Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Jan. 31, 2018 | Jun. 30, 2017 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | QUALYS, INC. | ||
Entity Central Index Key | 1,107,843 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 38,628,442 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 1,293 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 86,591 | $ 86,737 |
Short-term investments | 201,823 | 157,119 |
Accounts receivable, net of allowance of $702 and $769 at December 31, 2016 and 2015, respectively | 64,412 | 47,024 |
Prepaid expenses and other current assets | 16,524 | 9,808 |
Total current assets | 369,350 | 300,688 |
Long-term investments | 67,224 | 45,725 |
Property and equipment, net | 58,557 | 39,401 |
Deferred tax assets, net | 25,066 | 16,590 |
Intangible assets, net | 12,401 | 987 |
Goodwill | 1,549 | 317 |
Restricted cash | 1,200 | 1,200 |
Other noncurrent assets | 2,178 | 2,096 |
Total assets | 537,525 | 407,004 |
Current liabilities: | ||
Accounts payable | 1,144 | 2,051 |
Accrued liabilities | 21,444 | 13,317 |
Deferred revenues, current | 143,186 | 114,964 |
Total current liabilities | 165,774 | 130,332 |
Deferred revenues, noncurrent | 17,136 | 15,528 |
Other noncurrent liabilities | 11,071 | 2,731 |
Total liabilities | 193,981 | 148,591 |
Commitments and contingencies (Note 6) | ||
Stockholders’ equity: | ||
Preferred stock: $0.001 par value; 20,000,000 shares authorized, no shares issued and outstanding at December 31, 2016 and 2015 | 0 | 0 |
Common stock, $0.001 par value; 1,000,000,000 shares authorized, 35,841,001 and 34,414,631 shares issued and outstanding at December 31, 2016 and 2015, respectively | 39 | 36 |
Additional paid-in capital | 304,155 | 266,794 |
Accumulated other comprehensive loss | (574) | (156) |
Accumulated deficit | 39,924 | (8,261) |
Total stockholders’ equity | 343,544 | 258,413 |
Total liabilities and stockholders’ equity | $ 537,525 | $ 407,004 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Allowance for Doubtful Accounts Receivable | $ 816 | $ 702 |
Preferred Stock, Par Value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 20,000,000 | 20,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share (in dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 1,000,000,000 | 1,000,000,000 |
Common Stock, Shares, Issued | 38,598,117 | 35,841,001 |
Common Stock, Shares, Outstanding | 38,598,117 | 35,841,001 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues | |||
Revenues | $ 230,828 | $ 197,925 | $ 164,284 |
Cost of revenues | 51,580 | 43,128 | 34,327 |
Gross profit | 179,248 | 154,797 | 129,957 |
Operating expenses: | |||
Research and development | 42,816 | 36,591 | 30,438 |
Sales and marketing | 63,855 | 58,985 | 50,397 |
General and administrative | 35,334 | 29,114 | 24,316 |
Total operating expenses | 142,005 | 124,690 | 105,151 |
Income from operations | 37,243 | 30,107 | 24,806 |
Other income (expense), net: | |||
Interest expense | (3) | (26) | (6) |
Interest income | 2,674 | 1,320 | 570 |
Other expense, net | (536) | (972) | (850) |
Total other income (expense), net | 2,135 | 322 | (286) |
Income before income taxes | 39,378 | 30,429 | 24,520 |
Provision for (benefit from) income taxes | (1,062) | 11,205 | 8,655 |
Net income | $ 40,440 | $ 19,224 | $ 15,865 |
Net income per share: | |||
Basic (usd per share) | $ 1.08 | $ 0.55 | $ 0.47 |
Diluted (usd per share) | $ 1.01 | $ 0.50 | $ 0.42 |
Weighted average shares used in computing net income per share: | |||
Basic (in shares) | 37,443 | 35,247 | 34,050 |
Diluted (in shares) | 40,071 | 38,369 | 38,184 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 40,440 | $ 19,224 | $ 15,865 |
Change in net unrealized loss on investments, net of tax | (462) | (57) | (202) |
Less: reclassification adjustment for net realized gain (loss) included in net income, net of tax | 44 | 112 | (19) |
Net change | 418 | (55) | 221 |
Comprehensive income | $ 40,022 | $ 19,279 | $ 15,644 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net income | $ 40,440 | $ 19,224 | $ 15,865 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization expense | 20,636 | 16,994 | 14,360 |
Bad debt expense | 657 | 199 | 851 |
Loss on disposal of property and equipment | 161 | 55 | 5 |
Stock-based compensation | 26,961 | 20,149 | 17,494 |
Amortization of premiums and accretion of discounts on investments | 1,324 | 1,000 | 594 |
Excess tax benefits from stock-based compensation | 7,696 | (8,700) | (487) |
Impairment of intangible assets | 0 | 0 | 255 |
Deferred income taxes | (10,414) | (440) | 6,564 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (17,966) | (4,898) | (10,183) |
Prepaid expenses and other assets | (53) | (2,107) | (1,011) |
Restricted cash | 0 | (1,200) | 0 |
Accounts payable | (454) | (1,220) | (3,293) |
Accrued liabilities | 1,485 | 9,696 | 3,339 |
Deferred revenues | 29,830 | 17,903 | 21,378 |
Other noncurrent liabilities | 7,343 | 1,455 | 229 |
Net cash provided by operating activities | 107,646 | 68,110 | 65,960 |
Cash flows from investing activities: | |||
Purchases of investments | (299,891) | (222,953) | (146,707) |
Sales and maturities of investments | 231,996 | 149,708 | 105,509 |
Purchases of property and equipment | (37,818) | (23,245) | (20,051) |
Payments to Acquire Businesses, Gross | (12,482) | 0 | 0 |
Capitalized software development costs | 0 | 0 | (99) |
Net cash used in investing activities | (118,195) | (96,490) | (61,348) |
Cash flows from financing activities: | |||
Proceeds from exercise of stock options | 31,327 | 15,157 | 10,095 |
Excess tax benefits from stock-based compensation | 0 | 8,700 | 487 |
Payments for taxes related to net share settlement of equity awards | (20,924) | (438) | 0 |
Net cash provided by financing activities | 10,403 | 23,419 | 10,582 |
Net (decrease) increase in cash and cash equivalents | (146) | (4,961) | 15,194 |
Cash and cash equivalents at beginning of period | 86,737 | 91,698 | 76,504 |
Cash and cash equivalents at end of period | 86,591 | 86,737 | 91,698 |
Supplemental disclosures of cash flow information | |||
Cash paid for interest expense | 3 | 27 | 6 |
Cash paid for income taxes, net of refunds | 1,584 | 856 | 995 |
Non-cash investing and financing activities | |||
Business acquisitions recorded in Intangible Assets and Accrued liabilities | 1,000 | 0 | 0 |
Purchases of property and equipment recorded in accounts payable and accrued liabilities | 2,765 | 1,438 | 0 |
Stock-based compensation | $ 0 | $ 0 | $ 19 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit |
Balance at Dec. 31, 2014 | $ 151,827 | $ 34 | $ 195,133 | $ 10 | $ (43,350) |
Balance (in shares) at Dec. 31, 2014 | 33,594,285 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 15,865 | 15,865 | |||
Change in unrealized loss on investments | (221) | (221) | |||
Issuance of common stock upon exercise of stock options | $ 10,095 | $ 0 | 10,095 | ||
Issuance of common stock upon exercise of stock options (shares) | 807,846 | 807,846 | |||
Issuance of common stock upon vesting of restricted stock units | $ 0 | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 12,500 | ||||
Vesting of early exercised common stock options | 19 | 19 | |||
Excess tax benefits from stock-based compensation | 487 | 487 | |||
Stock-based compensation | 17,494 | 17,494 | |||
Balance at Dec. 31, 2015 | 195,566 | $ 34 | 223,228 | (211) | (27,485) |
Balance (in shares) at Dec. 31, 2015 | 34,414,631 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 19,224 | 19,224 | |||
Change in unrealized loss on investments | 55 | 55 | 0 | ||
Issuance of common stock upon exercise of stock options | $ 15,157 | $ 2 | 15,155 | 0 | 0 |
Issuance of common stock upon exercise of stock options (shares) | 1,399,157 | 1,399,157 | |||
Issuance of common stock upon vesting of restricted stock units | $ 0 | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 25,213 | ||||
Vesting of early exercised common stock options | 0 | ||||
Excess tax benefits from stock-based compensation | 8,700 | 8,700 | |||
Issuance of common stock in exchange for services | 26 | 26 | |||
Issuance of common stock in exchange for services (shares) | 2,000 | ||||
Taxes from release of the restricted share units | (438) | (438) | |||
Stock-based compensation | 20,123 | 20,123 | |||
Balance at Dec. 31, 2016 | 258,413 | $ 36 | 266,794 | (156) | (8,261) |
Balance (in shares) at Dec. 31, 2016 | 35,841,001 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 40,440 | 40,440 | |||
Change in unrealized loss on investments | (418) | (418) | |||
Issuance of common stock upon exercise of stock options | $ 31,327 | $ 3 | 31,324 | 0 | 0 |
Issuance of common stock upon exercise of stock options (shares) | 2,997,095 | 2,997,095 | |||
Issuance of common stock upon vesting of restricted stock units | $ 0 | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 217,111 | ||||
Vesting of early exercised common stock options | 0 | ||||
Taxes from release of the restricted share units | (20,924) | (20,924) | |||
Taxes related to net share settlement of equity awards, shares | (457,090) | ||||
Stock-based compensation | 26,961 | 26,961 | |||
Balance at Dec. 31, 2017 | 343,544 | $ 39 | $ 304,155 | $ (574) | 39,924 |
Balance (in shares) at Dec. 31, 2017 | 38,598,117 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Cumulative effect of a change in accounting principle related to stock-based compensation | Accounting Standards Update 2016-09 | $ 7,745 | $ 7,745 |
The Company and Summary of Sign
The Company and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
The Company and Summary of Significant Accounting Policies | NOTE 1. The Company and Summary of Significant Accounting Policies Description of Business Qualys, Inc. (the “Company”, "we", "us", "our") was incorporated in the state of Delaware on December 30, 1999. The Company is headquartered in Foster City, California and has majority-owned subsidiaries throughout the world. The Company is a pioneer and leading provider of cloud-based security and compliance solutions that enable organizations to identify security risks to their IT infrastructures, help protect their IT systems and applications from ever-evolving cyber-attacks and achieve compliance with internal policies and external regulations. The Company’s cloud solutions address the growing security and compliance complexities and risks that are amplified by the dissolving boundaries between internal and external IT infrastructures and web environments, the rapid adoption of cloud computing and the proliferation of geographically dispersed IT assets. Organizations can use the Company’s integrated suite of solutions delivered on its Qualys cloud platform to cost-effectively obtain a unified view of their security and compliance posture across globally-distributed IT infrastructures. Basis of Presentation The accompanying consolidated financial statements and footnotes have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) as well as the instructions to Form 10-K and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). In the opinion of management, the accompanying consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s consolidated financial position, results of operations and cash flows for the periods presented. The accompanying consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated upon consolidation. Reclassification The Company reclassified certain information technology expenses across the functions that benefit from their support. In 2016, the Company reclassified $3.0 million out of general and administrative expenses. Of this amount the Company reclassified $0.7 million to cost of revenues, $1.3 million to research and development and $1.0 million to sales and marketing. In 2015, the Company reclassified $2.3 million out of general and administrative expenses. Of this amount the Company reclassified $0.5 million to cost of revenues, $1.0 million to research and development and $0.8 million to sales and marketing. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the consolidated financial statements and the reported results of operations during the reporting period. The Company’s management regularly assesses these estimates, which primarily affect revenue recognition, the valuation of accounts receivable, goodwill and intangible assets, stock-based compensation and the provision for income taxes. Actual results could differ from those estimates and such differences may be material to the accompanying consolidated financial statements. Concentration of Credit Risk The Company invests its cash and cash equivalents with major financial institutions. Cash balances with any one institution at times may be in excess of federally insured limits. Cash equivalents are invested in high-quality investment grade financial instruments and are diversified. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk. Credit risk with respect to accounts receivable is dispersed due to the large number of customers. Collateral is not required for accounts receivable. The Company maintains an allowance for potential credit losses based upon the expected collectability of accounts receivable. The Company writes off its receivables once collection efforts are unsuccessful. As of December 31, 2017 and 2016 , no customer or channel partner accounted for more than 10% of the Company's revenues and accounts receivable balance. Cash, Cash Equivalents, Short-Term and Long-Term Investments Cash and cash equivalents include cash held in banks, highly liquid money market funds, commercial paper, and fixed-income U.S. government agency securities, all with original maturities of three months or less when acquired. The Company’s investments consist of fixed-income U.S. government agency securities, corporate bonds, asset-backed securities and commercial paper. Management determines the appropriate classification of the Company's investments at the time of purchase and reevaluates such designation at each balance sheet date. The Company classifies its investments as either short-term or long-term based on each instrument's underlying contractual maturity date. Cash equivalents are stated at cost, which approximates fair market value. Short-term and long-term investments are classified as available-for-sale and are carried at fair value. Unrealized gains and losses in fair value are reported in other comprehensive income (loss). When the available-for-sale securities are sold, cost is based on the specific identification method, and the realized gains and losses are included in other income (expense) in the consolidated statements of operations. Short-term and long-term investments are reviewed quarterly for impairment that is deemed to be other-than-temporary. An investment is considered other-than-temporarily impaired when its fair value is below its amortized cost and (1) there is an intent to sell the security, (2) it is “more likely than not” that the security will be sold before recovery of its amortized cost basis or (3) the present value of expected cash flows from the investment is not expected to recover the entire amortized cost basis. Declines in value that are considered to be other-than-temporary and adjustments to amortized cost for the amortization of premiums and the accretion of discounts are recorded in other income (expense). Interest and dividends are recorded in interest income as earned. Accounts Receivable Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts represents the Company’s best estimate of the amount of probable credit losses and is determined based on a review of existing accounts receivable by aging category to identify significant customers or invoices with collectability issues. For those invoices not specifically reviewed, the reserve is calculated based on the age of the receivable and historical write-offs. Any change in the assumptions used in analyzing a specific account receivable may result in an additional provision for doubtful accounts being recognized in the period in which the change occurs. When the Company ultimately concludes that a receivable is uncollectible, the balance is written off against the allowance for doubtful accounts. Payments subsequently received on such receivables are credited back to the allowance for doubtful accounts. Property and Equipment, net Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Leasehold improvements are amortized on a straight-line basis over the lesser of the estimated useful life of the asset or the lease term. The Company purchases physical scanner appliances and other computer equipment that are provided to customers on a subscription basis. This equipment is recorded within property and equipment on the accompanying consolidated balance sheet, and the depreciation is recorded to cost of revenues over an estimated useful life of three years. Upon retirement or disposal, the cost of assets and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the consolidated statements of operations. Repairs and maintenance that do not extend the life of an asset are expensed as incurred and major improvements are capitalized as property and equipment. Leases On certain of our operating lease agreements, the Company may receive rent free periods or escalating rent payments over the terms of the leases. The Company recognizes rent expense under these agreements on a straight-line basis over the term of the lease, starting when the Company takes possession of the property from the landlord. The Company records the difference between the recognized rent expense and the amounts payable under the lease as a short-term or long-term deferred rent liability. When the Company receives tenant allowances upon entering into certain leases, the Company records the allowances as an offset to short-term or long-term deferred rent liability and amortizes them using the straight-line method as a reduction to rent expense over the term of the lease. Impairment of Long-Lived Assets The Company evaluates its long-lived assets, which consist of property and equipment, and intangible assets subject to amortization, for indicators of possible impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Impairment exists if the carrying amounts of such assets exceed the estimates of future undiscounted cash flows expected to be generated by such assets. Should an impairment exist, the impairment loss would be measured based on the excess carrying value of the asset over the asset’s estimated fair value. In each of 2017, 2016 and 2015, the Company had no impairment of long-lived assets. Goodwill and Intangible Assets Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination and is not subject to amortization. Goodwill and other intangible assets with indefinite lives are not amortized, but tested for impairment annually or if certain circumstances indicate a possible impairment may exist. These tests are performed at the reporting unit level. The Company’s operations are organized as one reporting unit. In testing for a potential impairment of goodwill, the Company first performs a qualitative assessment of its reporting unit to determine if it is more likely than not (a more than 50% likelihood) that the fair value of the reporting unit is less than its carrying amount. If the fair value is not considered to be less than the carrying amount, no further evaluation is necessary. The Company performed the annual qualitative assessment for the year ended December 31, 2017 and concluded there was no potential impairment of goodwill. In testing for a potential impairment of intangible assets with indefinite lives that are not subject to amortization, the Company first performs a qualitative assessment to determine if it is more likely than not (a more than 50% likelihood) that the fair value of the indefinite-lived intangible assets is less than the carrying amount. If the fair value is not considered to be less than the carrying amount, no further evaluation is necessary. The Company performed the annual qualitative assessment in 2017 and concluded that as of December 31, 2017 , there was no potential impairment of the indefinite-lived intangible