Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Oct. 24, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'Control4 Corp | ' |
Entity Central Index Key | '0001259515 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 23,880,867 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $17,450 | $84,546 |
Restricted cash | 325 | ' |
Short-term investments | 48,730 | ' |
Accounts receivable, net | 19,215 | 15,064 |
Inventories | 15,546 | 15,312 |
Prepaid expenses and other current assets | 2,179 | 1,773 |
Total current assets | 103,445 | 116,695 |
Property and equipment, net | 4,208 | 3,943 |
Long-term investments | 23,225 | ' |
Intangible assets, net | 1,570 | 928 |
Goodwill | 99 | ' |
Other assets | 1,144 | 1,120 |
Total assets | 133,691 | 122,686 |
Current liabilities: | ' | ' |
Accounts payable | 14,217 | 13,314 |
Accrued liabilities | 4,902 | 6,821 |
Deferred revenue | 743 | 644 |
Current portion of notes payable | 1,013 | 1,138 |
Total current liabilities | 20,875 | 21,917 |
Notes payable | 1,106 | 1,828 |
Other long-term liabilities | 440 | 467 |
Total liabilities | 22,421 | 24,212 |
Commitments and contingencies | ' | ' |
Stockholders' equity: | ' | ' |
Common stock, $0.0001 par value; 500,000,000 shares authorized; 22,785,104 and 23,870,761 shares issued and outstanding at December 31, 2013 and September 30, 2014 (unaudited), respectively | 2 | 2 |
Additional paid-in capital | 209,187 | 200,545 |
Accumulated deficit | -97,849 | -102,084 |
Accumulated other comprehensive income (loss) | -70 | 11 |
Total stockholders' equity | 111,270 | 98,474 |
Total liabilities and stockholders' equity | $133,691 | $122,686 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ' | ' |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 23,870,761 | 22,785,104 |
Common stock, shares outstanding | 23,870,761 | 22,785,104 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ' | ' | ' | ' |
Revenue | $39,120 | $33,641 | $107,636 | $92,755 |
Cost of revenue | 18,847 | 16,592 | 52,160 | 46,129 |
Cost of revenue - inventory purchase commitment | ' | ' | ' | -180 |
Gross margin | 20,273 | 17,049 | 55,476 | 46,806 |
Operating expenses: | ' | ' | ' | ' |
Research and development | 6,647 | 6,409 | 20,519 | 18,670 |
Sales and marketing | 6,876 | 5,596 | 19,541 | 16,597 |
General and administrative | 3,530 | 3,002 | 10,658 | 8,613 |
Litigation settlements | 10 | 200 | 45 | 440 |
Total operating expenses | 17,063 | 15,207 | 50,763 | 44,320 |
Income from operations | 3,210 | 1,842 | 4,713 | 2,486 |
Other income (expense): | ' | ' | ' | ' |
Interest, net | 24 | -205 | 25 | -412 |
Other income (expense), net | -221 | 197 | -150 | -709 |
Total other income (expense) | -197 | -8 | -125 | -1,121 |
Income before income taxes | 3,013 | 1,834 | 4,588 | 1,365 |
Income tax expense | -250 | -103 | -353 | -132 |
Net income | $2,763 | $1,731 | $4,235 | $1,233 |
Net income per common share: | ' | ' | ' | ' |
Basic (in dollars per share) | $0.12 | $0.12 | $0.18 | $0.19 |
Diluted (in dollars per share) | $0.11 | $0.07 | $0.16 | $0.06 |
Weighted-average number of shares: | ' | ' | ' | ' |
Basic (in shares) | 23,840 | 14,389 | 23,559 | 6,511 |
Diluted (in shares) | 25,590 | 23,556 | 25,671 | 21,206 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ' | ' | ' | ' |
Net income | $2,763 | $1,731 | $4,235 | $1,233 |
Other comprehensive income (loss): | ' | ' | ' | ' |
Foreign currency translation adjustment | -53 | 12 | -35 | 6 |
Net unrealized losses on available-for-sale investments | -46 | ' | -46 | ' |
Total other comprehensive income (loss) | -99 | 12 | -81 | 6 |
Comprehensive income | $2,664 | $1,743 | $4,154 | $1,239 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Operating activities | ' | ' |
Net income | $4,235 | $1,233 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation expense | 1,880 | 1,609 |
Amortization of intangible assets | 330 | 218 |
Provision for doubtful accounts | 271 | 112 |
Gain on inventory purchase commitment | ' | -180 |
Stock-based compensation | 3,994 | 2,648 |
Excess tax benefit from exercise of options for common stock | -18 | ' |
Warrant liability expense | ' | 709 |
Changes in assets and liabilities: | ' | ' |
Accounts receivable | -4,338 | -2,978 |
Inventories | -175 | -2,947 |
Restricted cash | -334 | ' |
Prepaid expenses and other current assets | -402 | -98 |
Other assets | -24 | -243 |
Accounts payable | 956 | 2,150 |
Accrued liabilities | -2,072 | -838 |
Deferred revenue | 99 | 95 |
Other long-term liabilities | -26 | -1,138 |
Net cash provided by operating activities | 4,376 | 352 |
Investing activities | ' | ' |
Purchases of available-for-sale investments | -86,765 | ' |
Proceeds from sales of available-for-sale investments | 2,850 | ' |
Proceeds from maturities of available-for-sale investments | 11,915 | ' |
Purchases of property and equipment | -2,148 | -2,575 |
Business acquisitions, net of cash acquired | -1,116 | -88 |
Net cash used in investing activities | -75,264 | -2,663 |
Financing activities | ' | ' |
Proceeds from issuance of common stock, net of issuance costs | ' | 65,556 |
Proceeds from exercise of options for common stock | 4,630 | 367 |
Excess tax benefit from exercise of options for common stock | 18 | ' |
Proceeds from notes payable | ' | 1,145 |
Repayment of notes payable | -847 | -986 |
Net cash provided by financing activities | 3,801 | 66,082 |
Effect of exchange rate changes on cash and cash equivalents | -9 | 19 |
Net decrease in cash and cash equivalents | -67,096 | 63,790 |
Cash and cash equivalents at beginning of period | 84,546 | 18,695 |
Cash and cash equivalents at end of period | 17,450 | 82,485 |
Supplemental disclosure of cash flow information | ' | ' |
Cash paid for interest | 150 | 419 |
Cash paid for taxes | 227 | 131 |
Supplemental schedule of non-cash investing and financing activities | ' | ' |
Options for common stock granted in connection with a business acquisition | ' | 174 |
Elimination of liability upon net exercise of warrants to purchase preferred stock | ' | 1,310 |
Conversion of redeemable convertible preferred stock to common stock | ' | $116,313 |
Description_of_Business_and_Su
Description of Business and Summary of Significant Accounting Policies | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Description of Business and Summary of Significant Accounting Policies | ' | |||||||||||||
Description of Business and Summary of Significant Accounting Policies | ' | |||||||||||||
1. Description of Business and Summary of Significant Accounting Policies | ||||||||||||||
Control4 Corporation (‘‘Control4’’ or the ‘‘Company’’) is a leading provider of automation and control solutions for the connected home. The Company unlocks the potential of connected devices, making entertainment systems easier to use, homes more comfortable, appliances more energy efficient, and families more secure. The Company was incorporated in the state of Delaware on March 27, 2003. | ||||||||||||||
Unaudited Interim Financial Statements | ||||||||||||||
The accompanying condensed consolidated balance sheets and the condensed consolidated statements of operations, comprehensive income and cash flows are unaudited. These unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (‘‘GAAP’’) on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, considered necessary to present fairly the Company’s financial position, results of operations and cash flows. The results of operations for the three and nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014, or any other future interim or annual period. | ||||||||||||||
These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 21, 2014. The December 31, 2013 consolidated balance sheet included herein was derived from the audited financial statements as of that date. | ||||||||||||||
Reclassifications | ||||||||||||||
Certain prior-year amounts have been reclassified in order to conform to the current-year presentation. A reclassification was made from general and administrative expenses to other income (expense) related to foreign currency transaction gains (losses). As a result, income from operations is impacted by $0.2 million for the three months ended September 30, 2013, and by $10,000 for the nine months ended September 30, 2013, but this reclassification did not impact previously reported net income, or related per share amounts, for either period. In addition, a reclassification was made related to international hospitality revenue previously disclosed as United States hospitality revenue. The reclassification did not materially impact previous disclosures related to geographic information. Furthermore, this reclassification had no effect on previously reported amounts related to total revenue, income from continuing operations, net income or related per share amounts, and does not impact previous disclosures regarding concentrations of revenue. | ||||||||||||||
Basis of Presentation | ||||||||||||||
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in the unaudited condensed consolidated financial statements. | ||||||||||||||
Segment Reporting | ||||||||||||||
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, the Chief Executive Officer, in making decisions regarding resource allocation and accessing performance. To date, the Company has viewed its operations and manages its business as one operating segment. | ||||||||||||||
Concentrations of Risk | ||||||||||||||
The Company’s accounts receivable are derived from revenue earned from its worldwide network of dealers and distributors. The Company’s sales to dealers and distributors located outside the United States are generally denominated in United States dollars, except for sales to dealers and distributors located in the United Kingdom and the European Union, which are generally denominated in pounds sterling and the euro, respectively. There were no individual account balances greater than 10% of total accounts receivable at December 31, 2013 and September 30, 2014. | ||||||||||||||
No dealer or distributor accounted for more than 10% of total revenue for the three and nine months ended September 30, 2013 and 2014. | ||||||||||||||
The Company relies on a limited number of suppliers for its contract manufacturing. A significant disruption in the operations of these manufacturers would impact the production of the Company’s products for a substantial period of time, which could have a material adverse effect on the Company’s business, financial condition and results of operations. | ||||||||||||||
Geographic Information | ||||||||||||||
The Company’s revenue includes amounts earned through sales to dealers and distributors located outside of the United States. With the exception of Canada, no single foreign country accounted for more than 10% of total revenue for the three and nine months ended September 30, 2013 and 2014. The following table sets forth revenue from the United States, Canada and all other international dealers and distributors combined (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Revenue-United States | $ | 22,140 | $ | 25,517 | $ | 60,933 | $ | 71,211 | ||||||
Revenue-Canada | 3,641 | 4,140 | 10,690 | 10,802 | ||||||||||
Revenue-all other international sources | 7,860 | 9,463 | 21,132 | 25,623 | ||||||||||
Total revenue | $ | 33,641 | $ | 39,120 | $ | 92,755 | $ | 107,636 | ||||||
International revenue (excluding Canada) as a percent of total revenue | 23 | % | 24 | % | 23 | % | 24 | % | ||||||
Use of Accounting Estimates | ||||||||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates including those related to revenue recognition, sales returns, provisions for doubtful accounts, asset impairment, product warranty, inventory obsolescence, litigation, determination of fair value of stock options, deferred tax asset valuation allowances and income taxes. Actual results may differ from those estimates. | ||||||||||||||
Product Warranty | ||||||||||||||
