (53,960 ) $ 9,129 Technology 2-10 years 64,843 (53,252 ) 11,591 Other 1 - 5 years 5,361 (5,361 ) — $ 133,293 $ (112,573 ) $ 20,720 (1) Included in other long-term assets. December 31, 2018 (in thousands) Useful Lives Cost Accumulated Amortization Net Book Value (1) Client-related 4-10 years $ 63,115 $ (51,224 ) $ 11,891 Technology 2-10 years 59,742 (50,398 ) 9,344 Other 1 - 5 years 5,361 (5,361 ) — $ 128,218 $ (106,983 ) $ 21,235 (1) Included in other long-term assets. Amortization of intangible assets was: (in thousands) Three Months Ended Nine Months Ended 2019 2018 2019 2018 Cost of revenue $ 647 $ 1,232 $ 2,854 $ 3,695 Selling and marketing 370 1,603 2,754 4,813 $ 1,017 $ 2,835 $ 5,608 $ 8,508 |
ACCRUED EXPENSES
ACCRUED EXPENSES | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | ACCRUED EXPENSES (in thousands) September 30, 2019 December 31, 2018 Outside professional services expenses $ 8,568 $ 10,367 Income and other taxes 5,418 10,387 Marketing and sales program expenses 5,969 5,860 Dividends payable 2,381 2,363 Employee-related expenses 4,785 3,536 Cloud hosting expenses 10,158 4,604 Other 4,241 8,389 $ 41,520 $ 45,506 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Assets and liabilities measured at fair value on a recurring basis The Company records its cash equivalents, marketable securities, and investments in privately-held companies at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants based on assumptions that market participants would use in pricing an asset or liability. As a basis for classifying the fair value measurements, a three-tier fair value hierarchy, which classifies the fair value measurements based on the inputs used in measuring fair value, was established as follows: • Level 1 - observable inputs such as quoted prices in active markets for identical assets or liabilities; • Level 2 - significant other inputs that are observable either directly or indirectly; and • Level 3 - significant unobservable inputs on which there is little or no market data, which require the Company to develop its own assumptions. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The Company’s cash equivalents are composed of money market funds and time deposits, which are classified within Level 1 and Level 2, respectively, in the fair value hierarchy. The Company’s marketable securities, which are classified within Level 2 of the fair value hierarchy, are valued based on a market approach using quoted prices, when available, or matrix pricing compiled by third-party pricing vendors, using observable market inputs such as interest rates, yield curves, and credit risk. The Company’s investments in privately-held companies are classified within Level 3 of the fair value hierarchy. If applicable, the Company will recognize transfers into and out of levels within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurs. There were no transfers between levels during the nine months ended September 30, 2019 . The Company’s assets and liabilities measured at fair value on a recurring basis were: September 30, 2019 (in thousands) Level 1 Level 2 Level 3 Total Cash equivalents $ 88 $ — $ — $ 88 Marketable securities: Municipal bonds $ — $ 10,749 $ — $ 10,749 Corporate bonds — 9,716 — 9,716 Total marketable securities $ — $ 20,465 $ — $ 20,465 Investments in privately-held companies (1) $ — $ — $ 4,583 $ 4,583 (1) Included in other long-term assets. December 31, 2018 (in thousands) Level 1 Level 2 Level 3 Total Cash equivalents $ 10,155 $ 10,000 $ — $ 20,155 Marketable securities: Municipal bonds $ — $ 44,705 $ — $ 44,705 Corporate bonds — 48,296 — 48,296 Total marketable securities $ — $ 93,001 $ — $ 93,001 Investments in privately-held companies (1) $ — $ — $ 3,390 $ 3,390 (1) Included in other long-term assets. For certain other financial instruments, including accounts receivable and accounts payable, the carrying value approximates fair value due to the relatively short maturity of these items. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
LEASES | LEASES The Company’s leases are primarily for office space used in the ordinary course of business. Accounting policy All the Company’s leases are operating leases. The Company accounts for a contract as a lease when it has the right to control the asset for a period of time while obtaining substantially all of the asset’s economic benefits. The Company determines the initial classification and measurement of its operating right of use assets and lease liabilities at the lease commencement date and thereafter if modified. Fixed lease costs are recognized on a straight-line basis over the term of the lease. Variable lease costs are recognized in the period in which the obligation for those payments is incurred. The Company combines lease and non-lease components in the determination of lease costs for its office space leases. The lease liability includes lease payments related to options to extend or renew the lease term if the Company is reasonably certain it will exercise those options. The Company’s leases do not contain any material residual value guarantees or restrictive covenants. Expense (in thousands) Three Months Ended Nine Months Ended Fixed lease costs $ 4,763 $ 13,344 Variable lease costs 1,470 4,153 $ 6,233 $ 17,497 Right of use assets and lease liabilities (in thousands) September 30, 2019 Right of use assets (1) $ 62,296 Lease liabilities (2) $ 15,742 Long-term lease liabilities $ 56,904 (1) Represents the Company’s right to use the leased asset during the lease term. Included in other long-term assets. (2) Included in other current liabilities. The weighted-average remaining lease term and discount rate for the Company’s leases were: September 30, 2019 Weighted-average remaining lease term 4.2 years Weighted-average discount rate (1) 5.8 % (1) The rates implicit in most of the Company’s leases are not readily determinable, therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease. Maturities of lease liabilities are: (in thousands) September 30, 2019 Remainder of 2019 $ 3,402 2020 21,061 2021 18,800 2022 17,642 2023 and thereafter 21,375 Total lease payments 82,280 Less: imputed interest (1) (9,634 ) Total short and long-term lease liabilities $ 72,646 (1) Lease liabilities are measured at the present value of the remaining lease payments using a discount rate determined at lease commencement unless the discount rate is updated as a result of a lease reassessment event. As of December 