Control4 (CTRL) 10-K 11 Feb 19 2018 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Feb. 07, 2019	Jun. 30, 2018
Document and Entity Information
Entity Registrant Name	Control4 Corp
Entity Central Index Key	1,259,515
Document Type	10-K
Document Period End Date	Dec. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 553.7
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding		26,520,482
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	FY

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 40,395	$ 29,761
Restricted cash	259	273
Short-term investments	52,794	44,057
Accounts receivable, net	33,016	29,925
Inventories	42,684	37,171
Prepaid expenses and other current assets	6,100	4,369
Total current assets	175,248	145,556
Property and equipment, net	9,663	7,337
Long-term investments		12,038
Intangible assets, net	20,651	26,081
Goodwill	21,530	21,867
Other assets	25,456	1,618
Total assets	252,548	214,497
Current liabilities:
Accounts payable	26,213	25,654
Accrued liabilities	9,142	10,835
Current portion of deferred revenue	5,507	4,538
Total current liabilities	40,862	41,027
Other long-term liabilities	5,339	3,942
Total liabilities	46,201	44,969
Commitments and contingencies (Note 11)
Stockholders’ equity:
Common stock, $0.0001 par value; 500,000,000 shares authorized; 26,516,912 and 25,832,895 shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively	3	3
Additional paid-in capital	235,529	242,281
Accumulated deficit	(28,385)	(72,225)
Accumulated other comprehensive loss	(800)	(531)
Total stockholders' equity	206,347	169,528
Total liabilities and stockholders’ equity	$ 252,548	$ 214,497

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
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	26,516,912	25,832,895
Common stock, shares outstanding	26,516,912	25,832,895

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
CONSOLIDATED STATEMENTS OF OPERATIONS
Revenue	$ 272,458	$ 244,175	$ 208,130
Cost of revenue	130,455	120,230	105,123
Gross margin	142,003	123,945	103,007
Operating expenses:
Research and development	43,605	40,638	35,985
Sales and marketing	50,834	47,825	42,198
General and administrative	26,399	21,926	20,309
Litigation settlement			475
Total operating expenses	120,838	110,389	98,967
Income from operations	21,165	13,556	4,040
Other income (expense), net:
Interest, net	1,222	409	45
Other income (expense), net	(1,538)	(78)	(587)
Total other income (expense), net	(316)	331	(542)
Income before income taxes	20,849	13,887	3,498
Income tax benefit	(22,991)	(1,568)	(8,800)
Net income	$ 43,840	$ 15,455	$ 12,298
Net income per common share:
Basic (in dollars per share)	$ 1.67	$ 0.62	$ 0.53
Diluted (in dollars per share)	$ 1.60	$ 0.58	$ 0.50
Weighted-average number of shares:
Basic (in shares)	26,235	24,803	23,402
Diluted (in shares)	27,484	26,775	24,360

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 43,840	$ 15,455	$ 12,298
Other comprehensive income (loss):
Foreign currency translation adjustment, net of tax	(281)	380	(171)
Net unrealized gains (losses) on available-for-sale investments, net of tax	12	(47)	46
Total other comprehensive income (loss)	(269)	333	(125)
Comprehensive income	$ 43,571	$ 15,788	$ 12,173

CONSOLIDATED STATEMENTS OF STOC

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Treasury Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive (Loss) Income	Total
Balance at Dec. 31, 2015	$ 2	$ (9,020)	$ 220,782	$ (95,580)	$ (739)	$ 115,445
Balance (in shares) at Dec. 31, 2015	23,436,288
Balance (in shares) at Dec. 31, 2015		1,154,480
Increase (Decrease) in Stockholders' Equity
Net income				12,298		12,298
Other comprehensive loss					(125)	(125)
Cumulative effect of accounting change				(4,065)		(4,065)
Excess tax benefit from exercise of options for common stock			89			89
Stock-based compensation			8,324			8,324
Issuance of common stock upon exercise of stock options and vesting of restricted stock			3,437			3,437
Issuance of common stock upon exercise of stock options and vesting of restricted stock (in shares)	721,138
Repurchase of common stock for treasury		$ (3,242)				(3,242)
Repurchase of common stock for treasury (in shares)	(427,646)	427,646
Retirement of treasury stock		$ 12,262	(12,262)
Retirement of treasury stock (in shares)		(1,582,126)
Balance at Dec. 31, 2016	$ 2		220,370	(87,347)	(864)	132,161
Balance (in shares) at Dec. 31, 2016	23,729,780
Increase (Decrease) in Stockholders' Equity
Net income				15,455		15,455
Other comprehensive loss					333	333
Cumulative effect of accounting change			333	(333)
Stock-based compensation			11,975			11,975
Stock-based compensation (in shares)	65,171
Issuance of common stock upon exercise of stock options and vesting of restricted stock	$ 1		11,424			11,425
Issuance of common stock upon exercise of stock options and vesting of restricted stock (in shares)	2,156,951
Repurchase of common stock for treasury		$ (1,821)				(1,821)
Repurchase of common stock for treasury (in shares)	(119,007)	119,007
Retirement of treasury stock		$ 1,821	(1,821)
Retirement of treasury stock (in shares)		(119,007)
Balance at Dec. 31, 2017	$ 3		242,281	(72,225)	(531)	$ 169,528
Balance (in shares) at Dec. 31, 2017	25,832,895					25,832,895
Increase (Decrease) in Stockholders' Equity
Net income				43,840		$ 43,840
Other comprehensive loss					(269)	(269)
Stock-based compensation			13,511			13,511
Stock-based compensation (in shares)	62,230
Issuance of common stock upon exercise of stock options and vesting of restricted stock			3,609			3,609
Issuance of common stock upon exercise of stock options and vesting of restricted stock (in shares)	1,559,051
Repurchase of common stock for treasury		$ (23,872)				(23,872)
Repurchase of common stock for treasury (in shares)	(937,264)	937,264
Retirement of treasury stock		$ 23,872	(23,872)
Retirement of treasury stock (in shares)		(937,264)
Balance at Dec. 31, 2018	$ 3		$ 235,529	$ (28,385)	$ (800)	$ 206,347
Balance (in shares) at Dec. 31, 2018	26,516,912					26,516,912

