Document and Entity Information
| Document and Entity Information - shares | 6 Months Ended | |
| Jun. 30, 2016 | Jul. 29, 2016 | |
| Document and Entity Information | ||
| Entity Registrant Name | Control4 Corp | |
| Entity Central Index Key | 1,259,515 | |
| Document Type | 10-Q | |
| Document Period End Date | Jun. 30, 2016 | |
| Amendment Flag | false | |
| Current Fiscal Year End Date | --12-31 | |
| Entity Current Reporting Status | Yes | |
| Entity Filer Category | Accelerated Filer | |
| Entity Common Stock, Shares Outstanding | 23,300,047 | |
| Document Fiscal Year Focus | 2,016 | |
| Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
| CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
| Current assets: | ||
| Cash and cash equivalents | $ 22,807 | $ 29,530 |
| Restricted cash | 268 | 296 |
| Short-term investments | 20,780 | 37,761 |
| Accounts receivable, net | 22,982 | 21,322 |
| Inventories | 32,775 | 19,855 |
| Prepaid expenses and other current assets | 3,395 | 3,842 |
| Total current assets | 103,007 | 112,606 |
| Property and equipment, net | 6,564 | 6,584 |
| Long-term investments | 5,010 | 13,716 |
| Intangible assets, net | 25,633 | 4,547 |
| Goodwill | 16,615 | 2,760 |
| Other assets | 2,097 | 1,650 |
| Total assets | 158,926 | 141,863 |
| Current liabilities: | ||
| Accounts payable | 19,484 | 17,588 |
| Accrued liabilities | 7,733 | 5,880 |
| Deferred revenue | 1,303 | 1,099 |
| Current portion of notes payable | 441 | 727 |
| Total current liabilities | 28,961 | 25,294 |
| Revolving credit line | 5,000 | |
| Notes payable | 85 | 186 |
| Other long-term liabilities | 805 | 938 |
| Total liabilities | 34,851 | 26,418 |
| Commitments and contingencies (Note 11) | ||
| Stockholders' equity: | ||
| Common stock, $0.0001 par value; 500,000,000 shares authorized; 24,753,839 and 24,590,768 shares issued; 23,171,713 and 23,436,288 shares outstanding at June 30, 2016 and December 31, 2015, respectively | 2 | 2 |
| Treasury stock, at cost; 1,582,126 and 1,154,480 shares at June 30, 2016 and December 31, 2015, respectively | (12,262) | (9,020) |
| Additional paid-in capital | 225,396 | 220,782 |
| Accumulated deficit | (88,417) | (95,580) |
| Accumulated other comprehensive loss | (644) | (739) |
| Total stockholders' equity | 124,075 | 115,445 |
| Total liabilities and stockholders' equity | $ 158,926 | $ 141,863 |
CONDENSED CONSOLIDATED BALANCE3
| CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2016 | Dec. 31, 2015 |
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
| Common stock, shares authorized | 500,000,000 | 500,000,000 |
| Common stock, shares issued | 24,753,839 | 24,590,768 |
| Common stock, shares outstanding | 23,171,713 | 23,436,288 |
| Treasury stock, shares | 1,582,126 | 1,154,480 |
CONDENSED CONSOLIDATED STATEMEN
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
| Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| Revenue | $ 53,215 | $ 44,641 | $ 96,250 | $ 76,724 |
| Cost of revenue | 27,188 | 22,312 | 49,737 | 38,784 |
| Gross margin | 26,027 | 22,329 | 46,513 | 37,940 |
| Operating expenses: | ||||
| Research and development | 9,039 | 8,122 | 17,518 | 16,117 |
| Sales and marketing | 11,114 | 7,812 | 21,249 | 15,179 |
| General and administrative | 5,059 | 4,288 | 9,872 | 8,909 |
| Litigation settlement | 400 | |||
| Total operating expenses | 25,212 | 20,222 | 49,039 | 40,205 |
| Income (loss) from operations | 815 | 2,107 | (2,526) | (2,265) |
| Other income (expense), net: | ||||
| Interest, net | 42 | 5 | 63 | |
| Other income (expense), net: | (122) | 70 | (217) | (340) |
| Total other income (expense), net | (122) | 112 | (212) | (277) |
| Income (loss) before income taxes | 693 | 2,219 | (2,738) | (2,542) |
| Income tax expense (benefit) | 169 | 178 | (9,901) | (352) |
| Net income (loss) | $ 524 | $ 2,041 | $ 7,163 | $ (2,190) |
| Net income (loss) per common share: | ||||
| Basic (in dollars per share) | $ 0.02 | $ 0.08 | $ 0.31 | $ (0.09) |
| Diluted (in dollars per share) | $ 0.02 | $ 0.08 | $ 0.30 | $ (0.09) |
| Weighted-average number of shares: | ||||
| Basic (in shares) | 23,162 | 24,309 | 23,248 | 24,326 |
| Diluted (in shares) | 23,930 | 25,296 | 23,958 | 24,326 |
CONDENSED CONSOLIDATED STATEME5
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
| Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||
| Net income (loss) | $ 524 | $ 2,041 | $ 7,163 | $ (2,190) |
| Other comprehensive income (loss): | ||||
| Foreign currency translation adjustment, net of tax | (366) | 41 | 25 | (246) |
| Net unrealized gains (losses) on available-for-sale investments, net of tax | (4) | (12) | 70 | 28 |
| Total other comprehensive income (loss) | (370) | 29 | 95 | (218) |
| Comprehensive income (loss) | $ 154 | $ 2,070 | $ 7,258 | $ (2,408) |
CONDENSED CONSOLIDATED STATEME6
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
| Jun. 30, 2016 | Jun. 30, 2015 | |
| Operating activities | ||
| Net income (loss) | $ 7,163 | $ (2,190) |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
| Depreciation expense | 1,573 | 1,321 |
| Amortization of intangible assets | 2,172 | 728 |
| Provision for doubtful accounts | 167 | 172 |
| Investment premium amortization | 216 | |
| Stock-based compensation | 3,950 | 3,528 |
| Tax benefit from business acquisition | (9,708) | |
| Changes in assets and liabilities: | ||
| Accounts receivable | (1,600) | (1,458) |
| Inventories | (6,940) | (1,912) |
| Prepaid expenses and other current assets | 1,513 | (421) |
| Other assets | (347) | (116) |
| Accounts payable | 1,752 | (1,818) |
| Accrued liabilities | 514 | (256) |
| Deferred revenue | 212 | 190 |
| Other long-term liabilities | (462) | (369) |
| Net cash provided by (used in) operating activities | 175 | (2,601) |
| Investing activities | ||
| Purchases of available-for-sale investments | (1,996) | (36,272) |
| Proceeds from maturities of available-for-sale investments | 27,208 | 39,079 |
| Purchases of property and equipment | (1,171) | (1,927) |
| Business acquisitions, net of cash acquired | (32,891) | (8,380) |
| Net cash used in investing activities | (8,850) | (7,500) |
| Financing activities | ||
| Proceeds from exercise of options for common stock | 711 | 710 |
| Repurchase of common stock | (3,242) | (2,148) |
| Repayment of notes payable | (387) | (506) |
| Proceeds from revolving credit facility | 5,000 | |
| Payment of debt issuance costs | (89) | |
| Net cash provided by (used in) financing activities | 1,993 | (1,944) |
| Effect of exchange rate changes on cash and cash equivalents | (41) | 38 |
| Net decrease in cash and cash equivalents | (6,723) | (12,007) |
| Cash and cash equivalents at beginning of period | 29,530 | 29,187 |
| Cash and cash equivalents at end of period | 22,807 | 17,180 |
| Supplemental disclosure of cash flow information | ||
| Cash paid for interest | 104 | 65 |
| Cash paid for taxes | 622 | 121 |
| Supplemental schedule of non-cash investing and financing activities | ||
| Net unrealized losses on available-for-sale investments | $ 70 | $ 28 |
Description of Business and Sum
| Description of Business and Summary of Significant Accounting Policies | 6 Months Ended |
| Jun. 30, 2016 | |
| 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 personalized, smart home solutions that are designed to enhance the daily lives of our customers. The Company’s solutions unlock the potential of connected devices throughout a home or business, making entertainment systems easier to use and more accessible, spaces more comfortable and energy efficient, and individuals 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, condensed consolidated statements of operations, condensed consolidated statements of comprehensive income (loss), and condensed consolidated statements of cash flows are unaudited. These unaudited interim 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 only of 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 six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016, or any other future interim or annual period. These unaudited interim 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 16, 2016. The December 31, 2015 consolidated balance sheet included herein was derived from the audited financial statements as of that date. Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of the Company and its 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 assessing 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 independent 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, Canada, Australia, and the European Union, which are generally denominated in pounds sterling, Canadian dollars, Australian dollars, and the euro, respectively. There were no individual account balances greater than 10% of total accounts receivable as of June 30, 2016 and December 31, 2015. No dealer or distributor accounted for more than 10% of total revenue for the three and six months ended June 30, 2016 and 2015. 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. There was no single foreign country that accounted for more than 10% of total revenue for the three and six months ended June 30, 2016 and 2015. The following table sets forth revenue from U.S., Canadian and all other international dealers and distributors combined (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Revenue-United States $ $ $ $ Revenue-Canada Revenue-all other international sources Total revenue $ $ $ $ International revenue (excluding Canada) as a percent of total revenue % % % % 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, 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. Limited Product Warranties The Company provides its customers a limited product warranty of two years, with the exception of networking products that have a limited product warranty of three years. The limited product warranties require the Company, at its option, to repair or replace defective products during the warranty period at no cost to the customer or refund the purchase price. The Company estimates the costs that may be incurred to replace, repair or issue a refund for 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 include 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, 2015 $ Warranty costs accrued Warranty claims Balance at June 30, 2016 $ Net Income (Loss) Per Share Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income (loss) 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 settlement of restricted stock units. The following table presents the reconciliation of the numerator and denominator used in the calculation of basic and diluted net income (loss) per share (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Numerator: Net income (loss) $ $ $ $ Denominator: Weighted average common stock outstanding