31, 2018 , the Company’s future minimum rental payments required under operating leases with noncancellable terms in excess of one year as determined before the adoption of ASC 842 were: (in thousands) Operating Leases (1) 2019 $ 15,993 2020 14,807 2021 13,262 2022 12,279 2023 11,084 $ 67,425 (1) Operating leases include future minimum rent payments, net of estimated sublease income for facilities that the Company has vacated pursuant to its restructuring activities. Cash flow information (in thousands) Nine Months Ended Cash paid for leases 14,586 Right of use assets recognized for new leases and amendments (non-cash) 31,126 |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Geographic revenue Three Months Ended Nine Months Ended (Dollars in thousands) 2019 2018 2019 2018 U.S. $ 123,447 57 % $ 103,075 51 % $ 347,120 55 % $ 327,409 51 % Other Americas 11,748 5 % 10,424 5 % 49,450 8 % 37,766 6 % United Kingdom (“U.K.”) 23,034 11 % 19,277 9 % 64,269 10 % 68,450 11 % Europe (excluding U.K.), Middle East, and Africa 34,761 16 % 42,254 21 % 102,342 16 % 101,150 16 % Asia-Pacific 23,713 11 % 28,233 14 % 71,660 11 % 100,449 16 % $ 216,703 100 % $ 203,263 100 % $ 634,841 100 % $ 635,224 100 % Revenue streams Three Months Ended Nine Months Ended (in thousands) 2019 2018 2019 2018 Perpetual license $ 9,016 $ 20,276 $ 43,286 $ 56,829 Term license 48,989 32,066 122,257 128,070 Revenue recognized at a point in time 58,005 52,342 165,543 184,899 Maintenance 70,371 66,017 207,406 196,448 Cloud 35,153 22,184 94,610 57,967 Consulting 53,174 62,720 167,282 195,910 Revenue recognized over time 158,698 150,921 469,298 450,325 $ 216,703 $ 203,263 $ 634,841 $ 635,224 (in thousands) Three Months Ended Nine Months Ended 2019 2018 2019 2018 Term license $ 48,989 $ 32,066 $ 122,257 $ 128,070 Cloud 35,153 22,184 94,610 57,967 Maintenance 70,371 66,017 207,406 196,448 Subscription (1) 154,513 120,267 424,273 382,485 Perpetual license 9,016 20,276 43,286 56,829 Consulting 53,174 62,720 167,282 195,910 $ 216,703 $ 203,263 $ 634,841 $ 635,224 (1) Reflects client arrangements (term license, cloud, and maintenance) that are subject to renewal. Remaining performance obligations (“RPO”) Expected future revenue on existing contracts: September 30, 2019 (Dollars in thousands) Perpetual license Term license Maintenance Cloud Consulting Total 1 year or less $ 7,689 $ 25,948 $ 158,220 $ 133,785 $ 13,145 $ 338,787 56 % 1-2 years 853 3,798 18,590 105,081 863 129,185 21 % 2-3 years 1,306 591 8,323 72,915 841 83,976 14 % Greater than 3 years — 85 4,959 51,591 — 56,635 9 % $ 9,848 $ 30,422 $ 190,092 $ 363,372 $ 14,849 $ 608,583 100 % September 30, 2018 (Dollars in thousands) Perpetual license Term License Maintenance Cloud Consulting Total 1 year or less $ 25,343 $ 44,283 $ 140,591 $ 88,529 $ 14,107 $ 312,853 60 % 1-2 years 6,490 10,063 8,877 70,815 1,830 98,075 19 % 2-3 years 360 1,598 2,586 54,646 449 59,639 11 % Greater than 3 years 1,306 218 1,079 49,110 50 51,763 10 % $ 33,499 $ 56,162 $ 153,133 $ 263,100 $ 16,436 $ 522,330 100 % Major clients Clients accounting for 10% or more of the Company’s total revenue were: Three Months Ended Nine Months Ended (in thousands) 2019 2018 2019 2018 Total revenue $ 216,703 $ 203,263 $ 634,841 $ 635,224 Client A * 10 % * * *Client accounted for less than 10% of total revenue. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Expense Three Months Ended Nine Months Ended (in thousands) 2019 2018 2019 2018 Cost of revenues $ 4,787 $ 4,319 $ 14,216 $ 12,277 Selling and marketing 8,317 6,198 24,055 16,895 Research and development 4,858 3,917 13,990 11,356 General and administrative 3,884 1,974 7,981 7,045 $ 21,846 $ 16,408 $ 60,242 $ 47,573 Income tax benefit $ (4,430 ) $ (3,555 ) $ (12,226 ) $ (10,037 ) As of September 30, 2019 , the Company had $95.6 million of unrecognized stock-based compensation expense, net of estimated forfeitures, which is expected to be recognized over a weighted-average period of 2.2 years. Grants The Company granted the following stock-based compensation awards: Nine Months Ended (in thousands) Shares Total Fair Value RSUs 1,153 $ 75,510 Non-qualified stock options 2,165 $ 41,260 Common stock 11 $ 800 Common stock issued During the nine months ended September 30, 2019 , the Company issued 1.1 million shares of common stock unde r the Company’s stock-based compensation plans. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Effective income tax rate Nine Months Ended (Dollars in thousands) 2019 2018 (Benefit from) income taxes $ (43,158 ) $ (23,692 ) Effective income tax rate 32 % 80 % During the nine months ended September 30, 2019 , the Company’s effective income tax rate decreased primarily due to the Global Intangible Low-Taxed Income (“GILTI”) provision of the Tax Reform Act. The Company’s effective income tax rate was also affected by excess tax benefits from stock-based compensation and an increase in U.S. research and development tax credits. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share is computed using the weighted-average number of common shares outstanding during the applicable period. Diluted earnings per share is computed using the weighted-average number of common shares outstanding during the applicable period, plus the dilutive effect of outstanding stock options and RSUs, using the treasury stock method. In periods of loss, all stock options and RSUs are excluded, as their inclusion would be anti-dilutive. The calculation of the basic and diluted earnings per share was: Three Months Ended Nine Months Ended (in thousands, except per share amounts) 2019 2018 2019 2018 Basic Net (loss) $ (30,338 ) $ (7,587 ) $ (91,351 ) $ (5,796 ) Weighted-average common shares outstanding 79,200 78,700 78,928 78,525 (Loss) per share, basic $ (0.38 ) $ (0.10 ) $ (1.16 ) $ (0.07 ) Diluted Net (loss) $ (30,338 ) $ (7,587 ) $ (91,351 ) $ (5,796 ) Weighted-average effect of dilutive securities: Stock options — — — — RSUs — — — — Effect of dilutive securities — — — — Weighted-average common shares outstanding, assuming dilution 79,200 78,700 78,928 78,525 (Loss) per share, diluted $ (0.38 ) $ (0.10 ) $ (1.16 ) $ (0.07 ) Outstanding anti-dilutive stock options and RSUs (1) 5,953 6,119 5,923 6,380 (1) Certain outstanding stock options and RSUs were excluded from the computation of diluted earnings per share because they were anti-dilutive in the period presented. These awards may be dilutive in the future. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS On November 6, 2019 , the Company entered into a five -year $100 million , senior secured revolving credit agreement (the “Credit Agreement”) with PNC Bank, National Association (“PNC”). The Company may use borrowings to finance working capital needs and for general corporate purposes. Subject to specific circumstances, the Credit Agreement allows the Company to increase the aggregate commitment up to $200 million . The Credit Agreement contains customary covenants, including, but not limited to, those relating to additional indebtedness, liens, asset divestures and affiliate transactions. The Company is also required to comply with financial covenants that consist of a maximum net consolidated leverage ratio of 3.5 (with a step-up in the event of certain acquisitions) and a minimum consolidated interest coverage ratio of 3.5 . The commitments expire on November 4, 2024 , and any outstanding loans will be payable on such date. |
