Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | Apr. 19, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | CHANNELADVISOR CORP | |
Entity Central Index Key | 1,169,652 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 26,330,352 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 63,386 | $ 65,420 |
Accounts receivable, net of allowance of $463 and $594 as of March 31, 2017 and December 31, 2016, respectively | 17,866 | 19,445 |
Prepaid expenses and other current assets | 8,518 | 10,972 |
Total current assets | 89,770 | 95,837 |
Property and equipment, net | 12,465 | 13,252 |
Goodwill | 21,632 | 21,632 |
Intangible assets, net | 2,513 | 2,660 |
Long-term deferred tax assets, net | 5,303 | 5,244 |
Other assets | 667 | 533 |
Total assets | 132,350 | 139,158 |
Current liabilities: | ||
Accounts payable | 1,753 | 4,709 |
Accrued expenses | 10,118 | 11,067 |
Deferred revenue | 24,293 | 23,474 |
Other current liabilities | 7,075 | 4,450 |
Total current liabilities | 43,239 | 43,700 |
Long-term capital leases, net of current portion | 1,303 | 1,262 |
Lease incentive obligation | 3,986 | 4,206 |
Other long-term liabilities | 3,238 | 2,993 |
Total liabilities | 51,766 | 52,161 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued and outstanding as of March 31, 2017 and December 31, 2016 | 0 | 0 |
Common stock, $0.001 par value, 100,000,000 shares authorized, 26,296,551 and 25,955,759 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively | 26 | 26 |
Additional paid-in capital | 253,591 | 252,158 |
Accumulated other comprehensive loss | (1,402) | (1,612) |
Accumulated deficit | (171,631) | (163,575) |
Total stockholders’ equity | 80,584 | 86,997 |
Total liabilities and stockholders’ equity | $ 132,350 | $ 139,158 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Allowance for doubtful accounts receivable, current | $ 463 | $ 594 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 26,296,551 | 25,955,759 |
Common stock, shares outstanding (in shares) | 26,296,551 | 25,955,759 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||
Revenue | $ 28,329 | $ 26,347 |
Cost of revenue | 6,842 | 6,913 |
Gross profit | 21,487 | 19,434 |
Operating expenses: | ||
Sales and marketing | 16,039 | 13,497 |
Research and development | 4,971 | 4,155 |
General and administrative | 8,530 | 6,421 |
Total operating expenses | 29,540 | 24,073 |
Loss from operations | (8,053) | (4,639) |
Other income (expense): | ||
Interest income (expense), net | 28 | (21) |
Other income (expense), net | 57 | 55 |
Total other income (expense) | 85 | 34 |
Loss before income taxes | (7,968) | (4,605) |
Income tax expense (benefit) | 88 | (42) |
Net loss | $ (8,056) | $ (4,563) |
Net loss per share: | ||
Basic and diluted (in dollars per share) | $ (0.31) | $ (0.18) |
Weighted average common shares outstanding: | ||
Basic and diluted (in shares) | 26,056,881 | 25,292,405 |
UNAUDITED CONDENSED CONSOLIDAT5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (8,056) | $ (4,563) |
Other comprehensive loss: | ||
Foreign currency translation adjustments | 210 | 135 |
Total comprehensive loss | $ (7,846) | $ (4,428) |
UNAUDITED CONDENSED CONSOLIDAT6
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows from operating activities | ||
Net loss | $ (8,056) | $ (4,563) |
Adjustments to reconcile net loss to cash and cash equivalents provided by operating activities: | ||
Depreciation and amortization | 1,733 | 2,095 |
Bad debt expense (recovery) | (5) | 289 |
Stock-based compensation expense | 2,924 | 3,425 |
Other items, net | (155) | (270) |
Changes in assets and liabilities: | ||
Accounts receivable | 1,661 | 489 |
Prepaid expenses and other assets | 2,348 | 2,507 |
Accounts payable and accrued expenses | (1,200) | (3,121) |
Deferred revenue | 1,101 | 1,867 |
Cash and cash equivalents provided by operating activities | 351 | 2,718 |
Cash flows from investing activities | ||
Purchases of property and equipment | (360) | (637) |
Payment of internal-use software development costs | (57) | (100) |
Cash and cash equivalents used in investing activities | (417) | (737) |
Cash flows from financing activities | ||
Repayment of capital leases | (587) | (55) |
Proceeds from exercise of stock options | 186 | 272 |
Payment of contingent consideration | 0 | (132) |
Payment of statutory tax withholding related to net-share settlement of restricted stock units | (1,677) | (1,060) |
Cash and cash equivalents used in financing activities | (2,078) | (975) |
Effect of currency exchange rate changes on cash and cash equivalents | 110 | 191 |
Net (decrease) increase in cash and cash equivalents | (2,034) | 1,197 |
Cash and cash equivalents, beginning of period | 65,420 | 60,474 |
Cash and cash equivalents, end of period | 63,386 | 61,671 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 24 | 1 |
Cash paid for income taxes, net | 14 | 49 |
Supplemental disclosure of noncash investing and financing activities | ||
Accrued capital expenditures | 9 | 182 |
Capital lease obligations entered into for the purchase of fixed assets | $ 567 | $ 0 |
Description of the Business