for basic net income (loss) per common share Effect of dilutive securities—stock options and restricted stock units — Weighted average common shares and dilutive securities outstanding 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 as they would decrease the loss per share. Potentially dilutive securities, including common equivalent shares, in which the assumed proceeds exceed the average market price of common stock for the applicable period, were not included in the calculation of diluted net income per share as their impact would be anti-dilutive. The following weighted-average common stock equivalents were anti-dilutive and therefore were excluded from the calculation of diluted net income (loss) per share (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Options to purchase common stock Restricted stock units - - Total Recent Accounting Pronouncements In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . ” The amendments in this update simplify several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 will be effective for the Company in fiscal year 2017, but early adoption is permitted. Any adjustments resulting from the adoption of this standard will be reflected as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact of this update on the consolidated financial statements. In February 2016 , the FASB issued ASU 2016-02, “ Leases (Topic 842 ) ,” which supersedes the guidance in ASC 840, “Leases .” The purpose of the new standard is to improve transparency and comparability related to the accounting and reporting of leasing arrangements. The guidance will require balance sheet recognition for assets and liabilities associated with rights and obligations created by leases with terms greater than twelve months. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. Modified retrospective application is required. Early adoption is permitted. The Company is evaluating the impact of adopting this guidance. In July 2015, the FASB issued ASU 2015-11, “Inventory (Subtopic 330) – Simplifying the Measurement of Inventory.” This update requires that inventory within the scope of the guidance be measured at the lower of cost and net realizable value. Inventory measured using last-in, first-out (LIFO) and the retail inventory method (RIM) are not impacted by the new guidance. The guidance is effective in fiscal years beginning after December 15, 2016, including interim periods within those years. Prospective application is required. Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is evaluating the impact of adopting this guidance. In May 2014, the FASB issued ASU 2014-09, “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. In August 2015, the FASB issued ASU 2015-14, deferring the effective date of this standard for one year, and is now effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The deferred standard allows early adoption of the standard on the original effective date of December 15, 2016. 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. |
Balance Sheet Components
| Balance Sheet Components | 6 Months Ended |
| Jun. 30, 2016 | |
| Balance Sheet Components | |
| Balance Sheet Components | 2. Balance Sheet Components Inventories consisted of the following (in thousands): June 30, December 31, 2016 2015 Finished goods $ $ Component parts Work-in-process $ $ Property and equipment, net consisted of the following (in thousands): June 30, December 31, 2016 2015 Computer equipment and software $ $ Manufacturing tooling and test equipment Lab and warehouse equipment Leasehold improvements Furniture and fixtures Marketing equipment Less: accumulated depreciation $ $ Other assets consisted of the following (in thousands): June 30, December 31, 2016 2015 Deposits $ $ Prepaid licensing Deferred tax asset — Other $ $ Accrued liabilities consisted of the following (in thousands): June 30, December 31, 2016 2015 Sales returns and warranty accruals $ $ Compensation accruals Other accrued liabilities $ $ |
Financial Instruments
| Financial Instruments | 6 Months Ended |
| Jun. 30, 2016 | |
| Financial Instruments | |
| Financial Instruments | 3. Financial Instruments Fair Value Measurements 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; and 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. Cash, Cash Equivalents and Marketable Securities The Company determines realized gains or losses on the sale of marketable securities on a specific identification method. During the three and six months ended June 30, 2016 and 2015, 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 June 30, 2016 and December 31, 201 5 (in thousands): June 30, 2016 Cash and Adjusted Unrealized Unrealized Cash Short-term Long-term Cost Gains Losses Fair Value Equivalents Investments Investments Cash $ $ — $ — $ $ $ — $ — Level 1: Money market funds — — — — U.S. government notes — — — Subtotal — — Level 2: Asset-backed securities — — — Corporate bonds — — — Commercial paper — — — U.S. agency securities — — — — Subtotal — Total $ $ $ — $ $ $ $ December 31, 2015 Cash and Adjusted Unrealized Unrealized Cash Short-term Long-term Cost Gains Losses Fair Value Equivalents Investments Investments Cash $ $ — $ — $ $ $ — $ — Level 1: Money market funds — — — — U.S. government notes — — — Subtotal — — Level 2: Asset-backed securities — — — Corporate bonds — Commercial paper — — — — U.S. agency securities — — — Subtotal — Total $ $ $ $ $ $ $ As of June 30, 2016, 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. During the three and six months ended June 30, 2016 and 2015, the Company did not recognize any significant impairment charges. 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, as well as the fact it is not more likely than not that the Company will be required to sell the investment before recovery of the investment’s cost basis, which may be maturity. Fair Value of Other Financial Instruments The carrying amounts reported in the accompanying consolidated financial statements for cash and cash equivalents, restricted cash, 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 and the revolving credit facility approximates the carrying value based on the variable nature of interest rates and current market rates available to the Company (see Note 6). As a result, the balance of the notes payable and revolving credit facility is categorized within the Level 2 fair value hierarchy. Derivative Financial Instruments The Company has foreign currency exposure related to the operations in the United Kingdom, Canada, Australia, as well as other foreign locations. The Company has entered into forward contracts to help offset the exposure to movements in foreign currency exchange rates in relation to certain U.S. dollar denominated balance sheet accounts of its subsidiaries in the United Kingdom and Australia. The foreign currency derivatives are not designated as accounting hedges. The Company recognizes these derivative instruments as either assets or liabilities in the accompanying Condensed Consolidated Balance Sheets at fair value. The Company records changes in the fair value (i.e. gains or losses) of these derivative instruments in the accompanying Condensed Consolidated Statements of Operations as Other income (expense), net. The Company settles its foreign exchange contracts on the last day of every month and enters into a new forward contract for the next month. As a result, there are no assets or liabilities recorded in the accompanying Condensed Consolidated Balance Sheets related to derivative instruments as of June 30, 2016. The following table shows the pre-tax gains (losses) of the Company’s derivative instruments not designated as hedging instruments (in thousands): Three Months Ended Six Months Ended June 30, June 30, Income Statement Location 2016 2015 2016 2015 Foreign exchange contracts Other income (expense), net $ $ $ $ |
Acquisitions
| Acquisitions | 6 Months Ended |
| Jun. 30, 2016 | |
| Acquisitions | |
| Acquisitions | 4. Acquisitions Australia Expansion On April 1, 2016, the Company began working directly with home automation integrators in Australia in order to capitalize on the growth of the smart home category in that country. As part of the shift from its distribution model in Australia, Control4 Corporation, through its wholly owned subsidiary, Control4 Australia Holdings Pty., Ltd, acquired customer lists and inventory from the Company’s Australian distributor for $0.7 million. Total consideration transferred for this acquisition was allocated to tangible and identifiable intangible assets acquired and liabilities assumed. The Company determined this acquisition was not a significant acquisition under Rule 3-05 of Regulation S-X. Acquisition of Pakedge Device and Software Inc. On January 29, 2016, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Pakedge Device and Software Inc. (“Pakedge”). In accordance with the terms and conditions of the Purchase Agreement, Control4 agreed to acquire all of the outstanding shares of common stock of Pakedge for a price of $32.0 million. After customary working capital adjustments, the total purchase price was $33.0 million, which included cash acquired of $0.8 million. In accordance with the Purchase Agreement, $5.0 million was deposited in escrow, and will be held for up to 18 months from the acquisition date, to cover any of the sellers’ post-closing obligations, including without limitation any indemnification obligations that may arise. Total consideration transferred for the Pakedge acquisition was allocated to tangible and identifiable intangible assets acquired and liabilities assumed, including an allocation of $0.3 million to a contingent liability for potential costs associated with regulatory compliance issues, based on their fair values at the acquisition date as set forth below. Management estimated the fair values of tangible and intangible assets 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 preliminary estimates of inventory, warranty reserves, sales return liability, contingent liability, or intangible assets are adjusted pending final valuation, and due to tax-related matters that could have a material impact on the consolidated financial statements. The Company expects the allocation of the consideration transferred to be final within the measurement period (up to one year from the acquisition date). Due to new information obtained related to the net working capital adjustments, valuation of inventory, and tax liabilities, based on facts that existed at the acquisition date, the Company recorded measurement period adjustments to inventory, goodwill and deferred tax liability. The net change to goodwill was an increase of $16,000 . Had these adjustments been recorded as of the acquisition date, the