Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 15, 2018 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | MSTR | |
Entity Registrant Name | MICROSTRATEGY INC | |
Entity Central Index Key | 1,050,446 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Class A | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 9,432,210 | |
Class B Convertible | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 2,035,184 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 112,082 | $ 420,244 |
Restricted cash | 901 | 938 |
Short-term investments | 587,093 | 254,927 |
Accounts receivable, net | 110,761 | 165,364 |
Prepaid expenses and other current assets | 27,629 | 19,180 |
Total current assets | 838,466 | 860,653 |
Property and equipment, net | 51,861 | 53,359 |
Capitalized software development costs, net | 0 | 2,499 |
Deposits and other assets | 7,549 | 7,411 |
Deferred tax assets, net | 15,628 | 9,297 |
Total assets | 913,504 | 933,219 |
Current liabilities: | ||
Accounts payable and accrued expenses | 23,002 | 30,711 |
Accrued compensation and employee benefits | 37,819 | 41,498 |
Deferred revenue and advance payments | 151,043 | 198,734 |
Total current liabilities | 211,864 | 270,943 |
Deferred revenue and advance payments | 4,923 | 6,400 |
Other long-term liabilities | 61,290 | 50,146 |
Deferred tax liabilities | 4 | 4 |
Total liabilities | 278,081 | 327,493 |
Commitments and Contingencies | ||
Stockholders' Equity | ||
Preferred stock undesignated, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Additional paid-in capital | 573,474 | 559,918 |
Treasury stock, at cost; 6,405 shares | (475,184) | (475,184) |
Accumulated other comprehensive loss | (8,718) | (5,659) |
Retained earnings | 545,833 | 526,633 |
Total stockholders' equity | 635,423 | 605,726 |
Total liabilities and stockholders' equity | 913,504 | 933,219 |
Class A | ||
Stockholders' Equity | ||
Common stock | 16 | 16 |
Class B Convertible | ||
Stockholders' Equity | ||
Common stock | $ 2 | $ 2 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Treasury stock, shares | 6,405,000 | 6,405,000 |
Class A | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 330,000,000 | 330,000,000 |
Common stock, shares issued | 15,837,000 | 15,817,000 |
Common stock, shares outstanding | 9,432,000 | 9,412,000 |
Class B Convertible | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 165,000,000 | 165,000,000 |
Common stock, shares issued | 2,035,000 | 2,035,000 |
Common stock, shares outstanding | 2,035,000 | 2,035,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Revenues: | |||||
Total revenues | $ 122,152 | $ 126,010 | $ 365,721 | $ 367,462 | |
Cost of revenues: | |||||
Total cost of revenues | 23,389 | 24,389 | 73,614 | 71,896 | |
Gross profit | 98,763 | 101,621 | 292,107 | 295,566 | |
Operating expenses: | |||||
Sales and marketing | 45,429 | 42,005 | 147,742 | 123,213 | |
Research and development | 25,829 | 19,360 | 74,471 | 57,347 | |
General and administrative | 20,285 | 19,082 | 63,756 | 58,921 | |
Total operating expenses | 91,543 | 80,447 | 285,969 | 239,481 | |
Income from operations | 7,220 | 21,174 | 6,138 | 56,085 | |
Interest income, net | 3,441 | 1,449 | 8,698 | 3,449 | |
Other income (expense), net | 798 | (1,903) | 3,665 | (6,377) | |
Income before income taxes | 11,459 | 20,720 | 18,501 | 53,157 | |
(Benefit from) provision for income taxes | (1,240) | 2,536 | (699) | 9,463 | |
Net income | $ 12,699 | $ 18,184 | $ 19,200 | $ 43,694 | |
Basic earnings per share | [1] | $ 1.11 | $ 1.59 | $ 1.68 | $ 3.82 |
Weighted average shares outstanding used in computing basic earnings per share | 11,467 | 11,447 | 11,458 | 11,443 | |
Diluted earnings per share | [1] | $ 1.10 | $ 1.58 | $ 1.67 | $ 3.78 |
Weighted average shares outstanding used in computing diluted earnings per share | 11,538 | 11,499 | 11,502 | 11,567 | |
Product licenses | |||||
Revenues: | |||||
Total revenues | $ 20,264 | $ 22,356 | $ 56,857 | $ 62,730 | |
Cost of revenues: | |||||
Total cost of revenues | 377 | 1,763 | 4,255 | 5,182 | |
Subscription services | |||||
Revenues: | |||||
Total revenues | 7,240 | 7,725 | 22,486 | 23,843 | |
Cost of revenues: | |||||
Total cost of revenues | 3,259 | 3,592 | 9,953 | 10,031 | |
Total product licenses and subscription services | |||||
Revenues: | |||||
Total revenues | 27,504 | 30,081 | 79,343 | 86,573 | |
Cost of revenues: | |||||
Total cost of revenues | 3,636 | 5,355 | 14,208 | 15,213 | |
Product support | |||||
Revenues: | |||||
Total revenues | 74,463 | 72,881 | 222,554 | 214,159 | |
Cost of revenues: | |||||
Total cost of revenues | 5,079 | 4,218 | 14,685 | 13,094 | |
Other services | |||||
Revenues: | |||||
Total revenues | 20,185 | 23,048 | 63,824 | 66,730 | |
Cost of revenues: | |||||
Total cost of revenues | $ 14,674 | $ 14,816 | $ 44,721 | $ 43,589 | |
[1] | Basic and fully diluted earnings per share for class A and class B common stock are the same. |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income | $ 12,699 | $ 18,184 | $ 19,200 | $ 43,694 |
Other comprehensive (loss) income, net of applicable taxes: | ||||
Foreign currency translation adjustment | (607) | 1,120 | (3,059) | 4,425 |
Unrealized loss on short-term investments | 0 | (30) | ||
Total other comprehensive (loss) income | (607) | 1,120 | (3,059) | 4,395 |
Comprehensive income | $ 12,092 | $ 19,304 | $ 16,141 | $ 48,089 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Operating activities: | ||
Net income | $ 19,200 | $ 43,694 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 3,483 | 12,009 |
Bad debt expense | 1,053 | 1,726 |
Deferred taxes | (6,667) | (5,508) |
Share-based compensation expense | 11,132 | 10,557 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 9,300 | 18,804 |
Prepaid expenses and other current assets | (1,075) | (5,042) |
Deposits and other assets | (956) | (1,288) |
Accounts payable and accrued expenses | (5,816) | (14,468) |
Accrued compensation and employee benefits | (3,901) | (10,437) |
Deferred revenue and advance payments | (4,032) | 1,140 |
Other long-term liabilities | 1,527 | (1,904) |
Net cash provided by operating activities | 23,248 | 49,283 |
Investing activities: | ||
Proceeds from redemption of short-term investments | 348,980 | 340,920 |
Purchases of property and equipment | (4,457) | (2,282) |
Purchases of short-term investments | (674,528) | (411,666) |
Net cash used in investing activities | (330,005) | (73,028) |
Financing activities: | ||
Proceeds from sale of class A common stock under exercise of employee stock options | 2,471 | 1,677 |
Payments on capital lease obligations and other financing arrangements | (9) | (17) |
Net cash provided by financing activities | 2,462 | 1,660 |
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash | (3,904) | 6,992 |
Net decrease in cash, cash equivalents, and restricted cash | (308,199) | (15,093) |
Cash, cash equivalents and restricted cash, beginning of period | 421,182 | 402,712 |
Cash, cash equivalents and restricted cash, end of period | $ 112,983 | $ 387,619 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | (1) Summary of Significant Accounting Policies (a) Basis of Presentation The accompanying Consolidated Financial Statements of MicroStrategy Incorporated (“MicroStrategy” or the “Company”) are unaudited. In the opinion of management, all adjustments necessary for a fair statement of financial position and results of operations have been included. All such adjustments are of a normal recurring nature, unless otherwise disclosed. Interim results are not necessarily indicative of results for a full year. Certain amounts in the prior year’s Consolidated Financial Statements have been restated upon the adoption of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) The Consolidated Financial Statements and Notes to Consolidated Financial Statements are presented as required by the United States Securities and Exchange Commission (“SEC”) and do not contain certain information included in the Company’s annual financial statements and notes. These financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto filed with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. There have been no significant changes in the Company’s accounting policies since December 31, 2017, except as discussed below with respect to the Company’s adoption of ASU 2014-09. The accompanying Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company is not aware of any subsequent event which would require recognition or disclosure. (b) Revenue Recognition The Company adopted ASU 2014-09 effective as of January 1, 2018 and has adjusted its prior period consolidated financial statements to reflect full retrospective adoption. Refer to Note 2, Recent Accounting Standards, to the Consolidated Financial Statements for a summary of the significant changes in accounting principles and the impact to the Company’s previously reported consolidated financial statements. Under ASU 2014-09, the Company recognizes revenue using a five-step model: (i) Identifying the contract(s) with a customer, (ii) Identifying the performance obligation, (iii) Determining the transaction price, (iv) Allocating the transaction price to the performance obligations in the contract, and (v) Recognizing revenue when, or as, the Company satisfies a performance obligation. The Company has elected to exclude taxes assessed by government authorities in determining the transaction price, and therefore revenue is recognized net of taxes collected from customers. Performance Obligations and Timing of Revenue Recognition The Company primarily sells goods and services that fall into the categories discussed below. Each category contains one or more performance obligations that are either (i) capable of being distinct (i.e., the customer can benefit from the good or service on its own or together with readily available resources, including those purchased separately from the Company) and distinct within the context of the contract (i.e., separately identifiable from other promises in the contract), or (ii) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. Aside from the Company’s term and perpetual software licenses, which are delivered at a point in time, the majority of the Company’s other services are delivered over time. Product Licenses The Company sells different types of on-premise business intelligence software, licensed on a term or perpetual basis. Although license arrangements are sold with product support, the software is fully functional at the outset of the arrangement and is considered a distinct performance obligation. Revenue from product license sales is recognized when control of the software license has transferred to the customer, which is the later of delivery or commencement of the license term. The Company may also sell through resellers and original equipment manufacturers (“OEMs”) who purchase the Company’s products for resale. In reseller arrangements, revenue is recognized when control of the product is transferred to the end user. In OEM arrangements, revenue is recognized upon delivery to the OEM. Subscription Services The Company also sells access to its software through a subscription-based cloud offering, wherein customers access the software through a third-party hosting service. Control of the software itself does not transfer to the customer under this arrangement and is not considered a separate performance obligation. Subscription services are regularly sold on a standalone basis with telephone support only. Revenue related to this subscription service is recognized on a straight-line basis over the contract period, which is the period over which the customer has continuous access to the software. Product Support In all license arrangements, customers are required to purchase a standard product support package and may also purchase a premium product support package for a fixed annual fee. All product support packages include both technical support and when-and-if-available software upgrades, which are treated as a single performance obligation as they are considered a series of distinct services that are substantially the same and have the same duration and measure of progress. Revenue from product support is recognized on a straight-line basis over the contract period, which is the period over which the customer has continuous access to product support. Consulting Services The Company sells consulting services to help customers plan and execute deployment of the Company’s software. Customers are not required to use consulting services to fully benefit from the software license. Consulting services are regularly sold on a standalone basis and either (i) prepaid upfront or (ii) sold on a time and materials basis. Consulting arrangements are each considered separate performance obligations because they do not integrate with each other or with other products and services to deliver a combined output to the customer, do not modify or customize (or are not modified or customized by) each other or other products and services, and do not affect the customer’s ability to use the other consulting offerings or other products and services. Revenue under consulting arrangements is recognized over time as services are delivered. For time and materials-based consulting arrangements, the Company has elected the practical expedient of recognizing revenue upon invoicing since the invoiced amount corresponds directly to the value of the Company’s service to date. Education Services The Company sells various education and training services to its customers. Education services are sold on a standalone basis under three different arrangements: (i) prepaid bulk training units that may be redeemed on training courses based on standard redemption rates, (ii) an annual subscription to unlimited training courses, and (iii) individual courses purchased a la carte. Education arrangements are each considered separate performance obligations because they do not integrate with each other or with other products and services to deliver a combined output to the customer, do not modify or customize (or are not modified or customized by) each other or other products and services, and do not affect