Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Sep. 30, 2014 | Oct. 20, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | '8X8 INC /DE/ | ' |
Entity Central Index Key | '0001023731 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--03-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'Yes | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 89,461,885 |
Document Fiscal Period Focus | 'Q2 | ' |
Document Fiscal Year Focus | '2015 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Mar. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $56,048 | $59,159 |
Short-term investments | 129,519 | 47,181 |
Accounts receivable, net | 7,266 | 5,503 |
Inventory | 754 | 811 |
Deferred cost of goods sold | 591 | 263 |
Deferred tax asset | 1,732 | 2,065 |
Other current assets | 2,656 | 1,951 |
Total current assets | 198,566 | 116,933 |
Long-term investments | 0 | 72,021 |
Property and equipment, net | 9,555 | 7,711 |
Intangible assets, net | 13,826 | 15,095 |
Goodwill | 38,114 | 38,461 |
Non-current deferred tax asset | 46,128 | 47,797 |
Other assets | 1,144 | 1,185 |
Total assets | 307,333 | 299,203 |
Current liabilities: | ' | ' |
Accounts payable | 8,898 | 6,789 |
Accrued compensation | 5,500 | 4,583 |
Accrued warranty | 538 | 660 |
Accrued taxes | 2,570 | 2,323 |
Deferred revenue | 1,522 | 1,857 |
Other accrued liabilities | 1,321 | 1,909 |
Total current liabilities | 20,349 | 18,121 |
Non-current liabilities | 1,494 | 1,619 |
Non-current deferred revenue | 1,038 | 1,285 |
Total liabilities | 22,881 | 21,025 |
Commitments and contingencies (Note 8) | ' | ' |
Stockholders' equity: | ' | ' |
Common stock | 89 | 88 |
Additional paid-in capital | 389,755 | 384,325 |
Accumulated other comprehensive gain | -26 | 430 |
Accumulated deficit | -105,366 | -106,665 |
Total stockholders' equity | 284,452 | 278,178 |
Total liabilities and stockholders' equity | $307,333 | $299,203 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Condensed Consolidated Statements Of Income | ' | ' | ' | ' |
Service revenue | $36,121 | $27,826 | $70,397 | $54,325 |
Product revenue | 3,477 | 2,989 | 7,114 | 5,741 |
Total revenue | 39,598 | 30,815 | 77,511 | 60,066 |
Operating expenses: | ' | ' | ' | ' |
Cost of service revenue | 7,505 | 5,209 | 14,502 | 9,995 |
Cost of product revenue | 3,762 | 3,783 | 7,731 | 7,130 |
Research and development | 3,496 | 2,640 | 6,902 | 4,976 |
Sales and marketing | 19,440 | 13,745 | 38,600 | 26,817 |
General and administrative | 3,893 | 3,125 | 7,771 | 5,897 |
Gain on patent sale | -1,000 | 0 | -1,000 | 0 |
Total operating expenses | 37,096 | 28,502 | 74,506 | 54,815 |
Income from operations | 2,502 | 2,313 | 3,005 | 5,251 |
Other income, net | 200 | 1 | 377 | 16 |
Income from continuing operations before provision for income taxes | 2,702 | 2,314 | 3,382 | 5,267 |
Provision for income taxes | 1,411 | 826 | 2,083 | 1,787 |
Income from continuing operations | 1,291 | 1,488 | 1,299 | 3,480 |
Income from discontinued operations, net of income tax provision | 0 | 154 | 0 | 301 |
Gain on disposal of discontinued operations, net of income tax provision of $463 | 0 | 589 | 0 | 589 |
Net income | $1,291 | $2,231 | $1,299 | $4,370 |
Income per share - continuing operations: | ' | ' | ' | ' |
Basic | $0.01 | $0.02 | $0.01 | $0.05 |
Diluted | $0.01 | $0.02 | $0.01 | $0.05 |
Income per share - discontinued operations: | ' | ' | ' | ' |
Basic | $0 | $0.01 | $0 | $0.01 |
Diluted | $0 | $0.01 | $0 | $0.01 |
Net income per share: | ' | ' | ' | ' |
Basic | $0.01 | $0.03 | $0.01 | $0.06 |
Diluted | $0.01 | $0.03 | $0.01 | $0.06 |
Weighted average number of shares: | ' | ' | ' | ' |
Basic | 89,073 | 72,970 | 88,861 | 72,788 |
Diluted | 91,615 | 76,232 | 91,568 | 76,035 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Condensed Consolidated Statements Of Income | ' | ' | ' | ' |
Discontinued Operation, Tax Effect of Income from Disposal of Discontinued Operations | $0 | $463 | $0 | $463 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' | ' | ' |
Net income | $1,291 | $2,231 | $1,299 | $4,370 |
Other comprehensive income (loss), net of tax | ' | ' | ' | ' |
Unrealized gain (loss) on investments in securities | -51 | 10 | 35 | -55 |
Foreign currency translation adjustment | -944 | 0 | -491 | 0 |
Comprehensive income | $296 | $2,241 | $843 | $4,315 |
CONDENSED_CONSOLIDATED_STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 6 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash flows from operating activities: | ' | ' |
Net income | $1,299 | $4,370 |
Adjustments to reconcile net income to net cash provided by operating activites: | ' | ' |
Depreciation | 1,576 | 1,287 |
Amortization of intangible assets | 1,133 | 671 |
Amortization of capitalized software | 170 | 37 |
Net accretion of discount and amortization of premium on marketable securities | 428 | 0 |
Gain on disposal of discontinued operations | 0 | -589 |
Stock-based compensation | 3,855 | 2,013 |
Deferred income tax provision | 2,002 | 1,589 |
Other | 115 | 390 |
Changes in assets and liabilities: | ' | ' |
Accounts receivable, net | -1,883 | -1,179 |
Inventory | 29 | 91 |
Other current and non-current assets | -608 | -431 |
Deferred cost of goods sold | -340 | -6 |
Accounts payable | 980 | 22 |
Accrued compensation | 918 | 17 |
Accrued warranty | -122 | 100 |
Accrued taxes and fees | 249 | -166 |
Deferred revenue | -564 | 961 |
Other current and non-current liabilities | -607 | -166 |
Net cash provided by operating activities | 8,630 | 9,011 |
Cash flows from investing activities: | ' | ' |
Purchases of property and equipment | -2,553 | -1,445 |
Cost of capitalized software | -181 | -473 |
Proceeds from maturity of investments | 21,600 | 0 |
Sales of investments - available for sale | 25,537 | 0 |
Purchases of investments - available for sale | -57,854 | 0 |
Net cash used in investing activities | -13,451 | -1,918 |
Cash flows from financing activities: | ' | ' |
Capital lease payments | -81 | -10 |
Repurchase of common stock | -80 | -257 |
Proceeds from issuance of common stock under employee stock plans | 1,699 | 2,214 |
Net cash provided by financing activities | 1,538 | 1,947 |
Effect of exchange rate changes on cash | 172 | 0 |
Net (decrease) increase in cash and cash equivalents | -3,111 | 9,040 |
Cash and cash equivalents at the beginning of the period | 59,159 | 50,305 |
Cash and cash equivalents at the end of the period | 56,048 | 59,345 |
Supplemental cash flow information | ' | ' |
Income taxes paid | 93 | 276 |
Interest paid | $16 | $2 |
DESCRIPTION_OF_THE_BUSINESS_No
DESCRIPTION OF THE BUSINESS - Note 1 | 6 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | ' |
DESCRIPTION OF THE BUSINESS - Note 1 | ' |
1. DESCRIPTION OF THE BUSINESS | |
THE COMPANY | |
8x8, Inc. ("8x8" or the "Company") develops and markets a comprehensive portfolio of cloud-based communications and collaboration solutions that include hosted cloud telephony, unified communications, contact center, video conferencing and virtual desktop software and services. These unified communications and collaboration services are offered from the Internet cloud via a software-as-a-service subscription. The Company also provides cloud-based computing services. As of September 30, 2014, the Company had approximately 40,400 business customers. | |
The Company was incorporated in California in February 1987 and was reincorporated in Delaware in December 1996. The Company's fiscal year ends on March 31 of each calendar year. Each reference to a fiscal year in these notes to the condensed consolidated financial statements refers to the fiscal year ending March 31 of the calendar year indicated (for example, fiscal 2015 refers to the fiscal year ending March 31, 2015). | |
BASIS_OF_PRESENTATION_Note_2
BASIS OF PRESENTATION - Note 2 | 6 Months Ended | ||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||||
BASIS OF PRESENTATION - Note 2 | ' | ||||||||||||||||||
2. BASIS OF PRESENTATION | |||||||||||||||||||
The accompanying interim condensed consolidated financial statements are unaudited and have been prepared on substantially the same basis as our annual consolidated financial statements for the fiscal year ended March 31, 2014. In the opinion of the Company's management, these interim condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles 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 condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates. | |||||||||||||||||||
The March 31, 2014 year-end condensed consolidated balance sheet data in this document was derived from audited consolidated financial statements and does not include all of the disclosures required by U.S. generally accepted accounting principles. These condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements as of and for the fiscal year ended March 31, 2014 and notes thereto included in the Company's fiscal 2014 Annual Report on Form 10-K. | |||||||||||||||||||
The results of operations and cash flows for the interim periods included in these condensed consolidated financial statements are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. | |||||||||||||||||||
Service and Product Revenue | |||||||||||||||||||
The Company recognizes service revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, price is fixed or determinable and collectability is reasonably assured. The Company defers recognition of service revenues in instances when cash receipts are received before services are delivered and recognizes deferred revenues ratably as services are provided. | |||||||||||||||||||
The Company recognizes revenue from product sales for which there are no related services to be rendered upon shipment to customers provided that persuasive evidence of an arrangement exists, the price is fixed, title has transferred, collection of resulting receivables is reasonably assured, there are no customer acceptance requirements, and there are no remaining significant obligations. Gross outbound shipping and handling charges are recorded as revenue, and the related costs are included in cost of goods sold. Reserves for returns and allowances for customer sales are recorded at the time of shipment. In accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 985-605, the Company records shipments to distributors, retailers, and resellers, where the right of return exists, as deferred revenue. The Company defers recognition of revenue on sales to distributors, retailers, and resellers until products are resold to the customer. | |||||||||||||||||||
The Company records revenue net of any sales-related taxes that are billed to its customers. The Company believes this approach results in consolidated financial statements that are more easily understood by users. | |||||||||||||||||||
Under the terms of the Company's typical subscription agreement, new customers can terminate their service within 30 days of order placement and receive a full refund of fees previously paid. The Company has determined that it has sufficient history of subscriber conduct to make a reasonable estimate of cancellations within the 30-day trial period. Therefore, the Company recognizes new subscriber revenue in the month in which the new order was shipped, net of an allowance for expected cancellations. | |||||||||||||||||||
Multiple Element Arrangements | |||||||||||||||||||
ASC 605-25 requires that revenue arrangements with multiple deliverables be divided into separate units of accounting if the deliverables in the arrangement meet specific criteria. The provisioning of the 8x8 cloud service with the accompanying 8x8 IP telephone constitutes a revenue arrangement with multiple deliverables. For arrangements with multiple deliverables, the Company allocates the arrangement consideration to all units of accounting based on their relative selling prices. In such circumstances, the accounting principles establish a hierarchy to determine the relative selling price to be used for allocating arrangement consideration to units of accounting as follows: (i) vendor-specific objective evidence of fair value ("VSOE"), (ii) third-party evidence of selling price ("TPE"), and (iii) best estimate of the selling price ("BESP"). | |||||||||||||||||||
VSOE generally exists only when the Company sells the deliverable separately, on more than a limited basis, at prices within a relatively narrow range. When VSOE cannot be established, the Company attempts to establish the selling price of deliverables based on relevant TPE. TPE is determined based on manufacturer's prices for similar deliverables when sold separately, when possible. When the Company is unable to establish selling price using VSOE or TPE, it uses a BESP for the allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service was sold on a stand-alone basis. BESP is generally used for offerings that are not typically sold on a stand-alone basis or for new or highly customized offerings. The Company determines BESP for a product or service by considering multiple factors including, but not limited to: | |||||||||||||||||||
the price list established by its management which is typically based on general pricing practices and targeted gross margin of products and services sold; and | |||||||||||||||||||
analysis of pricing history of new arrangements, including multiple element and stand-alone transactions. | |||||||||||||||||||
In accordance with the guidance of ASC 605-25, when the Company enters into revenue arrangements with multiple deliverables the Company allocates arrangement consideration, including activation fees, among the 8x8 IP telephones and subscriber services based on their relative selling prices. Arrangement consideration allocated to the IP telephones that is fixed or determinable and that is not contingent on future performance or deliverables is recognized as product revenues during the period of the sale less the allowance for estimated returns during the 30-day trial period. Arrangement consideration allocated to subscriber services that is fixed or determinable and that is not contingent on future performance or deliverables is recognized ratably as service revenues as the related services are provided, which is generally over the initial contract term. | |||||||||||||||||||