Company’s deferred tax benefit would have decreased $0.1 million for the three months ended March 31, 2016. The following reflects the Company’s preliminary allocation of consideration transferred for the Pakedge acquisition (in thousands): Pakedge Acquisition Cash $ Accounts receivable Inventory Other assets acquired Intangible assets Goodwill Total assets acquired Deferred tax liability Warranty liability Other liabilities assumed Total net assets acquired $ Identifiable Intangible Assets The Company acquired intangible assets that consisted of customer relationships, trademarks/trade names, developed technology and non-compete agreements, which had estimated fair values of $8.8 million, $4.4 million, $9.7 million and $0.3 million, respectively. The intangible 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 discount rates between 15% and 17% , based on the estimated internal rate of return for the acquisition and represent the rates that market participants might use to value the intangible assets based on the risk profile of the asset. The projected cash flows were determined using key assumptions such as: estimates of revenues and operating profits; capital expense investments; and the life of the product. The Company will amortize the intangible assets on a straight-line basis over their estimated useful lives of 8 years for the customer relationships, 12 years for the trademark/trade name, 5 years for the developed technology, and 2 years for non-compete agreements. The amortization of these intangible assets is not deductible for income tax purposes. Goodwill Goodwill of $13.5 million represents the excess of consideration transferred over the fair value of assets acquired and liabilities assumed and is attributable to Pakedge’s assembled workforce, strategic positioning value and the projected profits from new products and dealers. This goodwill is not deductible for income tax purposes. Other From the date of acquisition through June 30, 2016, the Company recorded revenue and net losses associated with Pakedge of approximately $9.0 million and $0.5 million, respectively. Additionally, the Company incurred approximately $2.1 million in total acquisition-related costs accounted for in the accompanying condensed consolidated statements of operations as cost of revenue and general and administrative expenses for the six months ended June 30, 2016 related solely to the Pakedge acquisition. Of this amount, approximately $1.5 million is related to the step-up in inventory recorded to cost of revenue as the acquired inventory was sold. Pro Forma Information The unaudited pro forma information for the three and six months ended June 30, 2016 and 2015 presented below includes the effects of the Pakedge acquisition as if it had been consummated as of January 1, 2015, 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, stock-based compensation expense, depreciation expense, interest expense and estimated tax benefits. These adjustments are based upon information and assumptions available to us at the time of filing this Quarterly Report on Form 10-Q. The income tax benefit related to the reduction in the Company’s valuation allowance as a result of the acquisition is excluded from the pro forma information as it is non-recurring. The unaudited pro forma information does not reflect any operating efficiency or potential cost savings that could result from the consolidation of Pakedge. 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. Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Revenue $ $ $ $ Income (loss) from operations Net income (loss) $ $ Net income (loss) per common share: Basic $ $ Diluted $ $ Acquisition of Nexus Technologies Pty Ltd. On January 30, 2015, the Company, through its wholly owned subsidiary, Control4 Australia Pty., Ltd (“Control4 Australia”), completed the acquisition of Nexus Technologies Pty Ltd. (“Nexus”), an Australia-based provider of audio/video distribution products (under the brand of Leaf), pursuant to a Share Sale Agreement dated January 30, 2015, by and among Control4 Australia and all of the shareholders of Nexus, under which Control4 Australia purchased all of the issued and outstanding shares of Nexus from its shareholders, and Nexus became a wholly owned subsidiary of Control4 Australia. The total consideration transferred was $8.5 million in cash. Of the cash consideration, $0.8 million of cash was deposited in escrow as partial security for the indemnification obligations of the Nexus shareholders pursuant to the Share Sale Agreement, which was released to the Nexus shareholders on December 18, 2015. The Company incurred $0.9 million in acquisition-related expenses accounted for in the accompanying condensed consolidated statements of operations as general and administrative expenses and cost of revenue for the six months ended June 30, 2015. Of this amount, approximately $0.3 million is related to the step-up in inventory recorded to cost of revenue as the acquired inventory was sold. The Company determined the Nexus acquisition was not a significant acquisition under Rule 3-05 of Regulation S-X. |
Goodwill and Intangible Assets
| Goodwill and Intangible Assets | 6 Months Ended |
| Jun. 30, 2016 | |
| Goodwill and Intangible Assets | |
| Goodwill and Intangible Assets | 5. Goodwill and Intangible Assets Goodwill Changes in the carrying amount of goodwill consisted of the following (in thousands): Amount Balance at December 31, 2015 $ Current period acquisitions Foreign currency translation adjustment Balance at June 30, 2016 $ Goodwill represents the excess of consideration transferred over the fair value of assets acquired and liabilities assumed. Amortizable Intangible Assets The Company’s intangible assets and related accumulated amortization consisted of the following as of June 30, 2016 and December 31, 2015 (in thousands): June 30, 2016 Gross Carrying Accumulated Amount Amortization Net Developed technology $ $ $ Customer relationships Trademark/trade name Non-competition agreements Total intangible assets $ $ $ December 31, 2015 Gross Carrying Accumulated Amount Amortization Net Developed technology $ $ $ Customer relationships Non-competition agreements Total intangible assets $ $ $ The weighted average amortization period for acquired technology, customer relationships, trademarks/trade names and non-competition agreements is 4.9 years, 7.9 years, 12.0 years, and 2.0 years, respectively; and 6.8 years for all amortizable intangible assets in total. The Company recorded amortization expense during the respective periods for these intangible assets as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Amortization of intangible assets $ $ $ $ Amortization of finite lived intangible assets as of June 30, 2016 for the next five years is as follows (in thousands): Amount 2016 $ 2017 2018 2019 2020 Thereafter $ |
Long-Term Obligations
| Long-Term Obligations | 6 Months Ended |
| Jun. 30, 2016 | |
| Long-Term Obligations | |
| Long-Term Obligations | 6. Long-Term Obligations Loan and Security Agreement On January 29, 2016, Control4 entered into the Second Loan Modification Agreement (the “2016 Loan Amendment”) with Silicon Valley Bank, a California corporation (“SVB”), which amends that certain Amended and Restated Loan and Security Agreement dated as of June 17, 2013, between Control4 and SVB (the “2013 Loan Agreement”). In the 2016 Loan Amendment, Control4 established a revolving credit facility of $30.0 million under the terms of the 2013 Loan Agreement (the “New Credit Facility”). All borrowings under the New Credit Facility are collateralized by the general assets of the Company. Amounts borrowed under the New Credit Facility are due and payable in full on the maturity date, which is January 28, 2018. Advances made pursuant to the New Credit Facility are either: (i) Prime Rate Advances, which bear interest at the Prime Rate plus a Prime Rate Margin of either 0% or 0.25% , depending on Control4’s leverage ratio for the subject quarter, or (ii) LIBOR Rate Advances, which bear interest at the LIBOR Rate plus a LIBOR Rate Margin of either 2.50% or 2.75% , depending on Control4’s leverage ratio for the subject quarter. As of June 30, 2016, the interest rate on the revolving credit facility equaled the prime rate of 3.50% , and Control4 had outstanding borrowings of $5.0 million under the revolving credit facility. The 2016 Loan Amendment did not amend the term borrowing provisions of the 2013 Loan Agreement. Term borrowings are payable in 42 equal monthly payments of principal plus interest and bear interest at prime plus 0.50% , which was 4.00% as of June 30, 2016. The 2016 Loan Amendment contains various restrictive and financial covenants and the Company was in compliance with each of these covenants as of June 30, 2016. |
Income Taxes
| Income Taxes | 6 Months Ended |
| Jun. 30, 2016 | |
| Income Taxes | |
| Income Taxes | 7. 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 $0.2 million and $0.2 million for the three months ended June 30, 2016 and 2015, respectively, or approximately 24% and 8% of income (loss) before income taxes, respectively. Income tax benefit was $9.9 million and $0.4 million for the six months ended June 30, 2016 and 2015, respectively, or approximately 362% and 14% of income (loss) before income taxes, respectively. The effective tax rate for the three and six months ended June 30, 2016 differs from the U.S. federal statutory rate of 34% primarily due to the domestic valuation allowance offsetting most of the statutory rate, offset by the partial reversal of the Company’s valuation allowance due to the deferred tax liability that was recorded as part of the Pakedge acquisition, primarily due the differences between the book and tax basis of the acquired intangible assets. The rate is further increased by foreign income taxes, minimum state income taxes or taxes in states for which net operating loss carryforwards are not available, the U.S. federal alternative minimum tax and the impact of incentive stock options as well as other permanent differences. As of December 31, 2015, the Company’s net operating loss (“NOL”) carryforward amounts for U.S. federal income and state tax purposes were $ 78.1 million and $75.9 million, respectively. The NOL carryforwards will expire between 2019 and 2035. In addition to the NOL carryforwards, as of December 31, 2015, the Company had U.S. federal and state research and development credit carryforwards of $ 6.7 million and $ 2.8 million, respectively, which will expire between 2017 and 2034. Significant judgment is required in determining the Company’s provision for income taxes, recording valuation allowances against deferred tax assets and evaluating the Company’s