The Company provides its customers a limited product warranty of two years, which requires the Company to repair or replace (at its option) defective products during the warranty period at no cost to the customer. The Company estimates the costs that may be incurred to replace or repair defective products and records a reserve at the time revenue is recognized. Factors that affect the Company’s warranty liability include the number of installed systems, the Company’s historical experience and management’s judgment regarding anticipated rates of product warranty returns, net of refurbished products. The Company assesses the adequacy of its recorded warranty liability each period and makes adjustments to the liability as necessary. Warranty costs accrued includes amounts accrued for products at the time of shipment, adjustments for changes in estimated costs for warranties on products shipped in the period, and changes in estimated costs for warranties on products shipped in prior periods. It is not practicable for the Company to determine the amounts applicable to each of these components. | ||||||||||||||
The following table presents the changes in the product warranty liability (in thousands): | ||||||||||||||
Warranty Liability | ||||||||||||||
Balance at December 31, 2013 | $ | 1,213 | ||||||||||||
Warranty costs accrued | 679 | |||||||||||||
Warranty claims | (778 | ) | ||||||||||||
Balance at September 30, 2014 | $ | 1,114 | ||||||||||||
Net Income Per Share | ||||||||||||||
Basic net income per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period that have a dilutive effect on net income per share. Potentially dilutive common shares result from the assumed exercise of outstanding stock options and the assumed conversion of outstanding convertible preferred stock and warrants using the if-converted method. In a net loss position, diluted net loss per share is computed using only the weighted-average number of common shares outstanding during the period, as any additional common shares would be anti-dilutive. | ||||||||||||||
The following table presents the reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per share (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Numerator: | ||||||||||||||
Net income | $ | 1,731 | $ | 2,763 | $ | 1,233 | $ | 4,235 | ||||||
Denominator: | ||||||||||||||
Weighted average common stock outstanding for basic net income per common share | 14,389 | 23,840 | 6,511 | 23,559 | ||||||||||
Effect of dilutive securities—stock options, convertible preferred stock, and warrants to purchase common stock and preferred stock | 9,167 | 1,750 | 14,695 | 2,112 | ||||||||||
Weighted average common shares and dilutive securities outstanding | 23,556 | 25,590 | 21,206 | 25,671 | ||||||||||
The following weighted-average common stock equivalents were anti-dilutive and therefore were excluded from the calculation of diluted net income per share (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Convertible preferred stock | — | — | — | — | ||||||||||
Options to purchase common stock | 253 | 1,245 | 355 | 912 | ||||||||||
Warrants to purchase common stock | — | — | — | — | ||||||||||
Warrants to purchase preferred stock | — | — | 1 | — | ||||||||||
Total | 253 | 1,245 | 356 | 912 | ||||||||||
Restricted Cash | ||||||||||||||
Restricted cash as of September 30, 2014, is composed of a guarantee made by our subsidiary in the United Kingdom to HM Revenue & Customs related to a customs duty deferment account. | ||||||||||||||
Recent Accounting Pronouncements | ||||||||||||||
In July 2013, the FASB issued ASU 2013-11, ‘‘Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.’’ The amended guidance requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The guidance was effective for the Company beginning January 1, 2014. The adoption of this guidance did not have an impact on the Company’s results of operations, financial position, or cash flows as it relates only to financial statement presentation. | ||||||||||||||
In May 2014, the FASB issued ASU 2004-09, “Revenue from Contracts with Customers (Topic 606),” which amends the guidance in ASC 605, “Revenue Recognition.” The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company is still evaluating the impact of adopting this guidance as well as whether the Company will apply the amendments retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of applying this update at the date of initial application. | ||||||||||||||
In August 2014, the FASB issued ASU 2014-15, ‘‘Presentation of Financial Statements — Going Concern (Subtopic 205-40).’’ The amended guidance requires an entity to prepare financial statements under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements—Liquidation Basis of Accounting, if liquidation of the entity becomes imminent. The guidance is effective for the annual period ending on December 31, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The adoption of this guidance will not have an impact on the Company’s results of operations, financial position, or cash flows. | ||||||||||||||
Balance_Sheet_Components
Balance Sheet Components | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Balance Sheet Components | ' | |||||||
Balance Sheet Components | ' | |||||||
2. Balance Sheet Components | ||||||||
Inventories consisted of the following (in thousands): | ||||||||
December 31, | September 30, | |||||||
2013 | 2014 | |||||||
Finished goods | $ | 14,061 | $ | 14,689 | ||||
Component parts | 1,251 | 857 | ||||||
$ | 15,312 | $ | 15,546 | |||||
Property and equipment, net consisted of the following (in thousands): | ||||||||
December 31, | September 30, | |||||||
2013 | 2014 | |||||||
Computer equipment and software | $ | 4,152 | $ | 4,240 | ||||
Lab and warehouse equipment | 2,374 | 2,737 | ||||||
Manufacturing tooling and test equipment | 2,652 | 2,655 | ||||||
Furniture and fixtures | 2,046 | 2,587 | ||||||
Leasehold improvements | 1,450 | 1,646 | ||||||
Marketing equipment | 604 | 662 | ||||||
13,278 | 14,527 | |||||||
Less: accumulated depreciation | (9,335 | ) | (10,319 | ) | ||||
$ | 3,943 | $ | 4,208 | |||||
Intangible assets, net consisted of the following (in thousands): | ||||||||
December 31, | September 30, | |||||||
2013 | 2014 | |||||||
Acquired technology | $ | 1,678 | $ | 2,650 | ||||
Less: accumulated amortization | (750 | ) | (1,080 | ) | ||||
$ | 928 | $ | 1,570 | |||||
Other assets consisted of the following (in thousands): | ||||||||
December 31, | September 30, | |||||||
2013 | 2014 | |||||||
Prepaid licensing | $ | 716 | $ | 653 | ||||
Deposits | 404 | 491 | ||||||
$ | 1,120 | $ | 1,144 | |||||
Accrued liabilities consisted of the following (in thousands): | ||||||||
December 31, | September 30, | |||||||
2013 | 2014 | |||||||
Sales returns and warranty accruals | $ | 2,137 | $ | 2,075 | ||||
Compensation accruals | 3,233 | 1,569 | ||||||
Other accrued liabilities | 544 | 1,238 | ||||||
Current portion of settlement obligations | 907 | 20 | ||||||
$ | 6,821 | $ | 4,902 | |||||
Fair_Value_Measurements
Fair Value Measurements | 9 Months Ended | ||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||||||||
3. Fair Value Measurements | |||||||||||||||||||||||
Assets Measured and Recorded at Fair Value on a Recurring Basis | |||||||||||||||||||||||
The Company’s financial assets that are measured at fair value on a recurring basis consist of money market funds and available-for-sale investments. The following three levels of inputs are used to measure the fair value of financial instruments: | |||||||||||||||||||||||
Level 1: Quoted prices in active markets for identical assets or liabilities. | |||||||||||||||||||||||
Level 2: Observable inputs 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: Unobservable inputs are used when little or no market data is available. | |||||||||||||||||||||||
The fair values for substantially all of the Company’s financial assets are based on quoted prices in active markets or observable inputs. For Level 2 securities, the Company uses a third-party pricing service which provides documentation on an ongoing basis that includes, among other things, pricing information with respect to reference data, methodology, inputs summarized by asset class, pricing application and corroborative information. | |||||||||||||||||||||||
The Company determines realized gains or losses on the sale of marketable securities on a specific identification method. During the three and nine months ended September 30, 2014, the Company did not record significant realized gains or losses on the sales of available-for-sale investments. The following tables show the Company’s cash and available-for-sale investments’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term investments as of December 31, 2013 and September 30, 2014 (in thousands): | |||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair Value | Cash and | Short-term | Long-term | |||||||||||||||||
Cost | Gains | Losses | Cash | Investments | Investments | ||||||||||||||||||
Equivalents | |||||||||||||||||||||||
Cash | $ | 5,533 | $ | — | $ | — | $ | 5,533 | $ | 5,533 | $ | — | $ | — | |||||||||
Level 1: | |||||||||||||||||||||||
Money market funds | 79,013 | — | — | 79,013 | 79,013 | — | — | ||||||||||||||||
Subtotal | 79,013 | — | — | 79,013 | 79,013 | — | — | ||||||||||||||||
Total | $ | 84,546 | $ | — | $ | — | $ | 84,546 | $ | 84,546 | $ | — | $ | — | |||||||||
September 30, 2014 | |||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair Value | Cash and | Short-term | Long-term | |||||||||||||||||
Cost | Gains | Losses | Cash | Investments | Investments | ||||||||||||||||||
Equivalents | |||||||||||||||||||||||
Cash | $ | 8,310 | $ | — | $ | — | $ | 8,310 | $ | 8,310 | $ | — | $ | — | |||||||||
Level 1: | |||||||||||||||||||||||
Money market funds | 8,440 | — | — | 8,440 | 8,440 | — | — | ||||||||||||||||
Subtotal | 8,440 | — | — | 8,440 | 8,440 | — | — | ||||||||||||||||
Level 2: | |||||||||||||||||||||||
Asset-backed securities | 4,461 | — | (3 | ) | 4,458 | — | — | 4,458 | |||||||||||||||
Corporate bonds | 54,146 | 4 | (47 | ) | 54,103 | — | 37,837 | 16,266 | |||||||||||||||
Commercial paper | 11,593 | — | — | 11,593 | 700 | 10,893 | — | ||||||||||||||||
U.S. agency securities | 2,501 | — | — | 2,501 | — | — | 2,501 | ||||||||||||||||
Subtotal | 72,701 | 4 | (50 | ) | 72,655 | 700 | 48,730 | 23,225 | |||||||||||||||
Total | $ | 89,451 | $ | 4 | $ | (50 | ) | $ | 89,405 | $ | 17,450 | $ | 48,730 | $ | 23,225 | ||||||||
As of September 30, 2014, the Company considers the declines in market value of its investment portfolio to be temporary in nature and does not consider any of its investments other-than-temporarily impaired. The Company typically invests in highly-rated securities, and its investment policy generally limits the amount of credit exposure to any one issuer. The policy requires investments generally to be investment grade, with the primary objective of minimizing the potential risk of principal loss. Fair values were determined for each individual security in the investment portfolio. The maturities of the Company’s long-term investments range from one to two years. When evaluating an investment for other-than-temporary impairment the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates, and the Company’s intent to sell, or whether it is more likely than not it will be required to sell the investment before recovery of the investment’s cost basis. During the three and nine months ended September 30, 2014, the Company did not recognize any significant impairment charges. | |||||||||||||||||||||||
Fair Value of Other Financial Instruments | |||||||||||||||||||||||
The carrying amounts reported in the accompanying consolidated financial statements for cash and cash equivalents, accounts payable and accrued liabilities approximate their fair value because of the short term nature of the accounts. The fair value of the notes payable approximates its carrying value based on the variable nature of interest rates and current market rates available to the Company (see Note 4). As a result, the balance of the notes payable is categorized within the Level 2 fair value hierarchy. | |||||||||||||||||||||||
LongTerm_Obligations
Long-Term Obligations | 9 Months Ended |
Sep. 30, 2014 | |
Long-Term Obligations | ' |
Long-Term Obligations | ' |
4. Long-Term Obligations | |
Loan and Security Agreement | |
