| Basis of Presentation [Text Block] | Basis of Presentation The Condensed Consolidated Financial Statements as of and for the nine months ended September 30, 2015 included in this Quarterly Report on Form 10-Q have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The condensed consolidated balance sheet data as of December 31, 2014 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed on March 2, 2015. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures contained in this Quarterly Report comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, for a Quarterly Report on Form 10-Q and are adequate to make the information presented not misleading. These Condensed Consolidated Financial Statements are meant to be, and should be, read in conjunction with the Consolidated Financial Statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed on March 2, 2015. The unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q reflect all adjustments (which include only normal, recurring adjustments and those items discussed in these Notes) that are, in the opinion of management, necessary to state fairly the financial position and results for the dates and periods presented. The results for such periods are not necessarily indicative of the results to be expected for the full fiscal year. Recent Accounting Pronouncements In September 2015, the Financial Accounting Standards Board ("FASB") issued new accounting guidance: Business Combinations - Simplifying the Accounting for Measurement-Period Adjustments. The guidance requires the acquirer to recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustment amounts are determined. The business combination guidance is effective for interim and annual periods beginning after December 15, 2015, with early adoption permitted, and is to be applied on a prospective basis. The Company has elected not to early adopt. The adoption of the business combination guidance is not expected to have a material impact on the Company's condensed consolidated financial statements. In April 2015, the Financial Accounting Standard Board ("FASB") issued new accounting guidance Simplifying the Presentation of Debt Issuance Costs . The guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The debt issuance costs guidance is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. The Company has elected not to early adopt. The adoption of the debt guidance is not expected to have a material impact on the Company's condensed consolidated financial statements. In April 2015, the FASB issued new accounting guidance Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. This guidance is intended to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement, primarily to determine whether the arrangement includes a sale or license of software. The new guidance is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. The Company has elected not to early adopt. The adoption of the guidance is not expected to have a material impact on the Company's condensed consolidated financial statements. In May 2014, the FASB issued new accounting guidance related to revenue recognition, Revenue from Contracts with Customers . This new standard will replace most existing U.S. GAAP guidance on this topic. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB approved a one-year deferral of the effective date for the new revenue reporting standard for entities reporting under U.S. GAAP. In accordance with the deferral, this guidance will be effective for the Company beginning January 1, 2018 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. Early adoption is permitted beginning January 1, 2017. The Company is evaluating the impact of adopting this new accounting standard on its financial statements and has not selected a transition method. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition The Company generates revenue from two sources: (1) subscription and support; and (2) professional services and other. Subscription and support revenue includes subscription fees from customers accessing its on-demand application suite and support fees from customers purchasing support. Arrangements with customers do not provide the customer with the right to take possession of the software supporting the on-demand application service at any time. Professional services and other revenue includes fees generated from training and consulting services such as business process mapping, configuration, data migration and integration. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. For the most part, subscription and support agreements are entered into for 12 to 36 months. In aggregate, more than 90% of the professional services component of the arrangements with customers is performed within 300 days of entering into a contract with the customer. The subscription agreements generally provide service level commitments of 99.5% uptime per period, excluding scheduled maintenance. The failure to meet this level of service availability may require the Company to credit qualifying customers up to the value of an entire month of their subscription and support fees. In light of the Company’s historical experience with meeting its service level commitments, the Company has not accrued any liabilities on its balance sheet for these commitments. The Company commences revenue recognition when all of the following conditions are met: • There is persuasive evidence of an arrangement; • The service is being provided to the customer; • The collection of the fees is reasonably assured; and • The amount of fees to be paid by the customer is fixed or determinable. In most instances, revenue from new customer acquisition is generated under sales agreements with multiple elements, comprised of subscription and support fees from customers accessing the Company's on-demand application suite and professional services associated with consultation services. The Company evaluates each element in a multiple-element arrangement to determine whether it represents a separate unit of accounting. An element constitutes a separate unit of accounting when the delivered item has standalone value and delivery of the undelivered element is probable and within the Company’s control. Subscription and support have standalone value because they are routinely sold separately by the