Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | May 05, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 0-27275 | |
Entity Registrant Name | Akamai Technologies, Inc | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 04-3432319 | |
Entity Address, Address Line One | 145 Broadway | |
Entity Address, City or Town | Cambridge | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02142 | |
City Area Code | 617 | |
Local Phone Number | 444-3000 | |
Title of 12(b) Security | Common Stock - par value $0.01 per share | |
Trading Symbol | AKAM | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 162,274,472 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001086222 | |
Current Fiscal Year End Date | --12-31 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 384,103 | $ 393,745 |
Marketable securities | 865,168 | 1,143,249 |
Accounts receivable, net of reserves of $3,181 and $1,880 at March 31, 2020, and December 31, 2019, respectively | 613,809 | 551,943 |
Prepaid expenses and other current assets | 151,504 | 142,676 |
Total current assets | 2,014,584 | 2,231,613 |
Marketable securities | 961,150 | 835,384 |
Property and equipment, net | 1,180,550 | 1,152,153 |
Operating lease right-of-use assets | 738,176 | 758,450 |
Acquired intangible assets, net | 205,486 | 179,431 |
Goodwill | 1,594,197 | 1,600,265 |
Deferred income tax assets | 80,037 | 76,528 |
Other assets | 173,776 | 173,062 |
Total assets | 6,947,956 | 7,006,886 |
Current liabilities: | ||
Accounts payable | 114,100 | 138,946 |
Accrued expenses | 265,442 | 334,861 |
Deferred revenue | 99,101 | 71,223 |
Operating lease liabilities | 141,876 | 139,463 |
Other current liabilities | 9,728 | 8,843 |
Total current liabilities | 630,247 | 693,336 |
Deferred revenue | 4,182 | 4,368 |
Deferred income tax liabilities | 29,049 | 29,187 |
Convertible senior notes | 1,856,287 | 1,839,791 |
Operating lease liabilities | 673,029 | 692,181 |
Other liabilities | 82,944 | 90,065 |
Total liabilities | 3,275,738 | 3,348,928 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock, $0.01 par value; 5,000,000 shares authorized; 700,000 shares designated as Series A Junior Participating Preferred Stock; no shares issued or outstanding | 0 | 0 |
Common stock, $0.01 par value; 700,000,000 shares authorized; 163,047,883 shares issued and 162,176,589 shares outstanding at March 31, 2020, and 162,000,843 shares issued and outstanding at December 31, 2019 | 1,631 | 1,620 |
Additional paid-in capital | 3,658,990 | 3,653,486 |
Accumulated other comprehensive loss | (78,995) | (45,144) |
Treasury stock, at cost, 871,294 shares at March 31, 2020, and no shares at December 31, 2019 | (80,550) | 0 |
Retained earnings | 171,142 | 47,996 |
Total stockholders’ equity | 3,672,218 | 3,657,958 |
Total liabilities and stockholders’ equity | $ 6,947,956 | $ 7,006,886 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable reserve | $ 3,181 | $ 1,880 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares designated as Series A Junior Participating Preferred Stock (in shares) | 700,000 | 700,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 700,000,000 | 700,000,000 |
Common stock, shares issued (in shares) | 163,047,883 | 162,000,843 |
Common stock, shares outstanding (in shares) | 162,176,589 | 162,000,843 |
Treasury stock (in shares) | 871,294 | 0 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Revenue | $ 764,302 | $ 706,508 |
Costs and operating expenses: | ||
Cost of revenue (exclusive of amortization of acquired intangible assets shown below) | 268,582 | 240,743 |
Research and development | 71,224 | 66,141 |
Sales and marketing | 123,786 | 126,276 |
General and administrative | 127,361 | 122,835 |
Amortization of acquired intangible assets | 10,434 | 9,599 |
Restructuring charge | 10,585 | 6,389 |
Total costs and operating expenses | 611,972 | 571,983 |
Income from operations | 152,330 | 134,525 |
Interest income | 7,043 | 8,635 |
Interest expense | (17,205) | (12,116) |
Other (expense) income, net | (4,108) | 511 |
Income before provision for income taxes | 138,060 | 131,555 |
Provision for income taxes | (14,292) | (24,425) |
Loss from equity method investment | (622) | 0 |
Net income | $ 123,146 | $ 107,130 |
Net income per share: | ||
Basic (in dollars per share) | $ 0.76 | $ 0.66 |
Diluted (in dollars per share) | $ 0.75 | $ 0.65 |
Shares used in per share calculations: | ||
Basic (in shares) | 161,992 | 163,236 |
Diluted (in shares) | 163,684 | 164,787 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 123,146 | $ 107,130 |
Other comprehensive (loss) income: | ||
Foreign currency translation adjustment | (26,277) | 502 |
Change in unrealized (loss) gain on investments, net of income tax benefit (provision) of $1,465 and $(554) for the three months ended March 31, 2020 and 2019, respectively | (7,574) | 1,431 |
Other comprehensive (loss) income | (33,851) | 1,933 |
Comprehensive income | $ 89,295 | $ 109,063 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Income tax benefit (provision) on unrealized gain (loss) on investments | $ 1,465 | $ (554) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 123,146 | $ 107,130 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 116,208 | 108,205 |
Stock-based compensation | 47,493 | 45,305 |
(Benefit) provision for deferred income taxes | (2,888) | 8,982 |
Amortization of debt discount and issuance costs | 15,633 | 11,618 |
Other non-cash reconciling items, net | 12,052 | (121) |
Changes in operating assets and liabilities, net of effects of acquisitions: | ||
Accounts receivable | (73,913) | (43,766) |
Prepaid expenses and other current assets | (10,434) | (13,029) |
Accounts payable and accrued expenses | (27,458) | (85,366) |
Deferred revenue | 26,989 | 29,286 |
Other current liabilities | 928 | (9,473) |
Other non-current assets and liabilities | (4,513) | 2,079 |
Net cash provided by operating activities | 223,243 | 160,850 |
Cash flows from investing activities: | ||
Cash received (paid) for business acquisitions, net of cash acquired | 106 | (121,464) |
Cash paid for asset acquisition | (36,376) | 0 |
Cash paid for equity method investment | 0 | (40,213) |
Purchases of property and equipment | (141,095) | (69,752) |
Capitalization of internal-use software development costs | (74,334) | (72,677) |
Purchases of short- and long-term marketable securities | (389,779) | (10,625) |
Proceeds from sales of short- and long-term marketable securities | 1,179 | 244 |
Proceeds from maturities of short- and long-term marketable securities | 529,637 | 547,793 |
Other non-current assets and liabilities | (76) | 2,935 |
Net cash (used in) provided by investing activities | (110,738) | 236,241 |
Cash flows from financing activities: | ||
Repayment of convertible senior notes | 0 | (690,000) |
Proceeds related to the issuance of common stock under stock plans | 19,546 | 19,774 |
Employee taxes paid related to net share settlement of stock-based awards | (50,835) | (38,639) |
Repurchases of common stock | (80,550) | (34,872) |
Other non-current assets and liabilities | 0 | (1,558) |
Net cash used in financing activities | (111,839) | (745,295) |
Effects of exchange rate changes on cash, cash equivalents and restricted cash | (8,983) | 1,601 |
Net decrease in cash, cash equivalents and restricted cash | (8,317) | (346,603) |
Cash, cash equivalents and restricted cash at beginning of period | 394,146 | 1,036,987 |
Cash, cash equivalents and restricted cash at end of period | 385,829 | 690,384 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes, net of refunds received of $1,204 and $1,176 for the three months ended March 31, 2020 and 2019, respectively | 21,440 | 44,165 |
Cash paid for interest expense | 2,360 | 0 |
Cash paid for operating lease liabilities | 47,066 | 30,504 |
Non-cash activities: | ||
Operating lease right-of-use assets obtained in exchange for operating lease liabilities | 31,050 | 29,257 |
Purchases of property and equipment and capitalization of internal-use software development costs included in accounts payable and accrued expenses | 22,874 | 49,627 |
Capitalization of stock-based compensation | $ 8,722 | $ 8,831 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Cash Flows [Abstract] | ||
Proceeds from income tax refunds | $ 1,204 | $ 1,176 |
Reconciliation of cash, cash equivalents and restricted cash: | ||
Cash and cash equivalents | 384,103 | 688,698 |
Restricted cash | 1,726 | 1,686 |
Cash, cash equivalents and restricted cash at end of period | $ 385,829 | $ 690,384 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Treasury Stock | Accumulated Deficit |
Beginning balance (in shares) at Dec. 31, 2018 | 162,904,550 | |||||
Beginning Balance at Dec. 31, 2018 | $ 3,191,860 | $ 1,629 | $ 3,670,033 | $ (48,912) | $ 0 | $ (430,890) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock upon the exercise of stock options and vesting of restricted and deferred stock units, net of shares withheld for employee taxes (in shares) | 1,090,658 | |||||
Issuance of common stock upon the exercise of stock options and vesting of restricted and deferred stock units, net of shares withheld for employee taxes | (37,764) | $ 11 | (37,775) | |||
Stock-based compensation | 54,079 | 54,079 | ||||
Repurchases of common stock (in shares) | (491,950) | |||||
Repurchases of common stock | (34,872) | (34,872) | ||||
Net income | 107,130 | 107,130 | ||||
Foreign currency translation adjustment | 502 | 502 | ||||
Change in unrealized loss on investments, net of tax | 1,431 | 1,431 | ||||
Ending balance (in shares) at Mar. 31, 2019 | 163,503,258 | |||||
Ending Balance at Mar. 31, 2019 | 3,283,217 | $ 1,640 | 3,686,337 | (46,979) | (34,872) | (322,909) |
Beginning balance (in shares) at Dec. 31, 2019 | 162,000,843 | |||||
Beginning Balance at Dec. 31, 2019 | 3,657,958 | $ 1,620 | 3,653,486 | (45,144) | 0 | 47,996 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock upon the exercise of stock options and vesting of restricted and deferred stock units, net of shares withheld for employee taxes (in shares) | 1,047,040 | |||||
Issuance of common stock upon the exercise of stock options and vesting of restricted and deferred stock units, net of shares withheld for employee taxes | (50,700) | $ 11 | (50,711) | |||
Stock-based compensation | 56,215 | 56,215 | ||||
Repurchases of common stock (in shares) | (871,294) | |||||
Repurchases of common stock | (80,550) | (80,550) | ||||
Net income | 123,146 | 123,146 | ||||
Foreign currency translation adjustment | (26,277) | (26,277) | ||||
Change in unrealized loss on investments, net of tax | (7,574) | (7,574) | ||||
Ending balance (in shares) at Mar. 31, 2020 | 162,176,589 | |||||
Ending Balance at Mar. 31, 2020 | $ 3,672,218 | $ 1,631 | $ 3,658,990 | $ (78,995) | $ (80,550) | $ 171,142 |
Nature of Business and Basis of
