Control4 (CTRL) 10-Q 4 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 28, 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	Sep. 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		23,639,120
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 25,671	$ 29,530
Restricted cash	259	296
Short-term investments	21,293	37,761
Accounts receivable, net	24,667	21,322
Inventories	31,714	19,855
Prepaid expenses and other current assets	3,166	3,842
Total current assets	106,770	112,606
Property and equipment, net	6,355	6,584
Long-term investments	5,008	13,716
Intangible assets, net	24,498	4,547
Goodwill	17,016	2,760
Other assets	2,110	1,650
Total assets	161,757	141,863
Current liabilities:
Accounts payable	20,028	17,588
Accrued liabilities	7,407	5,880
Deferred revenue	1,378	1,099
Current portion of notes payable	298	727
Total current liabilities	29,111	25,294
Revolving credit line	1,500
Notes payable	34	186
Other long-term liabilities	805	938
Total liabilities	31,450	26,418
Commitments and contingencies (Note 11)
Stockholders' equity:
Common stock, $0.0001 par value; 500,000,000 shares authorized; 25,221,246 and 24,590,768 shares issued; 23,639,120 and 23,436,288 shares outstanding at September 30, 2016 and December 31, 2015, respectively	3	2
Treasury stock, at cost; 1,582,126 and 1,154,480 shares at September 30, 2016 and December 31, 2015, respectively	(12,262)	(9,020)
Additional paid-in capital	229,688	220,782
Accumulated deficit	(86,640)	(95,580)
Accumulated other comprehensive loss	(482)	(739)
Total stockholders' equity	130,307	115,445
Total liabilities and stockholders' equity	$ 161,757	$ 141,863

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 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	25,221,246	24,590,768
Common stock, shares outstanding	23,639,120	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		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Revenue	$ 55,185	$ 43,558	$ 151,435	$ 120,282
Cost of revenue	27,566	21,748	77,303	60,532
Gross margin	27,619	21,810	74,132	59,750
Operating expenses:
Research and development	9,190	8,191	26,708	24,308
Sales and marketing	10,852	8,489	32,101	23,668
General and administrative	5,407	4,220	15,279	13,129
Litigation settlement			400
Total operating expenses	25,449	20,900	74,488	61,105
Income (loss) from operations	2,170	910	(356)	(1,355)
Other income (expense), net:
Interest, net	12	79	17	142
Other income (expense), net:	(89)	(112)	(306)	(452)
Total other income (expense), net	(77)	(33)	(289)	(310)
Income (loss) before income taxes	2,093	877	(645)	(1,665)
Income tax expense (benefit)	316	(314)	(9,585)	(666)
Net income (loss)	$ 1,777	$ 1,191	$ 8,940	$ (999)
Net income (loss) per common share:
Basic (in dollars per share)	$ 0.08	$ 0.05	$ 0.38	$ (0.04)
Diluted (in dollars per share)	$ 0.07	$ 0.05	$ 0.37	$ (0.04)
Weighted-average number of shares:
Basic (in shares)	23,424	24,129	23,307	24,260
Diluted (in shares)	24,530	24,856	24,149	24,260

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Net income (loss)	$ 1,777	$ 1,191	$ 8,940	$ (999)
Other comprehensive income (loss):
Foreign currency translation adjustment, net of tax	172	(547)	197	(793)
Net unrealized gains (losses) on available-for-sale investments, net of tax	(10)	37	60	65
Total other comprehensive income (loss)	162	(510)	257	(728)
Comprehensive income (loss)	$ 1,939	$ 681	$ 9,197	$ (1,727)

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Operating activities
Net income (loss)	$ 8,940	$ (999)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation expense	2,402	2,146
Amortization of intangible assets	3,393	1,113
Loss on disposal of fixed assets	13
Provision for doubtful accounts	313	281
Investment premium amortization	293
Stock-based compensation	5,933	5,336
Tax benefit from business acquistion	(9,402)
Changes in assets and liabilities:
Accounts receivable	(3,469)	(2,097)
Inventories	(6,776)	(1,779)
Prepaid expenses and other current assets	1,740	(566)
Other assets	(341)	(247)
Accounts payable	2,333	342
Accrued liabilities	421	(622)
Deferred revenue	291	347
Other long-term liabilities	(451)	(298)
Net cash provided by operating activities	5,633	2,957
Investing activities
Purchases of available-for-sale investments	(10,147)	(49,095)
Proceeds from sales of available-for-sale investments	900	2,018
Proceeds from maturities of available-for-sale investments	33,858	49,535
Purchases of property and equipment	(1,780)	(2,917)
Business acquisitions, net of cash acquired	(32,891)	(8,380)
Net cash used in investing activities	(10,060)	(8,839)
Financing activities
Proceeds from exercise of options for common stock	3,021	1,127
Repurchase of common stock	(3,242)	(4,942)
Repayment of notes payable	(581)	(722)
Proceeds from revolving credit facility	5,000
Repayment of revolving credit facility	(3,500)
Payment of debt issuance costs	(89)
Net cash provided by (used in) financing activities	609	(4,537)
Effect of exchange rate changes on cash and cash equivalents	(41)	(31)
Net decrease in cash and cash equivalents	(3,859)	(10,450)
Cash and cash equivalents at beginning of period	29,530	29,187
Cash and cash equivalents at end of period	25,671	18,737
Supplemental disclosure of cash flow information
Cash paid for interest	164	85
Cash paid for taxes	858	431
Supplemental schedule of non-cash investing and financing activities
Net unrealized losses on available-for-sale investments	$ 60	$ 65

