Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 05, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | RACKSPACE HOSTING, INC. | |
Entity Central Index Key | 1,107,694 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 134,695,396 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 189 | $ 213.5 |
Accounts receivable, net of allowance for doubtful accounts and customer credits of $5.3 as of December 31, 2014 and $6.8 as of September 30, 2015 | 174.9 | 156.5 |
Deferred income taxes | 5.8 | 9.3 |
Prepaid expenses | 55.5 | 33.6 |
Other current assets | 15.5 | 8.8 |
Total current assets | 440.7 | 421.7 |
Property and equipment, net | 1,161.3 | 1,057.7 |
Goodwill | 81.1 | 81.1 |
Intangible assets, net | 10.3 | 16.6 |
Other non-current assets | 60.4 | 47.2 |
Total assets | 1,753.8 | 1,624.3 |
Current liabilities: | ||
Accounts payable and accrued expenses | 173.6 | 137.3 |
Accrued compensation and benefits | 56.2 | 66.7 |
Income and other taxes payable | 7.1 | 11.8 |
Deferred revenue | 29.9 | 20.9 |
Capital lease obligations | 3.1 | 15 |
Debt | 140 | 25.1 |
Total current liabilities | 409.9 | 276.8 |
Non-current liabilities: | ||
Deferred revenue | 1.9 | 1.4 |
Capital lease obligations | 0.5 | 1.5 |
Finance lease obligations for build-to-suit leases | 165.4 | 117.4 |
Deferred income taxes | 46.6 | 71.2 |
Deferred rent | 49.4 | 49.9 |
Other liabilities | 30.7 | 32.3 |
Total liabilities | $ 704.4 | $ 550.5 |
Commitments and Contingencies | ||
Stockholders' equity: | ||
Common stock, $0.001 par value per share: 300,000,000 shares authorized; 140,945,171 shares issued and outstanding as of December 31, 2014; 134,685,554 shares issued and outstanding as of September 30, 2015 | $ 0.1 | $ 0.1 |
Additional paid-in capital | 841.8 | 696 |
Accumulated other comprehensive loss | (29.7) | (20.7) |
Retained earnings | 237.2 | 398.4 |
Total stockholders’ equity | 1,049.4 | 1,073.8 |
Total liabilities and stockholders’ equity | $ 1,753.8 | $ 1,624.3 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Allowance for doubtful accounts and customer credits | $ 6.8 | $ 5.3 |
Stockholders' equity: | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 134,685,554 | 140,945,171 |
Common stock, shares outstanding | 134,685,554 | 140,945,171 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Net revenue | $ 508.9 | $ 459.7 | $ 1,478.5 | $ 1,321.9 |
Costs and expenses: | ||||
Cost of revenue | 171.2 | 142.9 | 496.4 | 428.4 |
Research and development | 29.9 | 30.7 | 95.1 | 85.6 |
Sales and marketing | 61.8 | 60.6 | 185.2 | 178.4 |
General and administrative | 88.2 | 86.7 | 261.3 | 239.3 |
Depreciation and amortization | 101.3 | 98.3 | 295.9 | 276.7 |
Total costs and expenses | 452.4 | 419.2 | 1,333.9 | 1,208.4 |
Income from operations | 56.5 | 40.5 | 144.6 | 113.5 |
Other income (expense): | ||||
Interest expense | (2.8) | (0.5) | (5.1) | (1.5) |
Interest and other income (expense) | (1.1) | (2.1) | (1.7) | (1.7) |
Total other income (expense) | (3.9) | (2.6) | (6.8) | (3.2) |
Income before income taxes | 52.6 | 37.9 | 137.8 | 110.3 |
Income taxes | 16.1 | 12.2 | 43.7 | 36.7 |
Net income | 36.5 | 25.7 | 94.1 | 73.6 |
Other comprehensive income, net of tax | ||||
Foreign currency translation adjustments | (10.2) | (13.2) | (9) | (4.8) |
Other comprehensive income (loss) | (10.2) | (13.2) | (9) | (4.8) |
Comprehensive income | $ 26.3 | $ 12.5 | $ 85.1 | $ 68.8 |
Net income per share | ||||
Basic | $ 0.26 | $ 0.18 | $ 0.67 | $ 0.52 |
Diluted | $ 0.26 | $ 0.18 | $ 0.66 | $ 0.51 |
Weighted average number of shares outstanding | ||||
Basic | 139 | 143 | 140.9 | 142 |
Diluted | 140.6 | 144.9 | 143.3 | 144.3 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash Flows From Operating Activities | ||
Net income | $ 94.1 | $ 73.6 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 295.9 | 276.7 |
Deferred income taxes | (34.1) | (30.1) |
Share-based compensation expense | 60 | 49.8 |
Excess tax benefits from share-based compensation arrangements | (51.5) | (45.3) |
Other operating activities | 7.1 | 5.8 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (26.3) | (15.7) |
Prepaid expenses and other current assets | (25.1) | (17.2) |
Accounts payable, accrued expenses, and other current liabilities | 45.7 | 93.9 |
Deferred revenue | 9.5 | (5) |
Deferred rent | 0 | 6.3 |
Other non-current assets and liabilities | 4.3 | (1.2) |
Net cash provided by operating activities | 379.6 | 391.6 |
Cash Flows From Investing Activities | ||
Purchases of property and equipment | (331.9) | (323.1) |
All other investing activities | (4.6) | 1.9 |
Net cash used in investing activities | (336.5) | (321.2) |
Cash Flows From Financing Activities | ||
Proceeds from debt | 140 | 0 |
Repayments of debt | (25.1) | (1.8) |
Proceeds from finance lease obligations for build-to-suit leases | 2.5 | 0 |
Principal payments of capital and build-to-suit leases | (13.3) | (32.5) |
Payments for deferred acquisition obligations | (0.2) | (0.2) |
Receipt of Texas Enterprise Fund grant | 0 | 5.5 |
Repurchase of common stock | (250.1) | 0 |
Shares of common stock withheld for employee taxes | 0 | (13.6) |
Proceeds from employee stock plans | 29.2 | 18 |
Excess tax benefits from share-based compensation arrangements | 51.5 | 45.3 |
Net cash provided by (used in) financing activities | (65.5) | 20.7 |
Effect of exchange rate changes on cash and cash equivalents | (2.1) | (1.3) |
Increase (decrease) in cash and cash equivalents | (24.5) | 89.8 |
Cash and cash equivalents, beginning of period | 213.5 | 259.7 |
Cash and cash equivalents, end of period | 189 | 349.5 |
Supplemental Cash Flow Information | ||
Cash payments for interest, net of amount capitalized | 2.2 | 1.4 |
Cash payments for income taxes, net of refunds | 17 | 6.8 |
Non-Cash Purchases of Property and Equipment | ||
Non-cash purchases of property and equipment | 37.6 | 7.4 |
Additional finance lease obligations for build-to-suit leases and other | 48.6 | 70.8 |
Acquisition of property and equipment by capital leases | ||
Non-Cash Purchases of Property and Equipment | ||
Non-cash purchases of property and equipment | 0.4 | 0.9 |
Increase in property and equipment in accounts payable and accrued expenses | ||
Non-Cash Purchases of Property and Equipment | ||
Non-cash purchases of property and equipment | $ 37.2 | $ 6.5 |
Company Overview, Basis of Pres
Company Overview, Basis of Presentation, and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Company Overview, Basis of Presentation, and Summary of Significant Accounting Policies [Abstract] | |