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Operating activities
Net income	$ 43,840	$ 15,455	$ 12,298
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	3,946	3,686	3,318
Amortization of intangible assets	5,464	5,212	4,598
Loss on disposal of fixed assets	5	1	13
Provision for doubtful accounts	839	815	345
Investment discount and premium amortization	(534)	(109)	339
Release of valuation allowance	(23,435)
Stock-based compensation	13,511	12,105	8,370
Tax benefit from business acquisition		(2,257)	(9,402)
Deferred tax asset adjustment		767
Changes in assets and liabilities:
Accounts receivable, net	(4,503)	(5,116)	(3,765)
Inventories	(6,341)	(9,324)	(1,589)
Prepaid expenses and other current assets	(1,729)	(593)	1,184
Other assets	(450)	(201)	(307)
Accounts payable	1,940	6,370	(32)
Accrued liabilities	(67)	(441)	1,999
Deferred revenue	1,086	1,213	1,362
Other long-term liabilities	1,378	(156)	(653)
Net cash provided by operating activities	34,950	27,427	18,078
Investing activities
Purchases of available-for-sale investments	(62,603)	(76,796)	(19,227)
Proceeds from sales of available-for-sale investments	3,800	3,955	900
Proceeds from maturities of available-for-sale investments	62,650	43,780	42,203
Purchases of property and equipment	(6,288)	(3,952)	(2,682)
Business acquisitions, net of cash acquired	(1,411)	(9,258)	(32,891)
Net cash used in investing activities	(3,852)	(42,271)	(11,697)
Financing activities
Proceeds from exercise of options for common stock	10,976	16,959	3,437
Payments for withholding taxes related to net share settlement of equity awards	(7,367)	(5,534)
Repurchase of common stock	(23,872)	(1,821)	(3,242)
Repayment of notes payable			(913)
Proceeds from revolving credit facility			5,000
Repayment of revolving credit facility			(5,000)
Payment of debt issuance costs	(113)		(89)
Net cash (used in) provided by financing activities	(20,376)	9,604	(807)
Effect of exchange rate changes on cash and cash equivalents	(102)	214	(340)
Net change in cash and cash equivalents	10,620	(5,026)	5,234
Unrestricted and restricted cash and cash equivalents at beginning of period	30,034	35,060	29,826
Unrestricted and restricted cash and cash equivalents at end of period	40,654	30,034	35,060
Supplemental disclosure of cash flow information
Cash paid for interest	145	57	204
Cash paid for taxes	1,159	1,292	1,115
Supplemental schedule of non-cash investing and financing activities
Landlord paid tenant improvements			39
Business acquisitions holdback liability		1,414
Purchases of property and equipment financed by accounts payable	400	351	135
Net unrealized gains (losses) on available-for-sale investments	$ 12	$ (47)	$ 46