Deferred Cost of Goods Sold | |||||||||||||||||||
Deferred cost of goods sold represents the cost of products sold for which the end customer or distributor has a right of return. The cost of the products sold is recognized contemporaneously with the recognition of revenue, when the subscriber has accepted the service. | |||||||||||||||||||
Cash, Cash Equivalents and Investments | |||||||||||||||||||
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Management determines the appropriate categorization of its investments at the time of purchase and reevaluates the classification at each reporting date. The cost of the Company's investments is determined based upon specific identification. | |||||||||||||||||||
The Company's investments are comprised of mutual funds, commercial paper, corporate debt, municipal securities, asset backed securities, mortgage backed securities, international government securities, certificates of deposit and money market funds. At September 30, 2014 and March 31, 2014, all investments were classified as available-for-sale and reported at fair value, based either upon quoted prices in active markets, quoted prices in less active markets, or quoted market prices for similar investments, with unrealized gains and losses, net of related tax, if any, included in other comprehensive loss and disclosed as a separate component of consolidated stockholders' equity. Realized gains and losses on sales of all such investments are reported within the caption of "other income, net" in the consolidated statements of income and are computed using the specific identification method. The Company classifies its investments as current based on the nature of the investments and their availability for use in current operations. The Company's investments in marketable securities are monitored on a periodic basis for impairment. In the event that the carrying value of an investment exceeds its fair value and the decline in value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis for the investment is established. These available-for-sale investments are primarily held in the custody of a major financial institution. | |||||||||||||||||||
Available-for-sale investments were (in thousands): | |||||||||||||||||||
Gross | Gross | ||||||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | ||||||||||||||||
As of September 30, 2014 | Costs | Gain | Loss | Fair Value | |||||||||||||||
Money market funds | $ | 22,571 | $ | - | $ | - | $ | 22,571 | |||||||||||
Fixed income | |||||||||||||||||||
Mutual funds | 2,000 | - | -87 | 1,913 | |||||||||||||||
Commercial paper | 18,232 | 5 | -1 | 18,236 | |||||||||||||||
Corporate debt | 67,902 | 69 | -2 | 67,969 | |||||||||||||||
Municipal securities | 5,435 | 3 | -6 | 5,432 | |||||||||||||||
Asset backed securities | 26,038 | 6 | -5 | 26,039 | |||||||||||||||
Mortgage backed securities | 6,955 | - | -29 | 6,926 | |||||||||||||||
International government securities | 800 | 5 | - | 805 | |||||||||||||||
Certificates of deposit | 2,200 | - | -1 | 2,199 | |||||||||||||||
Total available-for-sale investments | $ | 152,133 | $ | 88 | $ | -131 | $ | 152,090 | |||||||||||
Reported as (in thousands): | |||||||||||||||||||
Cash and cash equivalents | $ | 22,571 | |||||||||||||||||
Short-term investments | 129,519 | ||||||||||||||||||
Total | $ | 152,090 | |||||||||||||||||
Contractual maturities of mutual funds, commercial paper, corporate debt, municipal securities, asset backed securities, mortgage backed securities, international government securities, certificates of deposit and money market funds as of September 30, 2014 are set forth below (in thousands): | |||||||||||||||||||
Due within one year | $ | 102,300 | |||||||||||||||||
Due after one year | 49,790 | ||||||||||||||||||
Total | $ | 152,090 | |||||||||||||||||
Gross | Gross | ||||||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | ||||||||||||||||
As of March 31, 2014 | Costs | Gain | Loss | Fair Value | |||||||||||||||
Money market funds | $ | 32,611 | $ | - | $ | - | $ | 32,611 | |||||||||||
Fixed income | |||||||||||||||||||
Mutual funds | 1,964 | - | -55 | 1,909 | |||||||||||||||
Commercial paper | 30,374 | 5 | - | 30,379 | |||||||||||||||
Corporate debt | 63,621 | 35 | -39 | 63,617 | |||||||||||||||
Municipal securities | 5,435 | 5 | -1 | 5,439 | |||||||||||||||
Asset backed securities | 17,049 | 6 | -1 | 17,054 | |||||||||||||||
International government securities | 800 | 4 | - | 804 | |||||||||||||||
Total available-for-sale investments | $ | 151,854 | $ | 55 | $ | -96 | $ | 151,813 | |||||||||||
Reported as (in thousands): | |||||||||||||||||||
Cash and cash equivalents | $ | 32,611 | |||||||||||||||||
Short-term investments | 47,181 | ||||||||||||||||||
Long-term investments | 72,021 | ||||||||||||||||||
Total | $ | 151,813 | |||||||||||||||||
Contractual maturities of mutual funds, commercial paper, corporate debt, municipal securities, asset backed securities, international government securities and money market funds as of March 31, 2014 are set forth below (in thousands): | |||||||||||||||||||
Due within one year | $ | 79,792 | |||||||||||||||||
Due after one year | 72,021 | ||||||||||||||||||
Total | $ | 151,813 | |||||||||||||||||
Intangible Assets | |||||||||||||||||||
Amortization expense for the customer relationship intangible asset is included in sales and marketing expenses. Amortization expense for technology is included in cost of service revenue. The carrying values of intangible assets were as follows (in thousands): | |||||||||||||||||||
30-Sep-14 | 31-Mar-14 | ||||||||||||||||||
Gross | Gross | ||||||||||||||||||
Carrying | Accumulated | Net Carrying | Carrying | Accumulated | Net Carrying | ||||||||||||||
Amount | Amortization | Amount | Amount | Amortization | Amount | ||||||||||||||
Technology | $ | 8,242 | $ | -2,493 | $ | 5,749 | $ | 8,242 | $ | -2,080 | $ | 6,162 | |||||||
Customer relationships | 9,686 | -2,566 | 7,120 | 9,686 | -1,710 | 7,976 | |||||||||||||
Trade names/domains | 957 | - | 957 | 957 | - | 957 | |||||||||||||
Total acquired identifiable | |||||||||||||||||||
intangible assets | $ | 18,885 | $ | -5,059 | $ | 13,826 | $ | 18,885 | $ | -3,790 | $ | 15,095 | |||||||
At September 30, 2014, annual amortization of intangible assets, based upon our existing intangible assets and current useful lives, is estimated to be the following (in thousands): | |||||||||||||||||||
Amount | |||||||||||||||||||
Remaining 2015 | $ | 1,119 | |||||||||||||||||
2016 | 2,238 | ||||||||||||||||||
2017 | 2,231 | ||||||||||||||||||
2018 | 1,983 | ||||||||||||||||||
2019 | 1,737 | ||||||||||||||||||
Thereafter | 3,561 | ||||||||||||||||||
Total | $ | 12,869 | |||||||||||||||||
Research, Development and Software Costs | |||||||||||||||||||
The Company accounts for software to be sold or otherwise marketed in accordance with ASC 985-20 - Costs of Software to be Sold, Leased or Marketed, which requires capitalization of certain software development costs subsequent to the establishment of technological feasibility. The Company defines establishment of technological feasibility as the completion of a working model. Software development costs for software to be sold or otherwise marketed incurred prior to the establishment of technological feasibility are included in research and development and are expensed as incurred. Software development costs incurred subsequent to the establishment of technological feasibility through the period of general market availability of the product are capitalized, if material. | |||||||||||||||||||
In the first six months of fiscal 2015, the Company expensed all research and development costs in accordance with ASC 985-20. At September 30, 2014 and March 31, 2014, total capitalized software development costs included in other long-term assets was approximately $1.1 million and $1.0 million, respectively, and accumulated amortization costs related to capitalized software was approximately $0.3 million and $0.1 million, respectively. | |||||||||||||||||||
In the first six months of fiscal 2014, the Company capitalized $0.5 million in accordance with ASC 985-20. | |||||||||||||||||||
The Company accounts for computer software developed or obtained for internal use in accordance with ASC 350-40 - Internal Use Software, which requires capitalization of certain software development costs incurred during the application development stage. In the first six months of fiscal 2015, the Company capitalized $0.5 million in accordance with ASC 350-40, of which $0.2 million is classified as other long-term assets and $0.3 million is classified as property and equipment. No such costs were capitalized in the first six months of fiscal 2014. | |||||||||||||||||||
Foreign Currency Translation | |||||||||||||||||||
The Company has determined that the functional currency of its UK foreign subsidiary is the subsidiary's local currency, the British Pound Sterling ("GBP"), which the Company believes most appropriately reflects the current economic facts and circumstances of the UK subsidiary's operations. The assets and liabilities of the subsidiary are translated at the applicable exchange rate as of the end of the balance sheet period and revenue and expenses are translated at an average rate over the period presented. Resulting currency translation adjustments are recorded as a component of accumulated other comprehensive income or loss within the stockholders' equity in the consolidated balance sheets. | |||||||||||||||||||
Stock Purchase Right/Restricted Stock Unit and Option Activity | |||||||||||||||||||
Stock purchase right activity for the six months ended September 30, 2014 is summarized as follows: | |||||||||||||||||||
Weighted | Weighted | ||||||||||||||||||
Average | Average | ||||||||||||||||||
Grant-Date | Remaining | ||||||||||||||||||
Number of | Fair Market | Contractual | |||||||||||||||||
Shares | Value | Term (in Years) | |||||||||||||||||
Balance at March 31, 2014 | 489,627 | $ | 4.83 | 1.93 | |||||||||||||||
Granted | 31,432 | 7.88 | |||||||||||||||||
Vested | -175,038 | 3.81 | |||||||||||||||||
Forfeited | -34,075 | 5.67 | |||||||||||||||||
Balance at September 30, 2014 | 311,946 | $ | 5.62 | 1.84 | |||||||||||||||
Restricted stock unit and performance stock unit activity for the six months ended September 30, 2014 is summarized as follows: | |||||||||||||||||||
Weighted | |||||||||||||||||||
Weighted | Average | ||||||||||||||||||
Average | Remaining | ||||||||||||||||||
Number of | Purchase | Contractual | |||||||||||||||||
Shares | Price | Term (in Years) | |||||||||||||||||
Balance at March 31, 2014 | 1,134,856 | $ | - | 2.00 | |||||||||||||||
Granted | 248,492 | ||||||||||||||||||
Vested | -118,561 | ||||||||||||||||||
Forfeited | -93,755 | ||||||||||||||||||
Balance at September 30, 2014 | 1,171,032 | $ | - | 1.87 | |||||||||||||||
Option activity for the six months ended September 30, 2014 is summarized as follows (table includes stock purchase rights and RSUs; not limited to options): | |||||||||||||||||||
Weighted | |||||||||||||||||||
Shares | Average | ||||||||||||||||||
Shares | Subject to | Exercise | |||||||||||||||||
Available | Options | Price | |||||||||||||||||
for Grant | Outstanding | Per Share | |||||||||||||||||
Balance at March 31, 2014 | 1,613,943 | 6,002,382 | $ | 4.14 | |||||||||||||||
Change in options available for grant | 6,800,000 | - | - | ||||||||||||||||
Granted - options | -106,684 | 106,684 | 7.56 | ||||||||||||||||
Stock purchase rights/restricted stock unit (1) | -279,924 | - | - | ||||||||||||||||
Exercised | - | -483,184 | 1.55 | ||||||||||||||||
Canceled/forfeited - options | 278,098 | -278,098 | 5.11 | ||||||||||||||||
Canceled/forfeited - restricted stock unit | 93,944 | - | 5.67 | ||||||||||||||||
Balance at September 30, 2014 | 8,399,377 | 5,347,784 | $ | 4.16 | |||||||||||||||
(1) The reduction to shares available for grant includes awards granted of 279,924 shares. | |||||||||||||||||||
The following table summarizes stock options outstanding and exercisable at September 30, 2014: | |||||||||||||||||||
Options Outstanding | Options Exercisable | ||||||||||||||||||
Weighted | Weighted | Weighted | |||||||||||||||||
Average | Average | Average | |||||||||||||||||
Exercise | Remaining | Aggregate | Exercise | Aggregate | |||||||||||||||
Range of | Price | Contractual | Intrinsic | Price | Intrinsic | ||||||||||||||
Exercise Price | Shares | Per Share | Life (Years) | Value | Shares | Per Share | Value | ||||||||||||
$0.55 - $1.26 | 1,453,500 | $ | 1.03 | 3.3 | $ | 8,208,733 | 1,453,500 | $ | 1.03 | $ | 8,208,733 | ||||||||
$1.27 - $1.79 | 1,103,128 | $ | 1.54 | 1.5 | 5,673,510 | 1,103,128 | $ | 1.54 | 5,673,510 | ||||||||||
$1.80 - $5.87 | 1,305,184 | $ | 4.68 | 6.1 | 2,607,072 | 869,566 | $ | 4.30 | 2,059,942 | ||||||||||
$5.88 - $9.74 | 1,335,972 | $ | 9.35 | 9.0 | 33,180 | 294,442 | $ | 9.40 | 15,899 | ||||||||||
$10.97 - $11.26 | 150,000 | $ | 11.11 | 9.3 | - | - | $ | - | - | ||||||||||
5,347,784 | $ | 16,522,495 | 3,720,636 | $ | 15,958,084 | ||||||||||||||
Stock-based Compensation Expense | |||||||||||||||||||
The Company accounts for its employee stock options, stock purchase rights, restricted stock units including restricted performance stock units granted under the 1996 Stock Plan, 1996 Director Option Plan, the 2006 Stock Plan, the 2003 Contactual Plan, the 2012 Equity Incentive Plan, the 2013 New Employee Inducement Incentive Plan and stock purchase rights under the 1996 Employee Stock Purchase Plan (collectively "Equity Compensation Plans") under the provisions of ASC 718 - Stock Compensation. Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense over the employee's requisite service period (generally the vesting period of the equity grant), net of estimated forfeitures. | |||||||||||||||||||