Description of Business and Sum

Description of Business and Summary of Significant Accounting Policies	9 Months Ended
	Sep. 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 and business 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 nine months ended September 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 U.S. 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 September 30, 2016 and December 31, 2015. No dealer or distributor accounted for more than 10% of total revenue for the three and nine months ended September 30, 2016 and 2015. The Company relies on a limited number of suppliers for its contract manufacturing. A significant disruption in the operations of certain 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 nine months ended September 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 Nine Months Ended September 30, September 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 for all Control4 branded products and three years for all Pakedge branded products. 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 cost of the products sold, 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 for the nine months ended September 30, 2016 (in thousands): Warranty Liability Balance at December 31, 2015 $ Warranty costs accrued Warranty claims Balance at September 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 Nine Months Ended September 30, September 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 Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Options to purchase common stock Restricted stock units — — Total Recent Accounting Pronouncements In August 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-15, “ Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments ,” which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. This standard is effective for fiscal periods beginning after December 15, 2017, including interim periods within those years. Early adoption is permitted and the guidance must be applied using a retrospective transition method. The Company is currently evaluating the impact of adopting this guidance. 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. Any adjustments resulting from the adoption of this standard will be reflected as of the beginning of the fiscal year of adoption. In accordance with the provisions of this standard, the Company will start recognizing excess tax benefits in our provision for income taxes rather than paid-in capital beginning January 1, 2017. The Company doesn’t anticipate that additional amendments to the accounting for income taxes and minimum statutory withholding requirements will have a material impact to retained earnings as of January 1, 2017, where the cumulative effect of these amendments are required to be recorded. The Company is still evaluating the accounting policy election to estimate forfeitures, as currently required, or to recognize forfeitures as they occur. If the Company elects to change this accounting policy and recognize forfeitures as they occur, there will be a cumulative effect adjustment recorded to opening retained earnings to reflect the impact of this change. In addition, the Company is still evaluating if the presentation for cash flows related to excess tax benefits will be adopted prospectively or retrospectively. 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. 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 early adopted this guidance this quarter, and the adoption of this guidance did not have an impact on the Company’s results of operations, financial position, or cash flows. 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 which would be effective for annual reporting periods beginning after 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	9 Months Ended
	Sep. 30, 2016
Balance Sheet Components
Balance Sheet Components	2. Balance Sheet Components Inventories consisted of the following (in thousands): September 30, December 31, 2016 2015 Finished goods $ $ Component parts Work-in-process $ $ Property and equipment, net consisted of the following (in thousands): September 30, December 31, 2016 2015 Computer equipment and software $ $ Manufacturing tooling and test equipment Lab and warehouse equipment Leasehold improvements Furniture and fixtures Other Less: accumulated depreciation $ $ Other assets consisted of the following (in thousands): September 30, December 31, 2016 2015 Deposits $ $ Prepaid licensing Deferred tax asset — Other $ $ Accrued liabilities consisted of the following (in thousands): September 30, December 31, 2016 2015 Sales returns and warranty accruals $ $ Compensation accruals Other accrued liabilities $ $

Financial Instruments

Financial Instruments	9 Months Ended
	Sep. 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 nine months ended September 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 September 30, 2016 and December 31, 2015 (in thousands): September 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 September 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 nine months ended September 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 Level 2 of the 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 September 30, 2016. However, the notional principal of foreign exchange contracts for 2016 was $9.9 million as of September 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 Nine Months Ended September 30, September 30, Income Statement Location 2016 2015 2016 2015 Foreign exchange contracts Other income (expense), net $ $ $ $