Nature of Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business and Basis of Presentation | Nature of Business and Basis of Presentation Akamai Technologies, Inc. (the “Company”) provides solutions for delivering, optimizing and securing content and business applications over the Internet. Its globally-distributed platform comprises more than 250,000 servers across more than 130 countries. The Company was incorporated in Delaware in 1998 and is headquartered in Cambridge, Massachusetts. The Company currently operates in one industry segment: providing cloud services for delivering, optimizing and securing content and business applications over the Internet. The accompanying interim consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. These financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in the accompanying financial statements. Certain information and footnote disclosures normally included in the Company’s annual audited consolidated financial statements and accompanying notes have been condensed in, or omitted from, these interim financial statements. Accordingly, the unaudited consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission on February 28, 2020. The results of operations presented in this quarterly report on Form 10-Q are not necessarily indicative of the results of operations that may be expected for any future periods. In the opinion of management, these unaudited consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, that are necessary for a fair statement of the results of all interim periods reported herein. Newly-Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board ("FASB") issued guidance that introduces a new methodology for accounting for credit losses on financial instruments. The guidance establishes a new "expected credit loss model" that requires entities to estimate current expected credit losses on financial instruments by using all practical and relevant information. Any expected credit losses are to be reflected as allowances. The Company prospectively adopted this standard on January 1, 2020. Adoption of the standard did not have a material impact on the Company's consolidated financial statements. In August 2018, the FASB issued guidance that addresses a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The guidance aligns the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement with the guidance for capitalizing costs associated with developing or obtaining internal-use software. The Company prospectively adopted this standard on January 1, 2020. Adoption of the standard did not have a material impact on the Company's consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The following is a summary of available-for-sale marketable securities held as of March 31, 2020 and December 31, 2019 (in thousands): Gross Unrealized Classification on Balance Sheet Amortized Cost Gains Losses Aggregate Short-Term Long-Term As of March 31, 2020 Commercial paper $ 42,800 $ 26 $ (7) $ 42,819 $ 42,819 $ — Corporate bonds 1,404,124 1,435 (10,550) 1,395,009 725,175 669,834 U.S. government agency obligations 372,266 1,545 (3) 373,808 97,117 276,691 $ 1,819,190 $ 3,006 $ (10,560) $ 1,811,636 $ 865,111 $ 946,525 As of December 31, 2019 Certificates of deposit $ 150,000 $ — $ — $ 150,000 $ 150,000 $ — Commercial paper 73,829 23 (7) 73,845 73,845 — Corporate bonds 1,368,668 1,840 (378) 1,370,130 753,538 616,592 U.S. government agency obligations 369,475 80 (74) 369,481 165,623 203,858 $ 1,961,972 $ 1,943 $ (459) $ 1,963,456 $ 1,143,006 $ 820,450 The Company offers certain eligible employees the ability to participate in a non-qualified deferred compensation plan. The mutual funds held by the Company that are associated with this plan are classified as restricted trading securities. These securities are not included in the available-for-sale securities table above but are included in marketable securities in the consolidated balance sheets. Unrealized gains and unrealized temporary losses on investments classified as available-for-sale are included within accumulated other comprehensive loss in the consolidated balance sheets. Upon realization, those amounts are reclassified from accumulated other comprehensive loss to interest income in the consolidated statements of income. As of March 31, 2020, the Company did not hold any investments which were classified as available-for-sale marketable securities that had been in a continuous unrealized loss position for more than 12 months. The following table details the fair value measurements within the fair value hierarchy of the Company’s financial assets as of March 31, 2020 and December 31, 2019 (in thousands): Total Fair Value Fair Value Measurements at Level 1 Level 2 As of March 31, 2020 Money market funds $ 1,348 $ 1,348 $ — Commercial paper 42,819 — 42,819 Corporate bonds 1,395,009 — 1,395,009 U.S. government agency obligations 373,808 — 373,808 Mutual funds 14,682 14,682 — $ 1,827,666 $ 16,030 $ 1,811,636 As of December 31, 2019 Money market funds $ 50,779 $ 50,779 $ — Certificates of deposit 150,000 — 150,000 Commercial paper 73,845 — 73,845 Corporate bonds 1,370,130 — 1,370,130 U.S. government agency obligations 369,481 — 369,481 Mutual funds 15,177 15,177 — $ 2,029,412 $ 65,956 $ 1,963,456 As of March 31, 2020 and December 31, 2019, the Company grouped money market funds and mutual funds using a Level 1 valuation because market prices for such investments are readily available in active markets. As of March 31, 2020 and December 31, 2019, the Company grouped commercial paper, corporate bonds and U.S. government agency obligations using a Level 2 valuation because quoted prices for similar assets in active markets (or identical assets in an inactive market) are available. As of December 31, 2019, the Company also included bank certificates of deposit using Level 2 valuation because quoted prices for similar assets in active markets (or identical assets in an inactive market) are available. The Company did not have any transfers of assets between Level 1, Level 2 or Level 3 of the fair value measurement hierarchy during the three months ended March 31, 2020. When developing fair value estimates, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs. When available, the Company uses quoted market prices to measure fair value. The valuation technique used to measure fair value for the Company's Level 1 and Level 2 assets is a market approach, using prices and other relevant information generated by market transactions involving identical or comparable assets. If market prices are not available, the fair value measurement is based on models that primarily use market-based parameters including yield curves, volatilities, credit ratings and currency rates. In certain cases where market rate assumptions are not available, the Company is required to make judgments about assumptions market participants would use to estimate the fair value of a financial instrument. Contractual maturities of the Company’s available-for-sale marketable securities held as of March 31, 2020 and December 31, 2019 were as follows (in thousands): March 31, December 31, Due in 1 year or less $ 865,111 $ 1,143,006 Due after 1 year through 3 years 946,525 820,450 $ 1,811,636 $ 1,963,456 |
Accounts Receivable
Accounts Receivable | 3 Months Ended |
Mar. 31, 2020 | |
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | |
Accounts Receivable | Accounts Receivable Net accounts receivable consisted of the following as of March 31, 2020 and December 31, 2019 (in thousands): March 31, December 31, Trade accounts receivable $ 440,302 $ 396,204 Unbilled accounts receivable 176,688 157,619 Gross accounts receivable 616,990 553,823 Allowances for current expected credit losses and other reserves (3,181) (1,880) Accounts receivable, net $ 613,809 $ 551,943 The following table summarizes the activity of the Company's allowance for current expected credit losses and other reserves during the three months ended March 31, 2020 (in thousands): Balance as of January 1, 2020 $ 1,880 Charges to income from operations 1,752 Collections from customers previously reserved and other (451) Balance at March 31, 2020 $ 3,181 The allowance for current expected credit losses has been developed using historical loss rates for the previous twelve months as well as expectations about the future where the Company has been able to develop forecasts to support its estimates. |
Incremental Costs to Obtain a C
Incremental Costs to Obtain a Contract with a Customer | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Incremental Costs to Obtain a Contract with a Customer | Incremental Costs to Obtain a Contract with a Customer The following table summarizes the deferred costs associated with obtaining customer contracts, specifically commission and incentive payments, as of March 31, 2020 and December 31, 2019 (in thousands): March 31, December 31, Deferred costs included in prepaid and other current assets $ 43,044 $ 45,009 Deferred costs included in other assets 22,980 25,698 Total deferred costs $ 66,024 $ 70,707 During the three months ended March 31, 2020 and 2019, the Company recognized $14.1 million and $10.8 million, respectively, of amortization expense related to deferred commissions. During the three months ended March 31, 2020 and 2019, the Company capitalized incremental costs to obtain a contract of $10.8 million and $6.5 million, respectively. Amortization expense and capitalization related to deferred commissions is primarily included in sales and marketing expense in the consolidated statements of income. The Company sells its solutions through a sales force located both domestically and abroad. Revenue derived from operations outside of the U.S. is determined based on the country in which the sale originated. Other than the U.S., no single country accounted for 10% or more of the Company’s total revenue for any reported period. The following table summarizes revenue by geography included in the Company’s consolidated statements of income for the three months ended March 31, 2020 and 2019 (in thousands): For the Three Months 2020 2019 U.S. $ 428,930 $ 418,200 International 335,372 288,308 Total revenue $ 764,302 $ 706,508 While the Company sells its solutions through a geographically dispersed sales force, it manages its customer relationships in two divisions: the Web Division and the Media and Carrier Division. Customers are assigned to a division for relationship management purposes according to their predominant purchasing activity; however, customers may purchase solutions managed by the other division as well. As of January 1, 2020, the Company reassigned some of its customers between the Media and Carrier Division and the Web Division and revised historical results in order to reflect the most recent categorization and to provide a comparable view for all periods presented. As the purchasing patterns and required account expertise of customers change over time, the Company may reassign a customer's division from one to another. The following table summarizes revenue by division included in the Company’s consolidated statements of income for the