Description of the Business | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF THE BUSINESS | DESCRIPTION OF THE BUSINESS ChannelAdvisor Corporation ("ChannelAdvisor" or the "Company") was incorporated in the state of Delaware and capitalized in June 2001. The Company began operations in July 2001. ChannelAdvisor is a provider of software-as-a-service, or SaaS, solutions that allow retailers and branded manufacturers to integrate, manage and optimize their merchandise sales across hundreds of online channels. The Company is headquartered in Morrisville, North Carolina and has international offices in England, Ireland, Germany, Australia, Brazil and China. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Interim Condensed Consolidated Financial Information The accompanying condensed consolidated financial statements and footnotes have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") as contained in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") for interim financial information. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of financial position, the results of operations, comprehensive loss and cash flows. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results for the full year or the results for any future periods. These unaudited interim financial statements should be read in conjunction with the audited financial statements and related footnotes for the year ended December 31, 2016 ("fiscal 2016"), which are included in the Company’s Annual Report on Form 10-K for fiscal 2016. There have been no material changes to the Company’s significant accounting policies from those described in the footnotes to the audited financial statements contained in the Company’s Annual Report on Form 10-K for fiscal 2016. Reclassification Certain prior period amounts included on the unaudited condensed consolidated statements of operations have been reclassified to conform to the current period’s presentation. The reclassifications had no effect on the Company's reported gross profit or net loss for the three months ended March 31, 2016. Recent Accounting Pronouncements Standard Description Effect on the Financial Statements or Other Significant Matters Standards that the Company has not yet adopted Revenue Recognition: Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606) The Company's adoption date: January 1, 2018 The standard will replace existing revenue recognition standards and provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. The Company formed a project team to evaluate and direct the implementation of the new revenue recognition standard and related amendments. The project team developed an implementation plan centered around specific functional areas that may be impacted by the standard and its amendments, including accounting and reporting, information technology ("IT"), internal audit and contracts and legal, among others. This team has recently completed certain IT updates to the Company's accounting system to support recognition and disclosure under the new standard. The project team completed an initial contract assessment on a sample of contracts and continues to analyze the Company's contract portfolio and contract costs. The team is assessing the appropriateness of applying the portfolio approach in accounting for revenue and contract costs, the potential changes to internal controls and the significant judgments and estimates required under the new standard. The project team has reported the findings and progress of the implementation plan to management and to the Audit Committee on a frequent basis over the last two years and will continue to do so as the effective date of the new revenue recognition standard approaches. The Company anticipates that the adoption of the new standard will impact the timing of revenue recognition of fixed fees for its contracts, as well as the accounting for costs to obtain contracts. For managed-service contracts, the Company currently defers revenue until the completion of the implementation services, at which point the Company recognizes a cumulative catch-up adjustment equal to the revenue earned during the implementation period but previously deferred. The remaining balance of these fixed fees is recognized ratably over the remaining term of the contract. Under the new standard, the Company expects revenue recognition for the managed-service subscription and implementation fees to begin on the launch date and to be recognized ratably through the contract end date, with no cumulative catch-up adjustment on the launch date. Further, the Company currently expenses sales commissions and related bonuses as incurred. Under the new standard, the Company will be required to defer and amortize a portion of these contract costs. The Company intends to adopt the new standard using the modified retrospective transition method effective January 1, 2018. The Company continues to evaluate the provisions of the new standard to identify further potential impacts to its consolidated financial statements. ASU 2016-08, Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) The Company's adoption date: January 1, 2018 The standard clarifies implementation guidance on principal versus agent considerations in ASU 2014-09. ASU 2016-10, Identifying Performance Obligations and Licensing The Company's adoption date: January 1, 2018 The standard clarifies implementation guidance on the identification of performance obligations and the licensing implementation guidance in ASU 2014-09. ASU 