Acquisitions

Acquisitions	9 Months Ended
	Sep. 30, 2016
Acquisitions
Acquisitions	4. Acquisitions Australia Expansion On April 1, 2016, the Company began working directly with home automation integrators in Australia to better serve and support customers 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 definitive agreement to acquire Pakedge Device and Software Inc. (“Pakedge”) through the purchase of all of the outstanding shares of common stock of Pakedge for a price of $32.0 million (the “Purchase Agreement”). 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 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, or sales return liability, 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, contingent liability, and tax liabilities, based on facts that existed at the acquisition date, the Company recorded measurement period adjustments to inventory, accrued liabilities, goodwill and deferred tax liability. The net change to goodwill was an increase of $0.4 million . Had these adjustments been recorded as of the acquisition date, the Company’s deferred tax benefit would have decreased $0.4 million for the three months ended March 31, 2016. In addition, the Company’s deferred tax expense for the three months ended June 30, 2016 and September 30, 2016 would have decreased $0.1 million and $0.3 million, respectively. 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 $13.9 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 September 30, 2016, the Company recorded revenue and pre-tax net income associated with Pakedge of approximately $16.1 million and $2.3 million, respectively. Additionally, the Company incurred approximately $3.2 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 nine months ended September 30, 2016 related solely to the Pakedge acquisition. Of this amount, approximately $2.0 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 nine months ended September 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, estimated tax benefits and non-recurring transaction costs. 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 Nine Months Ended September 30, September 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”), acquired 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, under which Control4 Australia purchased all of the issued and outstanding shares of Nexus from its shareholders. 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 $1.2 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 nine months ended September 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	9 Months Ended
	Sep. 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 September 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 September 30, 2016 and December 31, 2015 (in thousands): September 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 Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Cost of revenue $ $ $ $ Research and development Sales and marketing - - Total amortization of intangible assets $ $ $ $ Amortization of finite lived intangible assets as of September 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	9 Months Ended
	Sep. 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, at Control4’s option, 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 September 30, 2016, the interest rate on the revolving credit facility equaled the prime rate of 3.50%, and Control4 had outstanding borrowings of $1.5 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 September 30, 2016. Control4 had outstanding term borrowings of $0.3 million as of September 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 September 30, 2016.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 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 $0.3 million for the three months ended September 30, 2016 compared to an income tax benefit of $0.3 million for the three months ended September 30, 2015, or approximately 15% and 36% of income (loss) before income taxes, respectively. Income tax benefit was $9.6 million and $0.7 million for the nine months ended September 30, 2016 and 2015, respectively, or approximately 1487% and 40% of income (loss) before income taxes, respectively. The effective tax rate for the three and nine months ended September 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 $76.6 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. Utilization of the NOL carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended (the “IRC”), and similar state provisions. The Company recently performed a detailed analysis under Section 382 of the IRC to determine whether any ownership changes had occurred. The effect of an ownership change could limit the use of NOL carryforwards attributable to periods before the change. The detailed analysis confirmed that Section 382 ownership changes occurred from July 29, 2003, through March 27, 2007, and on July 31, 2014, but the Company concluded that the ownership changes should not result in a limitation on the expected utilization of the NOL carryforwards. 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 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 September 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	9 Months Ended
	Sep. 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, restricted stock units and restricted stock awards. 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 after 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. The Company and its Board of Directors decided to forego increasing the number of reserved shares on January 1, 2016, and will revisit this option for an annual increase next year. A summary of stock option activity for the nine months ended September 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 September 30, 2016 Exercisable options at September 30, 2016 Vested and expected to vest at September 30, 2016 The following table summarizes information about stock options outstanding and exercisable at September 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 nine months ended September 30, 2016, the total fair value was $1.3 million and $4.2 million, respectively. The following table summarizes the aggregate intrinsic-value of options exercised, exercisable and vested and expected to vest (in thousands): For the Nine Months Ended and as of September 30, 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 Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Expected volatility — 53 % 62 % 53 - 55 % Expected dividends — 0 % 0 % 0 % Expected terms (in years) — 5.3 - 6.1 6.1 5.3 - 6.1 Risk-free rate — 1.5 - 1.8 % 1.1 % 1.3 - 1.8 % No stock options were granted during the three months ended September 30, 2016. Restricted stock units A summary of restricted stock unit activity for the nine months ended September 30, 2016 is presented below: Number of Weighted Average Shares Grant Date Fair Value Non-vested balance at December 31, 2015 $ Awarded Vested Forfeited Non-vested balance at September 30, 2016 During the nine months ended September 30, 2016, 17,670 restricted stock units vested of which 6,949 shares were withheld for tax purposes resulting in the issuance of 10,721 shares of common stock. 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 Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Cost of revenue $ $ $ $ Research and development Sales and marketing General and administrative Total stock-based compensation expense $ $ $ $ At September 30, 2016, there was $7.8 million of total unrecognized compensation cost related to non-vested stock option awards that will be recognized over a weighted-average period of 1.9 years. At September 30, 2016, there was $8.5 million of total unrecognized compensation cost related to non-vested restricted stock units that will be recognized over a weighted-average period of 2.4 years.