Company Overview, Basis of Presentation, and Summary of Significant Accounting Policies | Company Overview, Basis of Presentation, and Summary of Significant Accounting Policies Nature of Operations As used in this report, the terms “Rackspace,” “Rackspace Hosting,” “we,” “our company,” “the company,” “us,” or “our” refer to Rackspace ® Hosting, Inc. and its subsidiaries. Rackspace Hosting, Inc., through its operating subsidiaries, is a provider of cloud computing services, managing web-based IT systems for small and medium-sized businesses as well as large enterprises. We focus on providing a service experience for our customers, which we call Fanatical Support ® . Our operations began in 1998 as a limited partnership, and Rackspace Hosting, Inc. was incorporated in Delaware in March 2000. Basis of Consolidation The accompanying consolidated financial statements include the accounts of Rackspace Hosting, Inc. and our wholly-owned subsidiaries, which include, among others, Rackspace US, Inc., our domestic operating entity, and Rackspace Limited, our United Kingdom operating entity. Intercompany transactions and balances have been eliminated in consolidation. Foreign currency translation adjustments arising from differences in exchange rates from period to period are included in the foreign currency translation adjustment account in accumulated other comprehensive income (loss). There were no income taxes allocated to foreign currency translation adjustments during the three or nine months ended September 30, 2014 or 2015 . Unaudited Interim Financial Information The accompanying consolidated financial statements as of September 30, 2015 , and for the three and nine months ended September 30, 2014 and 2015 , are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and Rule 10-01 of Regulation S-X. Accordingly, they do not include all financial information and disclosures required by GAAP for complete financial statements, and certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of December 31, 2014 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 2, 2015 (the " 2014 Annual Consolidated Financial Statements"). The unaudited interim consolidated financial statements have been prepared on the same basis as the 2014 Annual Consolidated Financial Statements and, in the opinion of management, reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of our financial position as of September 30, 2015 , our results of operations for the three and nine months ended September 30, 2014 and 2015 , and our cash flows for the nine months ended September 30, 2014 and 2015 . The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2015 , or for any other interim period, or for any other future year. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable and customer credits, property and equipment, fair values of intangible assets and goodwill, useful lives of intangible assets, fair value of share-based compensation, contingencies, and income taxes, among others. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from our estimates. Significant Accounting Policies and Estimates Our 2014 Annual Consolidated Financial Statements include an additional discussion of the significant accounting policies and estimates used in the preparation of our consolidated financial statements. There were no material changes to our significant accounting policies and estimates during the three or nine months ended September 30, 2015 ; however, we have updated our Revenue and Deferred Revenue policy description to reflect our existing accounting practices for multiple-element arrangements, as follows: Revenue and Deferred Revenue We provide cloud computing to customers, which is broadly defined as the delivery of computing, storage and applications over the Internet. Cloud computing is a service transaction for which revenue is recognized when persuasive evidence of an arrangement exists, usually either a signed, written contract or customer acknowledgment of online terms of service; services have been delivered to the customer; the amounts to be received for the services delivered are fixed or determinable; and collection of such amounts is reasonably assured. Customers primarily consume our principal service offerings in one of two ways: (i) via dedicated computing resources committed to a single customer or (ii) via multi-tenant pools of computing resources provided on demand over the Internet. We also offer customers the flexibility to select the best combination of the two in order to meet the requirements of their unique applications and provide the technology to operate and manage multiple cloud computing environments seamlessly. Each service offering is priced according to the terms of our committed resources and services. Contracts for dedicated computing resources are generally fixed term agreements with a 12 - 36 month term with a monthly recurring fee based on the computing resources reserved and provided to the customer, the complexity of the underlying infrastructure and the level of support we provide. Customers generally have the right to cancel their contracts by providing prior written notice to us of their intent to cancel the remainder of the contract term. In the event that a customer cancels their contract, they are not entitled to a refund for services already rendered. In certain instances we may charge a non-refundable installation fee. Beginning on the date the service is made available to customers, the monthly recurring fee is recognized monthly as services are provided and installation fees are recognized ratably over the estimated average life of a customer relationship. If a customer terminates its relationship with us before the expiration of the estimated average customer life, any unamortized installation fees are recognized as revenue at that time. Setup and other direct implementation activities performed at the inception of a customer contract are expensed as incurred. Contracts for services utilizing pooled resources on demand are typically initiated online and can be canceled at any time without penalty. Customers are billed according to usage for only the resources consumed, and revenue is recognized in the month in which the customer uses the services. Revenue recognition for multiple-element arrangements requires judgment to determine whether elements can be accounted for as separate units of accounting, and if so, the fair value for each of the elements using a hierarchy for allocating revenue to the elements: (i) vendor-specific objective evidence of fair value, (ii) third-party evidence, and (iii) best estimate of selling price. Revenue arrangements with multiple deliverables are divided into separate units of accounting when the delivered item(s) has value to the customer on a standalone basis, which is normally the situation for our services contracts. In this