three months ended March 31, 2020 and 2019 (in thousands): For the Three Months 2020 2019 Web Division $ 405,995 $ 374,202 Media and Carrier Division 358,307 332,306 Total revenue $ 764,302 $ 706,508 Most content delivery and security services sold by the Company represent obligations that are satisfied over time as the customer simultaneously receives and consumes the services provided. Accordingly, the majority of the Company's revenue is recognized over time, generally ratably over the term of the arrangement due to consistent monthly traffic commitments that expire each period. A small percentage of the Company's services are satisfied at a point in time, such as one-time professional services contracts, integration services and most license sales where the primary obligation is delivery of the license at the start of the term. In these cases, revenue is recognized at a point in time of delivery or satisfaction of the performance obligation. During the three months ended March 31, 2020 and 2019, the Company recognized $44.2 million and $47.8 million of revenue that was included in deferred revenue as of December 31, 2019 and 2018, respectively. As of March 31, 2020, the aggregate amount of remaining performance obligations from contracts with customers was $2.5 billion. The Company expects to recognize approximately 70% of its remaining performance obligations as revenue over the next 12 months, with the remaining recognized thereafter. Remaining performance obligations represent the amount of the transaction price under contracts with customers that are attributable to performance obligations that are unsatisfied or partially satisfied at the reporting date. This consists of future committed revenue for monthly, quarterly or annual periods within current contracts with customers, as well as deferred revenue arising from consideration invoiced in prior periods for which the related performance obligations have not been satisfied. It excludes estimates of variable consideration such as usage-based contracts with no committed contract as well as anticipated renewed contracts. |
Goodwill and Acquired Intangibl
Goodwill and Acquired Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Acquired Intangible Assets | Goodwill and Acquired Intangible Assets The change in the carrying amount of goodwill for the three months ended March 31, 2020 was as follows (in thousands): Balance as of January 1, 2020 $ 1,600,265 Measurement period adjustments related to acquisitions completed in prior years (1,056) Foreign currency translation (5,012) Balance as of March 31, 2020 $ 1,594,197 The Company tests goodwill for impairment at least annually. Through the date the consolidated financial statements were issued, no triggering events had occurred that would indicate a potential impairment exists. Acquired intangible assets that are subject to amortization consisted of the following as of March 31, 2020 and December 31, 2019 (in thousands): March 31, 2020 December 31, 2019 Gross Accumulated Amortization Net Gross Accumulated Net Completed technology $ 153,972 $ (98,349) $ 55,623 $ 153,722 $ (94,088) $ 59,634 Customer-related intangible assets 315,837 (168,943) 146,894 279,684 (163,155) 116,529 Non-compete agreements 823 (594) 229 830 (529) 301 Trademarks and trade names 7,555 (4,815) 2,740 7,600 (4,633) 2,967 Acquired license rights 490 (490) — 490 (490) — Total $ 478,677 $ (273,191) $ 205,486 $ 442,326 $ (262,895) $ 179,431 Aggregate expense related to amortization of acquired intangible assets for the three months ended March 31, 2020 and 2019 was $10.4 million and $9.6 million, respectively. Based on the Company’s acquired intangible assets as of March 31, 2020, aggregate expense related to amortization of acquired intangible assets is expected to be $31.4 million for the remainder of 2020, and $43.0 million, $37.3 million, $28.9 million and $20.5 million for 2021, 2022, 2023 and 2024, respectively. |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2020 | |
Asset Acquisition [Abstract] | |
Acquisitions | AcquisitionsIn February 2020, the Company acquired certain assets from Instart Logic, Inc. ("Instart"), a provider of cloud solutions to improve web and mobile application performance, for $36.4 million in cash. The purchase price was primarily allocated to a customer-related intangible asset that will be amortized over 17 years in a pattern that matches expense with expected economic benefits. The Company is transitioning the acquired customers to its Intelligent Edge Platform. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt Convertible Notes – Due 2027 In August 2019, the Company issued $1,150.0 million in par value of convertible senior notes due 2027 (the "2027 Notes"). The 2027 Notes are senior unsecured obligations of the Company, bear regular interest of 0.375%, payable semi-annually in arrears on March 1 and September 1 of each year and mature on September 1, 2027, unless repurchased or converted in accordance with their terms prior to maturity. At their option, holders may convert their 2027 Notes prior to the close of business on the business day immediately preceding May 1, 2027, only under the following circumstances: • during any calendar quarter commencing after the calendar quarter ended December 31, 2019 (and only during such calendar quarter), if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; • during the five five • upon the occurrence of specified corporate events. On or after May 1, 2027, holders may convert all or any portion of their 2027 Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Company, at its election, may pay or deliver to holders cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock. The initial conversion rate is 8.6073 shares of the Company's common stock per $1,000 principal amount, which is equivalent to an initial conversion price of approximately $116.18 per share, subject to adjustments in certain events, and represents a potential conversion into 9.9 million shares. In accounting for the issuance of the 2027 Notes, the Company separated the 2027 Notes into liability and equity components. The carrying cost of the liability component was calculated by measuring the fair value of a similar debt obligation that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2027 Notes. The difference between the principal amount of the 2027 Notes and the proceeds allocated to the liability component (“debt discount”) is amortized to interest expense using the effective interest method over the term of the 2027 Notes. The equity component is recorded in additional paid-in capital in the consolidated balance sheet and will not be remeasured as long as it continues to meet the conditions for equity classification. In accounting for the transaction costs related to the issuance of the 2027 Notes, the Company allocated the total transaction costs incurred to the liability and equity components based on their relative values. Transaction costs attributable to the liability component are being amortized to interest expense over the term of the 2027 Notes, and transaction costs attributable to the equity component are netted against the equity component of the 2027 Notes in stockholders’ equity. The 2027 Notes consisted of the following components as of March 31, 2020 and December 31, 2019 (in thousands): March 31, December 31, Liability component: Principal $ 1,150,000 $ 1,150,000 Less: debt discount and issuance costs, net of amortization (216,356) (222,928) Net carrying amount $ 933,644 $ 927,072 Equity component: $ 220,529 $ 220,529 The estimated fair value of the 2027 Notes at March 31, 2020 and December 31, 2019 was $1,147.5 million and $1,133.8 million, respectively. The fair value was determined based on the quoted price of the 2027 Notes in an inactive market on the last trading day of the reporting period and has been classified as Level 2 within the fair value hierarchy. Based on the closing price of the Company's common stock of $91.49 on March 31, 2020, the value of the 2027 Notes if converted to common stock was less than the principal amount of $1,150.0 million. The Company used $100.0 million of the proceeds from the offering to repurchase shares of its common stock, concurrent with the issuance of the 2027 Notes. The repurchase was made in accordance with a share repurchase program previously approved by the Board of Directors. Additionally, $127.1 million of the proceeds was used for the net cost of convertible note hedge and warrant transactions. The net proceeds are intended to be used for working capital, share repurchases, potential acquisitions and strategic transactions and other corporate purposes. Note Hedge To minimize the impact of potential dilution upon conversion of the 2027 Notes, the Company entered into convertible note hedge transactions with respect to its common stock in August 2019. The Company paid $312.2 million for the note hedge transactions. The note hedge transactions cover approximately 9.9 million shares of the Company’s common stock at a strike price that corresponds to the initial conversion price of the 2027 Notes, also subject to adjustment, and are exercisable upon conversion of the 2027 Notes. The note hedge transactions are intended to reduce dilution in the event of conversion of the 2027 Notes. Warrants Separately, in August 2019, the Company entered into warrant transactions, whereby the Company sold warrants to acquire, subject to anti-dilution adjustments, up to 9.9 million shares of the Company’s common stock at a strike price of approximately $178.74 per share. The Company received aggregate proceeds of $185.2 million from the sale of the warrants. The convertible note hedge and warrant transactions will generally have the effect of increasing the conversion price of the 2027 Notes to approximately $178.74 per share. Convertible Notes – Due 2025 In May 2018, the Company issued $1,150.0 million in par value of convertible senior notes due 2025 (the "2025 Notes"). The 2025 Notes are senior unsecured obligations of the Company, bear regular interest of 0.125%, payable semi-annually on May 1 and November 1 of each year, and mature on May 1, 2025, unless repurchased or converted prior to maturity. At their option, holders may convert their 2025 Notes prior to the close of business on the business day immediately preceding January 1, 2025, only under the following circumstances: • during any calendar quarter commencing after the calendar quarter ended June 30, 2018 (and only during such calendar quarter), if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; • during the five five • upon the occurrence of specified corporate events. On or after January 1, 2025, holders may convert all or any portion of their 2025 Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date, regardless of the foregoing circumstances. Upon conversion, the Company, at its election, may pay or deliver to holders cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock. The