2016-12, Narrow-Scope Improvements and Practical Expedients The Company's adoption date: January 1, 2018 The standard clarifies the guidance on assessing collectability, presentation of sales taxes, noncash consideration and completed contracts and contract modifications at transition. ASU 2016-20, Technical Corrections and Improvements to Topic 606 The Company's adoption date: January 1, 2018 The standard clarifies certain narrow aspects of ASU 2014-09. Leases: ASU 2016-02, Leases (Topic 842) The Company's adoption date: January 1, 2019 The standard requires that lessees recognize assets and liabilities for leases with lease terms greater than twelve months in the statement of financial position. The standard also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The Company is currently evaluating the impact the adoption of the standard will have on its consolidated financial statements. Financial Instruments: ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) The Company's adoption date: January 1, 2020 The standard replaces the incurred loss impairment methodology in current U.S. GAAP (defined below) with a methodology that reflects expected credit losses. The update is intended to provide financial statement users with more useful information about expected credit losses. The Company is currently evaluating the impact the adoption of the standard will have on its consolidated financial statements. Cash Flow: ASU 2016-18, Restricted Cash The Company's adoption date: January 1, 2018 The standard requires that entities show the changes in the total of cash, cash equivalents and restricted cash in the statement of cash flows. Transfers between cash, cash equivalents and restricted cash should not be presented as cash flow activities on the statement of cash flows. The Company is currently evaluating the impact the adoption of the standard will have on its consolidated financial statements. Standards that the Company has recently adopted Stock-Based Compensation: ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718) The Company's adoption date: January 1, 2017 The standard is intended to simplify several aspects of the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The Company adopted this standard effective January 1, 2017. As a result of this adoption, the Company recognized $8.2 million of deferred tax assets attributable to accumulated excess tax benefits that under the previous guidance could not be recognized until the benefits were realized through a reduction in income taxes payable. This adjustment was applied using a modified retrospective method with a cumulative-effect adjustment to the accumulated deficit for the excess tax benefits not previously recognized. However, given the full valuation allowance placed on the additional $8.2 million of deferred tax assets, the recognition upon adoption had no impact on the Company's accumulated deficit as of January 1, 2017. Further, the Company has elected to continue to estimate forfeitures to determine the amount of compensation cost to be recognized in each period. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to the accounts receivable allowance, the useful lives of long-lived assets and other intangible assets, income taxes and assumptions used for purposes of determining stock-based compensation, among others. Estimates and assumptions are also required to value assets acquired and liabilities assumed as well as contingent consideration, where applicable, in conjunction with business combinations. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable, the results of which form the basis for making judgments about the carrying value of assets and liabilities. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2017 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS' EQUITY The following table summarizes the stockholders' equity activity for the three months ended March 31, 2017 (in thousands): Balance as of December 31, 2016 $ 86,997 Exercise of stock options and vesting of restricted stock units 186 Stock-based compensation expense 2,924 Statutory tax withholding related to net-share settlement of restricted stock units (1,677 ) Net loss (8,056 ) Foreign currency translation adjustments 210 Balance as of March 31, 2017 $ 80,584 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS The Company acquired intangible assets in connection with its business acquisitions. These assets were recorded at their estimated fair values at the acquisition date and are being amortized over their respective estimated useful lives using the straight-line method. The estimated useful lives and amortization methodology used in computing amortization are as follows: Estimated Useful Life Amortization Methodology Customer relationships 7 years Straight-line Acquired technology 7 years Straight-line Trade names 3 years Straight-line Amortization expense associated with the Company's intangible assets was $0.1 million for each of the three months ended March 31, 2017 and 2016. There have been no changes to the Company's goodwill during the three months ended March 31, 2017 . |
Commitments