circumstance, revenue is recognized for each unit of accounting based on its relative estimated selling price. Estimated selling prices are management’s best estimates of the prices that we would charge our customers if we were to sell the standalone elements separately and include considerations of customer demand, prices charged by us and others for similar deliverables, and the cost of providing the service. When elements are delivered in different periods of time, revenue is recognized as each element is delivered. Revenue is reported net of customer credits and sales and use tax. Invoiced amounts and accrued unbilled usage is recorded in accounts receivable and either deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. Therefore, deferred revenue primarily consists of amounts that have been prepaid or deferred installation fees. As of September 30, 2015 , of the total $31.8 million in deferred revenue recorded on our balance sheet (the majority of which related to prepaid amounts), $21.9 million , $8.7 million and $1.2 million will be amortized to revenue in 2015, 2016 and 2017, respectively. Recent Accounting Pronouncements Not Yet Adopted In May 2014, the Financial Accounting Standards Board ("FASB") issued guidance to clarify principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the standard requires capitalization of incremental costs to obtain a contract and significantly expanded quantitative and qualitative disclosures. The standard is effective for annual reporting periods beginning after December 15, 2017, with early adoption permitted for annual periods beginning after December 15, 2016. Upon adoption, the new guidance will be applied retrospectively using one of two methods. One method is to apply the guidance retrospectively to each prior period presented with practical expedients available. The second method is to apply the guidance retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application. We are evaluating the impact on our consolidated financial statements of adopting this new accounting standard. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Net Income Per Share The following table sets forth the computation of basic and diluted net income per share: Three Months Ended September 30, Nine Months Ended September 30, (In millions, except per share data) 2014 2015 2014 2015 Basic net income per share: Net income $ 25.7 $ 36.5 $ 73.6 $ 94.1 Weighted average shares outstanding: Common stock 143.0 139.0 142.0 140.9 Number of shares used in per share computations 143.0 139.0 142.0 140.9 Net income per share $ 0.18 $ 0.26 $ 0.52 $ 0.67 Diluted net income per share: Net income $ 25.7 $ 36.5 $ 73.6 $ 94.1 Weighted average shares outstanding: Common stock 143.0 139.0 142.0 140.9 Stock options, awards and employee share purchase plans 1.9 1.6 2.3 2.4 Number of shares used in per share computations 144.9 140.6 144.3 143.3 Net income per share $ 0.18 $ 0.26 $ 0.51 $ 0.66 We excluded 5.8 million and 5.2 million potential common shares from the computation of dilutive net income per share for the three months ended September 30, 2014 and 2015 , respectively, and 5.6 million and 3.8 million potential shares for the nine months ended September 30, 2014 and 2015 , respectively, because the effect would have been anti-dilutive. |
Property and Equipment, net
Property and Equipment, net | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | Property and Equipment, net Property and equipment consisted of: (Dollar amounts in millions) Estimated Useful Lives December 31, September 30, Computers and equipment 3 - 5 years $ 1,495.2 $ 1,739.6 Computer software 1 - 5 years 318.9 362.0 Furniture and fixtures 7 years 56.7 60.6 Buildings and leasehold improvements 2 - 30 years 253.6 353.8 Land 27.9 28.4 Property and equipment, at cost 2,152.3 2,544.4 Less accumulated depreciation and amortization (1,249.5 ) (1,465.2 ) Work in process 154.9 82.1 Property and equipment, net $ 1,057.7 $ 1,161.3 At December 31, 2014 , the work in process balance consisted of build outs of $51.3 million for office facilities, $80.5 million for data centers, and $23.1 million for capitalized software and other projects. At September 30, 2015 , the work in process balance consisted of build outs of $14.0 million for office facilities, $50.2 million for data centers, and $17.9 million for capitalized software and other projects. During the first quarter of 2015, we placed into service and began depreciating $51.4 million of construction costs related to the completed portion of a data center in the U.K. In addition, during the third quarter of 2015 we placed into service and began depreciating $47.7 million of construction costs related to the completion of our new U.K. office. We are deemed the owner of both buildings for accounting purposes. See Note 4 . " Build-to-Suit Leases " for more information. For the three and nine months ended September 30, 2015 , we capitalized interest of $1.2 million and $5.9 million , respectively, related to finance lease obligations for build-to-suit leases. There was no interest capitalized during the three and nine months ended September 30, 2014 . |
Build-to-Suit Leases
Build-to-Suit Leases | 9 Months Ended |
Sep. 30, 2015 | |
Leases [Abstract] | |
Build-to-Suit Leases | Build-to-Suit Leases We have entered into multiple complex real estate development and build-to-suit lease arrangements with independent real estate developers to design, construct and lease certain real estate projects. While the independent developers legally own the real estate projects and must finance the overall construction, we agreed to fund certain structural improvements and/or retain obligations related to certain potential construction cost overruns. As a result of our involvement during the construction period, we are considered the owner of the construction project, for accounting purposes only. We have recorded construction costs for these projects as an asset and a corresponding long-term liability within "Property and equipment, net" and "Finance lease obligations for build-to-suit leases," respectively, on our consolidated balance sheets. When construction of a project is complete, we evaluate whether the build-to-suit lease arrangement qualifies for sales recognition under sale-leaseback accounting guidance. If the lease meets the criteria to qualify as a sale-leaseback, the asset and liability can be derecognized and the lease is accounted for as an operating lease with rent expense recognized over the lease term. If the sale-leaseback criteria are not met, the asset and liability remain on our consolidated balance sheets. The asset is then depreciated over the term of the lease and rental payments