To value option grants, stock purchase rights and restricted stock units under the Equity Compensation Plans for stock-based compensation, the Company used the Black-Scholes option valuation model. Fair value determined using the Black-Scholes option valuation model varies based on assumptions used for the expected stock prices volatility, expected life, risk-free interest rates and future dividend payments. For the three and six months ended September 30, 2014 and 2013, the Company used the historical volatility of its stock over a period equal to the expected life of the options. The expected life assumptions represent the weighted-average period stock-based awards are expecting to remain outstanding. These expected life assumptions were established through the review of historical exercise behavior of stock-based award grants with similar vesting periods. The risk-free interest rate is based on the closing market bid yields on actively traded U.S. treasury securities in the over-the-counter market for the expected term equal to the expected term of the option. The dividend yield assumption is based on the Company's history and expectation of future dividend payout. Compensation expense for stock-based payment awards is recognized using the straight-line single-option method and includes the impact of estimated forfeitures. | |||||||||||||||||||
As of September 30, 2014, unamortized stock-based compensation expense related to unvested stock awards was approximately $15.0 million, which is expected to be recognized over a weighted average period of 2.65 years. | |||||||||||||||||||
The following table summarizes the assumptions used to compute reported stock-based compensation to employees and directors for the three and six months ended September 30, 2014 and 2013: | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Expected volatility | 58% | 64% | 58% | 64% | |||||||||||||||
Expected dividend yield | - | - | - | - | |||||||||||||||
Risk-free interest rate | 1.74% | 1.98% | 1.72% | 1.88% | |||||||||||||||
Weighted average expected option term | 5.30 years | 6.20 years | 5.20 years | 6.10 years | |||||||||||||||
Weighted average fair value of options granted | $ | 3.9 | $ | 5.76 | $ | 3.91 | $ | 5.62 | |||||||||||
In accordance with ASC 718 - Stock Compensation, the Company recorded $1.7 million and $1.0 million in compensation expense relative to stock-based awards for the three months ended September 30, 2014 and 2013, and $3.4 million and $1.8 million for the six months ended September 30, 2014 and 2013, respectively. | |||||||||||||||||||
Employee Stock Purchase Plan | |||||||||||||||||||
Under the Company's Employee Stock Purchase Plan, or ESPP, eligible employees can participate and purchase common stock semi-annually through payroll deductions at a price equal to 85% of the fair market value of the common stock at the beginning of each one year offering period or the end of the applicable six month purchase period within that offering period, whichever is lower. The contribution amount may not exceed 10% of an employee's base compensation, including commissions but not including bonuses and overtime. The Company accounts for the ESPP as a compensatory plan and recorded compensation expense of $0.3 million and $0.1 million for the three months ended September 30, 2014 and 2013, and $0.5 million and $0.3 million for the six months ended September 30, 2014 and 2013, respectively, in accordance with ASC 718. | |||||||||||||||||||
The estimated fair value of ESPP options granted under the Employee Stock Purchase Plan was estimated at the date of grant using Black-Scholes pricing model with the following weighted average assumptions: | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Expected volatility | 46% | 38% | 46% | 38% | |||||||||||||||
Expected dividend yield | - | - | - | - | |||||||||||||||
Risk-free interest rate | 0.09% | 0.11% | 0.09% | 0.11% | |||||||||||||||
Weighted average expected ESPP option term | 0.75 years | 0.75 years | 0.75 years | 0.75 years | |||||||||||||||
Weighted average fair value of | |||||||||||||||||||
ESPP options granted | $ | 2.46 | $ | 2.6 | $ | 2.46 | $ | 2.6 | |||||||||||
As of September 30, 2014, there were approximately $0.4 million of total unrecognized compensation cost related to employee stock purchases. This cost is expected to be recognized over a weighted average period of 0.5 years. | |||||||||||||||||||
ASC 718 requires the benefits of tax deductions in excess of recognized compensation costs to be reported as a financing cash flow, rather than as an operating cash flow. The future realization of tax benefits related to stock-based compensation is dependent upon the timing of employee exercises and future taxable income, among other factors. The Company did not realize any tax benefit from the stock-based compensation charges incurred during the three and six months ended September 30, 2014 and 2013, respectively. | |||||||||||||||||||
The following table summarizes the classification of stock-based compensation expense related to employee stock options and employee stock purchases under ASC 718 among the Company's operating functions for the three and six months ended September 30, 2014 and 2013 which was recorded as follows (in thousands): | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Cost of service revenue | $ | 160 | $ | 68 | $ | 275 | $ | 136 | |||||||||||
Cost of product revenue | - | - | - | - | |||||||||||||||
Research and development | 315 | 141 | 629 | 295 | |||||||||||||||
Sales and marketing | 910 | 393 | 1,654 | 740 | |||||||||||||||
General and administrative | 623 | 504 | 1,297 | 842 | |||||||||||||||
Total stock-based compensation expense related to employee | |||||||||||||||||||
stock options and employee stock purchases, pre-tax | 2,008 | 1,106 | 3,855 | 2,013 | |||||||||||||||
Tax benefit | - | - | - | - | |||||||||||||||
Stock-based compensation expense related to employee | |||||||||||||||||||
stock options and employee stock purchases, net of tax | $ | 2,008 | $ | 1,106 | $ | 3,855 | $ | 2,013 | |||||||||||
Recent Accounting Pronouncements | |||||||||||||||||||
In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) and the IASB has issued IFRS 15, Revenue from Contracts with Customers. The issuance of these documents completes the joint effort by the FASB and the IASB to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and IFRS. The new guidance affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. For public entities, the amendments are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements. | |||||||||||||||||||
In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This ASU requires that a performance target that affects vesting and could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in ASC 718, Compensation-Stock Compensation, as it relates to such awards. ASU 2014-12 is effective for us in our first quarter of fiscal 2017 with early adoption permitted using either of two methods: (i) prospective to all awards granted or modified after the effective date; or (ii) retrospective to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter, with the cumulative effect of applying ASU 2014-12 as an adjustment to the opening retained earnings balance as of the beginning of the earliest annual period presented in the financial statements. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements. | |||||||||||||||||||
FAIR_VALUE_MEASURMENT_Note_3
FAIR VALUE MEASURMENT - Note 3 | 6 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Notes to Financial Statements | ' | |||||||||||
FAIR VALUE MEASURMENT - Note 3 | ' | |||||||||||
3. FAIR VALUE MEASUREMENT | ||||||||||||
The following tables present the Company's fair value hierarchy for assets and liabilities measured at fair value on a recurring basis (in thousands): | ||||||||||||
Quoted Prices in | Other | Significant | ||||||||||
Active Markets for | Observable | Unobservable | Balance at | |||||||||
Identical Assets | Inputs | Inputs | September 30, | |||||||||
30-Sep-14 | (Level 1) | (Level 2) | (Level 3) | 2014 | ||||||||
Cash equivalents: | ||||||||||||
Money market funds | $ | 22,571 | $ | - | $ | - | $ | 22,571 | ||||
Short-term investments: | ||||||||||||
Money market funds | 1,913 | - | - | 1,913 | ||||||||
Commercial paper | - | 18,235 | - | 18,235 | ||||||||
Corporate debt | - | 67,968 | - | 67,968 | ||||||||
Municipal securities | - | 5,433 | - | 5,433 | ||||||||
Asset backed securities | - | 26,039 | - | 26,039 | ||||||||
Mortgage backed securities | - | 6,926 | - | 6,926 | ||||||||
International government securities | - | 805 | - | 805 | ||||||||
Certificates of deposit | - | 2,200 | - | 2,200 | ||||||||
Total | $ | 24,484 | $ | 127,606 | $ | - | $ | 152,090 | ||||
Quoted Prices in | Other | Significant | ||||||||||
Active Markets for | Observable | Unobservable | Balance at | |||||||||
Identical Assets | Inputs | Inputs | March 31, | |||||||||
31-Mar-14 | (Level 1) | (Level 2) | (Level 3) | 2014 | ||||||||
Cash equivalents: | ||||||||||||
Money market funds | $ | 32,611 | $ | - | $ | - | $ | 32,611 | ||||
Short-term investments: | ||||||||||||
Mutual funds | 1,909 | - | - | 1,909 | ||||||||
Commercial paper | - | 30,379 | - | 30,379 | ||||||||
Corporate debt | - | 14,893 | - | 14,893 | ||||||||
Long-term investments: | ||||||||||||
Corporate debt | - | 48,724 | - | 48,724 | ||||||||
Municipal securities | - | 5,439 | - | 5,439 | ||||||||
Asset backed securities | - | 17,054 | - | 17,054 | ||||||||
International government securities | - | 804 | - | 804 | ||||||||
Total | $ | 34,520 | $ | 117,293 | $ | - | $ | 151,813 | ||||
BALANCE_SHEET_DETAIL_Note_4
BALANCE SHEET DETAIL - Note 4 | 6 Months Ended | ||||||
Sep. 30, 2014 | |||||||
Notes to Financial Statements | ' | ||||||
BALANCE SHEET DETAIL - Note 4 | ' | ||||||
4. BALANCE SHEET DETAIL | |||||||
September 30, | March 31, | ||||||
2014 | 2014 | ||||||
Inventory (in thousands): | |||||||
Work-in-process | $ | 12 | $ | 23 | |||
Finished goods | 742 | 788 | |||||
$ | 754 | $ | 811 | ||||
NET_INCOME_PER_SHARE_Note_5
NET INCOME PER SHARE - Note 5 | 6 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Notes to Financial Statements | ' | ||||||||||||
NET INCOME PER SHARE - Note 5 | ' | ||||||||||||
5. NET INCOME PER SHARE | |||||||||||||
Basic net income per share is computed by dividing net income available to common stockholders (numerator) by the weighted average number of vested, unrestricted common shares outstanding during the period (denominator). Diluted net income per share is computed on the basis of the weighted average number of shares of common stock outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include shares issuable upon exercise of outstanding stock options and under the ESPP. | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
(in thousands, except per share amounts) | |||||||||||||
Numerator: | |||||||||||||
Income from continuing operations | $ | 1,291 | $ | 1,488 | $ | 1,299 | $ | 3,480 | |||||
Income from discontinued operations, net of income tax provision | - | 743 | - | 890 | |||||||||
Net income available to common stockholders | 1,291 | 2,231 | 1,299 | 4,370 | |||||||||
Denominator: | |||||||||||||
Common shares | 89,073 | 72,970 | 88,861 | 72,788 | |||||||||
Denominator for basic calculation | 89,073 | 72,970 | 88,861 | 72,788 | |||||||||
Employee stock options | 2,187 | 2,913 | 2,335 | 2,896 | |||||||||
Stock awards | 355 | 349 | 372 | 351 | |||||||||
Denominator for diluted calculation | 91,615 | 76,232 | 91,568 | 76,035 | |||||||||
Income per share - continuing operations | |||||||||||||
Basic | $ | 0.01 | $ | 0.02 | $ | 0.01 | $ | 0.05 | |||||
Diluted | $ | 0.01 | $ | 0.02 | $ | 0.01 | $ | 0.05 | |||||
Income per share - discontinued operations | |||||||||||||
Basic | $ | 0.00 | $ | 0.01 | $ | 0.00 | $ | 0.01 | |||||
Diluted | $ | 0.00 | $ | 0.01 | $ | 0.00 | $ | 0.01 | |||||
Net income per share | |||||||||||||
Basic | $ | 0.01 | $ | 0.03 | $ | 0.01 | $ | 0.06 | |||||
Diluted | $ | 0.01 | $ | 0.03 | $ | 0.01 | $ | 0.06 | |||||
The following shares attributable to outstanding stock options and stock purchase rights were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive (in thousands): | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Employee stock options | 1,422 | 325 | 1,396 | 495 | |||||||||
Stock purchase rights | 62 | 72 | 60 | 55 | |||||||||
Total anti-dilutive employee stock-based securities | 1,484 | 397 | 1,456 | 550 | |||||||||
INCOME_TAXES_Note_6
INCOME TAXES - Note 6 | 6 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | ' |
INCOME TAXES - Note 6 | ' |
6. INCOME TAXES | |
For the three and six months ended September 30, 2014, the Company recorded a provision for income taxes of $1.4 million and $2.1 million which was primarily attributable to income from continuing operations. For the three and six months ended September 30, 2013, the Company recorded a provision for income taxes of $1.4 million and $2.5 million which was primarily attributable to income from continuing operations ($0.8 million and $1.8 million, respectively), income from discontinued operations ($0.1 million and $0.2 million respectively) and gain on disposal of discontinued operations ($0.5 million). | |
The effective tax rate is calculated by dividing the income tax provision by net income before income tax expense. | |
At March 31, 2014, there were $2.2 million of unrecognized tax benefits that, if recognized, would have affected the effective tax rate. The Company does not believe that there has been any significant change in the unrecognized tax benefits in the six-month period ended September 30, 2014, and does not expect the remaining unrecognized tax benefit to change materially in the next 12 months. To the extent that the remaining unrecognized tax benefits are ultimately recognized, they will have an impact on the effective tax rate in future periods. | |
The Company is subject to taxation in the U.S., California and various other states and foreign jurisdictions in which it has or had a subsidiary or branch operations or it is collecting sales tax. All tax returns from fiscal 1995 to fiscal 2014 may be subject to examination by the Internal Revenue Service, California and various other states. As of October 20, 2014, there were no active federal or state income tax audits. Returns filed in foreign jurisdictions may be subject to examination for the fiscal years 2010 to 2014. | |