NEW ACCOUNTING PRONOUNCEMENTS (
NEW ACCOUNTING PRONOUNCEMENTS (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of presentation | Pegasystems Inc. (together with its subsidiaries, “the Company”) has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all the information required by accounting principles generally accepted in the United States of America (“U.S.”) for complete financial statements and should be read in conjunction with the Company’s audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2018 . In the opinion of management, the Company has prepared the accompanying unaudited condensed consolidated financial statements on the same basis as its audited financial statements, and these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented. |
Leases | Leases On January 1, 2019, the Company adopted Accounting Standards Codification 842 “Leases” (“ASC 842”) using the modified retrospective method, reflecting any cumulative effect as an adjustment to equity. Results for reporting periods beginning on or after January 1, 2019 are presented under ASC 842, while prior period amounts were not adjusted and continue to be reported in accordance with the Company’s historical accounting under ASC 840 “Leases”. The Company elected the permitted practical expedients to not reassess the following related to leases that commenced before the effective date of ASC 842: (i) whether any expired or existing contracts contain leases; (ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. Upon adoption, the Company recorded right of use assets of $41.8 million and lease liabilities of $54.2 million . The difference between the value of the right of use assets and lease liabilities is due to the reclassification of existing deferred rent, prepaid rent, and unamortized lease incentives as of January 1, 2019. See Note 9. “Leases” for additional information. All the Company’s leases are operating leases. The Company accounts for a contract as a lease when it has the right to control the asset for a period of time while obtaining substantially all of the asset’s economic benefits. The Company determines the initial classification and measurement of its operating right of use assets and lease liabilities at the lease commencement date and thereafter if modified. Fixed lease costs are recognized on a straight-line basis over the term of the lease. Variable lease costs are recognized in the period in which the obligation for those payments is incurred. The Company combines lease and non-lease components in the determination of lease costs for its office space leases. The lease liability includes lease payments related to options to extend or renew the lease term if the Company is reasonably certain it will exercise those options. The Company’s leases do not contain any material residual value guarantees or restrictive covenants. |
Financial Instruments | Financial instruments In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires measurement and recognition of expected credit losses for financial assets measured at amortized cost, including accounts receivable, upon initial recognition of that financial asset using a forward-looking expected loss model, rather than an incurred loss model. Credit losses relating to available-for-sale debt securities should be recorded through an allowance for credit losses when the fair value is below the amortized cost of the asset, removing the concept of “other-than-temporary” impairments. The effective date for the Company will be January 1, 2020, with early adoption permitted. The Company does not expect the adoption of this standard will have a material effect on its financial position or results of operations. |
Assets and liabilities measured at fair value on a recurring basis | Assets and liabilities measured at fair value on a recurring basis The Company records its cash equivalents, marketable securities, and investments in privately-held companies at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants based on assumptions that market participants would use in pricing an asset or liability. As a basis for classifying the fair value measurements, a three-tier fair value hierarchy, which classifies the fair value measurements based on the inputs used in measuring fair value, was established as follows: • Level 1 - observable inputs such as quoted prices in active markets for identical assets or liabilities; • Level 2 - significant other inputs that are observable either directly or indirectly; and • Level 3 - significant unobservable inputs on which there is little or no market data, which require the Company to develop its own assumptions. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The Company’s cash equivalents are composed of money market funds and time deposits, which are classified within Level 1 and Level 2, respectively, in the fair value hierarchy. The Company’s marketable securities, which are classified within Level 2 of the fair value hierarchy, are valued based on a market approach using quoted prices, when available, or matrix pricing compiled by third-party pricing vendors, using observable market inputs such as interest rates, yield curves, and credit risk. The Company’s investments in privately-held companies are classified within Level 3 of the fair value hierarchy. |
MARKETABLE SECURITIES (Tables)