assets. If the qualitative assessment indicates there is more than a 50% likelihood that the fair value is less than the carrying amount of the reporting unit or the intangible asset, the Company would perform a two-step test. In the first step, the carrying value of the reporting unit or intangible asset is compared to its estimated fair value. If the estimated fair value is less than the carrying value, then potential impairment exists. In the second step, for goodwill, the Company calculates the amount of any impairment by determining the implied fair value of goodwill using a hypothetical purchase price allocation, similar to that which would be applied if it were an acquisition and the purchase price was equivalent to fair value as calculated in the first step. Impairment is equivalent to any excess of goodwill carrying value over its implied fair value. For indefinite-lived intangible assets, the Company performs the currently prescribed quantitative impairment test by comparing the fair value of the indefinite-lived intangible asset with its carrying value. In 2015, the Company determined there was an impairment of certain indefinite-lived intangible assets and recorded a write-off of $0.3 million recorded in other expense, net. Certain other intangible assets acquired are amortized over their estimated useful lives and tested for impairment if certain circumstances indicate an impairment may exist. The Company’s intangible assets are comprised primarily of existing technology, patent license, and non-competition agreements and are amortized over periods ranging from three to fourteen years on a straight-line basis. As of December 31, 2017 , the Company has not written down any of these intangible assets as a result of impairment. Software Development Costs The Company capitalizes qualifying software costs developed for internal use. These costs include internal costs, such as payroll and benefits of those employees directly associated with the development of the software, and other consulting expenses. Total capitalized development costs and the related accumulated amortization were $0.4 million each at both December 31, 2017 and 2016. Business Combinations We apply the provisions of ASC 805, Business Combinations, in accounting for our acquisitions. It requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as any contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations. Derivative Financial Instruments Derivative financial instruments are utilized by the Company to reduce foreign currency exchange risks. The Company uses foreign currency forward contracts to mitigate the impact of foreign currency fluctuations of certain non-U.S. dollar denominated asset positions, primarily cash and accounts receivable. These contracts are recorded within prepaid expenses and other current assets in the consolidated balance sheets. Gains and losses resulting from currency exchange rate movements on these forward contracts are recognized in other income (expense) in the accompanying consolidated statements of operations in the period in which the exchange rates change and offset the foreign currency gains and losses on the underlying exposure being hedged. The Company does not enter into derivative financial instruments for trading or speculative purposes. At December 31, 2017 , the Company had two outstanding forward contracts with notional amounts of 7.0 million Euros and 4.8 million British Pounds , respectively, both with the expiry date of January 31, 2018 . At December 31, 2016 , the Company had two outstanding forward contracts with notional amounts of 7.6 million Euros and 4.6 million British Pounds , which expired on February 2, 2017 . These forward contracts were entered into as of December 29, 2017 and December 30, 2016 , respectively, and had a fair value of $0 at both December 31, 2017 and 2016 . These derivatives did not meet the criteria to be designated as hedges. These instruments were valued using Level 2 inputs. The following summarizes the gains (losses) recognized from forward contracts and other foreign currency transactions: Year Ended December 31, 2017 2016 2015 Net (loss) gain from forward contracts $ (1,665 ) $ 554 $ 608 Other foreign currency transaction gains (losses) 1,310 (1,324 ) (1,052 ) Total foreign exchange loss, net $ (355 ) $ (770 ) $ (444 ) Stock-Based Compensation The Company recognizes the fair value of its employee stock options and restricted stock units (RSUs) over the requisite service period for those awards ultimately expected to vest. The fair value of each option is estimated on date of grant using the Black-Scholes-Merton option pricing model and the fair value of each restricted stock unit is based on the fair value of the Company's stock on the date of grant. Forfeitures are estimated on the date of grant and revised if actual or expected forfeiture activity differs materially from original estimates. Option grants to non-employees are accounted for at the fair value of the equity instrument issued, as calculated using the Black-Scholes-Merton option-pricing model and the expense is recognized over the vesting periods of the options. The value of options granted to non-employees is re-measured as they vest over a performance period. Revenue Recognition The Company derives revenues from subscriptions that require customers to pay a fee in order to access the Company’s cloud solutions. Customers generally enter into one year renewable subscriptions though some customers do enter into subscriptions with longer terms. The subscription fee entitles the customer to an unlimited number of scans for a specified number of networked devices or web applications and, if requested by a customer as part of their subscription, a specified number of physical or virtual scanner appliances. The Company’s physical and virtual scanner appliances are requested by certain customers as part of their subscriptions in order to scan IT infrastructures within their firewalls and do not function without, and are not sold separately from, subscriptions for the Company’s solutions. In some limited cases, the Company also provides certain computer equipment used to extend its Qualys cloud platform into its customers’ private cloud environment. Customers are required to return physical scanner appliances and computer equipment if they do not renew their subscriptions. The Company recognizes revenues when all of the following conditions are met: • There is persuasive evidence of an arrangement. • The service has been provided to the customer. • The collection of the fees is reasonably assured. • The amount of fees to be paid by the customer is fixed or determinable. Subscriptions are recognized ratably over the subscription period. The Company recognizes revenues from subscriptions that include physical scanner appliances and other computer equipment ratably over the period of the subscription. Physical equipment (scanners and private cloud platforms) are accounted for as operating leases and revenue is recognized over the subscription term. The Company recognizes revenues for certain limited scan arrangements, for which expiration dates can be extended, on an as-used basis. Deferred revenues consist of revenues billed or received that will be recognized in the future under subscriptions existing at the balance sheet date. The current portion of deferred revenues represents amounts that are expected to be recognized within one year of the balance sheet date. Costs of shipping and handling charges incurred by the Company associated with physical scanner appliances and other computer equipment are included in cost of revenues. Sales taxes and other taxes collected from customers to be remitted to government authorities are excluded from revenues. Advertising Expenses Advertising costs are expensed as incurred and include costs of advertising, trade show costs and promotional materials. The Company incurred advertising costs of $8.6 million , $7.7 million and $6.1 million for 2017 , 2016 and 2015 , respectively. Income Taxes The Company provides for the effect of income taxes in its consolidated financial statements using the asset and liability method which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, net operating loss carryovers, and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. As a result of the 2017 Tax Act the Company re-measured certain deferred tax assets and liabilities as of December 31, 2017 and recorded $10.4 million of deferred tax expense during 2017 as detailed in Note 9, “Income Taxes”. Income tax expense or benefit is recognized for the amount of taxes payable or refundable for the current year, and for deferred tax assets and liabilities for the tax consequences of events that have been recognized in an entity’s financial statements or tax returns. The Company must make significant assumptions, judgments and estimates to determine its current provision (benefit) for income taxes, its deferred tax assets and liabilities, and any valuation allowance to be recorded against its deferred tax assets. The Company's judgments, assumptions and estimates relating to the current provision (benefit) for income taxes include the geographic mix and amount of income (loss), its interpretation of current tax laws, and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. The Company's judgments also include anticipating the tax positions the Company will record in the consolidated financial statements before actually preparing and filing the tax returns. The Company's estimates and assumptions may differ from the actual results as reflected in its income tax returns and the Company records the required adjustments when they are identified or resolved. Changes in the Company's business, tax laws or the Company's interpretation of tax laws, and developments in current and future tax audits, could significantly impact the amounts provided for income taxes in the Company's results of operations, financial position, or cash flows. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to tax benefit carry-forwards and to differences between the financial statement amounts of assets and liabilities and their respective tax basis. The Company regularly reviews its deferred tax assets for recoverability and establishes a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. To make this assessment, the Company takes into account predictions of the amount and category of taxable income from various sources and all available positive and negative evidence about these possible sources of taxable income. The weight given to the potential effect of negative and positive evidence is commensurate with the extent to which the strength of the evidence can be objectively verified. The Company applies a two-step approach to determining the financial statement recognition and measurement of uncertain tax positions. The Company only recognizes an income tax expense or benefit with respect to uncertain tax positions in its financial statements that the Company judges is more likely than not to be sustained solely on its technical merits in a tax audit, including resolution of any related appeals or litigation processes. To make this judgment, the Company must interpret complex and sometimes ambiguous tax laws, regulations and administrative practices. If an income tax position meets the more likely than not recognition threshold, then the Company must measure the amount of the tax benefit to be recognized by determining the largest amount of tax benefit that has a greater than a 50% likelihood of being realized upon effective settlement with a taxing authority that has full knowledge of all of the relevant facts. It is inherently difficult and subjective to estimate such amounts, as this requires the Company to determine the probability of various possible settlement outcomes. To determine if a tax position is effectively settled after a tax examination has been completed, the Company must also estimate the likelihood that another taxing authority could review the respective tax position. The Company must also determine when it is reasonably possible that the amount of unrecognized tax benefits will significantly increase or decrease in the 12 months after each fiscal year-end. These judgments are difficult because a taxing authority may change its behavior as a result of the Company's disclosures in its financial statements. The Company must reevaluate its income tax positions on a quarterly basis to consider factors such as changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement would result in recognition of a tax benefit or an additional charge to the tax provision. The Company's policy is to recognize interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. Comprehensive Income (Loss) Other comprehensive income (loss) consists of unrealized gains (losses) on available-for-sale investments, net of tax, which are not included in the Company’s net income. Total comprehensive income includes net income and other comprehensive income (loss) and is included in the consolidated statements of comprehensive income. Foreign Currency Transactions The Company’s operations are conducted in various countries around the world and the financial statements of its foreign subsidiaries are reported in the U.S. dollar as their respective functional currency. Monetary assets and liabilities denominated in foreign currencies have been re-measured into U.S. dollars using the exchange rates in effect at the balance sheet date, and income and expenses are re-measured at average exchange rates during the period. Foreign currency re-measurement gains and losses and foreign currency transaction gains and losses are recognized in other income (expense), net. The Company recorded total foreign currency transaction losses of $0.4 million , $0.8 million and $0.4 million during 2017 , 2016 and 2015 , respectively. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. For certain of the Company’s financial instruments, including certain cash equivalents, accounts receivable, accounts payable, and other current liabilities, the carrying amounts approximate their fair value due to the relatively short maturity of these balances. The Company measures and reports certain cash equivalents, investments and derivative foreign currency forward contracts at fair value in accordance with the provisions of the authoritative accounting guidance that addresses fair value measurements. This guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy is broken down into three levels based on the reliability of inputs as follows: Level 1 —Valuations based on quoted prices in active markets for identical assets or liabilities. Level 2 —Valuations based on other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3— Valuations based on inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The Company's financial instruments consist of assets measured using Level 1 and 2 inputs. Level 1 assets include a highly liquid money market fund, which is valued using unadjusted quoted prices that are available in an active market for an identical asset. Level 2 assets include fixed-income U.S. government agency securities, commercial paper, corporate bonds, asset-backed securities and derivative financial instruments consisting of foreign currency forward contracts. The securities, bonds and commercial paper are valued using prices from independent pricing services based on quoted prices in active markets for similar instruments or on industry models using data inputs such as interest rates and prices that can be directly observed or corroborated in active markets. The foreign currency forward contracts are valued using observable inputs , such as quotations on forward foreign exchange points and foreign interest rates . See Note 2 for more information regarding the fair value measurement of the Company's financial instruments. Net Income Per Share Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. All participating securities are excluded from basic weighted average common shares outstanding. In computing diluted net income per share, undistributed earnings are reallocated to reflect the potential impact of dilutive securities. Diluted net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period, adjusted for the effects of potentially dilutive common shares, which are comprised of outstanding stock options . The dilutive potential common shares are computed using the treasury stock method or the as-if converted method, as applicable. The effects of outstanding stock options are excluded from the computation of diluted net income per common share in periods in which the effect would be antidilutive. Recently Adopted Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 intended to simplify and improve various aspects related to how employee-share based payment transactions are accounted for and presented in the financial statements, requiring excess tax benefits and deficiencies to be recognized as a component of income tax expense rather than equity. The inclusion of excess tax benefits and deficiencies as a component of income tax expense will increase volatility within our provision for income taxes as the amount of excess tax benefits or deficiencies from stock-based compensation awards depends on our stock price at the date the awards vest. This guidance also requires excess tax benefits to be presented as an operating activity on the statement of cash flows and allows an entity to make an accounting policy election to either estimate expected forfeitures or to account for them as they occur. The Company adopted this ASU in its first quarter of 2017 and elected to apply this adoption prospectively, recording an increase to retained earnings of $7.7 million with a corresponding increase to deferred tax assets for federal and state net operating losses and federal research credits. Additionally, the income tax consequences in the current year include a tax deduction benefit of $27.1 million and increased current and deferred tax b |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | NOTE 2. Fair Value of Financial Instruments The Company's cash and cash equivalents, short-term investments, and long-term investments consist of the following: December 31, 2017 Amortized Cost Unrealized Gains Unrealized Losses Fair Value (in thousands) Cash and cash equivalents: Cash $ 86,500 $ — $ — $ 86,500 Money market funds 91 — — 91 Total 86,591 — — 86,591 Short-term investments: Commercial paper 12,623 — (3 ) 12,620 Corporate bonds 38,425 1 (64 ) 38,362 U.S. government agencies 151,058 — (217 ) 150,841 Total 202,106 1 (284 ) 201,823 Long-term investments: Asset-backed securities 4,998 — (12 ) 4,986 U.S. government agencies 24,269 — (54 ) 24,215 Corporate bonds 38,198 — (175 ) 38,023 Total 67,465 — (241 ) 67,224 Total $ 356,162 $ 1 $ (525 ) $ 355,638 December 31, 2016 Amortized Cost Unrealized Gains Unrealized Losses Fair Value (in thousands) Cash and cash equivalents: Cash $ 72,673 $ — $ — $ 72,673 Money market funds 473 — — 473 Commercial paper 13,591 — — 13,591 Total 86,737 — — 86,737 Short-term investments: Commercial paper 14,782 5 — 14,787 Corporate bonds 13,490 — (11 ) 13,479 Asset-backed securities 1,235 — — 1,235 U.S. government agencies 127,660 — (42 ) 127,618 Total 157,167 5 (53 ) 157,119 Long-term investments: Asset-backed securities 5,091 2 — 5,093 U.S. government agencies 29,501 — (71 ) 29,430 Corporate bonds 11,243 — (41 ) 11,202 Total 45,835 2 (112 ) 45,725 Total $ 289,739 $ 7 $ (165 ) $ 289,581 The following table sets forth by level within the fair value hierarchy the fair value of the Company's available-for-sale securities measured on a recurring basis, excluding cash and money market funds: December 31, 2017 Level 1 Level 2 Level 3 Fair Value (in thousands) Commercial paper $ — $ 12,620 $ — $ 12,620 U.S. government agencies — 175,056 — 175,056 Corporate bonds — 76,385 — 76,385 Asset-backed securities — 4,986 — 4,986 Total $ — $ 269,047 $ — $ 269,047 December 31, 2016 Level 1 Level 2 Level 3 Fair Value (in thousands) Commercial paper $ — $ 28,378 $ — $ 28,378 U.S. government agencies — 157,048 — 157,048 Corporate bonds — 24,681 — 24,681 Asset-backed securities — 6,328 — 6,328 Total $ — $ 216,435 $ — $ 216,435 The following summarizes the fair value of securities classified as available-for-sale by contractual maturity: December 31, 2017 Mature within One Year After One Year through Two Years Over Two Years Fair Value (in thousands) Commercial paper $ 12,620 $ — $ — $ 12,620 U.S. government agencies 150,841 22,033 2,182 175,056 Corporate bonds 38,362 22,717 15,306 76,385 Asset-backed securities 4,702 284 — 4,986 Total $ 206,525 $ 45,034 $ 17,488 $ 269,047 At December 31, 2017 and 2016 , derivative financial instruments, consisting of foreign currency forward contracts, were valued at $0 as the contracts were entered into on the last day of the respective reporting periods. These instruments were valued using Level 2 inputs. There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy, as determined at the end of each reporting period. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | NOTE 3. Property and Equipment, Net Property and equipment consists of the following: December 31, December 31, 2017 2016 (in thousands) Computer equipment $ 77,883 $ 57,295 Computer software 20,447 19,716 Furniture, fixtures and equipment 5,075 3,425 Scanner appliances 14,325 14,776 Leasehold improvements 16,067 3,694 Total property and equipment 133,797 98,906 Less: accumulated depreciation and amortization (75,240 ) (59,505 ) Property and equipment, net $ 58,557 $ 39,401 Physical scanner appliances and other computer equipment that are or will be subject to leases by customers have a net carrying value of $6.8 million and $8.3 million at December 31, 2017 and 2016, respectively, including assets that have not been placed in service of $0.9 million and $1.3 million , respectively. Other fixed assets not placed in service at December 31, 2017 and 2016 were $9.6 million and $3.6 million , respectively. Depreciation and amortization expense relating to property and equipment was $19.9 million , $16.6 million and $13.9 million for 2017 , 2016 and 2015 , respectively. On November 20, 2017, the Company moved its headquarters office from Redwood City, California to Foster City, California. Due to the move, the Company incurred a loss of disposal of $0.2 million from abandoning the Redwood City office facilities. The gross amount of abandoned costs was $2.4 million with accumulated depreciation of $2.2 million and a net book value of $0.2 million . The loss was recognized in operating expenses. |