Share Repurchases

Share Repurchases	9 Months Ended
	Sep. 30, 2016
Share Repurchases
Share Repurchases	9. Share Repurchases In May 2015, the Company’s Board of Directors authorized the repurchase of up to $20.0 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 months ended September 30, 2016, the Company did not repurchase any common stock. During the nine months ended September 30, 2016, the Company repurchased 427,646 shares for $3.2 million. These share repurchases are classified as treasury stock in the accompanying Condensed Consolidated Balance Sheets as a reduction of Stockholders’ Equity. As of September 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	9 Months Ended
	Sep. 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 nine months ended September 30, 2016, Control4 recognized revenue from sales of this product line of $43,000 and $106,000, 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 September 30, 2016, the Company had accounts payable due to this related party of $28,000. 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 months ended September 30, 2016, the Company didn’t incur any royalty expenses due to this related party. For the nine months ended September 30, 2016, the Company had incurred royalty expenses of $0.2 million. As of September 30, 2016, the Company was current on all outstanding accounts payable due to this related party.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 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 $0.7 million and $0.5 million for the three months ended September 30, 2016 and 2015, respectively, and $1.9 million and $1.4 million for the nine months ended September 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 September 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 March 2017 totaling approximately $28.7 million at September 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 has no liabilities recorded for these agreements as of September 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)	9 Months Ended
	Sep. 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 nine months ended September 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 U.S. 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 September 30, 2016 and December 31, 2015. No dealer or distributor accounted for more than 10% of total revenue for the three and nine months ended September 30, 2016 and 2015. The Company relies on a limited number of suppliers for its contract manufacturing. A significant disruption in the operations of certain 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 nine months ended September 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 Nine Months Ended September 30, September 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 for all Control4 branded products and three years for all Pakedge branded products. 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 cost of the products sold, 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 for the nine months ended September 30, 2016 (in thousands): Warranty Liability Balance at December 31, 2015 $ Warranty costs accrued Warranty claims Balance at September 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 Nine Months Ended September 30, September 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 Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Options to purchase common stock Restricted stock units — — Total
Recent Accounting Pronouncements	Recent Accounting Pronouncements In August 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-15, “ Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments ,” which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. This standard is effective for fiscal periods beginning after December 15, 2017, including interim periods within those years. Early adoption is permitted and the guidance must be applied using a retrospective transition method. The Company is currently evaluating the impact of adopting this guidance. 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. Any adjustments resulting from the adoption of this standard will be reflected as of the beginning of the fiscal year of adoption. In accordance with the provisions of this standard, the Company will start recognizing excess tax benefits in our provision for income taxes rather than paid-in capital beginning January 1, 2017. The Company doesn’t anticipate that additional amendments to the accounting for income taxes and minimum statutory withholding requirements will have a material impact to retained earnings as of January 1, 2017, where the cumulative effect of these amendments are required to be recorded. The Company is still evaluating the accounting policy election to estimate forfeitures, as currently required, or to recognize forfeitures as they occur. If the Company elects to change this accounting policy and recognize forfeitures as they occur, there will be a cumulative effect adjustment recorded to opening retained earnings to reflect the impact of this change. In addition, the Company is still evaluating if the presentation for cash flows related to excess tax benefits will be adopted prospectively or retrospectively. 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. 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 early adopted this guidance this quarter, and the adoption of this guidance did not have an impact on the Company’s results of operations, financial position, or cash flows. 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 which would be effective for annual reporting periods beginning after 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)	9 Months Ended
	Sep. 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 Nine Months Ended September 30, September 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 for the nine months ended September 30, 2016 (in thousands): Warranty Liability Balance at December 31, 2015 $ Warranty costs accrued Warranty claims Balance at September 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 Nine Months Ended September 30, September 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 Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Options to purchase common stock Restricted stock units — — Total

Balance Sheet Components (Table

Balance Sheet Components (Tables)	9 Months Ended
	Sep. 30, 2016
Balance Sheet Components
Schedule of inventories	Inventories consisted of the following (in thousands): September 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): September 30, December 31, 2016 2015 Computer equipment and software $ $ Manufacturing tooling and test equipment Lab and warehouse equipment Leasehold improvements Furniture and fixtures Other Less: accumulated depreciation $ $
Schedule of other assets	Other assets consisted of the following (in thousands): September 30, December 31, 2016 2015 Deposits $ $ Prepaid licensing Deferred tax asset — Other $ $
Schedule of accrued liabilities	Accrued liabilities consisted of the following (in thousands): September 30, December 31, 2016 2015 Sales returns and warranty accruals $ $ Compensation accruals Other accrued liabilities $ $

Financial Instruments (Tables)

Financial Instruments (Tables)	9 Months Ended
	Sep. 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 September 30, 2016 and December 31, 2015 (in thousands): September 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 Nine Months Ended September 30, September 30, Income Statement Location 2016 2015 2016 2015 Foreign exchange contracts Other income (expense), net $ $ $ $

Acquisition (Tables)