Company. Professional services have standalone value because the Company has sold professional services separately and there are several third-party vendors that routinely provide similar professional services to its customers on a standalone basis. The Company allocates revenue to each element in an arrangement based on a selling price hierarchy. The selling price for a deliverable is based on its vendor-specific objective evidence (“VSOE”), if available, third-party evidence (“TPE”), if VSOE is not available, or estimated selling price (“ESP”), if neither VSOE nor TPE is available. As the Company has been unable to establish VSOE or TPE for the elements of its arrangements, the Company establishes the ESP for each element primarily by considering the weighted average of actual sales prices of professional services sold on a standalone basis and subscription and support including various add-on modules when sold together without professional services, and other factors such as gross margin objectives, pricing practices and growth strategy. The consideration allocated to subscription and support is recognized as revenue over the contract period commencing when the subscription service is made available to the customer. The consideration allocated to professional services is recognized as revenue using the proportional performance method. The total arrangement fee for a multiple element arrangement is allocated based on the relative ESP of each element. However, since the professional services are generally completed prior to completion of delivery of subscription and support services, the revenue recognized for professional services in a given reporting period does not include fees subject to delivery of subscription and support services. This results in the recognition of revenue for professional services that is generally no greater than the contractual fees for those professional services. For single element sales agreements, subscription and support revenue is recognized ratably over the contract term beginning on the provisioning date of the contract. The Company recognizes professional services revenue using the proportional performance method for single element arrangements. Sales and other taxes collected from customers to be remitted to government authorities are excluded from revenues. Concentration of Credit Risk and Significant Customers Financial instruments potentially exposing the Company to concentration of credit risk consist primarily of cash and cash equivalents, marketable securities, restricted cash and trade accounts receivable. The Company maintains an allowance for doubtful accounts receivable balances. The allowance is based upon historical loss patterns and an evaluation of the potential risk of loss associated with problem accounts. The Company generally charges off the receivable balances of uncollectible accounts when accounts are 120 days past-due based on the account’s contractual terms. Credit risk arising from accounts receivable is mitigated due to the large number of customers comprising the Company’s customer base and their dispersion across various industries. As of September 30, 2015 and December 31, 2014 , there were no customers that represented more than 10% of the net accounts receivable balance. There were no customers that individually exceeded 10% of the Company’s revenue in any of the periods presented. As of September 30, 2015 and December 31, 2014 , long-lived assets located outside the United States were not significant. Revenue by geographic region, based on the billing address of the customer, was as follows for the periods presented: Nine Months Ended September 30, Three Months Ended September 30, 2015 2014 2015 2014 (dollars in thousands) United States $ 398,311 $ 299,071 $ 143,673 $ 107,007 International 136,609 99,344 49,150 36,653 Total revenue $ 534,920 $ 398,415 $ 192,823 $ 143,660 Percentage of revenue generated outside of the United States 26 % 25 % 25 % 26 % No single country outside the United States represented more than 10% of revenue during the nine months ended September 30, 2015 or 2014 . The Company maintains cash balances at several banks. Accounts located in the United States are insured by the Federal Deposit Insurance Corporation (“FDIC”), up to $250,000 . Certain operating cash accounts may exceed the FDIC limits. Intellectual Property Rights Indemnification The Company’s arrangements include provisions indemnifying customers against liabilities if the Company's products infringe a third-party’s intellectual property rights. The Company has not incurred any costs as a result of such indemnifications and has not accrued any liabilities related to such obligations in the accompanying condensed consolidated financial statements. Qualified Operating Expense Reimbursements At the Company's product development facility in the Czech Republic, the Company participated in a government subsidy program for employing local residents. Under the program, the Czech government would reimburse the Company for certain operating expenses it incurs. In the period the Company incurs the reimbursable operating expense, it would record a reduction in product development expense and a receivable from the Czech government. During the nine months ended September 30, 2015 , the Company's product development operating expenses were reduced by $569,000 for reimbursement of eligible operating expenses incurred during this time period. During the nine and three months ended September 30, 2014 , the Company's product development operating expenses were reduced by $1.2 million and $355,000 , respectively, for reimbursement of eligible operating expenses incurred. During the nine and three months ended September 30, 2015 , the Company received $1.2 million and $654,000 , respectively, from the Czech government. During the nine and three months ended September 30, 2014 , the Company received $1.9 million and $589,000 , respectively, from the Czech government. As of September 30, 2015 , no reimbursements were due the Company. The Company has reached its subsidy reimbursement limit under this program. Currently, the Company is evaluating alternative subsidy employment programs offered by the Czech Republic and other countries. Business Combinations Monexa Software On August 5, 2015, the Company completed the