SEGMENT_REPORTING_Note_7
SEGMENT REPORTING - Note 7 | 6 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||
SEGMENT REPORTING - Note 7 | ' | ||||||||||||
7. SEGMENT REPORTING | |||||||||||||
ASC 280, "Segment Reporting" establishes annual and interim reporting standards for an enterprise's business segments and related disclosures about its products, services, geographic areas and major customers. Under ASC 280, the method for determining what information to report is based upon the way management organizes the operating segments within the Company for making operating decisions and assessing financial performance. The Company has determined that it has only one reportable segment. The Company's chief operating decision makers, the Chief Executive Officer, Chief Financial Officer and Chief Technology Officer, evaluate performance of the Company and make decisions regarding allocation of resources based on total Company results. | |||||||||||||
No customer represented greater than 10% of the Company's total revenues for the three and six months ended September 30, 2014 or 2013. The Company's revenue distribution by geographic region (based upon the destination of shipments and the customer's service address) was as follows: | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Americas (principally US) | 92% | 99% | 92% | 99% | |||||||||
Europe | 7% | 0% | 7% | 0% | |||||||||
Asia Pacific | 1% | 1% | 1% | 1% | |||||||||
100% | 100% | 100% | 100% | ||||||||||
Geographic area data is based upon the location of the property and equipment and was as follows (in thousands): | |||||||||||||
September 30, | March 31, | ||||||||||||
2014 | 2014 | ||||||||||||
United States | $ | 7,822 | $ | 6,305 | |||||||||
Europe | 1,474 | 1,087 | |||||||||||
Asia | 259 | 319 | |||||||||||
Total | $ | 9,555 | $ | 7,711 | |||||||||
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES - Note 8 | 6 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Notes to Financial Statements | ' | ||||||||||||
COMMITMENTS AND CONTINGENCIES - Note 8 | ' | ||||||||||||
8. COMMITMENTS AND CONTINGENCIES | |||||||||||||
Guarantees | |||||||||||||
Indemnifications | |||||||||||||
In the normal course of business, the Company indemnifies other parties, including customers, lessors and parties to other transactions with the Company, with respect to certain matters. Under these arrangements, the Company typically agrees to hold the other party harmless against losses arising from a breach of representations or covenants, intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors. | |||||||||||||
It is not possible to determine the maximum potential amount of the Company's exposure under these indemnification agreements due to the limited history of indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements have not had a material impact on the Company's operating results, financial position or cash flows. Under some of these agreements, however, the Company's potential indemnification liability might not have a contractual limit. | |||||||||||||
Product Warranties | |||||||||||||
The Company accrues for the estimated costs that may be incurred under its product warranties upon revenue recognition. Changes in the Company's product warranty liability, which is included in cost of product revenue in the condensed consolidated statements of income, were as follows (in thousands): | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Balance at beginning of period | $ | 619 | $ | 474 | $ | 660 | $ | 452 | |||||
Accruals for warranties | 15 | 293 | 68 | 470 | |||||||||
Settlements | -96 | -215 | -190 | -370 | |||||||||
Balance at end of period | $ | 538 | $ | 552 | $ | 538 | $ | 552 | |||||
Minimum Third Party Customer Support Commitments | |||||||||||||
In the third quarter of fiscal 2010, the Company amended a contract with one of its third party customer support vendors containing a minimum monthly commitment of approximately $0.4 million. The agreement requires a 150-day notice to terminate. The total remaining obligation under the amended contract is $2.2 million. | |||||||||||||
Minimum Third Party Network Service Provider Commitments | |||||||||||||
The Company entered into contracts with multiple vendors for third party network services that expire on various dates in fiscal 2015 through 2016. At September 30, 2014, future minimum annual payments under these third party network service contracts were as follows (in thousands): | |||||||||||||
Year ending March 31: | |||||||||||||
Remaining 2015 | $ | 1,196 | |||||||||||
2016 | 1,726 | ||||||||||||
2017 | 1,501 | ||||||||||||
2018 | 1,035 | ||||||||||||
Total minimum payments | $ | 5,458 | |||||||||||
Legal Proceedings | |||||||||||||
From time to time, the Company may become involved in various legal claims and litigation that arise in the normal course of its operations. While the results of such claims and litigation cannot be predicted with certainty, the Company is not currently aware of any such matters that it believes would have a material adverse effect on its financial position, results of operations or cash flows. | |||||||||||||
On February 22, 2011, we were named a defendant in a lawsuit, Bear Creek Technologies, Inc. v. 8x8, Inc. et al., along with 20 other defendants. On August 17, 2011, we were dismissed without prejudice from this lawsuit under Rule 21 of the Federal Rules of Civil Procedure. On August 17, 2011, we were sued again by Bear Creek Technologies, Inc. in the United States District Court for the District of Delaware. We believe we have factual and legal defenses to these claims and are presenting a vigorous defense. Further, on November 28, 2012, the U.S. Patent & Trademark Office initiated a Reexamination proceeding with a Reexamination Declaration explaining that there is a substantial new question of patentability, based on four separate grounds and affecting each claim of the patent which is the basis for the complaint filed against us. On March 26, 2013, the USPTO issued a first Office Action in the Reexamination, with all claims of the '722 patent being rejected on each of the four separate grounds raised in the Request for Reexamination. On July 10, 2013, we filed an informational pleading in support of and joining a motion to stay the proceeding in the District Court; the District Court granted the motion on July 17, 2013, based on the possibility that at least one of the USPTO rejections will be upheld and considering the USPTO's conclusion that Bear Creek's patent suffers from a defective claim for priority. On March 24, 2014, the USPTO issued another Office Action in which the rejections of the claims were maintained. On August 15, 2014, the USPTO issued a Right of Appeal Notice, as the USPTO maintained all rejections of the patent claims. On September 15, 2014, Bear Creek Technologies, Inc. filed a Notice of Appeal of this decision. We cannot estimate potential liability in this case at this early stage of litigation. | |||||||||||||
On March 31, 2014, we were named a defendant in a lawsuit, CallWave Communications LLC v. 8x8, Inc. CallWave Communications also sued Fonality Inc. on March 31, 2014, and previously sued other companies including Verizon, Google, T-Mobile, and AT&T. We are currently assessing factual and legal defenses to these claims and expect to present a vigorous defense. We have answered the complaint and filed counterclaims in response thereto. We cannot estimate potential liability in this case at this early stage of the litigation. | |||||||||||||
State and Municipal Taxes | |||||||||||||
From time to time, the Company has received inquiries from a number of state and municipal taxing agencies with respect to the remittance of taxes. The Company collects or has accrued for taxes that it believes are required to be remitted. The amounts that have been remitted have historically been within the accruals established by the Company. | |||||||||||||
PATENT_SALE_Note_9
PATENT SALE - Note 9 | 6 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | ' |
PATENT SALE - Note 9 | ' |
9. PATENT SALE | |
On June 22, 2012, the Company entered into a patent purchase agreement and sold a family of patents to a third party for $12.0 million plus a future payment of up to a maximum of $3.0 million based on future license agreements entered into by the third party purchaser. In August 2014, the Company collected and recognized a gain of $1.0 million attributable to a license agreement obtained by the third party purchaser. As of September 30, 2014, there remained a maximum of $1.0 million of potential future payments under the agreement based on future license agreements obtained by the third party purchaser. Under the terms and conditions of the patent purchase agreement, the Company has retained certain limited rights to continue to use the patents. The patent purchase agreement contains representations and warranties customary for transactions of this type. | |
DISCONTINUED_OPERATIONS_Note_1
DISCONTINUED OPERATIONS - Note 10 | 6 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Discontinued Operations - Note 10 | ' | ||||||||||||
DISCONTINUED OPERATIONS - Note 10 | ' | ||||||||||||
10. DISCONTINUED OPERATIONS | |||||||||||||
On September 30, 2013, the Company completed the sale of its dedicated server hosting business to IRC Company, Inc. ("IRC") and, as a result, no longer provides dedicated server hosting services. In the transaction, IRC purchased 100% of the stock of Central Host, Inc., which had been wholly owned by the Company and all of the assets specific to the dedicated server hosting business. | |||||||||||||
The Company sold its dedicated server hosting business for total consideration of $3.0 million in cash, which was received on October 1, 2013. | |||||||||||||
The dedicated server hosting business has been reported as discontinued operations. The results of operations of these discontinued operations were as follows (in thousands): | |||||||||||||
Results of operations: | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Revenue | $ | - | $ | 677 | $ | - | $ | 1,430 | |||||
Operating expense | - | 420 | - | 922 | |||||||||
Income before income taxes | - | 257 | - | 508 | |||||||||
Provision for income taxes | - | 103 | - | 207 | |||||||||
Income from discontinued operations | - | 154 | - | 301 | |||||||||
Gain on disposal of discontinued operations, | |||||||||||||
net of income tax provision of $463 | - | 589 | - | 589 | |||||||||
Summary_of_Significant_Account
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | ' |
Company | ' |
THE COMPANY | |
8x8, Inc. ("8x8" or the "Company") develops and markets a comprehensive portfolio of cloud-based communications and collaboration solutions that include hosted cloud telephony, unified communications, contact center, video conferencing and virtual desktop software and services. These unified communications and collaboration services are offered from the Internet cloud via a software-as-a-service subscription. The Company also provides cloud-based computing services. As of September 30, 2014, the Company had approximately 40,400 business customers. | |
The Company was incorporated in California in February 1987 and was reincorporated in Delaware in December 1996. | |
Fiscal Period | ' |
The Company's fiscal year ends on March 31 of each calendar year. Each reference to a fiscal year in these notes to the condensed consolidated financial statements refers to the fiscal year ending March 31 of the calendar year indicated (for example, fiscal 2015 refers to the fiscal year ending March 31, 2015). | |
Basis of Presentation | ' |
The accompanying interim condensed consolidated financial statements are unaudited and have been prepared on substantially the same basis as our annual consolidated financial statements for the fiscal year ended March 31, 2014. In the opinion of the Company's management, these interim condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles 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 condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates. | |
The March 31, 2014 year-end condensed consolidated balance sheet data in this document was derived from audited consolidated financial statements and does not include all of the disclosures required by U.S. generally accepted accounting principles. These condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements as of and for the fiscal year ended March 31, 2014 and notes thereto included in the Company's fiscal 2014 Annual Report on Form 10-K. | |
The results of operations and cash flows for the interim periods included in these condensed consolidated financial statements are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. | |
Service Revenue | ' |
The Company recognizes service revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, price is fixed or determinable and collectability is reasonably assured. The Company defers recognition of service revenues in instances when cash receipts are received before services are delivered and recognizes deferred revenues ratably as services are provided. | |
Product Revenue | ' |
The Company recognizes revenue from product sales for which there are no related services to be rendered upon shipment to customers provided that persuasive evidence of an arrangement exists, the price is fixed, title has transferred, collection of resulting receivables is reasonably assured, there are no customer acceptance requirements, and there are no remaining significant obligations. Gross outbound shipping and handling charges are recorded as revenue, and the related costs are included in cost of goods sold. Reserves for returns and allowances for customer sales are recorded at the time of shipment. In accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 985-605, the Company records shipments to distributors, retailers, and resellers, where the right of return exists, as deferred revenue. The Company defers recognition of revenue on sales to distributors, retailers, and resellers until products are resold to the customer. | |