Acquisition (Tables)	9 Months Ended
	Sep. 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 Nine Months Ended September 30, September 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)	9 Months Ended
	Sep. 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 September 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 September 30, 2016 and December 31, 2015 (in thousands): September 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 Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Cost of revenue $ $ $ $ Research and development Sales and marketing - - Total amortization of intangible assets $ $ $ $
Schedule of amortization of finite-lived intangible assets	Amortization of finite lived intangible assets as of September 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)	9 Months Ended
	Sep. 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 September 30, 2016 Exercisable options at September 30, 2016 Vested and expected to vest at September 30, 2016
Summary of stock options outstanding and exercisable	The following table summarizes information about stock options outstanding and exercisable at September 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 Nine Months Ended and as of September 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 Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Expected volatility — 53 % 62 % 53 - 55 % Expected dividends — 0 % 0 % 0 % Expected terms (in years) — 5.3 - 6.1 6.1 5.3 - 6.1 Risk-free rate — 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 Vested Forfeited Non-vested balance at September 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 Nine Months Ended September 30, September 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)	9 Months Ended
	Sep. 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 September 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		9 Months Ended
	Sep. 30, 2016USD ($)	Sep. 30, 2015USD ($)	Sep. 30, 2016USD ($)item	Sep. 30, 2015USD ($)
Revenue from U.S., Canadian and all other international dealers and distributors combined
Total revenue	$ 55,185	$ 43,558	$ 151,435	$ 120,282
International revenue (excluding Canada) as a percent of total revenue	20.00%	24.00%	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	$ 39,670	$ 29,300	$ 108,506	$ 80,571
Canada
Revenue from U.S., Canadian and all other international dealers and distributors combined
Total revenue	4,246	3,702	11,355	10,910
All other international sources
Revenue from U.S., Canadian and all other international dealers and distributors combined
Total revenue	$ 11,269	$ 10,556	$ 31,574	$ 28,801

Description of Business and S27

Description of Business and Summary of Significant Accounting Policies (Warranty) (Details) $ in Thousands	9 Months Ended
	Sep. 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	1,145
Warranty claims	(863)
Balance at end of period	$ 1,697

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		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Numerator:
Net income (loss)	$ 1,777	$ 1,191	$ 8,940	$ (999)
Denominator:
Weighted average common stock outstanding for basic net income (loss) per common share (in shares)	23,424	24,129	23,307	24,260
Effect of dilutive securities—stock options and restricted stock units (in shares)	1,106	727	842
Weighted average common shares and dilutive securities outstanding (in shares)	24,530	24,856	24,149	24,260

Description of Business and S29

Description of Business and Summary of Significant Accounting Policies (AntiDilutive) (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Anti-dilutive weighted-average common stock equivalents excluded from the calculation of diluted net income per share
Total (in shares)	2,221	2,687	2,513	4,883
Options | Common Stock
Anti-dilutive weighted-average common stock equivalents excluded from the calculation of diluted net income per share
Total (in shares)	2,221	2,687	2,490	4,796
Restricted stock units
Anti-dilutive weighted-average common stock equivalents excluded from the calculation of diluted net income per share
Total (in shares)			23	87

Balance Sheet Components (Inven

Balance Sheet Components (Inventories, Property and Equipment) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Inventories
Finished goods	$ 28,963	$ 16,982
Component parts	2,443	2,575
Work-in-process	308	298
Total inventories	31,714	19,855
Property and equipment, net
Property and equipment, gross	18,247	19,024
Less: accumulated depreciation	(11,892)	(12,440)
Property and equipment, net	6,355	6,584
Computer equipment and software
Property and equipment, net
Property and equipment, gross	3,672	4,799
Manufacturing tooling and test equipment
Property and equipment, net
Property and equipment, gross	4,222	4,267
Lab and warehouse equipment
Property and equipment, net
Property and equipment, gross	3,546	3,376
Leasehold improvements
Property and equipment, net
Property and equipment, gross	3,120	2,949
Furniture and fixtures
Property and equipment, net
Property and equipment, gross	2,934	2,881
Other
Property and equipment, net
Property and equipment, gross	$ 753	$ 752

Balance Sheet Components (Other

Balance Sheet Components (Other assets and Accrued liabilities) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Other assets
Deposits	$ 665	$ 933
Prepaid licensing	552	664
Deferred tax asset	882
Other	11	53
Other assets total	2,110	1,650
Accrued liabilities
Sales returns and warranty accruals	3,016	2,508
Compensation accruals	3,249	2,331
Other accrued liabilities	1,142	1,041
Total accrued liabilities	$ 7,407	$ 5,880