the customer’s ability to use the other education offerings or other products and services. Revenue on prepaid bulk training units and individual course purchases are recognized when the courses are delivered. Revenue on the annual subscription is recognized on a straight-line basis over the contract period, which is the period over which the customer has continuous access to unlimited training courses. Refer to Note 10, Segment Information, to the Consolidated Financial Statements for information regarding total revenues by geographic region. Significant Judgments and Estimates The adoption of ASU 2014-09 requires the Company to make significant judgments to determine the transaction price of a contract and subsequently allocate the transaction price based on an estimated standalone selling price (“SSP”). The Company is also required to make significant judgements with respect to capitalizing incremental costs to obtain a customer contract and determining the subsequent amortization period. These significant judgments and estimates are discussed further below. Determining the Transaction Price The transaction price includes both fixed and variable consideration. Variable consideration is included in the transaction price to the extent it is probable that a significant reversal will not occur. The amount of variable consideration excluded from the transaction price was not material for the three and nine months ended September 30, 2018 and 2017. The Company’s estimates of variable consideration are also subject to subsequent true-up adjustments and may result in changes to its transaction prices, but such true-up adjustments are not expected to be material. The Company has the following sources of variable consideration: (i) Performance penalties – Subscription services and product support arrangements generally contain performance response time guarantees. For subscription services arrangements, the Company estimates variable consideration using a portfolio approach because performance penalties are tied to standard up-time requirements. For product support arrangements, the Company estimates variable consideration on a contract basis because such arrangements are customer-specific. For both subscription services and product support arrangements, the Company uses an expected value approach to estimate variable consideration based on historical business practices and current and future performance expectations to determine the likelihood of incurring penalties. (ii) Extended payment terms – The Company’s standard payment terms are generally within 180 days of invoicing. If extended payment terms are granted to customers, those terms generally do not exceed one year. For contracts with extended payment terms, the Company estimates variable consideration on a contract basis because such estimates are customer-specific, and uses an expected value approach to analyze historical business experience on a customer-by-customer basis to determine the likelihood that extended payment terms lead to an implied price concession. (iii) Sales and usage-based royalties – Certain product license arrangements include sales or usage-based royalties, covering both the software license and product support. In these arrangements, the Company uses an expected value approach to estimate and recognize revenue for royalty sales each period, utilizing historical data on a contract-by-contract basis. True-up adjustments are recorded in subsequent periods when royalty reporting is received from the OEM partners. The Company provides a standard software assurance warranty to repair, replace, or refund software that does not perform in accordance with documentation. The standard software assurance warranty period is generally less than one year. Assurance warranty claims were not material for the three and nine months ended September 30, 2018 and 2017. The Company does not adjust the transaction price for significant financing components where the time period between cash payment and performance is one year or less. However, there are circumstances where the timing between cash payment and performance may exceed one year. These circumstances generally involve prepaid multi-year product support and subscription services arrangements where the customer determines when the service is utilized (e.g., when to request on-call support services or when to use and access the software on the cloud). In these circumstances, the Company has determined no significant financing component exists because the customer controls when to utilize the service and because there are significant business purposes behind the timing difference between payment and performance (e.g., maximizing profit in the case of product support services and ensuring collectability in the case of subscription services). Allocating the Transaction Price Based on Standalone Selling Prices The Company allocates the transaction price to each performance obligation in a contract based on its relative SSP. The SSP is the price at which the Company sells the product or service on a standalone basis at contract inception. In circumstances where SSP is not directly observable, the Company estimates SSP using the following methodologies: (i) Product licenses – Product licenses are not sold on a standalone basis and pricing is highly variable. The Company establishes SSP of product licenses using a residual approach after first establishing the SSP of standard product support. Standard product support is sold on a standalone basis within a narrow range of the net license fee, and because an economic relationship exists between product licenses and standard product support, the Company has concluded that the residual method to estimate SSP of product licenses sold on both a perpetual and term basis is a fair allocation of the transaction price. (ii) Subscription services – Given the highly variable selling price of subscription services, the Company establishes the SSP of its subscription services arrangements using a similar residual approach after first establishing the SSP of consulting and education services. The Company has concluded that the residual method to estimate SSP of its subscription services is a fair allocation of the transaction price. (iii) Standard product support – The Company establishes SSP of standard product support as a percentage of the stated net license fee, given such pricing is consistent with its normal pricing practices and there exists sufficient history of customers renewing at similar percentages. Each quarter, the Company tracks renewal rates negotiated when standard product support is initially sold with a perpetual license in order to determine the SSP of standard product support within each geographic region for the upcoming quarter. If the stated standard product support fee falls within the SSP range, the specific rate in the contract will be used to estimate SSP. If the stated fee is above or below SSP, the highest or lowest end of the range, respectively, will generally be used to estimate SSP of standard product support. (iv) Premium product support, consulting services, and education services –SSP of premium product support, consulting services, and education services is established by using a bell-shaped curve approach to define a narrow range within each geographic region in which the services are discounted off of the list price on a standalone basis. The Company often provides options to purchase future products or services at a discount. The Company analyzes the option price against the previously established SSP of the goods or services to determine if the options represent material rights that should be accounted for as separate performance obligations. In general, options sold at or above SSP are not considered separate performance obligations because the customer could have received that right without entering into the contract. If a material right exists, revenue associated with the option is recognized when the future goods or services are transferred, or when the option expires. During the three and nine months ended September 30, 2018 and 2017, rights arising from future purchase options have not been material. Incremental Costs to Obtain Customer Contracts Incremental costs incurred to obtain contracts with customers include certain variable compensation (e.g., commissions and bonuses) paid to the Company’s sales team. Although the Company may bundle its goods and services into one contract, commissions are individually determined on each distinct good or service in the contract. The Company expenses as incurred those amounts earned on consulting and education services, which are generally performed within a one-year period and primarily sold on a standalone basis. The Company also expenses as incurred those amounts earned on product license sales, since the amount is earned when the license is delivered. The Company capitalizes those amounts earned on product support and amortizes the costs over a period of time that is consistent with the pattern of transfer of the product support to the customer, which the Company has determined to be a period of three years. Although the Company typically sells product support for a period of one year, a majority of customers renew their product support arrangements. Three years is generally the period after which platforms are no longer supported by the Company's support team and when customers generally choose to upgrade their software platform. The Company does not pay variable compensation on product support renewals. Variable compensation earned on subscription cloud services are expensed as incurred due to their immaterial nature. As of September 30, 2018 and December 31, 2017, capitalized costs to obtain customer contracts, net of accumulated amortization, were $3.9 million and $4.5 million, respectively, and are presented within “Deposits and other assets” in the Consolidated Balance Sheets. During the three and nine months ended September 30, 2018 and 2017, amortization expense related to these capitalized costs were $0.6 million and $1.6 million, and $0.8 million and $2.2 million, respectively, and are reflected within “Sales and marketing” in the Consolidated Statements of Operations. |
Recent Accounting Standards
Recent Accounting Standards | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Changes And Error Corrections [Abstract] | |
Recent Accounting Standards | (2) Recent Accounting Standards Revenue from contracts with customers The Company adopted ASU 2014-09 effective as of January 1, 2018 and adjusted prior period consolidated financial statements to reflect full retrospective adoption. In adopting ASU 2014-09, the Company has made the following significant changes in accounting principles: (i) Timing of revenue recognition for term license sales. (ii) Timing of revenue recognition for sales to channel partners (iii) Allocating the transaction price to the performance obligations in the contract. (iv) Material rights. (v) Presentation of accounts receivable, contract assets, and contract liabilities (deferred revenue). (vi) Deferral of incremental direct costs to obtaining a contract with a customer. Upon adoption of ASU 2014-09, the Company recorded a cumulative $13.0 million increase to its 2016 beginning retained earnings balance, offset by a $12.9 million decrease in gross deferred revenues, a $5.2 million decrease in deferred tax assets, net of deferred tax liabilities, a $4.4 million increase in other non-current assets, and a $0.9 million increase in other current assets. The following line items as of December 31, 2017 and for the three and nine months ended September 30, 2017 have been adjusted in the Consolidated Financial Statements to reflect the adoption of ASU 2014-09: December 31, 2017 Consolidated Balance Sheet As Reported (audited) Effect of the Adoption of ASU 2014-09 (unaudited) As Adjusted (unaudited) Accounts receivable, net $ 69,500 $ 95,864 $ 165,364 Prepaid expenses and other current assets 18,002 1,178 19,180 Deposits and other assets 2,868 4,543 7,411 Deferred tax assets, net 13,391 (4,094 ) 9,297 Deferred revenue and advance payments 112,649 86,085 198,734 Deferred revenue and advance payments, non-current 10,181 (3,781 ) 6,400 Accumulated other comprehensive loss (5,968 ) 309 (5,659 ) Retained earnings 511,755 14,878 526,633 Three Months Ended September 30, 2017 Consolidated Statement of Operations: As Reported (unaudited) Effect of the Adoption of ASU 2014-09 (unaudited) As Adjusted (unaudited) Product licenses revenue $ 21,553 $ 803 $ 22,356 Product support revenues 72,886 (5 ) 72,881 Sales and marketing expenses 41,806 199 42,005 Provision for income taxes 2,197 339 2,536 Net income 17,924 260 18,184 Diluted earnings per share 1.56 0.02 1.58 Nine Months Ended September 30, 2017 Consolidated Statement of Operations: As Reported (unaudited) Effect of the Adoption of ASU 2014-09 (unaudited) As Adjusted (unaudited) Product licenses revenue $ 61,683 $ 1,047 $ 62,730 Product support revenues 214,142 17 214,159 Sales and marketing expenses 122,635 578 123,213 Provision for income taxes 8,804 659 9,463 Net income 43,867 (173 ) 43,694 Diluted earnings per share 3.79 (0.01 ) 3.78 Three Months Ended September 30, 2017 Consolidated Statement of Comprehensive Income: As Reported (unaudited) Effect of the Adoption of ASU 2014-09 (unaudited) As Adjusted (unaudited) Net income $ 17,924 $ 260 $ 18,184 Foreign currency translation adjustment 1,060 60 1,120 Comprehensive income 18,984 320 19,304 Nine Months Ended September 30, 2017 Consolidated Statement of Comprehensive Income: As Reported (unaudited) Effect of the Adoption of ASU 2014-09 (unaudited) As Adjusted (unaudited) Net income $ 43,867 $ (173 ) $ 43,694 Foreign currency translation adjustment 4,090 335 4,425 Comprehensive income 47,927 162 48,089 Nine Months Ended September 30, 2017 Consolidated Statement of Cash Flows: As Reported (unaudited) Effect of the Adoption of ASU 2014-09 (unaudited) As Adjusted (unaudited) Net income $ 43,867 $ (173 ) $ 43,694 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 9,838 2,171 12,009 Deferred taxes (6,214 ) 706 (5,508 ) Changes in operating assets and liabilities: Prepaid expenses and other current assets (3,954 ) (1,088 ) (5,042 ) Deposits and other assets (1,280 ) (8 ) (1,288 ) Accrued compensation and employee benefits (8,845 ) (1,592 ) (10,437 ) Deferred revenue and advance payments 1,156 (16 ) 1,140 Intra-entity asset transfers In October 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory Lease accounting In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) Leases (Topic 842): Targeted Improvements Cloud computing arrangements In August 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract |
Short-term Investments
Short-term Investments | 9 Months Ended |
Sep. 30, 2018 | |
Short Term Investments [Abstract] | |
Short-term Investments | (3) Short-term Investments The Company periodically invests a portion of its excess cash in short-term investment instruments. Substantially all of the Company’s short-term investments are in U.S. Treasury securities, and the Company has the ability and intent to hold these investments to maturity. The stated maturity dates of these investments are between three months and one year from the purchase date. These held-to-maturity investments are recorded at amortized cost and included within “Short-term investments” on the accompanying Consolidated Balance Sheets. The fair value of held-to-maturity investments is determined based on quoted market prices in active markets for identical securities (Level 1 inputs). The amortized cost, carrying value, and fair value of held-to-maturity investments at September 30, 2018 were $587.1 million, $587.1 million, and $586.2 million, respectively. The amortized cost, carrying value, and fair value of held-to-maturity investments at December 31, 2017 were $254.9 million, $254.9 million, and $254.8 million, respectively. The gross unrecognized holding gains and losses were not material for each of the three and nine months ended September 30, 2018 and 2017. No other-than-temporary impairments related to these investments have been recognized as of September 30, 2018 and December 31, 2017. |
Contract Balances
Contract Balances | 9 Months Ended |
Sep. 30, 2018 | |
Contract With Customer Asset And Liability [Abstract] | |
Contract Balances | (4) Contract Balances The Company invoices its customers in accordance with billing schedules established in each contract. The Company’s rights to consideration from customers are presented separately in the Company’s Consolidated Balance Sheets depending on whether those rights are conditional or unconditional. The Company presents unconditional rights to consideration from customers within “Accounts receivable, net” in its Consolidated Balance Sheets. All of the Company’s contracts are generally non-cancellable and/or non-refundable and therefore an unconditional right generally exists when the customer is billed or amounts are billable per the contract. Accounts receivable (in thousands) consisted of the following, as of: September 30, December 31, 2018 2017 (as adjusted) Billed and billable $ 114,483 $ 169,554 Less: allowance for doubtful accounts (3,722 ) (4,190 ) Accounts receivable, net $ 110,761 $ 165,364 The Company maintains an allowance for doubtful accounts which represents its best estimate of probable losses inherent in the accounts receivable balances. The Company evaluates specific accounts when it becomes aware that a customer may not be able to meet its financial obligations due to deterioration of its liquidity or financial viability, credit ratings, or bankruptcy. In addition, the Company periodically adjusts this allowance based on its review and assessment of the aging of receivables. For the three and nine months ended September 30, 2018 and 2017, the Company’s bad debt expense and write-offs (reversals) totaled $0.1 million and $1.1 million, and $(0.1) million and $1.7 million, respectively. In contrast, rights to consideration that are subject to a condition other than the passage of time are considered contract assets and presented within “Prepaid expenses and other current assets” in the Consolidated Balance Sheets since the rights to consideration are expected to become unconditional and transfer to accounts receivable within one year. Contract assets generally consist of accrued sales and usage-based royalty revenue. In these arrangements, consideration is not billed or billable until the royalty reporting is received, generally in the subsequent quarter, at which time the contract asset will transfer to accounts receivable and a true-up adjustment will be recorded to revenue. During the three and nine months ended September 30, 2018 and 2017, there were no significant impairments to the Company’s contract assets, nor were there any significant changes in the timing of the Company’s contract assets being reclassified to accounts receivable. Contract assets included in “Prepaid expenses and other current assets” in the Consolidated Balance Sheets consisted of $0.4 million and $1.2 million in accrued sales and usage-based royalty revenue, as of September 30, 2018 and December 31, 2017, respectively. Contract liabilities are amounts received or due from customers in advance of the Company transferring the products or services to the customer. Revenue is subsequently recognized in the period(s) in which control of the products or services are transferred to the customer. The Company’s contract liabilities are presented as either current or non-current “Deferred revenues and advance payments” in the Consolidated Balance Sheets, depending on whether the products or services are expected to be transferred to the customer within the next year. Deferred revenue and advance payments (in thousands) from customers consisted of the following, as of: September 30, December 31, 2018 2017 (as adjusted) Current: Deferred product licenses revenue $ 584 $ 3,760 Deferred subscription services revenue 11,736 17,324 Deferred product support revenue 131,185 168,185 Deferred other services revenue 7,538 9,465 Total current deferred revenue and advance payments $ 151,043 $ 198,734 Non-current: Deferred product licenses revenue $ 730 $ 820 Deferred subscription services revenue 0 126 Deferred product support revenue 3,701 4,826 Deferred other services revenue 492 628 Total non-current deferred revenue and advance payments $ 4,923 $ 6,400 During the three and nine months ended September 30, 2018 and 2017, the Company recognized revenues of $39.2 million and $170.6 million, and $40.4 million and $170.9 million, respectively, from amounts included in the total current deferred revenue and advance payments balances at the beginning of the respective year. For the three and nine months ended September 30, 2018 and 2017, there were no significant changes in the timing of revenue recognition on the Company’s deferred balances. As of September 30, 2018, the Company had an aggregate transaction price of $156.0 million allocated to unsatisfied performance obligations related to product support, subscription services, other services, and product licenses contracts. The Company expects to recognize $151.0 million within the next year and $4.9 million thereafter. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | (5) Commitments and Contingencies (a) Commitments From time to time, the Company enters into certain types of contracts that require it to indemnify parties against third-party claims. These contracts primarily relate to agreements under which the Company assumes indemnity obligations for intellectual property infringement, as well as other obligations from time to time depending on arrangements negotiated with customers and other third parties. The conditions of these obligations vary. Thus, the overall maximum amount of the Company’s indemnification obligations cannot be reasonably estimated. Historically, the Company has not been obligated to make significant payments for these obligations and does not currently expect to incur any material obligations in the future. Accordingly, the Company has not recorded an indemnification liability on its balance sheets as of September 30, 2018 or December 31, 2017. The Company leases office space under operating lease agreements. Under the lease agreements, in addition to base rent, the Company is generally responsible for certain taxes, utilities and maintenance costs, and other fees. Several of these leases include options for renewal. The Company does not have any material capital leases. The Company leases approximately 214,000 square feet of office space at a location in Northern Virginia that began serving as its corporate headquarters in October 2010. In January 2018, the Company amended the lease to extend the lease term through December 2030. The amended lease also provides for certain tenant allowances and incentives. At September 30, 2018 and December 31, 2017, deferred rent of $27.1 million and $8.5 million, respectively, was included in other long-term liabilities. As a result of the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), the Company estimated and recorded a one-time $40.3 million tax expense related to the mandatory deemed repatriation transition tax (“Transition Tax”) during the year ended December 31, 2017. The Company subsequently recorded a measurement-period adjustment to reduce the Transition Tax by $3.1 million during the three months ended September 30, 2018. At September 30, 2018, $28.9 million of the Transition Tax was unpaid and was included in “Other long-term liabilities.” (b) Contingencies Following an internal review, the Company believes that its Brazilian subsidiary failed or likely failed to comply with local procurement regulations in conducting business with certain Brazilian government entities. While the Company believes that it is probable that the resolution of this matter will result in a loss, the amount or range of loss is not reasonably estimable at this time. Given the early state of the matter, no assurance can be given that the outcome will not result in a material impact on the Company’s earnings and financial results for the period in which any such liability is accrued. However, the Company believes that the outcome of this matter will not have a material effect on the Company’s financial position. The Company is also involved in various legal proceedings arising in the normal course of business. Although the outcomes of these legal proceedings are inherently difficult to predict, management does not expect the resolution of these legal proceedings to have a material adverse effect on the Company’s financial position, results of operations, or cash flows. The Company has contingent liabilities that, in management’s judgment, are not probable of assertion. If such unasserted contingent liabilities were to be asserted, or become probable of assertion, the Company may be required to record significant expenses and liabilities in the period in which these liabilities are asserted or become probable of assertion. |
Treasury Stock
Treasury Stock | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Treasury Stock | (6) Treasury Stock The Board of Directors previously authorized the Company’s repurchase of up to an aggregate of $800.0 million of its class A common stock from time to time on the open market through April 29, 2018 (the “2005 Share Repurchase Program”). In April 2018, the Board of Directors extended the term of the 2005 Share Repurchase Program through April 29, 2023, although the program may be suspended or discontinued by the Company at any time. The timing and amount of any shares repurchased will be determined by the Company’s management based on its evaluation of market conditions and other factors. The 2005 Share Repurchase Program may be funded using the Company’s working capital, as well as proceeds from any other funding arrangements that the Company may enter into in the future. During the three and nine months ended September 30, 2018 and 2017, the Company did not repurchase any shares of its class A common stock pursuant to the 2005 Share Repurchase Program. As of September 30, 2018, the Company had repurchased an aggregate of 3,826,947 shares of its class A common stock at an average price per share of $90.23 and an aggregate cost of $345.3 million. The average price per share and aggregate cost amounts disclosed above include broker commissions. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (7) Income Taxes The Company and its subsidiaries conduct business in the United States and various foreign countries and are subject to taxation in numerous domestic and foreign jurisdictions. As a result of its business activities, the Company files tax returns that are subject to examination by various federal, state and local, and foreign tax authorities. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or foreign income tax examination by tax authorities for years before 2014. However, due to its use of state net operating loss (“NOL”) and federal tax credit carryovers in the United States, U.S. tax authorities may attempt to reduce or fully offset the amount of state NOL or federal tax credit carryovers from tax years ended 2007 and forward that were used in later tax years. The Company’s major foreign tax jurisdictions and tax years that remain subject to potential examination are Germany for tax years 2016 and forward, Italy, Poland and China for tax years 2013 and forward, Spain for tax years 2014 and forward, and the United Kingdom for tax years 2016 and forward. To date there have been no material audit assessments related to audits in any of the applicable foreign jurisdictions. As of September 30, 2018, the Company had unrecognized tax benefits of $4.5 million, which are recorded in “Other long-term liabilities” in the Company’s Consolidated Balance Sheets. If recognized, $4.0 million of these unrecognized tax benefits would impact the effective tax rate. The Company recognizes estimated accrued interest related to unrecognized income tax benefits in the (benefit from) provision for income tax accounts. Penalties relating to income taxes, if incurred, would also be recognized as a component of the Company’s (benefit from) provision for income taxes. Over the next 12 months, the amount of the Company’s liability for unrecognized tax benefits is not expected to change by a material amount. As of September 30, 2018, the amount of cumulative accrued interest expense on unrecognized income tax benefits was approximately $0.7 million. The following table summarizes the Company’s deferred tax assets, net of deferred tax liabilities and valuation allowance (in thousands), as of: September 30, December 31, 2018 2017 (as adjusted) Deferred tax assets, net of deferred tax liabilities $ 16,783 $ 10,308 Valuation allowance (1,159 ) (1,015 ) Deferred tax assets, net of deferred tax liabilities and valuation allowance $ 15,624 $ 9,293 The valuation allowance as of September 30, 2018 and December 31, 2017 related to certain foreign tax credit carryforwards that, in the Company’s present estimation, more likely than not will not be realized. The Company has estimated its annual effective tax rate for the full fiscal year 2018 and applied that rate to its income before income taxes in determining its benefit from income taxes for the nine months ended September 30, 2018. The Company also records discrete items in each respective period as appropriate. The estimated effective tax rate is subject to fluctuation based on the level and mix of earnings and losses by tax jurisdiction, foreign tax rate differentials, and the relative impact of permanent book to tax differences (e.g., non-deductible expenses). Each quarter, a cumulative adjustment is recorded for any fluctuations in the estimated annual effective tax rate as compared to the prior quarter. As a result of these factors, and due to potential changes in the Company’s period-to-period results, fluctuations in the Company’s effective tax rate and respective tax provisions or benefits may occur. For the nine months ended September 30, 2018, the Company recorded a benefit from income taxes of $0.7 million that resulted in an effective tax rate of (3.8)%, as compared to a provision for income taxes of $9.5 million that resulted in an effective tax rate of 17.8% for the nine months ended September 30, 2017. The change in the effective tax rate in 2018 is mainly due to discrete items, such as the adjustment to the Transition Tax recorded in the three months ended September 30, 2018. The Tax Act reduced the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018. Additionally, the Tax Act requires certain Global Intangible Low Taxed Income (“GILTI”) earned by controlled foreign corporations (“CFCs”) to be included in the gross income of the CFCs’ U.S. shareholder. GAAP allows the Company to either: (i) treat taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”); or (ii) factor such amounts into its measurement of deferred taxes (the “deferred method”). The Company has elected the period cost method. The Tax Act allows a U.S. corporation a deduction equal to a certain percentage of its foreign-derived intangible income (“FDII”). The Company estimated the impact of the GILTI tax and FDII deduction in determining its 2018 annual effective tax rate that is reflected in its benefit from income taxes for the nine months ended September 30, 2018. The Company will continue to refine its calculation for the GILTI tax and FDII deduction in future quarters. The Tax Act also imposes a Transition Tax on previously untaxed accumulated and current earnings and profits (“E&P”) of certain foreign subsidiaries of the Company. The SEC staff issued Staff Accounting Bulletin (“SAB”) 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the related accounting under FASB Accounting Standards Codification 740, Income Taxes The Company’s accounting for certain elements of the Tax Act was incomplete as of December 31, 2017 and remains incomplete as of September 30, 2018. However, the Company was able to make reasonable estimates of certain tax effects and recorded provisional estimates for these items. In connection with its initial analysis of the impact of the Tax Act, the Company recorded an initial provisional net tax expense of $40.3 million, of which $36.8 million was recorded in “Other long-term liabilities” in the Company’s Consolidated Balance Sheet as of December 31, 2017 related to the one-time Transition Tax. To determine the Transition Tax, the Company must determine the amount of post-1986 accumulated E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. Upon refining its non-U.S. E&P and associated income taxes during the three months ended September 30, 2018, the Company recorded a measurement-period adjustment to reduce the Transition Tax by $3.1 million. As of September 30, 2018, the Company’s total provisional estimate for the Transition Tax was $37.2 million, of which $8.3 million had been paid and $28.9 million was recorded in “Other long-term liabilities” in the Company’s Consolidated Balance Sheets. As the Company continues to analyze the impact of foreign exchange gains or losses and gathers support for non-U.S. income taxes paid, and as regulators issue further guidance, the Company’s estimates may change in the fourth quarter of 2018. The Company will continue to refine such amounts within the measurement period allowed, which it expects to complete no later than December 22, 2018. Likewise, while the Company was able to make a reasonable estimate of the impact of the reduced U.S. corporate tax rate, its effective tax rate may be affected by other aspects of the Tax Act, including, but not limited to, the impact of the Tax Act on state taxes. Except as discussed below, the Company intends to indefinitely reinvest its undistributed earnings of all of its foreign subsidiaries. U.S. federal tax laws require the Company to include in its U.S. taxable income certain investment income earned outside of the United States in excess of certain limits (“Subpart F deemed dividends”). Because Subpart F deemed dividends are already required to be recognized in the Company’s U.S. federal income tax return, the Company regularly repatriates Subpart F deemed dividends to the United States and no additional tax is incurred on the distribution. As of September 30, 2018 and December 31, 2017, the amount of cash and cash equivalents and short-term investments held by the Company’s U.S. entities was $297.0 million and $293.8 million, respectively, and by the Company’s non-U.S. entities was $402.2 million and $381.4 million, respectively. If the cash and cash equivalents and short-term investments held by the Company’s non-U.S. entities were to be repatriated to the United States, after taking into account the $37.2 million Transition Tax, the Company does not expect such repatriation to generate any additional U.S. federal taxable income to the Company. In determining the Company’s benefit from or provision for income taxes, net deferred tax assets, liabilities, and valuation allowances, management is required to make judgments and estimates related to projections of domestic and foreign profitability, the timing and extent of the utilization of NOL carryforwards, applicable tax rates, transfer pricing methods, and prudent and feasible tax planning strategies. As a multinational company, the Company is required to calculate and provide for estimated income tax liabilities for each of the tax jurisdictions in which it operates. This process involves estimating current tax obligations and exposures in each jurisdiction, as well as making judgments regarding the future recoverability of deferred tax assets. Changes in the estimated level of annual pre-tax income, changes in tax laws, particularly changes related to the utilization of NOLs in various jurisdictions, and changes resulting from tax audits can all affect the overall effective income tax rate which, in turn, impacts the overall level of income tax expense or benefit and net income. Judgments and estimates related to the Company’s projections and assumptions are inherently uncertain. Therefore, actual results could differ materially from projections. Currently, the Company expects to use its deferred tax assets, subject to Internal Revenue Code limitations, within the carryforward periods. Valuation allowances have been established where the Company has concluded that it is more likely than not that such deferred tax assets are not realizable. If the Company is unable to sustain profitability in future periods, it may be required to increase the valuation allowance against the deferred tax assets, which could result in a charge that would materially adversely affect net income in the period in which the charge is incurred. |
Share-based Compensation
Share-based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share-based Compensation | (8) Share-based Compensation The Company’s 2013 Stock Incentive Plan (as amended, the “2013 Equity Plan”) authorizes the issuance of various types of share-based awards to the Company’s employees, officers, directors, and other eligible participants. As of September 30, 2018, the total number of shares of the Company’s class A common stock authorized for issuance under the 2013 Equity Plan was 2,300,000 shares. As of September 30, 2018, there were 556,250 shares of class A common stock reserved and available for future issuance under the 2013 Equity Plan. Stock option awards During the third quarter of 2018, stock options to purchase an aggregate of 75,000 shares of class A common stock were granted pursuant to the 2013 Equity Plan. As of September 30, 2018, there were options to purchase 1,489,983 shares of class A common stock outstanding under the 2013 Equity Plan. The following table summarizes the Company’s stock option activity (in thousands, except per share data and years) for the three months ended September 30, 2018: Stock Options Outstanding Weighted Average Aggregate Weighted Average Exercise Price Intrinsic Remaining Contractual Shares Per Share Value Term (Years) Balance as of July 1, 2018 1,481 $ 139.26 Granted 75 127.93 Exercised 0 0.00 $ 0 Forfeited/Expired (66 ) 135.36 Balance as of September 30, 2018 1,490 $ 138.87 Exercisable as of September 30, 2018 735 138.16 9,935 5.3 Expected to vest as of September 30, 2018 755 139.55 6,123 9.2 Total 1,490 $ 138.87 16,058 7.3 Stock options outstanding as of September 30, 2018 are comprised of the following range of exercise prices per share (in thousands, except per share data and years): Stock Options Outstanding at September 30, 2018 Weighted Average Weighted Average Exercise Price Remaining Contractual Range of Exercise Prices per Share Shares Per Share Term (Years) $117.85 - $120.00 23 $ 118.50 3.3 $120.01 - $150.00 1,124 $ 126.78 7.7 $150.01 - $180.00 173 $ 167.40 4.2 $180.01 - $201.25 170 $ 192.44 7.6 Total 1,490 $ 138.87 7.3 An aggregate of 15,000 stock options with an aggregate fair value of $1.2 million vested during the three months ended September 30, 2018. The weighted average grant date fair value of stock option awards using the Black-Scholes pricing model was $50.57 for each share subject to a stock option granted during the three months ended September 30, 2018, based on the following assumptions: Three months ended September 30, 2018 Expected term of options in years 6.3 Expected volatility 34.5 % Risk-free interest rate 2.9 % Expected dividend yield 0.0 No stock option awards were granted during the three months ended September 30, 2017. For the three and nine months ended September 30, 2018, the Company recognized approximately $3.0 million and $11.1 million, respectively, in share-based compensation expense from stock options granted under the 2013 Equity Plan. For the three and nine months ended September 30, 2017, the Company recognized approximately $3.7 million and $10.6 million, respectively, in share-based compensation expense from stock options granted under the 2013 Equity Plan. As of September 30, 2018, there was approximately $35.1 million of total unrecognized share-based compensation expense related to unvested stock options. The Company expects to recognize this remaining share-based compensation expense over a weighted average vesting period of approximately 3.1 years. Other stock-based awards During the second quarter of 2018, the Company granted certain awards characterized as “other stock-based awards” under the 2013 Equity Plan. These other stock-based awards are similar to stock options, but these awards are settled in cash only and not in shares of the Company’s class A common stock. Upon exercise of one of these awards, the participant would be entitled to receive an amount in cash equal to the fair market value of the Company’s class A common stock in excess of a stated exercise price. These awards vest in equal annual installments over a four-year period (unless accelerated upon a change in control event (as defined in the applicable award agreement) or otherwise in accordance with the provisions of the 2013 Equity Plan or applicable award agreement). During the second quarter of 2018, the Company granted such other stock-based awards with respect to an aggregate of 10,000 underlying shares of class A common stock with a weighted average exercise price per share of $129.90 pursuant to the 2013 Equity Plan. Similar to stock option awards, the Company recognizes share-based compensation expense associated with these awards on a straight-line basis over the award’s requisite service period (generally, the vesting period), with share-based compensation expense based on the fair value of the award estimated using the Black-Scholes option pricing model. However, due to the required cash settlement feature, these awards are classified as liabilities in the Company’s Consolidated Balance Sheets and the fair value of the awards is remeasured each quarterly reporting period with resulting adjustments to share-based compensation expense recorded until the earlier of settlement or expiration. For each of the three and nine months ended September 30, 2018, the Company did not recognize a material amount in share-based compensation expense from these awards. As of September 30, 2018, there was approximately $0.5 million of total unrecognized share-based compensation expense related to these awards. The Company expects to recognize this remaining share-based compensation expense over a weighted average vesting period of approximately 3.7 years, subject to additional fair value adjustments through the earlier of settlement or expiration. |