uncertain tax positions. In evaluating the ability to recover its deferred tax assets, in full or in part, the Company considers all available positive and negative evidence, including past operating results, 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, the Company has a full valuation allowance against domestic deferred tax assets. To the extent that the Company generates positive income and expects, with reasonable certainty, to continue to generate positive domestic income, the Company may release all or a portion of the valuation allowance in a future period. This release would result in the recognition of certain deferred tax assets, resulting in a decrease to income tax expense for the period such release is made. In addition, the 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 the 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, Australia, China, Germany, India and Serbia. The Company is subject to examination in the United States, the United Kingdom, Australia, Hong Kong, China, Germany, India and Serbia as well as various state jurisdictions. As of June 30, 2016, the Company was not under examination by any tax authorities. Tax years beginning in 2012 are subject to examination by tax authorities in the United States and in some states tax years as early as 2011 are subject to examination by tax authorities, 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 Australia and Hong Kong. Tax years beginning in 2012 are subject to examination by the taxing authorities in China and India. Tax years beginning in 2013 are subject to examination by the taxing authorities in the United Kingdom. Tax years beginning in 2015 are subject to examination by the taxing authorities in Germany. Tax years beginning in 2016 are subject to examination by the taxing authorities in Serbia. |
Equity Compensation
| Equity Compensation | 6 Months Ended |
| Jun. 30, 2016 | |
| Equity Compensation | |
| Equity Compensation | 8. 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 5% of the outstanding number of shares of the Company’s Common Stock as of the preceding December 31. There was no annual increase to the Company’s reserved shares in 2016. A summary of stock option activity for the six months ended June 30, 2016 is presented below: Weighted Weighted Average Shares Subject Average Weighted Remaining to Options Grant Date Average Contractual Outstanding Fair Value Exercise Price Life (Years) Balance at December 31, 2015 $ Granted Exercised Expired Forfeited Balance at June 30, 2016 Exercisable options at June 30, 2016 Vested and expected to vest at June 30, 2016 The following table summarizes information about stock options outstanding and exercisable at June 30, 2016: Options Outstanding Options Exercisable Weighted- Weighted- Weighted Average Average Average Number of Remaining Number of Remaining Exercise Underlying Contractual Underlying Contractual Range of Exercise Prices Price Shares Life (in years) Shares Life (in years) $ - $ - $ - $ - $ - For the stock option awards vested during the three and six months ended June 30, 2016, the total fair value was $1.4 million and $2.9 million, respectively. The following table summarizes the aggregate intrinsic-value of options exercised, exercisable and vested and expected to vest (in thousands): For the Six Months Ended and as of June 30, 2016 2015 Options Exercised $ $ Options Exercisable Options Vested and Expected to Vest The fair value of each option award was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Expected volatility 62 % 53 % 62 % 53 - 55 % Expected dividends 0 % 0 % 0 % 0 % Expected terms (in years) 6.1 5.3 - 6.1 6.1 5.3 - 6.1 Risk-free rate 1.1 % 1.5 - 1.8 % 1.1 % 1.3 - 1.8 % Restricted stock units A summary of restricted stock unit activity for the six months ended June 30, 2016 is presented below: Number of Weighted Average Shares Grant Date Fair Value Non-vested balance at December 31, 2015 $ Awarded Forfeited Non-vested balance at June 30, 2016 There were no restricted stock units that vested during the six months ended June 30, 2016. Stock-based compensation expense Total stock-based compensation expense has been classified as follows in the accompanying Condensed Consolidated Statements of Operations (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Cost of revenue $ $ $ $ Research and development Sales and marketing General and administrative Total stock-based compensation expense $ $ $ $ At June 30, 2016, there was $8.9 million of total unrecognized compensation cost related to non-vested stock option awards that will be recognized over a weighted-average period of 2.1 years. At June 30, 2016, there was $9.7 million of total unrecognized compensation cost related to non-vested restricted stock units that will be recognized over a weighted-average period of 2.6 years. |
Share Repurchases
| Share Repurchases | 6 Months Ended |
| Jun. 30, 2016 | |
| Share Repurchases | |
| Share Repurchases | 9. Share Repurchases In May 2015, the Company’s Board of Directors authorized the repurchase of up to $20 million in Control4 common stock from time to time on the open market. In February 2016, the Board of Directors authorized an extension to this repurchase program from its original end-date of May 13, 2016 to June 30, 2017, unless terminated earlier. During the three and six months ended June 30, 2016, the Company repurchased 193,831 and 427,646 shares for $1.5 million and $3.2 million , respectively. These share repurchases are classified as treasury stock in the accompanying Condensed Consolidated Balance Sheets as a reduction of Stockholders’ Equity. As of June 30, 2016, the Company has $7.7 million remaining to repurchase shares of common stock under this share repurchase program. |
Related Party Transactions
| Related Party Transactions | 6 Months Ended |
| Jun. 30, 2016 | |
| Related Party Transactions | |
| Related Party Transactions | 10. Related Party Transactions A member of the Company’s Board of Directors is also an officer of a company that has a product line the Comp any began selling in its online store in November 2015. For the three and six months ended June 30, 2016, Control4 recognized revenue from sales of this product line of $34,000 and $63,000 , net of cost of revenue, consistent with the Company’s accounting policy on sales of third-party products sold through the Company’s online ordering system. As of June 30, 2016, the Company had accounts payable due to this related party of $ 19,000 . The Company has a royalty agreement with a company that has a director who is also a member of the Company’s Board of Directors. For the three and six months ended June 30, 2016, the Company had incurred royalty expenses of $0.1 million and $0.2 million and had accounts payable due to this related party of $0.1 million. |
Commitments and Contingencies
| Commitments and Contingencies | 6 Months Ended |
| Jun. 30, 2016 | |
| Commitments and Contingencies | |
| Commitments and Contingencies | 11. Commitments and Contingencies Operating Leases The Company leases office and warehouse space under operating leases that expire between 2017 and 2021. 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 $0.6 million and $ 0.5 million for the three months ended June 30, 2016 and 2015, respectively, and $1.2 million and $0.9 million for the six months ended June 30, 2016 and 2015, 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 June 30, 2016 (in thousands): 2016 $ 2017 2018 2019 2020 Thereafter $ Purchase Commitments The Company had non-cancellable purchase commitments for the purchase of inventory, which extend through February 2017 totaling approximately $33.5 million at June 30, 2016. 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 directors’ and officers’ 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 June 30, 2016, as there were no outstanding claims. Legal Matters From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not presently a party to any legal proceedings, that if determined adversely to us, we believe would individually or in the aggregate have a material adverse effect on our business, results of operations, financial condition or cash flows. |
Description of Business and S18
| Description of Business and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
| Jun. 30, 2016 | |
| Description of Business and Summary of Significant Accounting Policies | |
| Unaudited Interim Financial Statements | Unaudited Interim Financial Statements The accompanying condensed consolidated balance sheets, condensed consolidated statements of operations, condensed consolidated statements of comprehensive income (loss), and condensed consolidated statements of cash flows are unaudited. These unaudited interim 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 only of 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 six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016, or any other future interim or annual period. These unaudited interim 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 16, 2016. The December 31, 2015 consolidated balance sheet included herein was derived from the audited financial statements as of that date. |
| Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of the Company and its 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 assessing 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 independent 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, Canada, Australia, and the European Union, which are generally denominated in pounds sterling, Canadian dollars, Australian dollars, and the euro, respectively. There were no individual account balances greater than 10% of total accounts receivable as of June 30, 2016 and December 31, 2015. No dealer or distributor accounted for more than 10% of total revenue for the three and six months ended June 30, 2016 and 2015. 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. There was no single foreign country that accounted for more than 10% of total revenue for the three and six months ended June 30, 2016 and 2015. The following table sets forth revenue from U.S., Canadian and all other international dealers and distributors combined (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Revenue-United States $ $ $ $ Revenue-Canada Revenue-all other international sources Total revenue $ $ $ $ International revenue (excluding Canada) as a percent of total revenue % % % % |
| 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, 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. |