The Company records revenue net of any sales-related taxes that are billed to its customers. The Company believes this approach results in consolidated financial statements that are more easily understood by users. | |
Under the terms of the Company's typical subscription agreement, new customers can terminate their service within 30 days of order placement and receive a full refund of fees previously paid. The Company has determined that it has sufficient history of subscriber conduct to make a reasonable estimate of cancellations within the 30-day trial period. Therefore, the Company recognizes new subscriber revenue in the month in which the new order was shipped, net of an allowance for expected cancellations. | |
Revenue Recognition for Multiple Element Arrangements | ' |
Multiple Element Arrangements | |
ASC 605-25 requires that revenue arrangements with multiple deliverables be divided into separate units of accounting if the deliverables in the arrangement meet specific criteria. The provisioning of the 8x8 cloud service with the accompanying 8x8 IP telephone constitutes a revenue arrangement with multiple deliverables. For arrangements with multiple deliverables, the Company allocates the arrangement consideration to all units of accounting based on their relative selling prices. In such circumstances, the accounting principles establish a hierarchy to determine the relative selling price to be used for allocating arrangement consideration to units of accounting as follows: (i) vendor-specific objective evidence of fair value ("VSOE"), (ii) third-party evidence of selling price ("TPE"), and (iii) best estimate of the selling price ("BESP"). | |
VSOE generally exists only when the Company sells the deliverable separately, on more than a limited basis, at prices within a relatively narrow range. When VSOE cannot be established, the Company attempts to establish the selling price of deliverables based on relevant TPE. TPE is determined based on manufacturer's prices for similar deliverables when sold separately, when possible. When the Company is unable to establish selling price using VSOE or TPE, it uses a BESP for the allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service was sold on a stand-alone basis. BESP is generally used for offerings that are not typically sold on a stand-alone basis or for new or highly customized offerings. The Company determines BESP for a product or service by considering multiple factors including, but not limited to: | |
the price list established by its management which is typically based on general pricing practices and targeted gross margin of products and services sold; and | |
analysis of pricing history of new arrangements, including multiple element and stand-alone transactions. | |
In accordance with the guidance of ASC 605-25, when the Company enters into revenue arrangements with multiple deliverables the Company allocates arrangement consideration, including activation fees, among the 8x8 IP telephones and subscriber services based on their relative selling prices. Arrangement consideration allocated to the IP telephones that is fixed or determinable and that is not contingent on future performance or deliverables is recognized as product revenues during the period of the sale less the allowance for estimated returns during the 30-day trial period. Arrangement consideration allocated to subscriber services that is fixed or determinable and that is not contingent on future performance or deliverables is recognized ratably as service revenues as the related services are provided, which is generally over the initial contract term. | |
Deferred Cost of Goods Sold | ' |
Deferred Cost of Goods Sold | |
Deferred cost of goods sold represents the cost of products sold for which the end customer or distributor has a right of return. The cost of the products sold is recognized contemporaneously with the recognition of revenue, when the subscriber has accepted the service. | |
Cash and Equivalents | ' |
Cash, Cash Equivalents and Investments | |
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Management determines the appropriate categorization of its investments at the time of purchase and reevaluates the classification at each reporting date. The cost of the Company's investments is determined based upon specific identification. | |
The Company's investments are comprised of mutual funds, commercial paper, corporate debt, municipal securities, asset backed securities, mortgage backed securities, international government securities, certificates of deposit and money market funds. At September 30, 2014 and March 31, 2014, all investments were classified as available-for-sale and reported at fair value, based either upon quoted prices in active markets, quoted prices in less active markets, or quoted market prices for similar investments, with unrealized gains and losses, net of related tax, if any, included in other comprehensive loss and disclosed as a separate component of consolidated stockholders' equity. Realized gains and losses on sales of all such investments are reported within the caption of "other income, net" in the consolidated statements of income and are computed using the specific identification method. The Company classifies its investments as current based on the nature of the investments and their availability for use in current operations. The Company's investments in marketable securities are monitored on a periodic basis for impairment. In the event that the carrying value of an investment exceeds its fair value and the decline in value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis for the investment is established. These available-for-sale investments are primarily held in the custody of a major financial institution. | |
Investments | ' |
Investments | |
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Management determines the appropriate categorization of its investments at the time of purchase and reevaluates the classification at each reporting date. The cost of the Company's investments is determined based upon specific identification. | |
The Company's investments are comprised of mutual funds, commercial paper, corporate debt, municipal securities, asset backed securities, and mortgage backed securities, international government securities, certificates of deposit and money market funds. At September 30, 2014 and March 31, 2014, all investments were classified as available-for-sale and reported at fair value, based either upon quoted prices in active markets, quoted prices in less active markets, or quoted market prices for similar investments, with unrealized gains and losses, net of related tax, if any, included in other comprehensive loss and disclosed as a separate component of consolidated stockholders' equity. Realized gains and losses on sales of all such investments are reported within the caption of "other income, net" in the consolidated statements of income and are computed using the specific identification method. The Company classifies its investments as current based on the nature of the investments and their availability for use in current operations. The Company's investments in marketable securities are monitored on a periodic basis for impairment. In the event that the carrying value of an investment exceeds its fair value and the decline in value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis for the investment is established. These available-for-sale investments are primarily held in the custody of a major financial institution. | |
Intangible Assets | ' |
Intangible Assets | |
Amortization expense for the customer relationship intangible asset is included in sales and marketing expenses. Amortization expense for technology is included in cost of service revenue. | |
Research, Development and Software Costs | ' |
Research, Development and Software Costs | |
The Company accounts for software to be sold or otherwise marketed in accordance with ASC 985-20 - Costs of Software to be Sold, Leased or Marketed, which requires capitalization of certain software development costs subsequent to the establishment of technological feasibility. The Company defines establishment of technological feasibility as the completion of a working model. Software development costs for software to be sold or otherwise marketed incurred prior to the establishment of technological feasibility are included in research and development and are expensed as incurred. Software development costs incurred subsequent to the establishment of technological feasibility through the period of general market availability of the product are capitalized, if material. | |
In the first six months of fiscal 2015, the Company expensed all research and development costs in accordance with ASC 985-20. At September 30, 2014 and March 31, 2014, total capitalized software development costs included in other long-term assets was approximately $1.1 million and $1.0 million, respectively, and accumulated amortization costs related to capitalized software was approximately $0.3 million and $0.1 million, respectively. | |
In the first six months of fiscal 2014, the Company capitalized $0.5 million in accordance with ASC 985-20. | |
The Company accounts for computer software developed or obtained for internal use in accordance with ASC 350-40 - Internal Use Software, which requires capitalization of certain software development costs incurred during the application development stage. In the first six months of fiscal 2015, the Company capitalized $0.5 million in accordance with ASC 350-40, of which $0.2 million is classified as other long-term assets and $0.3 million is classified as property and equipment. No such costs were capitalized in the first six months of fiscal 2014. | |
Foreign Currency Translation | ' |
Foreign Currency Translation | |
The Company has determined that the functional currency of its UK foreign subsidiary is the subsidiary's local currency, the British Pound Sterling ("GBP"), which the Company believes most appropriately reflects the current economic facts and circumstances of the UK subsidiary's operations. The assets and liabilities of the subsidiary are translated at the applicable exchange rate as of the end of the balance sheet period and revenue and expenses are translated at an average rate over the period presented. Resulting currency translation adjustments are recorded as a component of accumulated other comprehensive income or loss within the stockholders' equity in the consolidated balance sheets. | |
Accounting for Stock-Based Compensation | ' |
Stock-based Compensation Expense | |
The Company accounts for its employee stock options, stock purchase rights, restricted stock units including restricted performance stock units granted under the 1996 Stock Plan, 1996 Director Option Plan, the 2006 Stock Plan, the 2003 Contactual Plan, the 2012 Equity Incentive Plan, the 2013 New Employee Inducement Incentive Plan and stock purchase rights under the 1996 Employee Stock Purchase Plan (collectively "Equity Compensation Plans") under the provisions of ASC 718 - Stock Compensation. Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense over the employee's requisite service period (generally the vesting period of the equity grant), net of estimated forfeitures. | |
To value option grants, stock purchase rights and restricted stock units under the Equity Compensation Plans for stock-based compensation, the Company used the Black-Scholes option valuation model. Fair value determined using the Black-Scholes option valuation model varies based on assumptions used for the expected stock prices volatility, expected life, risk-free interest rates and future dividend payments. For the three and six months ended September 30, 2014 and 2013, the Company used the historical volatility of its stock over a period equal to the expected life of the options. The expected life assumptions represent the weighted-average period stock-based awards are expecting to remain outstanding. These expected life assumptions were established through the review of historical exercise behavior of stock-based award grants with similar vesting periods. The risk-free interest rate is based on the closing market bid yields on actively traded U.S. treasury securities in the over-the-counter market for the expected term equal to the expected term of the option. The dividend yield assumption is based on the Company's history and expectation of future dividend payout. Compensation expense for stock-based payment awards is recognized using the straight-line single-option method and includes the impact of estimated forfeitures. | |
Employee Stock Purchase Plan | ' |
Employee Stock Purchase Plan | |
Under the Company's Employee Stock Purchase Plan, or ESPP, eligible employees can participate and purchase common stock semi-annually through payroll deductions at a price equal to 85% of the fair market value of the common stock at the beginning of each one year offering period or the end of the applicable six month purchase period within that offering period, whichever is lower. The contribution amount may not exceed 10% of an employee's base compensation, including commissions but not including bonuses and overtime. The Company accounts for the ESPP as a compensatory plan and recorded compensation expense of $0.3 million and $0.1 million for the three months ended September 30, 2014 and 2013, and $0.5 million and $0.3 million for the six months ended September 30, 2014 and 2013, respectively, in accordance with ASC 718. | |
ASC 718 requires the benefits of tax deductions in excess of recognized compensation costs to be reported as a financing cash flow, rather than as an operating cash flow. The future realization of tax benefits related to stock-based compensation is dependent upon the timing of employee exercises and future taxable income, among other factors. The Company did not realize any tax benefit from the stock-based compensation charges incurred during the three and six months ended September 30, 2014 and 2013, respectively. | |
Net Income Per Share | ' |
NET INCOME PER SHARE | |