Description of Business and Sum

Description of Business and Summary of Significant Accounting Policies	12 Months Ended
	Dec. 31, 2018
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 Policie 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 its 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. Basis of Presentation The consolidated financial statements include the accounts of the Company and its wholly‑owned subsidiaries. All intercompany balances and transactions have been eliminated in the 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 is 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 December 31, 2018 and 2017. No dealer or distributor accounted for more than 10% of total revenue for the years ended December 31, 2018, 2017 and 2016. 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. 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, three, or ten years depending on product type and brand. 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 (in thousands): Years Ended December 31, 2018 2017 2016 Balance at the beginning of the period $ 2,032 $ 1,945 $ 1,415 Warranty costs accrued 4,040 3,147 2,458 Warranty claims (3,548) (3,060) (1,928) Balance at the end of the period $ 2,524 $ 2,032 $ 1,945 Net Income Per Share Basic net income per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period that have a dilutive effect on net income per share. Potentially dilutive common shares result from the assumed exercise of outstanding stock options and 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 per share (in thousands): Years Ended December 31, 2018 2017 2016 Numerator: Net income $ 43,840 $ 15,455 $ 12,298 Denominator: Weighted average common stock outstanding for basic net income per common share 26,235 24,803 23,402 Effect of dilutive securities—stock options and restricted stock units 1,249 1,972 958 Weighted average common shares and dilutive securities outstanding 27,484 26,775 24,360 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 per share (in thousands): Years Ended December 31, 2018 2017 2016 Options to purchase common stock — 660 2,328 Restricted stock units 98 5 17 Total 98 665 2,345 Cost of Revenue Cost of revenue includes the following: the cost of inventory sold during the period, inventory write‑down costs, payroll, purchasing costs, royalty obligations, shipping expenses to dealers and distributors and warehousing costs, which include inbound freight costs from manufacturers, rent, payroll and benefit costs, acquisition-related costs, amortization of intangible assets and depreciation. Cash and Cash Equivalents The Company considers all highly liquid short‑term investments with original maturities of three months or less at the time of purchase to be cash equivalents. Cash equivalents consist primarily of money market funds. Restricted Cash Restricted cash as of December 31, 2018 and 2017, is composed of a guarantee made by the Company’s subsidiary in the United Kingdom to HM Revenue & Customs related to a customs duty deferment account. Inventories Inventories consist primarily of hardware and related component parts and are stated at the lower of cost or net realizable value using the first‑in, first‑out method. The Company periodically assesses the recoverability of its inventory and reduces the carrying value of the inventory when items are determined to be obsolete, defective or in excess of forecasted sales requirements. Inventory write‑downs for excess, defective and obsolete inventory are recorded as a cost of revenue and totaled $4.2 million, $4.1 million, and $3.1 million, for the years ended December 31, 2018, 2017 and 2016, respectively. Property and Equipment Property and equipment are recorded at historical cost, less accumulated depreciation. Depreciation is computed using the straight‑line method over the following estimated useful lives: Computer equipment and software - 4 years Manufacturing tooling and test equipment - 4 years Lab and warehouse equipment - 5 years Furniture and fixtures - 5 years Other - 3 years Maintenance and repairs that do not extend the life of or improve the asset are expensed in the year incurred. Leasehold improvements are depreciated over the estimated useful life (usually 3‑8 years) or the life of the associated lease, whichever is less. Intangible Assets Intangible assets primarily consist of acquired technology, customer relationships and trademarks/trade names. The Company amortizes, to cost of revenue and operating expenses, definite‑lived intangible assets on a straight‑line basis over the life of the asset. Impairment of Long‑Lived Assets and Goodwill The carrying value of long‑lived assets is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. An impairment loss is recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded is calculated by the excess of the asset’s carrying value over its fair value. Fair value is generally determined using a discounted cash flow analysis. The Company tests goodwill for impairment annually as of October 1, or whenever events or changes in circumstances indicate that goodwill may be impaired. The Company initially assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, the Company determines it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then the Company compares the reporting unit’s carrying amount to its fair value. If the reporting unit’s carrying amount exceeds its fair value, an impairment charge is recorded based on that difference. There was no impairment of long-lived assets or goodwill during the years ended December 31, 2018, 2017 and 2016. Foreign Currency Translation The functional currency of the Company’s subsidiaries in the United Kingdom, Germany and Serbia, Australia, China, and India are the pound sterling, the euro, the Australian dollar, the Chinese yuan, and the Indian rupee, respectively. The subsidiary’s assets and liabilities have been translated to U.S. dollars using the exchange rates in effect at the balance sheet dates. Statements of operations amounts have been translated using the monthly average exchange rate for each year. Resulting gains or losses from translating foreign currency financial statements are recorded as other comprehensive income (loss). Foreign currency transaction gains and losses resulting from exchange rate fluctuations on transactions denominated in a currency other than the local currency are primarily included in other income (expense). The Company enters 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 recognized a foreign exchange loss, net of the foreign currency derivatives, of $1.6 million, $0.1 million and $0.6 million for the years ended December 31, 2018, 2017 and 2016, respectively. Stock‑Based Compensation The Company recognizes compensation expense for all stock‑based awards issued to employees and directors based on estimated grant date fair values. Stock-based awards issued to non-employees in exchange for goods or services are recognized and expensed using the same methodology. The Company selected the Black‑Scholes option‑pricing model to determine the estimated fair value at the date of grant for stock options. The Black‑Scholes option‑pricing model requires management assumptions regarding various factors that require extensive use of accounting judgment and financial estimates. The Company estimates the expected term for options using the simplified method, which utilizes the weighted average expected life of each tranche of the stock option, determined