| Limited Product Warranties | Limited Product Warranties The Company provides its customers a limited product warranty of two years, with the exception of networking products that have a limited product warranty of three years. The limited product warranties require the Company, at its option, to repair or replace defective products during the warranty period at no cost to the customer or refund the purchase price. The Company estimates the costs that may be incurred to replace, repair or issue a refund for 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 include 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, 2015 $ Warranty costs accrued Warranty claims Balance at June 30, 2016 $ |
| Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income (loss) 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 settlement of restricted stock units. The following table presents the reconciliation of the numerator and denominator used in the calculation of basic and diluted net income (loss) per share (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Numerator: Net income (loss) $ $ $ $ Denominator: Weighted average common stock outstanding for basic net income (loss) per common share Effect of dilutive securities—stock options and restricted stock units — Weighted average common shares and dilutive securities outstanding 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 as they would decrease the loss per share. Potentially dilutive securities, including common equivalent shares, in which the assumed proceeds exceed the average market price of common stock for the applicable period, were not included in the calculation of diluted net income per share as their impact would be anti-dilutive. The following weighted-average common stock equivalents were anti-dilutive and therefore were excluded from the calculation of diluted net income (loss) per share (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Options to purchase common stock Restricted stock units - - Total |
| Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . ” The amendments in this update simplify several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 will be effective for the Company in fiscal year 2017, but early adoption is permitted. Any adjustments resulting from the adoption of this standard will be reflected as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact of this update on the consolidated financial statements. In February 2016 , the FASB issued ASU 2016-02, “ Leases (Topic 842 ) ,” which supersedes the guidance in ASC 840, “Leases .” The purpose of the new standard is to improve transparency and comparability related to the accounting and reporting of leasing arrangements. The guidance will require balance sheet recognition for assets and liabilities associated with rights and obligations created by leases with terms greater than twelve months. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. Modified retrospective application is required. Early adoption is permitted. The Company is evaluating the impact of adopting this guidance. In July 2015, the FASB issued ASU 2015-11, “Inventory (Subtopic 330) – Simplifying the Measurement of Inventory.” This update requires that inventory within the scope of the guidance be measured at the lower of cost and net realizable value. Inventory measured using last-in, first-out (LIFO) and the retail inventory method (RIM) are not impacted by the new guidance. The guidance is effective in fiscal years beginning after December 15, 2016, including interim periods within those years. Prospective application is required. Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is evaluating the impact of adopting this guidance. In May 2014, the FASB issued ASU 2014-09, “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. In August 2015, the FASB issued ASU 2015-14, deferring the effective date of this standard for one year, and is now effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The deferred standard allows early adoption of the standard on the original effective date of December 15, 2016. 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. |
Description of Business and S19
| Description of Business and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
| Jun. 30, 2016 | |
| 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 U.S., Canadian and all other international dealers and distributors combined (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Revenue-United States $ $ $ $ Revenue-Canada Revenue-all other international sources Total revenue $ $ $ $ International revenue (excluding Canada) as a percent of total revenue % % % % |
| 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, 2015 $ Warranty costs accrued Warranty claims Balance at June 30, 2016 $ |
| Schedule of reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share | The following table presents the reconciliation of the numerator and denominator used in the calculation of basic and diluted net income (loss) per share (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Numerator: Net income (loss) $ $ $ $ Denominator: Weighted average common stock outstanding for basic net income (loss) per common share Effect of dilutive securities—stock options and restricted stock units — Weighted average common shares and dilutive securities outstanding |
| Schedule of anti-dilutive weighted-average common stock equivalents excluded from the calculation of diluted net loss per share | The following weighted-average common stock equivalents were anti-dilutive and therefore were excluded from the calculation of diluted net income (loss) per share (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Options to purchase common stock Restricted stock units - - Total |
Balance Sheet Components (Table
| Balance Sheet Components (Tables) | 6 Months Ended |
| Jun. 30, 2016 | |
| Balance Sheet Components | |
| Schedule of inventories | Inventories consisted of the following (in thousands): June 30, December 31, 2016 2015 Finished goods $ $ Component parts Work-in-process $ $ |
| Schedule of property and equipment, net | Property and equipment, net consisted of the following (in thousands): June 30, December 31, 2016 2015 Computer equipment and software $ $ Manufacturing tooling and test equipment Lab and warehouse equipment Leasehold improvements Furniture and fixtures Marketing equipment Less: accumulated depreciation $ $ |
| Schedule of other assets | Other assets consisted of the following (in thousands): June 30, December 31, 2016 2015 Deposits $ $ Prepaid licensing Deferred tax asset — Other $ $ |
| Schedule of accrued liabilities | Accrued liabilities consisted of the following (in thousands): June 30, December 31, 2016 2015 Sales returns and warranty accruals $ $ Compensation accruals Other accrued liabilities $ $ |
Financial Instruments (Tables)
| Financial Instruments (Tables) | 6 Months Ended |
| Jun. 30, 2016 | |
| Financial Instruments | |
| 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 June 30, 2016 and December 31, 201 5 (in thousands): June 30, 2016 Cash and Adjusted Unrealized Unrealized Cash Short-term Long-term Cost Gains Losses Fair Value Equivalents Investments Investments Cash $ $ — $ — $ $ $ — $ — Level 1: Money market funds — — — — U.S. government notes — — — Subtotal — — Level 2: Asset-backed securities — — — Corporate bonds — — — Commercial paper — — — U.S. agency securities — — — — Subtotal — Total $ $ $ — $ $ $ $ December 31, 2015 Cash and Adjusted Unrealized Unrealized Cash Short-term Long-term Cost Gains Losses Fair Value Equivalents Investments Investments Cash $ $ — $ — $ $ $ — $ — Level 1: Money market funds — — — — U.S. government notes — — — Subtotal — — Level 2: Asset-backed securities — — — Corporate bonds — Commercial paper — — — — U.S. agency securities — — — Subtotal — Total $ $ $ $ $ $ $ |
| Schedule of pre-tax gains (losses) not designated as hedging instruments | The following table shows the pre-tax gains (losses) of the Company’s derivative instruments not designated as hedging instruments (in thousands): Three Months Ended Six Months Ended June 30, June 30, Income Statement Location 2016 2015 2016 2015 Foreign exchange contracts Other income (expense), net $ $ $ $ |
Acquisition (Tables)
| Acquisition (Tables) | 6 Months Ended |
| Jun. 30, 2016 | |
| Acquisitions | |
| Schedule of preliminary allocation of consideration transferred | The following reflects the Company’s preliminary allocation of consideration transferred for the Pakedge acquisition (in thousands): Pakedge Acquisition Cash $ Accounts receivable Inventory Other assets acquired Intangible assets Goodwill Total assets acquired Deferred tax liability Warranty liability Other liabilities assumed Total net assets acquired $ |
| Schedule of unaudited pro forma information regarding the acquisition | Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Revenue $ $ $ $ Income (loss) from operations Net income (loss) $ $ Net income (loss) per common share: Basic $ $ Diluted $ $ |
Goodwill and Intangible Assets
| Goodwill and Intangible Assets (Tables) | 6 Months Ended |
| Jun. 30, 2016 | |
| Goodwill and 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, 2015 $ Current period acquisitions Foreign currency translation adjustment Balance at June 30, 2016 $ |
| 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 June 30, 2016 and December 31, 2015 (in thousands): June 30, 2016 Gross Carrying Accumulated Amount Amortization Net Developed technology $ $ $ Customer relationships Trademark/trade name Non-competition agreements Total intangible assets $ $ $ December 31, 2015 Gross Carrying Accumulated Amount Amortization Net Developed technology $ $ $ Customer relationships Non-competition agreements Total intangible assets $ $ $ |
| Schedule of amortization expense during the respective periods | The Company recorded amortization expense during the respective periods for these intangible assets as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Amortization of intangible assets $ $ $ $ |
| Schedule of amortization of finite-lived intangible assets | Amortization of finite lived intangible assets as of June 30, 2016 for the next five years is as follows (in thousands): Amount 2016 $ 2017 2018 2019 2020 Thereafter $ |
Equity Compensation (Tables)
| Equity Compensation (Tables) | 6 Months Ended |
| Jun. 30, 2016 | |
| Equity Compensation | |
| Summary of stock option activity | Weighted Weighted Average Shares Subject Average Weighted Remaining to Options Grant Date Average Contractual Outstanding Fair Value Exercise Price Life (Years) Balance at December 31, 2015 $ Granted Exercised Expired Forfeited Balance at June 30, 2016 Exercisable options at June 30, 2016 Vested and expected to vest at June 30, 2016 |