under the lease are recorded as a reduction of the liability and interest expense. During the first quarter of 2015, we changed our non-current liability account title for finance lease obligations for assets under construction to finance lease obligations for build-to-suit leases. This non-current liability account now includes all build-to-suit finance lease obligations, including those for assets under construction as well as projects that did not qualify as a sale-leaseback at the completion of construction. As a result, finance obligations of $7.4 million as of December 31, 2014 associated with build-to-suit construction projects that have failed sale leaseback have been reclassified from capital lease obligations to finance lease obligations for build-to-suit leases in the consolidated balance sheets to conform to the current period presentation. During the first quarter of 2015, construction of one of these real estate projects, a data center in the U.K., was partially completed. However, since the project is considered one unit of accounting, we will not perform a sale-leaseback analysis until the entire project is completed. As a result, we placed into service and began depreciating $51.4 million of construction costs related to the completed portion of the project as building and leasehold improvements within "Property and equipment, net" on our consolidated balance sheets. The lease on a portion of the project commenced during the first quarter of 2015. Rental payments are recorded as a reduction of the corresponding liability and as interest expense, and at the end of the lease term, we will derecognize the remaining asset and liability balances. During the third quarter of 2015, construction of an office building in the U.K was completed. We performed a sale-leaseback analysis, and, due to our continuing involvement in the project, we were precluded from derecognizing the asset and liability. As a result, we placed into service and began depreciating $47.7 million of construction costs as building and leasehold improvements within "Property and equipment, net" on our consolidated balance sheets. The assets will be depreciated throughout the lease term. Rental payments under the lease are recorded as a reduction of the liability and as interest expense, and at the end of the lease term, we will derecognize the remaining asset and liability balances. As of December 31, 2014 and September 30, 2015 we had $117.4 million and $165.4 million , respectively, of finance lease obligations for build-to-suit leases related to real estate projects either completed or under construction for which we are deemed the accounting owner. |
Cost Method Investments
Cost Method Investments | 9 Months Ended |
Sep. 30, 2015 | |
Investments, All Other Investments [Abstract] | |
Cost Method Investments | Cost Method Investments We have several direct investments accounted for under the cost method. The aggregate carrying amount of our cost method investments, which are recorded as Other non-current assets, as of December 31, 2014 and September 30, 2015 was $1.1 million and $11.6 million , respectively. We hav e determined that it is not practicable to estimate the fair value of these investments. As such, if we identify events or changes in circumstances that may have a significant adverse effect on the fair value of the investment, we will then estimate the fair value of the investment and determine if any decline in the fair value of the investment below its carrying value is other-than-temporary . No events or circumstances indicating a potential impairment were identified as of September 30, 2015 . |
Debt
Debt | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt | Debt We are party to a revolving credit facility that has a total commitment of $200 million . As of December 31, 2014 , we had outstanding borrowings of $25 million under this facility at an interest rate of 1.42% . These outstanding borrowings were fully repaid in January 2015. During the three months ended September 30, 2015 , we borrowed $140 million under the credit facility. The weighted average interest rate of these borrowings was 1.47% . Additionally there were insignificant letters of credit outstanding as of September 30, 2015 , and therefore, we had $60 million available for future borrowings. As of the same date, we were in compliance with all of the covenants under our facility . |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies We have contingent liabilities resulting from various litigation, claims and commitments. We record accruals for loss contingencies when losses are considered probable and can be reasonably estimated. The amount that will ultimately be paid related to these matters may differ from the recorded accruals, and the timing of such payments is uncertain. We are a party to various claims that certain of our products, services, and technologies infringe the intellectual property rights of others. Adverse results in these lawsuits may include awards of substantial monetary damages, costly royalty or licensing agreements, or orders preventing us from offering certain features, products, or services, and may also cause us to change our business practices and require development of non-infringing products or technologies, which could result in a loss of revenue for us and otherwise harm our business. We have disputed the allegations of wrongdoing in these proceedings and intend to vigorously defend ourselves in all such matters. We cannot predict the impact, if any, that any of the matters described above may have on our business, results of operations, financial position, or cash flows. Because of the inherent uncertainties of such matters, including the early stage and lack of specific damage claims in many of them, we cannot estimate the range of possible losses from them. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-Based Compensation We have granted equity awards to our employees and directors in the form of stock options and restricted stock. The exercise price of all stock options granted is not less than 100% of the fair market value of a share of common stock as of the date of grant. The stock options granted vest ratably over a four -year period. All stock options expire seven to ten years following the grant date. The restricted stock generally vests ratably over a four -year period. We also have made restricted stock grants to employees that cliff-vest over various terms from one to three years. Vesting of these grants are generally based on predetermined market and/or performance conditions. The composition of the equity awards outstanding as of December 31, 2014 and September 30, 2015 was as follows: (in millions) December 31, September 30, Restricted stock 4.3 4.4 Stock options 6.8 4.8 Total outstanding awards 11.1 9.2 We also have an Employee Stock Purchase Plan (the "ESPP"). Under the ESPP, eligible employees may purchase a limited number of shares of our common stock at the lesser of 85% of the market value on the enrollment date or 85% of the market value on the purchase date. The ESPP is made up of a series of offering periods. Each offering period has a maximum term of 24 months and is divided into semi-annual purchase intervals. Eligible employees may enroll at the beginning of any semi-annual purchase interval. Share-Based Compensation Expense Share-based compensation expense was recognized as follows: Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2014 2015 2014 2015 Cost of revenue $ 4.2 $ 4.2 $ 12.1 $ 12.3 Research and development 3.3 2.4 9.4 11.3 Sales and marketing 2.7 2.7 6.8 8.2 General and administrative 9.6 10.3 21.5 28.2 Pre-tax share-based compensation 19.8 19.6 49.8 60.0 Less: Income tax benefit (6.3 ) (5.9 ) (16.5 ) (19.0 ) Total share-based compensation expense, net of tax $ 13.5 $ 13.7 $ 33.3 $ 41.0 As of September 30, 2015 , there was $156.9 million of total unrecognized compensation cost related to restricted stock, stock options and the ESPP, which will be recognized using the straight-line method over a weighted average period of 2.4 years . |
Taxes
Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Taxes | Taxes We are subject to U.S. federal income tax and various state, local, and international income taxes in numerous jurisdictions. Our domestic and international tax liabilities are subject to the allocation of revenue and expenses in different jurisdictions and the timing of recognizing revenue and expenses. As such, our effective tax rate is impacted by the geographical distribution of income and mix of profits in the various jurisdictions. Additionally, the amount of income taxes paid is subject to our interpretation of applicable tax laws in the jurisdictions in which we file. We expect a taxable profit in the U.S. and U.K. for the full year 2015 before consideration of excess tax benefits, and therefore we anticipate utilizing benefits of tax deductions related to share-based compensation in 2015 . As a result, we have recognized an excess tax benefit in the U.S. and U.K. during the three and nine months ended September 30, 2015 . On July 27, 2015, in Altera Corp. v. Commissioner, the U.S. Tax Court issued an opinion related to the treatment of share-based compensation expense in an intercompany cost-sharing arrangement. A final decision has yet to be issued by the Tax Court. At this time, the U.S. Department of the Treasury has not withdrawn the requirement to include share-based compensation from its regulations and the Internal Revenue Service may appeal. We will continue to monitor developments related to the regulation and the potential impact of those developments on the consolidated financial statements. |
Share Repurchase Program
Share Repurchase Program | 9 Months Ended |
Sep. 30, 2015 | |
Share Repurchase Program [Abstract] | |
Share Repurchase Program | Share Repurchase Program On November 6, 2014, our board of directors authorized a share repurchase program. Under this program, shares may be repurchased from time to time through both open market and privately negotiated transactions. On November 12, 2014, we entered into an accelerated share repurchase ("ASR") agreement with a financial institution and paid $200 million to repurchase our common stock. The payment was accounted for as a reduction to stockholders' equity in our consolidated balance sheet in 2014. We received an initial delivery of 3.3 million shares of common stock in November 2014, and we received an additional 0.9 million shares of common stock in May 2015 as final settlement of the ASR. All shares received were subsequently retired. On August 5, 2015, our board of directors increased the authorization under the existing share repurchase program to a total of up to $1 billion , in addition to the $200 million already purchased under the ASR. The program will remain in effect for a period not to exceed 24 months from authorization. During the three months ended September 30, 2015 , we repurchased $250 million , or 8.2 million shares, of our common stock on the open market; these shares were subsequently retired. Therefore, as of September 30, 2015 , approximately $750 million remained available for additional purchases under the current program. |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Basis of Consolidation | The accompanying consolidated financial statements include the accounts of Rackspace Hosting, Inc. and our wholly-owned subsidiaries, which include, among others, Rackspace US, Inc., our domestic operating entity, and Rackspace Limited, our United Kingdom operating entity. Intercompany transactions and balances have been eliminated in consolidation. |
Foreign Currency Translation | Foreign currency translation adjustments arising from differences in exchange rates from period to period are included in the foreign currency translation adjustment account in accumulated other comprehensive income (loss). |
Basis of Accounting | The accompanying consolidated financial statements as of September 30, 2015 , and for the three and nine months ended September 30, 2014 and 2015 , are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and Rule 10-01 of Regulation S-X. Accordingly, they do not include all financial information and disclosures required by GAAP for complete financial statements, and certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of December 31, 2014 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 2, 2015 (the " 2014 Annual Consolidated Financial Statements"). The unaudited interim consolidated financial statements have been prepared on the same basis as the 2014 Annual Consolidated Financial Statements and, in the opinion of management, reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of our financial position as of September 30, 2015 , our results of operations for the three and nine months ended September 30, 2014 and 2015 , and our cash flows for the nine months ended September 30, 2014 and 2015 . |
Use of Estimates | The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to accounts receivable and customer credits, property and equipment, fair values of intangible assets and goodwill, useful lives of intangible assets, fair value of share-based compensation, contingencies, and income taxes, among others. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from our estimates. |