Basic net income per share is computed by dividing net income available to common stockholders (numerator) by the weighted average number of vested, unrestricted common shares outstanding during the period (denominator). Diluted net income per share is computed on the basis of the weighted average number of shares of common stock outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include shares issuable upon exercise of outstanding stock options and under the ESPP. | |
Segment Reporting | ' |
ASC 280, "Segment Reporting" establishes annual and interim reporting standards for an enterprise's business segments and related disclosures about its products, services, geographic areas and major customers. Under ASC 280, the method for determining what information to report is based upon the way management organizes the operating segments within the Company for making operating decisions and assessing financial performance. The Company has determined that it has only one reportable segment. The Company's chief operating decision makers, the Chief Executive Officer, Chief Financial Officer and Chief Technology Officer, evaluate performance of the Company and make decisions regarding allocation of resources based on total Company results. | |
Indemnifications | ' |
Indemnifications | |
In the normal course of business, the Company indemnifies other parties, including customers, lessors and parties to other transactions with the Company, with respect to certain matters. Under these arrangements, the Company typically agrees to hold the other party harmless against losses arising from a breach of representations or covenants, intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors. | |
It is not possible to determine the maximum potential amount of the Company's exposure under these indemnification agreements due to the limited history of indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements have not had a material impact on the Company's operating results, financial position or cash flows. Under some of these agreements, however, the Company's potential indemnification liability might not have a contractual limit. | |
Product Warranties | ' |
Product Warranties | |
The Company accrues for the estimated costs that may be incurred under its product warranties upon revenue recognition. | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | |
In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) and the IASB has issued IFRS 15, Revenue from Contracts with Customers. The issuance of these documents completes the joint effort by the FASB and the IASB to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and IFRS. The new guidance affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. For public entities, the amendments are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements. | |
In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This ASU requires that a performance target that affects vesting and could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in ASC 718, Compensation-Stock Compensation, as it relates to such awards. ASU 2014-12 is effective for us in our first quarter of fiscal 2017 with early adoption permitted using either of two methods: (i) prospective to all awards granted or modified after the effective date; or (ii) retrospective to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter, with the cumulative effect of applying ASU 2014-12 as an adjustment to the opening retained earnings balance as of the beginning of the earliest annual period presented in the financial statements. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements. | |
Cash_Cash_Equivalents_and_Inve
Cash, Cash Equivalents and Investments (Tables) | 6 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Cash Cash Equivalents And Investments Tables | ' | ||||||||||||
Cash and Cash Equivalents (Tables) | ' | ||||||||||||
Available-for-sale investments were (in thousands): | |||||||||||||
Gross | Gross | ||||||||||||
Amortized | Unrealized | Unrealized | Estimated | ||||||||||
As of September 30, 2014 | Costs | Gain | Loss | Fair Value | |||||||||
Money market funds | $ | 22,571 | $ | - | $ | - | $ | 22,571 | |||||
Fixed income | |||||||||||||
Mutual funds | 2,000 | - | -87 | 1,913 | |||||||||
Commercial paper | 18,232 | 5 | -1 | 18,236 | |||||||||
Corporate debt | 67,902 | 69 | -2 | 67,969 | |||||||||
Municipal securities | 5,435 | 3 | -6 | 5,432 | |||||||||
Asset backed securities | 26,038 | 6 | -5 | 26,039 | |||||||||
Mortgage backed securities | 6,955 | - | -29 | 6,926 | |||||||||
International government securities | 800 | 5 | - | 805 | |||||||||
Certificates of deposit | 2,200 | - | -1 | 2,199 | |||||||||
Total available-for-sale investments | $ | 152,133 | $ | 88 | $ | -131 | $ | 152,090 | |||||
Reported as (in thousands): | |||||||||||||
Cash and cash equivalents | $ | 22,571 | |||||||||||
Short-term investments | 129,519 | ||||||||||||
Total | $ | 152,090 | |||||||||||
Contractual maturities of mutual funds, commercial paper, corporate debt, municipal securities, asset backed securities, mortgage backed securities, international government securities, certificates of deposit and money market funds as of September 30, 2014 are set forth below (in thousands): | |||||||||||||
Due within one year | $ | 102,300 | |||||||||||
Due after one year | 49,790 | ||||||||||||
Total | $ | 152,090 | |||||||||||
Gross | Gross | ||||||||||||
Amortized | Unrealized | Unrealized | Estimated | ||||||||||
As of March 31, 2014 | Costs | Gain | Loss | Fair Value | |||||||||
Money market funds | $ | 32,611 | $ | - | $ | - | $ | 32,611 | |||||
Fixed income | |||||||||||||
Mutual funds | 1,964 | - | -55 | 1,909 | |||||||||
Commercial paper | 30,374 | 5 | - | 30,379 | |||||||||
Corporate debt | 63,621 | 35 | -39 | 63,617 | |||||||||
Municipal securities | 5,435 | 5 | -1 | 5,439 | |||||||||
Asset backed securities | 17,049 | 6 | -1 | 17,054 | |||||||||
International government securities | 800 | 4 | - | 804 | |||||||||
Total available-for-sale investments | $ | 151,854 | $ | 55 | $ | -96 | $ | 151,813 | |||||
Reported as (in thousands): | |||||||||||||
Cash and cash equivalents | $ | 32,611 | |||||||||||
Short-term investments | 47,181 | ||||||||||||
Long-term investments | 72,021 | ||||||||||||
Total | $ | 151,813 | |||||||||||
Contractual maturities of mutual funds, commercial paper, corporate debt, municipal securities, asset backed securities, international government securities and money market funds as of March 31, 2014 are set forth below (in thousands): | |||||||||||||
Due within one year | $ | 79,792 | |||||||||||
Due after one year | 72,021 | ||||||||||||
Total | $ | 151,813 | |||||||||||
Intangible_Assets_Tables
Intangible Assets (Tables) | 6 Months Ended | |||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||
Intangible Assets Tables | ' | |||||||||||||||||
Carrying values of intangible assets | ' | |||||||||||||||||
The carrying values of intangible assets were as follows (in thousands): | ||||||||||||||||||
30-Sep-14 | 31-Mar-14 | |||||||||||||||||
Gross | Gross | |||||||||||||||||
Carrying | Accumulated | Net Carrying | Carrying | Accumulated | Net Carrying | |||||||||||||
Amount | Amortization | Amount | Amount | Amortization | Amount | |||||||||||||
Technology | $ | 8,242 | $ | -2,493 | $ | 5,749 | $ | 8,242 | $ | -2,080 | $ | 6,162 | ||||||
Customer relationships | 9,686 | -2,566 | 7,120 | 9,686 | -1,710 | 7,976 | ||||||||||||
Trade names/domains | 957 | - | 957 | 957 | - | 957 | ||||||||||||
Total acquired identifiable | ||||||||||||||||||
intangible assets | $ | 18,885 | $ | -5,059 | $ | 13,826 | $ | 18,885 | $ | -3,790 | $ | 15,095 | ||||||
Finite-lived intangible assets - future amortization expense | ' | |||||||||||||||||
At September 30, 2014, annual amortization of intangible assets, based upon our existing intangible assets and current useful lives, is estimated to be the following (in thousands): | ||||||||||||||||||
Amount | ||||||||||||||||||
Remaining 2015 | $ | 1,119 | ||||||||||||||||
2016 | 2,238 | |||||||||||||||||
2017 | 2,231 | |||||||||||||||||
2018 | 1,983 | |||||||||||||||||
2019 | 1,737 | |||||||||||||||||
Thereafter | 3,561 | |||||||||||||||||
Total | $ | 12,869 | ||||||||||||||||
StockBased_Compensation_And_Em
Stock-Based Compensation And Employee Purchase Plans (Tables) | 6 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Employee Stock Purchase Plan | ' | ||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | ' | ||||||||||||
The estimated fair value of ESPP options granted under the Employee Stock Purchase Plan was estimated at the date of grant using Black-Scholes pricing model with the following weighted average assumptions: | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Expected volatility | 46% | 38% | 46% | 38% | |||||||||
Expected dividend yield | - | - | - | - | |||||||||
Risk-free interest rate | 0.09% | 0.11% | 0.09% | 0.11% | |||||||||
Weighted average expected ESPP option term | 0.75 years | 0.75 years | 0.75 years | 0.75 years | |||||||||
Weighted average fair value of | |||||||||||||
ESPP options granted | $ | 2.46 | $ | 2.6 | $ | 2.46 | $ | 2.6 | |||||
Stock Options | ' | ||||||||||||
Disclosure Of Share-Based Compensation Arrangements By Share-Based Payment Award | ' | ||||||||||||
Option activity for the six months ended September 30, 2014 is summarized as follows (table includes stock purchase rights and RSUs; not limited to options): | |||||||||||||
Weighted | |||||||||||||
Shares | Average | ||||||||||||
Shares | Subject to | Exercise | |||||||||||
Available | Options | Price | |||||||||||
for Grant | Outstanding | Per Share | |||||||||||
Balance at March 31, 2014 | 1,613,943 | 6,002,382 | $ | 4.14 | |||||||||
Change in options available for grant | 6,800,000 | - | - | ||||||||||
Granted - options | -106,684 | 106,684 | 7.56 | ||||||||||
Stock purchase rights/restricted stock unit (1) | -279,924 | - | - | ||||||||||
Exercised | - | -483,184 | 1.55 | ||||||||||
Canceled/forfeited - options | 278,098 | -278,098 | 5.11 | ||||||||||
Canceled/forfeited - restricted stock unit | 93,944 | - | 5.67 | ||||||||||
Balance at September 30, 2014 | 8,399,377 | 5,347,784 | $ | 4.16 | |||||||||
(1) The reduction to shares available for grant includes awards granted of 279,924 shares. | |||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | ' | ||||||||||||
The following table summarizes the assumptions used to compute reported stock-based compensation to employees and directors for the three and six months ended September 30, 2014 and 2013: | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Expected volatility | 58% | 64% | 58% | 64% | |||||||||
Expected dividend yield | - | - | - | - | |||||||||
Risk-free interest rate | 1.74% | 1.98% | 1.72% | 1.88% | |||||||||
Weighted average expected option term | 5.30 years | 6.20 years | 5.20 years | 6.10 years | |||||||||
Weighted average fair value of options granted | $ | 3.9 | $ | 5.76 | $ | 3.91 | $ | 5.62 | |||||
Stock Purchase Rights | ' | ||||||||||||
Disclosure Of Share-Based Compensation Arrangements By Share-Based Payment Award | ' | ||||||||||||
Stock purchase right activity for the six months ended September 30, 2014 is summarized as follows: | |||||||||||||
Weighted | Weighted | ||||||||||||
Average | Average | ||||||||||||
Grant-Date | Remaining | ||||||||||||
Number of | Fair Market | Contractual | |||||||||||
Shares | Value | Term (in Years) | |||||||||||
Balance at March 31, 2014 | 489,627 | $ | 4.83 | 1.93 | |||||||||
Granted | 31,432 | 7.88 | |||||||||||
Vested | -175,038 | 3.81 | |||||||||||
Forfeited | -34,075 | 5.67 | |||||||||||
Balance at September 30, 2014 | 311,946 | $ | 5.62 | 1.84 | |||||||||
Restricted Stock Units | ' | ||||||||||||
Disclosure Of Share-Based Compensation Arrangements By Share-Based Payment Award | ' | ||||||||||||
Restricted stock unit and performance stock unit activity for the six months ended September 30, 2014 is summarized as follows: | |||||||||||||
Weighted | |||||||||||||
Weighted | Average | ||||||||||||
Average | Remaining | ||||||||||||
Number of | Purchase | Contractual | |||||||||||
Shares | Price | Term (in Years) | |||||||||||
Balance at March 31, 2014 | 1,134,856 | $ | - | 2.00 | |||||||||
Granted | 248,492 | ||||||||||||
Vested | -118,561 | ||||||||||||
Forfeited | -93,755 | ||||||||||||
Balance at September 30, 2014 | 1,171,032 | $ | - | 1.87 | |||||||||
Stock_Options_Outstanding_And_
Stock Options Outstanding And Exercisable (Tables) | 6 Months Ended | ||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||
Stock Options Outstanding And Exercisable Tables | ' | ||||||||||||||||||
Summary Of Outstanding And Exercisable Stock Options | ' | ||||||||||||||||||
The following table summarizes stock options outstanding and exercisable at September 30, 2014: | |||||||||||||||||||
Options Outstanding | Options Exercisable | ||||||||||||||||||
Weighted | Weighted | Weighted | |||||||||||||||||
Average | Average | Average | |||||||||||||||||
Exercise | Remaining | Aggregate | Exercise | Aggregate | |||||||||||||||
Range of | Price | Contractual | Intrinsic | Price | Intrinsic | ||||||||||||||
Exercise Price | Shares | Per Share | Life (Years) | Value | Shares | Per Share | Value | ||||||||||||
$0.55 - $1.26 | 1,453,500 | $ | 1.03 | 3.3 | $ | 8,208,733 | 1,453,500 | $ | 1.03 | $ | 8,208,733 | ||||||||
$1.27 - $1.79 | 1,103,128 | $ | 1.54 | 1.5 | 5,673,510 | 1,103,128 | $ | 1.54 | 5,673,510 | ||||||||||
$1.80 - $5.87 | 1,305,184 | $ | 4.68 | 6.1 | 2,607,072 | 869,566 | $ | 4.30 | 2,059,942 | ||||||||||
$5.88 - $9.74 | 1,335,972 | $ | 9.35 | 9.0 | 33,180 | 294,442 | $ | 9.40 | 15,899 | ||||||||||
$10.97 - $11.26 | 150,000 | $ | 11.11 | 9.3 | - | - | $ | - | - | ||||||||||
5,347,784 | $ | 16,522,495 | 3,720,636 | $ | 15,958,084 | ||||||||||||||
Distribution_of_StockBased_Com
Distribution of Stock-Based Compensation Plan Expense (Tables) | 6 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Distribution Of Stock-based Compensation Plan Expense Tables | ' | ||||||||||||
Schedule Of Stock-Based Compensation Expense By Statement Of Operations Line Item | ' | ||||||||||||