Common Equity and Earnings per
Common Equity and Earnings per Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Common Equity and Earnings per Share | (9) Common Equity and Earnings per Share The Company has two classes of common stock: class A common stock and class B common stock. Holders of class A common stock generally have the same rights, including rights to dividends, as holders of class B common stock, except that holders of class A common stock have one vote per share while holders of class B common stock have ten votes per share. Each share of class B common stock is convertible at any time, at the option of the holder, into one share of class A common stock. As such, basic and fully diluted earnings per share for class A common stock and for class B common stock are the same. The Company has never declared or paid any cash dividends on either class A or class B common stock. As of September 30, 2018 and December 31, 2017, there were no shares of preferred stock issued or outstanding. Potential shares of common stock are included in the diluted earnings per share calculation when dilutive. Potential shares of common stock, consisting of common stock issuable upon exercise of outstanding stock options, are calculated using the treasury stock method. For the three and nine months ended September 30, 2018, stock options issued under the 2013 Equity Plan to purchase a weighted average of approximately 979,000 and 880,000 shares of class A common stock, respectively, were excluded from the diluted earnings per share calculation because their impact would have been anti-dilutive. For the three and nine months ended September 30, 2017, stock options issued under the 2013 Equity Plan to purchase a weighted average of approximately 412,000 and 385,000 shares of class A common stock, respectively, were excluded from the diluted earnings per share calculation because their impact would have been anti-dilutive. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | (10) Segment Information The Company manages its business in one reportable operating segment. The Company’s one reportable operating segment is engaged in the design, development, marketing, and sales of its software platform through licensing arrangements and cloud-based subscriptions and related services. The following table presents total revenues, gross profit, and long-lived assets, excluding long-term deferred tax assets, (in thousands) according to geographic region: Geographic regions: Domestic EMEA Other Regions Consolidated Three months ended September 30, 2018 Total revenues $ 70,611 $ 37,628 $ 13,913 $ 122,152 Gross profit $ 56,549 $ 30,779 $ 11,435 $ 98,763 Three months ended September 30, 2017 (as adjusted) Total revenues $ 73,443 $ 40,081 $ 12,486 $ 126,010 Gross profit $ 58,720 $ 32,779 $ 10,122 $ 101,621 Nine months ended September 30, 2018 Total revenues $ 210,715 $ 113,834 $ 41,172 $ 365,721 Gross profit $ 166,839 $ 91,540 $ 33,728 $ 292,107 Nine months ended September 30, 2017 (as adjusted) Total revenues $ 222,245 $ 107,833 $ 37,384 $ 367,462 Gross profit $ 177,882 $ 87,008 $ 30,676 $ 295,566 As of September 30, 2018 Long-lived assets $ 50,215 $ 5,825 $ 3,370 $ 59,410 As of December 31, 2017 (as adjusted) Long-lived assets $ 55,355 $ 5,626 $ 2,288 $ 63,269 The domestic region consists of the United States and Canada. The EMEA region includes operations in Europe, the Middle East, and Africa. The other regions include all other foreign countries, generally comprising Latin America and the Asia Pacific region. For the three and nine months ended September 30, 2018 and 2017, no individual foreign country accounted for 10% or more of total consolidated revenues. For the three and nine months ended September 30, 2018 and 2017, no individual customer accounted for 10% or more of total consolidated revenues. As of September 30, 2018 and December 31, 2017, no individual foreign country accounted for 10% or more of total consolidated assets. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | (a) Basis of Presentation The accompanying Consolidated Financial Statements of MicroStrategy Incorporated (“MicroStrategy” or the “Company”) are unaudited. In the opinion of management, all adjustments necessary for a fair statement of financial position and results of operations have been included. All such adjustments are of a normal recurring nature, unless otherwise disclosed. Interim results are not necessarily indicative of results for a full year. Certain amounts in the prior year’s Consolidated Financial Statements have been restated upon the adoption of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) The Consolidated Financial Statements and Notes to Consolidated Financial Statements are presented as required by the United States Securities and Exchange Commission (“SEC”) and do not contain certain information included in the Company’s annual financial statements and notes. These financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto filed with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. There have been no significant changes in the Company’s accounting policies since December 31, 2017, except as discussed below with respect to the Company’s adoption of ASU 2014-09. The accompanying Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company is not aware of any subsequent event which would require recognition or disclosure. |
Revenue Recognition | (b) Revenue Recognition The Company adopted ASU 2014-09 effective as of January 1, 2018 and has adjusted its prior period consolidated financial statements to reflect full retrospective adoption. Refer to Note 2, Recent Accounting Standards, to the Consolidated Financial Statements for a summary of the significant changes in accounting principles and the impact to the Company’s previously reported consolidated financial statements. Under ASU 2014-09, the Company recognizes revenue using a five-step model: (i) Identifying the contract(s) with a customer, (ii) Identifying the performance obligation, (iii) Determining the transaction price, (iv) Allocating the transaction price to the performance obligations in the contract, and (v) Recognizing revenue when, or as, the Company satisfies a performance obligation. The Company has elected to exclude taxes assessed by government authorities in determining the transaction price, and therefore revenue is recognized net of taxes collected from customers. Performance Obligations and Timing of Revenue Recognition The Company primarily sells goods and services that fall into the categories discussed below. Each category contains one or more performance obligations that are either (i) capable of being distinct (i.e., the customer can benefit from the good or service on its own or together with readily available resources, including those purchased separately from the Company) and distinct within the context of the contract (i.e., separately identifiable from other promises in the contract), or (ii) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. Aside from the Company’s term and perpetual software licenses, which are delivered at a point in time, the majority of the Company’s other services are delivered over time. Product Licenses The Company sells different types of on-premise business intelligence software, licensed on a term or perpetual basis. Although license arrangements are sold with product support, the software is fully functional at the outset of the arrangement and is considered a distinct performance obligation. Revenue from product license sales is recognized when control of the software license has transferred to the customer, which is the later of delivery or commencement of the license term. The Company may also sell through resellers and original equipment manufacturers (“OEMs”) who purchase the Company’s products for resale. In reseller arrangements, revenue is recognized when control of the product is transferred to the end user. In OEM arrangements, revenue is recognized upon delivery to the OEM. Subscription Services The Company also sells access to its software through a subscription-based cloud offering, wherein customers access the software through a third-party hosting service. Control of the software itself does not transfer to the customer under this arrangement and is not considered a separate performance obligation. Subscription services are regularly sold on a standalone basis with telephone support only. Revenue related to this subscription service is recognized on a straight-line basis over the contract period, which is the period over which the customer has continuous access to the software. Product Support In all license arrangements, customers are required to purchase a standard product support package and may also purchase a premium product support package for a fixed annual fee. All product support packages include both technical support and when-and-if-available software upgrades, which are treated as a single performance obligation as they are considered a series of distinct services that are substantially the same and have the same duration and measure of progress. Revenue from product support is recognized on a straight-line basis over the contract period, which is the period over which the customer has continuous access to product support. Consulting Services The Company sells consulting services to help customers plan and execute deployment of the Company’s software. Customers are not required to use consulting services to fully benefit from the software license. Consulting services are regularly sold on a standalone basis and either (i) prepaid upfront or (ii) sold on a time and materials basis. Consulting arrangements are each considered separate performance obligations because they do not integrate with each other or with other products and services to deliver a combined output to the customer, do not modify or customize (or are not modified or customized by) each other or other products and services, and do not affect the customer’s ability to use the other consulting offerings or other products and services. Revenue under consulting arrangements is recognized over time as services are delivered. For time and materials-based consulting arrangements, the Company has elected the practical expedient of recognizing revenue upon invoicing since the invoiced amount corresponds directly to the value of the Company’s service to date. Education Services The Company sells various education and training services to its customers. Education services are sold on a standalone basis under three different arrangements: (i) prepaid bulk training units that may be redeemed on training courses based on standard redemption rates, (ii) an annual subscription to unlimited training courses, and (iii) individual courses purchased a la carte. Education arrangements are each considered separate performance obligations because they do not integrate with each other or with other products and services to deliver a combined output to the customer, do not modify or customize (or are not modified or customized by) each other or other products and services, and do not affect the customer’s ability to use the other education offerings or other products and services. Revenue on prepaid bulk training units and individual course purchases are recognized when the courses are delivered. Revenue on the annual subscription is recognized on a straight-line basis over the contract period, which is the period over which the customer has continuous access to unlimited training courses. Refer to Note 10, Segment Information, to the Consolidated Financial Statements for information regarding total revenues by geographic region. Significant Judgments and Estimates The adoption of ASU 2014-09 requires the Company to make significant judgments to determine the transaction price of a contract and subsequently allocate the transaction price based on an estimated standalone selling price (“SSP”). The Company is also required to make significant judgements with respect to capitalizing incremental costs to obtain a customer contract and determining the subsequent amortization period. These significant judgments and estimates are discussed further below. Determining the Transaction Price The transaction price includes both fixed and variable consideration. Variable consideration is included in the transaction price to the extent it is probable that a significant reversal will not occur. The amount of variable consideration excluded from the transaction price was not material for the three and nine months ended September 30, 2018 and 2017. The Company’s estimates of variable consideration are also subject to subsequent true-up adjustments and may result in changes to its transaction prices, but such true-up adjustments are not expected to be material. The Company has the following sources of variable consideration: (i) Performance penalties – Subscription services and product support arrangements generally contain performance response time guarantees. For subscription services arrangements, the Company estimates variable consideration using a portfolio approach because performance penalties are tied to standard up-time requirements. For product support arrangements, the Company estimates variable consideration on a contract basis because such arrangements are customer-specific. For both subscription services and product support arrangements, the Company uses an expected value approach to estimate variable consideration based on historical business practices and current and future performance expectations to determine the likelihood of incurring penalties. (ii) Extended payment terms – The Company’s standard payment terms are generally within 180 days of invoicing. If extended payment terms are granted to customers, those terms generally do not exceed one year. For contracts with extended payment terms, the Company estimates variable consideration on a contract basis because such estimates are customer-specific, and uses an expected value approach to analyze historical business experience