Commitments | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS | COMMITMENTS Sales Tax During the three months ended March 31, 2017, the Company completed its analysis with regard to potential unpaid sales tax obligations. Based on the results of this analysis, the Company has made the decision to enter into voluntary disclosure agreements ("VDAs") with certain jurisdictions to reduce the Company’s potential sales tax liability. VDAs generally provide for a maximum look-back period, a waiver of penalties and, at times, interest as well as payment arrangements. The Company's estimated aggregate VDA liability is $2.5 million , which was recorded as a one-time charge in the first quarter of 2017 in general and administrative expense in the accompanying condensed consolidated statements of operations. This amount represents the Company's estimate of its potential unpaid sales tax liability through the anticipated look-back periods including interest, where applicable, in all jurisdications in which the Company intends to enter into VDAs. It is possible that the actual aggregate VDA liability may be higher or lower than this estimate, or that the Company’s decision to enter into VDAs may prove unsuccessful or may not resolve all potential unpaid sales tax obligations. The Company expects to have the VDA process complete within the next twelve months following the date of filing this Quarterly Report on Form 10-Q. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company recognizes stock-based compensation expense using the accelerated attribution method, net of estimated forfeitures, in which compensation cost for each vesting tranche in an award is recognized ratably from the service inception date to the vesting date for that tranche. Stock-based compensation expense is included in the following line items in the accompanying condensed consolidated statements of operations for the three months ended March 31, 2017 and 2016 (in thousands): Three Months Ended March 31, 2017 2016 Cost of revenue $ 297 $ 269 Sales and marketing 776 1,121 Research and development 568 443 General and administrative 1,283 1,592 $ 2,924 $ 3,425 During the three months ended March 31, 2017 , the Company granted the following share-based awards: Number of Shares Underlying Grant Weighted Average Grant Date Fair Value Stock options 575,617 $ 4.19 Restricted stock units ("RSUs") 1,209,121 10.39 Total share-based awards 1,784,738 8.39 |
Net Loss Per Share
Net Loss Per Share | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NET LOSS PER SHARE Diluted loss per share is the same as basic loss per share for all periods presented because the effects of potentially dilutive items were anti-dilutive given the Company’s net loss. The following securities have been excluded from the calculation of weighted average common shares outstanding because the effect is anti-dilutive for the three months ended March 31, 2017 and 2016 : Three Months Ended March 31, 2017 2016 Stock options 2,198,987 1,788,260 RSUs 2,821,627 2,673,244 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES At the end of each interim reporting period, the Company estimates its effective income tax rate expected to be applicable for the full year. This estimate is used to determine the income tax provision or benefit on a year-to-date basis and may change in subsequent interim periods. The Company’s effective tax rate was (1.1)% and 0.9% for the three months ended March 31, 2017 and 2016 , respectively. The tax expense (benefit) for each of the periods was based on state, local and foreign taxes. The Company’s effective tax rate for these periods is lower than the U.S. federal statutory rate of 34% primarily due to operating losses which are subject to a valuation allowance. The Company cannot recognize the tax benefit of operating loss carryforwards generated in certain jurisdictions due to uncertainties relating to future taxable income in those jurisdictions in terms of both its timing and its sufficiency, which would enable the Company to realize the benefits of those carryforwards. |
Segment and Geographic Informat
Segment and Geographic Information | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
SEGMENT AND GEOGRAPHIC INFORMATION | SEGMENT AND GEOGRAPHIC INFORMATION Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) for purposes of allocating resources and evaluating financial performance. The Company’s CODM reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. As such, the Company’s operations constitute a single operating segment and one reportable segment. Substantially all assets were held in the United States during the three months ended March 31, 2017 and 2016 . The table below summarizes revenue by geography for the three months ended March 31, 2017 and 2016 (in thousands). The Company categorizes domestic and international revenue from customers based on their billing address. Three Months Ended March 31, 2017 2016 Domestic $ 22,507 $ 20,424 International 5,822 5,923 Total revenue $ 28,329 $ 26,347 |
Significant Accounting Polici16
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