Revenue and Deferred Revenue | We provide cloud computing to customers, which is broadly defined as the delivery of computing, storage and applications over the Internet. Cloud computing is a service transaction for which revenue is recognized when persuasive evidence of an arrangement exists, usually either a signed, written contract or customer acknowledgment of online terms of service; services have been delivered to the customer; the amounts to be received for the services delivered are fixed or determinable; and collection of such amounts is reasonably assured. Customers primarily consume our principal service offerings in one of two ways: (i) via dedicated computing resources committed to a single customer or (ii) via multi-tenant pools of computing resources provided on demand over the Internet. We also offer customers the flexibility to select the best combination of the two in order to meet the requirements of their unique applications and provide the technology to operate and manage multiple cloud computing environments seamlessly. Each service offering is priced according to the terms of our committed resources and services. Contracts for dedicated computing resources are generally fixed term agreements with a 12 - 36 month term with a monthly recurring fee based on the computing resources reserved and provided to the customer, the complexity of the underlying infrastructure and the level of support we provide. Customers generally have the right to cancel their contracts by providing prior written notice to us of their intent to cancel the remainder of the contract term. In the event that a customer cancels their contract, they are not entitled to a refund for services already rendered. In certain instances we may charge a non-refundable installation fee. Beginning on the date the service is made available to customers, the monthly recurring fee is recognized monthly as services are provided and installation fees are recognized ratably over the estimated average life of a customer relationship. If a customer terminates its relationship with us before the expiration of the estimated average customer life, any unamortized installation fees are recognized as revenue at that time. Setup and other direct implementation activities performed at the inception of a customer contract are expensed as incurred. Contracts for services utilizing pooled resources on demand are typically initiated online and can be canceled at any time without penalty. Customers are billed according to usage for only the resources consumed, and revenue is recognized in the month in which the customer uses the services. Revenue recognition for multiple-element arrangements requires judgment to determine whether elements can be accounted for as separate units of accounting, and if so, the fair value for each of the elements using a hierarchy for allocating revenue to the elements: (i) vendor-specific objective evidence of fair value, (ii) third-party evidence, and (iii) best estimate of selling price. Revenue arrangements with multiple deliverables are divided into separate units of accounting when the delivered item(s) has value to the customer on a standalone basis, which is normally the situation for our services contracts. In this circumstance, revenue is recognized for each unit of accounting based on its relative estimated selling price. Estimated selling prices are management’s best estimates of the prices that we would charge our customers if we were to sell the standalone elements separately and include considerations of customer demand, prices charged by us and others for similar deliverables, and the cost of providing the service. When elements are delivered in different periods of time, revenue is recognized as each element is delivered. Revenue is reported net of customer credits and sales and use tax. Invoiced amounts and accrued unbilled usage is recorded in accounts receivable and either deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. Therefore, deferred revenue primarily consists of amounts that have been prepaid or deferred installation fees. |
Recent Accounting Pronouncements Not Yet Adopted | In May 2014, the Financial Accounting Standards Board ("FASB") issued guidance to clarify principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the standard requires capitalization of incremental costs to obtain a contract and significantly expanded quantitative and qualitative disclosures. The standard is effective for annual reporting periods beginning after December 15, 2017, with early adoption permitted for annual periods beginning after December 15, 2016. Upon adoption, the new guidance will be applied retrospectively using one of two methods. One method is to apply the guidance retrospectively to each prior period presented with practical expedients available. The second method is to apply the guidance retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application. We are evaluating the impact on our consolidated financial statements of adopting this new accounting standard. |
Real Estate Held for Development and Sale | We have entered into multiple complex real estate development and build-to-suit lease arrangements with independent real estate developers to design, construct and lease certain real estate projects. While the independent developers legally own the real estate projects and must finance the overall construction, we agreed to fund certain structural improvements and/or retain obligations related to certain potential construction cost overruns. As a result of our involvement during the construction period, we are considered the owner of the construction project, for accounting purposes only. We have recorded construction costs for these projects as an asset and a corresponding long-term liability within "Property and equipment, net" and "Finance lease obligations for build-to-suit leases," respectively, on our consolidated balance sheets. When construction of a project is complete, we evaluate whether the build-to-suit lease arrangement qualifies for sales recognition under sale-leaseback accounting guidance. If the lease meets the criteria to qualify as a sale-leaseback, the asset and liability can be derecognized and the lease is accounted for as an operating lease with rent expense recognized over the lease term. If the sale-leaseback criteria are not met, the asset and liability remain on our consolidated balance sheets. The asset is then depreciated over the term of the lease and rental payments under the lease are recorded as a reduction of the liability and interest expense. |