initial conversion rate is 10.5150 shares of the Company's common stock per $1,000 principal amount, which is equivalent to an initial conversion price of approximately $95.10 per share, subject to adjustments in certain events, and represents a potential conversion into 12.1 million shares. In accounting for the issuance of the 2025 Notes, the Company separated the 2025 Notes into liability and equity components. The carrying cost of the liability component was calculated by measuring the fair value of a similar debt obligation that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2025 Notes. The difference between the principal amount of the 2025 Notes and the proceeds allocated to the liability component (“debt discount”) is amortized to interest expense using the effective interest method over the term of the 2025 Notes. The equity component is recorded in additional paid-in capital in the consolidated balance sheet and will not be remeasured as long as it continues to meet the conditions for equity classification. In accounting for the transaction costs related to the issuance of the 2025 Notes, the Company allocated the total transaction costs incurred to the liability and equity components based on their relative values. Transaction costs attributable to the liability component are being amortized to interest expense over the term of the 2025 Notes, and transaction costs attributable to the equity component are netted against the equity component of the 2025 Notes in stockholders’ equity. The 2025 Notes consisted of the following components as of March 31, 2020 and December 31, 2019 (in thousands): March 31, December 31, Liability component: Principal $ 1,150,000 $ 1,150,000 Less: debt discount and issuance costs, net of amortization (227,357) (237,281) Net carrying amount $ 922,643 $ 912,719 Equity component: $ 285,225 $ 285,225 The estimated fair value of the 2025 Notes at March 31, 2020 and December 31, 2019 was $1,289.7 million and $1,270.7 million, respectively. The fair value was determined based on the quoted price of the 2025 Notes in an inactive market on the last trading day of the reporting period and has been classified as Level 2 within the fair value hierarchy. Based on the closing price of the Company's common stock of $91.49 on March 31, 2020, the value of the 2025 Notes if converted to common stock was less than the principal amount of $1,150.0 million. The Company used $46.2 million of the proceeds from the offering to repurchase shares of its common stock, concurrent with the issuance of the 2025 Notes. The repurchase was made in accordance with a share repurchase program previously approved by the Board of Directors. Additionally, $141.8 million of the proceeds was used for the net cost of convertible note hedge and warrant transactions. The Company also used a portion of the net proceeds to repay at maturity the $690.0 million in par value of convertible senior notes due in 2019. Note Hedge To minimize the impact of potential dilution upon conversion of the 2025 Notes, the Company entered into convertible note hedge transactions with respect to its common stock in May 2018. The Company paid $261.7 million for the note hedge transactions. The note hedge transactions cover approximately 12.1 million shares of the Company’s common stock at a strike price that corresponds to the initial conversion price of the 2025 Notes, also subject to adjustment, and are exercisable upon conversion of the 2025 Notes. The note hedge transactions are intended to reduce dilution in the event of conversion of the 2025 Notes. Warrants Separately, in May 2018, the Company entered into warrant transactions, whereby the Company sold warrants to acquire, subject to anti-dilution adjustments, up to 12.1 million shares of the Company’s common stock at a strike price of approximately $149.18 per share. The Company received aggregate proceeds of $119.9 million from the sale of the warrants. The convertible note hedge and warrant transactions will generally have the effect of increasing the conversion price of the 2025 Notes to approximately $149.18 per share. Convertible Notes – Due 2019 In February 2014, the Company issued $690.0 million in par value of convertible senior notes due 2019 (the "2019 Notes"). The 2019 Notes were senior unsecured obligations of the Company and did not bear regular interest. The 2019 Notes matured and were repaid in full on February 15, 2019 as no repurchases or conversions occurred prior to maturity. Revolving Credit Facility In May 2018, the Company entered into a $500.0 million five Borrowings under the Credit Agreement bear interest, at the Company's option, at a base rate plus a spread of 0.00% to 0.25% or an adjusted LIBOR rate plus a spread of 0.875% to 1.25%, in each case with such spread being determined based on the Company's consolidated leverage ratio specified in the Credit Agreement. Regardless of what amounts, if any, are outstanding under the Credit Agreement, the Company is also obligated to pay an ongoing commitment fee on undrawn amounts at a rate of 0.075% to 0.15%, with such rate being based on the Company's consolidated leverage ratio specified in the Credit Agreement. The Credit Agreement contains customary representations and warranties, affirmative and negative covenants and events of default. Principal covenants include a maximum consolidated leverage ratio and a minimum consolidated interest coverage ratio. There were no outstanding borrowings under the Credit Agreement as of March 31, 2020. Interest Expense The 2027 Notes bear interest at a fixed rate of 0.375%. The interest is payable semi-annually on March 1 and September 1 of each year. The 2027 Notes have an effective interest rate of 3.1% attributable to the conversion feature. The 2025 Notes bear interest at a fixed rate of 0.125%. The interest is payable semi-annually on May 1 and November 1 of each year, commencing in November 2018. The 2025 Notes have an effective interest rate of 4.26% attributable to the conversion feature. The 2019 Notes did not bear regular interest, but had an effective interest rate of 3.2% attributable to the conversion feature. The Company is also obligated to pay ongoing commitment fees under the terms of the Credit Agreement. The following table sets forth total interest expense included in the consolidated statements of income for the three and three months ended March 31, 2020 and 2019 (in thousands): For the Three Months 2020 2019 Amortization of debt discount and issuance costs $ 16,555 $ 13,009 Coupon interest payable on 2025 Notes 359 359 Coupon interest payable on 2027 Notes 1,078 — Revolving credit facility contractual interest expense 135 139 Capitalization of interest expense (922) (1,391) Total interest expense $ 17,205 $ 12,116 |
Restructuring
Restructuring | 3 Months Ended |
Mar. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Restructuring During the fourth quarter of 2019, management committed to an action to restructure certain parts of the Company to focus on investments with the potential to accelerate revenue growth. As a result, certain headcount reductions were necessary and certain capitalized internal-use software charges were realized for software not yet placed into service that will not be completed and implemented due to this action. The Company has incurred restructuring charges of $20.8 million as part of this action, of which $10.6 million was recognized during the three months ended March 31, 2020. Included in the charge is $6.2 million related to impairment of a right-of-use asset related to the exit of a leased facility. The Company does not expect to incur material additional restructuring charges related to this action. During the fourth quarter of 2018, management committed to an action to restructure certain parts of the Company with the intent of re-balancing investments to ensure long-term growth and scale. As a result, certain headcount reductions were necessary and certain capitalized internal-use software charges were realized for software not yet placed into service that will not be completed and implemented due to this action. The Company has incurred restructuring charges of $19.0 million as part of this action, of which $6.2 million was incurred during the three months ended March 31, 2019. There were no charges related to these actions during the three months ended March 31, 2020, and no additional charges are expected. The following table summarizes the activity of the Company's restructuring accrual during the three months ended March 31, 2020 (in thousands): Employee Severance and Related Benefits Software Charges Other Total Balance as of January 1, 2020 $ 5,707 $ 99 $ 151 $ 5,957 Costs incurred 4,356 — 28 4,384 Cash disbursements (3,935) (99) (137) (4,171) Non-cash charges — — (11) (11) Balance as of March 31, 2020 $ 6,128 $ — $ 31 $ 6,159 |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Share Repurchase Program Effective November 2018, the Board authorized a $1.1 billion share repurchase program through December 2021. During the three months ended March 31, 2020, the Company repurchased 0.9 million shares of its common stock for $80.6 million. The Company's goals for the share repurchase program are to offset the dilution created by its employee equity compensation programs and provide the flexibility to return capital to shareholders as business and market conditions warrant. Stock-Based Compensation The following table summarizes stock-based compensation included in the Company’s consolidated statements of income for the three months ended March 31, 2020 and 2019 (in thousands): For the Three Months 2020 2019 Cost of revenue $ 5,736 $ 5,569 Research and development 12,065 12,057 Sales and marketing 15,735 15,051 General and administrative 13,957 12,628 Total stock-based compensation 47,493 45,305 Provision for income taxes (12,636) (12,993) Total stock-based compensation, net of income taxes $ 34,857 $ 32,312 In addition to the amounts of stock-based compensation reported in the table above, the Company’s consolidated statements of income for the three months ended March 31, 2020 and 2019 include stock-based compensation reflected as a component of amortization of capitalized internal-use software of $7.6 million and $8.1 million, respectively, before taxes. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The following table summarizes the changes in accumulated other comprehensive loss, net of tax, which is reported as a component of stockholders' equity, for the three months ended March 31, 2020 (in thousands): Foreign Currency Translation Net Unrealized Gains (Losses) on Investments Total Balance as of January 1, 2020 $ (52,924) $ 7,780 $ (45,144) Other comprehensive loss (26,277) (7,574) (33,851) Balance as of March 31, 2020 $ (79,201) $ 206 $ (78,995) |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Incremental Costs to Obtain a Contract with a Customer The following table summarizes the deferred costs associated with obtaining customer contracts, specifically commission and incentive payments, as of March 31, 2020 and December 31, 2019 (in thousands): March 31, December 31, Deferred costs included in prepaid and other current assets $ 43,044 $ 45,009 Deferred costs included in other assets 22,980 25,698 Total deferred costs $ 66,024 $ 70,707 During the three months ended March 31, 2020 and 2019, the Company recognized $14.1 million and $10.8 million, respectively, of amortization expense related to deferred commissions. During the three months ended March 31, 2020 and 2019, the Company capitalized incremental costs to obtain a contract of $10.8 million and $6.5 million, respectively. Amortization expense and capitalization related to deferred commissions is primarily included in sales and marketing expense in the consolidated statements of income. The Company sells its solutions through a sales force located both domestically and abroad. Revenue derived from operations outside of the U.S. is determined based on the country in which the sale originated. Other than the U.S., no single country accounted for 10% or more of the Company’s total revenue for any reported period. The following table summarizes revenue by geography included in the Company’s consolidated statements of income for the three months ended March 31, 2020 and 2019 (in thousands): For the Three Months 2020 2019 U.S. $ 428,930 $ 418,200 International 335,372 288,308 Total revenue $ 764,302 $ 706,508 While the Company sells its solutions through a geographically dispersed sales force, it manages its customer relationships in two divisions: the Web Division and the Media and Carrier Division. Customers are assigned to a division for relationship management purposes according to their predominant purchasing activity; however, customers may purchase solutions managed by the other division as well. As of January 1, 2020, the Company reassigned some of its customers between the Media and Carrier Division and the Web Division and revised historical results in order to reflect the most recent categorization and to provide a comparable view for all periods presented. As the purchasing patterns and required account expertise of customers change over time, the Company may reassign a customer's division from one to another. The following table summarizes revenue by division included in the Company’s consolidated statements of income for the three months ended March 31, 2020 and 2019 (in thousands): For the Three Months 2020 2019 Web Division $ 405,995 $ 374,202 Media and Carrier Division 358,307 332,306 Total revenue $ 764,302 $ 706,508 Most content delivery and security services sold by the Company represent obligations that are satisfied over time as the customer simultaneously receives and consumes the services provided. Accordingly, the majority of the Company's revenue is recognized over time, generally ratably over the term of the arrangement due to consistent monthly traffic commitments that expire each period. A small percentage of the Company's services are satisfied at a point in time, such as one-time professional services contracts, integration services and most license sales where the primary obligation is delivery of the license at the start of the term. In these cases, revenue is recognized at a point in time of delivery or satisfaction of the performance obligation. During the three months ended March 31, 2020 and 2019, the Company recognized $44.2 million and $47.8 million of revenue that was included in deferred revenue as of December 31, 2019 and 2018, respectively. As of March 31, 2020, the aggregate amount of remaining performance obligations from contracts with customers was $2.5 billion. The Company expects to recognize approximately 70% of its remaining performance obligations as revenue over the next 12 months, with the remaining recognized thereafter. Remaining performance obligations represent the amount of the transaction price under contracts with customers that are attributable to performance obligations that are unsatisfied or partially satisfied at the reporting date. This consists of future committed revenue for monthly, quarterly or annual periods within current contracts with customers, as well as deferred revenue arising from consideration invoiced in prior periods for which the related performance obligations have not been satisfied. It excludes estimates of variable consideration such as usage-based contracts with no committed contract as well as anticipated renewed contracts. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company's effective income tax rate is based on estimated income for the year, the estimated composition of the income in different jurisdictions and discrete adjustments, if any, in the applicable quarterly periods. Potential discrete adjustments include tax charges or benefits related to stock-based compensation, changes in tax legislation, settlements of tax audits or assessments, uncertain tax positions and acquisitions, among other items. The Company is currently under audit in multiple jurisdictions and, in certain cases, is involved in litigation related to adverse audit determinations. In the second quarter of 2018, the Company filed an appeal with the Massachusetts Appellate Tax Board contesting the adverse audit findings related to certain tax benefits and exemptions and is awaiting a ruling following trial. The Company has determined that it is more-likely-than-not that it will prevail, and no reserve has been recorded related to these controversies. However, over the next 12 months, the Company’s current assumptions and positions could change based on audit determinations and other events impacting its analysis. Such events, if resolved unfavorably, could significantly impact the Company’s effective income tax rate and results of operations. The Company has estimated that an adverse ruling related to its Massachusetts controversy could ultimately result in a gross income tax charge of approximately $36.0 million, which may be partially offset by certain state tax credits of $26.0 million, which are not currently benefited as a result of the Company's valuation allowance assessment. The Company’s effective income tax rate was 10.4% and 18.6% for the three months ended March 31, 2020 and 2019, respectively. The lower effective tax rate for the three months ended March 31, 2020, is primarily due to an increase in foreign income taxed at lower rates, an increase in the excess tax benefit related to stock-based compensation, a decrease in intercompany sales of intellectual property and a decrease in the valuation allowance recorded against deferred tax assets related to state tax credits. These amounts were partially offset by a decrease in the benefit of U.S. federal, state and foreign research and development credits. For the three months ended March 31, 2020, the effective income tax rate was lower than the federal statutory tax rate due to foreign income taxed at lower rates, the excess tax benefit related to stock-based compensation and the benefit of U.S. federal, state and foreign research and development credits. These amounts were partially offset by the valuation allowance recorded against deferred tax assets related to state tax credits, non-deductible stock-based compensation and state taxes. For the three months ended March 31, 2019, the effective income tax rate was lower than the federal statutory tax rate due to foreign income taxed at lower rates, the excess tax benefit related to stock-based compensation and the benefit of U.S. federal, state and foreign research and development credits. These amounts were partially offset by the valuation allowance recorded against deferred tax assets related to state tax credits, non-deductible executive compensation, state taxes and an intercompany sale of intellectual property. In response to the novel coronavirus, or COVID-19, pandemic, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted on March 27, 2020. The CARES Act did not have a material impact on the effective tax rate for the period ending March 31, 2020. The Company will continue to monitor further changes to the global legislative and regulatory developments enacted as a result of COVID-19. |
Net Income per Share
Net Income per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share Reconciliation [Abstract] | |
Net Income per Share | Net Income per ShareBasic net income per share is computed using the weighted average number of common shares outstanding during the applicable period. Diluted net income per share is computed using the weighted average number of common shares outstanding during the period, plus the dilutive effect of potential common stock. Potential common stock consists of shares issuable pursuant to stock options, restricted stock units ("RSUs"), deferred stock units ("DSUs"), convertible senior notes and warrants issued by the Company. The dilutive effect of outstanding awards and convertible securities is reflected in diluted earnings per share by application of the treasury stock method. The following table sets forth the components used in the computation of basic and diluted net income per share for the three months ended March 31, 2020 and 2019 (in thousands, except per share data): For the Three Months 2020 2019 Numerator: Net income $ 123,146 $ 107,130 Denominator: Shares used for basic net income per share 161,992 163,236 Effect of dilutive securities: Stock options 11 49 RSUs and DSUs 1,681 1,502 Convertible senior notes — — Warrants related to issuance of convertible senior notes — — Shares used for diluted net income per share 163,684 164,787 Basic net income per share $ 0.76 $ 0.66 Diluted net income per share $ 0.75 $ 0.65 For the three months ended March 31, 2020 and 2019, certain potential outstanding common shares from stock options, service-based RSUs, convertible notes and warrants were excluded from the computation of diluted net income per share because the effect of including these items was anti-dilutive. Additionally, certain performance-based RSUs were excluded from the computation of diluted net income per share because the underlying performance conditions for such RSUs had not been met as of these dates. The number of potentially outstanding common shares excluded from the computation of diluted net income per share for the three months ended March 31, 2020 and 2019 are as follows (in thousands): For the Three Months 2020 2019 Service-based RSUs 2,022 2,565 Market-and performance-based RSUs 1,487 1,484 Convertible senior notes 21,991 12,093 Warrants related to issuance of convertible senior notes 21,991 12,093 Total shares excluded from computation 47,491 28,235 |
Nature of Business and Basis _2