based on the sum of each tranche’s vesting period plus one‑half of the period from the vesting date of each tranche to the stock option’s expiration, because the Company’s options are considered “plain vanilla.” The Company computed the expected volatility using multiple peer companies for a period approximating the expected term. The risk‑free interest rate was determined using the implied yield on U.S. Treasury issues with a remaining term within the expected life of the award. The fair value of each restricted stock unit award is based on the number of shares granted and the closing price of the Company’s common stock as reported on the NASDAQ Global Select Market. The Company elected to amortize compensation expense using the straight‑line attribution method, under which stock‑based compensation expense is recognized on a straight‑line basis over the period the employee performs the related services, generally the vesting period, net of estimated forfeitures. The Company has elected to recognize forfeitures as they occur. Income Taxes The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to the differences between the financial statement carrying value of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the fiscal year in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company operates in various tax jurisdictions and is subject to audit by various tax authorities. The Company provides for tax contingencies whenever it is deemed probable that a tax asset has been impaired or a tax liability has been incurred for events such as tax claims or changes in tax laws. Tax contingencies are based upon their technical merits, relative tax law and the specific facts and circumstances as of each reporting period. Changes in facts and circumstances could result in material changes to the amounts recorded for such tax contingencies. The Company recognizes uncertain income tax positions taken on income tax returns at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. The Company’s policy for recording interest and penalties associated with uncertain tax positions is to record such items as a component of its income tax provision. During the years ended December 31, 2018, 2017 and 2016, the Company did not record any material interest income, interest expense or penalties related to uncertain tax positions or the settlement of audits for prior periods. Presentation of Certain Taxes The Company collects various taxes from dealers and distributors and remits these amounts to the applicable taxing authorities. The Company’s accounting policy is to exclude these taxes from revenue and cost of revenue. Research and Development Research and development expenses consist primarily of personnel costs, including incentive compensation, depreciation associated with research and development equipment, contract labor and consulting services, facilities‑related costs, and travel‑related costs. Research and development costs are expensed as incurred. Sales and Marketing Sales and marketing expenses consist primarily of personnel costs and related travel expenses for sales and marketing personnel, including non-cash stock-based compensation expense. Sales and marketing expenses also include expenses associated with trade shows, marketing events, advertising, training and other marketing-related programs. Advertising and other promotional costs are expensed as incurred and were $1.9 million, $1.3 million, and $1.2 million, for the years ended December 31, 2018, 2017, and 2016, respectively. Recent Accounting Pronouncements In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, “Disclosure Update and Simplification,” amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. This analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule is effective as of November 5, 2018. The adoption of this final rule will not have a material impact on the interim condensed consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting,” which expands the scope of Topic 718 to include all share-based payment transactions for acquiring goods and services from non-employees. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company elected to early-adopt this standard in the current period; the adoption of this standard did not impact the consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “ Statement of Cash Flows (Topic 230): Restricted Cash ,” which provides amendments to current guidance to address the classifications and presentation of changes in restricted cash in the statement of cash flows. The effective date for the standard is for fiscal years beginning after December 15, 2017. The Company adopted the standard effective January 1, 2018; the adoption of this standard did not have a material impact on the consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, “ Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory .” The amendments in this update will require recognition of current and deferred income taxes resulting from an intra-entity transfer of an asset other than inventory when the transfer occurs. This update is effective for annual and interim periods beginning after December 15, 2017. The Company adopted the standard effective January 1, 2018; the adoption of this standard did not have a material impact on the consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326)” which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. For trade receivables, the Company will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The guidance is effective for fiscal years beginning after December 31, 2019, including interim periods within those years. Early application of the guidance is permitted for all entities for fiscal years beginning after December 15, 2018, including the interim periods within those fiscal years. Application of the amendments is through a cumulative-effect adjustment to retained earnings as of the effective date. The Company is currently evaluating the impact of this update on the consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842 ) ,” which supersedes the guidance in ASC 840, “Leases .” The purpose of the new standard is to improve transparency and comparability related to the accounting and reporting of leasing arrangements. The guidance will require balance sheet recognition for assets and liabilities associated with rights and obligations created by leases with terms greater than twelve months. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. Although the standard initially required the modified retrospective approach for adoption, in July 2018, the FASB issued ASU 2018-18, allowing companies to initially apply the new lease requirements at the effective date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Early adoption is permitted. The Company expects the standard will have a material impact on the Company’s consolidated balance sheets but will not have a material impact on the consolidated statements of operations. The most significant impact will be the recognition of right of use assets and lease liabilities for operating leases. In connection with the adoption of the new lease accounting standard, the Company has completed scoping reviews and continues to make progress implementing new processes, systems, accounting policies and internal controls relevant to the standard. The Company will adopt this standard on January 1, 2019 using the prospective adoption approach and has elected to use the practical expedients allowed under the standard.