Financial Instruments (Fair Val

Financial Instruments (Fair Value Measurements) (Details) - Measured on a recurring basis - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value Measurements
Adjusted Cost, assets	$ 51,973	$ 81,068
Unrealized Gains, available-for-sale securities	5	2
Unrealized Losses, available-for-sale securities	(6)	(63)
Fair Value, assets	51,972	81,007
Cash and Cash Equivalents
Fair Value Measurements
Fair Value, available-for-sale investments	25,671	29,530
Short-term investments
Fair Value Measurements
Fair Value, available-for-sale investments	21,293	37,761
Long-term investments
Fair Value Measurements
Fair Value, available-for-sale investments	5,008	13,716
Cash
Fair Value Measurements
Fair value, cash and cash equivalents	14,939	7,593
Cash | Cash and Cash Equivalents
Fair Value Measurements
Fair value, cash and cash equivalents	14,939	7,593
Level 1
Fair Value Measurements
Adjusted Cost, assets	11,731	22,935
Unrealized Gains, available-for-sale securities	1
Unrealized Losses, available-for-sale securities		(2)
Fair Value, assets	11,732	22,933
Level 1 | Cash and Cash Equivalents
Fair Value Measurements
Fair Value, available-for-sale investments	10,732	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	10,732	21,937
Level 1 | Money market funds | Cash and Cash Equivalents
Fair Value Measurements
Fair value, cash and cash equivalents	10,732	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	25,303	50,540
Unrealized Gains, available-for-sale securities	4	2
Unrealized Losses, available-for-sale securities	(6)	(61)
Fair Value, available-for-sale investments	25,301	50,481
Level 2 | Available-for-sale investments | Short-term investments
Fair Value Measurements
Fair Value, available-for-sale investments	20,293	37,761
Level 2 | Available-for-sale investments | Long-term investments
Fair Value Measurements
Fair Value, available-for-sale investments	5,008	12,720
Level 2 | Asset-backed securities
Fair Value Measurements
Adjusted Cost, available-for-sale securities	5,005	6,739
Unrealized Gains, available-for-sale securities	3
Unrealized Losses, available-for-sale securities		(9)
Fair Value, available-for-sale investments	5,008	6,730
Level 2 | Asset-backed securities | Long-term investments
Fair Value Measurements
Fair Value, available-for-sale investments	5,008	6,730
Level 2 | Corporate bonds
Fair Value Measurements
Adjusted Cost, available-for-sale securities	17,302	39,195
Unrealized Gains, available-for-sale securities	1	2
Unrealized Losses, available-for-sale securities	(6)	(51)
Fair Value, available-for-sale investments	17,297	39,146
Level 2 | Corporate bonds | Short-term investments
Fair Value Measurements
Fair Value, available-for-sale investments	17,297	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	1,996	1,100
Fair Value, available-for-sale investments	1,996	1,100
Level 2 | Commercial paper | Short-term investments
Fair Value Measurements
Fair Value, available-for-sale investments	1,996	1,100
Level 2 | U.S. agency securities
Fair Value Measurements
Adjusted Cost, available-for-sale securities	1,000	3,506
Unrealized Losses, available-for-sale securities		(1)
Fair Value, available-for-sale investments	1,000	3,505
Level 2 | U.S. agency securities | Short-term investments
Fair Value Measurements
Fair Value, available-for-sale investments	$ 1,000	$ 3,505

Financial Instruments (Investme

Financial Instruments (Investment and Derivative Information) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Foreign Exchange Contract
Fair Value Measurements
Assets related to derivative instruments	$ 0		$ 0
Liabilities related to derivative instruments	0		0
Notional principal amount of foreign exchange contracts	9,900		9,900
Foreign Exchange Contract | Other income (expense), net | Not Designated as Hedging Instrument
Fair Value Measurements
Foreign exchange contracts	$ (60)	$ 418	$ (17)	$ 318
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 (Australia Expansi

Acquisitions (Australia Expansion) (Details) $ in Millions	Apr. 01, 2016USD ($)
Australia Expansion
Purchase Agreement
Total consideration transferred	$ 0.7

Acquisitions (Pakedge Device an

Acquisitions (Pakedge Device and Software Inc.) (Details) - Pakedge Device And Software Inc. - USD ($) $ in Thousands	Jan. 29, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Sep. 30, 2016
Purchase Agreement
Purchase Price per Purchase Agreement	$ 32,000
Total consideration transferred	33,000
Cash acquired in acquisition	843
Escrow deposit	$ 5,000
Period of escrow deposit	18 months
Measurement Period Adjustments
Net change to goodwill					$ 400
Pro Forma increase (decrease) in deferred tax expense (benefit)		$ (300)	$ (100)	$ 400

Acquisitions (Pakedge Device 36

Acquisitions (Pakedge Device and Software Inc. 2) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Jan. 29, 2016	Dec. 31, 2015
Preliminary allocation of consideration
Goodwill	$ 17,016		$ 2,760
Pakedge Device And Software Inc.
Preliminary allocation of consideration
Cash		$ 843
Accounts receivable		460
Inventory		4,767
Other assets acquired		1,139
Intangible assets		23,156
Goodwill		13,876
Total assets acquired		44,241
Deferred tax liability		9,402
Warranty liability		391
Other liabilities assumed		1,428
Total net assets acquired		$ 33,020

Acquisitions (Identifiable Inta

Acquisitions (Identifiable Intangible Assets) (Details) - USD ($) $ in Thousands	Jan. 29, 2016	Sep. 30, 2016	Dec. 31, 2015
Identifiable Intangible Assets
Weighted average amortization period		6 years 9 months 18 days
Goodwill
Goodwill		$ 17,016	$ 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	$ 13,876
Other
Revenue associated with acquisition		$ 16,100
Net income associated with acquisition		2,300
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		3,200
Pakedge Device And Software Inc. | Cost of revenue
Other
Cost of step-up in inventory		$ 2,000