The following table summarizes the classification of stock-based compensation expense related to employee stock options and employee stock purchases under ASC 718 among the Company's operating functions for the three and six months ended September 30, 2014 and 2013 which was recorded as follows (in thousands): | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Cost of service revenue | $ | 160 | $ | 68 | $ | 275 | $ | 136 | |||||
Cost of product revenue | - | - | - | - | |||||||||
Research and development | 315 | 141 | 629 | 295 | |||||||||
Sales and marketing | 910 | 393 | 1,654 | 740 | |||||||||
General and administrative | 623 | 504 | 1,297 | 842 | |||||||||
Total stock-based compensation expense related to employee | |||||||||||||
stock options and employee stock purchases, pre-tax | 2,008 | 1,106 | 3,855 | 2,013 | |||||||||
Tax benefit | - | - | - | - | |||||||||
Stock-based compensation expense related to employee | |||||||||||||
stock options and employee stock purchases, net of tax | $ | 2,008 | $ | 1,106 | $ | 3,855 | $ | 2,013 | |||||
Fair_Value_Measurement_Tables
Fair Value Measurement (Tables) | 6 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Fair Value Measurement Tables | ' | |||||||||||
Fair Value Measurement (Tables) | ' | |||||||||||
The following tables present the Company's fair value hierarchy for assets and liabilities measured at fair value on a recurring basis (in thousands): | ||||||||||||
Quoted Prices in | Other | Significant | ||||||||||
Active Markets for | Observable | Unobservable | Balance at | |||||||||
Identical Assets | Inputs | Inputs | September 30, | |||||||||
30-Sep-14 | (Level 1) | (Level 2) | (Level 3) | 2014 | ||||||||
Cash equivalents: | ||||||||||||
Money market funds | $ | 22,571 | $ | - | $ | - | $ | 22,571 | ||||
Short-term investments: | ||||||||||||
Money market funds | 1,913 | - | - | 1,913 | ||||||||
Commercial paper | - | 18,235 | - | 18,235 | ||||||||
Corporate debt | - | 67,968 | - | 67,968 | ||||||||
Municipal securities | - | 5,433 | - | 5,433 | ||||||||
Asset backed securities | - | 26,039 | - | 26,039 | ||||||||
Mortgage backed securities | - | 6,926 | - | 6,926 | ||||||||
International government securities | - | 805 | - | 805 | ||||||||
Certificates of deposit | - | 2,200 | - | 2,200 | ||||||||
Total | $ | 24,484 | $ | 127,606 | $ | - | $ | 152,090 | ||||
Quoted Prices in | Other | Significant | ||||||||||
Active Markets for | Observable | Unobservable | Balance at | |||||||||
Identical Assets | Inputs | Inputs | March 31, | |||||||||
31-Mar-14 | (Level 1) | (Level 2) | (Level 3) | 2014 | ||||||||
Cash equivalents: | ||||||||||||
Money market funds | $ | 32,611 | $ | - | $ | - | $ | 32,611 | ||||
Short-term investments: | ||||||||||||
Mutual funds | 1,909 | - | - | 1,909 | ||||||||
Commercial paper | - | 30,379 | - | 30,379 | ||||||||
Corporate debt | - | 14,893 | - | 14,893 | ||||||||
Long-term investments: | ||||||||||||
Corporate debt | - | 48,724 | - | 48,724 | ||||||||
Municipal securities | - | 5,439 | - | 5,439 | ||||||||
Asset backed securities | - | 17,054 | - | 17,054 | ||||||||
International government securities | - | 804 | - | 804 | ||||||||
Total | $ | 34,520 | $ | 117,293 | $ | - | $ | 151,813 | ||||
Inventory_Tables
Inventory (Tables) | 6 Months Ended | ||||||
Sep. 30, 2014 | |||||||
Inventory Tables | ' | ||||||
Inventory (Tables) | ' | ||||||
Inventory was comprised of the following: | |||||||
September 30, | March 31, | ||||||
2014 | 2014 | ||||||
Inventory (in thousands): | |||||||
Work-in-process | $ | 12 | $ | 23 | |||
Finished goods | 742 | 788 | |||||
$ | 754 | $ | 811 | ||||
Net_Income_Per_Share_Tables
Net Income Per Share (Tables) | 6 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Net Income Per Share Tables | ' | ||||||||||||
Net Income Per Share | ' | ||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
(in thousands, except per share amounts) | |||||||||||||
Numerator: | |||||||||||||
Income from continuing operations | $ | 1,291 | $ | 1,488 | $ | 1,299 | $ | 3,480 | |||||
Income from discontinued operations, net of income tax provision | - | 743 | - | 890 | |||||||||
Net income available to common stockholders | 1,291 | 2,231 | 1,299 | 4,370 | |||||||||
Denominator: | |||||||||||||
Common shares | 89,073 | 72,970 | 88,861 | 72,788 | |||||||||
Denominator for basic calculation | 89,073 | 72,970 | 88,861 | 72,788 | |||||||||
Employee stock options | 2,187 | 2,913 | 2,335 | 2,896 | |||||||||
Stock awards | 355 | 349 | 372 | 351 | |||||||||
Denominator for diluted calculation | 91,615 | 76,232 | 91,568 | 76,035 | |||||||||
Income per share - continuing operations | |||||||||||||
Basic | $ | 0.01 | $ | 0.02 | $ | 0.01 | $ | 0.05 | |||||
Diluted | $ | 0.01 | $ | 0.02 | $ | 0.01 | $ | 0.05 | |||||
Income per share - discontinued operations | |||||||||||||
Basic | $ | 0.00 | $ | 0.01 | $ | 0.00 | $ | 0.01 | |||||
Diluted | $ | 0.00 | $ | 0.01 | $ | 0.00 | $ | 0.01 | |||||
Net income per share | |||||||||||||
Basic | $ | 0.01 | $ | 0.03 | $ | 0.01 | $ | 0.06 | |||||
Diluted | $ | 0.01 | $ | 0.03 | $ | 0.01 | $ | 0.06 | |||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | ' | ||||||||||||
The following shares attributable to outstanding stock options and stock purchase rights were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive (in thousands): | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Employee stock options | 1,422 | 325 | 1,396 | 495 | |||||||||
Stock purchase rights | 62 | 72 | 60 | 55 | |||||||||
Total anti-dilutive employee stock-based securities | 1,484 | 397 | 1,456 | 550 | |||||||||
Segment_Information_Tables
Segment Information (Tables) | 6 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Segment Information Tables | ' | ||||||||||||
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas | ' | ||||||||||||
The Company's revenue distribution by geographic region (based upon the destination of shipments and the customer's service address) was as follows: | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Americas (principally US) | 92% | 99% | 92% | 99% | |||||||||
Europe | 7% | 0% | 7% | 0% | |||||||||
Asia Pacific | 1% | 1% | 1% | 1% | |||||||||
100% | 100% | 100% | 100% | ||||||||||
Geographic area data is based upon the location of the property and equipment and was as follows (in thousands): | |||||||||||||
September 30, | March 31, | ||||||||||||
2014 | 2014 | ||||||||||||
United States | $ | 7,822 | $ | 6,305 | |||||||||
Europe | 1,474 | 1,087 | |||||||||||
Asia | 259 | 319 | |||||||||||
Total | $ | 9,555 | $ | 7,711 | |||||||||
Recovered_Sheet1
Commitments And Contingencies (Tables) | 6 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Commitments And Contingencies Tables | ' | ||||||||||||
Product warranties | ' | ||||||||||||
Changes in the Company's product warranty liability, which is included in cost of product revenue in the condensed consolidated statements of income, were as follows (in thousands): | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Balance at beginning of period | $ | 619 | $ | 474 | $ | 660 | $ | 452 | |||||
Accruals for warranties | 15 | 293 | 68 | 470 | |||||||||
Settlements | -96 | -215 | -190 | -370 | |||||||||
Balance at end of period | $ | 538 | $ | 552 | $ | 538 | $ | 552 | |||||
Minimum third party network service provider commitments | ' | ||||||||||||
At September 30, 2014, future minimum annual payments under these third party network service contracts were as follows (in thousands): | |||||||||||||
Year ending March 31: | |||||||||||||
Remaining 2015 | $ | 1,196 | |||||||||||
2016 | 1,726 | ||||||||||||
2017 | 1,501 | ||||||||||||
2018 | 1,035 | ||||||||||||
Total minimum payments | $ | 5,458 | |||||||||||
Discontinued_Operations_Tables
Discontinued Operations (Tables) | 6 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Discontinued Operations Tables | ' | ||||||||||||
Schedule of Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures | ' | ||||||||||||
The results of operations of these discontinued operations were as follows (in thousands): | |||||||||||||
Results of operations: | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Revenue | $ | - | $ | 677 | $ | - | $ | 1,430 | |||||
Operating expense | - | 420 | - | 922 | |||||||||
Income before income taxes | - | 257 | - | 508 | |||||||||
Provision for income taxes | - | 103 | - | 207 | |||||||||
Income from discontinued operations | - | 154 | - | 301 | |||||||||
Gain on disposal of discontinued operations, | |||||||||||||
net of income tax provision of $463 | - | 589 | - | 589 | |||||||||
Description_of_the_Business_Na
Description of the Business (Narrative) (Details) | 6 Months Ended |
Sep. 30, 2014 | |
Description Of Business Narrative Details | ' |
Approximate number of business customers | 40,400 |
Year Founded | '1987 |
Entity Incorporation, Date of Incorporation | 31-Dec-96 |
Entity Incorporation, State Country Name | 'Delaware |
Fiscal Year End Date | '--03-31 |
Basis_of_Presentation_Cash_Cas
Basis of Presentation (Cash Cash Equivalents and Short-term Investments) (Details) (USD $) | 6 Months Ended | 12 Months Ended | 6 Months Ended | 12 Months Ended | 6 Months Ended | 12 Months Ended | 6 Months Ended | 12 Months Ended | 6 Months Ended | 12 Months Ended | 6 Months Ended | 12 Months Ended | 6 Months Ended | 12 Months Ended | 6 Months Ended | 12 Months Ended | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2014 |
Money Market Funds | Money Market Funds | Mutual Funds | Mutual Funds | Commercial Paper | Commercial Paper | Corporate Debt | Corporate Debt | Municipal Securities | Municipal Securities | Asset Backed Securities | Asset Backed Securities | Mortgage Backed Securities | Internatinal Government Securities | Internatinal Government Securities | Certificates of Deposit | |||
Amortized Cost Basis | $152,133 | $151,854 | $22,571 | $32,611 | $2,000 | $1,964 | $18,232 | $30,374 | $67,902 | $63,621 | $5,435 | $5,435 | $26,038 | $17,049 | $6,955 | $804 | $800 | $2,200 |
Available-for-sale Securities, Gross Unrealized Gain | 88 | 55 | 0 | 0 | 0 | 0 | 5 | 5 | 69 | 35 | 3 | 5 | 6 | 6 | 0 | 1 | 5 | 0 |
Gross Unrealized Losses | -131 | -96 | 0 | 0 | -87 | -55 | -1 | 0 | -2 | -39 | -6 | -1 | -5 | -1 | -29 | 0 | 0 | -1 |
Total available-for-sale investments, estimated fair value | 152,090 | 151,813 | 22,571 | 32,611 | 1,913 | 1,909 | 18,236 | 30,379 | 67,969 | 63,617 | 5,432 | 5,439 | 26,039 | 17,054 | 6,926 | 805 | 805 | 2,199 |
Reported as: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash equivalents | 22,571 | 32,611 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Short-term investments | 129,519 | 47,181 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Long-term investments | 0 | 72,021 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contractual maturities of investments: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Investments due within one year | 102,300 | 79,792 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Investments due after one year | $49,790 | $72,021 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basis_of_Presentation_Service_
Basis of Presentation (Service and Product Revenue) (Narrative) (Details) | Sep. 30, 2014 |
Basis Of Presentation Service And Product Revenue Narrative Details | ' |
Trial period offered with all new services, days | 30 |
Basis_of_Presentation_Goodwill
Basis of Presentation (Goodwill And Other Intangibles Schedule Of Intangibles) (Details) (USD $) | Sep. 30, 2014 | Mar. 31, 2014 |
In Thousands, unless otherwise specified | ||
Gross Carrying Amount | $18,885 | $18,885 |
Accumulated Amortization | -5,059 | -3,790 |
Net Carrying Amount | 13,826 | 15,095 |
Technology | ' | ' |
Gross Carrying Amount | 8,242 | 8,242 |
Accumulated Amortization | -2,493 | -2,080 |
Net Carrying Amount | 5,749 | 6,162 |
Customer relationships | ' | ' |
Gross Carrying Amount | 9,686 | 9,686 |
Accumulated Amortization | -2,566 | -1,710 |
Net Carrying Amount | 7,120 | 7,976 |
Trade names domains | ' | ' |
Gross Carrying Amount | 957 | 957 |
Accumulated Amortization | 0 | 0 |
Net Carrying Amount | $957 | $957 |
Basis_of_Presentation_Goodwill1
Basis of Presentation (Goodwill And Other Intangibles Schedule Of Future Amortization Of Intangibles) (Details) (USD $) | Sep. 30, 2014 |
In Thousands, unless otherwise specified | |
Basis Of Presentation Goodwill And Other Intangibles Schedule Of Future Amortization Of Intangibles Details | ' |
Remaining 2015 | $1,119 |
2016 | 2,238 |
2017 | 2,231 |
2018 | 1,983 |
2019 | 1,737 |
Thereafter | 3,561 |
Total | $12,869 |
Basis_of_Presentation_Software
Basis of Presentation (Software Development Costs) (Details) (USD $) | Mar. 31, 2014 | Sep. 30, 2014 |
In Millions, unless otherwise specified | Software Development Costs | |
Software costs capitalized during the period | ' | $0.20 |
Total capitalized software costs | 1 | 1.1 |
Accumulated software costs amortization | $0.10 | $0.30 |
Basis_of_Presentation_Schedule
Basis of Presentation (Schedule Of Stock Purchase Right Activity) (Details) (USD $) | 6 Months Ended |
Sep. 30, 2014 | |
Basis Of Presentation Schedule Of Stock Purchase Right Activity Details | ' |
Balance at March 31, 2014 | 489,627 |
Granted | 31,432 |
Vested | -175,038 |
Forfeited | -34,075 |
Balance at September 30, 2014 | 311,946 |
Weighted-average grant date fair market value, March 31, 2014 | $4.83 |
Weighted-average grant date fair market value of restricted stock rights granted | $7.88 |
Weighted-average grant date fair market value, vested during period | $3.81 |
Weighted-average grant date fair market value, forfeited during period | $5.67 |
Weighted-average grant date fair market value, September 30, 2014 | $5.62 |
Weighted-average remaining contractual term, in years, March 31, 2014 | '1 year 339 days |
Weighted-average remaining contractual term, in years, September 30, 2014 | '1 year 307 days |
Basis_of_Presentation_Schedule1
Basis of Presentation (Schedule Of Restricted Stock Unit and Performance Stock Unit Activity) (Details) | 6 Months Ended | |
Sep. 30, 2014 | Mar. 31, 2014 | |
Basis Of Presentation Schedule Of Restricted Stock Unit And Performance Stock Unit Activity Details | ' | ' |
Balance at March 31, 2014 | 1,134,856 | ' |
Granted | 248,492 | ' |
Vested | -118,561 | ' |
Forfeited | -93,755 | ' |