Balance Sheet Components

Balance Sheet Components	12 Months Ended
	Dec. 31, 2018
Balance Sheet Components
Balance Sheet Components	2. Balance Sheet Components Inventories consisted of the following (in thousands): December 31, December 31, 2018 2017 Finished goods $ 39,142 $ 33,050 Component parts 3,490 4,025 Work-in-process 52 96 $ 42,684 $ 37,171 Property and equipment, net consisted of the following (in thousands): December 31, December 31, 2018 2017 Computer equipment and software $ 5,380 $ 5,030 Manufacturing tooling and test equipment 4,598 4,894 Lab and warehouse equipment 5,938 4,869 Leasehold improvements 5,954 3,960 Furniture and fixtures 4,670 3,698 Other 1,159 1,086 27,699 23,537 Less: accumulated depreciation (18,036) (16,200) $ 9,663 $ 7,337 Other assets consisted of the following (in thousands): December 31, December 31, 2018 2017 Deferred tax asset $ 23,098 $ 464 Deposits 2,183 404 Other 175 750 $ 25,456 $ 1,618 Accrued liabilities consisted of the following (in thousands): December 31, December 31, 2018 2017 Sales returns and current portion of warranty liability $ 2,539 $ 2,872 Compensation accruals 5,444 5,241 Other accrued liabilities 1,159 2,722 $ 9,142 $ 10,835 Other long-term liabilities consisted of the following (in thousands): December 31, December 31, 2018 2017 Deferred revenue $ 3,192 $ 3,143 Warranty 875 600 Other 1,272 199 $ 5,339 $ 3,942

Fair Value Measurements

Fair Value Measurements	12 Months Ended
	Dec. 31, 2018
Fair Value Measurements
Fair Value Measurements	3. Fair Value Measurements Assets Measured and Recorded at Fair Value on a Recurring Basis The Company’s financial assets that are measured at fair value on a recurring basis consist of money market funds and available-for-sale investments. The following three levels of inputs are used to measure the fair value of financial instruments: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs are used when little or no market data is available. The fair values for substantially all of the Company’s financial assets are based on quoted prices in active markets or observable inputs. For Level 2 securities, the Company uses a third-party pricing service which provides documentation on an ongoing basis that includes, among other things, pricing information with respect to reference data, methodology, inputs summarized by asset class, pricing application and corroborative information. The Company determines realized gains or losses on the sale of marketable securities on a specific identification method. During the years ended December 31, 2018 and 2017, the Company did not record significant realized gains or losses on the sales of available-for-sale investments. The following tables show the Company’s cash and available-for-sale investments’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term investments as of December 31, 2018 and December 31, 2017 (in thousands): December 31, 2018 Cash and Adjusted Unrealized Unrealized Cash Short-term Long-term Cost Gains Losses Fair Value Equivalents Investments Investments Cash $ 30,501 $ — $ — $ 30,501 $ 30,501 $ — $ — Level 1: Money market funds 6,903 — — 6,903 6,903 — — U.S. government notes 10,420 — (14) 10,406 — 10,406 — Subtotal 17,323 — (14) 17,309 6,903 10,406 — Level 2: Corporate bonds 21,612 1 (37) 21,576 — 21,576 — Commercial paper 23,803 — — 23,803 2,991 20,812 — Subtotal 45,415 1 (37) 45,379 2,991 42,388 — Total $ 93,239 $ 1 $ (51) $ 93,189 $ 40,395 $ 52,794 $ — December 31, 2017 Cash and Adjusted Unrealized Unrealized Cash Short-term Long-term Cost Gains Losses Fair Value Equivalents Investments Investments Cash $ 24,367 $ — $ — $ 24,367 $ 24,367 $ — $ — Level 1: Money market funds 5,394 — — 5,394 5,394 — — U.S. government notes 9,060 — (13) 9,047 — 4,098 4,949 Subtotal 14,454 — (13) 14,441 5,394 4,098 4,949 Level 2: Corporate bonds 24,943 — (49) 24,894 — 17,805 7,089 Commercial paper 22,154 — — 22,154 — 22,154 — Subtotal 47,097 — (49) 47,048 — 39,959 7,089 Total $ 85,918 $ — $ (62) $ 85,856 $ 29,761 $ 44,057 $ 12,038 As of December 31, 2018, the Company considers the declines in market value of its investment portfolio to be temporary in nature and does not consider any of its investments other-than-temporarily impaired. The Company typically invests in highly-rated securities, and its investment policy generally limits the amount of credit exposure to any one issuer. The policy requires investments generally to be investment grade, with the primary objective of minimizing the potential risk of principal loss. Fair values were determined for each individual security in the investment portfolio. The maturities of the Company’s long-term investments range from one to two years. When evaluating an investment for other-than-temporary impairment the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates, and the Company’s intent to sell, 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. During the years ended December 31, 2018 and 2017, the Company did not recognize any significant impairment charges. Fair Value of Other Financial Instruments The carrying amounts reported in the accompanying consolidated financial statements for cash and cash equivalents, restricted cash, accounts payable and accrued liabilities approximate their fair value because of the short term nature of the accounts. Derivative Financial Instruments The Company has foreign currency exposure related to the operations in Australia, Canada, the United Kingdom, as well as other foreign locations. The Company enters 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 Australia and the United Kingdom. The foreign currency derivatives are not designated as accounting hedges. The Company recognizes these derivative instruments as either assets or liabilities in the accompanying 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 Consolidated Statements of Operations as Other income (expense), net. The settlements of these transactions are included in net income (loss) in the accompanying Consolidated Statements of Cash Flow. The Company settles its foreign exchange contracts on the last day of every month. As a result, there are no assets or liabilities recorded in the accompanying Consolidated Balance Sheets related to derivative instruments as of December 31, 2018 and 2017. The following table shows the pre-tax gains (losses) of the Company’s derivative instruments not designated as hedging instruments (in thousands): Years Ended December 31, Income Statement Location 2018 2017 2016 Foreign exchange forward contracts Other income (expense), net $ 35 $ (1,662) $ 418