purchase of all the outstanding equity of Monexa Services Inc. ("Monexa"), a private company that provides cloud-based invoicing and payment services for its customers. Monexa functionality will enhance the Company’s existing invoicing and payment solution. Beginning in the third quarter of 2015, Monexa assets, liabilities and operating results are reflected in the Company’s condensed consolidated financial statements from the date of acquisition. On the closing date, the Company paid approximately $33.1 million in cash. Of the consideration paid, $5.7 million is being held in escrow for up to 15 months following the close of the transaction in the event of certain breaches of representations, warranties and potential tax obligations covered in the purchase agreement. In connection with the transaction, the Monexa Board of Directors accelerated the vesting of certain Monexa employee stock options that were exercised shortly before the closing date. Since Monexa accelerated the stock option vesting in contemplation of the business combination, the Company was required to record the $1.8 million in net proceeds received by Monexa employees as compensation cost in the general and administrative expense line of the Company's financial statements. Acquisition related transaction costs amounted to $2.0 million in the period ended September 30, 2015 , and are reflected as general and administrative expense in the statement of operations. Under the acquisition method of accounting, the Company allocated the purchase price to the identifiable assets and liabilities based on their estimated fair value at the date of acquisition. To determine the value of the intangible assets, the Company made various estimates and assumptions. Methodologies used in valuing the intangible assets include, but are not limited to, multiple period excess earnings method for customer relationships, relief of royalty for trademarks, and replacement cost and relief from royalty methods for developed technology. The excess of the purchase price over the total net identifiable assets has been recorded as goodwill which includes synergies expected from the expanded service capabilities and the value of the assembled work-force in accordance with generally accepted accounting principles. $7.3 million of the acquired Monexa goodwill is expected to be deductible for tax purposes. The Company did not record any in-process research and development intangible assets in connection with the acquisition. The following table summarizes the preliminary allocation of the consideration to the fair value of assets acquired and liabilities assumed at the acquisition date: (dollars in thousands) Cash $ 594 Accounts receivable 301 Fixed assets 231 Developed technology 8,700 Customer relationships 4,200 Trademarks 400 Goodwill 18,717 Other assets / liabilities, net (23 ) Fair value of assets acquired and liabilities assumed $ 33,120 The Company will amortize certain intangible assets on a straight-line basis over the following periods: Fair Value Amount Useful Life (dollars in thousands) (in years) Developed technology $ 8,700 5 Customer relationships 4,200 4 Trademarks 400 2 The initial accounting for Monexa accounts receivable, fixed assets, intangible assets, other customer related liabilities, vendor obligations and employee related liabilities is incomplete because the Company is in the process of determining the fair value of these assets and liabilities. The Company is also undertaking an analysis of certain tax matters associated with the Monexa acquisition which could result in an adjustment to the acquisition price allocation. Comparative pro forma financial information for this acquisition has not been presented because Monexa historical financial results are not material to the Company's condensed consolidated results of operations. Bronto Software On June 8, 2015, the Company completed the purchase of all the outstanding equity of Bronto Software, Inc. (“Bronto"), a private company that provides a cloud-based marketing platform for its customers to drive revenue through their email, mobile and social campaigns. Bronto functionality will enhance the Company’s existing email marketing solution and its existing omnichannel commerce platform. Beginning in the second quarter of 2015, Bronto assets, liabilities and operating results are reflected in the Company’s condensed consolidated financial statements from the date of acquisition. The Company paid approximately $98.2 million in cash and issued 1,030,508 unregistered shares of the Company's common stock with a fair value of $85.9 million , inclusive of a discount from the quoted market price due to certain trading restrictions associated with the shares. Of the consideration paid, $39.6 million is being held in escrow for up to 18 months following the close of the transaction in the event of certain breaches of representations and warranties covered in the purchase agreement. Another $3.9 million is being held in escrow for up to two years as protection against tax contingencies and losses. Acquisition related transaction costs amounted to $4.7 million and are reflected as general and administrative expense in the statement of operations. Under the acquisition method of accounting, the Company allocated the purchase price to the identifiable assets and liabilities based on their estimated fair value at the date of acquisition. To determine the value of the intangible assets, the Company made various estimates and assumptions. Methodologies used in valuing the intangible assets include, but are not limited to, the with-and-without excess earnings and multiple period excess earnings method for customer relationships, relief of royalty for trademarks and multiple period excess earnings method for developed technology. The excess of the purchase price over the total net identifiable assets has been recorded as goodwill which includes synergies expected from the expanded service capabilities and the value of the assembled work-force in accordance with generally accepted accounting principles. Goodwill is not expected to be deductible for tax purposes. The Company did not record any in-process research and development intangible assets in connection with the acquisition. The following table summarizes the allocation of the consideration