Cost Method Investments | We hav e determined that it is not practicable to estimate the fair value of these investments. As such, if we identify events or changes in circumstances that may have a significant adverse effect on the fair value of the investment, we will then estimate the fair value of the investment and determine if any decline in the fair value of the investment below its carrying value is other-than-temporary . |
Contingencies | We have contingent liabilities resulting from various litigation, claims and commitments. We record accruals for loss contingencies when losses are considered probable and can be reasonably estimated. The amount that will ultimately be paid related to these matters may differ from the recorded accruals, and the timing of such payments is uncertain. |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Net Income Per Share | The following table sets forth the computation of basic and diluted net income per share: Three Months Ended September 30, Nine Months Ended September 30, (In millions, except per share data) 2014 2015 2014 2015 Basic net income per share: Net income $ 25.7 $ 36.5 $ 73.6 $ 94.1 Weighted average shares outstanding: Common stock 143.0 139.0 142.0 140.9 Number of shares used in per share computations 143.0 139.0 142.0 140.9 Net income per share $ 0.18 $ 0.26 $ 0.52 $ 0.67 Diluted net income per share: Net income $ 25.7 $ 36.5 $ 73.6 $ 94.1 Weighted average shares outstanding: Common stock 143.0 139.0 142.0 140.9 Stock options, awards and employee share purchase plans 1.9 1.6 2.3 2.4 Number of shares used in per share computations 144.9 140.6 144.3 143.3 Net income per share $ 0.18 $ 0.26 $ 0.51 $ 0.66 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and equipment consisted of: (Dollar amounts in millions) Estimated Useful Lives December 31, September 30, Computers and equipment 3 - 5 years $ 1,495.2 $ 1,739.6 Computer software 1 - 5 years 318.9 362.0 Furniture and fixtures 7 years 56.7 60.6 Buildings and leasehold improvements 2 - 30 years 253.6 353.8 Land 27.9 28.4 Property and equipment, at cost 2,152.3 2,544.4 Less accumulated depreciation and amortization (1,249.5 ) (1,465.2 ) Work in process 154.9 82.1 Property and equipment, net $ 1,057.7 $ 1,161.3 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Composition of equity awards outstanding | The composition of the equity awards outstanding as of December 31, 2014 and September 30, 2015 was as follows: (in millions) December 31, September 30, Restricted stock 4.3 4.4 Stock options 6.8 4.8 Total outstanding awards 11.1 9.2 |
Allocation of share-based compensation expense to income statement line items | Share-based compensation expense was recognized as follows: Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2014 2015 2014 2015 Cost of revenue $ 4.2 $ 4.2 $ 12.1 $ 12.3 Research and development 3.3 2.4 9.4 11.3 Sales and marketing 2.7 2.7 6.8 8.2 General and administrative 9.6 10.3 21.5 28.2 Pre-tax share-based compensation 19.8 19.6 49.8 60.0 Less: Income tax benefit (6.3 ) (5.9 ) (16.5 ) (19.0 ) Total share-based compensation expense, net of tax $ 13.5 $ 13.7 $ 33.3 $ 41.0 |
Company Overview, Basis of Pr20
Company Overview, Basis of Presentation, and Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Foreign Currency | ||||
Income taxes allocated to foreign currency translation adjustments | $ 0 | $ 0 | $ 0 | $ 0 |
Revenue and Deferred Revenue | ||||
Deferred revenue | 31,800,000 | 31,800,000 | ||
Deferred revenue to be amortized to revenue in 2015 | ||||
Revenue and Deferred Revenue | ||||
Deferred revenue | 21,900,000 | 21,900,000 | ||
Deferred revenue to be amortized to revenue in 2016 | ||||
Revenue and Deferred Revenue | ||||
Deferred revenue | 8,700,000 | 8,700,000 | ||
Deferred revenue to be amortized to revenue in 2017 | ||||
Revenue and Deferred Revenue | ||||
Deferred revenue | $ 1,200,000 | $ 1,200,000 | ||
Minimum | ||||
Revenue and Deferred Revenue | ||||
Term of customer contracts for dedicated computing resources | 12 months | |||
Maximum | ||||
Revenue and Deferred Revenue | ||||
Term of customer contracts for dedicated computing resources | 36 months |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Basic net income per share: | ||||
Net income | $ 36.5 | $ 25.7 | $ 94.1 | $ 73.6 |
Weighted average shares outstanding: | ||||
Common stock | 139 | 143 | 140.9 | 142 |
Number of shares used in per share computations | 139 | 143 | 140.9 | 142 |
Net income per share - basic | $ 0.26 | $ 0.18 | $ 0.67 | $ 0.52 |
Diluted net income per share: | ||||
Net income | $ 36.5 | $ 25.7 | $ 94.1 | $ 73.6 |
Weighted average shares outstanding: | ||||
Common stock | 139 | 143 | 140.9 | 142 |
Stock options, awards and employee share purchase plans | 1.6 | 1.9 | 2.4 | 2.3 |
Number of shares used in per share computations | 140.6 | 144.9 | 143.3 | 144.3 |
Net income per share - diluted | $ 0.26 | $ 0.18 | $ 0.66 | $ 0.51 |
Number of potential common shares excluded from the computation of dilutive net income per share because the effect would have been anti-dilutive | 5.2 | 5.8 | 3.8 | 5.6 |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Property and equipment, net | ||||||
Property and equipment, at cost | $ 2,544,400,000 | $ 2,544,400,000 | $ 2,152,300,000 | |||
Less accumulated depreciation and amortization | (1,465,200,000) | (1,465,200,000) | (1,249,500,000) | |||
Work in process | 82,100,000 | 82,100,000 | 154,900,000 | |||
Property and equipment, net | 1,161,300,000 | 1,161,300,000 | 1,057,700,000 | |||
Interest capitalized | 1,200,000 | $ 0 | 5,900,000 | $ 0 | ||
Computers and equipment | ||||||
Property and equipment, net | ||||||
Property and equipment, at cost | 1,739,600,000 | $ 1,739,600,000 | 1,495,200,000 | |||
Computers and equipment | Minimum | ||||||
Property and equipment, net | ||||||
Estimated Useful Lives | 3 years | |||||
Computers and equipment | Maximum | ||||||
Property and equipment, net | ||||||
Estimated Useful Lives | 5 years | |||||
Computer software | ||||||
Property and equipment, net | ||||||
Property and equipment, at cost | 362,000,000 | $ 362,000,000 | 318,900,000 | |||
Computer software | Minimum | ||||||
Property and equipment, net | ||||||
Estimated Useful Lives | 1 year | |||||
Computer software | Maximum | ||||||
Property and equipment, net | ||||||
Estimated Useful Lives | 5 years | |||||
Furniture and fixtures | ||||||
Property and equipment, net | ||||||
Estimated Useful Lives | 7 years | |||||
Property and equipment, at cost | 60,600,000 | $ 60,600,000 | 56,700,000 | |||
Buildings and leasehold improvements | ||||||
Property and equipment, net | ||||||
Property and equipment, at cost | 353,800,000 | $ 353,800,000 | 253,600,000 | |||
Buildings and leasehold improvements | Data center in the U.K. | ||||||
Property and equipment, net | ||||||
Construction costs placed into service | $ 51,400,000 | |||||