MARKETABLE SECURITIES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Marketable Securities | September 30, 2019 (in thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value Municipal bonds $ 10,680 $ 69 $ — $ 10,749 Corporate bonds 9,611 105 — 9,716 $ 20,291 $ 174 $ — $ 20,465 December 31, 2018 (in thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value Municipal bonds $ 44,802 $ 13 $ (110 ) $ 44,705 Corporate bonds 48,499 23 (226 ) 48,296 $ 93,301 $ 36 $ (336 ) $ 93,001 |
RECEIVABLES, CONTRACT ASSETS,_2
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
Summary of Receivable | Receivables (in thousands) September 30, 2019 December 31, 2018 Accounts receivable $ 123,268 $ 180,872 Unbilled receivables 172,090 172,656 Long-term unbilled receivables 123,962 151,237 $ 419,320 $ 504,765 |
Summary of Unbilled Receivables | Unbilled receivables are expected to be billed in the future as follows : (Dollars in thousands) September 30, 2019 1 year or less $ 172,090 59 % 1-2 years 84,045 28 % 2-5 years 39,917 13 % $ 296,052 100 % |
Summary of Contract Assets and Deferred Revenue | Contract assets and deferred revenue (in thousands) September 30, 2019 December 31, 2018 Contract assets (1) $ 5,046 $ 3,711 Long-term contract assets (2) 2,381 2,543 $ 7,427 $ 6,254 (1) Included in other current assets. (2) Included in other long-term assets. (in thousands) September 30, 2019 December 31, 2018 Deferred revenue $ 159,849 $ 185,145 Long-term deferred revenue (1) 4,029 5,344 $ 163,878 $ 190,489 (1) Included in other long-term liabilities. |
DEFERRED CONTRACT COSTS (Tables
DEFERRED CONTRACT COSTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Impairment of Deferred Contract Costs | (in thousands) September 30, 2019 December 31, 2018 Deferred contract costs (1) $ 67,182 $ 64,367 (1) Included in other long-term assets. |
Schedule of Amortization of Deferred Contract Costs | Three Months Ended Nine Months Ended (in thousands) 2019 2018 2019 2018 Amortization of deferred contract costs (1) $ 8,193 $ 4,208 $ 22,372 $ 11,806 (1) Included in selling and marketing expenses . |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Change in Carrying Amount of Goodwill | The change in the carrying amount of goodwill was: (in thousands) Nine Months Ended Balance as of January 1, $ 72,858 Acquisition (1) 6,179 Currency translation adjustments (175 ) Balance as of September 30, $ 78,862 (1) In May 2019, the Company acquired In the Chat Communications Inc., a privately-held software provider of digital customer service software, for $10.9 million , net of cash acquired. The Company also expects to issue up to approximately 15 thousand shares in retention-based bonus payments to a key employee upon the achievement of specified retention milestones. The principal assets and liabilities acquired as part of the business combination were additional goodwill and technology intangible assets of $6.2 million and $5.1 million . |
Schedule of Amortizable Intangible Assets | Intangible assets are recorded at cost and amortized using the straight-line method over their estimated useful lives as follows: September 30, 2019 (in thousands) Useful Lives Cost Accumulated Net Book Value (1) Client-related 4-10 years $ 63,089 $ (53,960 ) $ 9,129 Technology 2-10 years 64,843 (53,252 ) 11,591 Other 1 - 5 years 5,361 (5,361 ) — $ 133,293 $ (112,573 ) $ 20,720 (1) Included in other long-term assets. December 31, 2018 (in thousands) Useful Lives Cost Accumulated Amortization Net Book Value (1) Client-related 4-10 years $ 63,115 $ (51,224 ) $ 11,891 Technology 2-10 years 59,742 (50,398 ) 9,344 Other 1 - 5 years 5,361 (5,361 ) — $ 128,218 $ (106,983 ) $ 21,235 (1) Included in other long-term assets. |
Amortization of Intangible Assets | Amortization of intangible assets was: (in thousands) Three Months Ended Nine Months Ended 2019 2018 2019 2018 Cost of revenue $ 647 $ 1,232 $ 2,854 $ 3,695 Selling and marketing 370 1,603 2,754 4,813 $ 1,017 $ 2,835 $ 5,608 $ 8,508 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | (in thousands) September 30, 2019 December 31, 2018 Outside professional services expenses $ 8,568 $ 10,367 Income and other taxes 5,418 10,387 Marketing and sales program expenses 5,969 5,860 Dividends payable 2,381 2,363 Employee-related expenses 4,785 3,536 Cloud hosting expenses 10,158 4,604 Other 4,241 8,389 $ 41,520 $ 45,506 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured at Fair Value | The Company’s assets and liabilities measured at fair value on a recurring basis were: September 30, 2019 (in thousands) Level 1 Level 2 Level 3 Total Cash equivalents $ 88 $ — $ — $ 88 Marketable securities: Municipal bonds $ — $ 10,749 $ — $ 10,749 Corporate bonds — 9,716 — 9,716 Total marketable securities $ — $ 20,465 $ — $ 20,465 Investments in privately-held companies (1) $ — $ — $ 4,583 $ 4,583 (1) Included in other long-term assets. December 31, 2018 (in thousands) Level 1 Level 2 Level 3 Total Cash equivalents $ 10,155 $ 10,000 $ — $ 20,155 Marketable securities: Municipal bonds $ — $ 44,705 $ — $ 44,705 Corporate bonds — 48,296 — 48,296 Total marketable securities $ — $ 93,001 $ — $ 93,001 Investments in privately-held companies (1) $ — $ — $ 3,390 $ 3,390 (1) Included in other long-term assets. |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Schedule of Lease Expense | Expense (in thousands) Three Months Ended Nine Months Ended Fixed lease costs $ 4,763 $ 13,344 Variable lease costs 1,470 4,153 $ 6,233 $ 17,497 The weighted-average remaining lease term and discount rate for the Company’s leases were: September 30, 2019 Weighted-average remaining lease term 4.2 years Weighted-average discount rate (1) 5.8 % (1) The rates implicit in most of the Company’s leases are not readily determinable, therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease. |
Schedule of Right of Use Asset and Lease Liabilities | Right of use assets and lease liabilities (in thousands) September 30, 2019 Right of use assets (1) $ 62,296 Lease liabilities (2) $ 15,742 Long-term lease liabilities $ 56,904 (1) Represents the Company’s right to use the leased asset during the lease term. Included in other long-term assets. (2) Included in other current liabilities. |
Schedule of Lease Maturities after Adoption of 842 | Maturities of lease liabilities are: (in thousands) September 30, 2019 Remainder of 2019 $ 3,402 2020 21,061 2021 18,800 2022 17,642 2023 and thereafter 21,375 Total lease payments 82,280 Less: imputed interest (1) (9,634 ) Total short and long-term lease liabilities $ 72,646 (1) Lease liabilities are measured at the present value of the remaining lease payments using a discount rate determined at lease commencement unless the discount rate is updated as a result of a lease reassessment event. |