Interim Condensed Consolidated Financial Information | The accompanying condensed consolidated financial statements and footnotes have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") as contained in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") for interim financial information. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of financial position, the results of operations, comprehensive loss and cash flows. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results for the full year or the results for any future periods. These unaudited interim financial statements should be read in conjunction with the audited financial statements and related footnotes for the year ended December 31, 2016 ("fiscal 2016"), which are included in the Company’s Annual Report on Form 10-K for fiscal 2016. There have been no material changes to the Company’s significant accounting policies from those described in the footnotes to the audited financial statements contained in the Company’s Annual Report on Form 10-K for fiscal 2016. |
Reclassification | Certain prior period amounts included on the unaudited condensed consolidated statements of operations have been reclassified to conform to the current period’s presentation. |
Recent Accounting Pronouncements | Standard Description Effect on the Financial Statements or Other Significant Matters Standards that the Company has not yet adopted Revenue Recognition: Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606) The Company's adoption date: January 1, 2018 The standard will replace existing revenue recognition standards and provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. The Company formed a project team to evaluate and direct the implementation of the new revenue recognition standard and related amendments. The project team developed an implementation plan centered around specific functional areas that may be impacted by the standard and its amendments, including accounting and reporting, information technology ("IT"), internal audit and contracts and legal, among others. This team has recently completed certain IT updates to the Company's accounting system to support recognition and disclosure under the new standard. The project team completed an initial contract assessment on a sample of contracts and continues to analyze the Company's contract portfolio and contract costs. The team is assessing the appropriateness of applying the portfolio approach in accounting for revenue and contract costs, the potential changes to internal controls and the significant judgments and estimates required under the new standard. The project team has reported the findings and progress of the implementation plan to management and to the Audit Committee on a frequent basis over the last two years and will continue to do so as the effective date of the new revenue recognition standard approaches. The Company anticipates that the adoption of the new standard will impact the timing of revenue recognition of fixed fees for its contracts, as well as the accounting for costs to obtain contracts. For managed-service contracts, the Company currently defers revenue until the completion of the implementation services, at which point the Company recognizes a cumulative catch-up adjustment equal to the revenue earned during the implementation period but previously deferred. The remaining balance of these fixed fees is recognized ratably over the remaining term of the contract. Under the new standard, the Company expects revenue recognition for the managed-service subscription and implementation fees to begin on the launch date and to be recognized ratably through the contract end date, with no cumulative catch-up adjustment on the launch date. Further, the Company currently expenses sales commissions and related bonuses as incurred. Under the new standard, the Company will be required to defer and amortize a portion of these contract costs. The Company intends to adopt the new standard using the modified retrospective transition method effective January 1, 2018. The Company continues to evaluate the provisions of the new standard to identify further potential impacts to its consolidated financial statements. ASU 2016-08, Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) The Company's adoption date: January 1, 2018 The standard clarifies implementation guidance on principal versus agent considerations in ASU 2014-09. ASU 2016-10, Identifying Performance Obligations and Licensing The Company's adoption date: January 1, 2018 The standard clarifies implementation guidance on the identification of performance obligations and the licensing implementation guidance in ASU 2014-09. ASU 2016-12, Narrow-Scope Improvements and Practical Expedients The Company's adoption date: January 1, 2018 The standard clarifies the guidance on assessing collectability, presentation of sales taxes, noncash consideration and completed contracts and contract modifications at transition. ASU 2016-20, Technical Corrections and Improvements to Topic 606 The Company's adoption date: January 1, 2018 The standard clarifies certain narrow aspects of ASU 2014-09. Leases: ASU 2016-02, Leases (Topic 842) The Company's adoption date: January 1, 2019 The standard requires that lessees recognize assets and liabilities for leases with lease terms greater than twelve months in the statement of financial position. The standard also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The Company is currently evaluating the impact the adoption of the standard will have on its consolidated financial statements. Financial Instruments: ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) The Company's adoption