on a customer-by-customer basis to determine the likelihood that extended payment terms lead to an implied price concession. (iii) Sales and usage-based royalties – Certain product license arrangements include sales or usage-based royalties, covering both the software license and product support. In these arrangements, the Company uses an expected value approach to estimate and recognize revenue for royalty sales each period, utilizing historical data on a contract-by-contract basis. True-up adjustments are recorded in subsequent periods when royalty reporting is received from the OEM partners. The Company provides a standard software assurance warranty to repair, replace, or refund software that does not perform in accordance with documentation. The standard software assurance warranty period is generally less than one year. Assurance warranty claims were not material for the three and nine months ended September 30, 2018 and 2017. The Company does not adjust the transaction price for significant financing components where the time period between cash payment and performance is one year or less. However, there are circumstances where the timing between cash payment and performance may exceed one year. These circumstances generally involve prepaid multi-year product support and subscription services arrangements where the customer determines when the service is utilized (e.g., when to request on-call support services or when to use and access the software on the cloud). In these circumstances, the Company has determined no significant financing component exists because the customer controls when to utilize the service and because there are significant business purposes behind the timing difference between payment and performance (e.g., maximizing profit in the case of product support services and ensuring collectability in the case of subscription services). Allocating the Transaction Price Based on Standalone Selling Prices The Company allocates the transaction price to each performance obligation in a contract based on its relative SSP. The SSP is the price at which the Company sells the product or service on a standalone basis at contract inception. In circumstances where SSP is not directly observable, the Company estimates SSP using the following methodologies: (i) Product licenses – Product licenses are not sold on a standalone basis and pricing is highly variable. The Company establishes SSP of product licenses using a residual approach after first establishing the SSP of standard product support. Standard product support is sold on a standalone basis within a narrow range of the net license fee, and because an economic relationship exists between product licenses and standard product support, the Company has concluded that the residual method to estimate SSP of product licenses sold on both a perpetual and term basis is a fair allocation of the transaction price. (ii) Subscription services – Given the highly variable selling price of subscription services, the Company establishes the SSP of its subscription services arrangements using a similar residual approach after first establishing the SSP of consulting and education services. The Company has concluded that the residual method to estimate SSP of its subscription services is a fair allocation of the transaction price. (iii) Standard product support – The Company establishes SSP of standard product support as a percentage of the stated net license fee, given such pricing is consistent with its normal pricing practices and there exists sufficient history of customers renewing at similar percentages. Each quarter, the Company tracks renewal rates negotiated when standard product support is initially sold with a perpetual license in order to determine the SSP of standard product support within each geographic region for the upcoming quarter. If the stated standard product support fee falls within the SSP range, the specific rate in the contract will be used to estimate SSP. If the stated fee is above or below SSP, the highest or lowest end of the range, respectively, will generally be used to estimate SSP of standard product support. (iv) Premium product support, consulting services, and education services –SSP of premium product support, consulting services, and education services is established by using a bell-shaped curve approach to define a narrow range within each geographic region in which the services are discounted off of the list price on a standalone basis. The Company often provides options to purchase future products or services at a discount. The Company analyzes the option price against the previously established SSP of the goods or services to determine if the options represent material rights that should be accounted for as separate performance obligations. In general, options sold at or above SSP are not considered separate performance obligations because the customer could have received that right without entering into the contract. If a material right exists, revenue associated with the option is recognized when the future goods or services are transferred, or when the option expires. During the three and nine months ended September 30, 2018 and 2017, rights arising from future purchase options have not been material. |
Incremental Costs to Obtain Customer Contracts | Incremental Costs to Obtain Customer Contracts Incremental costs incurred to obtain contracts with customers include certain variable compensation (e.g., commissions and bonuses) paid to the Company’s sales team. Although the Company may bundle its goods and services into one contract, commissions are individually determined on each distinct good or service in the contract. The Company expenses as incurred those amounts earned on consulting and education services, which are generally performed within a one-year period and primarily sold on a standalone basis. The Company also expenses as incurred those amounts earned on product license sales, since the amount is earned when the license is delivered. The Company capitalizes those amounts earned on product support and amortizes the costs over a period of time that is consistent with the pattern of transfer of the product support to the customer, which the Company has determined to be a period of three years. Although the Company typically sells product support for a period of one year, a majority of customers renew their product support arrangements. Three years is generally the period after which platforms are no longer supported by the Company's support team and when customers generally choose to upgrade their software platform. The Company does not pay variable compensation on product support renewals. Variable compensation earned on subscription cloud services are expensed as incurred due to their immaterial nature. As of September 30, 2018 and December 31, 2017, capitalized costs to obtain customer contracts, net of accumulated amortization, were $3.9 million and $4.5 million, respectively, and are presented within “Deposits and other assets” in the Consolidated Balance Sheets. During the three and nine months ended September 30, 2018 and 2017, amortization expense related to these capitalized costs were $0.6 million and $1.6 million, and $0.8 million and $2.2 million, respectively, and are reflected within “Sales and marketing” in the Consolidated Statements of Operations. |
Short-term Investments | The Company periodically invests a portion of its excess cash in short-term investment instruments. Substantially all of the Company’s short-term investments are in U.S. Treasury securities, and the Company has the ability and intent to hold these investments to maturity. The stated maturity dates of these investments are between three months and one year from the purchase date. These held-to-maturity investments are recorded at amortized cost and included within “Short-term investments” on the accompanying Consolidated Balance Sheets. The fair value of held-to-maturity investments is determined based on quoted market prices in active markets for identical securities (Level 1 inputs). |
Income Taxes | The Company recognizes estimated accrued interest related to unrecognized income tax benefits in the (benefit from) provision for income tax accounts. GAAP allows the Company to either: (i) treat taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”); or (ii) factor such amounts into its measurement of deferred taxes (the “deferred method”). The Company has elected the period cost method. The Tax Act allows a U.S. corporation a deduction equal to a certain percentage of its foreign-derived intangible income (“FDII”). The Company estimated the impact of the GILTI tax and FDII deduction in determining its 2018 annual effective tax rate that is reflected in its benefit from income taxes for the nine months ended September 30, 2018. The Company will continue to refine its calculation for the GILTI tax and FDII deduction in future quarters. The Tax Act also imposes a Transition Tax on previously untaxed accumulated and current earnings and profits (“E&P”) of certain foreign subsidiaries of the Company. In determining the Company’s benefit from or provision for income taxes, net deferred tax assets, liabilities, and valuation allowances, management is required to make judgments and estimates related to projections of domestic and foreign profitability, the timing and extent of the utilization of NOL carryforwards, applicable tax rates, transfer pricing methods, and prudent and feasible tax planning strategies. As a multinational company, the Company is required to calculate and provide for estimated income tax liabilities for each of the tax jurisdictions in which it operates. This process involves estimating current tax obligations and exposures in each jurisdiction, as well as making judgments regarding the future recoverability of deferred tax assets. Changes in the estimated level of annual pre-tax income, changes in tax laws, particularly changes related to the utilization of NOLs in various jurisdictions, and changes resulting from tax audits can all affect the overall effective income tax rate which, in turn, impacts the overall level of income tax expense or benefit and net income. Judgments and estimates related to the Company’s projections and assumptions are inherently uncertain. Therefore, actual results could differ materially from projections. Currently, the Company expects to use its deferred tax assets, subject to Internal Revenue Code limitations, within the carryforward periods. Valuation allowances have been established where the Company has concluded that it is more likely than not that such deferred tax assets are not realizable. If the Company is unable to sustain profitability in future periods, it may be required to increase the valuation allowance against the deferred tax assets, which could result in a charge that would materially adversely affect net income in the period in which the charge is incurred. |
Basic and Diluted Earnings per Share | Potential shares of common stock are included in the diluted earnings per share calculation when dilutive. Potential shares of common stock, consisting of common stock issuable upon exercise of outstanding stock options, are calculated using the treasury stock method. |
Recent Accounting Standards (Ta
Recent Accounting Standards (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Changes And Error Corrections [Abstract] | |
Summary of Line Items Adjusted in Consolidated Financial Statements | The following line items as of December 31, 2017 and for the three and nine months ended September 30, 2017 have been adjusted in the Consolidated Financial Statements to reflect the adoption of ASU 2014-09: December 31, 2017 Consolidated Balance Sheet As Reported (audited) Effect of the Adoption of ASU 2014-09 (unaudited) As Adjusted (unaudited) Accounts receivable, net $ 69,500 $ 95,864 $ 165,364 Prepaid expenses and other current assets 18,002 1,178 19,180 Deposits and other assets 2,868 4,543 7,411 Deferred tax assets, net 13,391 (4,094 ) 9,297 Deferred revenue and advance payments 112,649 86,085 198,734 Deferred revenue and advance payments, non-current 10,181 (3,781 ) 6,400 Accumulated other comprehensive loss (5,968 ) 309 (5,659 ) Retained earnings 511,755 14,878 526,633 Three Months Ended September 30, 2017 Consolidated Statement of Operations: As Reported (unaudited) Effect of the Adoption of ASU 2014-09 (unaudited) As Adjusted (unaudited) Product licenses revenue $ 21,553 $ 803 $ 22,356 Product support revenues 72,886 (5 ) 72,881 Sales and marketing expenses 41,806 199 42,005 Provision for income taxes 2,197 339 2,536 Net income 17,924 260 18,184 Diluted earnings per share 1.56 0.02 1.58 Nine Months Ended September 30, 2017 Consolidated Statement of Operations: As Reported (unaudited) Effect of the Adoption of ASU 2014-09 (unaudited) As Adjusted (unaudited) Product licenses revenue $ 61,683 $ 1,047 $ 62,730 Product support revenues 214,142 17 214,159 Sales and marketing expenses 122,635 578 123,213 Provision for income taxes 8,804 659 9,463 Net income 43,867 (173 ) 43,694 Diluted earnings per share 3.79 (0.01 ) 3.78 Three Months Ended September 30, 2017 Consolidated Statement of Comprehensive Income: As Reported (unaudited) Effect of the Adoption of ASU 2014-09 (unaudited) As Adjusted (unaudited) Net income $ 17,924 $ 260 $ 18,184 Foreign currency translation adjustment 1,060 60 1,120 Comprehensive income 18,984 320 19,304 Nine Months Ended September 30, 2017 Consolidated Statement of Comprehensive Income: As Reported (unaudited) Effect of the Adoption of ASU 2014-09 (unaudited) As Adjusted (unaudited) Net income $ 43,867 $ (173 ) $ 43,694 Foreign currency translation adjustment 4,090 335 4,425 Comprehensive income 47,927 162 48,089 Nine Months Ended September 30, 2017 Consolidated Statement of Cash Flows: As Reported (unaudited) Effect of the Adoption of ASU 2014-09 (unaudited) As Adjusted (unaudited) Net income $ 43,867 $ (173 ) $ 43,694 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 9,838 2,171 12,009 Deferred taxes (6,214 ) 706 (5,508 ) Changes in operating assets and liabilities: Prepaid expenses and other current assets (3,954 ) (1,088 ) (5,042 ) Deposits and other assets (1,280 ) (8 ) (1,288 ) Accrued compensation and employee benefits (8,845 ) (1,592 ) (10,437 ) Deferred revenue and advance payments 1,156 (16 ) 1,140 |