Schedule of Lease Maturities before Adoption of 842 | As of December 31, 2018 , the Company’s future minimum rental payments required under operating leases with noncancellable terms in excess of one year as determined before the adoption of ASC 842 were: (in thousands) Operating Leases (1) 2019 $ 15,993 2020 14,807 2021 13,262 2022 12,279 2023 11,084 $ 67,425 (1) Operating leases include future minimum rent payments, net of estimated sublease income for facilities that the Company has vacated pursuant to its restructuring activities. |
Schedule of Supplemental Cash Flow Lease Information | Cash flow information (in thousands) Nine Months Ended Cash paid for leases 14,586 Right of use assets recognized for new leases and amendments (non-cash) 31,126 |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Revenue by Geographic Location | Geographic revenue Three Months Ended Nine Months Ended (Dollars in thousands) 2019 2018 2019 2018 U.S. $ 123,447 57 % $ 103,075 51 % $ 347,120 55 % $ 327,409 51 % Other Americas 11,748 5 % 10,424 5 % 49,450 8 % 37,766 6 % United Kingdom (“U.K.”) 23,034 11 % 19,277 9 % 64,269 10 % 68,450 11 % Europe (excluding U.K.), Middle East, and Africa 34,761 16 % 42,254 21 % 102,342 16 % 101,150 16 % Asia-Pacific 23,713 11 % 28,233 14 % 71,660 11 % 100,449 16 % $ 216,703 100 % $ 203,263 100 % $ 634,841 100 % $ 635,224 100 % |
Schedule of Revenue Streams | Revenue streams Three Months Ended Nine Months Ended (in thousands) 2019 2018 2019 2018 Perpetual license $ 9,016 $ 20,276 $ 43,286 $ 56,829 Term license 48,989 32,066 122,257 128,070 Revenue recognized at a point in time 58,005 52,342 165,543 184,899 Maintenance 70,371 66,017 207,406 196,448 Cloud 35,153 22,184 94,610 57,967 Consulting 53,174 62,720 167,282 195,910 Revenue recognized over time 158,698 150,921 469,298 450,325 $ 216,703 $ 203,263 $ 634,841 $ 635,224 (in thousands) Three Months Ended Nine Months Ended 2019 2018 2019 2018 Term license $ 48,989 $ 32,066 $ 122,257 $ 128,070 Cloud 35,153 22,184 94,610 57,967 Maintenance 70,371 66,017 207,406 196,448 Subscription (1) 154,513 120,267 424,273 382,485 Perpetual license 9,016 20,276 43,286 56,829 Consulting 53,174 62,720 167,282 195,910 $ 216,703 $ 203,263 $ 634,841 $ 635,224 (1) Reflects client arrangements (term license, cloud, and maintenance) that are subject to renewal. |
Revenue for Remaining Performance Obligations Expected to be Recognized | Expected future revenue on existing contracts: September 30, 2019 (Dollars in thousands) Perpetual license Term license Maintenance Cloud Consulting Total 1 year or less $ 7,689 $ 25,948 $ 158,220 $ 133,785 $ 13,145 $ 338,787 56 % 1-2 years 853 3,798 18,590 105,081 863 129,185 21 % 2-3 years 1,306 591 8,323 72,915 841 83,976 14 % Greater than 3 years — 85 4,959 51,591 — 56,635 9 % $ 9,848 $ 30,422 $ 190,092 $ 363,372 $ 14,849 $ 608,583 100 % September 30, 2018 (Dollars in thousands) Perpetual license Term License Maintenance Cloud Consulting Total 1 year or less $ 25,343 $ 44,283 $ 140,591 $ 88,529 $ 14,107 $ 312,853 60 % 1-2 years 6,490 10,063 8,877 70,815 1,830 98,075 19 % 2-3 years 360 1,598 2,586 54,646 449 59,639 11 % Greater than 3 years 1,306 218 1,079 49,110 50 51,763 10 % $ 33,499 $ 56,162 $ 153,133 $ 263,100 $ 16,436 $ 522,330 100 % |
Schedule of Revenue by Major Clients | Clients accounting for 10% or more of the Company’s total revenue were: Three Months Ended Nine Months Ended (in thousands) 2019 2018 2019 2018 Total revenue $ 216,703 $ 203,263 $ 634,841 $ 635,224 Client A * 10 % * * *Client accounted for less than 10% of total revenue. |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Stock Based Compensation Expense | Expense Three Months Ended Nine Months Ended (in thousands) 2019 2018 2019 2018 Cost of revenues $ 4,787 $ 4,319 $ 14,216 $ 12,277 Selling and marketing 8,317 6,198 24,055 16,895 Research and development 4,858 3,917 13,990 11,356 General and administrative 3,884 1,974 7,981 7,045 $ 21,846 $ 16,408 $ 60,242 $ 47,573 Income tax benefit $ (4,430 ) $ (3,555 ) $ (12,226 ) $ (10,037 ) |
Summary of Stock Based Compensation Award Granted | Grants The Company granted the following stock-based compensation awards: Nine Months Ended (in thousands) Shares Total Fair Value RSUs 1,153 $ 75,510 Non-qualified stock options 2,165 $ 41,260 Common stock 11 $ 800 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Summary of Benefit from Income Taxes and Discrete Tax Items | Effective income tax rate Nine Months Ended (Dollars in thousands) 2019 2018 (Benefit from) income taxes $ (43,158 ) $ (23,692 ) Effective income tax rate 32 % 80 % |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Summary of Basic and Diluted Earnings Per Share | The calculation of the basic and diluted earnings per share was: Three Months Ended Nine Months Ended (in thousands, except per share amounts) 2019 2018 2019 2018 Basic Net (loss) $ (30,338 ) $ (7,587 ) $ (91,351 ) $ (5,796 ) Weighted-average common shares outstanding 79,200 78,700 78,928 78,525 (Loss) per share, basic $ (0.38 ) $ (0.10 ) $ (1.16 ) $ (0.07 ) Diluted Net (loss) $ (30,338 ) $ (7,587 ) $ (91,351 ) $ (5,796 ) Weighted-average effect of dilutive securities: Stock options — — — — RSUs — — — — Effect of dilutive securities — — — — Weighted-average common shares outstanding, assuming dilution 79,200 78,700 78,928 78,525 (Loss) per share, diluted $ (0.38 ) $ (0.10 ) $ (1.16 ) $ (0.07 ) Outstanding anti-dilutive stock options and RSUs (1) 5,953 6,119 5,923 6,380 (1) Certain outstanding stock options and RSUs were excluded from the computation of diluted earnings per share because they were anti-dilutive in the period presented. These awards may be dilutive in the future. |
NEW ACCOUNTING PRONOUNCEMENTS_2
NEW ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 |
Accounting Policies [Abstract] | ||
Right-of-use assets | $ 62,296 | $ 41,800 |
Total short and long-term lease liabilities | $ 72,646 | $ 54,200 |
MARKETABLE SECURITIES (Details)
MARKETABLE SECURITIES (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 20,291 | $ 93,301 |
Unrealized Gains | 174 | 36 |
Unrealized Losses | 0 | (336) |
Fair Value | $ 20,465 | 93,001 |
Weighted-average remaining maturity | 1 year 6 months | |
Municipal bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 10,680 | 44,802 |
Unrealized Gains | 69 | 13 |
Unrealized Losses | 0 | (110) |