In June 2013, the Company entered into an Amended and Restated Loan and Security Agreement with Silicon Valley Bank (the “SVB Agreement”), which consists of a revolving credit facility of $13.0 million (subject to certain borrowing base restrictions) and term borrowings to fund purchases of property and equipment. All borrowings under the SVB Agreement are collateralized by the general assets of the Company. The revolving credit facility has a variable rate of interest of prime (as published in the Wall Street Journal) or LIBOR plus 2.50%, as selected by the Company. The rate was 3.25% at September 30, 2014. In addition, the Company pays an annual commitment fee of $20,000 and a quarterly unused line of credit fee of 0.375% based on the difference between the borrowing commitment of $13.0 million and the then current balance. In addition, the SVB Agreement provided for term borrowings to fund purchases of property and equipment through May 2014. Term borrowings are payable in 42 equal monthly payments of principal plus interest and bear interest at prime plus 0.50%, which was 3.75% at September 30, 2014. | |
Borrowing under the revolving credit facility is subject to certain collateral restrictions relating primarily to the Company’s accounts receivable and inventory levels. As of September 30, 2014, the total borrowing capacity was approximately $13.0 million, and no borrowings were outstanding. The revolving credit facility has a maturity date of May 29, 2015. | |
The SVB Agreement contains various restrictive and financial covenants and the Company was in compliance with each of these covenants as of September 30, 2014. | |
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2014 | |
Income Taxes | ' |
Income Taxes | ' |
5. Income Taxes | |
In order to determine the quarterly provision for income taxes, the Company considers the estimated annual effective tax rate, which is based on expected annual taxable income and statutory tax rates in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter during which they occur and can be a source of variability in the effective tax rates from quarter to quarter. | |
Income tax expense was $0.1 million and $0.3 million for the three months ended September 30, 2013 and 2014, respectively, or approximately 6% and 8% of income before income taxes, respectively. Income tax expense was $0.1 million and $0.4 million for the nine months ended September 30, 2013 and 2014, respectively, or approximately 10% and 8% of income before income taxes, respectively. The effective tax rate for the three and nine months ended September 30, 2014 differs from the U.S. federal statutory rate of 34% primarily due to the domestic valuation allowance offsetting most of the statutory rate, state income taxes, foreign income taxes, U.S. federal alternative minimum tax, and incentive stock options. | |
Significant judgment is required in determining our provision for income taxes, recording valuation allowances against deferred tax assets and evaluating our uncertain tax positions. In evaluating our ability to recover our deferred tax assets, in full or in part, we consider all available positive and negative evidence, including our past operating results, our forecast of future market growth, forecasted earnings, future taxable income and prudent and feasible tax planning strategies. Due to historical net losses incurred and the uncertainty of realizing the deferred tax assets, for all the periods presented, we have a full valuation allowance against our deferred tax assets. To the extent that we generate positive income and expect, with reasonable certainty, to continue to generate positive income we may release all or a portion of our valuation allowance in a future period. This release would result in the recognition of certain deferred tax assets, a decrease to income tax expense for the period such release is made. In addition, our effective tax rate in subsequent periods would increase, and more closely approximate the federal statutory rate of 34%, after giving consideration to state income taxes, foreign income taxes and effect of exercising incentive stock options. | |
The Company files income tax returns in the United States, including various state and local jurisdictions. The Company’s subsidiaries file income tax returns in the United Kingdom, Hong Kong, China and India. The Company is subject to examination in the United States, the United Kingdom, Hong Kong, China, and India as well as various state jurisdictions. As of September 30, 2014, the Company was not under examination by any tax authorities. Tax years beginning in 2010 are subject to examination by tax authorities in the United States, although net operating loss and credit carryforwards from all years are subject to examinations and adjustments for at least three years following the year in which the attributes are used. Tax years beginning in 2011 are subject to examination by the taxing authorities in Hong Kong. Tax years beginning in 2012 are subject to examination by the taxing authorities in the United Kingdom, China, and India. | |
Equity_Compensation
Equity Compensation | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Equity Compensation | ' | |||||||||||||
Equity Compensation | ' | |||||||||||||
6. Equity Compensation | ||||||||||||||
Stock Options | ||||||||||||||
In 2003, the Board of Directors adopted the 2003 Equity Incentive Plan (the “2003 Plan”), which provided for the granting of nonqualified and incentive stock options, stock appreciation rights, stock awards and restricted stock. Under the 2003 Plan, the Company was able to grant nonqualified and incentive stock options to directors, employees and non-employees providing services to the Company. On June 11, 2013, the Company’s Board of Directors adopted the 2013 Stock Option and Incentive Plan (the “2013 Plan”), which was subsequently approved by the Company’s stockholders. The 2013 Plan became effective as of the closing of the Company’s initial public offering. To the extent that any awards outstanding under the 2003 Plan are forfeited or lapse unexercised subsequent to August 1, 2013, the shares of common stock subject to such awards will become available for issuance under the 2013 Plan. The 2013 Plan provides for annual increases in the number of reserved shares of up to 5% of the outstanding number of shares of the Company’s Common Stock as of the preceding December 31. On January 1, 2014, the number of reserved shares was increased by 1,139,255 shares in accordance with the provisions of the 2013 Plan. | ||||||||||||||
A summary of stock option activity for the nine months ended September 30, 2014 is presented below: | ||||||||||||||
Shares | Weighted | Weighted | Weighted | |||||||||||
Subject to | Average | Average | Average | |||||||||||
Options | Grant Date | Exercise | Remaining | |||||||||||
Outstanding | Fair Value | Price | Contractual | |||||||||||
Life (Years) | ||||||||||||||
Balance at December 31, 2013 | 4,905,214 | $ | 6.31 | |||||||||||
Granted | 1,060,278 | $ | 10.91 | 19.34 | ||||||||||
Exercised | (1,077,534 | ) | 4.29 | |||||||||||
Expired | (136 | ) | 7.4 | |||||||||||
Forfeited | (69,338 | ) | 15.53 | |||||||||||
Balance at September 30, 2014 | 4,818,484 | 9.47 | ||||||||||||
Exercisable options at September 30, 2014 | 2,786,424 | 5.86 | 5.1 | |||||||||||
Vested and expected to vest at September 30, 2014 | 4,627,382 | 9.21 | 6.5 | |||||||||||
The following table summarizes information about stock options outstanding and exercisable at September 30, 2014: | ||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||
Range of Exercise Prices | Weighted | Number of | Weighted- | Number of | Weighted- | |||||||||
Average | Underlying | Average | Underlying | Average | ||||||||||
Exercise | Shares | Remaining | Shares | Remaining | ||||||||||
Price | Contractual | Contractual | ||||||||||||
Life (in | Life (in | |||||||||||||
years) | years) | |||||||||||||
$0.52 - 1.72 | $ | 0.98 | 52,095 | 0.8 | 52,095 | 0.8 | ||||||||
1.97 - 3.38 | 2.41 | 383,489 | 1.6 | 383,489 | 1.6 | |||||||||
3.58 - 6.14 | 5.54 | 1,855,137 | 5.3 | 1,625,426 | 5.1 | |||||||||
6.34 - 9.94 | 8.27 | 1,044,732 | 7.5 | 586,174 | 7.3 | |||||||||
11.28 - 16.97 | 12.77 | 656,299 | 8.4 | 121,117 | 6.3 | |||||||||
17.66 - 22.92 | 21.01 | 826,732 | 9.4 | 18,123 | 8.9 | |||||||||
4,818,484 | 2,786,424 | |||||||||||||
For the stock option awards vested during the three and nine months ended September 30, 2014, the total fair value was $1.0 million and $3.4 million, respectively. The following table summarizes the aggregate intrinsic-value of options exercised, exercisable and vested and expected to vest (in thousands): | ||||||||||||||
For the nine months ended | ||||||||||||||
and as of September 30, 2014 | ||||||||||||||
Options Exercised | $ | 17,856 | ||||||||||||
Options Exercisable | 19,883 | |||||||||||||
Options Vested and Expected to Vest | 23,644 | |||||||||||||
The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Expected volatility | 57 | % | 57-58 | % | 56-59 | % | 56-60 | % | ||||||
Expected dividends | 0 | % | 0 | % | 0 | % | 0 | % | ||||||
Expected terms (in years) | 5.5-6.1 | 6.1 | 3.3-7.2 | 3.8-6.1 | ||||||||||
Risk-free rate | 1.5-1.7 | % | 1.8-1.9 | % | 0.8-1.7 | % | 1.1-2.0 | % | ||||||
Total stock-based compensation expense has been classified as follows in the accompanying statements of operations (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Cost of revenue | $ | 15 | $ | 29 | $ | 46 | $ | 77 | ||||||
Research and development | 419 | 562 | 974 | 1,682 | ||||||||||
Sales and marketing | 187 | 296 | 543 | 810 | ||||||||||
General and administrative | 319 | 452 | 1,085 | 1,425 | ||||||||||
Total stock-based compensation expense | $ | 940 | $ | 1,339 | $ | 2,648 | $ | 3,994 | ||||||
At September 30, 2014, there was $16.1 million of total unrecognized compensation cost related to non-vested stock option awards that will be recognized over a weighted-average period of 3.0 years. | ||||||||||||||
Related_Party_Transactions
Related Party Transactions | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Related Party Transactions | ' | |||||||||||||
Related Party Transactions | ' | |||||||||||||
7. Related Party Transactions | ||||||||||||||
The Company has entered into sales agreements with companies affiliated with certain of its investors. The following table sets forth revenue from product sales to these companies (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Company 1 | $ | 694 | $ | 1,011 | $ | 2,059 | $ | 2,601 | ||||||
Company 2 | — | 139 | 128 | 542 | ||||||||||
Company 3 | 262 | 9 | 748 | 11 | ||||||||||
Company 4 | 4 | — | 423 | — | ||||||||||
$ | 960 | $ | 1,159 | $ | 3,358 | $ | 3,154 | |||||||
As of December 31, 2013 and September 30, 2014, the Company had accounts receivable from these companies totaling $0.6 million and $0.9 million, respectively. Purchase and payment terms with these related parties are consistent with other non-affiliated companies. | ||||||||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Commitments and Contingencies | ' | ||||
Commitments and Contingencies | ' | ||||
8. Commitments and Contingencies | |||||
Operating Leases | |||||
The Company leases office and warehouse space under operating leases that expire between 2015 and 2018. The terms of the leases include periods of free rent, options for the Company to extend the leases (three to five years) and increasing rental rates over time. The Company recognizes rental expense under these operating leases on a straight line basis over the lives of the leases and has accrued for rental expense recorded but not paid. | |||||
Rental expense was approximately $0.3 million and $0.5 million for the three months ended September 30, 2013 and 2014, respectively, and $1.0 million and $1.3 million for the nine months ended September 30, 2013 and 2014, respectively. | |||||
Future minimum rental payments required under non-cancelable operating leases with initial or remaining terms in excess of one year consist of the following as of September 30, 2014 (in thousands): | |||||
2014 | $ | 466 | |||
2015 | 1,917 | ||||
2016 | 1,811 | ||||
2017 | 1,578 | ||||
2018 | 835 | ||||
$ | 6,607 | ||||
Purchase Commitments | |||||
The Company had non-cancellable purchase commitments for the purchase of inventory, which extend through May 2015 totaling approximately $25.4 million at September 30, 2014. | |||||
Indemnification | |||||