Nature of Business and Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting | The accompanying interim consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. These financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in the accompanying financial statements. Certain information and footnote disclosures normally included in the Company’s annual audited consolidated financial statements and accompanying notes have been condensed in, or omitted from, these interim financial statements. Accordingly, the unaudited consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission on February 28, 2020. The results of operations presented in this quarterly report on Form 10-Q are not necessarily indicative of the results of operations that may be expected for any future periods. In the opinion of management, these unaudited consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, that are necessary for a fair statement of the results of all interim periods reported herein. |
Newly-Adopted Accounting Pronouncements | Newly-Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board ("FASB") issued guidance that introduces a new methodology for accounting for credit losses on financial instruments. The guidance establishes a new "expected credit loss model" that requires entities to estimate current expected credit losses on financial instruments by using all practical and relevant information. Any expected credit losses are to be reflected as allowances. The Company prospectively adopted this standard on January 1, 2020. Adoption of the standard did not have a material impact on the Company's consolidated financial statements. In August 2018, the FASB issued guidance that addresses a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The guidance aligns the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement with the guidance for capitalizing costs associated with developing or obtaining internal-use software. The Company prospectively adopted this standard on January 1, 2020. Adoption of the standard did not have a material impact on the Company's consolidated financial statements. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Marketable Securities | The following is a summary of available-for-sale marketable securities held as of March 31, 2020 and December 31, 2019 (in thousands): Gross Unrealized Classification on Balance Sheet Amortized Cost Gains Losses Aggregate Short-Term Long-Term As of March 31, 2020 Commercial paper $ 42,800 $ 26 $ (7) $ 42,819 $ 42,819 $ — Corporate bonds 1,404,124 1,435 (10,550) 1,395,009 725,175 669,834 U.S. government agency obligations 372,266 1,545 (3) 373,808 97,117 276,691 $ 1,819,190 $ 3,006 $ (10,560) $ 1,811,636 $ 865,111 $ 946,525 As of December 31, 2019 Certificates of deposit $ 150,000 $ — $ — $ 150,000 $ 150,000 $ — Commercial paper 73,829 23 (7) 73,845 73,845 — Corporate bonds 1,368,668 1,840 (378) 1,370,130 753,538 616,592 U.S. government agency obligations 369,475 80 (74) 369,481 165,623 203,858 $ 1,961,972 $ 1,943 $ (459) $ 1,963,456 $ 1,143,006 $ 820,450 |
Schedule of Fair Value Measurement | The following table details the fair value measurements within the fair value hierarchy of the Company’s financial assets as of March 31, 2020 and December 31, 2019 (in thousands): Total Fair Value Fair Value Measurements at Level 1 Level 2 As of March 31, 2020 Money market funds $ 1,348 $ 1,348 $ — Commercial paper 42,819 — 42,819 Corporate bonds 1,395,009 — 1,395,009 U.S. government agency obligations 373,808 — 373,808 Mutual funds 14,682 14,682 — $ 1,827,666 $ 16,030 $ 1,811,636 As of December 31, 2019 Money market funds $ 50,779 $ 50,779 $ — Certificates of deposit 150,000 — 150,000 Commercial paper 73,845 — 73,845 Corporate bonds 1,370,130 — 1,370,130 U.S. government agency obligations 369,481 — 369,481 Mutual funds 15,177 15,177 — $ 2,029,412 $ 65,956 $ 1,963,456 |
Schedule of Contractual Maturities of Marketable Securities and Other Investment Related Assets | Contractual maturities of the Company’s available-for-sale marketable securities held as of March 31, 2020 and December 31, 2019 were as follows (in thousands): March 31, December 31, Due in 1 year or less $ 865,111 $ 1,143,006 Due after 1 year through 3 years 946,525 820,450 $ 1,811,636 $ 1,963,456 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | |
Schedule of Accounts Receivable | Net accounts receivable consisted of the following as of March 31, 2020 and December 31, 2019 (in thousands): March 31, December 31, Trade accounts receivable $ 440,302 $ 396,204 Unbilled accounts receivable 176,688 157,619 Gross accounts receivable 616,990 553,823 Allowances for current expected credit losses and other reserves (3,181) (1,880) Accounts receivable, net $ 613,809 $ 551,943 |
Summary of Allowance for Credit Loss Activity | The following table summarizes the activity of the Company's allowance for current expected credit losses and other reserves during the three months ended March 31, 2020 (in thousands): Balance as of January 1, 2020 $ 1,880 Charges to income from operations 1,752 Collections from customers previously reserved and other (451) Balance at March 31, 2020 $ 3,181 |
Incremental Costs to Obtain a_2
Incremental Costs to Obtain a Contract with a Customer (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of deferred costs associated with obtaining customer contracts | The following table summarizes the deferred costs associated with obtaining customer contracts, specifically commission and incentive payments, as of March 31, 2020 and December 31, 2019 (in thousands): March 31, December 31, Deferred costs included in prepaid and other current assets $ 43,044 $ 45,009 Deferred costs included in other assets 22,980 25,698 Total deferred costs $ 66,024 $ 70,707 |
Goodwill and Acquired Intangi_2
Goodwill and Acquired Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The change in the carrying amount of goodwill for the three months ended March 31, 2020 was as follows (in thousands): Balance as of January 1, 2020 $ 1,600,265 Measurement period adjustments related to acquisitions completed in prior years (1,056) Foreign currency translation (5,012) Balance as of March 31, 2020 $ 1,594,197 |
Schedule of Acquired Intangible Assets | Acquired intangible assets that are subject to amortization consisted of the following as of March 31, 2020 and December 31, 2019 (in thousands): March 31, 2020 December 31, 2019 Gross Accumulated Amortization Net Gross Accumulated Net Completed technology $ 153,972 $ (98,349) $ 55,623 $ 153,722 $ (94,088) $ 59,634 Customer-related intangible assets 315,837 (168,943) 146,894 279,684 (163,155) 116,529 Non-compete agreements 823 (594) 229 830 (529) 301 Trademarks and trade names 7,555 (4,815) 2,740 7,600 (4,633) 2,967 Acquired license rights 490 (490) — 490 (490) — Total $ 478,677 $ (273,191) $ 205,486 $ 442,326 $ (262,895) $ 179,431 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Senior Notes | The 2027 Notes consisted of the following components as of March 31, 2020 and December 31, 2019 (in thousands): March 31, December 31, Liability component: Principal $ 1,150,000 $ 1,150,000 Less: debt discount and issuance costs, net of amortization (216,356) (222,928) Net carrying amount $ 933,644 $ 927,072 Equity component: $ 220,529 $ 220,529 The 2025 Notes consisted of the following components as of March 31, 2020 and December 31, 2019 (in thousands): March 31, December 31, Liability component: Principal $ 1,150,000 $ 1,150,000 Less: debt discount and issuance costs, net of amortization (227,357) (237,281) Net carrying amount $ 922,643 $ 912,719 Equity component: $ 285,225 $ 285,225 |
Schedule of Interest Expense | The following table sets forth total interest expense included in the consolidated statements of income for the three and three months ended March 31, 2020 and 2019 (in thousands): For the Three Months 2020 2019 Amortization of debt discount and issuance costs $ 16,555 $ 13,009 Coupon interest payable on 2025 Notes 359 359 Coupon interest payable on 2027 Notes 1,078 — Revolving credit facility contractual interest expense 135 139 Capitalization of interest expense (922) (1,391) Total interest expense $ 17,205 $ 12,116 |
Restructuring (Tables)
Restructuring (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Summary of Restructuring Accrual Activity | The following table summarizes the activity of the Company's restructuring accrual during the three months ended March 31, 2020 (in thousands): Employee Severance and Related Benefits Software Charges Other Total Balance as of January 1, 2020 $ 5,707 $ 99 $ 151 $ 5,957 Costs incurred 4,356 — 28 4,384 Cash disbursements (3,935) (99) (137) (4,171) Non-cash charges — — (11) (11) Balance as of March 31, 2020 $ 6,128 $ — $ 31 $ 6,159 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Stock-Based Compensation Expense | The following table summarizes stock-based compensation included in the Company’s consolidated statements of income for the three months ended March 31, 2020 and 2019 (in thousands): For the Three Months 2020 2019 Cost of revenue $ 5,736 $ 5,569 Research and development 12,065 12,057 Sales and marketing 15,735 15,051 General and administrative 13,957 12,628 Total stock-based compensation 47,493 45,305 Provision for income taxes (12,636) (12,993) Total stock-based compensation, net of income taxes $ 34,857 $ 32,312 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table summarizes the changes in accumulated other comprehensive loss, net of tax, which is reported as a component of stockholders' equity, for the three months ended March 31, 2020 (in thousands): Foreign Currency Translation Net Unrealized Gains (Losses) on Investments Total Balance as of January 1, 2020 $ (52,924) $ 7,780 $ (45,144) Other comprehensive loss (26,277) (7,574) (33,851) Balance as of March 31, 2020 $ (79,201) $ 206 $ (78,995) |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table summarizes revenue by geography included in the Company’s consolidated statements of income for the three months ended March 31, 2020 and 2019 (in thousands): For the Three Months 2020 2019 U.S. $ 428,930 $ 418,200 International 335,372 288,308 Total revenue $ 764,302 $ 706,508 For the Three Months 2020 2019 Web Division $ 405,995 $ 374,202 Media and Carrier Division 358,307 332,306 Total revenue $ 764,302 $ 706,508 |
Net Income per Share (Tables)
Net Income per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share Reconciliation [Abstract] | |
Schedule of Components Used in Diluted and Basic Income Per Common Share | The following table sets forth the components used in the computation of basic and diluted net income per share for the three months ended March 31, 2020 and 2019 (in thousands, except per share data): For the Three Months 2020 2019 Numerator: Net income $ 123,146 $ 107,130 Denominator: Shares used for basic net income per share 161,992 163,236 Effect of dilutive securities: Stock options 11 49 RSUs and DSUs 1,681 1,502 Convertible senior notes — — Warrants related to issuance of convertible senior notes — — Shares used for diluted net income per share 163,684 164,787 Basic net income per share $ 0.76 $ 0.66 Diluted net income per share $ 0.75 $ 0.65 |