Fair Value | 10,749 | 44,705 |
Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 9,611 | 48,499 |
Unrealized Gains | 105 | 23 |
Unrealized Losses | 0 | (226) |
Fair Value | $ 9,716 | $ 48,296 |
RECEIVABLES, CONTRACT ASSETS,_3
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE - Summary of Receivable (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||
Accounts receivable | $ 123,268 | $ 180,872 |
Unbilled receivables | 172,090 | 172,656 |
Long-term unbilled receivables | 123,962 | 151,237 |
Total receivables | $ 419,320 | $ 504,765 |
RECEIVABLES, CONTRACT ASSETS,_4
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE - Summary of Unbilled Receivables (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||
1 year or less | $ 172,090 | $ 172,656 |
1-2 years | 84,045 | |
2-5 years | 39,917 | |
Total | $ 296,052 | |
Percentage of unbilled receivables, 1 Year or Less | 59.00% | |
Percentage of unbilled receivables, 1-2 Years | 28.00% | |
Percentage of unbilled receivables, 2-5 Years | 13.00% | |
Total percentage of unbilled receivables | 100.00% |
RECEIVABLES, CONTRACT ASSETS,_5
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE - Summary of Contract Assets and Deferred Revenue (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||
Contract assets | $ 5,046 | $ 3,711 |
Long-term contract assets | 2,381 | 2,543 |
Total contract assets | 7,427 | 6,254 |
Deferred revenue | 159,849 | 185,145 |
Long-term deferred revenue | 4,029 | 5,344 |
Total deferred revenue | $ 163,878 | $ 190,489 |
DEFERRED CONTRACT COSTS - Addit
DEFERRED CONTRACT COSTS - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Amortized period | 5 years |
DEFERRED CONTRACT COSTS - Sched
DEFERRED CONTRACT COSTS - Schedule of Impairment of Deferred Contract Costs (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Deferred contract costs | $ 67,182 | $ 64,367 |
DEFERRED CONTRACT COSTS - Sch_2
DEFERRED CONTRACT COSTS - Schedule of Amortization of Deferred Contract Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||
Amortization of deferred contract costs | $ 8,193 | $ 4,208 | $ 22,372 | $ 11,806 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Change in Carrying Amount of Goodwill (Details) - USD ($) shares in Thousands, $ in Thousands | 1 Months Ended | 9 Months Ended | ||
May 31, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | May 31, 2019 | |
Goodwill [Roll Forward] | ||||
Balance as of January 1, | $ 72,858 | |||
Acquisition | 6,179 | |||
Currency translation adjustments | (175) | |||
Balance as of March 31, | 78,862 | |||
Business Acquisition [Line Items] | ||||
Payments for acquisitions, net of cash acquired | 10,934 | $ 0 | ||
Goodwill | $ 72,858 | |||
In the Chat Communications Inc. | ||||
Goodwill [Roll Forward] | ||||
Balance as of March 31, | $ 6,200 | |||
Business Acquisition [Line Items] | ||||
Payments for acquisitions, net of cash acquired | $ 10,900 | |||
Number of shares the company expects to issue upon specified retention milestones (in shares) | 15 | |||
Goodwill | $ 6,200 | $ 6,200 | ||
Technology | In the Chat Communications Inc. | ||||
Business Acquisition [Line Items] | ||||
Technology intangible assets acquired | $ 5,100 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Amortizable Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Goodwill and Other Intangible Assets [Line Items] | ||
Cost | $ 133,293 | $ 128,218 |
Accumulated Amortization | (112,573) | (106,983) |
Net Book Value | 20,720 | 21,235 |
Client-related | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Cost | 63,089 | 63,115 |
Accumulated Amortization | (53,960) | (51,224) |
Net Book Value | $ 9,129 | $ 11,891 |
Client-related | Minimum | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Useful Lives | 4 years | 4 years |
Client-related | Maximum | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Useful Lives | 10 years | 10 years |
Technology | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Cost | $ 64,843 | $ 59,742 |
Accumulated Amortization | (53,252) | (50,398) |
Net Book Value | $ 11,591 | $ 9,344 |
Technology | Minimum | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Useful Lives | 2 years | 2 years |
Technology | Maximum | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Useful Lives | 10 years | 10 years |
Other | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Cost | $ 5,361 | $ 5,361 |
Accumulated Amortization | (5,361) | (5,361) |
Net Book Value | $ 0 | $ 0 |
Other | Minimum | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Useful Lives | 1 year | 1 year |
Other | Maximum | ||
Goodwill and Other Intangible Assets [Line Items] | ||
Useful Lives | 5 years | 5 years |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS - Amortization of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Total amortization expense | $ 1,017 | $ 2,835 | $ 5,608 | $ 8,508 |
Cost of revenue | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Total amortization expense | 647 | 1,232 | 2,854 | 3,695 |
Selling and marketing | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Total amortization expense | $ 370 | $ 1,603 | $ 2,754 | $ 4,813 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Outside professional services expenses | $ 8,568 | $ 10,367 |
Income and other taxes | 5,418 | 10,387 |
Marketing and sales program expenses | 5,969 | 5,860 |
Dividends payable | 2,381 | 2,363 |
Employee-related expenses | 4,785 | 3,536 |
Cloud hosting expenses | 10,158 | 4,604 |
Other | 4,241 | 8,389 |
Total accrued expenses | $ 41,520 | $ 45,506 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Fair Value Assets | ||
Total marketable securities | $ 20,465 | $ 93,001 |
Level 1 | ||
Fair Value Assets | ||
Total marketable securities | 0 | 0 |
Level 2 | ||
Fair Value Assets | ||
Total marketable securities | 20,465 | 93,001 |
Level 3 | ||
Fair Value Assets | ||
Total marketable securities | 0 | 0 |
Cash equivalents | ||
Fair Value Assets | ||
Cash equivalents | 88 | 20,155 |
Cash equivalents | Level 1 | ||
Fair Value Assets | ||
Cash equivalents | 88 | 10,155 |
Cash equivalents | Level 2 | ||
Fair Value Assets | ||
Cash equivalents | 0 | 10,000 |
Cash equivalents | Level 3 | ||
Fair Value Assets | ||
Cash equivalents | 0 | 0 |
Municipal bonds | ||
Fair Value Assets | ||
Total marketable securities | 10,749 | 44,705 |
Municipal bonds | Level 1 | ||
Fair Value Assets | ||
Total marketable securities | 0 | 0 |
Municipal bonds | Level 2 | ||
Fair Value Assets | ||