The Company has agreed to indemnify its officers and directors for certain events or occurrences, while the officer or director is or was serving at the Company’s request in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that provides corporate reimbursement coverage that limits its exposure and enables it to recover a portion of any future amounts paid. The Company is unable to reasonably estimate the maximum amount that could be payable under these arrangements since these obligations are not capped but are conditional to the unique facts and circumstances involved. Accordingly, the Company has no liabilities recorded for these agreements as of September 30, 2014. | |||||
Employment Agreements | |||||
The Company has signed employment agreements with certain executive officers who are entitled to receive certain benefits if their employment is terminated by the Company, including severance payments, accelerated vesting of stock options and continuation of certain insurance benefits. | |||||
Legal Matters | |||||
The Company is subject to various lawsuits and other claims that arise from time to time in the ordinary course of business. These actions may be based on alleged patent infringement or other matters. For example, on April 23, 2014, Olivistar, LLC (“Olivistar”), a limited liability company organized under the laws of Texas, filed a Complaint against the Company in the Eastern District of Texas alleging that the Company’s light switches and MyHome App infringe two United States patents that Olivistar owns by assignment. On July 15, 2014, the Company filed an Answer to Olivistar’s Complaint, and on August 8, 2014, the parties entered into a settlement agreement, which resulted in Olivistar dismissing its Complaint with prejudice. | |||||
On August 12, 2014 and September 16, 2014, respectively, the Company received letters from Nokia Corporation alleging that the Company manufactures or supplies products that practice IEEE 802.11 Standards related to wireless technology, and that Nokia is the owner of a portfolio of patents essential to that standard. The Company is conducting an investigation of the claims made by Nokia regarding its patent portfolio. Nokia has not initiated litigation against the Company, but the Company believes that Nokia may do so. The Company intends to defend itself vigorously with respect to this and any other claims or litigation. | |||||
The Company establishes reserves for specific liabilities in connection with legal actions that it deems to be probable and estimable. In management’s opinion, the Company is not currently involved in any legal proceedings other than specifically identified above, that individually or in the aggregate, could have a material effect on the Company’s financial condition, operations, or cash flows. Currently, a range of loss associated with any individual material legal proceeding cannot be reasonably estimated. | |||||
Acquisition
Acquisition | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Acquisition | ' | |||||||||||||
Acquisition | ' | |||||||||||||
9. Acquisition | ||||||||||||||
On September 10, 2014, Control4 Corporation (“Control4”), through its wholly owned subsidiary, Control4 EMEA, LTD (“Control4 EMEA”), completed the acquisition of Extra Vegetables Limited, a company incorporated in England and Wales (“Extra Vegetables”), pursuant to a Stock Purchase Agreement dated August 28, 2014, by and among Control4 EMEA and all of the shareholders of Extra Vegetables (the “Purchase Agreement”). Extra Vegetables developed integration modules and third-party device drivers for Control4 and other third-party home automation systems. | ||||||||||||||
Pursuant to the terms of the Purchase Agreement, Control4 EMEA purchased all of the issued and outstanding shares of Extra Vegetables from its shareholders (each a “Selling Shareholder,” and together, the “Selling Shareholders”) and Extra Vegetables became a wholly owned subsidiary of Control4 EMEA. Each Selling Shareholder also agreed to become an employee of Control4 EMEA or Control4. The total consideration transferred was $0.9 million in cash, which included a base purchase price of $0.7 million and $0.2 million as payment for the Company’s net working capital. | ||||||||||||||
Total consideration transferred was allocated to tangible and identifiable intangible assets acquired and liabilities assumed based on their preliminary fair values at the acquisition date as set forth below, with such preliminary fair values being subject to final review and analysis. While, from the acquisition date, the Extra Vegetables products will be provided without charge of a separate fee, the Company believes that the acquisition of Extra Vegetables will strengthen the Company’s interoperability development efforts for the connected home, accelerate the development and time-to-market for essential third-party device drivers, offer more comprehensive technical support, deliver better functionality, and provide more integration opportunities, while eliminating complexity for the Company’s dealers and distributors managing multiple vendors, licensing, and permission models. Management estimated the fair values of tangible and intangible asset and liabilities in accordance with the applicable accounting guidance for business combinations. The preliminary amount of consideration transferred is subject to potential adjustments in the event that the accounts receivable becomes uncollectible or preliminary estimates of accrued liabilities, including income taxes payable, are inaccurate. The Company expects the allocation of the consideration transferred to be final within the measurement period (up to one year from the acquisition date). | ||||||||||||||
The Company’s preliminary allocation of consideration transferred for Extra Vegetables is as follows (in thousands): | ||||||||||||||
Estimated Fair Value | ||||||||||||||
Cash | $ | 265 | ||||||||||||
Other assets acquired | 125 | |||||||||||||
Intangible assets | 596 | |||||||||||||
Goodwill | 79 | |||||||||||||
Total assets acquired | 1,065 | |||||||||||||
Taxes payable | 175 | |||||||||||||
Other liabilities assumed | 8 | |||||||||||||
Total net assets acquired | $ | 882 | ||||||||||||
Identifiable Intangible Assets | ||||||||||||||
The Company acquired intangible assets that consisted of developed technology and non-compete agreements, which had preliminary estimated fair values of $574,000 and $22,000, respectively. The assets were measured at fair value reflecting the highest and best use of nonfinancial assets in combination with other assets and liabilities using an income approach that discounts expected future cash flows to present value. The estimated net cash flows were discounted using a discount rate of 22%, which is based on the estimated internal rate of return for the acquisition and represents the rate that market participants might use to value the intangible assets. The projected cash flows were determined using key assumptions such as: estimates of revenues and operating profits; the time and resources needed to recreate integration modules and drivers; the life of the product; and associated risks related to viability and product alternatives. The Company will amortize the intangible assets on a straight-line basis over their estimated useful lives of four years for developed technology and two years for non-competition agreements. This amortization is not deductible for income tax purposes. | ||||||||||||||
Goodwill | ||||||||||||||
The $79,000 of goodwill represents the excess of consideration transferred over the fair value of assets acquired and liabilities assumed and is attributable to Extra Vegetables’ assembled workforce as well as the benefits expected from combining the Company’s research and engineering operations with Extra Vegetables’. This goodwill is not deductible for income tax purposes. | ||||||||||||||
Other | ||||||||||||||
From the date of acquisition through September 30, 2014, the Company recorded revenue and net income associated with Extra Vegetables of approximately $7,000 and $3,500, respectively. Additionally, the Company incurred, and expects to incur, approximately $95,000 in total acquisition-related costs accounted for in general and administrative expenses. | ||||||||||||||
Pro Forma Information | ||||||||||||||
The unaudited pro forma information presented below includes the effects of the Extra Vegetables acquisition as if it had been consummated as of January 1, 2013, with adjustments to give effect to pro forma events that are directly attributable to the acquisition, including adjustments related to the amortization of acquired intangible assets. The unaudited pro forma information does not reflect any operating efficiency or potential cost savings, which may result from the consolidation of Extra Vegetables. Accordingly, the unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of what the actual results of the combined company would have been if the acquisition had occurred at the beginning of the period presented, nor is it indicative of the future results of operations. In fact, the Company plans to provide the Extra Vegetables products in Control4’s driver database and make them freely available to Control4 dealers through the Company’s installation software; therefore, the Company will not generate any direct, stand-alone product revenue from the Extra Vegetables technology in future periods. | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
(in thousands) | ||||||||||||||
Revenue | $ | 33,961 | $ | 39,443 | $ | 93,691 | $ | 108,724 | ||||||
Income from operations | 2,046 | 3,433 | 3,095 | 5,460 | ||||||||||
Net income | $ | 1,868 | $ | 2,936 | $ | 1,661 | $ | 4,792 | ||||||
Net income per share, basic | $ | 0.13 | $ | 0.12 | $ | 0.26 | $ | 0.20 | ||||||
Net income per share, diluted | $ | 0.08 | $ | 11 | $ | 0.08 | $ | 0.19 | ||||||
Goodwill_and_Intangible_assets
Goodwill and Intangible assets | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Intangible Assets | ' | |||||||||||||
Goodwill and Intangible Assets | ' | |||||||||||||
10. Goodwill and Intangible Assets | ||||||||||||||
Goodwill | ||||||||||||||
Changes in the carrying amount of goodwill consisted of the following (in thousands): | ||||||||||||||
Amount | ||||||||||||||
Balance at December 31, 2013 | $ | — | ||||||||||||
Current period acquisitions | 99 | |||||||||||||
Balance at September 30, 2014 | $ | 99 | ||||||||||||
For a discussion of the significant changes in goodwill, see Note 9. The Company’s goodwill is not deductible for income tax purposes. | ||||||||||||||
Intangible assets | ||||||||||||||
The Company’s intangible assets and related accumulated amortization consisted of the following as of December 31, 2013 and September 30, 2014 (in thousands): | ||||||||||||||
December 31, 2013 | ||||||||||||||
Gross Carrying | Accumulated | Net | ||||||||||||
Amount | Amortization | |||||||||||||
Developed technology | $ | 1,647 | $ | (742 | ) | $ | 905 | |||||||
Non-competition agreements | 31 | (8 | ) | 23 | ||||||||||
Total intangible assets | $ | 1,678 | $ | (750 | ) | $ | 928 | |||||||
September 30, 2014 | ||||||||||||||
Gross Carrying | Accumulated | Net | ||||||||||||
Amount | Amortization | |||||||||||||
Developed technology | $ | 2,597 | $ | (1,060 | ) | $ | 1,537 | |||||||
Non-competition agreements | 53 | (20 | ) | 33 | ||||||||||
Total intangible assets | $ | 2,650 | $ | (1,080 | ) | $ | 1,570 | |||||||
For a discussion of the significant changes in intangible assets, see Note 9. The weighted average amortization period is 4.4 years for developed technology, 2.0 years for non-competition agreements, and 4.3 years in total. | ||||||||||||||
The Company recorded amortization expense during the respective periods for these intangible assets as follows: (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Amortization of intangible assets | $ | 83 | $ | 134 | $ | 218 | $ | 330 | ||||||
Amortization of finite lived intangible assets as of September 30, 2014 is as follows for the next four years (in thousands): | ||||||||||||||
Amount | ||||||||||||||
2014 | $ | 160 | ||||||||||||
2015 | 612 | |||||||||||||
2016 | 418 | |||||||||||||
2017 | 237 | |||||||||||||
2018 | 143 | |||||||||||||
$ | 1,570 | |||||||||||||