Acquisitions

Acquisitions	12 Months Ended
	Dec. 31, 2018
Acquisitions
Acquisitions	4. Acquisitions ihiji Acquisition On December 22, 2017, the Company acquired the intellectual property and key operating assets of ihiji, a provider of remote management services for technical integrators servicing connected home customers. Total consideration transferred for this acquisition was immaterial. The majority of the consideration transferred was allocated to a developed technology intangible asset. In accordance with the purchase agreement, a portion of the purchase price was withheld at the acquisition date to cover any of the sellers’ post-closing obligations and was subsequently distributed to the shareholders during the second quarter of 2018. Acquisition of Triad Holdings, Inc. On February 27, 2017, the Company entered into a definitive agreement to acquire Triad Holdings, Inc., (“Triad Holdings”), along with its wholly owned subsidiary Triad Speakers, Inc. (“Triad Speakers” and together with Triad Holdings “Triad”) through the purchase of all the outstanding shares of common stock of Triad for a purchase price of $9.2 million, which included cash acquired of $0.3 million. In accordance with the purchase agreement, $1.4 million of the purchase price was held for 18 months from the acquisition date to cover any of the sellers’ post-closing obligations, including without limitation any indemnification obligations that may arise (the “Holdback”). Due to customary working capital adjustments after the acquisition date, the Holdback was reduced to $1.1 million and was subsequently distributed during the third quarter of 2018. The Company determined the Triad acquisition was not a significant acquisition under Rule 3-05 of Regulation S‑X.

Goodwill and Intangible Assets

Goodwill and Intangible Assets	12 Months Ended
	Dec. 31, 2018
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, 2017 $ 21,867 Measurement period adjustments (37) Foreign currency translation adjustment (300) Balance at December 31, 2018 $ 21,530 Goodwill represents the excess of consideration transferred over the fair value of assets acquired and liabilities assumed and is attributable to assembled workforces as well as the benefits expected from combining the Company’s research and engineering operations with the acquired company’s. For a discussion of the significant changes in goodwill, see Note 4. Most of the Company’s goodwill is not deductible for income tax purposes. Intangible assets The Company’s intangible assets and related accumulated amortization consisted of the following as of December 31, 2018 and 2017 (in thousands): December 31, 2018 Gross Carrying Accumulated Amount Amortization Net Developed technology $ 17,495 $ (10,145) $ 7,350 Customer relationships 12,009 (4,050) 7,959 Trademark/trade name 6,776 (1,434) 5,342 Non-competition agreements 295 (295) — Total intangible assets $ 36,575 $ (15,924) $ 20,651 December 31, 2017 Gross Carrying Accumulated Amount Amortization Net Developed technology $ 19,626 $ (8,914) $ 10,712 Customer relationships 12,009 (2,556) 9,453 Trademark/trade name 6,776 (869) 5,907 Non-competition agreements 295 (286) 9 Total intangible assets $ 38,706 $ (12,625) $ 26,081 For a discussion of the significant changes in intangible assets, see Note 4. The weighted average amortization period is 6.9 years for developed technology, 8.4 years for customer relationships, 12.0 years for trademark/trade names, 2.0 years for non-competition agreements, and 7.3 years in total. The Company recorded amortization expense during the respective periods for these intangible assets as follows: (in thousands): Years Ended December 31, 2018 2017 2016 Cost of revenue $ 3,397 $ 3,164 $ 3,052 Research and development 80 193 188 Sales and marketing 1,987 1,855 1,358 Total amortization of intangible assets $ 5,464 $ 5,212 $ 4,598 Amortization of finite lived intangible assets as of December 31, 2018 is as follows for the next five years (in thousands): Amount 2019 $ 5,655 2020 4,604 2021 2,256 2022 2,093 2023 2,035 Thereafter 4,008 $ 20,651

Long-Term Obligations

Long-Term Obligations	12 Months Ended
	Dec. 31, 2018
Long-Term Obligations
Long-Term Obligations	6. Long‑Term Obligations Loan and Security Agreement On February 6, 2018, Control4 entered into the 2018 Loan Amendment with SVB, which amends the 2013 Loan Agreement. In the 2018 Loan Amendment, Control4 increased the revolving credit facility from $30.0 million to $40.0 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 29, 2020. Advances made pursuant to the New Credit Facility depend on Control4’s leverage ratio and are either: (i) Prime Rate Advances, which bear interest at the Prime Rate plus a Prime Rate Margin of either 0% or 0.25%, or (ii) LIBOR Rate Advances, which bear interest at the LIBOR Rate plus a LIBOR Rate Margin of either 2.50% or 2.75%. Control4 will be assessed an unused revolving line facility fee of 0.25% in any quarter wherein the amount of advances under the New Credit Facility is less than $15.0 million. As of December 31, 2018, Control4 had no outstanding borrowings under the New Credit Facility. The 2018 Loan Amendment contains various restrictive and financial covenants, and the Company was in compliance with each of these covenants as of December 31, 2018.