Contract Balances (Tables)
Contract Balances (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Contract With Customer Asset And Liability [Abstract] | |
Schedule of Accounts Receivable | Accounts receivable (in thousands) consisted of the following, as of: September 30, December 31, 2018 2017 (as adjusted) Billed and billable $ 114,483 $ 169,554 Less: allowance for doubtful accounts (3,722 ) (4,190 ) Accounts receivable, net $ 110,761 $ 165,364 |
Deferred Revenue and Advance Payments | Deferred revenue and advance payments (in thousands) from customers consisted of the following, as of: September 30, December 31, 2018 2017 (as adjusted) Current: Deferred product licenses revenue $ 584 $ 3,760 Deferred subscription services revenue 11,736 17,324 Deferred product support revenue 131,185 168,185 Deferred other services revenue 7,538 9,465 Total current deferred revenue and advance payments $ 151,043 $ 198,734 Non-current: Deferred product licenses revenue $ 730 $ 820 Deferred subscription services revenue 0 126 Deferred product support revenue 3,701 4,826 Deferred other services revenue 492 628 Total non-current deferred revenue and advance payments $ 4,923 $ 6,400 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Company's Deferred Tax Assets, Net of Deferred Tax Liabilities and Valuation Allowance | The following table summarizes the Company’s deferred tax assets, net of deferred tax liabilities and valuation allowance (in thousands), as of: September 30, December 31, 2018 2017 (as adjusted) Deferred tax assets, net of deferred tax liabilities $ 16,783 $ 10,308 Valuation allowance (1,159 ) (1,015 ) Deferred tax assets, net of deferred tax liabilities and valuation allowance $ 15,624 $ 9,293 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Stock Option Activity | The following table summarizes the Company’s stock option activity (in thousands, except per share data and years) for the three months ended September 30, 2018: Stock Options Outstanding Weighted Average Aggregate Weighted Average Exercise Price Intrinsic Remaining Contractual Shares Per Share Value Term (Years) Balance as of July 1, 2018 1,481 $ 139.26 Granted 75 127.93 Exercised 0 0.00 $ 0 Forfeited/Expired (66 ) 135.36 Balance as of September 30, 2018 1,490 $ 138.87 Exercisable as of September 30, 2018 735 138.16 9,935 5.3 Expected to vest as of September 30, 2018 755 139.55 6,123 9.2 Total 1,490 $ 138.87 16,058 7.3 |
Schedule of Range of Exercise Prices per Share | Stock options outstanding as of September 30, 2018 are comprised of the following range of exercise prices per share (in thousands, except per share data and years): Stock Options Outstanding at September 30, 2018 Weighted Average Weighted Average Exercise Price Remaining Contractual Range of Exercise Prices per Share Shares Per Share Term (Years) $117.85 - $120.00 23 $ 118.50 3.3 $120.01 - $150.00 1,124 $ 126.78 7.7 $150.01 - $180.00 173 $ 167.40 4.2 $180.01 - $201.25 170 $ 192.44 7.6 Total 1,490 $ 138.87 7.3 |
Assumptions Used in Black-Scholes Pricing Model | The weighted average grant date fair value of stock option awards using the Black-Scholes pricing model was $50.57 for each share subject to a stock option granted during the three months ended September 30, 2018, based on the following assumptions: Three months ended September 30, 2018 Expected term of options in years 6.3 Expected volatility 34.5 % Risk-free interest rate 2.9 % Expected dividend yield 0.0 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Revenues and Long-Lived Assets, by Geographic Region | The following table presents total revenues, gross profit, and long-lived assets, excluding long-term deferred tax assets, (in thousands) according to geographic region: Geographic regions: Domestic EMEA Other Regions Consolidated Three months ended September 30, 2018 Total revenues $ 70,611 $ 37,628 $ 13,913 $ 122,152 Gross profit $ 56,549 $ 30,779 $ 11,435 $ 98,763 Three months ended September 30, 2017 (as adjusted) Total revenues $ 73,443 $ 40,081 $ 12,486 $ 126,010 Gross profit $ 58,720 $ 32,779 $ 10,122 $ 101,621 Nine months ended September 30, 2018 Total revenues $ 210,715 $ 113,834 $ 41,172 $ 365,721 Gross profit $ 166,839 $ 91,540 $ 33,728 $ 292,107 Nine months ended September 30, 2017 (as adjusted) Total revenues $ 222,245 $ 107,833 $ 37,384 $ 367,462 Gross profit $ 177,882 $ 87,008 $ 30,676 $ 295,566 As of September 30, 2018 Long-lived assets $ 50,215 $ 5,825 $ 3,370 $ 59,410 As of December 31, 2017 (as adjusted) Long-lived assets $ 55,355 $ 5,626 $ 2,288 $ 63,269 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Summary Of Significant Accounting Policies [Line Items] | |||||
Payment terms | The Company’s standard payment terms are generally within 180 days of invoicing. If extended payment terms are granted to customers, those terms generally do not exceed one year. | ||||
Description of warranty | The standard software assurance warranty period is generally less than one year. | ||||
Amortization period for capitalized contract costs | 3 years | 3 years | |||
Product support period | 1 year | ||||
Capitalized cost to obtain customer contracts net | $ 3.9 | $ 3.9 | $ 4.5 | ||
Sales and Marketing | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Amortization expenses related to capitalized cost | $ 0.6 | $ 0.8 | $ 1.6 | $ 2.2 |
Recent Accounting Standards - A
Recent Accounting Standards - Additional Information (Detail) - USD ($) | Sep. 30, 2018 | Jan. 01, 2018 | Jan. 01, 2016 |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Capitalized cost amortization period | 3 years | ||
ASU 2014-09 | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Capitalized cost amortization period | 3 years | ||
ASU 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Cumulative-effect adjustment to retained earnings | $ 13,000,000 | ||
ASU 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | Deferred Revenue | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Cumulative-effect adjustment to retained earnings | (12,900,000) | ||
ASU 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | Deferred Tax Assets Net of Deferred Tax Liabilities | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Cumulative-effect adjustment to retained earnings | 5,200,000 | ||
ASU 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | Other Non-current Assets | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Cumulative-effect adjustment to retained earnings | (4,400,000) | ||
ASU 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | Other Current Assets | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Cumulative-effect adjustment to retained earnings | $ (900,000) | ||
Accounting Standards Update No. 2016-16 | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Cumulative-effect adjustment to retained earnings | $ 0 |
Recent Accounting Standards - L
Recent Accounting Standards - Line Items Adjusted in Consolidated Balance Sheet (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Accounts receivable, net | $ 110,761 | $ 165,364 |
Prepaid expenses and other current assets | 27,629 | 19,180 |
Deposits and other assets | 7,549 | 7,411 |
Deferred tax assets, net | 15,628 | 9,297 |
Deferred revenue and advance payments | 151,043 | 198,734 |
Deferred revenue and advance payments, non-current | 4,923 | 6,400 |
Accumulated other comprehensive loss | (8,718) | (5,659) |
Retained earnings | $ 545,833 | 526,633 |
As Reported | ASU 2014-09 | ||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Accounts receivable, net | 69,500 | |
Prepaid expenses and other current assets | 18,002 | |
Deposits and other assets | 2,868 | |
Deferred tax assets, net | 13,391 | |
Deferred revenue and advance payments | 112,649 | |
Deferred revenue and advance payments, non-current | 10,181 | |
Accumulated other comprehensive loss | (5,968) | |
Retained earnings | 511,755 | |
Effect of the Adoption | ASU 2014-09 | ||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Accounts receivable, net | 95,864 | |
Prepaid expenses and other current assets | 1,178 | |
Deposits and other assets | 4,543 | |
Deferred tax assets, net | (4,094) | |
Deferred revenue and advance payments | 86,085 | |
Deferred revenue and advance payments, non-current | (3,781) | |
Accumulated other comprehensive loss | 309 | |
Retained earnings | $ 14,878 |
Recent Accounting Standards -_2
Recent Accounting Standards - Line Items Adjusted in Consolidated Statement of Operations (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||||
Revenues | $ 122,152 | $ 126,010 | $ 365,721 | $ 367,462 | |
Sales and marketing expenses | 45,429 | 42,005 | 147,742 | 123,213 | |
Provision for income taxes | (1,240) | 2,536 | (699) | 9,463 | |
Net income | $ 12,699 | $ 18,184 | $ 19,200 | $ 43,694 | |
Diluted earnings per share | [1] | $ 1.10 | $ 1.58 | $ 1.67 | $ 3.78 |
Product licenses | |||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||||
Revenues | $ 20,264 | $ 22,356 | $ 56,857 | $ 62,730 | |
Product support | |||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||||
Revenues | $ 74,463 | 72,881 | $ 222,554 | 214,159 | |
As Reported | ASU 2014-09 | |||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||||
Sales and marketing expenses | 41,806 | 122,635 | |||
Provision for income taxes | 2,197 | 8,804 | |||
Net income | $ 17,924 | $ 43,867 | |||
Diluted earnings per share | $ 1.56 | $ 3.79 | |||
As Reported | Product licenses | ASU 2014-09 | |||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||||
Revenues | $ 21,553 | $ 61,683 | |||
As Reported | Product support | ASU 2014-09 | |||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||||
Revenues | 72,886 | 214,142 | |||
Effect of the Adoption | ASU 2014-09 | |||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||||
Sales and marketing expenses | 199 | 578 | |||
Provision for income taxes | 339 | 659 | |||
Net income | $ 260 | $ (173) | |||
Diluted earnings per share | $ 0.02 | $ (0.01) | |||
Effect of the Adoption | Product licenses | ASU 2014-09 | |||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||||
Revenues | $ 803 | $ 1,047 | |||
Effect of the Adoption | Product support | ASU 2014-09 | |||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||||
Revenues | $ (5) | $ 17 | |||
[1] | Basic and fully diluted earnings per share for class A and class B common stock are the same. |
Recent Accounting Standards -_3
Recent Accounting Standards - Line Items Adjusted in Consolidated Statement of Comprehensive Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Net income | $ 12,699 | $ 18,184 | $ 19,200 | $ 43,694 |
Foreign currency translation adjustment | (607) | 1,120 | (3,059) | 4,425 |
Comprehensive income | $ 12,092 | 19,304 | $ 16,141 | 48,089 |
As Reported | ASU 2014-09 | ||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Net income | 17,924 | 43,867 | ||
Foreign currency translation adjustment | 1,060 | 4,090 | ||
Comprehensive income | 18,984 | 47,927 | ||
Effect of the Adoption | ASU 2014-09 | ||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Net income | 260 | (173) | ||
Foreign currency translation adjustment | 60 | 335 | ||
Comprehensive income | $ 320 | $ 162 |
Recent Accounting Standards -_4
Recent Accounting Standards - Line Items Adjusted in Consolidated Statement of Cash Flows (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Net income | $ 12,699 | $ 18,184 | $ 19,200 | $ 43,694 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 3,483 | 12,009 | ||
Deferred taxes | (6,667) | (5,508) | ||
Changes in operating assets and liabilities: | ||||
Prepaid expenses and other current assets | (1,075) | (5,042) | ||
Deposits and other assets | (956) | (1,288) | ||
Accrued compensation and employee benefits | (3,901) | (10,437) | ||
Deferred revenue and advance payments | $ (4,032) | 1,140 | ||
As Reported | ASU 2014-09 | ||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Net income | 17,924 | 43,867 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 9,838 | |||
Deferred taxes | (6,214) | |||
Changes in operating assets and liabilities: | ||||
Prepaid expenses and other current assets | (3,954) | |||
Deposits and other assets | (1,280) | |||
Accrued compensation and employee benefits | (8,845) | |||
Deferred revenue and advance payments | 1,156 | |||
Effect of the Adoption | ASU 2014-09 | ||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Net income | $ 260 | (173) | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 2,171 | |||
Deferred taxes | 706 | |||
Changes in operating assets and liabilities: | ||||
Prepaid expenses and other current assets | (1,088) | |||
Deposits and other assets | (8) | |||
Accrued compensation and employee benefits | (1,592) | |||
Deferred revenue and advance payments | $ (16) |
Short-term Investments - Additi
Short-term Investments - Additional Information (Detail) - US Treasury Securities and Certificates of Deposit - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Investment [Line Items] | ||
Held to maturity securities, amortized cost | $ 587,100,000 | $ 254,900,000 |
Held to maturity securities, carrying value | 587,100,000 | 254,900,000 |
Held to maturity securities, fair value | 586,200,000 | 254,800,000 |
Other-than-temporary impairments related to these investments | $ 0 | $ 0 |
Minimum | ||
Investment [Line Items] | ||
Held to maturity securities maturity range | 3 months | |
Maximum | ||
Investment [Line Items] | ||
Held to maturity securities maturity range | 1 year |
Schedule of Accounts Receivable
Schedule of Accounts Receivable (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Receivables [Abstract] | ||
Billed and billable | $ 114,483 | $ 169,554 |
Less: allowance for doubtful accounts | (3,722) | (4,190) |
Accounts receivable, net | $ 110,761 | $ 165,364 |
Contract Balances - Additional
Contract Balances - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Contract With Customer Asset And Liability [Line Items] | |||||
Bad debt expense and write-offs (reversals) | $ 100,000 | $ (100,000) | $ 1,100,000 | $ 1,700,000 | |