Description_of_Business_and_Su1
Description of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Description of Business and Summary of Significant Accounting Policies | ' | |||||||||||||
Reclassifications | ' | |||||||||||||
Reclassifications | ||||||||||||||
Certain prior-year amounts have been reclassified in order to conform to the current-year presentation. A reclassification was made from general and administrative expenses to other income (expense) related to foreign currency transaction gains (losses). As a result, income from operations is impacted by $0.2 million for the three months ended September 30, 2013, and by $10,000 for the nine months ended September 30, 2013, but this reclassification did not impact previously reported net income, or related per share amounts, for either period. In addition, a reclassification was made related to international hospitality revenue previously disclosed as United States hospitality revenue. The reclassification did not materially impact previous disclosures related to geographic information. Furthermore, this reclassification had no effect on previously reported amounts related to total revenue, income from continuing operations, net income or related per share amounts, and does not impact previous disclosures regarding concentrations of revenue. | ||||||||||||||
Basis of Presentation | ' | |||||||||||||
Basis of Presentation | ||||||||||||||
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in the unaudited condensed consolidated financial statements. | ||||||||||||||
Segment Reporting | ' | |||||||||||||
Segment Reporting | ||||||||||||||
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, the Chief Executive Officer, in making decisions regarding resource allocation and accessing performance. To date, the Company has viewed its operations and manages its business as one operating segment. | ||||||||||||||
Concentrations of Risk | ' | |||||||||||||
Concentrations of Risk | ||||||||||||||
The Company’s accounts receivable are derived from revenue earned from its worldwide network of dealers and distributors. The Company’s sales to dealers and distributors located outside the United States are generally denominated in United States dollars, except for sales to dealers and distributors located in the United Kingdom and the European Union, which are generally denominated in pounds sterling and the euro, respectively. There were no individual account balances greater than 10% of total accounts receivable at December 31, 2013 and September 30, 2014. | ||||||||||||||
No dealer or distributor accounted for more than 10% of total revenue for the three and nine months ended September 30, 2013 and 2014. | ||||||||||||||
The Company relies on a limited number of suppliers for its contract manufacturing. A significant disruption in the operations of these manufacturers would impact the production of the Company’s products for a substantial period of time, which could have a material adverse effect on the Company’s business, financial condition and results of operations. | ||||||||||||||
Geographic Information | ' | |||||||||||||
Geographic Information | ||||||||||||||
The Company’s revenue includes amounts earned through sales to dealers and distributors located outside of the United States. With the exception of Canada, no single foreign country accounted for more than 10% of total revenue for the three and nine months ended September 30, 2013 and 2014. The following table sets forth revenue from the United States, Canada and all other international dealers and distributors combined (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Revenue-United States | $ | 22,140 | $ | 25,517 | $ | 60,933 | $ | 71,211 | ||||||
Revenue-Canada | 3,641 | 4,140 | 10,690 | 10,802 | ||||||||||
Revenue-all other international sources | 7,860 | 9,463 | 21,132 | 25,623 | ||||||||||
Total revenue | $ | 33,641 | $ | 39,120 | $ | 92,755 | $ | 107,636 | ||||||
International revenue (excluding Canada) as a percent of total revenue | 23 | % | 24 | % | 23 | % | 24 | % | ||||||
Use of Accounting Estimates | ' | |||||||||||||
Use of Accounting Estimates | ||||||||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates including those related to revenue recognition, sales returns, provisions for doubtful accounts, asset impairment, product warranty, inventory obsolescence, litigation, determination of fair value of stock options, deferred tax asset valuation allowances and income taxes. Actual results may differ from those estimates. | ||||||||||||||
Product Warranty | ' | |||||||||||||
Product Warranty | ||||||||||||||
The Company provides its customers a limited product warranty of two years, which requires the Company to repair or replace (at its option) defective products during the warranty period at no cost to the customer. The Company estimates the costs that may be incurred to replace or repair defective products and records a reserve at the time revenue is recognized. Factors that affect the Company’s warranty liability include the number of installed systems, the Company’s historical experience and management’s judgment regarding anticipated rates of product warranty returns, net of refurbished products. The Company assesses the adequacy of its recorded warranty liability each period and makes adjustments to the liability as necessary. Warranty costs accrued includes amounts accrued for products at the time of shipment, adjustments for changes in estimated costs for warranties on products shipped in the period, and changes in estimated costs for warranties on products shipped in prior periods. It is not practicable for the Company to determine the amounts applicable to each of these components. | ||||||||||||||
The following table presents the changes in the product warranty liability (in thousands): | ||||||||||||||
Warranty Liability | ||||||||||||||
Balance at December 31, 2013 | $ | 1,213 | ||||||||||||
Warranty costs accrued | 679 | |||||||||||||
Warranty claims | (778 | ) | ||||||||||||
Balance at September 30, 2014 | $ | 1,114 | ||||||||||||
Net Income Per Share | ' | |||||||||||||
Net Income Per Share | ||||||||||||||
Basic net income per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period that have a dilutive effect on net income per share. Potentially dilutive common shares result from the assumed exercise of outstanding stock options and the assumed conversion of outstanding convertible preferred stock and warrants using the if-converted method. In a net loss position, diluted net loss per share is computed using only the weighted-average number of common shares outstanding during the period, as any additional common shares would be anti-dilutive. | ||||||||||||||
The following table presents the reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per share (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Numerator: | ||||||||||||||
Net income | $ | 1,731 | $ | 2,763 | $ | 1,233 | $ | 4,235 | ||||||
Denominator: | ||||||||||||||
Weighted average common stock outstanding for basic net income per common share | 14,389 | 23,840 | 6,511 | 23,559 | ||||||||||
Effect of dilutive securities—stock options, convertible preferred stock, and warrants to purchase common stock and preferred stock | 9,167 | 1,750 | 14,695 | 2,112 | ||||||||||
Weighted average common shares and dilutive securities outstanding | 23,556 | 25,590 | 21,206 | 25,671 | ||||||||||
The following weighted-average common stock equivalents were anti-dilutive and therefore were excluded from the calculation of diluted net income per share (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Convertible preferred stock | — | — | — | — | ||||||||||
Options to purchase common stock | 253 | 1,245 | 355 | 912 | ||||||||||
Warrants to purchase common stock | — | — | — | — | ||||||||||
Warrants to purchase preferred stock | — | — | 1 | — | ||||||||||
Total | 253 | 1,245 | 356 | 912 | ||||||||||
Restricted Cash | ' | |||||||||||||
Restricted Cash | ||||||||||||||
Restricted cash as of September 30, 2014, is composed of a guarantee made by our subsidiary in the United Kingdom to HM Revenue & Customs related to a customs duty deferment account. | ||||||||||||||
Recent Accounting Pronouncements | ' | |||||||||||||
Recent Accounting Pronouncements | ||||||||||||||
In July 2013, the FASB issued ASU 2013-11, ‘‘Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.’’ The amended guidance requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The guidance was effective for the Company beginning January 1, 2014. The adoption of this guidance did not have an impact on the Company’s results of operations, financial position, or cash flows as it relates only to financial statement presentation. | ||||||||||||||
In May 2014, the FASB issued ASU 2004-09, “Revenue from Contracts with Customers (Topic 606),” which amends the guidance in ASC 605, “Revenue Recognition.” The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company is still evaluating the impact of adopting this guidance as well as whether the Company will apply the amendments retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of applying this update at the date of initial application. | ||||||||||||||
In August 2014, the FASB issued ASU 2014-15, ‘‘Presentation of Financial Statements — Going Concern (Subtopic 205-40).’’ The amended guidance requires an entity to prepare financial statements under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements—Liquidation Basis of Accounting, if liquidation of the entity becomes imminent. The guidance is effective for the annual period ending on December 31, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The adoption of this guidance will not have an impact on the Company’s results of operations, financial position, or cash flows. | ||||||||||||||
Description_of_Business_and_Su2
Description of Business and Summary of Significant Accounting Policies (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Description of Business and Summary of Significant Accounting Policies | ' | |||||||||||||
Schedule of revenue from United States, Canada and all other international dealers and distributors combined | ' | |||||||||||||
The following table sets forth revenue from the United States, Canada and all other international dealers and distributors combined (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Revenue-United States | $ | 22,140 | $ | 25,517 | $ | 60,933 | $ | 71,211 | ||||||
Revenue-Canada | 3,641 | 4,140 | 10,690 | 10,802 | ||||||||||
Revenue-all other international sources | 7,860 | 9,463 | 21,132 | 25,623 | ||||||||||
Total revenue | $ | 33,641 | $ | 39,120 | $ | 92,755 | $ | 107,636 | ||||||
International revenue (excluding Canada) as a percent of total revenue | 23 | % | 24 | % | 23 | % | 24 | % | ||||||
Schedule of changes in the product warranty liability | ' | |||||||||||||
The following table presents the changes in the product warranty liability (in thousands): | ||||||||||||||
Warranty Liability | ||||||||||||||
Balance at December 31, 2013 | $ | 1,213 | ||||||||||||
Warranty costs accrued | 679 | |||||||||||||
Warranty claims | (778 | ) | ||||||||||||
Balance at September 30, 2014 | $ | 1,114 | ||||||||||||
Schedule of reconciliation of the numerator and denominator used in the calculation of basic and diluted net income (loss) per share | ' | |||||||||||||
The following table presents the reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per share (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Numerator: | ||||||||||||||
Net income | $ | 1,731 | $ | 2,763 | $ | 1,233 | $ | 4,235 | ||||||
Denominator: | ||||||||||||||
Weighted average common stock outstanding for basic net income per common share | 14,389 | 23,840 | 6,511 | 23,559 | ||||||||||
Effect of dilutive securities—stock options, convertible preferred stock, and warrants to purchase common stock and preferred stock | 9,167 | 1,750 | 14,695 | 2,112 | ||||||||||
Weighted average common shares and dilutive securities outstanding | 23,556 | 25,590 | 21,206 | 25,671 | ||||||||||
Schedule of anti-dilutive weighted-average common stock equivalents excluded from the calculation of diluted net income (loss) per share | ' | |||||||||||||