Revenue Recognition

Revenue Recognition	12 Months Ended
	Dec. 31, 2018
Revenue Recognition
Revenue Recognition	7. Revenue Recognition ASC 606 Adoption On January 1, 2018, the Company adopted ASC 606 utilizing the full retrospective method of transition, which required a retrospective adjustment of each prior reporting period presented. The Company applied the new standard using a practical expedient where the consideration allocated to the remaining performance obligations or an explanation of when the Company expects to recognize that amount as revenue for all reporting periods presented before the date of the initial application is not disclosed. Upon adoption of ASC 606, t he Company implemented internal controls over revenue recognition and related financial statement disclosures. Adoption of ASC 606 did not have a significant impact on the Company’s financial statements, however, while preparing for the adoption of ASC 606, the Company evaluated the accounting for technical support and unspecified upgrade rights, which the Company considered inconsequential under ASC 605. While the Company determined that these services are immaterial in the context of the contract under ASC 606, the Company believes that as product offerings continue to mature these services will become more material over time. Accordingly, under ASC 606, the Company will account for technical support and unspecified upgrade rights as a performance obligation, distinct from the hardware product and embedded software, with the associated revenue satisfied over time. The adoption of ASC 606 impacted the Company’s previously reported results as follows (in thousands, except per share data): Year Ended Year Ended December 31, December 31, 2017 2016 As previously reported ASC 606 adjustment As As previously reported ASC 606 adjustment As Revenue $ 244,725 $ (550) $ 244,175 $ 208,802 $ (672) $ 208,130 Income tax benefit (1,542) (26) (1,568) (8,784) (16) (8,800) Net income 15,979 (524) 15,455 12,954 (656) 12,298 Basic earnings per share $ 0.64 $ (0.02) $ 0.62 $ 0.55 $ (0.02) $ 0.53 Diluted earnings per share $ 0.60 $ (0.02) $ 0.58 $ 0.53 $ (0.03) $ 0.50 December 31, 2017 As previously reported ASC 606 adjustment As Other assets $ 1,576 $ 42 $ 1,618 Current portion of deferred revenue 2,311 2,227 4,538 Other long-term liabilities 882 3,060 3,942 Stockholders’ equity 174,773 (5,245) 169,528 Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration expected to be received in exchange for those products or services. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. Shipping charges billed to dealers and distributors are included in product revenue and related shipping costs are included in cost of revenue. The Company has elected to account for shipping and handling activities performed after control has been transferred to the customer as a fulfillment cost and accrues for these costs if revenue is recognized before contractually agreed-upon shipping and handling occurs. Solution Products Revenue The Company sells its solution products through a network of independent dealers, distributors and retailers. These dealers, distributors and retailers generally sell the Company’s products as part of a bundled sale, which typically includes other third‑party products and related services, project design, installation services and on‑going support. The Company’s products are generally highly dependent on, and interrelated with, the underlying operating system and cannot function without the operating system. In these cases, the hardware and software license are accounted for as a single performance obligation and revenue is recognized at the point in time when ownership is transferred to dealers, distributors, and retailers, which is typically at the time the product is shipped. In cases where revenue is allocated to software updates and technical support, primarily because the updates and technical support are provided at no additional charge, revenue is recognized as the updates and technical support are provided, which is ratably over the estimated life of the related device. Certain customers may receive cash-based incentives or credits; which are accounted for as variable consideration. The Company records estimated reductions to revenue for dealer incentives at the time of the initial sale. The estimated reductions to revenue are based on the sales terms and the Company’s historical experience and trend analysis. The most common incentive relates to amounts paid or credited to dealers for achieving defined volume levels or growth objectives. Subscription Service Revenue The Company offers a subscription service that allows consumers to control and monitor their homes remotely and allows the consumer’s respective Control4 dealer to perform remote diagnostic services. Subscription revenue is deferred at the time of payment and recognized ratably over the contract period which is typically one year. Third-Party Product Revenue The Company recognizes revenue net of cost of revenue for non-inventoried, third‑party products sold through the Company’s online ordering system. The Company’s primary role is to arrange for another entity to provide the goods or services and the Company does not control the promised good or service before it is transferred to the customer. Significant Judgments The Company’s contracts with dealers, distributors, and retailers can include promises to transfer multiple products and services. Determining whether multiple products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is required to determine the stand-alone selling price (“SSP”) for each distinct performance obligation. The Company uses a single amount to estimate SSP for items that are not sold separately, including software updates and technical support provided at no additional charge. In instances where SSP is not directly observable, such as when the Company does not sell the product or service separately, the SSP is determined using information that may include market conditions and other observable inputs. The Company’s products are generally sold with a limited right of return and the Company may provide other credits or incentives, which are accounted for as variable consideration when estimating the amount of revenue to recognize. Disaggregated Revenue 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 years ended December 31, 2018, 2017, and 2016. The following table sets forth revenue from the United States, Canada and all other international dealers and distributors combined (in thousands, except percentages): Years Ended December 31, 2018 2017 2016 Revenue-United States $ 187,852 $ 169,547 $ 147,713 Revenue-Canada 22,700 20,765 16,694 Revenue-all other international sources 61,906 53,863 43,723 Total revenue $ 272,458 $ 244,175 $ 208,130 International revenue (excluding Canada) as a percent of total revenue % % % Contract Balances As of December 31, 2018, and December 31, 2017, accounts receivable, net of allowance for doubtful accounts, were $33.0 million and $29.9 million, respectively. The Company extends credit to some of its dealers and distributors, which consist primarily of small, local businesses. Issuance of credit is based on ongoing credit evaluations by the Company of dealers’ and distributors’ financial condition and generally requires no collateral. Trade accounts receivable are recorded at the invoiced amount and do not generally bear interest. The Company maintains an allowance for doubtful accounts to reserve for potential uncollectible receivables. The allowance is based upon the creditworthiness of the Company’s dealers and distributors, the dealers’ and distributors’ historical payment experience, the age of the receivables and current market and economic conditions. Provisions for potentially uncollectible receivables are recorded in sales and marketing expenses. The Company writes off accounts receivable balances to the allowance for doubtful accounts when it becomes likely that they will not be collected. The following table presents the changes in the allowance for doubtful accounts (in thousands): Years Ended December 31, 2018 2017 2016 Balance at beginning of period $ 1,147 $ 981 $ 824 Provision 839 815 345 Write-offs (457) (649) (188) Balance at end of period $ 1,529 $ 1,147 $ 981 Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 days. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined the contracts generally do not include a significant financing component. The primary purpose of invoicing terms is to provide customers with simplified and predictable ways of purchasing products and services, not to receive financing from customers, such as invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period. Deferred revenue is comprised mainly of unearned revenue related to subscription services as well as revenue deferred on the sale of solution products for software updates and technical support. The following table presents the changes in deferred revenue (in thousands): Years Ended December 31, 2018 2017 2016 Balance at the beginning of the period $ 7,681 $ 6,390 $ 5,164 Deferred revenue 8,640 6,320 4,979 Recognition of deferred revenue (7,622) (5,029) (3,753) Balance at the end of the period $ 8,699 $ 7,681 $ 6,390 Revenue allocated to remaining performance obligations represent contracted revenue that has not yet been recognized (“contracted not recognized”), which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. Contracted but not recognized revenue was $9.8 million as of December 31, 2018, of which the Company expects to recognize approximately 44% of the revenue over the next 12 months and the remainder over a period of three to four years. Assets Recognized from the Costs to Obtain a Contract with a Customer The Company has elected to immediately expense contract acquisition costs that would be amortized in one year or less. The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if the benefit of those costs is expected to be longer than one year; these incremental costs were immaterial for all periods presented.