Acquisitions (Pro Forma Informa

Acquisitions (Pro Forma Information) (Details) - Pakedge Device And Software Inc. - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Intangible assets
Revenue	$ 55,185	$ 48,519	$ 152,619	$ 134,072
Income (loss) from operations	2,340	81	(1,939)	(3,902)
Net income (loss)	$ 2,006	$ 737	$ (2,294)	$ (2,483)
Net income (loss) per common share:
Basic (in dollars per share)	$ 0.08	$ 0.03	$ (0.10)	$ (0.10)
Diluted (in dollars per share)	$ 0.08	$ 0.03	$ (0.10)	$ (0.10)

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	1.2
Cost of revenue
Purchase Agreement
Cost of step-up in inventory	$ 0.3

Goodwill and Intangible Asset40

Goodwill and Intangible Assets (Goodwill) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2016USD ($)
Business Combination - Goodwill
Balance at beginning of the period	$ 2,760
Current period acquisitions	14,140
Foreign currency translation adjustment	116
Balance at end of the period	$ 17,016

Goodwill and Intangible Asset41

Goodwill and Intangible Assets (Intangible assets) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Intangible assets
Gross Carrying Amount	$ 30,684	$ 7,302
Accumulated Amortization	(6,186)	(2,755)
Intangible assets, net	$ 24,498	4,547
Weighted average amortization period	6 years 9 months 18 days
Developed technology
Intangible assets
Gross Carrying Amount	$ 16,761	6,907
Accumulated Amortization	(4,939)	(2,643)
Intangible assets, net	$ 11,822	4,264
Weighted average amortization period	4 years 10 months 24 days
Customer relationships
Intangible assets
Gross Carrying Amount	$ 9,218	342
Accumulated Amortization	(868)	(66)
Intangible assets, net	$ 8,350	276
Weighted average amortization period	7 years 10 months 24 days
Trademark/trade name
Intangible assets
Gross Carrying Amount	$ 4,410
Accumulated Amortization	(245)
Intangible assets, net	$ 4,165
Weighted average amortization period	12 years
Non-competition agreements
Intangible assets
Gross Carrying Amount	$ 295	53
Accumulated Amortization	(134)	(46)
Intangible assets, net	$ 161	$ 7
Weighted average amortization period	2 years

Goodwill and Intangible Asset42

Goodwill and Intangible Assets (Amortization expense) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Amortization expense
Amortization of intangible assets	$ 1,221	$ 385	$ 3,393	$ 1,113
Cost of revenue
Amortization expense
Amortization of intangible assets	800	365	2,266	1,049
Research and development
Amortization expense
Amortization of intangible assets	50	$ 20	140	$ 64
Sales and marketing
Amortization expense
Amortization of intangible assets	$ 371		$ 987

Goodwill and Intangible Asset43

Goodwill and Intangible Assets (Amortization) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Amortization of finite-lived intangible assets
2,016	$ 1,209
2,017	4,737
2,018	4,533
2,019	4,370
2,020	3,486
Thereafter	6,163
Intangible assets, net	$ 24,498	$ 4,547

Long-Term Obligations (Details)

Long-Term Obligations (Details) $ in Millions	9 Months Ended
	Sep. 30, 2016USD ($)item
Term borrowings
Long-Term Obligations
Outstanding borrowings	$ 0.3
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	$ 1.5
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		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Income tax expense (benefit)	$ 316	$ (314)	$ (9,585)	$ (666)
Effective income tax rate (as a percent)	15.00%	36.00%	1487.00%	40.00%
U.S. federal statutory rate (as a percent)	34.00%		34.00%
State
Net operating losses					$ 76,600
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	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 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)	0	50,000
Exercised (in shares)		(619,757)
Expired (in shares)		(69,832)
Forfeited (in shares)		(51,588)
Balance at the end of the period (in shares)	3,881,495	3,881,495
Exercisable options (in shares)	2,990,429	2,990,429
Vested and expected to vest at the end of the period (in shares)	3,822,911	3,822,911
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)		4.87
Expired (in dollars per share)		14.79
Forfeited (in dollars per share)		15.68
Balance at the end of the period (in dollars per share)	$ 11.48	11.48
Exercisable options at the end of the period (in dollars per share)	10.41	10.41
Vested and expected to vest (in dollars per share)	$ 11.44	$ 11.44
Weighted-Average Remaining Contractual Life
Exercisable options		5 years 7 months 6 days
Vested and expected to vest		6 years 1 month 6 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%