Total marketable securities | 10,749 | 44,705 |
Municipal bonds | Level 3 | ||
Fair Value Assets | ||
Total marketable securities | 0 | 0 |
Corporate bonds | ||
Fair Value Assets | ||
Total marketable securities | 9,716 | 48,296 |
Corporate bonds | Level 1 | ||
Fair Value Assets | ||
Total marketable securities | 0 | 0 |
Corporate bonds | Level 2 | ||
Fair Value Assets | ||
Total marketable securities | 9,716 | 48,296 |
Corporate bonds | Level 3 | ||
Fair Value Assets | ||
Total marketable securities | 0 | 0 |
Investments in privately-held companies | ||
Fair Value Assets | ||
Investments in privately-held companies | 4,583 | 3,390 |
Investments in privately-held companies | Level 1 | ||
Fair Value Assets | ||
Investments in privately-held companies | 0 | 0 |
Investments in privately-held companies | Level 2 | ||
Fair Value Assets | ||
Investments in privately-held companies | 0 | 0 |
Investments in privately-held companies | Level 3 | ||
Fair Value Assets | ||
Investments in privately-held companies | $ 4,583 | $ 3,390 |
LEASES - Operating Lease Expens
LEASES - Operating Lease Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Leases [Abstract] | ||
Fixed lease costs | $ 4,763 | $ 13,344 |
Variable lease costs | 1,470 | 4,153 |
Operating lease expenses | $ 6,233 | $ 17,497 |
LEASES - Right of Use Assets (D
LEASES - Right of Use Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Leases [Abstract] | |||
Right of use assets | $ 62,296 | $ 41,800 | |
Lease liabilities | 15,742 | ||
Long-term lease liabilities | $ 56,904 | $ 0 |
LEASES - Remaining Lease Term (
LEASES - Remaining Lease Term (Details) | Sep. 30, 2019 |
Leases [Abstract] | |
Weighted-average remaining lease term | 4 years 2 months 12 days |
Weighted-average discount rate | 5.80% |
LEASES - Maturities after Adopt
LEASES - Maturities after Adoption of 842 (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 |
Leases [Abstract] | ||
Remainder of 2019 | $ 3,402 | |
2020 | 21,061 | |
2021 | 18,800 | |
2022 | 17,642 | |
2023 and thereafter | 21,375 | |
Total lease payments | 82,280 | |
Less: imputed interest | (9,634) | |
Total short and long-term lease liabilities | $ 72,646 | $ 54,200 |
LEASES - Maturities before Adop
LEASES - Maturities before Adoption of 842 (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 15,993 |
2020 | 14,807 |
2021 | 13,262 |
2022 | 12,279 |
2023 | 11,084 |
Lease liabilities before adoption of 842 | $ 67,425 |
LEASES - Cash Flow Information
LEASES - Cash Flow Information (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Leases [Abstract] | |
Cash paid for leases | $ 14,586 |
Right of use assets recognized for new leases and amendments (non-cash) | $ 31,126 |
REVENUE - Geographic Revenue (D
REVENUE - Geographic Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 216,703 | $ 203,263 | $ 634,841 | $ 635,224 |
Concentration Risk, Percentage | 100.00% | 100.00% | 100.00% | 100.00% |
U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 123,447 | $ 103,075 | $ 347,120 | $ 327,409 |
Other Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 11,748 | 10,424 | 49,450 | 37,766 |
United Kingdom (“U.K.”) | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 23,034 | 19,277 | 64,269 | 68,450 |
Europe (excluding U.K.), Middle East, and Africa | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 34,761 | 42,254 | 102,342 | 101,150 |
Asia-Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 23,713 | $ 28,233 | $ 71,660 | $ 100,449 |
Total revenue | U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Concentration Risk, Percentage | 57.00% | 51.00% | 55.00% | 51.00% |
Total revenue | Other Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Concentration Risk, Percentage | 5.00% | 5.00% | 8.00% | 6.00% |
Total revenue | United Kingdom (“U.K.”) | ||||
Disaggregation of Revenue [Line Items] | ||||
Concentration Risk, Percentage | 11.00% | 9.00% | 10.00% | 11.00% |
Total revenue | Europe (excluding U.K.), Middle East, and Africa | ||||
Disaggregation of Revenue [Line Items] | ||||
Concentration Risk, Percentage | 16.00% | 21.00% | 16.00% | 16.00% |
Total revenue | Asia-Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Concentration Risk, Percentage | 11.00% | 14.00% | 11.00% | 16.00% |
REVENUE - Revenue Stream (Detai
REVENUE - Revenue Stream (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 216,703 | $ 203,263 | $ 634,841 | $ 635,224 |
Revenue recognized at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 58,005 | 52,342 | 165,543 | 184,899 |
Revenue recognized over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 158,698 | 150,921 | 469,298 | 450,325 |
Perpetual license | Revenue recognized at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 9,016 | 20,276 | 43,286 | 56,829 |
Term license | Revenue recognized at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 48,989 | 32,066 | 122,257 | 128,070 |
Maintenance | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 70,371 | 66,017 | 207,406 | 196,448 |
Subscription | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 154,513 | 120,267 | 424,273 | 382,485 |
Cloud | Revenue recognized over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 35,153 | 22,184 | 94,610 | 57,967 |
Consulting | Revenue recognized over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 53,174 | $ 62,720 | $ 167,282 | $ 195,910 |
REVENUE - Revenue for Remaining
REVENUE - Revenue for Remaining Performance Obligations Expected to be Recognized (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Sep. 30, 2018 |
Disaggregation of Revenue [Line Items] | ||
1 year or less | $ 338,787 | $ 312,853 |
1-2 years | 129,185 | 98,075 |
2-3 years | 83,976 | 59,639 |
Greater than 3 years | 56,635 | 51,763 |
Total | $ 608,583 | $ 522,330 |
Percentage of remaining performance obligations, 1 year or less | 56.00% | 60.00% |
Percentage of remaining performance obligations, 1-2 years | 21.00% | 19.00% |
Percentage of remaining performance obligations, 2-3 years | 14.00% | 11.00% |
Percentage of remaining performance obligations, Greater than 3 years | 9.00% | 10.00% |
Total percentage of remaining performance obligations | 100.00% | 100.00% |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | 1 year | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | 2 years | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | 3 years | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | ||
Perpetual license | ||
Disaggregation of Revenue [Line Items] | ||
1 year or less | $ 7,689 | $ 25,343 |