Business Combination (Notes)
Business Combination (Notes) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Business Combination | Business Combinations In 2017, the Company purchased certain assets of Nevis Networks (India) Private Limited (“Nevis”) and Defensative, LLC (NetWatcher). The Nevis acquisition accelerates the Company's development of network security solutions for detection and awareness of external intrusions to computer networks. The NetWatcher acquisition expands the Company's threat protection and management capabilities and adds new offerings to managed security service providers. Total purchase consideration related to the Company’s business combinations was $5.8 million in cash for Nevis, and $7.7 million for NetWatcher of which $1.0 million is payable in the future subject to terms and conditions of the purchase agreement. Total cash paid in the business combinations completed during 2017 was $12.5 million . Pro forma financial information for these acquisitions have not been presented because they are not material to our consolidated financial statements, either individually or in aggregate. In connection with the NetWatcher acquisition, certain founders of NetWatcher will receive future payments with continued employment at their one year and two year anniversaries with the Company. These future payments are being recorded as employee compensation expense ratably over the two-year period. The Company accounted for the acquisition of certain assets of Nevis and Netwatcher as business combinations. The allocation of the consideration for business combinations completed in year of 2017 is summarized as follows (in thousands): Acquiree Purchase Consideration Net Tangible Assets Acquired/ (liabilities assumed) Purchased Intangible Assets Goodwill Nevis $ 5,753 $ 14 $ 5,156 $ 583 NetWatcher 7,729 80 7,000 649 Total $ 13,482 $ 94 $ 12,156 $ 1,232 Purchased intangible assets represent the estimated fair value of purchased technology from our acquisitions of Nevis and NetWatcher. The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. Goodwill generated from these acquisitions was primarily related to the acquired workforce, expected improvements in technology performance and additional product functionality. The fair values assigned to tangible assets acquired and identifiable intangible assets are based on management's estimates and assumptions. The intangible assets have an estimated useful life of 5 years. Goodwill is deductible for tax purposes over 15 years. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets Disclosure [Text Block] | NOTE 5. Goodwill and Intangible Assets, Net Intangible assets consist primarily of developed technology and patent licenses in business combinations. Acquired intangibles are amortized on a straight-line basis over the respective estimated useful lives of the assets. The carrying values of intangible assets are as follows (in thousands): December 31, 2017 Weighted Average Lives Weighted Remaining Average Lives Cost Accumulated Amortization Net Book Value Developed technology 5 years 5 years $ 14,067 $ (2,371 ) $ 11,696 Patent licenses 14 years 7 years 1,388 (723 ) 665 Total intangibles subject to amortization $ 15,455 $ (3,094 ) 12,361 Intangible assets not subject to amortization 40 Total intangible assets, net $ 12,401 December 31, 2016 Weighted Average Lives Weighted Remaining Average Lives Cost Accumulated Amortization Net Book Value Developed technology 7 years 1 year $ 1,910 $ (1,728 ) $ 182 Patent licenses 14 years 8 years 1,388 (623 ) 765 Total intangibles subject to amortization $ 3,298 $ (2,351 ) 947 Intangible assets not subject to amortization 40 Total intangible assets, net $ 987 Intangible assets amortization expense was $0.7 million and $0.4 million for 2017 and 2016 , respectively. As of December 31, 2017 , the Company expects amortization expense in future periods to be as follows (in thousands): 2018 $ 2,531 2019 2,531 2020 2,531 2021 2,531 2022 2,071 2023 and thereafter 166 Total expected future amortization expense $ 12,361 Goodwill, which is not subject to amortization, totaled $1.5 million and $0.3 million as of December 31, 2017 and 2016 , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 6. Commitments and Contingencies Leases The Company leases certain computer equipment and its corporate office and data center facilities under non-cancelable operating leases for varying periods through 2028. The following are the minimum annual lease payments due under operating leases at December 31, 2017 (in thousands): 2018 $ 6,893 2019 5,784 2020 5,415 2021 4,663 2022 4,141 2023 and thereafter 22,000 Total minimum lease payments $ 48,896 Rent expense was $9.6 million , $7.1 million and $6.6 million for 2017 , 2016 and 2015 , respectively. Although certain of the operating lease agreements provide for rent free periods or escalating rent payments over the terms of the leases, rent expense under these agreements is recognized on a straight-line basis over the term of the lease, starting when the Company takes possession of the property from the landlord. As of December 31, 2017 and 2016 , the Company has accrued $9.5 million and $0.4 million of deferred rent related to these agreements, which is reflected in accrued liabilities and other noncurrent liabilities in the accompanying consolidated balance sheets. On October 14, 2016, the Company entered into a lease agreement (included in the table above) for its new headquarters office facility. The lease payments commence on May 1, 2018 and the lease has a ten -year term through April 2028. The total commitment of $38.6 million is payable monthly with escalating rental payments throughout the lease term. The Company took possession of the facility on May 1, 2017, completed construction of the facility and moved into the facility in November 2017. In connection with this lease, the Company has provided the landlord with a $1.2 million standby letter of credit to secure the Company’s obligations through the end of the lease term, which was classified as restricted cash in the accompanying consolidated balance sheets. Indemnifications The Company from time to time enters into certain types of contracts that contingently require it to indemnify various parties against claims from third parties. These contracts primarily relate to (i) the Company's by-laws, under which it must indemnify directors and executive officers, and may indemnify other officers and employees, for liabilities arising out of their relationship, (ii) contracts under which the Company must indemnify directors and certain officers for liabilities arising out of their relationship, and (iii) contracts under which the Company may be required to indemnify customers or resellers from certain liabilities arising from potential infringement of intellectual property rights, as well as potential damages caused by limited product defects. To date, the Company has not incurred and has not recorded any liability in connection with such indemnifications. The Company maintains director and officer insurance, which may cover certain liabilities arising from its obligation to indemnify its directors. Contingencies From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when it is probable a loss has been incurred and such loss can be reasonably estimated. As of December 31, 2017 and 2016, the Company has not recorded and is not aware of any material liabilities for contingencies. |
Employee Stock and Benefit Plan
Employee Stock and Benefit Plans | 12 Months Ended |
Dec. 31, 2017 | |
Share-based Compensation [Abstract] | |
Employee Stock and Benefit Plans | NOTE 7. Stockholders' Equity and Stock-based Compensation Common Stock The Company had reserved shares of common stock for future issuance as of December 31, 2017 as follows: Options and RSUs outstanding under equity incentive plans 2000 Equity Incentive Plan 691,589 2012 Equity Incentive Plan 5,214,890 Shares available for future grants under an equity incentive plan 2012 Equity Incentive Plan 2,208,858 Total shares reserved for future issuance 8,115,337 Preferred Stock Effective October 3, 2012, the Company is authorized to issue 20,000,000 shares of undesignated preferred stock with a par value of $0.001 per share. Each series of preferred stock will have such rights and preferences including dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price, and liquidation preferences as determined by the Board. As of December 31, 2017 and 2016 , there are no issued or outstanding shares of preferred stock. Stock Options 2012 Equity Incentive Plan The 2012 Equity Incentive Plan (the 2012 Plan) was adopted and approved in September 2012 and became effective on September 26, 2012. Under the 2012 Plan, the Company is authorized to grant to eligible participant's incentive stock options (ISOs), non-statutory stock options (NSOs), stock appreciation rights (SARs), restricted stock awards (RSAs), restricted stock units (RSUs), performance units and performance shares equivalent to up to 9,861,234 shares of common stock as of December 31, 2017 . The number of shares of common stock available for issuance under the 2012 Plan includes an annual increase on January 1 of each year by an amount equal to the least of 3,050,000 shares; 5% of the outstanding shares of stock as of the last day of the immediately preceding fiscal year; or an amount determined by the board of directors. Options may be granted with an exercise price that is at least equal to the fair market value of the Company's stock at the date of grant and are exercisable when vested. Options granted generally vest over a period of up to four years, with a maximum term of ten years. ISOs may only be granted to employees and any subsidiary corporations' employees. All other awards may be granted to employees, directors and consultants and subsidiary corporations' employees and consultants. Options, SARs, RSAs, RSUs, performance units and performance awards may be granted with vesting terms as determined by the board of directors and expire no more than ten years after the date of grant or earlier if employment or service is terminated. As of December 31, 2017 , 2,208,858 shares were available for grant under the 2012 Plan. 2000 Equity Incentive Plan Under the 2000 Equity Incentive Plan (the 2000 Plan), the Company was authorized to grant to eligible participants either ISOs or NSOs. The ISOs were granted at a price per share not less than the fair market value at the date of grant. The NSOs were granted at a price per share not less than 85% of the fair market value at the date of grant. Options granted generally vest over a period of up to four years, with a maximum term of ten years. The 2000 Plan was terminated in connection with the closing of the IPO, and accordingly, no shares are currently available for issuance under the 2000 Plan. The 2000 Plan continues to govern outstanding awards granted thereunder. Options granted under the 2000 Plan were immediately exercisable, and unvested shares are subject to repurchase by the Company. Upon termination of employment of an option holder, the Company has the right to repurchase at the original purchase price any issued but unvested common shares. The amounts paid for shares purchased under an early exercise of stock options and subject to repurchase by the Company are not reported as a component of stockholders ’ equity (deficit) until those shares vest. The amounts received in exchange for these shares are recorded as an accrued liability in the accompanying consolidated balance sheets and will be reclassified to common stock and additional paid-in capital as the shares vest. Stock-based Compensation Stock-based compensation included in the consolidated statements of operations is as follows: Year Ended December 31, 2017 2016 2015 (in thousands) Cost of revenues $ 2,159 $ 1,858 $ 1,250 Research and development 5,944 5,678 4,936 Sales and marketing 4,755 4,870 3,867 General and administrative 14,103 7,743 7,441 Total stock-based employee compensation $ 26,961 $ 20,149 $ 17,494 Stock-based compensation cost is recognized on a straight-line basis over the service period. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures materially differ from those estimates. As of December 31, 2017 , the Company had $16.5 million of total unrecognized employee compensation cost related to unvested options that it expects to recognize over a weighted-average period of 2.4 years. The fair value of each option granted to employees is estimated on the date of grant using the Black-Scholes-Merton option-pricing model based on the following assumptions: Year Ended December 31, 2017 2016 2015 Expected term (in years) 5.1 to 5.5 5.0 to 5.9 4.9 to 5.9 Volatility 47% to 49% 45% to 49% 45% to 48% Risk-free interest rate 1.8% to 2.0% 1.1% to 1.3% 1.3% to 1.7% Dividend yield — — — The expected term of the options is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected term at the grant date. Volatility is based on a combination of the historical volatility of the Company and of several public entities that are similar to the Company. The Company bases volatility on this combination because it does not have sufficient historical transactions in its own shares on which to solely base expected volatility. Beginning in the third quarter of 2017, the volatility was estimated using the historical volatility derived from the Company's common stock. The Company has not historically declared any dividends and does not expect to in the future. Non-Employee Stock-based Compensation The Company records compensation representing the fair value of stock options granted to non-employees. Stock-based non-employee compensation was $0.9 million , $0.7 million and $0.6 million for 2017 , 2016 and 2015 , respectively. Non-employee stock-based compensation is recognized over the vesting periods of the options. The value of options granted to non-employees is re-measured as they vest over a performance period. Stock Option Plan Activity A summary of the Company’s stock option activity is as follows: Outstanding Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (in thousands) Balance as of December 31, 2014 7,605,407 $ 12.93 6.5 $ 188,743 Granted 1,526,450 $ 39.50 Exercised (807,846 ) $ 12.50 Canceled (744,953 ) $ 27.67 Balance as of December 31, 2015 7,579,058 $ 16.88 5.9 $ 131,345 Granted 2,120,633 $ 26.64 Exercised (1,399,157 ) $ 10.83 Canceled (772,854 ) $ 31.57 Balance as of December 31, 2016 7,527,680 $ 19.25 6.0 $ 101,717 Granted 408,225 $ 40.82 Exercised (2,997,095 ) $ 11.05 Canceled (442,919 ) $ 33.29 Balance as of December 31, 2017 4,495,891 $ 25.29 6.6 $ 153,129 Vested and expected to vest—December 31, 2017 4,242,256 $ 24.75 6.6 $ 146,791 Exercisable—December 31, 2017 3,002,205 $ 21.90 5.8 $ 112,447 The following table summarizes the outstanding and vested stock options at December 31, 2017 : Outstanding Exercisable Exercise Price Number of Weighted Weighted Number of Weighted $2.60 - $4.40 471,051 $ 3.76 2.1 471,051 $ 3.76 $4.80 - $13.60 458,565 $ 10.50 4.8 458,565 $ 10.50 $16.68 - $25.17 605,184 $ 22.46 6.6 445,629 $ 21.59 $25.56 - $25.56 969,674 $ 25.56 8.3 394,095 $ 25.56 $26.58 - $26.86 478,043 $ 26.86 6.1 477,613 $ 26.86 $30.58 - $31.67 456,331 $ 30.87 7.2 350,657 $ 30.66 $34.97 - $37.28 559,687 $ 36.62 7.9 266,436 $ 36.81 $38.40 - $40.89 369,970 $ 39.57 7.7 100,054 $ 40.72 $52.14 - $52.14 57,886 $ 52.14 6.7 38,105 $ 52.14 $52.60 - $52.60 69,500 $ 52.60 9.8 — $ — 4,495,891 $ 25.29 6.6 3,002,205 $ 21.90 The weighted-average grant date fair value of the Company’s stock options granted during 2017 , 2016 and 2015 was $18.03 , $11.12 and $16.51 , respectively. The aggregate grant date fair value of the Company’s stock options granted during 2017 , 2016 and 2015 was $7.4 million , $23.6 million and $25.2 million , respectively. The intrinsic value of options exercised was $92.1 million , $25.0 million and $22.7 million during 2017 , 2016 and 2015 , respectively. Intrinsic value of an option is the difference between the fair value of the Company’s common stock at the time of exercise and the exercise price paid. Restricted Stock The terms and conditions of RSUs and RSAs, including vesting criteria and timing are set by the board of directors. The cost of RSUs and RSAs is determined using the fair value of the Company’s common stock on the date of the grant. Compensation cost is recognized on a straight-line basis over the requisite service period of each grant adjusted for estimated forfeitures. A summary of the Company’s RSUs and RSAs activity is as follows: Number of Shares Weighted-Average Grant Date Fair Value Per Share Balance as of December 31, 2015 47,500 $ 37.28 Granted 681,350 $ 28.52 Vested (39,998 ) $ 27.49 Cancelled (101,519 ) $ 31.12 Balance as of December 31, 2016 587,333 $ 28.85 Granted 1,326,849 $ 42.69 Vested (368,367 ) $ 33.52 Cancelled (135,227 ) $ 32.04 Balance as of December 31, 2017 1,410,588 $ 40.34 Expected to vest as of December 31, 2017 1,239,124 $ 39.87 As of December 31, 2017 , the Company had $44.6 million of unrecognized compensation cost related to unvested awards that it expects to recognize over a weighted-average period of 2.9 years. 401(k) Plan The Company’s 401(k) Plan (the “401(k) Plan”) was established in 2000 to provide retirement and incidental benefits for its employees. As allowed under section 401(k) of the Internal Revenue Code, the 401(k) Plan provides tax-deferred salary deductions for eligible employees. Contributions to the 401(k) Plan are limited to a maximum amount as set periodically by the Internal Revenue Service. During the years ended December 31, 2017 and 2016, the Company made contributions to the 401(k) Plan of $1.1 million and $0.6 million , respectively. During the year ended December 31, 2015, the Company made no contribution to the 401(k) Plan. |