Prepaid Expenses and Other Current Assets | |||||
Contract With Customer Asset And Liability [Line Items] | |||||
Assets impairment charges | 0 | 0 | 0 | 0 | |
Contract assets | 400,000 | 400,000 | $ 1,200,000 | ||
Current Deferred Revenue and Advanced Payments | |||||
Contract With Customer Asset And Liability [Line Items] | |||||
Revenue recognized from beginning deferred revenue | $ 39,200,000 | $ 40,400,000 | $ 170,600,000 | $ 170,900,000 |
Deferred Revenue and Advance Pa
Deferred Revenue and Advance Payments (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Deferred Revenue Disclosure [Abstract] | ||
Deferred product licenses revenue, Current | $ 584 | $ 3,760 |
Deferred subscription services revenue, Current | 11,736 | 17,324 |
Deferred product support revenue, Current | 131,185 | 168,185 |
Deferred other services revenue, Current | 7,538 | 9,465 |
Total current deferred revenue and advance payments | 151,043 | 198,734 |
Deferred product licenses revenue, Non-current | 730 | 820 |
Deferred subscription services revenue, Non-current | 0 | 126 |
Deferred product support revenue, Non-current | 3,701 | 4,826 |
Deferred other services revenue, Non-current | 492 | 628 |
Total non-current deferred revenue and advance payments | $ 4,923 | $ 6,400 |
Contract Balances - Additiona_2
Contract Balances - Additional Information (Detail1) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2018-10-01 | |
Contract With Customer Asset And Liability [Line Items] | |
Revenue, Remaining performance obligation | $ 151 |
Revenue, Remaining performance obligations, Expected timing of satisfaction, Period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-10-01 | |
Contract With Customer Asset And Liability [Line Items] | |
Revenue, Remaining performance obligation | $ 4.9 |
Revenue, Remaining performance obligations, Thereafter | thereafter |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: (nil) | |
Contract With Customer Asset And Liability [Line Items] | |
Revenue, Remaining performance obligation | $ 156 |
Revenue, Remaining performance obligations, Expected timing of satisfaction, Period |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) $ in Millions | 1 Months Ended | 3 Months Ended | |
Jan. 31, 2018 | Sep. 30, 2018USD ($)ft² | Dec. 31, 2017USD ($) | |
Commitments and Contingencies [Line Items] | |||
Transition tax | $ 40.3 | ||
Measurement period adjustment to reduce transition tax | $ 3.1 | ||
Other Long-term Liabilities | |||
Commitments and Contingencies [Line Items] | |||
Transition tax | $ 28.9 | 36.8 | |
Northern Virginia Office Space | |||
Commitments and Contingencies [Line Items] | |||
Office space area leased under the agreement | ft² | 214,000 | ||
Lease expiration date | 2030-12 | ||
Northern Virginia Office Space | Other Long-term Liabilities | |||
Commitments and Contingencies [Line Items] | |||
Deferred rent included in other long-term liabilities | $ 27.1 | $ 8.5 |
Treasury Stock - Additional Inf
Treasury Stock - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Equity, Class of Treasury Stock [Line Items] | ||||||
Treasury stock, shares | 6,405,000 | 6,405,000 | 6,405,000 | |||
Treasury stock, cost | $ 475,184,000 | $ 475,184,000 | $ 475,184,000 | |||
Class A | 2005 Share Repurchase Program | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Shares repurchased program expiration date | Apr. 29, 2018 | |||||
Stock authorized to repurchase by board of directors | $ 800,000,000 | $ 800,000,000 | ||||
Treasury stock, shares | 3,826,947 | 3,826,947 | ||||
Treasury stock, shares repurchased | 0 | 0 | 0 | 0 | ||
Shares repurchased, average price per share | $ 90.23 | |||||
Treasury stock, cost | $ 345,300,000 | $ 345,300,000 | ||||
Class A | 2005 Share Repurchase Program | Board of Directors | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Shares repurchased program expiration date | Apr. 29, 2023 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Income Taxes | |||||
Unrecognized tax benefits | $ 4,500 | $ 4,500 | |||
Unrecognized tax benefits would impact the effective tax rate | 4,000 | 4,000 | |||
Interest accrued | 700 | $ 700 | |||
Effective tax rate from operations | (3.80%) | 17.80% | |||
(Benefit from) provision for income taxes | (1,240) | $ 2,536 | $ (699) | $ 9,463 | |
Effective U.S corporate tax rate | 21.00% | 35.00% | |||
Transition tax | $ 40,300 | ||||
Measurement period adjustment to reduce transition tax | 3,100 | ||||
Provisional estimate for transition tax | 37,200 | $ 37,200 | |||
Transition tax paid | 8,300 | 8,300 | |||
Other Long-term Liabilities | |||||
Income Taxes | |||||
Transition tax | 28,900 | 28,900 | 36,800 | ||
U.S | |||||
Income Taxes | |||||
Cash and cash equivalents and short-term investments | 297,000 | $ 297,000 | 293,800 | ||
U.S | Earliest Tax Year | |||||
Income Taxes | |||||
Tax years subject to examination | 2,014 | ||||
Germany | Earliest Tax Year | |||||
Income Taxes | |||||
Tax years subject to examination | 2,016 | ||||
Poland | Earliest Tax Year | |||||
Income Taxes | |||||
Tax years subject to examination | 2,013 | ||||
Italy | Earliest Tax Year | |||||
Income Taxes | |||||
Tax years subject to examination | 2,013 | ||||
China | Earliest Tax Year | |||||
Income Taxes | |||||
Tax years subject to examination | 2,013 | ||||
Spain | Earliest Tax Year | |||||
Income Taxes | |||||
Tax years subject to examination | 2,014 | ||||
United Kingdom | Earliest Tax Year | |||||
Income Taxes | |||||
Tax years subject to examination | 2,016 | ||||
Foreign | |||||
Income Taxes | |||||
Cash and cash equivalents and short-term investments | $ 402,200 | $ 402,200 | $ 381,400 |
Company's Deferred Tax Assets,
Company's Deferred Tax Assets, Net of Deferred Tax Liabilities and Valuation Allowance (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Deferred tax assets, net of deferred tax liabilities | $ 16,783 | $ 10,308 |
Valuation allowance | (1,159) | (1,015) |
Deferred tax assets, net of deferred tax liabilities and valuation allowance | $ 15,624 | $ 9,293 |
Share-based Compensation - Addi
Share-based Compensation - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Jun. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Stock Option Awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock option awards granted | 75,000 | ||||
Options outstanding, shares | 1,490,000 | 1,481,000 | 1,490,000 | ||
2013 Equity Plan | Stock Option Awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock option awards granted | 0 | ||||
Stock options vested | 15,000 | ||||
Aggregate fair value of stock option vested | $ 1,200,000 | ||||
Weighted average grant date fair value of stock option awards | $ 50.57 | ||||
Share-based compensation expense recognized | $ 3,000,000 | $ 3,700,000 | $ 11,100,000 | $ 10,600,000 | |
Unrecognized share-based compensation expense | 35,100,000 | $ 35,100,000 | |||
Unrecognized compensation expense expected to be recognized | 3 years 1 month 6 days | ||||
2013 Equity Plan | Other Stock-based Awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation expense recognized | 0 | $ 0 | |||
Unrecognized compensation expense expected to be recognized | 3 years 8 months 12 days | ||||
Vesting period | 4 years | ||||
Unrecognized share-based compensation expense | $ 500,000 | $ 500,000 | |||
2013 Equity Plan | Class A | Other Stock-based Awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Other stock-based awards granted | 10,000 | ||||
Other stock-based awards granted weighted average exercise price per award | $ 129.90 | ||||
2013 Equity Plan | Class A | Board of Directors | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation, stock authorized | 2,300,000 | 2,300,000 | |||
2013 Equity Plan | Class A | Employees, Officers, and Directors | Stock Option Awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares of class A common stock reserved and available for future issuance | 556,250 | 556,250 | |||
Stock option awards granted | 75,000 | ||||
Options outstanding, shares | 1,489,983 | 1,489,983 |
Summary of Stock Option Activit
Summary of Stock Option Activity (Detail) - Stock Option Awards $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Sep. 30, 2018USD ($)$ / sharesshares | |
Options outstanding, shares | |
Beginning Balance | shares | 1,481 |
Granted | shares | 75 |
Exercised | shares | 0 |
Forfeited/Expired | shares | (66) |
Ending Balance | shares | 1,490 |
Exercisable as of September 30, 2018 | shares | 735 |
Expected to vest as of September 30, 2018 | shares | 755 |
Total | shares | 1,490 |
Weighted Average Exercise Price Per Share | |
Beginning Balance | $ / shares | $ 139.26 |
Granted | $ / shares | 127.93 |
Exercised | $ / shares | 0 |
Forfeited/Expired | $ / shares | 135.36 |
Ending Balance | $ / shares | 138.87 |
Exercisable as of September 30, 2018 | $ / shares | 138.16 |
Expected to vest as of September 30, 2018 | $ / shares | 139.55 |
Total | $ / shares | $ 138.87 |
Aggregate Intrinsic Value | |
Exercised | $ | $ 0 |
Exercisable as of September 30, 2018 | $ | 9,935 |
Expected to vest as of September 30, 2018 | $ | 6,123 |
Total | $ | $ 16,058 |
Weighted Average Remaining Contractual Term (Years) | |
Exercisable as of September 30, 2018 | 5 years 3 months 18 days |
Expected to vest as of September 30, 2018 | 9 years 2 months 12 days |
Total | 7 years 3 months 18 days |
Schedule of Range of Exercise P
Schedule of Range of Exercise Prices per Share (Detail) - Stock Option Awards shares in Thousands | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Shares, Stock Options Outstanding | shares | 1,490 |
Weighted Average Exercise Price Per Share, Stock Options Outstanding | $ 138.87 |
Weighted Average Remaining Contractual Term (Years), Stock Options Outstanding | 7 years 3 months 18 days |
117.85 - 120.00 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices per Share, minimum | $ 117.85 |
Range of Exercise Prices per Share, maximum | $ 120 |
Shares, Stock Options Outstanding | shares | 23 |
Weighted Average Exercise Price Per Share, Stock Options Outstanding | $ 118.50 |
Weighted Average Remaining Contractual Term (Years), Stock Options Outstanding | 3 years 3 months 18 days |
120.01 - 150.00 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices per Share, minimum | $ 120.01 |
Range of Exercise Prices per Share, maximum | $ 150 |
Shares, Stock Options Outstanding | shares | 1,124 |
Weighted Average Exercise Price Per Share, Stock Options Outstanding | $ 126.78 |
Weighted Average Remaining Contractual Term (Years), Stock Options Outstanding | 7 years 8 months 12 days |
150.01 - 180.00 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices per Share, minimum | $ 150.01 |
Range of Exercise Prices per Share, maximum | $ 180 |
Shares, Stock Options Outstanding | shares | 173 |
Weighted Average Exercise Price Per Share, Stock Options Outstanding | $ 167.40 |
Weighted Average Remaining Contractual Term (Years), Stock Options Outstanding | 4 years 2 months 12 days |
180.01 - 201.25 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices per Share, minimum | $ 180.01 |
Range of Exercise Prices per Share, maximum | $ 201.25 |
Shares, Stock Options Outstanding | shares | 170 |
Weighted Average Exercise Price Per Share, Stock Options Outstanding | $ 192.44 |
Weighted Average Remaining Contractual Term (Years), Stock Options Outstanding | 7 years 7 months 6 days |
Assumptions Used in Black-Schol
Assumptions Used in Black-Scholes Pricing Model (Detail) - Stock Option Awards | 3 Months Ended |
Sep. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term of options in years | 6 years 3 months 18 days |
Expected volatility | 34.50% |
Risk-free interest rate | 2.90% |
Expected dividend yield | 0.00% |
Common Equity and Earnings pe_2
Common Equity and Earnings per Share - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Class of Stock | |||||
Payments of dividends, common stock | $ 0 | $ 0 | |||
Preferred stock, shares issued | 0 | 0 | 0 | ||
Preferred stock, shares outstanding | 0 | 0 | 0 | ||
Class A | |||||
Class of Stock | |||||
Common stock, votes per share | one | ||||
Class A | 2013 Plan | |||||
Class of Stock | |||||
Shares issuable under stock options excluded from calculation of diluted earnings per share | 979,000 | 412,000 | 880,000 | 385,000 | |
Class B Convertible | |||||
Class of Stock | |||||
Common stock, votes per share | ten |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018CountryCustomer | Sep. 30, 2017CountryCustomer | Sep. 30, 2018SegmentCountryCustomer | Sep. 30, 2017CountryCustomer | Dec. 31, 2017Country | |
Segment Reporting Information | |||||
Number of operating segments | Segment | 1 | ||||
Geographic Concentration Risk | |||||
Segment Reporting Information | |||||
Number Of Individual Country accounted for 10% or more of total revenues | 0 | 0 | 0 | 0 | |
Number Of Individual country accounted for 10% or more of total consolidated assets | 0 | 0 | 0 | ||
Customer Concentration Risk | Sales Revenue, Goods, Net | |||||
Segment Reporting Information | |||||
Number Of Individual Customer accounted for 10% or more of total consolidated revenues | Customer | 0 | 0 | 0 | 0 |
Total Revenues Gross Profit and
Total Revenues Gross Profit and Long Lived Assets Excluding Long Term Deferred Tax Assets (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Revenues from External Customers and Long-Lived Assets | |||||
Total revenues | $ 122,152 | $ 126,010 | $ 365,721 | $ 367,462 | |
Gross profit | 98,763 | 101,621 | 292,107 | 295,566 | |
Long-lived assets | 59,410 | 59,410 | $ 63,269 | ||
Domestic | |||||
Revenues from External Customers and Long-Lived Assets | |||||
Total revenues | 70,611 | 73,443 | 210,715 | 222,245 | |
Gross profit | 56,549 | 58,720 | 166,839 | 177,882 | |
Long-lived assets | 50,215 | 50,215 | 55,355 | ||
EMEA | |||||
Revenues from External Customers and Long-Lived Assets | |||||
Total revenues | 37,628 | 40,081 | 113,834 | 107,833 | |
Gross profit | 30,779 | 32,779 | 91,540 | 87,008 | |
Long-lived assets | 5,825 | 5,825 | 5,626 | ||
Other Regions | |||||
Revenues from External Customers and Long-Lived Assets | |||||
Total revenues | 13,913 | 12,486 | 41,172 | 37,384 | |
Gross profit | 11,435 | $ 10,122 | 33,728 | $ 30,676 | |
Long-lived assets | $ 3,370 | $ 3,370 | $ 2,288 |