| Summary of stock options outstanding and exercisable | The following table summarizes information about stock options outstanding and exercisable at June 30, 2016: Options Outstanding Options Exercisable Weighted- Weighted- Weighted Average Average Average Number of Remaining Number of Remaining Exercise Underlying Contractual Underlying Contractual Range of Exercise Prices Price Shares Life (in years) Shares Life (in years) $ - $ - $ - $ - $ - |
| 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 Six Months Ended and as of June 30, 2016 2015 Options Exercised $ $ Options Exercisable Options Vested and Expected to Vest |
| Schedule of assumptions used to estimate fair value of option awards | Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Expected volatility 62 % 53 % 62 % 53 - 55 % Expected dividends 0 % 0 % 0 % 0 % Expected terms (in years) 6.1 5.3 - 6.1 6.1 5.3 - 6.1 Risk-free rate 1.1 % 1.5 - 1.8 % 1.1 % 1.3 - 1.8 % |
| Summary of restricted stock unit activity | Number of Weighted Average Shares Grant Date Fair Value Non-vested balance at December 31, 2015 $ Awarded Forfeited Non-vested balance at June 30, 2016 |
| 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 Condensed Consolidated Statements of Operations (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Cost of revenue $ $ $ $ Research and development Sales and marketing General and administrative Total stock-based compensation expense $ $ $ $ |
Commitments and Contingencies (
| Commitments and Contingencies (Tables) | 6 Months Ended |
| Jun. 30, 2016 | |
| 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 June 30, 2016 (in thousands): 2016 $ 2017 2018 2019 2020 Thereafter $ |
Description of Business and S26
| Description of Business and Summary of Significant Accounting Policies (Concentration) (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
| Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)item | Jun. 30, 2015USD ($) | |
| Revenue from U.S., Canadian and all other international dealers and distributors combined | ||||
| Total revenue | $ 53,215 | $ 44,641 | $ 96,250 | $ 76,724 |
| International revenue (excluding Canada) as a percent of total revenue | 22.00% | 23.00% | 21.00% | 24.00% |
| Segment Reporting | ||||
| Number of operating segments | item | 1 | |||
| United States | ||||
| Revenue from U.S., Canadian and all other international dealers and distributors combined | ||||
| Total revenue | $ 37,461 | $ 30,054 | $ 68,836 | $ 51,271 |
| Canada | ||||
| Revenue from U.S., Canadian and all other international dealers and distributors combined | ||||
| Total revenue | 4,164 | 4,122 | 7,109 | 7,208 |
| All other international sources | ||||
| Revenue from U.S., Canadian and all other international dealers and distributors combined | ||||
| Total revenue | $ 11,590 | $ 10,465 | $ 20,305 | $ 18,245 |
Description of Business and S27
| Description of Business and Summary of Significant Accounting Policies (Warranty) (Details) $ in Thousands | 6 Months Ended |
| Jun. 30, 2016USD ($) | |
| Product Warranty | |
| Product warranty period | 2 years |
| Product warranty period of networking products | 3 years |
| Changes in the product warranty liability | |
| Balance at beginning of period | $ 1,415 |
| Warranty costs accrued | 902 |
| Warranty claims | (562) |
| Balance at end of period | $ 1,755 |
Description of Business and S28
| Description of Business and Summary of Significant Accounting Policies (EPS) (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
| Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
| Numerator: | ||||
| Net income (loss) | $ 524 | $ 2,041 | $ 7,163 | $ (2,190) |
| Denominator: | ||||
| Weighted average common stock outstanding for basic net income (loss) per common share (in shares) | 23,162 | 24,309 | 23,248 | 24,326 |
| Effect of dilutive securities—stock options and restricted stock units (in shares) | 768 | 987 | 710 | |
| Weighted average common shares and dilutive securities outstanding (in shares) | 23,930 | 25,296 | 23,958 | 24,326 |
Description of Business and S29
| Description of Business and Summary of Significant Accounting Policies (AntiDilutive) (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
| Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
| Anti-dilutive weighted-average common stock equivalents excluded from the calculation of diluted net income per share | ||||
| Total (in shares) | 2,555 | 2,417 | 2,659 | 4,817 |
| Options | Common Stock | ||||
| Anti-dilutive weighted-average common stock equivalents excluded from the calculation of diluted net income per share | ||||
| Total (in shares) | 2,553 | 2,417 | 2,624 | 4,817 |
| Restricted stock units | ||||
| Anti-dilutive weighted-average common stock equivalents excluded from the calculation of diluted net income per share | ||||
| Total (in shares) | 2 | 35 | ||
Balance Sheet Components (Inven
| Balance Sheet Components (Inventories, Property and Equipment) (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
| Inventories | ||
| Finished goods | $ 29,731 | $ 16,982 |
| Component parts | 2,785 | 2,575 |
| Work-in-process | 259 | 298 |
| Total inventories | 32,775 | 19,855 |
| Property and equipment, net | ||
| Property and equipment, gross | 20,178 | 19,024 |
| Less: accumulated depreciation | (13,614) | (12,440) |
| Property and equipment, net | 6,564 | 6,584 |
| Computer equipment and software | ||
| Property and equipment, net | ||
| Property and equipment, gross | 5,254 | 4,799 |
| Manufacturing tooling and test equipment | ||
| Property and equipment, net | ||
| Property and equipment, gross | 4,678 | 4,267 |
| Lab and warehouse equipment | ||
| Property and equipment, net | ||
| Property and equipment, gross | 3,673 | 3,376 |
| Leasehold improvements | ||
| Property and equipment, net | ||
| Property and equipment, gross | 2,946 | 2,949 |
| Furniture and fixtures | ||
| Property and equipment, net | ||
| Property and equipment, gross | 2,879 | 2,881 |
| Marketing equipment | ||
| Property and equipment, net | ||
| Property and equipment, gross | $ 748 | $ 752 |
Balance Sheet Components (Other
| Balance Sheet Components (Other assets and Accrued liabilities) (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
| Other assets | ||
| Deposits | $ 664 | $ 933 |
| Prepaid licensing | 594 | 664 |
| Deferred tax asset | 817 | |
| Other | 22 | 53 |
| Other assets total | 2,097 | 1,650 |
| Accrued liabilities | ||
| Sales returns and warranty accruals | 3,125 | 2,508 |
| Compensation accruals | 3,121 | 2,331 |
| Other accrued liabilities | 1,487 | 1,041 |
| Total accrued liabilities | $ 7,733 | $ 5,880 |
Financial Instruments (Fair Val
| Financial Instruments (Fair Value Measurements) (Details) - Measured on a recurring basis - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
| Fair Value Measurements | ||
| Adjusted Cost, assets | $ 48,588 | $ 81,068 |
| Unrealized Gains, available-for-sale securities | 9 | 2 |
| Unrealized Losses, available-for-sale securities | (63) | |
| Fair Value, assets | 48,597 | 81,007 |
| Cash and Cash Equivalents | ||
| Fair Value Measurements | ||
| Fair Value, available-for-sale investments | 22,807 | 29,530 |
| Short-term investments | ||
| Fair Value Measurements | ||
| Fair Value, available-for-sale investments | 20,780 | 37,761 |
| Long-term investments | ||
| Fair Value Measurements | ||
| Fair Value, available-for-sale investments | 5,010 | 13,716 |
| Cash | ||
| Fair Value Measurements | ||
| Fair value, cash and cash equivalents | 11,653 | 7,593 |
| Cash | Cash and Cash Equivalents | ||
| Fair Value Measurements | ||
| Fair value, cash and cash equivalents | 11,653 | 7,593 |
| Level 1 | ||
| Fair Value Measurements | ||
| Adjusted Cost, assets | 11,155 | 22,935 |
| Unrealized Gains, available-for-sale securities | 1 | |
| Unrealized Losses, available-for-sale securities | (2) | |
| Fair Value, assets | 11,156 | 22,933 |
| Level 1 | Cash and Cash Equivalents | ||
| Fair Value Measurements | ||
| Fair Value, available-for-sale investments | 10,156 | 21,937 |
| Level 1 | Short-term investments | ||
| Fair Value Measurements | ||
| Fair Value, available-for-sale investments | 1,000 | |
| Level 1 | Long-term investments | ||
| Fair Value Measurements | ||
| Fair Value, available-for-sale investments | 996 | |
| Level 1 | Money market funds | ||
| Fair Value Measurements | ||
| Fair value, cash and cash equivalents | 10,156 | 21,937 |
| Level 1 | Money market funds | Cash and Cash Equivalents | ||
| Fair Value Measurements | ||
| Fair value, cash and cash equivalents | 10,156 | 21,937 |
| Level 1 | U.S. government notes | ||
| Fair Value Measurements | ||
| Adjusted Cost, available-for-sale securities | 999 | 998 |
| Unrealized Gains, available-for-sale securities | 1 | |
| Unrealized Losses, available-for-sale securities | (2) | |
| Fair Value, available-for-sale investments | 1,000 | 996 |
| Level 1 | U.S. government notes | Short-term investments | ||
| Fair Value Measurements | ||
| Fair Value, available-for-sale investments | 1,000 | |
| Level 1 | U.S. government notes | Long-term investments | ||
| Fair Value Measurements | ||
| Fair Value, available-for-sale investments | 996 | |
| Level 2 | Available-for-sale investments | ||
| Fair Value Measurements | ||
| Adjusted Cost, available-for-sale securities | 25,780 | 50,540 |
| Unrealized Gains, available-for-sale securities | 8 | 2 |
| Unrealized Losses, available-for-sale securities | (61) | |
| Fair Value, available-for-sale investments | 25,788 | 50,481 |
| Level 2 | Available-for-sale investments | Cash and Cash Equivalents | ||
| Fair Value Measurements | ||
| Fair Value, available-for-sale investments | 998 | |
| Level 2 | Available-for-sale investments | Short-term investments | ||
| Fair Value Measurements | ||
| Fair Value, available-for-sale investments | 19,780 | 37,761 |
| Level 2 | Available-for-sale investments | Long-term investments | ||
| Fair Value Measurements | ||
| Fair Value, available-for-sale investments | 5,010 | 12,720 |
| Level 2 | Asset-backed securities | ||
| Fair Value Measurements | ||
| Adjusted Cost, available-for-sale securities | 5,007 | 6,739 |
| Unrealized Gains, available-for-sale securities | 3 | |
| Unrealized Losses, available-for-sale securities | (9) | |
| Fair Value, available-for-sale investments | 5,010 | 6,730 |
| Level 2 | Asset-backed securities | Long-term investments | ||
| Fair Value Measurements | ||
| Fair Value, available-for-sale investments | 5,010 | 6,730 |
| Level 2 | Corporate bonds | ||
| Fair Value Measurements | ||
| Adjusted Cost, available-for-sale securities | 17,777 | 39,195 |
| Unrealized Gains, available-for-sale securities | 5 | 2 |
| Unrealized Losses, available-for-sale securities | (51) | |
| Fair Value, available-for-sale investments | 17,782 | 39,146 |
| Level 2 | Corporate bonds | Short-term investments | ||
| Fair Value Measurements | ||
| Fair Value, available-for-sale investments | 17,782 | 33,156 |