Other Income (Expense), Net
Other Income (Expense), Net | 12 Months Ended |
Dec. 31, 2017 | |
Other Income and Expenses [Abstract] | |
Other Income (Expense), Net | NOTE 8. Other Expense, Net Other expense, net consists of the following: Year Ended December 31, 2017 2016 2015 (in thousands) Foreign exchange losses $ (355 ) $ (770 ) $ (444 ) Other expense (181 ) (202 ) (406 ) Other expense, net $ (536 ) $ (972 ) $ (850 ) |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 9. Income Taxes The Company’s geographical breakdown of income before income taxes is as follows: Year Ended December 31, 2017 2016 2015 (in thousands) Domestic $ 34,914 $ 28,982 $ 22,540 Foreign 4,464 1,447 1,980 Income before income taxes $ 39,378 $ 30,429 $ 24,520 The provision for (benefit from) income taxes consists of the following: Year Ended December 31, 2017 2016 2015 (in thousands) Current Federal $ 22 $ 8,334 $ 115 State 23 1,125 1,041 Foreign 1,471 963 693 Total current provision 1,516 10,422 1,849 Deferred Federal (1,650 ) 611 7,115 State (996 ) 126 (247 ) Foreign 68 46 (62 ) Total deferred (benefit) provision (2,578 ) 783 6,806 Total (benefit from) provision for income taxes $ (1,062 ) $ 11,205 $ 8,655 The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows: Year Ended December 31, 2017 2016 2015 Federal statutory rate 35.0 % 35.0 % 35.0 % State taxes (2.1 ) 2.1 2.2 Stock-based compensation (58.1 ) 2.4 0.5 Foreign source income (0.2 ) 0.9 0.6 Change in valuation allowance 2.8 1.3 1.3 Federal rate adjustment (due to 2017 Tax Act) 26.4 — — Federal and state research and development credit (5.3 ) (3.6 ) (3.9 ) Other (1.2 ) (1.3 ) (0.4 ) (Benefit from) provision for income taxes (2.7 )% 36.8 % 35.3 % On December 22, 2017, the Tax Cuts and Jobs Act (the “2017 Tax Act”) was enacted into law. The new legislation contains several key tax provisions that impact the Company, including the reduction of the corporate income tax rate from 35% to 21% effective January 1, 2018. The new legislation also includes a variety of other changes, such as a one-time repatriation tax on accumulated foreign earnings (transition tax), acceleration of business asset expensing, and reduction in the amount of executive pay that could qualify as a tax deduction, among others. We have estimated our provision for income taxes in accordance with the 2017 Tax Act and guidance available as of the date of this filing and as a result have recorded $10.4 million as additional income tax expense due to the re-measurement of certain deferred tax assets and liabilities as a result of the reduction of the federal tax rate. No deferred taxes were recorded for the newly introduced provisions for Global Intangible Low Tax Income ("GILTI"), and no amount related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings was recorded due to cumulative foreign losses of our subsidiaries. On December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Act. In accordance with SAB 118, we have determined that the $10.4 million of the deferred tax expense recorded in connection with the re-measurement of certain deferred tax assets and liabilities and the $0 amount of transition tax on the mandatory deemed repatriation of foreign earnings were provisional amounts and reasonable estimates at December 31, 2017. A comprehensive analysis of GILTI, for which additional guidance is expected from the U.S. Internal Revenue Service, is required to finalize the amounts of our deferred tax assets and liabilities and a detailed analysis of historical foreign earnings and the potential correlative adjustments will be performed to verify the transitional tax does not apply. Subsequent adjustments resulting from the additional analysis to be completed will be recorded to current tax expense in the quarter of 2018 when the analysis is complete. The 2017 Tax Act includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries, and as a result, all previously unremitted earnings are no longer subject to U.S. tax after 2017. Depending on the jurisdiction, distributions of earnings could be subject to withholding taxes at rates applicable to the distributing jurisdiction. As the Company intends to continue to reinvest the earnings of foreign subsidiaries indefinitely, no U.S. income taxes or foreign withholding taxes have been provided on undistributed earnings earned by our foreign subsidiaries. The Company’s share of undistributed earnings of foreign subsidiaries that could be subject to foreign withholding taxes was $9.0 million and $5.7 million as of December 31, 2017 and 2016, respectively. Determination of the amount of unrecognized deferred tax liability for temporary differences related to investments in these non-U.S. subsidiaries that are essentially permanent in duration is not practicable. As a result of the adoption of ASU 2016-09 on January 1, 2017 we recorded a cumulative effect adjustment to increase retained earnings by $7.7 million with a corresponding increase to deferred tax assets for the federal and state net operating losses and federal research credits attributable to excess tax benefits from stock-based compensation which had not been previously recognized. All excess tax benefits and deficiencies in the current and future periods will be recognized as income tax expense in our Consolidated Statement of Operations in the reporting period in which they occur. This will result in increased volatility in our effective tax rate. For the year ended December 31, 2017, we recognized a benefit of $27.1 million related to the excess tax benefits. Deferred Income Taxes Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the Company’s deferred tax assets and liabilities are as follows: December 31, 2017 2016 (in thousands) Deferred tax assets Net operating loss carryforwards $ 8,947 $ 1,472 Research and development credit carryforwards 11,493 3,334 Foreign tax credit carryforwards 1,149 — Accrued liabilities 470 681 Deferred revenues 3,416 5,018 Deferred rent 558 74 Intangible assets 409 409 Stock-based compensation 7,135 12,513 Other 638 1,225 Gross deferred tax assets 34,215 24,726 Valuation allowance (5,773 ) (3,688 ) Net deferred tax assets 28,442 21,038 Deferred tax liabilities Fixed assets (3,372 ) (4,448 ) Intangible assets (4 ) — Total deferred tax liabilities (3,376 ) (4,448 ) Net deferred tax assets $ 25,066 $ 16,590 Realization of deferred tax assets is dependent upon future earnings, if any, and the timing and amount of such assets are uncertain. The Company believes it is more likely than not that its California deferred tax assets will not be realized because the income attributed to California is not expected to be sufficient to recognize these deferred tax assets. Accordingly, the Company continues to record the valuation allowance of $5.8 million as of December 31, 2017 for its California deferred tax assets. During the year ended December 31, 2017, the valuation allowance had increased by $2.1 million to $5.8 million . At December 31, 2017, the Company had federal and state net operating loss carryforwards of approximately $39.1 million and $15.3 million , respectively, available to reduce federal and state taxable income. Federal net operating losses begin to expire in 2021 , and state net operating losses expire from 2029 to 2037 . Utilization of the Company’s net operating loss carryforwards may be subject to an annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss carryforwards before utilization. As of December 31, 2017, the Company had $8.7 million of federal and $8.7 million of state research and development credit carryforwards. Federal research and development credits expire in the years 2022 to 2037 . State research and development credits do not expire. As of December 31, 2017, the Company had foreign tax credit carryforwards of $1.1 million which expire in the years 2024 to 2027 . The evaluation of an unrecognized tax position is a two-step process. The first step requires the Company to determine whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. The second step requires the Company to recognize in the financial statement each tax position that meets the more likely than not criteria, measured at the amount of benefit that has a greater than fifty percent likelihood of being realized. A reconciliation of the Company’s unrecognized tax benefits is as follows: Year Ended December 31, 2017 2016 2015 (in thousands) Unrecognized tax benefits beginning balance $ 4,071 $ 3,506 $ 3,330 Gross increase for tax positions of prior years 66 2 20 Gross decrease for tax positions of prior years — (15 ) (171 ) Gross increase for tax positions of current year 1,101 659 418 Lapse of statute of limitations (126 ) (81 ) (91 ) Total unrecognized tax benefits $ 5,112 $ 4,071 $ 3,506 The unrecognized tax benefits, if recognized, would impact the income tax provision by $2.8 million , $2.4 million and $2.1 million as of December 31, 2017 , 2016 and 2015 , respectively. The Company has elected to include interest and penalties as a component of income tax expense. The amounts were not material for 2017 , 2016 and 2015 . The Company files income tax returns in the United States, including various state jurisdictions. The Company’s subsidiaries file tax returns in various foreign jurisdictions. The tax years 2012 to 2017 remain open to examination by the major taxing jurisdictions in which the Company is subject to tax, with the exception of France which remains open to examination for the 2013 through 2017 tax years only. As of December 31, 2017 , the Company was not under examination by the Internal Revenue Service or any foreign or state tax jurisdiction. A retroactive and permanent reinstatement of the federal research and development tax credit was signed into law on December 18, 2015 in accordance with the Protecting Americans from Tax Hikes Act of 2015. The Company recorded a 2017 federal research and development credit of $1.3 million , net of reserves, in the fourth quarter of 2017 . The California research and development credit estimated for 2017 , net of reserves, is $1.3 million . |
Segment Information and Informa
Segment Information and Information about Geographic Area | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Information and Information about Geographic Area | NOTE 10. Segment Information and Information about Geographic Area The Company operates in one segment. The Company’s chief operating decision maker is the Chairman, President and Chief Executive Officer, who makes operating decisions, assesses performance and allocates resources on a consolidated basis. All of the Company’s principal operations and decision-making functions are located in the United States. Revenues by geographic area, based on the location of the customer, are as follows: Year Ended December 31, 2017 2016 2015 (in thousands) United States $ 162,681 $ 139,743 $ 115,384 Foreign 68,147 58,182 48,900 Total revenues $ 230,828 $ 197,925 $ 164,284 Property and equipment, net, by geographic area, are as follows: December 31, 2017 2016 (in thousands) United States $ 50,785 $ 30,733 Foreign 7,772 8,668 Total property and equipment, net $ 58,557 $ 39,401 |
Net Income Per Share Attributab
Net Income Per Share Attributable to Common Stockholders | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Net Income Per Share Attributable to Common Stockholders | NOTE 11. Net Income Per Share The computations for basic and diluted net income per share are as follows: Year Ended December 31, 2017 2016 2015 (in thousands, except per share data) Numerator: Net income - basic and diluted $ 40,440 $ 19,224 $ 15,865 Denominator: Weighted-average shares used in computing net income per share - basic 37,443 35,247 34,050 Effect of potentially dilutive securities: Common stock options 2,262 3,052 4,134 RSUs 366 70 — Weighted-average shares used in computing net income per share - diluted 40,071 38,369 38,184 Net income per share: Basic $ 1.08 $ 0.55 $ 0.47 Diluted $ 1.01 $ 0.50 $ 0.42 Potentially dilutive securities not included in the calculation of diluted net income per share because doing so would be antidilutive are as follows: Year Ended December 31, 2017 2016 2015 (in thousands) Common stock options 742 3,241 1,582 RSUs 71 24 — |
Quarterly Financial Information
Quarterly Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information (Unaudited) | NOTE 12. Selected Quarterly Financial Information (Unaudited) The following table shows a summary of the Company's quarterly financial information for each of the quarters in the two-year period ended December 31, 2017 : Three Months Ended Mar. 31, 2016 Jun. 30, 2016 Sep. 30, 2016 Dec 31, 2016 Mar. 31, 2017 Jun. 30, 2017 Sep. 30, 2017 Dec. 31, 2017 (unaudited) (in thousands, except per share data) Revenues $ 46,248 $ 48,466 $ 50,987 $ 52,224 $ 53,121 $ 55,302 $ 59,490 $ 62,915 Income from operations 7,597 5,712 7,987 8,811 7,656 9,009 10,849 9,729 Other income (expense), net 168 40 230 (116 ) 453 360 671 652 Income before income taxes 7,765 5,752 8,217 8,695 8,109 9,369 11,520 10,381 Net income 4,783 3,538 4,996 5,907 21,930 7,202 8,452 2,857 Net income per share: Basic $ 0.14 $ 0.10 $ 0.14 $ 0.17 $ 0.60 $ 0.19 $ 0.22 $ 0.07 Diluted $ 0.13 $ 0.09 $ 0.13 $ 0.15 $ 0.56 $ 0.18 $ 0.21 $ 0.07 |
Schedule II Schedule of Valuati
Schedule II Schedule of Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2017 | |
Valuation and Qualifying Accounts [Abstract] | |
Schedule II Schedule of Valuation and Qualifying Accounts | SCHEDULE II SUPPLEMENTARY CONSOLIDATED FINANCIAL STATEMENT SCHEDULE VALUATION AND QUALIFYING ACCOUNTS (in thousands) Additions Balance at Beginning of Year Charged to Costs and Expenses Deductions and Other (1) Balance at End of Year Allowance for Doubtful Accounts Year Ended December 31, 2017 $ 702 $ 657 $ (543 ) $ 816 Year Ended December 31, 2016 $ 769 $ 199 $ (266 ) $ 702 Year Ended December 31, 2015 $ 590 $ 851 $ (672 ) $ 769 (1) Primarily represents write-offs of uncollectible accounts, net of recoveries. All other schedules have been omitted because they are not required, not applicable, or the required information is otherwise included. |
The Company and Summary of Si21
The Company and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business Qualys, Inc. (the “Company”, "we", "us", "our") was incorporated in the state of Delaware on December 30, 1999. The Company is headquartered in Foster City, California and has majority-owned subsidiaries throughout the world. The Company is a pioneer and leading provider of cloud-based security and compliance solutions that enable organizations to identify security risks to their IT infrastructures, help protect their IT systems and applications from ever-evolving cyber-attacks and achieve compliance with internal policies and external regulations. The Company’s cloud solutions address the growing security and compliance complexities and risks that are amplified by the dissolving boundaries between internal and external IT infrastructures and web environments, the rapid adoption of cloud computing and the proliferation of geographically dispersed IT assets. Organizations can use the Company’s integrated suite of solutions delivered on its Qualys cloud platform to cost-effectively obtain a unified view of their security and compliance posture across globally-distributed IT infrastructures. |
Basis of presentation | Basis of Presentation The accompanying consolidated financial statements and footnotes have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) as well as the instructions to Form 10-K and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). In the opinion of management, the accompanying consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s consolidated financial position, results of operations and cash flows for the periods presented. The accompanying consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated upon consolidation. |
Use of estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the consolidated financial statements and the reported results of operations during the reporting period. The Company’s management regularly assesses these estimates, which primarily affect revenue recognition, the valuation of accounts receivable, goodwill and intangible assets, stock-based compensation and the provision for income taxes. Actual results could differ from those estimates and such differences may be material to the accompanying consolidated financial statements. |
Concentration of credit risk | Concentration of Credit Risk The Company invests its cash and cash equivalents with major financial institutions. Cash balances with any one institution at times may be in excess of federally insured limits. Cash equivalents are invested in high-quality investment grade financial instruments and are diversified. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk. Credit risk with respect to accounts receivable is dispersed due to the large number of customers. Collateral is not required for accounts receivable. The Company maintains an allowance for potential credit losses based upon the expected collectability of accounts receivable. The Company writes off its receivables once collection efforts are unsuccessful. As of December 31, 2017 and 2016 , no customer or channel partner accounted for more than 10% of the Company's revenues and accounts receivable balance. |
Cash, cash equivalents and short-term and long-term investments | Cash, Cash Equivalents, Short-Term and Long-Term Investments Cash and cash equivalents include cash held in banks, highly liquid money market funds, commercial paper, and fixed-income U.S. government agency securities, all with original maturities of three months or less when acquired. The Company’s investments consist of fixed-income U.S. government agency securities, corporate bonds, asset-backed securities and commercial paper. Management determines the appropriate classification of the Company's investments at the time of purchase and reevaluates such designation at each balance sheet date. The Company classifies its investments as either short-term or long-term based on each instrument's underlying contractual maturity date. Cash equivalents are stated at cost, which approximates fair market value. Short-term and long-term investments are classified as available-for-sale and are carried at fair value. Unrealized gains and losses in fair value are reported in other comprehensive income (loss). When the available-for-sale securities are sold, cost is based on the specific identification method, and the realized gains and losses are included in other income (expense) in the consolidated statements of operations. Short-term and long-term investments are reviewed quarterly for impairment that is deemed to be other-than-temporary. An investment is considered other-than-temporarily impaired when its fair value is below its amortized cost and (1) there is an intent to sell the security, (2) it is “more likely than not” that the security will be sold before recovery of its amortized cost basis or (3) the present value of expected cash flows from the investment is not expected to recover the entire amortized cost basis. Declines in value that are considered to be other-than-temporary and adjustments to amortized cost for the amortization of premiums and the accretion of discounts are recorded in other income (expense). Interest and dividends are recorded in interest income as earned. |
Accounts receivable | Accounts Receivable Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts represents the Company’s best estimate of the amount of probable credit losses and is determined based on a review of existing accounts receivable by aging category to identify significant customers or invoices with collectability issues. For those invoices not specifically reviewed, the reserve is calculated based on the age of the receivable and historical write-offs. Any change in the assumptions used in analyzing a specific account receivable may result in an additional provision for doubtful accounts being recognized in the period in which the change occurs. When the Company ultimately concludes that a receivable is uncollectible, the balance is written off against the allowance for doubtful accounts. Payments subsequently received on such receivables are credited back to the allowance for doubtful accounts. |