Schedule of Shares Excluded from Computation of Diluted Earnings Per Share | The number of potentially outstanding common shares excluded from the computation of diluted net income per share for the three months ended March 31, 2020 and 2019 are as follows (in thousands): For the Three Months 2020 2019 Service-based RSUs 2,022 2,565 Market-and performance-based RSUs 1,487 1,484 Convertible senior notes 21,991 12,093 Warrants related to issuance of convertible senior notes 21,991 12,093 Total shares excluded from computation 47,491 28,235 |
Nature of Business and Basis _3
Nature of Business and Basis of Presentation (Details) | 3 Months Ended |
Mar. 31, 2020segmentservercountry | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of servers (more than) | server | 250,000 |
Number of countries in which servers are located (more than) | country | 130 |
Number of industry segments | segment | 1 |
Fair Value Measurements - Marke
Fair Value Measurements - Marketable Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 1,819,190 | $ 1,961,972 |
Gross Unrealized Gains | 3,006 | 1,943 |
Gross Unrealized Losses | (10,560) | (459) |
Aggregate Fair Value | 1,811,636 | 1,963,456 |
Certificates of deposit | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 150,000 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | 0 | |
Aggregate Fair Value | 150,000 | |
Commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 42,800 | 73,829 |
Gross Unrealized Gains | 26 | 23 |
Gross Unrealized Losses | (7) | (7) |
Aggregate Fair Value | 42,819 | 73,845 |
Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 1,404,124 | 1,368,668 |
Gross Unrealized Gains | 1,435 | 1,840 |
Gross Unrealized Losses | (10,550) | (378) |
Aggregate Fair Value | 1,395,009 | 1,370,130 |
U.S. government agency obligations | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 372,266 | 369,475 |
Gross Unrealized Gains | 1,545 | 80 |
Gross Unrealized Losses | (3) | (74) |
Aggregate Fair Value | 373,808 | 369,481 |
Short-Term Marketable Securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Aggregate Fair Value | 865,111 | 1,143,006 |
Short-Term Marketable Securities | Certificates of deposit | ||
Debt Securities, Available-for-sale [Line Items] | ||
Aggregate Fair Value | 150,000 | |
Short-Term Marketable Securities | Commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Aggregate Fair Value | 42,819 | 73,845 |
Short-Term Marketable Securities | Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Aggregate Fair Value | 725,175 | 753,538 |
Short-Term Marketable Securities | U.S. government agency obligations | ||
Debt Securities, Available-for-sale [Line Items] | ||
Aggregate Fair Value | 97,117 | 165,623 |
Long-Term Marketable Securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Aggregate Fair Value | 946,525 | 820,450 |
Long-Term Marketable Securities | Certificates of deposit | ||
Debt Securities, Available-for-sale [Line Items] | ||
Aggregate Fair Value | 0 | |
Long-Term Marketable Securities | Commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Aggregate Fair Value | 0 | 0 |
Long-Term Marketable Securities | Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Aggregate Fair Value | 669,834 | 616,592 |
Long-Term Marketable Securities | U.S. government agency obligations | ||
Debt Securities, Available-for-sale [Line Items] | ||
Aggregate Fair Value | $ 276,691 | $ 203,858 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Fair Value Measurement (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate Fair Value | $ 1,811,636 | $ 1,963,456 |
Cash equivalents and marketable securities | 1,827,666 | 2,029,412 |
Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 1,348 | 50,779 |
Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate Fair Value | 150,000 | |
Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate Fair Value | 42,819 | 73,845 |
Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate Fair Value | 1,395,009 | 1,370,130 |
U.S. government agency obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate Fair Value | 373,808 | 369,481 |
Mutual funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate Fair Value | 14,682 | 15,177 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents and marketable securities | 16,030 | 65,956 |
Level 1 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 1,348 | 50,779 |
Level 1 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate Fair Value | 0 | |
Level 1 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate Fair Value | 0 | 0 |
Level 1 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate Fair Value | 0 | 0 |
Level 1 | U.S. government agency obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate Fair Value | 0 | 0 |
Level 1 | Mutual funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate Fair Value | 14,682 | 15,177 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents and marketable securities | 1,811,636 | 1,963,456 |
Level 2 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 0 | 0 |
Level 2 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate Fair Value | 150,000 | |
Level 2 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate Fair Value | 42,819 | 73,845 |
Level 2 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate Fair Value | 1,395,009 | 1,370,130 |
Level 2 | U.S. government agency obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate Fair Value | 373,808 | 369,481 |
Level 2 | Mutual funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate Fair Value | $ 0 | $ 0 |
Fair Value Measurements - Contr
Fair Value Measurements - Contractual Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Fair Value Disclosures [Abstract] | ||
Due in 1 year or less | $ 865,111 | $ 1,143,006 |
Due after 1 year through 3 years | 946,525 | 820,450 |
Aggregate Fair Value | $ 1,811,636 | $ 1,963,456 |
Accounts Receivable - Schedule
Accounts Receivable - Schedule of Accounts Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross accounts receivable | $ 616,990 | $ 553,823 |
Allowances for current expected credit losses and other reserves | (3,181) | (1,880) |
Accounts receivable, net | 613,809 | 551,943 |
Unbilled accounts receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross accounts receivable | 176,688 | 157,619 |
Trade accounts receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross accounts receivable | $ 440,302 | $ 396,204 |
Accounts Receivables - Allowanc
Accounts Receivables - Allowance for Credit Losses (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Beginning balance | $ 1,880 |
Charges to income from operations | 1,752 |
Collections from customers previously reserved and other | (451) |
Ending balance | $ 3,181 |
Incremental Costs to Obtain a_3
Incremental Costs to Obtain a Contract with a Customer (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Capitalized Contract Cost [Line Items] | |||
Capitalized contract cost | $ 10,800 | $ 6,500 | |
Commission and incentive payments | |||
Capitalized Contract Cost [Line Items] | |||
Total deferred costs | 66,024 | $ 70,707 | |
Commission and incentive payments | Deferred costs included in prepaid and other current assets | |||
Capitalized Contract Cost [Line Items] | |||
Total deferred costs | 43,044 | 45,009 | |
Commission and incentive payments | Deferred costs included in other assets | |||
Capitalized Contract Cost [Line Items] | |||
Total deferred costs | 22,980 | $ 25,698 | |
Deferred commissions | |||
Capitalized Contract Cost [Line Items] | |||
Amortization expense | $ 14,100 | $ 10,800 |
Goodwill and Acquired Intangi_3
Goodwill and Acquired Intangible Assets - Schedule of Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Schedule of Goodwill [Roll Forward] | |
Balance as of January 1, 2020 | $ 1,600,265 |
Measurement period adjustments related to acquisitions completed in prior years | (1,056) |
Foreign currency translation | (5,012) |
Balance as of March 31, 2020 | $ 1,594,197 |
Goodwill and Acquired Intangi_4
Goodwill and Acquired Intangible Assets - Schedule of Acquired Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 478,677 | $ 442,326 |
Accumulated Amortization | (273,191) | (262,895) |
Net Carrying Amount | 205,486 | 179,431 |
Completed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 153,972 | 153,722 |
Accumulated Amortization | (98,349) | (94,088) |
Net Carrying Amount | 55,623 | 59,634 |
Customer-related intangible assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 315,837 | 279,684 |
Accumulated Amortization | (168,943) | (163,155) |
Net Carrying Amount | 146,894 | 116,529 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 823 | 830 |
Accumulated Amortization | (594) | (529) |
Net Carrying Amount | 229 | 301 |
Trademarks and trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 7,555 | 7,600 |
Accumulated Amortization | (4,815) | (4,633) |
Net Carrying Amount | 2,740 | 2,967 |
Acquired license rights | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 490 | 490 |
Accumulated Amortization | (490) | (490) |
Net Carrying Amount | $ 0 | $ 0 |
Goodwill and Acquired Intangi_5
Goodwill and Acquired Intangible Assets - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of acquired intangible assets | $ 10,434 | $ 9,599 |
Future amortization expense to be recognized in remainder of 2020 | 31,400 | |
Future amortization expense 2021 | 43,000 | |
Future amortization expense 2022 | 37,300 | |
Future amortization expense 2023 | 28,900 | |
Future amortization expense 2024 | $ 20,500 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Feb. 29, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | |
Asset Acquisition [Line Items] | |||
Payments To Acquire Assets | $ 36,376 | $ 0 | |
Instart | |||
Asset Acquisition [Line Items] | |||
Payments To Acquire Assets | $ 36,400 | ||
Instart | Customer-related intangible assets | |||
Asset Acquisition [Line Items] | |||
Useful life of intangible asset | 17 years |
Debt - Narrative (Details)
Debt - Narrative (Details) $ / shares in Units, shares in Millions | 1 Months Ended | 3 Months Ended | ||||
Aug. 31, 2019USD ($)d$ / sharesshares | May 31, 2018USD ($)d$ / sharesshares | Mar. 31, 2020USD ($)$ / shares | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | Feb. 28, 2014USD ($) | |
Debt Instrument [Line Items] | ||||||
Repurchases of common stock | $ 80,550,000 | $ 34,872,000 | ||||
Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 500,000,000 | |||||
Debt term | 5 years | |||||
Maximum borrowing capacity under specific conditions | $ 1,000,000,000 | |||||
Outstanding borrowings | $ 0 | |||||
Credit Agreement | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Commitment fee | 0.075% | |||||
Credit Agreement | Minimum | Base Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 0.00% | |||||
Credit Agreement | Minimum | LIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 0.875% | |||||
Credit Agreement | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Commitment fee | 0.15% | |||||
Credit Agreement | Maximum | Base Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 0.25% | |||||