date: January 1, 2020 The standard replaces the incurred loss impairment methodology in current U.S. GAAP (defined below) with a methodology that reflects expected credit losses. The update is intended to provide financial statement users with more useful information about expected credit losses. The Company is currently evaluating the impact the adoption of the standard will have on its consolidated financial statements. Cash Flow: ASU 2016-18, Restricted Cash The Company's adoption date: January 1, 2018 The standard requires that entities show the changes in the total of cash, cash equivalents and restricted cash in the statement of cash flows. Transfers between cash, cash equivalents and restricted cash should not be presented as cash flow activities on the statement of cash flows. The Company is currently evaluating the impact the adoption of the standard will have on its consolidated financial statements. Standards that the Company has recently adopted Stock-Based Compensation: ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718) The Company's adoption date: January 1, 2017 The standard is intended to simplify several aspects of the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The Company adopted this standard effective January 1, 2017. As a result of this adoption, the Company recognized $8.2 million of deferred tax assets attributable to accumulated excess tax benefits that under the previous guidance could not be recognized until the benefits were realized through a reduction in income taxes payable. This adjustment was applied using a modified retrospective method with a cumulative-effect adjustment to the accumulated deficit for the excess tax benefits not previously recognized. However, given the full valuation allowance placed on the additional $8.2 million of deferred tax assets, the recognition upon adoption had no impact on the Company's accumulated deficit as of January 1, 2017. Further, the Company has elected to continue to estimate forfeitures to determine the amount of compensation cost to be recognized in each period. |
Use of Estimates | The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to the accounts receivable allowance, the useful lives of long-lived assets and other intangible assets, income taxes and assumptions used for purposes of determining stock-based compensation, among others. Estimates and assumptions are also required to value assets acquired and liabilities assumed as well as contingent consideration, where applicable, in conjunction with business combinations. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable, the results of which form the basis for making judgments about the carrying value of assets and liabilities. |
Goodwill and Intangible Assets | The Company acquired intangible assets in connection with its business acquisitions. These assets were recorded at their estimated fair values at the acquisition date and are being amortized over their respective estimated useful lives using the straight-line method. The estimated useful lives and amortization methodology used in computing amortization are as follows: Estimated Useful Life Amortization Methodology Customer relationships 7 years Straight-line Acquired technology 7 years Straight-line Trade names 3 years Straight-line |
Stock-Based Compensation | The Company recognizes stock-based compensation expense using the accelerated attribution method, net of estimated forfeitures, in which compensation cost for each vesting tranche in an award is recognized ratably from the service inception date to the vesting date for that tranche. |
Earnings Per Share | Diluted loss per share is the same as basic loss per share for all periods presented because the effects of potentially dilutive items were anti-dilutive given the Company’s net loss. |
Income Taxes | At the end of each interim reporting period, the Company estimates its effective income tax rate expected to be applicable for the full year. This estimate is used to determine the income tax provision or benefit on a year-to-date basis and may change in subsequent interim periods. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
Schedule of Stockholders Equity | The following table summarizes the stockholders' equity activity for the three months ended March 31, 2017 (in thousands): Balance as of December 31, 2016 $ 86,997 Exercise of stock options and vesting of restricted stock units 186 Stock-based compensation expense 2,924 Statutory tax withholding related to net-share settlement of restricted stock units (1,677 ) Net loss (8,056 ) Foreign currency translation adjustments 210 Balance as of March 31, 2017 $ 80,584 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | The estimated useful lives and amortization methodology used in computing amortization are as follows: Estimated Useful Life Amortization Methodology Customer relationships 7 years Straight-line Acquired technology 7 years Straight-line Trade names 3 years Straight-line |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Stock-Based Compensation Expense | Stock-based compensation expense is included in the following line items in the accompanying condensed consolidated statements of operations for the three months ended March 31, 2017 and 2016 (in thousands): Three Months Ended March 31, 2017 2016 Cost of revenue $ 297 $ 269 Sales and marketing 776 1,121 Research and development 568 443 General and administrative 1,283 1,592 $ 2,924 $ 3,425 |