Property and equipment, net | Property and Equipment, net Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Leasehold improvements are amortized on a straight-line basis over the lesser of the estimated useful life of the asset or the lease term. The Company purchases physical scanner appliances and other computer equipment that are provided to customers on a subscription basis. This equipment is recorded within property and equipment on the accompanying consolidated balance sheet, and the depreciation is recorded to cost of revenues over an estimated useful life of three years. Upon retirement or disposal, the cost of assets and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the consolidated statements of operations. Repairs and maintenance that do not extend the life of an asset are expensed as incurred and major improvements are capitalized as property and equipment. |
Impairment of long-lived assets | Impairment of Long-Lived Assets The Company evaluates its long-lived assets, which consist of property and equipment, and intangible assets subject to amortization, for indicators of possible impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Impairment exists if the carrying amounts of such assets exceed the estimates of future undiscounted cash flows expected to be generated by such assets. Should an impairment exist, the impairment loss would be measured based on the excess carrying value of the asset over the asset’s estimated fair value. In each of 2017, 2016 and 2015, the Company had no impairment of long-lived assets. |
Goodwill and intangible assets | Goodwill and Intangible Assets Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination and is not subject to amortization. Goodwill and other intangible assets with indefinite lives are not amortized, but tested for impairment annually or if certain circumstances indicate a possible impairment may exist. These tests are performed at the reporting unit level. The Company’s operations are organized as one reporting unit. In testing for a potential impairment of goodwill, the Company first performs a qualitative assessment of its reporting unit to determine if it is more likely than not (a more than 50% likelihood) that the fair value of the reporting unit is less than its carrying amount. If the fair value is not considered to be less than the carrying amount, no further evaluation is necessary. The Company performed the annual qualitative assessment for the year ended December 31, 2017 and concluded there was no potential impairment of goodwill. In testing for a potential impairment of intangible assets with indefinite lives that are not subject to amortization, the Company first performs a qualitative assessment to determine if it is more likely than not (a more than 50% likelihood) that the fair value of the indefinite-lived intangible assets is less than the carrying amount. If the fair value is not considered to be less than the carrying amount, no further evaluation is necessary. The Company performed the annual qualitative assessment in 2017 and concluded that as of December 31, 2017 , there was no potential impairment of the indefinite-lived intangible assets. If the qualitative assessment indicates there is more than a 50% likelihood that the fair value is less than the carrying amount of the reporting unit or the intangible asset, the Company would perform a two-step test. In the first step, the carrying value of the reporting unit or intangible asset is compared to its estimated fair value. If the estimated fair value is less than the carrying value, then potential impairment exists. In the second step, for goodwill, the Company calculates the amount of any impairment by determining the implied fair value of goodwill using a hypothetical purchase price allocation, similar to that which would be applied if it were an acquisition and the purchase price was equivalent to fair value as calculated in the first step. Impairment is equivalent to any excess of goodwill carrying value over its implied fair value. For indefinite-lived intangible assets, the Company performs the currently prescribed quantitative impairment test by comparing the fair value of the indefinite-lived intangible asset with its carrying value. In 2015, the Company determined there was an impairment of certain indefinite-lived intangible assets and recorded a write-off of $0.3 million recorded in other expense, net. Certain other intangible assets acquired are amortized over their estimated useful lives and tested for impairment if certain circumstances indicate an impairment may exist. The Company’s intangible assets are comprised primarily of existing technology, patent license, and non-competition agreements and are amortized over periods ranging from three to fourteen years on a straight-line basis. As of December 31, 2017 , the Company has not written down any of these intangible assets as a result of impairment. |
Software development cost | Software Development Costs The Company capitalizes qualifying software costs developed for internal use. These costs include internal costs, such as payroll and benefits of those employees directly associated with the development of the software, and other consulting expenses. Total capitalized development costs and the related accumulated amortization were $0.4 million each at both December 3 |
Business combinations | Business Combinations We apply the provisions of ASC 805, Business Combinations, in accounting for our acquisitions. It requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as any contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations. |
Derivative financial instruments | Derivative Financial Instruments Derivative financial instruments are utilized by the Company to reduce foreign currency exchange risks. The Company uses foreign currency forward contracts to mitigate the impact of foreign currency fluctuations of certain non-U.S. dollar denominated asset positions, primarily cash and accounts receivable. These contracts are recorded within prepaid expenses and other current assets in the consolidated balance sheets. Gains and losses resulting from currency exchange rate movements on these forward contracts are recognized in other income (expense) in the accompanying consolidated statements of operations in the period in which the exchange rates change and offset the foreign currency gains and losses on the underlying exposure being hedged. The Company does not enter into derivative financial instruments for trading or speculative purposes. At December 31, 2017 , the Company had two outstanding forward contracts with notional amounts of 7.0 million Euros and 4.8 million British Pounds , respectively, both with the expiry date of January 31, 2018 . At December 31, 2016 , the Company had two outstanding forward contracts with notional amounts of 7.6 million Euros and 4.6 million British Pounds , which expired on February 2, 2017 . These forward contracts were entered into as of December 29, 2017 and December 30, 2016 , respectively, and had a fair value of $0 at both December 31, 2017 and 2016 . These derivatives did not meet the criteria to be designated as hedges. |
Share-based compensation | Stock-Based Compensation The Company recognizes the fair value of its employee stock options and restricted stock units (RSUs) over the requisite service period for those awards ultimately expected to vest. The fair value of each option is estimated on date of grant using the Black-Scholes-Merton option pricing model and the fair value of each restricted stock unit is based on the fair value of the Company's stock on the date of grant. Forfeitures are estimated on the date of grant and revised if actual or expected forfeiture activity differs materially from original estimates. Option grants to non-employees are accounted for at the fair value of the equity instrument issued, as calculated using the Black-Scholes-Merton option-pricing model and the expense is recognized over the vesting periods of the options. The value of options granted to non-employees is re-measured as they vest over a performance period. |
Revenue recognition | Revenue Recognition The Company derives revenues from subscriptions that require customers to pay a fee in order to access the Company’s cloud solutions. Customers generally enter into one year renewable subscriptions though some customers do enter into subscriptions with longer terms. The subscription fee entitles the customer to an unlimited number of scans for a specified number of networked devices or web applications and, if requested by a customer as part of their subscription, a specified number of physical or virtual scanner appliances. The Company’s physical and virtual scanner appliances are requested by certain customers as part of their subscriptions in order to scan IT infrastructures within their firewalls and do not function without, and are not sold separately from, subscriptions for the Company’s solutions. In some limited cases, the Company also provides certain computer equipment used to extend its Qualys cloud platform into its customers’ private cloud environment. Customers are required to return physical scanner appliances and computer equipment if they do not renew their subscriptions. The Company recognizes revenues when all of the following conditions are met: • There is persuasive evidence of an arrangement. • The service has been provided to the customer. • The collection of the fees is reasonably assured. • The amount of fees to be paid by the customer is fixed or determinable. Subscriptions are recognized ratably over the subscription period. The Company recognizes revenues from subscriptions that include physical scanner appliances and other computer equipment ratably over the period of the subscription. Physical equipment (scanners and private cloud platforms) are accounted for as operating leases and revenue is recognized over the subscription term. The Company recognizes revenues for certain limited scan arrangements, for which expiration dates can be extended, on an as-used basis. Deferred revenues consist of revenues billed or received that will be recognized in the future under subscriptions existing at the balance sheet date. The current portion of deferred revenues represents amounts that are expected to be recognized within one year of the balance sheet date. Costs of shipping and handling charges incurred by the Company associated with physical scanner appliances and other computer equipment are included in cost of revenues. Sales taxes and other taxes collected from customers to be remitted to government authorities are excluded from revenues. |
Advertising expenses | Advertising Expenses Advertising costs are expensed as incurred and include costs of advertising, trade show costs and promotional materials. The Company incurred advertising costs of $8.6 million , $7.7 million and $6.1 million for 2017 , 2016 and 2015 , respectively. |
Income taxes | Income Taxes The Company provides for the effect of income taxes in its consolidated financial statements using the asset and liability method which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, net operating loss carryovers, and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. As a result of the 2017 Tax Act the Company re-measured certain deferred tax assets and liabilities as of December 31, 2017 and recorded $10.4 million of deferred tax expense during 2017 as detailed in Note 9, “Income Taxes”. Income tax expense or benefit is recognized for the amount of taxes payable or refundable for the current year, and for deferred tax assets and liabilities for the tax consequences of events that have been recognized in an entity’s financial statements or tax returns. The Company must make significant assumptions, judgments and estimates to determine its current provision (benefit) for income taxes, its deferred tax assets and liabilities, and any valuation allowance to be recorded against its deferred tax assets. The Company's judgments, assumptions and estimates relating to the current provision (benefit) for income taxes include the geographic mix and amount of income (loss), its interpretation of current tax laws, and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. The Company's judgments also include anticipating the tax positions the Company will record in the consolidated financial statements before actually preparing and filing the tax returns. The Company's estimates and assumptions may differ from the actual results as reflected in its income tax returns and the Company records the required adjustments when they are identified or resolved. Changes in the Company's business, tax laws or the Company's interpretation of tax laws, and developments in current and future tax audits, could significantly impact the amounts provided for income taxes in the Company's results of operations, financial position, or cash flows. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to tax benefit carry-forwards and to differences between the financial statement amounts of assets and liabilities and their respective tax basis. The Company regularly reviews its deferred tax assets for recoverability and establishes a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. To make this assessment, the Company takes into account predictions of the amount and category of taxable income from various sources and all available positive and negative evidence about these possible sources of taxable income. The weight given to the potential effect of negative and positive evidence is commensurate with the extent to which the strength of the evidence can be objectively verified. The Company applies a two-step approach to determining the financial statement recognition and measurement of uncertain tax positions. The Company only recognizes an income tax expense or benefit with respect to uncertain tax positions in its financial statements that the Company judges is more likely than not to be sustained solely on its technical merits in a tax audit, including resolution of any related appeals or litigation processes. To make this judgment, the Company must interpret complex and sometimes ambiguous tax laws, regulations and administrative practices. If an income tax position meets the more likely than not recognition threshold, then the Company must measure the amount of the tax benefit to be recognized by determining the largest amount of tax benefit that has a greater than a 50% likelihood of being realized upon effective settlement with a taxing authority that has full knowledge of all of the relevant facts. It is inherently difficult and subjective to estimate such amounts, as this requires the Company to determine the probability of various possible settlement outcomes. To determine if a tax position is effectively settled after a tax examination has been completed, the Company must also estimate the likelihood that another taxing authority could review the respective tax position. The Company must also determine when it is reasonably possible that the amount of unrecognized tax benefits will significantly increase or decrease in the 12 months after each fiscal year-end. These judgments are difficult because a taxing authority may change its behavior as a result of the Company's disclosures in its financial statements. The Company must reevaluate its income tax positions on a quarterly basis to consider factors such as changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement would result in recognition of a tax benefit or an additional charge to the tax provision. The Company's policy is to recognize interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. |
Comprehensive income (loss) | Comprehensive Income (Loss) Other comprehensive income (loss) consists of unrealized gains (losses) on available-for-sale investments, net of tax, which are not included in the Company’s net income. Total comprehensive income includes net income and other comprehensive income (loss) and is included in the consolidated statements of comprehensive income. |
Foreign currency translation and transactions | Foreign Currency Transactions The Company’s operations are conducted in various countries around the world and the financial statements of its foreign subsidiaries are reported in the U.S. dollar as their respective functional currency. Monetary assets and liabilities denominated in foreign currencies have been re-measured into U.S. dollars using the exchange rates in effect at the balance sheet date, and income and expenses are re-measured at average exchange rates during the period. Foreign currency re-measurement gains and losses and foreign currency transaction gains and losses are recognized in other income (expense), net. The Company recorded total foreign currency transaction losses of $0.4 million , $0.8 million and $0.4 million during 2017 , 2016 and 2015 , respectively. |
Fair value measurement | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. For certain of the Company’s financial instruments, including certain cash equivalents, accounts receivable, accounts payable, and other current liabilities, the carrying amounts approximate their fair value due to the relatively short maturity of these balances. The Company measures and reports certain cash equivalents, investments and derivative foreign currency forward contracts at fair value in accordance with the provisions of the authoritative accounting guidance that addresses fair value measurements. This guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy is broken down into three levels based on the reliability of inputs as follows: Level 1 —Valuations based on quoted prices in active markets for identical assets or liabilities. Level 2 —Valuations based on other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3— Valuations based on inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The Company's financial instruments consist of assets measured using Level 1 and 2 inputs. Level 1 assets include a highly liquid money market fund, which is valued using unadjusted quoted prices that are available in an active market for an identical asset. Level 2 assets include fixed-income U.S. government agency securities, commercial paper, corporate bonds, asset-backed securities and derivative financial instruments consisting of foreign currency forward contracts. The securities, bonds and commercial paper are valued using prices from independent pricing services based on quoted prices in active markets for similar instruments or on industry models using data inputs such as interest rates and prices that can be directly observed or corroborated in active markets. The foreign currency forward contracts are valued using observable inputs , such as quotations on forward foreign exchange points and foreign interest rates . See Note 2 for more information regarding the fair value measurement of the Company's financial instruments. |
Net income per share attributable to common stockholders | Net Income Per Share Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. All participating securities are excluded from basic weighted average common shares outstanding. In computing diluted net income per share, undistributed earnings are reallocated to reflect the potential impact of dilutive securities. Diluted net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period, adjusted for the effects of potentially dilutive common shares, which are comprised of outstanding stock options . The dilutive potential common shares are computed using the treasury stock method or the as-if converted method, as applicable. The effects of outstanding stock options are excluded from the computation of diluted net income per common share in periods in which the effect would be antidilutive. |