Buildings and leasehold improvements | New U.K. office | ||||||
Property and equipment, net | ||||||
Construction costs placed into service | 47,700,000 | |||||
Buildings and leasehold improvements | Minimum | ||||||
Property and equipment, net | ||||||
Estimated Useful Lives | 2 years | |||||
Buildings and leasehold improvements | Maximum | ||||||
Property and equipment, net | ||||||
Estimated Useful Lives | 30 years | |||||
Land | ||||||
Property and equipment, net | ||||||
Property and equipment, at cost | 28,400,000 | $ 28,400,000 | 27,900,000 | |||
Office facilities | ||||||
Property and equipment, net | ||||||
Work in process | 14,000,000 | 14,000,000 | 51,300,000 | |||
Data centers | ||||||
Property and equipment, net | ||||||
Work in process | 50,200,000 | 50,200,000 | 80,500,000 | |||
Capitalized software and other projects | ||||||
Property and equipment, net | ||||||
Work in process | $ 17,900,000 | $ 17,900,000 | $ 23,100,000 |
Build-to-Suit Leases (Details)
Build-to-Suit Leases (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Sep. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | |
Build-to-Suit Leases | |||
Finance lease obligations for build-to-suit leases | $ 165.4 | $ 117.4 | |
Build-to-suit construction projects that have failed sale leaseback | |||
Build-to-Suit Leases | |||
Finance lease obligations for build-to-suit leases | $ 7.4 | ||
Buildings and leasehold improvements | Data center in the U.K. | |||
Build-to-Suit Leases | |||
Construction costs placed into service | $ 51.4 | ||
Buildings and leasehold improvements | Office building in the U.K. | |||
Build-to-Suit Leases | |||
Construction costs placed into service | $ 47.7 |
Cost Method Investments (Detail
Cost Method Investments (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Investments, All Other Investments [Abstract] | ||
Aggregate carrying amount of cost method investments, not evaluated for impairment | $ 11.6 | $ 1.1 |
Debt (Details)
Debt (Details) - Revolving credit facility - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Jan. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | |
Line of Credit Facility | ||||
Total commitment | $ 200 | $ 200 | ||
Outstanding borrowings | $ 25 | |||
Interest rate at period end | 1.47% | 1.47% | 1.42% | |
Repayment of outstanding borrowings | $ 25 | |||
Proceeds from credit facility | $ 140 | |||
Amount available for future borrowings | $ 60 | $ 60 | ||
Status of compliance with covenants under facility | in compliance with all of the covenants under our facility |
Share-Based Compensation (Detai
Share-Based Compensation (Details 1) - General - shares shares in Millions | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Share-Based Compensation | ||
Restricted stock | 4.4 | 4.3 |
Stock options | 4.8 | 6.8 |
Total outstanding awards | 9.2 | 11.1 |
Stock Options | Minimum | ||
Share-Based Compensation | ||
Award expiration period | 7 years | |
Stock Options | Maximum | ||
Share-Based Compensation | ||
Award expiration period | 10 years | |
Stock Options | Awards that vest ratably over a service period | ||
Share-Based Compensation | ||
Award vesting period | 4 years | |
Stock Options | Grant Date | Minimum | ||
Share-Based Compensation | ||
Purchase price of common stock, as a percentage of market value | 100.00% | |
Restricted Stock | Awards that vest ratably over a service period | ||
Share-Based Compensation | ||
Award vesting period | 4 years | |
Restricted Stock | Awards that cliff-vest based on predetermined market and/or performance conditions | Minimum | ||
Share-Based Compensation | ||
Award vesting period | 1 year | |
Restricted Stock | Awards that cliff-vest based on predetermined market and/or performance conditions | Maximum | ||
Share-Based Compensation | ||
Award vesting period | 3 years | |
Employee Stock Purchase Plan | Maximum | ||
Share-Based Compensation | ||
Expected term of award | 24 months | |
Employee Stock Purchase Plan | Enrollment Date | Maximum | ||
Share-Based Compensation | ||
Purchase price of common stock, as a percentage of market value | 85.00% | |
Employee Stock Purchase Plan | Purchase Date | Maximum | ||
Share-Based Compensation | ||
Purchase price of common stock, as a percentage of market value | 85.00% |
Share-Based Compensation (Det27
Share-Based Compensation (Details 2) - Share-Based Compensation Expense - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Allocation of share-based compensation expense to income statement line items | ||||
Pre-tax share-based compensation | $ 19.6 | $ 19.8 | $ 60 | $ 49.8 |
Less: Income tax benefit | (5.9) | (6.3) | (19) | (16.5) |
Total share-based compensation expense, net of tax | 13.7 | 13.5 | 41 | 33.3 |
Share-Based Compensation Expense, Aggregate Disclosures | ||||
Total unrecognized compensation cost related to restricted stock, stock options and the ESPP ($) | 156.9 | $ 156.9 | ||
Weighted-average period over which the unrecognized compensation cost related to restricted stock, stock options and the ESPP will be recognized | 2 years 4 months 24 days | |||
Cost of revenue | ||||
Allocation of share-based compensation expense to income statement line items | ||||
Pre-tax share-based compensation | 4.2 | 4.2 | $ 12.3 | 12.1 |
Research and development | ||||
Allocation of share-based compensation expense to income statement line items | ||||
Pre-tax share-based compensation | 2.4 | 3.3 | 11.3 | 9.4 |
Sales and marketing | ||||
Allocation of share-based compensation expense to income statement line items | ||||
Pre-tax share-based compensation | 2.7 | 2.7 | 8.2 | 6.8 |
General and administrative | ||||
Allocation of share-based compensation expense to income statement line items | ||||
Pre-tax share-based compensation | $ 10.3 | $ 9.6 | $ 28.2 | $ 21.5 |
Share Repurchase Program (Detai
Share Repurchase Program (Details) - Common Stock - USD ($) shares in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
May. 31, 2015 | Nov. 30, 2014 | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | Aug. 05, 2015 | |
Share Repurchase Program | ||||||
Value of shares repurchased and subsequently retired | $ 250 | |||||
Number of shares repurchased and subsequently retired | 8.2 | |||||
Authorized repurchase amount remaining under the share repurchase program | $ 750 | $ 750 | $ 1,000 | |||
Amount of common stock authorized under share repurchase program that has been utilized | $ 200 | |||||
Maximum | ||||||
Share Repurchase Program | ||||||
Share repurchase period | 24 months | |||||
ASR agreement entered into on November 12, 2014 | ||||||
Share Repurchase Program | ||||||
Value of shares repurchased and subsequently retired | $ 200 | |||||
Number of shares repurchased and subsequently retired | 0.9 | 3.3 |