Balance at September 30, 2014 | 1,171,032 | ' |
RSU Weighted-average remaining contractual term, in years | ' | 2 |
RSU Weighted-average remaining contractual term, in years, end of period | 1.87 | ' |
Basis_of_Presentation_Schedule2
Basis of Presentation (Schedule Of Option Activity) (Details) (USD $) | 6 Months Ended | |
Sep. 30, 2014 | ||
Basis Of Presentation Schedule Of Option Activity Details | ' | |
Balance at March 31, 2014 | 6,002,382 | |
Granted - options | 106,684 | |
Exercised | -483,184 | |
Cancelled/forfeited | -278,098 | |
Balance at September 30, 2014 | 5,347,784 | |
Shares available for grant at March 31, 2014 | 1,613,943 | |
Change in options available for grant | 6,800,000 | |
Granted options, shares available for grant | -106,684 | |
Stock purchase rights/restricted stock unit (1) | -279,924 | [1] |
Exercised | 0 | |
Cancelled/forfeited shares available for grant | 278,098 | |
Cancelled/forfeited - restricted stock units | 93,944 | |
Shares available for grant, at September 30, 2014 | 8,399,377 | |
Weighted-average exercise price of options outstanding, at March 31, 2014 | $4.14 | |
Weighted-average exercise price of options granted during period | $7.56 | |
Weighted-average exercise price of stock purchases rights during period | $0 | |
Weighted-average exercise price of options exercised during the period | $1.55 | |
Weighted-average exercise price of options forfeited, cancelled or expired during the period | $5.11 | |
Weighted-average exercise price of canceled / forfeited - restricted stock unit during period | $5.67 | |
Weighted-average exercise price of options outstanding at September 30, 2014 | $4.16 | |
[1] | The reduction to shares available for grant includes awards granted of 279,924 shares |
Basis_of_Presentation_Summary_
Basis of Presentation (Summary Of Stock Options Outstanding And Exercisable) (Details) (USD $) | Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 |
$0.55 - $1.26 | $1.27 - $1.79 | $1.80 - $5.87 | $5.88 - $9.74 | $10.97 - $11.26 | $0.55 - $11.26 | |||
Range of Exercise Prices, Minimum | ' | ' | $0.55 | $1.27 | $1.80 | $5.88 | $10.97 | $0.55 |
Range of Exercise Prices, Maximum | ' | ' | $1.26 | $1.79 | $5.87 | $9.74 | $11.26 | $11.26 |
Options Outstanding, Number of Shares | 5,347,784 | 6,002,382 | 1,453,500 | 1,103,128 | 1,305,184 | 1,335,972 | 150,000 | 5,347,784 |
Options Outstanding, Weighted-Average Exercise Price Per Share | $4.16 | $4.14 | $1.03 | $1.54 | $4.68 | $9.35 | $11.11 | ' |
Options Outstanding, Weighted-Average Remaining Contractual Term (in years) | ' | ' | '3 years 110 days | '1 year 183 days | '6 years 37 days | '9 years | '9 years 110 days | ' |
Options Outstanding, Aggregate Intrinsic Value | ' | ' | $8,208,733 | $5,673,510 | $2,607,072 | $33,180 | $0 | $16,522,495 |
Options Exercisable, Number of Shares | ' | ' | 1,453,500 | 1,103,128 | 869,566 | 294,442 | 0 | 3,720,636 |
Options Exercisable, Weighted-Average Exercise Price Per Share | ' | ' | $1.03 | $1.54 | $4.30 | $9.40 | $0 | ' |
Options Exercisable, Aggregate Intrinsic Value | ' | ' | $8,208,733 | $5,673,510 | $2,059,942 | $15,899 | $0 | $15,958,084 |
Stock_Plans_Assumptions_Used_I
Stock Plans (Assumptions Used In Black-Scholes Model) (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Option Grants and Stock Purchase Rights | ' | ' | ' | ' |
Expected volatility | 58.00% | 64.00% | 58.00% | 64.00% |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Risk-free interest rate | 1.74% | 1.98% | 1.72% | 1.88% |
Weighted average expected option term, in years | '5 years 110 days | '6 years 73 days | '5 years 73 days | '6 years 37 days |
Weighted average fair value of options granted, per share | $3.90 | $5.76 | $3.91 | $5.62 |
Employee Stock Purchase Plan Rights | ' | ' | ' | ' |
Expected volatility | 46.00% | 38.00% | 46.00% | 38.00% |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Risk-free interest rate | 0.09% | 0.11% | 0.09% | 0.11% |
Weighted average expected option term, in years | '0 years 9 months 0 days | '0 years 9 months 0 days | '0 years 9 months 0 days | '0 years 9 months 0 days |
Weighted average fair value of options granted, per share | $2.46 | $2.60 | $2.46 | $2.60 |
Basis_of_Presentation_Schedule3
Basis of Presentation (Schedule Of Stock-Based Compensation Expense By Statement Of Operations) (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Stock-based employee compensation expense related to employee stock options and employee stock purchases, pre tax | $2,008 | $1,106 | $3,855 | $2,013 |
Tax benefit | 0 | 0 | 0 | 0 |
Stock-based employee compensation expense related to employee stock options and employee stock purchases, net of tax | 2,008 | 1,106 | 3,855 | 2,013 |
Cost of service revenue | ' | ' | ' | ' |
Stock-based employee compensation expense related to employee stock options and employee stock purchases, pre tax | 160 | 68 | 275 | 136 |
Cost of product revenue | ' | ' | ' | ' |
Stock-based employee compensation expense related to employee stock options and employee stock purchases, pre tax | 0 | 0 | 0 | 0 |
Research and development | ' | ' | ' | ' |
Stock-based employee compensation expense related to employee stock options and employee stock purchases, pre tax | 315 | 141 | 629 | 295 |
Sales and marketing | ' | ' | ' | ' |
Stock-based employee compensation expense related to employee stock options and employee stock purchases, pre tax | 910 | 393 | 1,654 | 740 |
General and administrative | ' | ' | ' | ' |
Stock-based employee compensation expense related to employee stock options and employee stock purchases, pre tax | $623 | $504 | $1,297 | $842 |
Basis_of_Presentation_Stock_Op
Basis of Presentation (Stock Option Narrative) (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Stock-based compensation expense | ' | ' | $3,855,000 | $2,013,000 |
Stock-Based Awards | ' | ' | ' | ' |
Unamortized stock-based compensation expense related to unvested stock awards | 15,000,000 | ' | 15,000,000 | ' |
Weighted average period of recognition for unrecognized compensation costs (in years) | ' | ' | '2 years 237 days | ' |
Tax benefit attributable to stock options exercised | ' | ' | 0 | 0 |
Stock-based compensation expense | 1,700,000 | 1,000,000 | 3,400,000 | 1,800,000 |
Employee Stock Purchase Plan | ' | ' | ' | ' |
Unamortized stock-based compensation expense related to unvested stock awards | 400,000 | ' | 400,000 | ' |
Weighted average period of recognition for unrecognized compensation costs (in years) | ' | ' | '0 years 6 months | ' |
Tax benefit attributable to stock options exercised | ' | ' | 0 | 0 |
Stock-based compensation expense | $300,000 | $100,000 | $500,000 | $300,000 |
Fair_Value_Measurement_Details
Fair Value Measurement (Details) (USD $) | Sep. 30, 2014 | Mar. 31, 2014 |
In Thousands, unless otherwise specified | ||
Cash equivalents: | ' | ' |
Money market funds | $22,571 | $32,611 |
Short-term investments: | ' | ' |
Mutual funds | 1,913 | 1,909 |
Commercial paper | 18,235 | 30,379 |
Corporate debt | 67,968 | 14,893 |
Certificates of deposit | 2,200 | 0 |
Long-term investments: | ' | ' |
Corporate debt | 0 | 48,724 |
Municipal securities | 5,433 | 5,439 |
Asset backed securities | 26,039 | 17,054 |
Mortgage backed securities | 6,926 | 0 |
International government securities | 805 | 804 |
Total | 152,090 | 151,813 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ' | ' |
Cash equivalents: | ' | ' |
Money market funds | 22,571 | 32,611 |
Short-term investments: | ' | ' |
Mutual funds | 1,913 | 1,909 |
Commercial paper | 0 | 0 |
Corporate debt | 0 | 0 |
Certificates of deposit | 0 | 0 |
Long-term investments: | ' | ' |
Corporate debt | 0 | 0 |
Municipal securities | 0 | 0 |
Asset backed securities | 0 | 0 |
Mortgage backed securities | 0 | 0 |
International government securities | 0 | 0 |
Total | 24,484 | 34,520 |
Other Observable Inputs (Level 2) | ' | ' |
Cash equivalents: | ' | ' |
Money market funds | 0 | 0 |
Short-term investments: | ' | ' |
Mutual funds | 0 | 0 |
Commercial paper | 18,235 | 30,379 |
Corporate debt | 67,968 | 14,893 |
Certificates of deposit | 2,200 | 0 |
Long-term investments: | ' | ' |
Corporate debt | 0 | 48,724 |
Municipal securities | 5,433 | 5,439 |
Asset backed securities | 26,039 | 17,054 |
Mortgage backed securities | 6,926 | 0 |
International government securities | 805 | 804 |
Total | 127,606 | 117,293 |
Significant Unobservable Inputs (Level 3) | ' | ' |
Cash equivalents: | ' | ' |
Money market funds | 0 | 0 |
Short-term investments: | ' | ' |
Mutual funds | 0 | 0 |
Commercial paper | 0 | 0 |
Corporate debt | 0 | 0 |
Certificates of deposit | 0 | 0 |
Long-term investments: | ' | ' |
Corporate debt | 0 | 0 |
Municipal securities | 0 | 0 |
Asset backed securities | 0 | 0 |
Mortgage backed securities | 0 | 0 |
International government securities | 0 | 0 |
Total | $0 | $0 |
Balance_Sheet_Detail_Inventory
Balance Sheet Detail (Inventory Components) (Details) (USD $) | Sep. 30, 2014 | Mar. 31, 2014 |
In Thousands, unless otherwise specified | ||
Balance Sheet Detail Inventory Components Details | ' | ' |
Work-in-process | $12 | $23 |
Finished goods | 742 | 788 |
Inventory, net | $754 | $811 |
Net_Income_Per_Share_Details
Net Income Per Share (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Net Income Per Share Details | ' | ' | ' | ' |
Income from continuing operations | $1,291 | $1,488 | $1,299 | $3,480 |
Income from discontinued operations, net of income tax provision | 0 | 743 | 0 | 890 |
Net income available to common stockholders | $1,291 | $2,231 | $1,299 | $4,370 |
Common shares | 89,073 | 72,970 | 88,861 | 72,788 |
Denominator for basic calculation | 89,073 | 72,970 | 88,861 | 72,788 |
Employee stock options | 2,187 | 2,913 | 2,335 | 2,896 |
Stock awards | 355 | 349 | 372 | 351 |
Denominator for diluted calculation | 91,615 | 76,232 | 91,568 | 76,035 |
Income per share - continuing operations: | ' | ' | ' | ' |
Basic | $0.01 | $0.02 | $0.01 | $0.05 |
Diluted | $0.01 | $0.02 | $0.01 | $0.05 |
Income per share - discontinued operations: | ' | ' | ' | ' |
Basic | $0 | $0.01 | $0 | $0.01 |
Diluted | $0 | $0.01 | $0 | $0.01 |
Net income per share: | ' | ' | ' | ' |
Basic | $0.01 | $0.03 | $0.01 | $0.06 |
Diluted | $0.01 | $0.03 | $0.01 | $0.06 |
Net_Income_Per_Share_Options_a
Net Income Per Share (Options and Rights Excluded) (Details) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Anti-dilutive shares | 1,484 | 397 | 1,456 | 550 |
Employee stock options | ' | ' | ' | ' |
Anti-dilutive shares | 1,422 | 325 | 1,396 | 495 |
Stock purchase rights | ' | ' | ' | ' |
Anti-dilutive shares | 62 | 72 | 60 | 55 |
Income_Taxes_Narrative_Details
Income Taxes (Narrative) (Details) (USD $) | 6 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2014 | Mar. 31, 2014 |
Income Taxes Narrative Details | ' | ' |
Unrecognized tax benefits | $2.20 | $2.20 |
Open Tax Year | '1995 | ' |
Segment_Reporting_Revenue_and_
Segment Reporting Revenue and Property and Equipment by Geographic Area (Details) (USD $) | 3 Months Ended | 6 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Mar. 31, 2014 |
Geographic Areas, Revenue from External Customers | '100% | '100% | '100% | '100% | ' |
Number of customers at more than 10% of revenue | '0 | '0 | '0 | '0 | ' |
Geographic Areas, Long-Lived Assets | $9,555 | ' | $9,555 | ' | $7,711 |
Americas | ' | ' | ' | ' | ' |
Geographic Areas, Revenue from External Customers | '92% | '99% | '92% | '99% | ' |
Europe | ' | ' | ' | ' | ' |
Geographic Areas, Revenue from External Customers | '7% | '0% | '7% | '0% | ' |
Geographic Areas, Long-Lived Assets | 1,474 | ' | 1,474 | ' | 1,087 |
Asia Pacific | ' | ' | ' | ' | ' |
Geographic Areas, Revenue from External Customers | '1% | '1% | '1% | '1% | ' |
United States | ' | ' | ' | ' | ' |
Geographic Areas, Long-Lived Assets | 7,822 | ' | 7,822 | ' | 6,305 |
Asia | ' | ' | ' | ' | ' |
Geographic Areas, Long-Lived Assets | $259 | ' | $259 | ' | $319 |
Recovered_Sheet2
Commitments and Contingencies (Product Warranties) (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Commitments And Contingencies Product Warranties Details | ' | ' | ' | ' |
Balance at beginning of period | $619 | $474 | $660 | $452 |
Accruals for warranties | 15 | 293 | 68 | 470 |
Settlements | -96 | -215 | -190 | -370 |
Balance at end of period | $538 | $552 | $538 | $552 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Service Provider Contracts) (Details) (USD $) | Sep. 30, 2014 |
In Thousands, unless otherwise specified | |
Commitments And Contingencies Service Provider Contracts Details | ' |
Remaining 2015 | $1,196 |
2016 | 1,726 |
2017 | 1,501 |
2018 | 1,035 |
Total minimum payments | $5,458 |
Commitments_and_Contingencies_2
Commitments and Contingencies (CustomerSupport Commitments) (Narrative) (Details) (USD $) | Sep. 30, 2014 |
Commitments And Contingencies Customersupport Commitments Narrative Details | ' |
Third party customer support vendor minimum monthly commitment | $400,000 |
Third party customer support vendor maximum obligation | $2,200,000 |
Advance termination notice required, days | 150 |
Patent_Sale_Narrative_Details
Patent Sale (Narrative) (Details) (USD $) | 1 Months Ended | |
In Millions, unless otherwise specified | Jun. 30, 2012 | Sep. 30, 2014 |
Patent Sale Narrative Details | ' | ' |
Sale of patents | $12 | ' |
Future maximum patent license collection | $3 | $1 |
Discontinued_Operations_Detail
Discontinued Operations (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Results of Operations | ' | ' | ' | ' |
Revenue | $0 | $677 | $0 | $1,430 |
Operating expense | 0 | 420 | 0 | 922 |
Income before income taxes | 0 | 257 | 0 | 508 |
Provision for income taxes | 0 | 103 | 0 | 207 |
Income from discontinued operations | 0 | 154 | 0 | 301 |
Gain on disposal of discontinued operations. net of income tax provision of $463k | 0 | 589 | 0 | 589 |
Income tax provision on gain on disposal | $0 | $463 | $0 | $463 |
Discontinued_Operations_Narrat
Discontinued Operations (Narrative) (Details) (USD $) | 1 Months Ended |
In Millions, unless otherwise specified | Oct. 31, 2013 |
Discontinued Operations Narrative Details | ' |
Proceeds from disposition of discontinued dedicated server operations | $3 |