| Level 2 | Corporate bonds | Long-term investments | ||
| Fair Value Measurements | ||
| Fair Value, available-for-sale investments | 5,990 | |
| Level 2 | Commercial paper | ||
| Fair Value Measurements | ||
| Adjusted Cost, available-for-sale securities | 1,995 | 1,100 |
| Fair Value, available-for-sale investments | 1,995 | 1,100 |
| Level 2 | Commercial paper | Cash and Cash Equivalents | ||
| Fair Value Measurements | ||
| Fair Value, available-for-sale investments | 998 | |
| Level 2 | Commercial paper | Short-term investments | ||
| Fair Value Measurements | ||
| Fair Value, available-for-sale investments | 997 | 1,100 |
| Level 2 | U.S. agency securities | ||
| Fair Value Measurements | ||
| Adjusted Cost, available-for-sale securities | 1,001 | 3,506 |
| Unrealized Losses, available-for-sale securities | (1) | |
| Fair Value, available-for-sale investments | 1,001 | 3,505 |
| Level 2 | U.S. agency securities | Short-term investments | ||
| Fair Value Measurements | ||
| Fair Value, available-for-sale investments | $ 1,001 | $ 3,505 |
Financial Instruments (Investme
| Financial Instruments (Investment and Derivative Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
| Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
| Foreign Exchange Contract | ||||
| Fair Value Measurements | ||||
| Assets related to derivative instruments | $ 0 | $ 0 | ||
| Liabilities related to derivative instruments | 0 | 0 | ||
| Foreign Exchange Contract | Other income (expense), net | Not Designated as Hedging Instrument | ||||
| Fair Value Measurements | ||||
| Foreign exchange contracts | $ 359 | $ (100) | $ 43 | $ (100) |
| Minimum | ||||
| Fair Value Measurements | ||||
| Maturity period of long-term investments | 1 year | |||
| Maximum | ||||
| Fair Value Measurements | ||||
| Maturity period of long-term investments | 2 years | |||
Acquisitions (Pakedge Device an
| Acquisitions (Pakedge Device and Software Inc.) (Details) - USD ($) | Apr. 01, 2016 | Jan. 29, 2016 | Jun. 30, 2016 | Mar. 31, 2016 |
| Australia Expansion | ||||
| Purchase Agreement | ||||
| Total consideration transferred | $ 700,000 | |||
| Pakedge Device And Software Inc. | ||||
| Purchase Agreement | ||||
| Purchase Price per Purchase Agreement | $ 32,000,000 | |||
| Total consideration transferred | 33,000,000 | |||
| Cash acquired in acquisition | 843,000 | |||
| Escrow deposit | $ 5,000,000 | |||
| Period of escrow deposit | 18 months | |||
| Allocation for contingent regulatory compliance liability | $ 300,000 | |||
| Measurement Period Adjustments | ||||
| Net change to goodwill | $ 16,000 | |||
| Pro Forma increase (decrease) in deferred tax expense (benefit) | $ 100,000 |
Acquisitions (Pakedge Device 35
| Acquisitions (Pakedge Device and Software Inc. 2) (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Jan. 29, 2016 | Dec. 31, 2015 |
| Preliminary allocation of consideration | |||
| Goodwill | $ 16,615 | $ 2,760 | |
| Pakedge Device And Software Inc. | |||
| Preliminary allocation of consideration | |||
| Cash | $ 843 | ||
| Accounts receivable | 460 | ||
| Inventory | 5,674 | ||
| Other assets acquired | 1,139 | ||
| Intangible assets | 23,156 | ||
| Goodwill | 13,535 | ||
| Total assets acquired | 44,807 | ||
| Deferred tax liability | 9,708 | ||
| Warranty liability | 391 | ||
| Other liabilities assumed | 1,688 | ||
| Total net assets acquired | $ 33,020 |
Acquisitions (Identifiable Inta
| Acquisitions (Identifiable Intangible Assets) (Details) - USD ($) $ in Thousands | Jan. 29, 2016 | Jun. 30, 2016 | Dec. 31, 2015 |
| Identifiable Intangible Assets | |||
| Weighted average amortization period | 6 years 9 months 18 days | ||
| Goodwill | |||
| Goodwill | $ 16,615 | $ 2,760 | |
| Customer Relationships | |||
| Identifiable Intangible Assets | |||
| Weighted average amortization period | 7 years 10 months 24 days | ||
| Trademark/trade name | |||
| Identifiable Intangible Assets | |||
| Weighted average amortization period | 12 years | ||
| Developed technology | |||
| Identifiable Intangible Assets | |||
| Weighted average amortization period | 4 years 10 months 24 days | ||
| Non-competition agreements | |||
| Identifiable Intangible Assets | |||
| Weighted average amortization period | 2 years | ||
| Pakedge Device And Software Inc. | |||
| Goodwill | |||
| Goodwill | $ 13,535 | ||
| Other | |||
| Revenue associated with acquisition | $ 9,000 | ||
| Net loss associated with acquisition | 500 | ||
| Pakedge Device And Software Inc. | Minimum | |||
| Identifiable Intangible Assets | |||
| Discount rate used | 15.00% | ||
| Pakedge Device And Software Inc. | Maximum | |||
| Identifiable Intangible Assets | |||
| Discount rate used | 17.00% | ||
| Pakedge Device And Software Inc. | Customer Relationships | |||
| Identifiable Intangible Assets | |||
| Acquired intangible assets | $ 8,800 | ||
| Weighted average amortization period | 8 years | ||
| Pakedge Device And Software Inc. | Trademark/trade name | |||
| Identifiable Intangible Assets | |||
| Acquired intangible assets | $ 4,400 | ||
| Weighted average amortization period | 12 years | ||
| Pakedge Device And Software Inc. | Developed technology | |||
| Identifiable Intangible Assets | |||
| Acquired intangible assets | $ 9,700 | ||
| Weighted average amortization period | 5 years | ||
| Pakedge Device And Software Inc. | Non-competition agreements | |||
| Identifiable Intangible Assets | |||
| Acquired intangible assets | $ 300 | ||
| Weighted average amortization period | 2 years | ||
| Pakedge Device And Software Inc. | Cost of revenue and general and administrative expense | |||
| Other | |||
| Acquisition related costs | 2,100 | ||
| Pakedge Device And Software Inc. | Cost of revenue | |||
| Other | |||
| Cost of step-up in inventory | $ 1,500 |
Acquisitions (Pro Forma Informa
| Acquisitions (Pro Forma Information) (Details) - Pakedge Device And Software Inc. - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
| Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
| Intangible assets | ||||
| Revenue | $ 53,215 | $ 49,357 | $ 97,434 | $ 85,553 |
| Income (loss) from operations | 803 | 1,253 | (4,279) | (3,983) |
| Net income (loss) | $ 675 | $ 1,543 | $ (4,300) | $ (3,220) |
| Net income (loss) per common share: | ||||
| Basic (in dollars per share) | $ 0.03 | $ 0.07 | $ (0.18) | $ (0.13) |
| Diluted (in dollars per share) | $ 0.03 | $ 0.07 | $ (0.18) | $ (0.13) |
Acquisitions (Nexus Technologie
| Acquisitions (Nexus Technologies Pty Ltd) (Details) - Nexus $ in Millions | Jan. 30, 2015USD ($) |
| Purchase Agreement | |
| Total consideration transferred | $ 8.5 |
| Escrow deposit | 0.8 |
| Cost of revenue and general and administrative expense | |
| Purchase Agreement | |
| Acquisition related costs | 0.9 |
| Cost of revenue | |
| Purchase Agreement | |
| Cost of step-up in inventory | $ 0.3 |
Goodwill and Intangible Asset39
| Goodwill and Intangible Assets (Goodwill) (Details) $ in Thousands | 6 Months Ended |
| Jun. 30, 2016USD ($) | |
| Business Combination - Goodwill | |
| Balance at beginning of the period | $ 2,760 |
| Current period acquisitions | 13,814 |
| Foreign currency translation adjustment | 41 |
| Balance at end of the period | $ 16,615 |
Goodwill and Intangible Asset40
| Goodwill and Intangible Assets (Intangible assets) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
| Jun. 30, 2016 | Dec. 31, 2015 | |
| Intangible assets | ||
| Gross Carrying Amount | $ 30,581 | $ 7,302 |
| Accumulated Amortization | (4,948) | (2,755) |
| Intangible assets, net | $ 25,633 | 4,547 |
| Weighted average amortization period | 6 years 9 months 18 days | |
| Developed technology | ||
| Intangible assets | ||
| Gross Carrying Amount | $ 16,668 | 6,907 |
| Accumulated Amortization | (4,123) | (2,643) |
| Intangible assets, net | $ 12,545 | 4,264 |
| Weighted average amortization period | 4 years 10 months 24 days | |
| Customer Relationships | ||
| Intangible assets | ||
| Gross Carrying Amount | $ 9,208 | 342 |
| Accumulated Amortization | (571) | (66) |
| Intangible assets, net | $ 8,637 | 276 |
| Weighted average amortization period | 7 years 10 months 24 days | |
| Trademark/trade name | ||
| Intangible assets | ||
| Gross Carrying Amount | $ 4,410 | |
| Accumulated Amortization | (153) | |
| Intangible assets, net | $ 4,257 | |
| Weighted average amortization period | 12 years | |
| Non-competition agreements | ||
| Intangible assets | ||
| Gross Carrying Amount | $ 295 | 53 |
| Accumulated Amortization | (101) | (46) |
| Intangible assets, net | $ 194 | $ 7 |
| Weighted average amortization period | 2 years |
Goodwill and Intangible Asset41
| Goodwill and Intangible Assets (Amortization expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
| Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
| Amortization expense | ||||
| Amortization of intangible assets | $ 1,238 | $ 403 | $ 2,172 | $ 728 |
Goodwill and Intangible Asset42
| Goodwill and Intangible Assets (Amortization) (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
| Amortization of finite-lived intangible assets | ||
| 2,016 | $ 2,416 | |
| 2,017 | 4,712 | |
| 2,018 | 4,508 | |
| 2,019 | 4,348 | |
| 2,020 | 3,484 | |
| Thereafter | 6,165 | |
| Intangible assets, net | $ 25,633 | $ 4,547 |
Long-Term Obligations (Details)
| Long-Term Obligations (Details) $ in Millions | 6 Months Ended |
| Jun. 30, 2016USD ($)item | |
| Term borrowings | |
| Long-Term Obligations | |
| Number of equal monthly payments of principal plus interest | item | 42 |
| Term borrowings | Prime Rate | |
| Long-Term Obligations | |
| Variable interest rate basis | Prime Rate |
| Basis spread on variable rate (as a percent) | 0.50% |
| Interest rate at the end of period (as a percent) | 4.00% |
| Revolving credit facility | |
| Long-Term Obligations | |
| Outstanding borrowings | $ 5 |
| Revolving credit facility | Prime Rate | |
| Long-Term Obligations | |
| Variable interest rate basis | Prime Rate |
| Interest rate at the end of period (as a percent) | 3.50% |
| Revolving credit facility | LIBOR | |
| Long-Term Obligations | |
| Variable interest rate basis | LIBOR |
| 2016 Loan Agreement | Revolving credit facility | |
| Long-Term Obligations | |
| Maximum borrowing capacity | $ 30 |
| Minimum | Revolving credit facility | Prime Rate | |
| Long-Term Obligations | |
| Basis spread on variable rate (as a percent) | 0.00% |
| Minimum | Revolving credit facility | LIBOR | |
| Long-Term Obligations | |
| Basis spread on variable rate (as a percent) | 2.50% |
| Maximum | Revolving credit facility | Prime Rate | |
| Long-Term Obligations | |
| Basis spread on variable rate (as a percent) | 0.25% |
| Maximum | Revolving credit facility | LIBOR | |
| Long-Term Obligations | |
| Basis spread on variable rate (as a percent) | 2.75% |