Credit Agreement | Maximum | LIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 1.25% | |||||
2027 Notes | Convertible Debt | ||||||
Debt Instrument [Line Items] | ||||||
Debt issued | $ 1,150,000,000 | $ 1,150,000,000 | $ 1,150,000,000 | |||
Interest rate | 0.375% | |||||
Threshold trading days exceeding price | d | 20 | |||||
Threshold consecutive trading days exceeding price | d | 30 | |||||
Threshold greater than percentage of stock price trigger | 130.00% | |||||
Threshold trading days not exceeding price | 5 days | |||||
Conversion rate | 0.0086073 | |||||
Principal amount per conversion | $ 1,000 | |||||
Conversion price (in dollars per share) | $ / shares | $ 116.18 | |||||
Potential conversion shares of convertible debt (in shares) | shares | 9.9 | |||||
Fair value of convertible senior notes | $ 1,147,500,000 | 1,133,800,000 | ||||
Closing price of common stock (in dollars per share) | $ / shares | $ 91.49 | |||||
Repurchases of common stock | $ 100,000,000 | |||||
Payments for purchase of convertible note hedge and warrant transactions | 127,100,000 | |||||
Payments for note hedge transactions | $ 312,200,000 | |||||
Warrants outstanding (in shares) | shares | 9.9 | |||||
Warrant strike price (in dollars per share) | $ / shares | $ 178.74 | |||||
Proceeds from sale of warrants | $ 185,200,000 | |||||
Threshold less than percentage of stock price trigger | 98.00% | |||||
Effective interest rate | 3.10% | |||||
2025 Notes | Convertible Debt | ||||||
Debt Instrument [Line Items] | ||||||
Debt issued | $ 1,150,000,000 | $ 1,150,000,000 | 1,150,000,000 | |||
Interest rate | 0.125% | |||||
Threshold trading days exceeding price | d | 20 | |||||
Threshold consecutive trading days exceeding price | d | 30 | |||||
Threshold greater than percentage of stock price trigger | 130.00% | |||||
Threshold trading days not exceeding price | 5 days | |||||
Conversion rate | 0.010515 | |||||
Principal amount per conversion | $ 1,000 | |||||
Conversion price (in dollars per share) | $ / shares | $ 95.10 | |||||
Potential conversion shares of convertible debt (in shares) | shares | 12.1 | |||||
Fair value of convertible senior notes | $ 1,289,700,000 | $ 1,270,700,000 | ||||
Closing price of common stock (in dollars per share) | $ / shares | $ 91.49 | |||||
Repurchases of common stock | $ 46,200,000 | |||||
Payments for purchase of convertible note hedge and warrant transactions | 141,800,000 | |||||
Payments for note hedge transactions | $ 261,700,000 | |||||
Warrants outstanding (in shares) | shares | 12.1 | |||||
Warrant strike price (in dollars per share) | $ / shares | $ 149.18 | |||||
Proceeds from sale of warrants | $ 119,900,000 | |||||
Threshold consecutive trading days not exceeding price | 5 days | |||||
Threshold less than percentage of stock price trigger | 98.00% | |||||
Effective interest rate | 4.26% | |||||
2019 Notes | Convertible Debt | ||||||
Debt Instrument [Line Items] | ||||||
Debt issued | $ 690,000,000 | |||||
Effective interest rate | 3.20% |
Debt - Schedule of Convertible
Debt - Schedule of Convertible Senior Notes (Details) - Convertible Debt - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | Aug. 31, 2019 | May 31, 2018 |
2027 Notes | ||||
Liability component: | ||||
Principal | $ 1,150,000,000 | $ 1,150,000,000 | $ 1,150,000,000 | |
Less: debt discount and issuance costs, net of amortization | (216,356,000) | (222,928,000) | ||
Net carrying amount | 933,644,000 | 927,072,000 | ||
Equity component: | 220,529,000 | 220,529,000 | ||
2025 Notes | ||||
Liability component: | ||||
Principal | 1,150,000,000 | 1,150,000,000 | $ 1,150,000,000 | |
Less: debt discount and issuance costs, net of amortization | (227,357,000) | (237,281,000) | ||
Net carrying amount | 922,643,000 | 912,719,000 | ||
Equity component: | $ 285,225,000 | $ 285,225,000 |
Debt - Schedule of Interest Exp
Debt - Schedule of Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Debt Instrument [Line Items] | ||
Amortization of debt discount and issuance costs | $ 16,555 | $ 13,009 |
Capitalization of interest expense | (922) | (1,391) |
Total interest expense | 17,205 | 12,116 |
Credit Agreement | ||
Debt Instrument [Line Items] | ||
Interest on debt instruments | 135 | 139 |
Convertible Debt | 2025 Notes | ||
Debt Instrument [Line Items] | ||
Interest on debt instruments | 359 | 359 |
Convertible Debt | 2027 Notes | ||
Debt Instrument [Line Items] | ||
Interest on debt instruments | $ 1,078 | $ 0 |
Restructuring (Details)
Restructuring (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 18 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2020 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges incurred | $ 10,585,000 | $ 6,389,000 | ||
Impairment on right-of-use asset | 6,200,000 | |||
Restructuring Reserve [Roll Forward] | ||||
Balance as of January 1, 2020 | 5,957,000 | |||
Costs incurred | 4,384,000 | |||
Cash disbursements | (4,171,000) | |||
Non-cash charges | (11,000) | |||
Balance as of March 31, 2020 | 6,159,000 | $ 6,159,000 | $ 6,159,000 | |
2019 Restructuring Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges incurred | 10,600,000 | 20,800,000 | ||
2018 Restructuring Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges incurred | 0 | $ 6,200,000 | 19,000,000 | |
Employee Severance and Related Benefits | ||||
Restructuring Reserve [Roll Forward] | ||||
Balance as of January 1, 2020 | 5,707,000 | |||
Costs incurred | 4,356,000 | |||
Cash disbursements | (3,935,000) | |||
Non-cash charges | 0 | |||
Balance as of March 31, 2020 | 6,128,000 | 6,128,000 | 6,128,000 | |
Software Charges | ||||
Restructuring Reserve [Roll Forward] | ||||
Balance as of January 1, 2020 | 99,000 | |||
Costs incurred | 0 | |||
Cash disbursements | (99,000) | |||
Non-cash charges | 0 | |||
Balance as of March 31, 2020 | 0 | 0 | 0 | |
Other | ||||
Restructuring Reserve [Roll Forward] | ||||
Balance as of January 1, 2020 | 151,000 | |||
Costs incurred | 28,000 | |||
Cash disbursements | (137,000) | |||
Non-cash charges | (11,000) | |||
Balance as of March 31, 2020 | $ 31,000 | $ 31,000 | $ 31,000 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) - USD ($) shares in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Nov. 30, 2018 | |
Class of Stock [Line Items] | |||
Stock repurchase program, authorized amount | $ 1,100,000,000 | ||
Repurchases of common stock | $ (80,550,000) | $ (34,872,000) | |
Amortization expense from capitalized stock-based compensation | $ 7,600,000 | $ 8,100,000 | |
Common Stock | |||
Class of Stock [Line Items] | |||
Shares repurchased during period (in shares) | 0.9 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Stock Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | $ 47,493 | $ 45,305 |
Provision for income taxes | (12,636) | (12,993) |
Total stock-based compensation, net of income taxes | 34,857 | 32,312 |
Cost of revenues | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | 5,736 | 5,569 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | 12,065 | 12,057 |
Sales and marketing | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | 15,735 | 15,051 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | $ 13,957 | $ 12,628 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss - Schedule of Accumulated Other Comprehensive Income Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning Balance | $ 3,657,958 | $ 3,191,860 |
Other comprehensive loss | (33,851) | 1,933 |
Ending Balance | 3,672,218 | 3,283,217 |
Total | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning Balance | (45,144) | (48,912) |
Ending Balance | (78,995) | $ (46,979) |
Foreign Currency Translation | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning Balance | (52,924) | |
Other comprehensive loss | (26,277) | |
Ending Balance | (79,201) | |
Net Unrealized Gains (Losses) on Investments | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning Balance | 7,780 | |
Other comprehensive loss | (7,574) | |
Ending Balance | $ 206 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Disaggregation of Revenue (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)division | Mar. 31, 2019USD ($) | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 764,302 | $ 706,508 |
Number of divisions | division | 2 | |
Web Division | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 405,995 | 374,202 |
Media and Carrier Division | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 358,307 | 332,306 |
U.S. | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 428,930 | 418,200 |
International | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 335,372 | $ 288,308 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Performance Obligation (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | ||
Revenue recognized | $ 44.2 | $ 47.8 |
Remaining performance obligation | $ 2,500 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining performance obligations, percentage | 70.00% | |
Remaining performance obligation, expected timing | 12 months |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Estimated income tax charge | $ 36 | |
Tax credit | $ 26 | |
Effective income tax rate | 10.40% | 18.60% |
Net Income per Share - Schedule
Net Income per Share - Schedule of Components Used in Diluted and Basic Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator: | ||
Net income (in dollars) | $ 123,146 | $ 107,130 |
Denominator: | ||
Shares used for basic net income per share (in shares) | 161,992 | 163,236 |
Effect of dilutive securities: | ||
Stock options (in shares) | 11 | 49 |
RSUs and DSUs (in shares) | 1,681 | 1,502 |
Convertible senior notes (in shares) | 0 | 0 |
Warrants related to issuance of convertible senior notes (in shares) | 0 | 0 |
Shares used for diluted net income per share (in shares) | 163,684 | 164,787 |
Basic net income per share (in dollars per share) | $ 0.76 | $ 0.66 |
Diluted net income per share (in dollars per share) | $ 0.75 | $ 0.65 |
Net Income per Share - Schedu_2
Net Income per Share - Schedule of Shares Excluded from Computation of Diluted EPS (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 47,491 | 28,235 |
Service-based RSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 2,022 | 2,565 |
Restricted Stock Units Market and Performance Based | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 1,487 | 1,484 |
Convertible senior notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 21,991 | 12,093 |
Warrants related to issuance of convertible senior notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 21,991 | 12,093 |
Uncategorized Items - akam-2020
Label | Element | Value |
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets | us-gaap_NewAccountingPronouncementOrChangeInAccountingPrincipleCumulativeEffectOfChangeOnEquityOrNetAssets1 | $ 851,000 |
Retained Earnings [Member] | ||
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets | us-gaap_NewAccountingPronouncementOrChangeInAccountingPrincipleCumulativeEffectOfChangeOnEquityOrNetAssets1 | $ 851,000 |