Recent accounting pronouncements | Recently Adopted Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 intended to simplify and improve various aspects related to how employee-share based payment transactions are accounted for and presented in the financial statements, requiring excess tax benefits and deficiencies to be recognized as a component of income tax expense rather than equity. The inclusion of excess tax benefits and deficiencies as a component of income tax expense will increase volatility within our provision for income taxes as the amount of excess tax benefits or deficiencies from stock-based compensation awards depends on our stock price at the date the awards vest. This guidance also requires excess tax benefits to be presented as an operating activity on the statement of cash flows and allows an entity to make an accounting policy election to either estimate expected forfeitures or to account for them as they occur. The Company adopted this ASU in its first quarter of 2017 and elected to apply this adoption prospectively, recording an increase to retained earnings of $7.7 million with a corresponding increase to deferred tax assets for federal and state net operating losses and federal research credits. Additionally, the income tax consequences in the current year include a tax deduction benefit of $27.1 million and increased current and deferred tax benefits for federal research credits. The Company has prospectively adjusted its consolidated statements of cash flows. The Company has made the accounting policy election to continue to estimate forfeitures expected to occur to determine the amount of stock-based compensation expense to record each period. See Note 9, "Income Taxes", for additional impact on the Company's consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products or services are transferred to customers. Subsequently, the FASB has issued the following standards related to ASU 2014-09: ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations; ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients and ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. We must adopt ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 with ASU 2014-09 (collectively, the “new revenue standards”) on January 1, 2018. The Company has considered the impact of the standards' requirements and we do not expect that the adoption will have a material impact on the amount or timing of revenue recognized but will impact the Company's consolidated financial statements with respect to the capitalization and amortization of incremental costs of obtaining a contract, primarily sales commissions. Under the Company’s current accounting policy, sales commissions are expensed as incurred. The new revenue standards require the capitalization of all incremental costs that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained, provided the Company expects to recover the costs. Under the new revenue standards, the Company will amortize these costs over a period of benefit, as estimated by management, which may extend beyond the contract term. The Company will elect to use the practical expedient in Accounting Standards Codification ("ASC") 340-40- 25-4 and expense commissions related to contract renewals with a renewal contract term of one year or less. The Company will adopt the new revenue standards as of January 1, 2018, using the modified retrospective transition method applied to those contracts which are not completed as of that date. For sales commissions that are capitalized, the Company expects to record an estimated net cumulative-effect adjustment to retained earnings of $2.7 million associated with the capitalization of sales commissions related to contracts in progress as of January 1, 2018. In addition, we expect to amortize sales commissions over five years, representing the period which our goods and services are being transferred to our customers. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which will impact certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The ASU will impact the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. This ASU is effective for public business entities in fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize all leases, including operating leases, on the balance sheet as a lease asset or lease liability, unless the lease is a short-term lease. ASU 2016-02 also requires additional disclosures regarding leasing arrangements. ASU 2016-02 is effective for us beginning in the first quarter of fiscal 2019 and early adoption is permitted. Pursuant to the leasing criteria, most of our leased space and equipment leases will be required to be accounted for as capitalized assets on the balance sheet with an offsetting financing obligations. In the statement of operations, what was formerly rent expense will be bifurcated into depreciation and interest expense. The Company is currently evaluating the impact and expects the ASU will have a material impact on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force), to provide guidance on the presentation of certain cash receipts and cash payments in the statement of cash flows in order to reduce diversity in existing practice. This ASU is effective for public business entities in fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The update provides guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows. The Company will adopt ASU 2016-18 retrospectively in the first quarter of fiscal 2018. Restricted cash at both December 31, 2017 and 2016 was $1.2 million . In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. This ASU is effective for public business entities in fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017 on a prospective basis. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (Topic 350). This standard eliminates Step 2 from the goodwill impairment test, instead requiring an entity to recognize a goodwill impairment charge for the amount by which the goodwill carrying amount exceeds the reporting unit’s fair value. This ASU is effective for interim and annual goodwill impairment tests in fiscal years beginning after December 15, 2019 with early adoption permitted. This ASU must be applied on a prospective basis. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements. |
Fair Value of Financial Instr22
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Cash and Cash Equivalents, Available-for-sale Securities Reconciliation | The Company's cash and cash equivalents, short-term investments, and long-term investments consist of the following: December 31, 2017 Amortized Cost Unrealized Gains Unrealized Losses Fair Value (in thousands) Cash and cash equivalents: Cash $ 86,500 $ — $ — $ 86,500 Money market funds 91 — — 91 Total 86,591 — — 86,591 Short-term investments: Commercial paper 12,623 — (3 ) 12,620 Corporate bonds 38,425 1 (64 ) 38,362 U.S. government agencies 151,058 — (217 ) 150,841 Total 202,106 1 (284 ) 201,823 Long-term investments: Asset-backed securities 4,998 — (12 ) 4,986 U.S. government agencies 24,269 — (54 ) 24,215 Corporate bonds 38,198 — (175 ) 38,023 Total 67,465 — (241 ) 67,224 Total $ 356,162 $ 1 $ (525 ) $ 355,638 December 31, 2016 Amortized Cost Unrealized Gains Unrealized Losses Fair Value (in thousands) Cash and cash equivalents: Cash $ 72,673 $ — $ — $ 72,673 Money market funds 473 — — 473 Commercial paper 13,591 — — 13,591 Total 86,737 — — 86,737 Short-term investments: Commercial paper 14,782 5 — 14,787 Corporate bonds 13,490 — (11 ) 13,479 Asset-backed securities 1,235 — — 1,235 U.S. government agencies 127,660 — (42 ) 127,618 Total 157,167 5 (53 ) 157,119 Long-term investments: Asset-backed securities 5,091 2 — 5,093 U.S. government agencies 29,501 — (71 ) 29,430 Corporate bonds 11,243 — (41 ) 11,202 Total 45,835 2 (112 ) 45,725 Total $ 289,739 $ 7 $ (165 ) $ 289,581 |
Schedule of Assets Measured on Recurring Basis | The following table sets forth by level within the fair value hierarchy the fair value of the Company's available-for-sale securities measured on a recurring basis, excluding cash and money market funds: December 31, 2017 Level 1 Level 2 Level 3 Fair Value (in thousands) Commercial paper $ — $ 12,620 $ — $ 12,620 U.S. government agencies — 175,056 — 175,056 Corporate bonds — 76,385 — 76,385 Asset-backed securities — 4,986 — 4,986 Total $ — $ 269,047 $ — $ 269,047 December 31, 2016 Level 1 Level 2 Level 3 Fair Value (in thousands) Commercial paper $ — $ 28,378 $ — $ 28,378 U.S. government agencies — 157,048 — 157,048 Corporate bonds — 24,681 — 24,681 Asset-backed securities — 6,328 — 6,328 Total $ — $ 216,435 $ — $ 216,435 |
Schedule of Investments Classified by Contractual Maturity | The following summarizes the fair value of securities classified as available-for-sale by contractual maturity: December 31, 2017 Mature within One Year After One Year through Two Years Over Two Years Fair Value (in thousands) Commercial paper $ 12,620 $ — $ — $ 12,620 U.S. government agencies 150,841 22,033 2,182 175,056 Corporate bonds 38,362 22,717 15,306 76,385 Asset-backed securities 4,702 284 — 4,986 Total $ 206,525 $ 45,034 $ 17,488 $ 269,047 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | Property and equipment consists of the following: December 31, December 31, 2017 2016 (in thousands) Computer equipment $ 77,883 $ 57,295 Computer software 20,447 19,716 Furniture, fixtures and equipment 5,075 3,425 Scanner appliances 14,325 14,776 Leasehold improvements 16,067 3,694 Total property and equipment 133,797 98,906 Less: accumulated depreciation and amortization (75,240 ) (59,505 ) Property and equipment, net $ 58,557 $ 39,401 |
Business Combination (Tables)
Business Combination (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | The allocation of the consideration for business combinations completed in year of 2017 is summarized as follows (in thousands): Acquiree Purchase Consideration Net Tangible Assets Acquired/ (liabilities assumed) Purchased Intangible Assets Goodwill Nevis $ 5,753 $ 14 $ 5,156 $ 583 NetWatcher 7,729 80 7,000 649 Total $ 13,482 $ 94 $ 12,156 $ 1,232 |
Goodwill and Intangible Asset25
Goodwill and Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Carrying value of intangible assets | The carrying values of intangible assets are as follows (in thousands): December 31, 2017 Weighted Average Lives Weighted Remaining Average Lives Cost Accumulated Amortization Net Book Value Developed technology 5 years 5 years $ 14,067 $ (2,371 ) $ 11,696 Patent licenses 14 years 7 years 1,388 (723 ) 665 Total intangibles subject to amortization $ 15,455 $ (3,094 ) 12,361 Intangible assets not subject to amortization 40 Total intangible assets, net $ 12,401 |
Intangible assets future periods amortization expense | As of December 31, 2017 , the Company expects amortization expense in future periods to be as follows (in thousands): 2018 $ 2,531 2019 2,531 2020 2,531 2021 2,531 2022 2,071 2023 and thereafter 166 Total expected future amortization expense $ 12,361 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments for Operating Leases | The following are the minimum annual lease payments due under operating leases at December 31, 2017 (in thousands): 2018 $ 6,893 2019 5,784 2020 5,415 2021 4,663 2022 4,141 2023 and thereafter 22,000 Total minimum lease payments $ 48,896 |
Employee Stock and Benefit Pl27
Employee Stock and Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Share-based Compensation [Abstract] | |
Schedule of shares reserved for future issuance | The Company had reserved shares of common stock for future issuance as of December 31, 2017 as follows: Options and RSUs outstanding under equity incentive plans 2000 Equity Incentive Plan 691,589 2012 Equity Incentive Plan 5,214,890 Shares available for future grants under an equity incentive plan 2012 Equity Incentive Plan 2,208,858 Total shares reserved for future issuance 8,115,337 |
Stock-based employee compensation | Stock-based compensation included in the consolidated statements of operations is as follows: Year Ended December 31, 2017 2016 2015 (in thousands) Cost of revenues $ 2,159 $ 1,858 $ 1,250 Research and development 5,944 5,678 4,936 Sales and marketing 4,755 4,870 3,867 General and administrative 14,103 7,743 7,441 Total stock-based employee compensation $ 26,961 $ 20,149 $ 17,494 |
Fair value assumptions of options granted to employees | The fair value of each option granted to employees is estimated on the date of grant using the Black-Scholes-Merton option-pricing model based on the following assumptions: Year Ended December 31, 2017 2016 2015 Expected term (in years) 5.1 to 5.5 5.0 to 5.9 4.9 to 5.9 Volatility 47% to 49% 45% to 49% 45% to 48% Risk-free interest rate 1.8% to 2.0% 1.1% to 1.3% 1.3% to 1.7% Dividend yield — — — |
Stock option activity | A summary of the Company’s stock option activity is as follows: Outstanding Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (in thousands) Balance as of December 31, 2014 7,605,407 $ 12.93 6.5 $ 188,743 Granted 1,526,450 $ 39.50 Exercised (807,846 ) $ 12.50 Canceled (744,953 ) $ 27.67 Balance as of December 31, 2015 7,579,058 $ 16.88 5.9 $ 131,345 Granted 2,120,633 $ 26.64 Exercised (1,399,157 ) $ 10.83 Canceled (772,854 ) $ 31.57 Balance as of December 31, 2016 7,527,680 $ 19.25 6.0 $ 101,717 Granted 408,225 $ 40.82 Exercised (2,997,095 ) $ 11.05 Canceled (442,919 ) $ 33.29 Balance as of December 31, 2017 4,495,891 $ 25.29 6.6 $ 153,129 Vested and expected to vest—December 31, 2017 4,242,256 $ 24.75 6.6 $ 146,791 Exercisable—December 31, 2017 3,002,205 $ 21.90 5.8 $ 112,447 |
Schedule of exercise price range, outstanding and vested | The following table summarizes the outstanding and vested stock options at December 31, 2017 : Outstanding Exercisable Exercise Price Number of Weighted Weighted Number of Weighted $2.60 - $4.40 471,051 $ 3.76 2.1 471,051 $ 3.76 $4.80 - $13.60 458,565 $ 10.50 4.8 458,565 $ 10.50 $16.68 - $25.17 605,184 $ 22.46 6.6 445,629 $ 21.59 $25.56 - $25.56 969,674 $ 25.56 8.3 394,095 $ 25.56 $26.58 - $26.86 478,043 $ 26.86 6.1 477,613 $ 26.86 $30.58 - $31.67 456,331 $ 30.87 7.2 350,657 $ 30.66 $34.97 - $37.28 559,687 $ 36.62 7.9 266,436 $ 36.81 $38.40 - $40.89 369,970 $ 39.57 7.7 100,054 $ 40.72 $52.14 - $52.14 57,886 $ 52.14 6.7 38,105 $ 52.14 $52.60 - $52.60 69,500 $ 52.60 9.8 — $ — 4,495,891 $ 25.29 6.6 3,002,205 $ 21.90 |
Summary of the Company’s RSUs and RSAs activity | A summary of the Company’s RSUs and RSAs activity is as follows: Number of Shares Weighted-Average Grant Date Fair Value Per Share Balance as of December 31, 2015 47,500 $ 37.28 Granted 681,350 $ 28.52 Vested (39,998 ) $ 27.49 Cancelled (101,519 ) $ 31.12 Balance as of December 31, 2016 587,333 $ 28.85 Granted 1,326,849 $ 42.69 Vested (368,367 ) $ 33.52 Cancelled (135,227 ) $ 32.04 Balance as of December 31, 2017 1,410,588 $ 40.34 Expected to vest as of December 31, 2017 1,239,124 $ 39.87 |
Other Income (Expense), Net (Ta
Other Income (Expense), Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Other Income and Expenses [Abstract] | |
Schedule of Other Nonoperating Income (Expense) | Other expense, net consists of the following: Year Ended December 31, 2017 2016 2015 (in thousands) Foreign exchange losses $ (355 ) $ (770 ) $ (444 ) Other expense (181 ) (202 ) (406 ) Other expense, net $ (536 ) $ (972 ) $ (850 ) |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Geographical Breakdown of Income (Loss) Before Provision for (Benefit From) Income Taxes | The Company’s geographical breakdown of income before income taxes is as follows: Year Ended December 31, 2017 2016 2015 (in thousands) Domestic $ 34,914 $ 28,982 $ 22,540 Foreign 4,464 1,447 1,980 Income before income taxes $ 39,378 $ 30,429 $ 24,520 |
Schedule of Provision for (Benefit From) Income Taxes | The provision for (benefit from) income taxes consists of the following: Year Ended December 31, 2017 2016 2015 (in thousands) Current Federal $ 22 $ 8,334 $ 115 State 23 1,125 1,041 Foreign 1,471 963 693 Total current provision 1,516 10,422 1,849 Deferred Federal (1,650 ) 611 7,115 State (996 ) 126 (247 ) Foreign 68 46 (62 ) Total deferred (benefit) provision (2,578 ) 783 6,806 Total (benefit from) provision for income taxes $ (1,062 ) $ 11,205 $ 8,655 |
Schedule of Effective Income Tax Rate Reconciliation | The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows: Year Ended December 31, 2017 2016 2015 Federal statutory rate 35.0 % 35.0 % 35.0 % State taxes (2.1 ) 2.1 2.2 Stock-based compensation (58.1 ) 2.4 0.5 Foreign source income (0.2 ) 0.9 0.6 Change in valuation allowance 2.8 1.3 1.3 Federal rate adjustment (due to 2017 Tax Act) 26.4 — — Federal and state research and development credit (5.3 ) (3.6 ) (3.9 ) Other (1.2 ) (1.3 ) (0.4 ) (Benefit from) provision for income taxes (2.7 )% 36.8 % 35.3 % |
Schedule of Deferred Tax Assets and Liabilities | The components of the Company’s deferred tax assets and liabilities are as follows: December 31, 2017 2016 (in thousands) Deferred tax assets Net operating loss carryforwards $ 8,947 $ 1,472 Research and development credit carryforwards 11,493 3,334 Foreign tax credit carryforwards 1,149 — Accrued liabilities 470 681 Deferred revenues 3,416 5,018 Deferred rent 558 74 Intangible assets 409 409 Stock-based compensation 7,135 12,513 Other 638 1,225 Gross deferred tax assets 34,215 24,726 Valuation allowance (5,773 ) (3,688 ) Net deferred tax assets 28,442 21,038 Deferred tax liabilities Fixed assets (3,372 ) (4,448 ) Intangible assets (4 ) — Total deferred tax liabilities (3,376 ) (4,448 ) Net deferred tax assets $ 25,066 $ 16,590 |
Schedule of Unrecognized Tax Benefits | A reconciliation of the Company’s unrecognized tax benefits is as follows: Year Ended December 31, 2017 2016 2015 (in thousands) Unrecognized tax benefits beginning balance $ 4,071 $ 3,506 $ 3,330 Gross increase for tax positions of prior years 66 2 20 Gross decrease for tax positions of prior years — (15 ) (171 ) Gross increase for tax positions of current year 1,101 659 418 Lapse of statute of limitations (126 ) (81 ) (91 ) Total unrecognized tax benefits $ 5,112 $ 4,071 $ 3,506 |
Segment Information and Infor30
Segment Information and Information about Geographic Area (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Revenues and property and equipment, net, by geographic area | Revenues by geographic area, based on the location of the customer, are as follows: Year Ended December 31, 2017 2016 2015 (in thousands) United States $ 162,681 $ 139,743 $ 115,384 Foreign 68,147 58,182 48,900 Total revenues $ 230,828 $ 197,925 $ 164,284 Property and equipment, net, by geographic area, are as follows: December 31, 2017 2016 (in thousands) United States $ 50,785 $ 30,733 Foreign 7,772 8,668 Total property and equipment, net $ 58,557 $ 39,401 |
Net Income Per Share Attribut31
Net Income Per Share Attributable to Common Stockholders (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The computations for basic and diluted net income per share are as follows: Year Ended December 31, 2017 2016 2015 (in thousands, except per share data) Numerator: Net income - basic and diluted $ 40,440 $ 19,224 $ 15,865 Denominator: Weighted-average shares used in computing net income per share - basic 37,443 35,247 34,050 Effect of potentially dilutive securities: Common stock options 2,262 3,052 4,134 RSUs 366 70 — Weighted-average shares used in computing net income per share - diluted 40,071 38,369 38,184 Net income per share: Basic $ 1.08 $ 0.55 $ 0.47 Diluted $ 1.01 $ 0.50 $ 0.42 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | otentially dilutive securities not included in the calculation of diluted net income per share because doing so would be antidilutive are as follows: Year Ended December 31, 2017 2016 2015 (in thousands) Common stock options 742 3,241 1,582 RSUs 71 24 — |
Quarterly Financial Informati32
Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | Three Months Ended Mar. 31, 2016 Jun. 30, 2016 Sep. 30, 2016 Dec 31, 2016 Mar. 31, 2017 Jun. 30, 2017 Sep. 30, 2017 Dec. 31, 2017 (unaudited) (in thousands, except per share data) Revenues $ 46,248 $ 48,466 $ 50,987 $ 52,224 $ 53,121 $ 55,302 $ 59,490 $ 62,915 Income from operations 7,597 5,712 7,987 8,811 7,656 9,009 10,849 9,729 Other income (expense), net 168 40 230 (116 ) 453 360 671 652 Income before income taxes 7,765 5,752 8,217 8,695 8,109 9,369 11,520 10,381 Net income 4,783 3,538 4,996 5,907 21,930 7,202 8,452 2,857 Net income per share: Basic $ 0.14 $ 0.10 $ 0.14 $ 0.17 $ 0.60 $ 0.19 $ 0.22 $ 0.07 Diluted $ 0.13 $ 0.09 $ 0.13 $ 0.15 $ 0.56 $ 0.18 $ 0.21 $ 0.07 |
The Company and Summary of Si33
The Company and Summary of Significant Accounting Policies (Details) € in Millions, £ in Millions | 12 Months Ended | |||||
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2017GBP (£)contractcustomer | Dec. 31, 2017EUR (€)contractcustomer | Dec. 31, 2017USD ($)contractcustomer | |
The company and qualitative disclosure about market risk [Line Items] | ||||||
General and administrative | $ 35,334,000 | $ 29,114,000 | $ 24,316,000 | |||
Cost of revenues | 51,580,000 | 43,128,000 | 34,327,000 | |||
Research and development | 42,816,000 | 36,591,000 | 30,438,000 | |||
Sales and marketing | 63,855,000 | 58,985,000 | 50,397,000 | |||
Goodwill and Intangible Assets | ||||||
Impairment of intangible assets | 0 | 0 | 255,000 | |||
Software Development Costs | ||||||
Capitalized software development costs | 0 | 0 | 99,000 | |||
Cost of intangible assets | 3,298,000 | $ 15,455,000 | ||||
Accumulated amortization of intangible assets | 2,351,000 | $ 3,094,000 | ||||
Derivative Financial Instruments | ||||||
Derivative, number of instruments held | contract | 2 | 2 | 2 | |||
Derivative, notional amount | £ 4.6 | € 7.6 | ||||
Foreign currency contract, asset, fair value disclosure | $ 0 | |||||
Net (loss) gain from forward contracts | (1,665,000) | 554,000 | 608,000 | |||
Other foreign currency transaction gains (losses) | 1,310,000 | (1,324,000) | (1,052,000) | |||
Total foreign exchange loss, net | (355,000) | (770,000) | (444,000) | |||
Advertising Expenses | ||||||
Advertising expense | 8,600,000 | 7,700,000 | 6,100,000 | |||
Income Taxes | ||||||
Tax Cuts and Jobs Act of 2017, Provisional income tax expense (benefit) | $ 10,400,000 | |||||
Noncurrent deferred tax assets | 16,590,000 | 25,066,000 | ||||
Sales commission amortization period | 5 years | |||||
Provision for (benefit from) income taxes | $ (1,062,000) | 11,205,000 | 8,655,000 | |||
Restricted cash | 1,200,000 | 1,200,000 | ||||
Minimum | ||||||
Property Equipment, Net | ||||||
Property, plant and equipment, useful life | 3 years | |||||
Goodwill and Intangible Assets | ||||||
Finite-lived intangible asset, useful life | 3 years | |||||
Maximum | ||||||
Property Equipment, Net | ||||||
Property, plant and equipment, useful life | 5 years | |||||
Goodwill and Intangible Assets | ||||||
Finite-lived intangible asset, useful life | 14 years | |||||
Scanner appliances | ||||||
Property Equipment, Net | ||||||
Property, plant and equipment, useful life | 3 years | |||||
Forward contracts | ||||||
Derivative Financial Instruments | ||||||
Derivative, notional amount | £ 4.8 | € 7 | ||||
Foreign currency contract, asset, fair value disclosure | 0 | 0 | ||||
Software and software development costs | ||||||
Software Development Costs | ||||||
Cost of intangible assets | 400,000 | $ 400,000 | ||||
Customer concentration risk | Accounts receivable | ||||||
Concentration of Credit Risk | ||||||
Concentration risk, number of customers | customer | 0 | 0 | 0 | |||
Restatement Adjustment | ||||||
The company and qualitative disclosure about market risk [Line Items] | ||||||
General and administrative | 3,000,000 | 2,300,000 | ||||
Cost of revenues | 700,000 | 500,000 | ||||
Research and development | 1,300,000 | 1,000,000 | ||||
Sales and marketing | $ 1,000,000 | 800,000 | ||||
Accounting Standards Update 2016-09 | ||||||
Income Taxes | ||||||
Cumulative effect adjustment | $ 7,745,000 | |||||
Provision for (benefit from) income taxes | $ (27,100,000) | |||||
Accounting Standards Update 2016-09 | Retained earnings | ||||||
Income Taxes | ||||||
Cumulative effect adjustment | 7,745,000 | |||||
Accounting Standards Update 2014-09 | Retained earnings | ||||||
Income Taxes | ||||||
Cumulative effect adjustment | $ 2,700,000 | |||||
Other expense, net | ||||||
Goodwill and Intangible Assets | ||||||
Impairment of intangible assets | $ 300,000 |
Fair Value of Financial Instr34
Fair Value of Financial Instruments (Cash and Cash Equivalents, Available-for-sale Securities, Restricted Cash Reconciliation) (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Amortized cost, total | $ (356,162) | $ (289,739) |
Unrealized Gains | 1 | 7 |
Unrealized Losses | (525) | (165) |
Fair value | 355,638 | 289,581 |
Cash and Cash Equivalents | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Amortized cost, total | (86,591) | (86,737) |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Fair value | 86,591 | 86,737 |
Cash and Cash Equivalents | Cash | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Amortized cost, total | (86,500) | (72,673) |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Fair value | 86,500 | 72,673 |
Cash and Cash Equivalents | Money market funds | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Amortized cost, total | (91) | (473) |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Fair value | 91 | 473 |
Cash and Cash Equivalents | Commercial paper | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Amortized cost, total | (13,591) | |
Unrealized Gains | 0 | |
Unrealized Losses | 0 | |
Fair value | 13,591 | |
Short-term Investments | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Amortized cost, total | (202,106) | (157,167) |
Unrealized Gains | 1 | 5 |
Unrealized Losses | (284) | (53) |
Fair value | 201,823 | 157,119 |
Short-term Investments | U.S. government agencies | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Amortized cost, total | (151,058) | (127,660) |
Unrealized Gains | 0 | 0 |
Unrealized Losses | (217) | (42) |
Fair value | 150,841 | 127,618 |
Short-term Investments | Commercial paper | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Amortized cost, total | (12,623) | (14,782) |
Unrealized Gains | 0 | 5 |
Unrealized Losses | (3) | 0 |
Fair value | 12,620 | 14,787 |
Short-term Investments | Corporate bonds | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Amortized cost, total | (38,425) | (13,490) |
Unrealized Gains | 1 | 0 |
Unrealized Losses | (64) | (11) |
Fair value | 38,362 | 13,479 |
Short-term Investments | Asset-backed securities | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Amortized cost, total | (1,235) | |
Unrealized Gains | 0 | |
Unrealized Losses | 0 | |
Fair value | 1,235 | |
Long-Term Investments | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Amortized cost, total | (67,465) | (45,835) |
Unrealized Gains | 0 | 2 |
Unrealized Losses | (241) | (112) |
Fair value | 67,224 | 45,725 |
Long-Term Investments | U.S. government agencies | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Amortized cost, total | (24,269) | (29,501) |
Unrealized Gains | 0 | 0 |
Unrealized Losses | (54) | (71) |
Fair value | 24,215 | 29,430 |
Long-Term Investments | Corporate bonds | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Amortized cost, total | (38,198) | (11,243) |
Unrealized Gains | 0 | 0 |
Unrealized Losses | (175) | (41) |
Fair value | 38,023 | 11,202 |
Long-Term Investments | Asset-backed securities | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Amortized cost, total | (4,998) | (5,091) |
Unrealized Gains | 0 | 2 |
Unrealized Losses | (12) | 0 |
Fair value | $ 4,986 | $ 5,093 |
Fair Value of Financial Instr35
Fair Value of Financial Instruments (Fair Value Hierarchy) (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | $ 269,047 | |
Recurring Basis | Fair Value | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 269,047 | $ 216,435 |
Level 1 | Recurring Basis | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 0 | 0 |
Level 2 | Recurring Basis | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 269,047 | 216,435 |
Level 3 | Recurring Basis | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 0 | 0 |
Commercial paper | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 12,620 | |
Commercial paper | Recurring Basis | Fair Value | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 12,620 | 28,378 |
Commercial paper | Level 1 | Recurring Basis | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 0 | 0 |
Commercial paper | Level 2 | Recurring Basis | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 12,620 | 28,378 |
Commercial paper | Level 3 | Recurring Basis | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 0 | 0 |
U.S. government agencies | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 175,056 | |
U.S. government agencies | Recurring Basis | Fair Value | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 175,056 | 157,048 |
U.S. government agencies | Level 1 | Recurring Basis | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 0 | 0 |
U.S. government agencies | Level 2 | Recurring Basis | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 175,056 | 157,048 |
U.S. government agencies | Level 3 | Recurring Basis | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 0 | 0 |
Corporate bonds | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 76,385 | |
Corporate bonds | Recurring Basis | Fair Value | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 76,385 | 24,681 |
Corporate bonds | Level 1 | Recurring Basis | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 0 | 0 |
Corporate bonds | Level 2 | Recurring Basis | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 76,385 | 24,681 |
Corporate bonds | Level 3 | Recurring Basis | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 0 | 0 |
Asset-backed securities | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 4,986 | |
Asset-backed securities | Recurring Basis | Fair Value | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 4,986 | 6,328 |
Asset-backed securities | Level 1 | Recurring Basis | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 0 | 0 |
Asset-backed securities | Level 2 | Recurring Basis | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | 4,986 | 6,328 |
Asset-backed securities | Level 3 | Recurring Basis | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities, fair value | $ 0 | $ 0 |
Fair Value of Financial Instr36
Fair Value of Financial Instruments (Contractual Maturity) (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Schedule of Available-for-sale Securities [Line Items] | |
Mature within One Year | $ 206,525 |
After One Year through Two Years | 45,034 |
Over Two Years | 17,488 |
Fair Value | 269,047 |
Commercial paper | |
Schedule of Available-for-sale Securities [Line Items] | |
Mature within One Year | 12,620 |
After One Year through Two Years | 0 |
Over Two Years | 0 |
Fair Value | 12,620 |
U.S. government agencies | |
Schedule of Available-for-sale Securities [Line Items] | |
Mature within One Year | 150,841 |
After One Year through Two Years | 22,033 |
Over Two Years | 2,182 |
Fair Value | 175,056 |
Corporate bonds | |
Schedule of Available-for-sale Securities [Line Items] | |
Mature within One Year | 38,362 |
After One Year through Two Years | 22,717 |
Over Two Years | 15,306 |
Fair Value | 76,385 |
Asset-backed securities | |
Schedule of Available-for-sale Securities [Line Items] | |
Mature within One Year | 4,702 |
After One Year through Two Years | 284 |
Over Two Years | 0 |
Fair Value | $ 4,986 |
Fair Value of Financial Instr37
Fair Value of Financial Instruments (Narrative) (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign currency contract, asset, fair value disclosure | $ 0 | |
Forward contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign currency contract, asset, fair value disclosure | $ 0 | $ 0 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | Nov. 20, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||||
Property and equipment | $ 133,797 | $ 98,906 | ||
Less: accumulated depreciation and amortization | (75,240) | (59,505) | ||
Property and equipment, net | 58,557 | 39,401 | ||
Depreciation and amortization expense | 19,900 | 16,600 | $ 13,900 | |
Loss on disposal of office facilities | $ 200 | |||
Gross amount of abandoned costs | 2,400 | |||
Accumulated depreciation on abandoned facility | $ 2,200 | |||
Computer equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment | 77,883 | 57,295 | ||
Computer software | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment | 20,447 | 19,716 | ||
Furniture, fixtures and equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment | 5,075 | 3,425 | ||
Scanner appliances | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment | 14,325 | 14,776 | ||
Scanner appliances and other computer equipment subject to subscription | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, net | 8,300 | 6,800 | ||
Scanner appliances and other computer equipment not placed in service | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment | 1,300 | 900 | ||
Leasehold improvements | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment | 16,067 | 3,694 | ||
Other fixed assets not placed in service | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment | $ 9,600 | $ 3,600 |
Business Combination (Details)
Business Combination (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Business Acquisition [Line Items] | |||
Total purchase price | $ 13,482 | ||
Cash payment to acquire businesses | $ 12,482 | $ 0 | $ 0 |
Estimated useful life of technology-based intangible assets | 5 years | ||
Nevis | |||
Business Acquisition [Line Items] | |||
Total purchase price | $ 5,753 | ||
NetWatcher | |||
Business Acquisition [Line Items] | |||
Total purchase price | 7,729 | ||
Reserve fund | $ 1,000 | ||
Future payments for continued employment, year 1 | 1 year | ||
Future payments for continued employment, year 2 | 2 years |
Business Combination - Schedule
Business Combination - Schedule of consideration allocation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Business Acquisition [Line Items] | ||
Purchase Consideration | $ 13,482 | |
Net Tangible Assets Acquired/ (liabilities assumed) | 94 | |
Purchased Intangible Assets | 12,156 | |
Goodwill | 1,549 | $ 317 |
Nevis | ||
Business Acquisition [Line Items] | ||
Purchase Consideration | 5,753 | |
Net Tangible Assets Acquired/ (liabilities assumed) | 14 | |
Purchased Intangible Assets | 5,156 | |
Goodwill | 583 | |
NetWatcher | ||
Business Acquisition [Line Items] | ||
Purchase Consideration | 7,729 | |
Net Tangible Assets Acquired/ (liabilities assumed) | 80 | |
Purchased Intangible Assets | 7,000 | |
Goodwill | 649 | |
Nevis and NetWatcher | ||
Business Acquisition [Line Items] | ||
Goodwill | $ 1,232 |
Goodwill and Intangible Asset41
Goodwill and Intangible Assets, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Schedule of Goodwill and Intangible Assets [Line Items] | ||
Cost | $ 15,455 | $ 3,298 |
Accumulated Amortization | (3,094) | (2,351) |
Net Book Value | 12,361 | 947 |
Intangible assets not subject to amortization | 40 | 40 |
Total intangible assets, net | 12,401 | 987 |
Amortization of intangible assets | 700 | 400 |
Goodwill | $ 1,549 | $ 317 |
Existing technology | ||
Schedule of Goodwill and Intangible Assets [Line Items] | ||
Estimated Lives | 5 years | 7 years |
Weighted Remaining Average Lives | 5 years | 1 year |
Cost | $ 14,067 | $ 1,910 |
Accumulated Amortization | (2,371) | (1,728) |
Net Book Value | $ 11,696 | $ 182 |
Patent license | ||
Schedule of Goodwill and Intangible Assets [Line Items] | ||
Estimated Lives | 14 years | 14 years |
Weighted Remaining Average Lives | 7 years | 8 years |
Cost | $ 1,388 | $ 1,388 |
Accumulated Amortization | (723) | (623) |
Net Book Value | $ 665 | $ 765 |
Goodwill and Intangible Asset42
Goodwill and Intangible Assets, Net (Future Amortization) (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2,017 | $ 2,531 | |
2,018 | 2,531 | |
2,019 | 2,531 | |
2,020 | 2,531 | |
2,021 | 2,071 | |
2021 and thereafter | 166 | |
Net Book Value | $ 12,361 | $ 947 |
Commitments and Contingencies43
Commitments and Contingencies (Future Minimum Lease Payments) (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Operating Leases | |
2,018 | $ 6,893 |
2,019 | 5,784 |
2,020 | 5,415 |
2,021 | 4,663 |
2,022 | 4,141 |
Thereafter | 22,000 |
Total minimum lease payments | $ 48,896 |
Commitments and Contingencies44
Commitments and Contingencies (Additional Information) (Details) - USD ($) $ in Thousands | Oct. 14, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Commitments and Contingencies Disclosure [Abstract] | ||||
Rent expense | $ 9,600 | $ 7,100 | $ 6,600 | |
Deferred rent credit, noncurrent | 9,500 | $ 400 | ||
Operating Leased Assets [Line Items] | ||||
Total lease commitments | $ 48,896 | |||
Standby letters of credit for headquarters | ||||
Operating Leased Assets [Line Items] | ||||
Maximum borrowing capacity | $ 1,200 | |||
Lease agreement for headquarters | ||||
Operating Leased Assets [Line Items] | ||||
Lease term | 10 years | |||
Total lease commitments | $ 38,600 |
Employee Stock and Benefit Pl45
Employee Stock and Benefit Plans (Common Stock and Preferred Stock) (Details) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Oct. 03, 2012 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options and RSUs outstanding under equity incentive plans | 4,495,891 | 7,527,680 | 7,579,058 | 7,605,407 | |
Total shares reserved for future issuance | 8,115,337 | ||||
Preferred Stock | |||||
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | |||
Preferred stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 | |||
Preferred stock, shares issued | 0 | 0 | |||
Preferred stock, shares outstanding | 0 | 0 | |||
Preferred Stock | |||||
Preferred Stock | |||||
Preferred stock, shares authorized | 20,000,000 | ||||
Preferred stock, par value per share (in dollars per share) | $ 0.001 | ||||
2000 Equity Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options and RSUs outstanding under equity incentive plans | 691,589 | ||||
2012 Equity Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options and RSUs outstanding under equity incentive plans | 5,214,890 | ||||
Shares available for future grants under an equity incentive plan | 2,208,858 |
Employee Stock and Benefit Pl46
Employee Stock and Benefit Plans (Plan Information) (Details) - shares | Sep. 26, 2012 | Dec. 31, 2017 |
2012 Equity Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized (in shares) | 9,861,234 | |
Shares available for future grants under an equity incentive plan | 2,208,858 | |
2012 Equity Incentive Plan | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expiration period | 10 years | |
2012 Equity Incentive Plan | Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 4 years | |
Term of award | 10 years | |
2000 Equity Incentive Plan | Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 4 years | |
Term of award | 10 years | |
Number of shares available for issuance (in shares) | 0 | |
2000 Equity Incentive Plan | Stock Options | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award strike price as a percentage of market value | 85.00% | |
Increase of Number of Shares Option | 2012 Equity Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity incentive plan annual increase (in shares) | 3,050,000 | |
Increase of Percentage of Shares Outstanding Option | 2012 Equity Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity incentive plan, annual increase, percent of shares outstanding | 5.00% |
Employee Stock and Benefit Pl47
Employee Stock and Benefit Plans (Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based employee compensation | $ 26,961 | $ 20,149 | $ 17,494 |
Unrecognized employee compensation cost | $ 16,500 | ||
Unrecognized employee compensation cost, period for recognition | 2 years 4 months 10 days | ||
Non-employee share-based compensation expense | $ 900 | 700 | 600 |
Contributions by the Company to the 401(k) plan | 1,100 | 600 | |