Summary of Awards Granted in Period | During the three months ended March 31, 2017 , the Company granted the following share-based awards: Number of Shares Underlying Grant Weighted Average Grant Date Fair Value Stock options 575,617 $ 4.19 Restricted stock units ("RSUs") 1,209,121 10.39 Total share-based awards 1,784,738 8.39 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Securities Excluded from Calculation of Weighted Average Common Shares Outstanding | The following securities have been excluded from the calculation of weighted average common shares outstanding because the effect is anti-dilutive for the three months ended March 31, 2017 and 2016 : Three Months Ended March 31, 2017 2016 Stock options 2,198,987 1,788,260 RSUs 2,821,627 2,673,244 |
Segment and Geographic Inform21
Segment and Geographic Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Summary of Revenue by Geography | The table below summarizes revenue by geography for the three months ended March 31, 2017 and 2016 (in thousands). The Company categorizes domestic and international revenue from customers based on their billing address. Three Months Ended March 31, 2017 2016 Domestic $ 22,507 $ 20,424 International 5,822 5,923 Total revenue $ 28,329 $ 26,347 |
Stockholders' Equity - Changes
Stockholders' Equity - Changes in Equity (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Stockholders' Equity Attributable to Parent [Abstract] | ||
Balance as of December 31, 2016 | $ 86,997 | |
Exercise of stock options and vesting of restricted stock units | 186 | |
Stock-based compensation expense | 2,924 | |
Statutory tax withholding related to net-share settlement of restricted stock units | (1,677) | |
Net loss | (8,056) | $ (4,563) |
Foreign currency translation adjustments | 210 | $ 135 |
Balance as of March 31, 2017 | $ 80,584 |
Goodwill and Intangible Asset23
Goodwill and Intangible Assets (Detail) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | $ 100,000 | $ 100,000 |
Change in goodwill during the period | $ 0 | |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life of intangible asset (in years) | 7 years | |
Acquired technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life of intangible asset (in years) | 7 years | |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life of intangible asset (in years) | 3 years |
Commitments (Details)
Commitments (Details) $ in Millions | Mar. 31, 2017USD ($) |
Sales Tax Obligations | |
Loss Contingencies [Line Items] | |
VDA liability for sales taxes | $ 2.5 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Stock-Based Compensation [Line Items] | ||
Stock-based compensation expense | $ 2,924 | $ 3,425 |
Cost of revenue | ||
Stock-Based Compensation [Line Items] | ||
Stock-based compensation expense | 297 | 269 |
Sales and marketing | ||
Stock-Based Compensation [Line Items] | ||
Stock-based compensation expense | 776 | 1,121 |
Research and development | ||
Stock-Based Compensation [Line Items] | ||
Stock-based compensation expense | 568 | 443 |
General and administrative | ||
Stock-Based Compensation [Line Items] | ||
Stock-based compensation expense | $ 1,283 | $ 1,592 |
Stock-Based Compensation - Gran
Stock-Based Compensation - Grants in Period (Detail) | 3 Months Ended |
Mar. 31, 2017$ / sharesshares | |
Number of Shares Underlying Grant | |
Stock options (in shares) | shares | 575,617 |
Total share-based awards (in shares) | shares | 1,784,738 |
Weighted Average Grant Date Fair Value | |
Stock options (in dollars per share) | $ / shares | $ 4.19 |
Total share-based awards (in dollars per share) | $ / shares | $ 8.39 |
Restricted stock units (RSUs) | |
Number of Shares Underlying Grant | |
Restricted stock units (RSUs) (in shares) | shares | 1,209,121 |
Weighted Average Grant Date Fair Value | |
Restricted stock units (RSUs) (in dollars per share) | $ / shares | $ 10.39 |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of Securities Excluded from Calculation of Weighted Average Common Shares Outstanding (Detail) - shares | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from calculation of weighted average common shares outstanding (in shares) | 2,198,987 | 1,788,260 |
RSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from calculation of weighted average common shares outstanding (in shares) | 2,821,627 | 2,673,244 |
Income Taxes (Detail)
Income Taxes (Detail) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | (1.10%) | 0.90% |
U.S. federal statutory tax rate | 34.00% | 34.00% |
Segment and Geographic Inform29
Segment and Geographic Information - Additional Information (Detail) | 3 Months Ended |
Mar. 31, 2017segment | |
Segment Reporting [Abstract] | |
Number of reportable segment | 1 |
Number of operating segment | 1 |
Segment and Geographic Inform30
Segment and Geographic Information - Summary of Revenue by Geography (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Segment Reporting Information [Line Items] | ||
Revenue | $ 28,329 | $ 26,347 |
Domestic | ||
Segment Reporting Information [Line Items] | ||
Revenue | 22,507 | 20,424 |
International | ||
Segment Reporting Information [Line Items] | ||
Revenue | $ 5,822 | $ 5,923 |