1-2 years | 853 | 6,490 |
2-3 years | 1,306 | 360 |
Greater than 3 years | 0 | 1,306 |
Total | $ 9,848 | 33,499 |
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | 1 year | |
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | 2 years | |
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | 3 years | |
Perpetual license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | ||
Term license | ||
Disaggregation of Revenue [Line Items] | ||
1 year or less | $ 25,948 | 44,283 |
1-2 years | 3,798 | 10,063 |
2-3 years | 591 | 1,598 |
Greater than 3 years | 85 | 218 |
Total | $ 30,422 | 56,162 |
Term license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | 1 year | |
Term license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | 2 years | |
Term license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | 3 years | |
Term license | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | ||
Maintenance | ||
Disaggregation of Revenue [Line Items] | ||
1 year or less | $ 158,220 | 140,591 |
1-2 years | 18,590 | 8,877 |
2-3 years | 8,323 | 2,586 |
Greater than 3 years | 4,959 | 1,079 |
Total | $ 190,092 | 153,133 |
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | 1 year | |
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | 2 years | |
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | 3 years | |
Maintenance | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | ||
Cloud | ||
Disaggregation of Revenue [Line Items] | ||
1 year or less | $ 133,785 | 88,529 |
1-2 years | 105,081 | 70,815 |
2-3 years | 72,915 | 54,646 |
Greater than 3 years | 51,591 | 49,110 |
Total | $ 363,372 | 263,100 |
Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | 1 year | |
Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | 2 years | |
Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | 3 years | |
Cloud | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | ||
Consulting | ||
Disaggregation of Revenue [Line Items] | ||
1 year or less | $ 13,145 | 14,107 |
1-2 years | 863 | 1,830 |
2-3 years | 841 | 449 |
Greater than 3 years | 0 | 50 |
Total | $ 14,849 | $ 16,436 |
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | 1 year | |
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | 2 years | |
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction | 3 years | |
Consulting | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected timing of satisfaction |
REVENUE - Revenue by Major Clie
REVENUE - Revenue by Major Client (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Product Information [Line Items] | ||||
Total revenue | $ 216,703 | $ 203,263 | $ 634,841 | $ 635,224 |
Concentration Risk, Percentage | 100.00% | 100.00% | 100.00% | 100.00% |
Total revenue | Client A | Customer concentration risk | ||||
Product Information [Line Items] | ||||
Concentration Risk, Percentage | 10.00% |
STOCK-BASED COMPENSATION - Summ
STOCK-BASED COMPENSATION - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation before tax | $ 21,846 | $ 16,408 | $ 60,242 | $ 47,573 |
Income tax benefit | (4,430) | (3,555) | (12,226) | (10,037) |
Cost of revenues | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation before tax | 4,787 | 4,319 | 14,216 | 12,277 |
Selling and marketing | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation before tax | 8,317 | 6,198 | 24,055 | 16,895 |
Research and development | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation before tax | 4,858 | 3,917 | 13,990 | 11,356 |
General and administrative | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation before tax | $ 3,884 | $ 1,974 | $ 7,981 | $ 7,045 |
STOCK-BASED COMPENSATION - Addi
STOCK-BASED COMPENSATION - Additional Information (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($)shares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Unrecognized stock-based compensation expense | $ | $ 95.6 |
Weighted-average period of recognition of unrecognized stock-based compensation expense (in years) | 2 years 2 months 12 days |
Shares issued (in shares) | shares | 1,100,000 |
STOCK-BASED COMPENSATION - Su_2
STOCK-BASED COMPENSATION - Summary of Stock-Based Compensation Awards Granted (Details) - Employees $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($)shares | |
RSUs | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |
RSUs (in shares) | shares | 1,153,000 |
Total Fair Value | $ | $ 75,510 |
Non-qualified stock options | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |
Options granted (in shares) | shares | 2,165,000 |
Total Fair Value | $ | $ 41,260 |
Common Stock | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |
Options granted (in shares) | shares | 11,000 |
Total Fair Value | $ | $ 800 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
(Benefit from) income taxes | $ (17,520) | $ (8,589) | $ (43,158) | $ (23,692) |
Effective income tax rate | 32.00% | 80.00% |
(Details)
(Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earning per share reconciliation | ||||||||
Net (loss) | $ (30,338) | $ (32,296) | $ (28,717) | $ (7,587) | $ (10,409) | $ 12,200 | $ (91,351) | $ (5,796) |
Weighted-average common shares outstanding (in shares) | 79,200 | 78,700 | 78,928 | 78,525 | ||||
(Loss) per share, basic (in dollars per share) | $ (0.38) | $ (0.10) | $ (1.16) | $ (0.07) | ||||
Effect of dilutive securities (in shares) | 0 | 0 | 0 | 0 | ||||
Weighted-average common shares outstanding, assuming dilution (in shares) | 79,200 | 78,700 | 78,928 | 78,525 | ||||
(Loss) per share, diluted (in dollars per share) | $ (0.38) | $ (0.10) | $ (1.16) | $ (0.07) | ||||
Outstanding anti-dilutive stock options and RSUs (in shares) | 5,953 | 6,119 | 5,923 | 6,380 | ||||
Stock options | ||||||||
Earning per share reconciliation | ||||||||
Weighted-average effect of dilutive securities (in shares) | 0 | 0 | 0 | 0 | ||||
RSUs | ||||||||
Earning per share reconciliation | ||||||||
Weighted-average effect of dilutive securities (in shares) | 0 | 0 | 0 | 0 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - PNC Bank, National Association - Subsequent Event | Nov. 06, 2019USD ($) |
Revolving Credit Facility | Line of Credit | |
Subsequent Event [Line Items] | |
Revolving credit agreement term | 5 years |
Senior secured revolving credit agreements | $ 100,000,000 |
Increase in aggregate commitment amount | $ 200,000,000 |
Credit Agreement | |
Subsequent Event [Line Items] | |
Maximum consolidated net leverage ratio | 3.5 |
Minimum consolidated coverage ratio | 3.5 |