The following weighted-average common stock equivalents were anti-dilutive and therefore were excluded from the calculation of diluted net income per share (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Convertible preferred stock | — | — | — | — | ||||||||||
Options to purchase common stock | 253 | 1,245 | 355 | 912 | ||||||||||
Warrants to purchase common stock | — | — | — | — | ||||||||||
Warrants to purchase preferred stock | — | — | 1 | — | ||||||||||
Total | 253 | 1,245 | 356 | 912 | ||||||||||
Balance_Sheet_Components_Table
Balance Sheet Components (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Balance Sheet Components | ' | |||||||
Schedule of inventories | ' | |||||||
Inventories consisted of the following (in thousands): | ||||||||
December 31, | September 30, | |||||||
2013 | 2014 | |||||||
Finished goods | $ | 14,061 | $ | 14,689 | ||||
Component parts | 1,251 | 857 | ||||||
$ | 15,312 | $ | 15,546 | |||||
Schedule of property and equipment, net | ' | |||||||
Property and equipment, net consisted of the following (in thousands): | ||||||||
December 31, | September 30, | |||||||
2013 | 2014 | |||||||
Computer equipment and software | $ | 4,152 | $ | 4,240 | ||||
Lab and warehouse equipment | 2,374 | 2,737 | ||||||
Manufacturing tooling and test equipment | 2,652 | 2,655 | ||||||
Furniture and fixtures | 2,046 | 2,587 | ||||||
Leasehold improvements | 1,450 | 1,646 | ||||||
Marketing equipment | 604 | 662 | ||||||
13,278 | 14,527 | |||||||
Less: accumulated depreciation | (9,335 | ) | (10,319 | ) | ||||
$ | 3,943 | $ | 4,208 | |||||
Schedule of intangible assets, net | ' | |||||||
Intangible assets, net consisted of the following (in thousands): | ||||||||
December 31, | September 30, | |||||||
2013 | 2014 | |||||||
Acquired technology | $ | 1,678 | $ | 2,650 | ||||
Less: accumulated amortization | (750 | ) | (1,080 | ) | ||||
$ | 928 | $ | 1,570 | |||||
Schedule of other assets | ' | |||||||
Other assets consisted of the following (in thousands): | ||||||||
December 31, | September 30, | |||||||
2013 | 2014 | |||||||
Prepaid licensing | $ | 716 | $ | 653 | ||||
Deposits | 404 | 491 | ||||||
$ | 1,120 | $ | 1,144 | |||||
Schedule of accrued liabilities | ' | |||||||
Accrued liabilities consisted of the following (in thousands): | ||||||||
December 31, | September 30, | |||||||
2013 | 2014 | |||||||
Sales returns and warranty accruals | $ | 2,137 | $ | 2,075 | ||||
Compensation accruals | 3,233 | 1,569 | ||||||
Other accrued liabilities | 544 | 1,238 | ||||||
Current portion of settlement obligations | 907 | 20 | ||||||
$ | 6,821 | $ | 4,902 | |||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 9 Months Ended | ||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||||||||
Schedule of cash and available-for-sale investments' adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term investments | ' | ||||||||||||||||||||||
The following tables show the Company’s cash and available-for-sale investments’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term investments as of December 31, 2013 and September 30, 2014 (in thousands): | |||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair Value | Cash and | Short-term | Long-term | |||||||||||||||||
Cost | Gains | Losses | Cash | Investments | Investments | ||||||||||||||||||
Equivalents | |||||||||||||||||||||||
Cash | $ | 5,533 | $ | — | $ | — | $ | 5,533 | $ | 5,533 | $ | — | $ | — | |||||||||
Level 1: | |||||||||||||||||||||||
Money market funds | 79,013 | — | — | 79,013 | 79,013 | — | — | ||||||||||||||||
Subtotal | 79,013 | — | — | 79,013 | 79,013 | — | — | ||||||||||||||||
Total | $ | 84,546 | $ | — | $ | — | $ | 84,546 | $ | 84,546 | $ | — | $ | — | |||||||||
September 30, 2014 | |||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair Value | Cash and | Short-term | Long-term | |||||||||||||||||
Cost | Gains | Losses | Cash | Investments | Investments | ||||||||||||||||||
Equivalents | |||||||||||||||||||||||
Cash | $ | 8,310 | $ | — | $ | — | $ | 8,310 | $ | 8,310 | $ | — | $ | — | |||||||||
Level 1: | |||||||||||||||||||||||
Money market funds | 8,440 | — | — | 8,440 | 8,440 | — | — | ||||||||||||||||
Subtotal | 8,440 | — | — | 8,440 | 8,440 | — | — | ||||||||||||||||
Level 2: | |||||||||||||||||||||||
Asset-backed securities | 4,461 | — | (3 | ) | 4,458 | — | — | 4,458 | |||||||||||||||
Corporate bonds | 54,146 | 4 | (47 | ) | 54,103 | — | 37,837 | 16,266 | |||||||||||||||
Commercial paper | 11,593 | — | — | 11,593 | 700 | 10,893 | — | ||||||||||||||||
U.S. agency securities | 2,501 | — | — | 2,501 | — | — | 2,501 | ||||||||||||||||
Subtotal | 72,701 | 4 | (50 | ) | 72,655 | 700 | 48,730 | 23,225 | |||||||||||||||
Total | $ | 89,451 | $ | 4 | $ | (50 | ) | $ | 89,405 | $ | 17,450 | $ | 48,730 | $ | 23,225 | ||||||||
Equity_Compensation_Tables
Equity Compensation (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Equity Compensation | ' | |||||||||||||
Summary of stock option activity | ' | |||||||||||||
A summary of stock option activity for the nine months ended September 30, 2014 is presented below: | ||||||||||||||
Shares | Weighted | Weighted | Weighted | |||||||||||
Subject to | Average | Average | Average | |||||||||||
Options | Grant Date | Exercise | Remaining | |||||||||||
Outstanding | Fair Value | Price | Contractual | |||||||||||
Life (Years) | ||||||||||||||
Balance at December 31, 2013 | 4,905,214 | $ | 6.31 | |||||||||||
Granted | 1,060,278 | $ | 10.91 | 19.34 | ||||||||||
Exercised | (1,077,534 | ) | 4.29 | |||||||||||
Expired | (136 | ) | 7.4 | |||||||||||
Forfeited | (69,338 | ) | 15.53 | |||||||||||
Balance at September 30, 2014 | 4,818,484 | 9.47 | ||||||||||||
Exercisable options at September 30, 2014 | 2,786,424 | 5.86 | 5.1 | |||||||||||
Vested and expected to vest at September 30, 2014 | 4,627,382 | 9.21 | 6.5 | |||||||||||
Summary of stock options outstanding and exercisable | ' | |||||||||||||
The following table summarizes information about stock options outstanding and exercisable at September 30, 2014: | ||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||
Range of Exercise Prices | Weighted | Number of | Weighted- | Number of | Weighted- | |||||||||
Average | Underlying | Average | Underlying | Average | ||||||||||
Exercise | Shares | Remaining | Shares | Remaining | ||||||||||
Price | Contractual | Contractual | ||||||||||||
Life (in | Life (in | |||||||||||||
years) | years) | |||||||||||||
$0.52 - 1.72 | $ | 0.98 | 52,095 | 0.8 | 52,095 | 0.8 | ||||||||
1.97 - 3.38 | 2.41 | 383,489 | 1.6 | 383,489 | 1.6 | |||||||||
3.58 - 6.14 | 5.54 | 1,855,137 | 5.3 | 1,625,426 | 5.1 | |||||||||
6.34 - 9.94 | 8.27 | 1,044,732 | 7.5 | 586,174 | 7.3 | |||||||||
11.28 - 16.97 | 12.77 | 656,299 | 8.4 | 121,117 | 6.3 | |||||||||
17.66 - 22.92 | 21.01 | 826,732 | 9.4 | 18,123 | 8.9 | |||||||||
4,818,484 | 2,786,424 | |||||||||||||
Summary of aggregate intrinsic-value of options exercised, exercisable, and vested and expected to vest | ' | |||||||||||||
The following table summarizes the aggregate intrinsic-value of options exercised, exercisable and vested and expected to vest (in thousands): | ||||||||||||||
For the nine months ended | ||||||||||||||
and as of September 30, 2014 | ||||||||||||||
Options Exercised | $ | 17,856 | ||||||||||||
Options Exercisable | 19,883 | |||||||||||||
Options Vested and Expected to Vest | 23,644 | |||||||||||||
Schedule of assumptions used to estimate fair value of option awards | ' | |||||||||||||
The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Expected volatility | 57 | % | 57-58 | % | 56-59 | % | 56-60 | % | ||||||
Expected dividends | 0 | % | 0 | % | 0 | % | 0 | % | ||||||
Expected terms (in years) | 5.5-6.1 | 6.1 | 3.3-7.2 | 3.8-6.1 | ||||||||||
Risk-free rate | 1.5-1.7 | % | 1.8-1.9 | % | 0.8-1.7 | % | 1.1-2.0 | % | ||||||
Schedule of total stock-based compensation expense classified in statements of operations | ' | |||||||||||||
Total stock-based compensation expense has been classified as follows in the accompanying statements of operations (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Cost of revenue | $ | 15 | $ | 29 | $ | 46 | $ | 77 | ||||||
Research and development | 419 | 562 | 974 | 1,682 | ||||||||||
Sales and marketing | 187 | 296 | 543 | 810 | ||||||||||
General and administrative | 319 | 452 | 1,085 | 1,425 | ||||||||||
Total stock-based compensation expense | $ | 940 | $ | 1,339 | $ | 2,648 | $ | 3,994 | ||||||
Related_Party_Transactions_Tab
Related Party Transactions (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Related Party Transactions | ' | |||||||||||||
Schedule of revenue from product sales to companies affiliated with investors | ' | |||||||||||||
The Company has entered into sales agreements with companies affiliated with certain of its investors. The following table sets forth revenue from product sales to these companies (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Company 1 | $ | 694 | $ | 1,011 | $ | 2,059 | $ | 2,601 | ||||||
Company 2 | — | 139 | 128 | 542 | ||||||||||
Company 3 | 262 | 9 | 748 | 11 | ||||||||||
Company 4 | 4 | — | 423 | — | ||||||||||
$ | 960 | $ | 1,159 | $ | 3,358 | $ | 3,154 | |||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Commitments and Contingencies | ' | ||||
Schedule of future minimum rental payments required under non-cancelable operating leases | ' | ||||
Future minimum rental payments required under non-cancelable operating leases with initial or remaining terms in excess of one year consist of the following as of September 30, 2014 (in thousands): | |||||
2014 | $ | 466 | |||
2015 | 1,917 | ||||
2016 | 1,811 | ||||
2017 | 1,578 | ||||
2018 | 835 | ||||
$ | 6,607 | ||||
Acquisition_Tables
Acquisition (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Acquisition | ' | |||||||||||||
Schedule of preliminary allocation of consideration transferred | ' | |||||||||||||
The Company’s preliminary allocation of consideration transferred for Extra Vegetables is as follows (in thousands): | ||||||||||||||
Estimated Fair Value | ||||||||||||||
Cash | $ | 265 | ||||||||||||
Other assets acquired | 125 | |||||||||||||
Intangible assets | 596 | |||||||||||||
Goodwill | 79 | |||||||||||||
Total assets acquired | 1,065 | |||||||||||||
Taxes payable | 175 | |||||||||||||
Other liabilities assumed | 8 | |||||||||||||
Total net assets acquired | $ | 882 | ||||||||||||
Business Acquisition, Pro Forma Information [Table Text Block] | ' | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
(in thousands) | ||||||||||||||
Revenue | $ | 33,961 | $ | 39,443 | $ | 93,691 | $ | 108,724 | ||||||
Income from operations | 2,046 | 3,433 | 3,095 | 5,460 | ||||||||||
Net income | $ | 1,868 | $ | 2,936 | $ | 1,661 | $ | 4,792 | ||||||
Net income per share, basic | $ | 0.13 | $ | 0.12 | $ | 0.26 | $ | 0.20 | ||||||
Net income per share, diluted | $ | 0.08 | $ | 11 | $ | 0.08 | $ | 0.19 | ||||||
Goodwill_and_Intangible_assets1
Goodwill and Intangible assets (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Intangible Assets | ' | |||||||||||||
Schedule of changes in carrying amount of goodwill | ' | |||||||||||||
Changes in the carrying amount of goodwill consisted of the following (in thousands): | ||||||||||||||
Amount | ||||||||||||||
Balance at December 31, 2013 | $ | — | ||||||||||||
Current period acquisitions | 99 | |||||||||||||
Balance at September 30, 2014 | $ | 99 | ||||||||||||
Schedule of company's intangible assets and related accumulated amortization | ' | |||||||||||||
The Company’s intangible assets and related accumulated amortization consisted of the following as of December 31, 2013 and September 30, 2014 (in thousands): | ||||||||||||||
December 31, 2013 | ||||||||||||||
Gross Carrying | Accumulated | Net | ||||||||||||
Amount | Amortization | |||||||||||||
Developed technology | $ | 1,647 | $ | (742 | ) | $ | 905 | |||||||
Non-competition agreements | 31 | (8 | ) | 23 | ||||||||||
Total intangible assets | $ | 1,678 | $ | (750 | ) | $ | 928 | |||||||
September 30, 2014 | ||||||||||||||
Gross Carrying | Accumulated | Net | ||||||||||||
Amount | Amortization | |||||||||||||
Developed technology | $ | 2,597 | $ | (1,060 | ) | $ | 1,537 | |||||||
Non-competition agreements | 53 | (20 | ) | 33 | ||||||||||
Total intangible assets | $ | 2,650 | $ | (1,080 | ) | $ | 1,570 | |||||||