to the fair value of assets acquired and liabilities assumed at the acquisition date: (dollars in thousands) Cash $ 1,667 Accounts receivable 4,139 Fixed assets 4,009 Deferred tax assets 5,547 Developed technology 13,400 Customer relationships 13,100 Customer relationships - backlog 3,000 Trademarks 3,060 Goodwill 156,385 Deferred tax liabilities (13,792 ) Taxes payable (2,358 ) Other assets / liabilities, net (4,051 ) Fair value of assets acquired and liabilities assumed $ 184,106 The fair value of the 1,030,508 unregistered shares of common stock issued as part of the consideration paid for Bronto ( $85.9 million ) was determined on the basis of the closing market price of the Company’s common stock on the acquisition date less a discount for lack of marketability due to the 6-month restriction of resale as a result of SEC Rule 144 for issuance of unregistered shares to a non-affiliate as such term is defined therein. The Company will amortize certain intangible assets on a straight-line basis, except for customer relationship - backlog, which is amortized in proportion to the related revenue recognition, over the following periods: Fair Value Amount Useful Life (dollars in thousands) (in years) Developed technology $ 13,400 5 Customer relationships 13,100 7 Customer relationships - backlog 3,000 1.5 Trademarks 3,060 3 The initial accounting for Bronto accounts receivable, fixed assets, other customer related liabilities, vendor obligations and employee related liabilities is incomplete because the Company is in the process of determining the fair value of these assets and liabilities. The Company is also undertaking an analysis of certain tax matters associated with the Bronto acquisition which could result in an adjustment to the acquisition price allocation. In accordance with the Bronto acquisition agreement, in the third quarter of 2015, the Company granted $15.0 million in restricted stock units to certain former employees of Bronto that were hired by the Company, and will grant another $10.0 million in restricted stock units on the one year anniversary of the close date to certain employees of the Company that are working on the Bronto business. The restricted stock units vest over four years in accordance with the terms of the Company's equity compensation plan. The fair value of the equity grants will be recognized as stock-based compensation expense in the Company's statement of operations over the four-year vesting period. Bronto revenue included in the Company's condensed consolidated financial statements for nine and three months ended September 30, 2015 was $10.6 million and $8.9 million , respectively. Bronto's operations have been integrated into the Company's operations so it is impractical to determine Bronto's results of operations on a standalone basis. The financial information in the table below summarizes the combined results of operations of the Company and Bronto, on a pro forma basis, as though the companies had been combined as of January 1, 2014. The pro forma financial information for Bronto is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2014 or of results that may occur in the future. The pro forma results include adjustments primarily related to amortization of developed technology, customer relationships and trademarks. The pro forma results also include a one-time adjustment to exclude $3.1 million in Bronto transaction costs. Supplemental information on a pro forma basis, as if Bronto had been acquired on January 1, 2014, is presented as follows: Nine Months Ended September 30, 2015 2014 (dollars in thousands) Pro forma total revenue $ 554,010 $ 425,423 Pro forma net loss $ (99,378 ) $ (82,522 ) Pro forma loss per share - basic and diluted $ (1.26 ) $ (1.07 ) Venda On July 17, 2014, the Company completed the purchase of all the outstanding equity of Venda, a private company that provides Ecommerce solutions to its customers. On the closing date, the Company paid $25.7 million in cash and issued 304,364 unregistered shares of the Company's common stock with a fair value of $22.8 million inclusive of a discount from the quoted market price due to certain trading restrictions associated with the shares. Of the cash consideration paid, $10.1 million is being held in escrow for up to two years following the close of the transaction as protection against tax contingencies and losses the Company may incur in the event of certain breaches of representations and warranties covered in the purchase agreement. In the first quarter of 2015, the Company completed the valuation of intangible assets with definitive lives which resulted in $1.2 million being reallocated from goodwill to developed technology. Following this reallocation, the amount allocated to developed technology is $8.9 million . In the third quarter of 2015, the Company completed the initial accounting for Venda by making a $1.0 million working capital adjustment and other adjustments totaling $368,000 . Other Intangible Assets Gross carrying amount Accumulated amortization Net carrying amount September 30, 2015 (dollars in thousands) Developed technology $ 50,417 $ (19,756 ) $ 30,661 Trade name 8,702 (4,008 ) 4,694 Customer relationships 53,013 (21,900 ) 31,113 Total $ 112,132 $ (45,664 ) $ 66,468 December 31, 2014 (dollars in thousands) Developed technology $ 27,432 $ (15,073 ) $ 12,359 Trade name 5,305 (2,696 ) 2,609 Customer relationships 32,959 (15,622 ) 17,337 Non-competition agreements 962 (863 ) 99 Total $ 66,658 $ (34,254 ) $ 32,404 Goodwill The following table details the Company's goodwill activity during the nine months ended September 30, 2015 : (dollars in thousands) Balance as of January 1, 2015 $ 123,049 Acquisition of Bronto 156,385 Acquisition of Monexa 18,717 Other adjustments to goodwill (1,844 ) Foreign exchange adjustment (3,191 ) Balance as of September 30, 2015 $ 293,116 Accumulated Other Comprehensive Loss Accumulated other comprehensive loss is comprised of foreign currency translation gains and losses, net of tax, marketable securities unrealized gains and losses and an accumulated pension liability for employees located in the Philippines. There were no significant reclassification adjustments out of accumulated other comprehensive loss to the condensed consolidated statement of operations and comprehensive loss. |