Income Taxes (Details)
| Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
| Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
| Income tax expense (benefit) | $ 169 | $ 178 | $ (9,901) | $ (352) | |
| Effective income tax rate (as a percent) | 24.00% | 8.00% | 362.00% | 14.00% | |
| U.S. federal statutory rate (as a percent) | 34.00% | 34.00% | |||
| State | |||||
| Net operating losses | $ 75,900 | ||||
| Tax credit carryforwards | 2,800 | ||||
| Federal | |||||
| Net operating losses | 78,100 | ||||
| Tax credit carryforwards | $ 6,700 | ||||
Equity Compensation (Activity)
| Equity Compensation (Activity) (Details) - Stock options - $ / shares | 6 Months Ended | |
| Jun. 30, 2016 | Jun. 11, 2013 | |
| Shares Subject to Options Outstanding | ||
| Balance at the beginning of the period (in shares) | 4,572,672 | |
| Granted (in shares) | 50,000 | |
| Exercised (in shares) | (163,071) | |
| Expired (in shares) | (49,001) | |
| Forfeited (in shares) | (42,701) | |
| Balance at the end of the period (in shares) | 4,367,899 | |
| Exercisable options (in shares) | 3,317,629 | |
| Vested and expected to vest at the end of the period (in shares) | 3,316,345 | |
| Weighted Average Grant Date Fair Value | ||
| Granted (in dollars per share) | $ 4.63 | |
| Weighted Average Exercise Price | ||
| Balance at the beginning of the period (in dollars per share) | 10.72 | |
| Granted (in dollars per share) | 8.16 | |
| Exercised (in dollars per share) | 4.36 | |
| Expired (in dollars per share) | 13.38 | |
| Forfeited (in dollars per share) | 16.02 | |
| Balance at the end of the period (in dollars per share) | 10.85 | |
| Exercisable options at the end of the period (in dollars per share) | 9.54 | |
| Vested and expected to vest (in dollars per share) | $ 10.79 | |
| Weighted-Average Remaining Contractual Life | ||
| Exercisable options | 5 years 2 months 12 days | |
| Vested and expected to vest | 5 years 9 months 18 days | |
| 2013 Plan | ||
| Stock options | ||
| Potential 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 | 0 |
Equity Compensation (Range) (De
| Equity Compensation (Range) (Details) | 6 Months Ended |
| Jun. 30, 2016$ / sharesshares | |
| Options Outstanding | |
| Number of Underlying Shares | shares | 4,367,899 |
| Options Exercisable | |
| Number of Underlying Shares | shares | 3,317,629 |
| 2.34-3.59 | |
| Equity compensation | |
| Range of Exercise Price, low end of range (in dollars per share) | $ 2.34 |
| Range of Exercise Price, high end of range (in dollars per share) | 3.59 |
| Options Outstanding | |
| Weighted Average Exercise Price (in dollars per share) | $ 2.78 |
| Number of Underlying Shares | shares | 206,448 |
| Weighted-Average Remaining Contractual Life | 7 months 6 days |
| Options Exercisable | |
| Number of Underlying Shares | shares | 206,448 |
| Weighted-Average Remaining Contractual Life | 7 months 6 days |
| 4.78-7.28 | |
| Equity compensation | |
| Range of Exercise Price, low end of range (in dollars per share) | $ 4.78 |
| Range of Exercise Price, high end of range (in dollars per share) | 7.28 |
| Options Outstanding | |
| Weighted Average Exercise Price (in dollars per share) | $ 5.90 |
| Number of Underlying Shares | shares | 1,499,698 |
| Weighted-Average Remaining Contractual Life | 4 years 3 months 18 days |
| Options Exercisable | |
| Number of Underlying Shares | shares | 1,477,314 |
| Weighted-Average Remaining Contractual Life | 4 years 2 months 12 days |
| 7.49-11.28 | |
| Equity compensation | |
| Range of Exercise Price, low end of range (in dollars per share) | $ 7.49 |
| Range of Exercise Price, high end of range (in dollars per share) | 11.28 |
| Options Outstanding | |
| Weighted Average Exercise Price (in dollars per share) | $ 9.69 |
| Number of Underlying Shares | shares | 1,109,401 |
| Weighted-Average Remaining Contractual Life | 6 years 1 month 6 days |
| Options Exercisable | |
| Number of Underlying Shares | shares | 836,360 |
| Weighted-Average Remaining Contractual Life | 5 years 6 months |
| 11.72-17.66 | |
| Equity compensation | |
| Range of Exercise Price, low end of range (in dollars per share) | $ 11.72 |
| Range of Exercise Price, high end of range (in dollars per share) | 17.66 |
| Options Outstanding | |
| Weighted Average Exercise Price (in dollars per share) | $ 14.75 |
| Number of Underlying Shares | shares | 867,106 |
| Weighted-Average Remaining Contractual Life | 8 years 4 months 24 days |
| Options Exercisable | |
| Number of Underlying Shares | shares | 382,475 |
| Weighted-Average Remaining Contractual Life | 8 years 3 months 18 days |
| 19.56-22.92 | |
| Equity compensation | |
| Range of Exercise Price, low end of range (in dollars per share) | $ 19.56 |
| Range of Exercise Price, high end of range (in dollars per share) | 22.92 |
| Options Outstanding | |
| Weighted Average Exercise Price (in dollars per share) | $ 21.04 |
| Number of Underlying Shares | shares | 685,246 |
| Weighted-Average Remaining Contractual Life | 7 years 4 months 24 days |
| Options Exercisable | |
| Number of Underlying Shares | shares | 415,032 |
| Weighted-Average Remaining Contractual Life | 7 years 2 months 12 days |
Equity Compensation (Fair Value
| Equity Compensation (Fair Value) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
| Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
| Stock options | ||||
| Total fair value for the awards vested during the period | $ 1,400 | $ 2,900 | ||
| Stock options | ||||
| Intrinsic-value | ||||
| Options Exercised | 585 | $ 1,039 | ||
| Options Exercisable | 4,553 | $ 6,991 | 4,553 | 6,991 |
| Options Vested and Expected to Vest | $ 4,574 | $ 7,266 | $ 4,574 | $ 7,266 |
| Assumptions used to estimate fair value of stock options | ||||
| Expected volatility, minimum (as a percent) | 53.00% | |||
| Expected volatility, maximum (as a percent) | 55.00% | |||
| Expected volatility (as a percent) | 62.00% | 53.00% | 62.00% | |
| Expected dividends (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% |
| Expected term | 6 years 1 month 6 days | 6 years 1 month 6 days | ||
| Risk-free rate (as a percent) | 1.10% | 1.10% | ||
| Risk-free rate, minimum (as a percent) | 1.50% | 1.30% | ||
| Risk-free rate, maximum (as a percent) | 1.80% | 1.80% | ||
| Stock options | Minimum | ||||
| Assumptions used to estimate fair value of stock options | ||||
| Expected term | 5 years 3 months 18 days | 5 years 3 months 18 days | ||
| Stock options | Maximum | ||||
| Assumptions used to estimate fair value of stock options | ||||
| Expected term | 6 years 1 month 6 days | 6 years 1 month 6 days | ||
Equity Compensation (Restricted
| Equity Compensation (Restricted Stock Units) (Details) - Restricted stock units | 6 Months Ended |
| Jun. 30, 2016$ / sharesshares | |
| Restricted stock units | |
| Non-vested balance at beginning of period (in shares) | 425,000 |
| Awarded | 1,139,846 |
| Forfeited | (50,000) |
| Non-vested balance at end of period (in shares) | 1,514,846 |
| Vested | 0 |
| Weighted Average Grant Date Fair Value | |
| Non-vested balance at beginning of period (in dollars per share) | $ / shares | $ 8.18 |
| Awarded (in dollars per share) | $ / shares | 7.37 |
| Forfeited | $ / shares | 7.32 |
| Non-vested balance at end of period (in dollars per share) | $ / shares | $ 7.60 |
Equity Compensation (Expense) (
| Equity Compensation (Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
| Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
| Total stock-based compensation expense | ||||
| Total stock-based compensation expense | $ 2,127 | $ 1,679 | $ 3,950 | $ 3,528 |
| Cost of revenue | ||||
| Total stock-based compensation expense | ||||
| Total stock-based compensation expense | 47 | 39 | 90 | 86 |
| Research and development | ||||
| Total stock-based compensation expense | ||||
| Total stock-based compensation expense | 890 | 667 | 1,704 | 1,439 |
| Sales and marketing | ||||
| Total stock-based compensation expense | ||||
| Total stock-based compensation expense | 600 | 387 | 1,109 | 841 |
| General and administrative | ||||
| Total stock-based compensation expense | ||||
| Total stock-based compensation expense | 590 | $ 586 | 1,047 | $ 1,162 |
| Stock options | ||||
| Total stock-based compensation expense | ||||
| Total unrecognized compensation cost related to non-vested stock option awards | 8,900 | $ 8,900 | ||
| Weighted-average period over which unrecognized compensation cost will be recognized | 2 years 1 month 6 days | |||
| Restricted stock units | ||||
| Total stock-based compensation expense | ||||
| Total unrecognized compensation cost related to non-vested restricted stock units | $ 9,700 | $ 9,700 | ||
| Weighted-average period over which unrecognized compensation cost will be recognized | 2 years 7 months 6 days | |||
Share Repurchases (Details)
| Share Repurchases (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
| Jun. 30, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | May 31, 2015 | |
| Common stock authorized for repurchase | $ 7,700 | $ 7,700 | ||
| Number of common stock repurchased (in shares) | 193,831 | 427,646 | ||
| Value of common stock repurchased | $ 1,500 | $ 3,242 | $ 2,148 | |
| Maximum | ||||
| Common stock authorized for repurchase | $ 20,000 | |||
Related Party Transactions (Det
| Related Party Transactions (Details) | 3 Months Ended | 6 Months Ended |
| Jun. 30, 2016USD ($) | Jun. 30, 2016USD ($) | |
| Officer | ||
| Related Party Transactions | ||
| Revenue from product sales | $ 34,000 | $ 63,000 |
| Accounts payable due to related party | 19,000 | 19,000 |
| Director | ||
| Related Party Transactions | ||
| Royalty expense | 100,000 | 200,000 |
| Accounts payable due to related party | $ 100,000 | $ 100,000 |
Commitments and Contingencies52
| Commitments and Contingencies (Details) | 3 Months Ended | 6 Months Ended | ||
| Jun. 30, 2016USD ($)claim | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)claim | Jun. 30, 2015USD ($) | |
| Operating Leases | ||||
| Rental expense | $ 600,000 | $ 500,000 | $ 1,200,000 | $ 900,000 |
| Future minimum rental payments | ||||
| 2,016 | 1,520,000 | 1,520,000 | ||
| 2,017 | 3,121,000 | 3,121,000 | ||
| 2,018 | 2,086,000 | 2,086,000 | ||
| 2,019 | 594,000 | 594,000 | ||
| 2,020 | 191,000 | 191,000 | ||
| Thereafter | 32,000 | 32,000 | ||
| Total | 7,544,000 | 7,544,000 | ||
| Purchase Commitments | ||||
| Non-cancellable purchase commitments | 33,500,000 | 33,500,000 | ||
| Indemnification agreements | ||||
| Indemnification | ||||
| Accrued liability | $ 0 | $ 0 | ||
| Number of outstanding claims | claim | 0 | 0 | ||
| Minimum | ||||
| Operating Leases | ||||
| Extension term of leases | 3 years | |||
| Maximum | ||||
| Operating Leases | ||||
| Extension term of leases | 5 years | |||