Schedule of amortization expense | ' | |||||||||||||
The Company recorded amortization expense during the respective periods for these intangible assets as follows: (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Amortization of intangible assets | $ | 83 | $ | 134 | $ | 218 | $ | 330 | ||||||
Schedule of amortization of finite-lived intangible assets | ' | |||||||||||||
Amortization of finite lived intangible assets as of September 30, 2014 is as follows for the next four years (in thousands): | ||||||||||||||
Amount | ||||||||||||||
2014 | $ | 160 | ||||||||||||
2015 | 612 | |||||||||||||
2016 | 418 | |||||||||||||
2017 | 237 | |||||||||||||
2018 | 143 | |||||||||||||
$ | 1,570 | |||||||||||||
Description_of_Business_and_Su3
Description of Business and Summary of Significant Accounting Policies (Details 1) (Operating income (loss), USD $) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2013 | Sep. 30, 2013 | |
Operating income (loss) | ' | ' |
Prior period reclassifications | ' | ' |
Prior period reclassification adjustment | $200,000 | $10,000 |
Description_of_Business_and_Su4
Description of Business and Summary of Significant Accounting Policies (Details 2) | 9 Months Ended |
Sep. 30, 2014 | |
item | |
Segment Reporting | ' |
Number of operating segments | 1 |
Description_of_Business_and_Su5
Description of Business and Summary of Significant Accounting Policies (Details 3) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Revenue from U.S., Canadian and all other international dealers and distributors combined | ' | ' | ' | ' |
Total revenue | $39,120 | $33,641 | $107,636 | $92,755 |
International revenue (excluding Canada) as a percent of total revenue | 24.00% | 23.00% | 24.00% | 23.00% |
United States | ' | ' | ' | ' |
Revenue from U.S., Canadian and all other international dealers and distributors combined | ' | ' | ' | ' |
Total revenue | 25,517 | 22,140 | 71,211 | 60,933 |
Canada | ' | ' | ' | ' |
Revenue from U.S., Canadian and all other international dealers and distributors combined | ' | ' | ' | ' |
Total revenue | 4,140 | 3,641 | 10,802 | 10,690 |
All other international sources | ' | ' | ' | ' |
Revenue from U.S., Canadian and all other international dealers and distributors combined | ' | ' | ' | ' |
Total revenue | $9,463 | $7,860 | $25,623 | $21,132 |
Description_of_Business_and_Su6
Description of Business and Summary of Significant Accounting Policies (Details 4) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Product Warranty | ' |
Product warranty period | '2 years |
Changes in the product warranty liability | ' |
Balance at beginning of period | $1,213 |
Warranty costs accrued | 679 |
Warranty claims | -778 |
Balance at end of period | $1,114 |
Description_of_Business_and_Su7
Description of Business and Summary of Significant Accounting Policies (Details 5) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Numerator: | ' | ' | ' | ' |
Net income | $2,763 | $1,731 | $4,235 | $1,233 |
Denominator: | ' | ' | ' | ' |
Weighted average common stock outstanding for basic net income per common share (in shares) | 23,840 | 14,389 | 23,559 | 6,511 |
Effect of dilutive securities-stock options, convertible preferred stock, and warrants to purchase common stock and preferred stock (in shares) | 1,750 | 9,167 | 2,112 | 14,695 |
Weighted average common shares and dilutive securities outstanding | 25,590 | 23,556 | 25,671 | 21,206 |
Anti-dilutive weighted-average common stock equivalents excluded from the calculation of diluted net income per share | ' | ' | ' | ' |
Total (in shares) | 1,245 | 253 | 912 | 356 |
Options to purchase common stock | ' | ' | ' | ' |
Anti-dilutive weighted-average common stock equivalents excluded from the calculation of diluted net income per share | ' | ' | ' | ' |
Total (in shares) | 1,245 | 253 | 912 | 355 |
Warrants to purchase preferred stock | ' | ' | ' | ' |
Anti-dilutive weighted-average common stock equivalents excluded from the calculation of diluted net income per share | ' | ' | ' | ' |
Total (in shares) | ' | ' | ' | 1 |
Balance_Sheet_Components_Detai
Balance Sheet Components (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Inventories | ' | ' |
Finished goods | $14,689 | $14,061 |
Component parts | 857 | 1,251 |
Total inventories | 15,546 | 15,312 |
Property and equipment, net | ' | ' |
Property and equipment, gross | 14,527 | 13,278 |
Less: accumulated depreciation | -10,319 | -9,335 |
Property and equipment, net | 4,208 | 3,943 |
Computer equipment and software | ' | ' |
Property and equipment, net | ' | ' |
Property and equipment, gross | 4,240 | 4,152 |
Lab and warehouse equipment | ' | ' |
Property and equipment, net | ' | ' |
Property and equipment, gross | 2,737 | 2,374 |
Manufacturing tooling and test equipment | ' | ' |
Property and equipment, net | ' | ' |
Property and equipment, gross | 2,655 | 2,652 |
Furniture and fixtures | ' | ' |
Property and equipment, net | ' | ' |
Property and equipment, gross | 2,587 | 2,046 |
Leasehold improvements | ' | ' |
Property and equipment, net | ' | ' |
Property and equipment, gross | 1,646 | 1,450 |
Marketing equipment | ' | ' |
Property and equipment, net | ' | ' |
Property and equipment, gross | $662 | $604 |
Balance_Sheet_Components_Detai1
Balance Sheet Components (Details 2) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Balance Sheet Components | ' | ' |
Intangible assets, gross | $2,650 | $1,678 |
Less: accumulated amortization | -1,080 | -750 |
Intangible assets, net | 1,570 | 928 |
Other assets | ' | ' |
Prepaid licensing | 653 | 716 |
Deposits | 491 | 404 |
Other assets total | 1,144 | 1,120 |
Accrued liabilities | ' | ' |
Sales returns and warranty accruals | 2,075 | 2,137 |
Compensation accruals | 1,569 | 3,233 |
Other accrued liabilities | 1,238 | 544 |
Current portion of settlement obligations | 20 | 907 |
Total accrued liabilities | $4,902 | $6,821 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | 9 Months Ended | ||||||||||||||||||||||||||||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 |
Minimum | Maximum | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | Measured on a recurring basis | |
Cash and Cash Equivalents | Cash and Cash Equivalents | Short-term investments | Long-term investments | Cash | Cash | Cash | Cash | Level 1 | Level 1 | Level 1 | Level 1 | Level 1 | Level 1 | Level 1 | Level 1 | Level 2 | Level 2 | Level 2 | Level 2 | Level 2 | Level 2 | Level 2 | Level 2 | Level 2 | Level 2 | Level 2 | Level 2 | Level 2 | |||||
Cash and Cash Equivalents | Cash and Cash Equivalents | Cash and Cash Equivalents | Cash and Cash Equivalents | Money market funds | Money market funds | Money market funds | Money market funds | Cash and Cash Equivalents | Short-term investments | Long-term investments | Asset-backed securities | Asset-backed securities | Corporate bonds | Corporate bonds | Corporate bonds | Commercial paper | Commercial paper | Commercial paper | U.S. agency securities | ||||||||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents | Long-term investments | Short-term investments | Long-term investments | Cash and Cash Equivalents | Short-term investments | |||||||||||||||||||||||||||
Fair Value Measurements | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Adjusted cost, Available-for-sale investments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $72,701 | ' | ' | ' | $4,461 | ' | $54,146 | ' | ' | $11,593 | ' | ' | $2,501 |
Unrealized Gains, available-for-sale investments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4 | ' | ' | ' | ' | ' | 4 | ' | ' | ' | ' | ' | ' |
Unrealized Losses, available-for-sale investments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -50 | ' | ' | ' | -3 | ' | -47 | ' | ' | ' | ' | ' | ' |
Fair value, Available-for-sale investments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 72,655 | 700 | 48,730 | 23,225 | 4,458 | 4,458 | 54,103 | 37,837 | 16,266 | 11,593 | 700 | 10,893 | 2,501 |
Assets, Adjusted Cost | ' | ' | 89,451 | 84,546 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Assets, Unrealized Gains | ' | ' | 4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Assets, Unrealized Losses | ' | ' | -50 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Assets, Fair Value | ' | ' | $89,405 | $84,546 | $17,450 | $84,546 | $48,730 | $23,225 | $8,310 | $5,533 | $8,310 | $5,533 | $8,440 | $79,013 | $8,440 | $79,013 | $8,440 | $79,013 | $8,440 | $79,013 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maturity period of long-term investments | '1 year | '2 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
LongTerm_Obligations_Details
Long-Term Obligations (Details) (USD $) | 1 Months Ended | 1 Months Ended | 9 Months Ended | |||
Jun. 30, 2013 | Sep. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | |
Revolving credit facility | Revolving credit facility | Revolving credit facility | Revolving credit facility | Term borrowings | Term borrowings | |
LIBOR | Prime rate | item | Prime rate | |||
Long-Term Obligations | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity | $13,000,000 | ' | ' | ' | ' | ' |
Variable interest rate basis | ' | ' | 'LIBOR | 'prime | ' | 'prime |
Basis spread on variable rate (as a percent) | ' | ' | 2.50% | ' | ' | 0.50% |
Interest rate at the end of period (as a percent) | ' | 3.25% | ' | ' | 3.75% | ' |
Annual commitment fee | 20,000 | ' | ' | ' | ' | ' |
Commitment fee for quarterly unused capacity (as a percent) | 0.38% | ' | ' | ' | ' | ' |
Number of equal monthly payments of principal plus interest | ' | ' | ' | ' | 42 | ' |
Current borrowing capacity | ' | 13,000,000 | ' | ' | ' | ' |
Borrowings outstanding | ' | $0 | ' | ' | ' | ' |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Income Taxes | ' | ' | ' | ' |
Income tax expense | $250 | $103 | $353 | $132 |
Effective income tax rate (as a percent) | 8.00% | 6.00% | 8.00% | 10.00% |
U.S. federal statutory rate (as a percent) | 34.00% | ' | 34.00% | ' |
Minimum period for which net operating loss and credit carryforwards are subject to examinations and adjustments | ' | ' | '3 years | ' |
Equity_Compensation_Details
Equity Compensation (Details) (Stock options, USD $) | 9 Months Ended | 0 Months Ended | |
Sep. 30, 2014 | Jan. 02, 2014 | Jun. 11, 2013 | |
2013 Plan | 2013 Plan | ||
Stock options | ' | ' | ' |
Annual increase in shares authorized for issuance as a percentage of shares outstanding as of the preceding December 31 | ' | ' | 5.00% |
Increase in number of shares authorized for issuance | ' | 1,139,255 | ' |
Shares Subject to Options Outstanding | ' | ' | ' |
Balance at the beginning of the period (in shares) | 4,905,214 | ' | ' |
Granted (in shares) | 1,060,278 | ' | ' |
Exercised (in shares) | -1,077,534 | ' | ' |
Expired (in shares) | -136 | ' | ' |
Forfeited (in shares) | -69,338 | ' | ' |
Balance at the end of the period (in shares) | 4,818,484 | ' | ' |
Exercisable options (in shares) | 2,786,424 | ' | ' |
Vested and expected to vest at the end of the period (in shares) | 4,627,382 | ' | ' |
Weighted Average Grant Date Fair Value | ' | ' | ' |
Granted (in dollars per share) | $10.91 | ' | ' |
Weighted Average Exercise Price | ' | ' | ' |
Balance at the beginning of the period (in dollars per share) | $6.31 | ' | ' |
Granted (in dollars per share) | $19.34 | ' | ' |
Exercised (in dollars per share) | $4.29 | ' | ' |
Expired (in dollars per share) | $7.40 | ' | ' |
Forfeited (in dollars per share) | $15.53 | ' | ' |
Balance at the end of the period (in dollars per share) | $9.47 | ' | ' |
Exercisable options at the end of the period (in dollars per share) | $5.86 | ' | ' |
Vested and expected to vest (in dollars per share) | $9.21 | ' | ' |
Weighted-Average Remaining Contractual Life | ' | ' | ' |
Exercisable options | '5 years 1 month 6 days | ' | ' |
Vested and expected to vest | '6 years 6 months | ' | ' |
Equity_Compensation_Details_2
Equity Compensation (Details 2) (Stock options, USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Options Outstanding | ' |
Number of Underlying Shares | 4,818,484 |
Options Exercisable | ' |
Number of Underlying Shares | 2,786,424 |
0.52-1.72 | ' |
Equity compensation | ' |
Range of Exercise Price, low end of range (in dollars per share) | $0.52 |
Range of Exercise Price, high end of range (in dollars per share) | $1.72 |