Equity Compensation (Range) (De

Equity Compensation (Range) (Details)	9 Months Ended
	Sep. 30, 2016$ / sharesshares
Options Outstanding
Number of Underlying Shares | shares	3,881,495
Options Exercisable
Number of Underlying Shares | shares	2,990,429
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)	$ 3.25
Number of Underlying Shares | shares	60,694
Weighted-Average Remaining Contractual Life	9 months 18 days
Options Exercisable
Number of Underlying Shares | shares	60,694
Weighted-Average Remaining Contractual Life	9 months 18 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)	$ 5.94
Number of Underlying Shares | shares	1,246,543
Weighted-Average Remaining Contractual Life	4 years 7 months 6 days
Options Exercisable
Number of Underlying Shares | shares	1,225,444
Weighted-Average Remaining Contractual Life	4 years 6 months
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)	$ 9.77
Number of Underlying Shares | shares	1,044,374
Weighted-Average Remaining Contractual Life	5 years 10 months 24 days
Options Exercisable
Number of Underlying Shares | shares	838,969
Weighted-Average Remaining Contractual Life	5 years 4 months 24 days
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	863,004
Weighted-Average Remaining Contractual Life	8 years 1 month 6 days
Options Exercisable
Number of Underlying Shares | shares	427,361
Weighted-Average Remaining Contractual Life	8 years
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	666,880
Weighted-Average Remaining Contractual Life	7 years 2 months 12 days
Options Exercisable
Number of Underlying Shares | shares	437,961
Weighted-Average Remaining Contractual Life	7 years 1 month 6 days

Equity Compensation (Fair Value

Equity Compensation (Fair Value) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Stock options
Total fair value for the awards vested during the period	$ 1,300		$ 4,200
Stock options
Stock options
Stock options granted (in shares)	0		50,000
Intrinsic-value
Options Exercised			$ 2,978	$ 1,327
Options Exercisable	$ 10,491	$ 5,333	10,491	5,333
Options Vested and Expected to Vest	$ 11,065	$ 5,389	$ 11,065	$ 5,389
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)		53.00%	62.00%
Expected dividends (as a percent)		0.00%	0.00%	0.00%
Expected term			6 years 1 month 6 days
Risk-free rate (as a percent)			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	9 Months Ended
	Sep. 30, 2016$ / sharesshares
Restricted stock units
Non-vested balance at beginning of period (in shares)	425,000
Awarded	1,139,846
Vested	(17,670)
Forfeited	(89,719)
Non-vested balance at end of period (in shares)	1,457,457
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
Vested (in dollars per share) | $ / shares	7.85
Forfeited (in dollars per share) | $ / shares	7.84
Non-vested balance at end of period (in dollars per share) | $ / shares	$ 7.57
Shares withheld for tax purposes (in shares)	6,949
Issuance of shares net of shares withheld (in shares)	10,721

Equity Compensation (Expense) (

Equity Compensation (Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Total stock-based compensation expense
Total stock-based compensation expense	$ 1,983	$ 1,808	$ 5,933	$ 5,336
Cost of revenue
Total stock-based compensation expense
Total stock-based compensation expense	38	40	128	126
Research and development
Total stock-based compensation expense
Total stock-based compensation expense	789	706	2,493	2,145
Sales and marketing
Total stock-based compensation expense
Total stock-based compensation expense	496	457	1,605	1,298
General and administrative
Total stock-based compensation expense
Total stock-based compensation expense	660	$ 605	1,707	$ 1,767
Stock options
Total stock-based compensation expense
Total unrecognized compensation cost related to non-vested stock option awards	7,800		$ 7,800
Weighted-average period over which unrecognized compensation cost will be recognized			1 year 10 months 24 days
Restricted stock units
Total stock-based compensation expense
Total unrecognized compensation cost related to non-vested restricted stock units	$ 8,500		$ 8,500
Weighted-average period over which unrecognized compensation cost will be recognized			2 years 4 months 24 days

Share Repurchases (Details)

Share Repurchases (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015	May 31, 2015
Common stock authorized for repurchase	$ 7,700	$ 7,700
Number of common stock repurchased (in shares)	0	427,646
Value of common stock repurchased		$ 3,242	$ 4,942
Maximum
Common stock authorized for repurchase				$ 20,000

Related Party Transactions (Det

Related Party Transactions (Details)	3 Months Ended	9 Months Ended
	Sep. 30, 2016USD ($)	Sep. 30, 2016USD ($)
Officer
Related Party Transactions
Revenue from product sales	$ 43,000	$ 106,000
Accounts payable due to related party	28,000	28,000
Director
Related Party Transactions
Royalty expense	$ 0	$ 200,000

Commitments and Contingencies53

Commitments and Contingencies (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2016USD ($)claim	Sep. 30, 2015USD ($)	Sep. 30, 2016USD ($)claim	Sep. 30, 2015USD ($)
Operating Leases
Rental expense	$ 700,000	$ 500,000	$ 1,900,000	$ 1,400,000
Future minimum rental payments
2,016	1,062,000		1,062,000
2,017	3,383,000		3,383,000
2,018	2,221,000		2,221,000
2,019	593,000		593,000
2,020	187,000		187,000
Thereafter	31,000		31,000
Total	7,477,000		7,477,000
Purchase Commitments
Non-cancellable purchase commitments	28,700,000		28,700,000
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