Restricted Stock Units | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Unrecognized employee compensation cost | $ 44,600 | ||
Unrecognized employee compensation cost, period for recognition | 2 years 10 months 24 days | ||
Cost of revenues | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based employee compensation | $ 2,159 | 1,858 | 1,250 |
Research and development | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based employee compensation | 5,944 | 5,678 | 4,936 |
Sales and marketing | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based employee compensation | 4,755 | 4,870 | 3,867 |
General and administrative | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based employee compensation | $ 14,103 | $ 7,743 | $ 7,441 |
Employee Stock and Benefit Pl48
Employee Stock and Benefit Plans (Fair Value Assumptions, Stock Options) (Details) - Stock Options | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dividend yield | 0.00% | 0.00% | 0.00% |
Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term | 5 years 1 month 6 days | 5 years | 4 years 10 months 24 days |
Volatility | 47.00% | 45.00% | 45.00% |
Risk-free interest rate | 1.80% | 1.10% | 1.30% |
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term | 5 years 6 months | 5 years 10 months 24 days | 5 years 10 months 24 days |
Volatility | 49.00% | 49.00% | 48.00% |
Risk-free interest rate | 2.00% | 1.30% | 1.70% |
Employee Stock and Benefit Pl49
Employee Stock and Benefit Plans (Stock Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Outstanding Shares | ||||
Beginning balance (in shares) | 7,527,680 | 7,579,058 | 7,605,407 | |
Granted (in shares) | 408,225 | 2,120,633 | 1,526,450 | |
Exercised (in shares) | (2,997,095) | (1,399,157) | (807,846) | |
Canceled (in shares) | (442,919) | (772,854) | (744,953) | |
Ending balance (in shares) | 4,495,891 | 7,527,680 | 7,579,058 | 7,605,407 |
Vested and Expected to vest (in shares) | 4,242,256 | |||
Exercisable (in shares) | 3,002,205 | |||
Weighted Average Exercise Price | ||||
Weighted average exercise price, beginning balance (in dollars per share) | $ 19.25 | $ 16.88 | $ 12.93 | |
Weighted average exercise price, granted (in dollars per share) | 40.82 | 26.64 | 39.50 | |
Weighted average exercise price, exercised (in dollars per share) | 11.05 | 10.83 | 12.50 | |
Weighted average exercise price, canceled (in dollars per share) | 33.29 | 31.57 | 27.67 | |
Weighted average exercise price, ending balance (in dollars per share) | 25.29 | $ 19.25 | $ 16.88 | $ 12.93 |
Vested and Expected to vest, weighted average exercise price (in dollars per share) | 24.75 | |||
Exercisable, Weighted average exercise price (in dollars per share) | $ 21.90 | |||
Weighted Average Remaining Contractual Life (Years) | ||||
Weighted average remaining contractual life | 6 years 7 months 6 days | 6 years | 5 years 10 months 24 days | 6 years 6 months |
Vested and Expected to vest, weighted average remaining contractual life | 6 years 7 months 6 days | |||
Exercisable, weighted average remaining contractual life | 5 years 9 months 18 days | |||
Aggregate Intrinsic Value | ||||
Aggregate intrinsic value | $ 153,129 | $ 101,717 | $ 131,345 | $ 188,743 |
Vested and Expected to vest, aggregate intrinsic value | 146,791 | |||
Exercisable, aggregate intrinsic value | $ 112,447 |
Employee Stock and Benefit Pl50
Employee Stock and Benefit Plans (Options Outstanding and Vested) (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Number of shares, outstanding | 4,495,891 | ||
Weighted average exercise price per share, outstanding (in dollar per share) | $ 25.29 | ||
Weighted average remaining contractual life, outstanding | 6 years 7 months 10 days | ||
Number of shares, vested | 3,002,205,000 | ||
Weighted average exercise price per share, vested (in dollar per share) | $ 21.90 | ||
Stock Options | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Weighted average grant date fair value (in dollars per share) | $ 18.03 | $ 11.12 | $ 16.51 |
Aggregate grant date fair value | $ 7.4 | $ 23.6 | $ 25.2 |
Intrinsic value of options exercised | $ 92.1 | $ 25 | $ 22.7 |
$1.90 - $1.90 | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Exercise price range, lower limit (in dollar per share) | $ 2.60 | ||
Exercise price range, upper limit (in dollar per share) | $ 4.40 | ||
Number of shares, outstanding | 471,051 | ||
Weighted average exercise price per share, outstanding (in dollar per share) | $ 3.76 | ||
Weighted average remaining contractual life, outstanding | 2 years 26 days | ||
Number of shares, vested | 471,051,000 | ||
Weighted average exercise price per share, vested (in dollar per share) | $ 3.76 | ||
$2.10 - $2.80 | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Exercise price range, lower limit (in dollar per share) | 4.80 | ||
Exercise price range, upper limit (in dollar per share) | $ 13.60 | ||
Number of shares, outstanding | 458,565 | ||
Weighted average exercise price per share, outstanding (in dollar per share) | $ 10.50 | ||
Weighted average remaining contractual life, outstanding | 4 years 9 months 7 days | ||
Number of shares, vested | 458,565,000 | ||
Weighted average exercise price per share, vested (in dollar per share) | $ 10.50 | ||
$3.80 - $3.80 | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Exercise price range, lower limit (in dollar per share) | 16.68 | ||
Exercise price range, upper limit (in dollar per share) | $ 25.17 | ||
Number of shares, outstanding | 605,184 | ||
Weighted average exercise price per share, outstanding (in dollar per share) | $ 22.46 | ||
Weighted average remaining contractual life, outstanding | 6 years 7 months 10 days | ||
Number of shares, vested | 445,629,000 | ||
Weighted average exercise price per share, vested (in dollar per share) | $ 21.59 | ||
$4.10 - $12.68 | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Exercise price range, lower limit (in dollar per share) | 25.56 | ||
Exercise price range, upper limit (in dollar per share) | $ 25.56 | ||
Number of shares, outstanding | 969,674 | ||
Weighted average exercise price per share, outstanding (in dollar per share) | $ 25.56 | ||
Weighted average remaining contractual life, outstanding | 8 years 3 months 15 days | ||
Number of shares, vested | 394,095,000 | ||
Weighted average exercise price per share, vested (in dollar per share) | $ 25.56 | ||
$13.50 - $25.17 | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Exercise price range, lower limit (in dollar per share) | 26.58 | ||
Exercise price range, upper limit (in dollar per share) | $ 26.86 | ||
Number of shares, outstanding | 478,043 | ||
Weighted average exercise price per share, outstanding (in dollar per share) | $ 26.86 | ||
Weighted average remaining contractual life, outstanding | 6 years 1 month 6 days | ||
Number of shares, vested | 477,613,000 | ||
Weighted average exercise price per share, vested (in dollar per share) | $ 26.86 | ||
$25.56 - $25.56 | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Exercise price range, lower limit (in dollar per share) | 30.58 | ||
Exercise price range, upper limit (in dollar per share) | $ 31.67 | ||
Number of shares, outstanding | 456,331 | ||
Weighted average exercise price per share, outstanding (in dollar per share) | $ 30.87 | ||
Weighted average remaining contractual life, outstanding | 7 years 1 month 28 days | ||
Number of shares, vested | 350,657,000 | ||
Weighted average exercise price per share, vested (in dollar per share) | $ 30.66 | ||
$26.86 - $30.58 | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Exercise price range, lower limit (in dollar per share) | 34.97 | ||
Exercise price range, upper limit (in dollar per share) | $ 37.28 | ||
Number of shares, outstanding | 559,687 | ||
Weighted average exercise price per share, outstanding (in dollar per share) | $ 36.62 | ||
Weighted average remaining contractual life, outstanding | 7 years 10 months 28 days | ||
Number of shares, vested | 266,436,000 | ||
Weighted average exercise price per share, vested (in dollar per share) | $ 36.81 | ||
$31.67 - $37.28 | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Exercise price range, lower limit (in dollar per share) | 38.40 | ||
Exercise price range, upper limit (in dollar per share) | $ 40.89 | ||
Number of shares, outstanding | 369,970 | ||
Weighted average exercise price per share, outstanding (in dollar per share) | $ 39.57 | ||
Weighted average remaining contractual life, outstanding | 7 years 8 months 23 days | ||
Number of shares, vested | 100,054,000 | ||
Weighted average exercise price per share, vested (in dollar per share) | $ 40.72 | ||
$40.68 - $40.89 | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Exercise price range, lower limit (in dollar per share) | 52.14 | ||
Exercise price range, upper limit (in dollar per share) | $ 52.14 | ||
Number of shares, outstanding | 57,886 | ||
Weighted average exercise price per share, outstanding (in dollar per share) | $ 52.14 | ||
Weighted average remaining contractual life, outstanding | 6 years 8 months 19 days | ||
Number of shares, vested | 38,105,000 | ||
Weighted average exercise price per share, vested (in dollar per share) | $ 52.14 | ||
$52.14 - $52.14 | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Exercise price range, lower limit (in dollar per share) | 52.60 | ||
Exercise price range, upper limit (in dollar per share) | $ 52.60 | ||
Number of shares, outstanding | 69,500 | ||
Weighted average exercise price per share, outstanding (in dollar per share) | $ 52.60 | ||
Weighted average remaining contractual life, outstanding | 9 years 9 months 26 days | ||
Number of shares, vested | 0 | ||
Weighted average exercise price per share, vested (in dollar per share) | $ 0 |
Employee Stock and Benefit Pl51
Employee Stock and Benefit Plans (Restricted Stock) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based employee compensation | $ 26,961 | $ 20,149 | $ 17,494 |
Unrecognized employee compensation cost, period for recognition | 2 years 4 months 10 days | ||
Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares granted (in shares) | 1,326,849 | 681,350 | |
Weighted-average grant date fair value (usd per share) | $ 42.69 | $ 28.52 | |
Units vested and released in period (in shares) | 368,367 | 39,998 | |
Units outstanding and expected to vest (in shares) | 1,410,588 | 587,333 | 47,500 |
Unrecognized employee compensation cost, period for recognition | 2 years 10 months 24 days |
Employee Stock and Benefit Pl52
Employee Stock and Benefit Plans (Restricted Stock Units and Restricted Stock Awards Activity) (Details) - Restricted Stock Units - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Shares | ||
Beginning balance (in shares) | 587,333 | 47,500 |
Granted (in shares) | 1,326,849 | 681,350 |
Vested (in shares) | (368,367) | (39,998) |
Canceled (in shares) | (135,227) | (101,519) |
Ending balance (in shares) | 1,410,588 | 587,333 |
Expected to vest as of December 31, 2016 | 1,239,124 | |
Weighted-Average Grant Date Fair Value Per Share | ||
Beginning balance (usd per share) | $ 28.85 | $ 37.28 |
Granted (in shares) | 42.69 | 28.52 |
Vested (in shares) | 33.52 | 27.49 |
Canceled (in shares) | 32.04 | 31.12 |
Ending balance (usd per share) | 40.34 | $ 28.85 |
Expected to vest as of December 31, 2016 | $ 39.87 |
Other Income (Expense), Net (De
Other Income (Expense), Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Other Income and Expenses [Abstract] | |||
Foreign exchange losses | $ (355) | $ (770) | $ (444) |
Other expense | (181) | (202) | (406) |
Other income (expense), net | $ (536) | $ (972) | $ (850) |
Income Taxes (Income Before Pro
Income Taxes (Income Before Provision for (Benefit From) Income Taxes) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income (Loss) from Continuing Operations | |||||||||||
Domestic | $ 34,914 | $ 28,982 | $ 22,540 | ||||||||
Foreign | 4,464 | 1,447 | 1,980 | ||||||||
Income before income taxes | $ 10,381 | $ 11,520 | $ 9,369 | $ 8,109 | $ 8,695 | $ 8,217 | $ 5,752 | $ 7,765 | $ 39,378 | $ 30,429 | $ 24,520 |
Income Taxes (Provision For (Be
Income Taxes (Provision For (Benefit From) Income Taxes) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current | |||
Federal | $ 22 | $ 8,334 | $ 115 |
State | 23 | 1,125 | 1,041 |
Foreign | 1,471 | 963 | 693 |
Total current provision | 1,516 | 10,422 | 1,849 |
Deferred | |||
Federal | (1,650) | 611 | 7,115 |
State | (996) | 126 | (247) |
Foreign | 68 | 46 | (62) |
Total deferred provision (benefit) | (2,578) | 783 | 6,806 |
Provision for (benefit from) income taxes | $ (1,062) | $ 11,205 | $ 8,655 |
Income Taxes (Tax Rate Reconcil
Income Taxes (Tax Rate Reconciliation) (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract] | |||
Federal statutory rate | 35.00% | 35.00% | 35.00% |
State taxes | (2.10%) | 2.10% | 2.20% |
Stock-based compensation | (58.10%) | 2.40% | 0.50% |
Foreign source income | (0.20%) | 0.90% | 0.60% |
Change in valuation allowance | 2.80% | 1.30% | 1.30% |
Incremental federal rate benefit previously not recognized | 26.40% | 0.00% | 0.00% |
Federal and state research and development credit | (5.30%) | (3.60%) | (3.90%) |
Other | (1.20%) | (1.30%) | (0.40%) |
Provision for (benefit from) income taxes | (2.70%) | 36.80% | 35.30% |
Income Taxes (Deferred Tax Asse
Income Taxes (Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets | ||
Net operating loss carryforwards | $ 8,947 | $ 1,472 |
Research and development credit carryforwards | 11,493 | 3,334 |
Foreign tax credit carryforwards | 1,149 | 0 |
Accrued liabilities | 470 | 681 |
Deferred revenues | 3,416 | 5,018 |
Deferred rent | 558 | 74 |
Intangible assets | 409 | 409 |
Stock-based compensation | 7,135 | 12,513 |
Other | 638 | 1,225 |
Gross deferred tax assets | 34,215 | 24,726 |
Valuation allowance | (5,773) | (3,688) |
Net deferred tax assets | 28,442 | 21,038 |
Deferred tax liabilities | ||
Fixed assets | (3,372) | (4,448) |
Intangible assets | (4) | 0 |
Total deferred tax liabilities | (3,376) | (4,448) |
Net deferred tax assets | $ 25,066 | $ 16,590 |
Income Taxes (Unrecognized Tax
Income Taxes (Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefits beginning balance | $ 4,071 | $ 3,506 | $ 3,330 |
Gross increase for tax positions of prior years | 66 | 2 | 20 |
Gross decrease for tax positions of prior years | 0 | (15) | (171) |
Gross increase for tax positions of current year | 1,101 | 659 | 418 |
Lapse of statute of limitations | (126) | (81) | (91) |
Total unrecognized tax benefits | $ 5,112 | $ 4,071 | $ 3,506 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax [Line Items] | ||||
Tax Cuts and Jobs Act of 2017, Provisional income tax expense (benefit) | $ 10,400,000 | |||
Tax Cuts and Jobs Act of 2017, transition tax for foreign earnings, provisional income tax expense (benefit) | 0 | |||
Undistributed earnings earned by foreign subsidiaries | 0 | |||
Undistributed earnings of foreign subsidiaries | $ 9,000,000 | 9,000,000 | $ 5,700,000 | |
Provision for (benefit from) income taxes | (1,062,000) | 11,205,000 | $ 8,655,000 | |
Valuation allowance | 5,773,000 | 5,773,000 | 3,688,000 | |
Increase in valuation allowance | (2,100,000) | |||
Unrecognized tax benefits that would impact effective tax rate | 2,800,000 | 2,800,000 | $ 2,400,000 | $ 2,100,000 |
Federal | ||||
Income Tax [Line Items] | ||||
Operating loss carryforwards | 39,100,000 | 39,100,000 | ||
Research and development tax credit | 1,300,000 | |||
Federal | Research and Development Credits [Member] | ||||
Income Tax [Line Items] | ||||
Tax credit carryforward | 8,700,000 | 8,700,000 | ||
State | ||||
Income Tax [Line Items] | ||||
Operating loss carryforwards | 15,300,000 | 15,300,000 | ||
Research and development tax credit | 1,300,000 | |||
Foreign Tax Authority | ||||
Income Tax [Line Items] | ||||
Tax credit carryforward | 1,100,000 | 1,100,000 | ||
Accounting Standards Update 2016-09 | ||||
Income Tax [Line Items] | ||||
Cumulative effect of a change in accounting principle related to stock-based compensation | 7,745,000 | 7,745,000 | ||
Provision for (benefit from) income taxes | (27,100,000) | |||
Retained earnings | Accounting Standards Update 2016-09 | ||||
Income Tax [Line Items] | ||||
Cumulative effect of a change in accounting principle related to stock-based compensation | $ 7,745,000 | $ 7,745,000 |
Segment Information and Infor60
Segment Information and Information about Geographic Area (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2017USD ($)segment | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Segment Reporting Information [Line Items] | |||||||||||
Number of operating segments (in segment) | segment | 1 | ||||||||||
Revenues | $ 62,915 | $ 59,490 | $ 55,302 | $ 53,121 | $ 52,224 | $ 50,987 | $ 48,466 | $ 46,248 | $ 230,828 | $ 197,925 | $ 164,284 |
Property and equipment, net | 58,557 | 39,401 | 58,557 | 39,401 | |||||||
United States | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues | 162,681 | 139,743 | 115,384 | ||||||||
Property and equipment, net | 50,785 | 30,733 | 50,785 | 30,733 | |||||||
Foreign | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues | 68,147 | 58,182 | $ 48,900 | ||||||||
Property and equipment, net | $ 7,772 | $ 8,668 | $ 7,772 | $ 8,668 |
Net Income Per Share Attribut61
Net Income Per Share Attributable to Common Stockholders (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Numerator: | |||||||||||
Net income attributable to common stockholders - basic and diluted | $ 40,440 | $ 19,224 | $ 15,865 | ||||||||
Denominator: | |||||||||||
Weighted-average shares used in computing net income per share - basic | 37,443 | 35,247 | 34,050 | ||||||||
Effect of potentially dilutive securities: | |||||||||||
Common stock options (in shares) | 2,262 | 3,052 | 4,134 | ||||||||
RSUs (in shares) | 366 | 70 | 0 | ||||||||
Weighted - average shares used in computing net income (loss) per share attributable to common stockholders - diluted (in shares) | 40,071 | 38,369 | 38,184 | ||||||||
Basic (usd per share) | $ 0.07 | $ 0.22 | $ 0.19 | $ 0.60 | $ 0.17 | $ 0.14 | $ 0.10 | $ 0.14 | $ 1.08 | $ 0.55 | $ 0.47 |
Diluted (usd per share) | $ 0.07 | $ 0.21 | $ 0.18 | $ 0.56 | $ 0.15 | $ 0.13 | $ 0.09 | $ 0.13 | $ 1.01 | $ 0.50 | $ 0.42 |
Stock Options | |||||||||||
Antidilutive Securities | |||||||||||
Common stock options (in shares) | 742 | 3,241 | 1,582 | ||||||||
RSUs | |||||||||||
Antidilutive Securities | |||||||||||
Common stock options (in shares) | 71 | 24 | 0 |
Quarterly Financial Informati62
Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues | |||||||||||
Revenues | $ 62,915 | $ 59,490 | $ 55,302 | $ 53,121 | $ 52,224 | $ 50,987 | $ 48,466 | $ 46,248 | $ 230,828 | $ 197,925 | $ 164,284 |
Cost of revenues | 51,580 | 43,128 | 34,327 | ||||||||
Gross profit | 179,248 | 154,797 | 129,957 | ||||||||
Operating expenses: | |||||||||||
Research and development | 42,816 | 36,591 | 30,438 | ||||||||
Sales and marketing | 63,855 | 58,985 | 50,397 | ||||||||
General and administrative | 35,334 | 29,114 | 24,316 | ||||||||
Total operating expenses | 142,005 | 124,690 | 105,151 | ||||||||
Income from operations | 9,729 | 10,849 | 9,009 | 7,656 | 8,811 | 7,987 | 5,712 | 7,597 | 37,243 | 30,107 | 24,806 |
Other income (expense), net | 652 | 671 | 360 | 453 | (116) | 230 | 40 | 168 | 2,135 | 322 | (286) |
Income before income taxes | 10,381 | 11,520 | 9,369 | 8,109 | 8,695 | 8,217 | 5,752 | 7,765 | 39,378 | 30,429 | 24,520 |
Provision for (benefit from) income taxes | (1,062) | 11,205 | 8,655 | ||||||||
Net income | $ 2,857 | $ 8,452 | $ 7,202 | $ 21,930 | $ 5,907 | $ 4,996 | $ 3,538 | $ 4,783 | $ 40,440 | $ 19,224 | $ 15,865 |
Earnings Per Share [Abstract] | |||||||||||
Basic (in usd per share) | $ 0.07 | $ 0.22 | $ 0.19 | $ 0.60 | $ 0.17 | $ 0.14 | $ 0.10 | $ 0.14 | $ 1.08 | $ 0.55 | $ 0.47 |
Diluted (usd per share) | $ 0.07 | $ 0.21 | $ 0.18 | $ 0.56 | $ 0.15 | $ 0.13 | $ 0.09 | $ 0.13 | $ 1.01 | $ 0.50 | $ 0.42 |
Schedule II Schedule of Valua63
Schedule II Schedule of Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Year | $ 702 | $ 769 | $ 590 |
Charged to Costs and Expenses | 657 | 199 | 851 |
Deductions and Other | (543) | (266) | (672) |
Balance at End of Year | $ 816 | $ 702 | $ 769 |