Options Outstanding | ' |
Weighted Average Exercise Price (in dollars per share) | $0.98 |
Number of Underlying Shares | 52,095 |
Weighted-Average Remaining Contractual Life | '9 months 18 days |
Options Exercisable | ' |
Number of Underlying Shares | 52,095 |
Weighted-Average Remaining Contractual Life | '9 months 18 days |
1.97-3.38 | ' |
Equity compensation | ' |
Range of Exercise Price, low end of range (in dollars per share) | $1.97 |
Range of Exercise Price, high end of range (in dollars per share) | $3.38 |
Options Outstanding | ' |
Weighted Average Exercise Price (in dollars per share) | $2.41 |
Number of Underlying Shares | 383,489 |
Weighted-Average Remaining Contractual Life | '1 year 7 months 6 days |
Options Exercisable | ' |
Number of Underlying Shares | 383,489 |
Weighted-Average Remaining Contractual Life | '1 year 7 months 6 days |
3.58-6.14 | ' |
Equity compensation | ' |
Range of Exercise Price, low end of range (in dollars per share) | $3.58 |
Range of Exercise Price, high end of range (in dollars per share) | $6.14 |
Options Outstanding | ' |
Weighted Average Exercise Price (in dollars per share) | $5.54 |
Number of Underlying Shares | 1,855,137 |
Weighted-Average Remaining Contractual Life | '5 years 3 months 18 days |
Options Exercisable | ' |
Number of Underlying Shares | 1,625,426 |
Weighted-Average Remaining Contractual Life | '5 years 1 month 6 days |
6.34-9.94 | ' |
Equity compensation | ' |
Range of Exercise Price, low end of range (in dollars per share) | $6.34 |
Range of Exercise Price, high end of range (in dollars per share) | $9.94 |
Options Outstanding | ' |
Weighted Average Exercise Price (in dollars per share) | $8.27 |
Number of Underlying Shares | 1,044,732 |
Weighted-Average Remaining Contractual Life | '7 years 6 months |
Options Exercisable | ' |
Number of Underlying Shares | 586,174 |
Weighted-Average Remaining Contractual Life | '7 years 3 months 18 days |
11.28-16.97 | ' |
Equity compensation | ' |
Range of Exercise Price, low end of range (in dollars per share) | $11.28 |
Range of Exercise Price, high end of range (in dollars per share) | $16.97 |
Options Outstanding | ' |
Weighted Average Exercise Price (in dollars per share) | $12.77 |
Number of Underlying Shares | 656,299 |
Weighted-Average Remaining Contractual Life | '8 years 4 months 24 days |
Options Exercisable | ' |
Number of Underlying Shares | 121,117 |
Weighted-Average Remaining Contractual Life | '6 years 3 months 18 days |
17.66-22.92 | ' |
Equity compensation | ' |
Range of Exercise Price, low end of range (in dollars per share) | $17.66 |
Range of Exercise Price, high end of range (in dollars per share) | $22.92 |
Options Outstanding | ' |
Weighted Average Exercise Price (in dollars per share) | $21.01 |
Number of Underlying Shares | 826,732 |
Weighted-Average Remaining Contractual Life | '9 years 4 months 24 days |
Options Exercisable | ' |
Number of Underlying Shares | 18,123 |
Weighted-Average Remaining Contractual Life | '8 years 10 months 24 days |
Equity_Compensation_Details_3
Equity Compensation (Details 3) (Stock options, USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Stock options | ' | ' | ' | ' |
Total fair value for the awards vested during the period | $1,000,000 | ' | $3,400,000 | ' |
Intrinsic-value | ' | ' | ' | ' |
Options Exercised | ' | ' | 17,856,000 | ' |
Options Exercisable | 19,883,000 | ' | 19,883,000 | ' |
Options Vested and Expected to Vest | $23,644,000 | ' | $23,644,000 | ' |
Assumptions used to estimate fair value of stock options | ' | ' | ' | ' |
Expected volatility (as a percent) | ' | 57.00% | ' | ' |
Expected dividends (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% |
Expected term | '6 years 1 month 6 days | ' | ' | ' |
Minimum | ' | ' | ' | ' |
Assumptions used to estimate fair value of stock options | ' | ' | ' | ' |
Expected volatility (as a percent) | 57.00% | ' | 56.00% | 56.00% |
Expected term | ' | '5 years 6 months | '3 years 9 months 18 days | '3 years 3 months 18 days |
Risk-free rate (as a percent) | 1.80% | 1.50% | 1.10% | 0.80% |
Maximum | ' | ' | ' | ' |
Assumptions used to estimate fair value of stock options | ' | ' | ' | ' |
Expected volatility (as a percent) | 58.00% | ' | 60.00% | 59.00% |
Expected term | ' | '6 years 1 month 6 days | '6 years 1 month 6 days | '7 years 2 months 12 days |
Risk-free rate (as a percent) | 1.90% | 1.70% | 2.00% | 1.70% |
Equity_Compensation_Details_4
Equity Compensation (Details 4) (Stock options, USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Total stock-based compensation expense | ' | ' | ' | ' |
Total stock-based compensation expense | $1,339,000 | $940,000 | $3,994,000 | $2,648,000 |
Total unrecognized compensation cost related to non-vested stock option awards | 16,100,000 | ' | 16,100,000 | ' |
Weighted-average period over which unrecognized compensation cost will be recognized | ' | ' | '3 years | ' |
Cost of revenue | ' | ' | ' | ' |
Total stock-based compensation expense | ' | ' | ' | ' |
Total stock-based compensation expense | 29,000 | 15,000 | 77,000 | 46,000 |
Research and development | ' | ' | ' | ' |
Total stock-based compensation expense | ' | ' | ' | ' |
Total stock-based compensation expense | 562,000 | 419,000 | 1,682,000 | 974,000 |
Sales and marketing | ' | ' | ' | ' |
Total stock-based compensation expense | ' | ' | ' | ' |
Total stock-based compensation expense | 296,000 | 187,000 | 810,000 | 543,000 |
General and administrative | ' | ' | ' | ' |
Total stock-based compensation expense | ' | ' | ' | ' |
Total stock-based compensation expense | $452,000 | $319,000 | $1,425,000 | $1,085,000 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Related Party Transactions | ' | ' | ' | ' | ' |
Revenue from product sales | $1,159,000 | $960,000 | $3,154,000 | $3,358,000 | ' |
Accounts receivable | 900,000 | ' | 900,000 | ' | 600,000 |
Investors | Company 1 | ' | ' | ' | ' | ' |
Related Party Transactions | ' | ' | ' | ' | ' |
Revenue from product sales | 1,011,000 | 694,000 | 2,601,000 | 2,059,000 | ' |
Investors | Company 2 | ' | ' | ' | ' | ' |
Related Party Transactions | ' | ' | ' | ' | ' |
Revenue from product sales | 139,000 | ' | 542,000 | 128,000 | ' |
Investors | Company 3 | ' | ' | ' | ' | ' |
Related Party Transactions | ' | ' | ' | ' | ' |
Revenue from product sales | 9,000 | 262,000 | 11,000 | 748,000 | ' |
Investors | Company 4 | ' | ' | ' | ' | ' |
Related Party Transactions | ' | ' | ' | ' | ' |
Revenue from product sales | ' | $4,000 | ' | $423,000 | ' |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Operating Leases | ' | ' | ' | ' |
Rental expense | $500,000 | $300,000 | $1,300,000 | $1,000,000 |
Future minimum rental payments | ' | ' | ' | ' |
2014 | 466,000 | ' | 466,000 | ' |
2015 | 1,917,000 | ' | 1,917,000 | ' |
2016 | 1,811,000 | ' | 1,811,000 | ' |
2017 | 1,578,000 | ' | 1,578,000 | ' |
2018 | 835,000 | ' | 835,000 | ' |
Total | 6,607,000 | ' | 6,607,000 | ' |
Purchase Commitments | ' | ' | ' | ' |
Non-cancellable purchase commitments | $25,400,000 | ' | $25,400,000 | ' |
Minimum | ' | ' | ' | ' |
Operating Leases | ' | ' | ' | ' |
Extension term of leases | ' | ' | '3 years | ' |
Maximum | ' | ' | ' | ' |
Operating Leases | ' | ' | ' | ' |
Extension term of leases | ' | ' | '5 years | ' |
Acquisition_Details
Acquisition (Details) (USD $) | 0 Months Ended | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Sep. 10, 2014 | Sep. 10, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Preliminary allocation of consideration | ' | ' | ' | ' | ' | ' | ' |
Goodwill | ' | ' | $99,000 | $99,000 | ' | $99,000 | ' |
Estimated life of intangible assets | ' | ' | ' | ' | ' | '4 years 3 months 18 days | ' |
Developed technology | ' | ' | ' | ' | ' | ' | ' |
Preliminary allocation of consideration | ' | ' | ' | ' | ' | ' | ' |
Estimated life of intangible assets | ' | ' | ' | ' | ' | '4 years 4 months 24 days | ' |
Non-competition agreement | ' | ' | ' | ' | ' | ' | ' |
Preliminary allocation of consideration | ' | ' | ' | ' | ' | ' | ' |
Estimated life of intangible assets | ' | ' | ' | ' | ' | '2 years | ' |
Extra Vegetables Limited | ' | ' | ' | ' | ' | ' | ' |
Acquisition | ' | ' | ' | ' | ' | ' | ' |
Total Consideration | ' | 900,000 | ' | ' | ' | ' | ' |
Base purchase price | ' | 700,000 | ' | ' | ' | ' | ' |
Net working capital | ' | 200,000 | ' | ' | ' | ' | ' |
Period for allocation of consideration transferred | ' | '1 year | ' | ' | ' | ' | ' |
Preliminary allocation of consideration | ' | ' | ' | ' | ' | ' | ' |
Cash | 265,000 | 265,000 | ' | ' | ' | ' | ' |
Other assets acquired | 125,000 | 125,000 | ' | ' | ' | ' | ' |
Intangible assets | 596,000 | 596,000 | ' | ' | ' | ' | ' |
Goodwill | 79,000 | 79,000 | ' | ' | ' | ' | ' |
Total assets acquired | 1,065,000 | 1,065,000 | ' | ' | ' | ' | ' |
Taxes payable | 175,000 | 175,000 | ' | ' | ' | ' | ' |
Other liabilities assumed | 8,000 | 8,000 | ' | ' | ' | ' | ' |
Total net assets acquired | 882,000 | 882,000 | ' | ' | ' | ' | ' |
Revenue associated with Extra Vegetables | ' | ' | 7,000 | ' | ' | ' | ' |
Net Income associated with Extra Vegetables | ' | ' | 3,500 | ' | ' | ' | ' |
Acquisition related costs associated with Extra Vegetables | 95,000 | ' | ' | ' | ' | ' | ' |
Pro Forma Information | ' | ' | ' | ' | ' | ' | ' |
Revenue | ' | ' | ' | 39,443,000 | 33,961,000 | 108,724,000 | 93,691,000 |
Income from operations | ' | ' | ' | 3,433,000 | 2,046,000 | 5,460,000 | 3,095,000 |
Net income | ' | ' | ' | 2,936,000 | 1,868,000 | 4,792,000 | 1,661,000 |
Net income per share, basic | ' | ' | ' | $0.12 | $0.13 | $0.20 | $0.26 |
Net income per share, diluted | ' | ' | ' | $0.11 | $0.08 | $0.19 | $0.08 |
Extra Vegetables Limited | Income Approach Valuation Technique | ' | ' | ' | ' | ' | ' | ' |
Preliminary allocation of consideration | ' | ' | ' | ' | ' | ' | ' |
Discount rate used | ' | 22.00% | ' | ' | ' | ' | ' |
Extra Vegetables Limited | Developed technology | ' | ' | ' | ' | ' | ' | ' |
Preliminary allocation of consideration | ' | ' | ' | ' | ' | ' | ' |
Intangible assets | 574,000 | 574,000 | ' | ' | ' | ' | ' |
Estimated life of intangible assets | ' | '4 years | ' | ' | ' | ' | ' |
Extra Vegetables Limited | Non-competition agreement | ' | ' | ' | ' | ' | ' | ' |
Preliminary allocation of consideration | ' | ' | ' | ' | ' | ' | ' |
Intangible assets | $22,000 | $22,000 | ' | ' | ' | ' | ' |
Estimated life of intangible assets | ' | '2 years | ' | ' | ' | ' | ' |
Goodwill_and_Intangible_assets2
Goodwill and Intangible assets (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Intangible Assets | ' | ' | ' | ' | ' |
Current period acquisitions | ' | ' | $99 | ' | ' |
Balance at end of the period | 99 | ' | 99 | ' | ' |
Intangible assets | ' | ' | ' | ' | ' |
Gross Carrying Amount | 2,650 | ' | 2,650 | ' | 1,678 |
Accumulated Amortization | -1,080 | ' | -1,080 | ' | -750 |
Intangible assets, net | 1,570 | ' | 1,570 | ' | 928 |
Weighted average amortization period | ' | ' | '4 years 3 months 18 days | ' | ' |
Amortization expense | ' | ' | ' | ' | ' |
Amortization of intangible assets | 134 | 83 | 330 | 218 | ' |
Amortization of finite-lived intangible assets | ' | ' | ' | ' | ' |
2014 | 160 | ' | 160 | ' | ' |
2015 | 612 | ' | 612 | ' | ' |
2016 | 418 | ' | 418 | ' | ' |
2017 | 237 | ' | 237 | ' | ' |
2018 | 143 | ' | 143 | ' | ' |
Intangible assets, net | 1,570 | ' | 1,570 | ' | 928 |
Developed technology | ' | ' | ' | ' | ' |
Intangible assets | ' | ' | ' | ' | ' |
Gross Carrying Amount | 2,597 | ' | 2,597 | ' | 1,647 |
Accumulated Amortization | -1,060 | ' | -1,060 | ' | -742 |
Intangible assets, net | 1,537 | ' | 1,537 | ' | 905 |
Weighted average amortization period | ' | ' | '4 years 4 months 24 days | ' | ' |
Amortization of finite-lived intangible assets | ' | ' | ' | ' | ' |
Intangible assets, net | 1,537 | ' | 1,537 | ' | 905 |
Non-competition agreement | ' | ' | ' | ' | ' |
Intangible assets | ' | ' | ' | ' | ' |
Gross Carrying Amount | 53 | ' | 53 | ' | 31 |
Accumulated Amortization | -20 | ' | -20 | ' | -8 |
Intangible assets, net | 33 | ' | 33 | ' | 23 |
Weighted average amortization period | ' | ' | '2 years | ' | ' |
Amortization of finite-lived intangible assets | ' | ' | ' | ' | ' |
Intangible assets, net | $33 | ' | $33 | ' | $23 |