Income Taxes

Income Taxes	12 Months Ended
	Dec. 31, 2018
Income Taxes
Income Taxes	8. Income Taxes On December 22, 2017, the United States enacted tax reform legislation commonly referred to as the Tax Cuts and Jobs Act (“the Tax Act”). The Tax Act made broad and complex changes to the U.S. tax code, including, but not limited to, a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018. The Company was required to recognize the effect of the tax law changes in the period of enactment. In order to calculate the effect of the Tax Act, the Company was required to determine the transition tax amount and remeasure U.S. deferred tax assets and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which allowed the Company to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. For the year ended December 31, 2017, the Company recorded provisional amounts in accordance SAB 118 where it was possible to make reasonable estimates of the effects of the Tax Act. The Tax Act reduced the U.S. federal corporate tax rate from 34% to 21% for tax years beginning after December 31, 2017. The Company evaluated the decrease in the tax rate and recorded a provisional, one-time tax expense of approximately $9.0 million as of December 31, 2017. This expense was offset by an equal change in the valuation allowance, resulting in a net tax expense or benefit of $0. The Company also recorded a one-time tax benefit and corresponding reduction to the valuation allowance of $0.4 million related to Alternative Minimum Tax credit carryforwards that are expected to be refundable as of December 31, 2017; the Tax Act contributed to $0.2 million of this tax benefit. During the year ended December 31, 2018, the Company recorded the federal income tax impact of the one-time mandatory transition tax on unrepatriated foreign earnings under the Tax Act resulting in a one-time deferred tax expense of $0.5 million. The Company fully offset the one-time deferred tax expense with a corresponding reduction to the valuation allowance of $0.5 million. All aspects of the Tax Act were accounted for prior to the closure of the one-year measurement period provided by SAB 118. The Tax Act also created a new requirement on global intangible low-taxed income (“GILTI”) earned by foreign subsidiaries for tax years beginning on or after January 1, 2018. The GILTI provisions require foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s assets to be included in the Company’s U.S. income tax return. Under U.S. GAAP, the Company is permitted to make an accounting policy election to either treat taxes due on future inclusions in U.S. taxable income related to GILTI as a current-period expense when incurred or to factor such amounts into the Company's measurement of its deferred taxes. The Company has made the election to account for GILTI as a component of current taxes incurred rather than as a component of deferred taxes. The domestic and foreign components of net income before income tax expense consists of the following for the periods shown below (in thousands): Years Ended December 31, 2018 2017 2016 Income before income taxes: Domestic $ 20,553 $ 10,848 $ 5,619 Foreign 296 3,039 (2,121) Total income before income taxes $ 20,849 $ 13,887 $ 3,498 The provision for income taxes consisted of the following components (in thousands): Years Ended December 31, 2018 2017 2016 Current: Domestic Federal $ (687) $ (511) $ 400 State 77 121 232 Foreign 308 490 522 Total current tax expense (302) 100 1,154 Deferred: Domestic Federal 1,817 6,322 1,313 State 669 (1,136) (458) Foreign (219) 896 (1,068) Valuation allowance (24,956) (7,750) (9,741) Total deferred tax benefit (22,689) (1,668) (9,954) Total income tax benefit $ (22,991) $ (1,568) $ (8,800) A reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate follows: Years Ended December 31, 2018 2017 2016 Federal income tax rate 21.0 % 34.0 % 35.0 % State taxes, net of federal benefit (20.1) (1.8) (21.9) Stock-based compensation (27.0) (56.6) 26.0 162(m) deductible compensation limitation 5.1 — — Research and development credits (1.4) (2.5) (1.1) Change in valuation allowance (95.5) (58.9) (294.6) Non-deductible acquisition costs 0.2 0.3 4.0 Return to provision adjustments 2.9 (2.1) (6.5) Permanent items 3.8 4.2 3.3 Capital loss write-off - 5.4 - Deferred tax rate changes - US income tax reform - 67.3 - Differences in foreign tax rates 0.3 (1.8) (0.6) Other, net 0.4 1.2 4.8 Effective income tax rate (110.3) % (11.3) % (251.6) % Deferred tax assets and (liabilities) are comprised of the following (in thousands): December 31, 2018 2017 Deferred tax assets: Reserves and accruals $ 2,757 $ 3,443 Inventories 1,095 1,906 Net operating loss carryforwards 14,621 17,354 Property, plant and equipment 1,491 1,073 Stock-based compensation 1,853 2,283 Research and development credit carryforwards 5,300 5,435 Other 111 — Total deferred tax assets 27,228 31,494 Valuation allowance (354) (25,346) Total deferred tax assets 26,874 6,148 Deferred tax liabilities: Undistributed earnings of foreign subsidiaries — (190) Intangible assets (3,776) (5,493) Other — (1) Total deferred tax liabilities (3,776) (5,684) Net deferred tax asset $ 23,098 $ 464 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. We have historically provided a full valuation allowance against the deferred tax assets of our domestic and U.K. operations. Given our current level of pre-tax income in the U.S., and assuming, at a minimum, we maintain our current level of pre-tax income, we expect to fully utilize our U.S. federal and state net operating loss carryforward balances. As a result, in the fourth quarter 2018, we released the full valuation allowance against our U.S. federal and state deferred tax assets, with the exception of our foreign tax credit carryovers, resulting in a non-cash benefit to income tax expense. Due to the net losses incurred and the uncertainty of realizing the deferred tax assets in the U.K., we continue to maintain a full valuation allowance against the deferred tax assets of our U.K. operations. To the extent that the Company generates positive income and expects, with reasonable certainty, to continue to generate positive income in the U.K., 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. The net valuation allowance decreased by approximately $25.0 million and $0.1 million and during the years ended December 31, 2018 and 2017, respectively. Net operating loss and tax credit carryforwards as of December 31, 2018 are as follows (in thousands): Amount Expiration Years Net operating losses, federal $ 57,054 2026 - 2037 Net operating losses, state 61,087 2020 - 2037 Tax credit carryforwards, federal 6,449 2023 -2034 Tax credit carryforwards, state 2,788 2019 - 2028 Net operating losses, foreign 535 None The following is a reconciliation of the changes in the gross balance of unrecognized tax benefits, excluding interest and penalties (in thousands): Years Ended December 31, 2018 2017 2016 Balance at the beginning of the period $ 3,583 $ 3,583 $ 3,583 Current year additions — — — Balance at the end of the period $ 3,583 $ 3,583 $ 3,583 No additional unrecognized tax benefits were computed for the 2018, 2017 or 2016 tax years, pending completion of a U.S. federal research and development credit tax study. Domestic research and development credits are the only source of unrecognized tax benefits. As there are no new domestic credits, there is no current year change in unrecognized tax benefits. As of December 31, 2018, the amount of unrecognized tax benefits that would, if recognized, impact the Company’s effective income tax rate is approximately $3.6 million. 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 federal income tax as well as income tax of multiple state and foreign jurisdictions. The Company is no longer subject to income tax examinations for the following jurisdictions and years: federal, for years before 2015; state and local, for years before 2014; or foreign; for years before 2013. However, federal net operating loss and credit carryforwards from all years are subject to examination and adjustments for at least three years following the year in which the attributes are used. During the year ended December 31, 2018, the Company concluded a U.S. federal income tax examination with the IRS for the tax years ended December 31, 2015 and December 31, 2016. The examination resulted in reductions to U.S. federal NOL carryovers of $0.6 million. The Company recognized a deferred tax expense of $0.1 million as a result of the IRS exam, which was offset by a corresponding reduction in the valuation allowance and a deferred tax benefit of $0.1 million, for a net tax impact of $0. At December 31, 2018, the Company had undistributed foreign earnings of $0.5 million, which the Company intends to permanently reinvest in foreign subsidiaries in Australia. The undistributed foreign earnings from Australia have already been taxed for US income tax purposes, and due to the tax treaty between the US and Australia, any dividends from Australia would likely be subject to a preferential dividend withholding tax rate of 0%. Accordingly, the Company has not recorded a deferred tax liability in connection with the permanently reinvested unremitted Australian earnings. The Company anticipates that future overseas earnings in th is jurisdiction will also be reinvested indefinitely. In accordance with the indefinite reinvestment criteria, the foreign currency gains recorded in other comprehensive income related to foreign currency translation in these jurisdictions have not been tax effected.

Equity Compensation

Equity Compensation	12 Months Ended
	Dec. 31, 2018
Equity Compensation
Equity Compensation	9. 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. 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. On January 1, 2019, the number of reserved shares was increased by 1,325,845 in accordance with the provisions of the 2013 Plan. A summary of stock option activity for the years ended December 31, 2018, 2017 and 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 4,572,672 $ 10.72 Granted 50,000 $ 4.63 8.16 Exercised (685,798) 5.01 Expired (76,907) 14.96 Forfeited (83,562) 14.81 Balance at December 31, 2016 3,776,405 11.55 Exercised (1,617,659) 10.48 Expired (60,275) 17.51 Forfeited (28,669) 16.70 Balance at December 31, 2017 2,069,802 12.13 Exercised (979,586) 11.20 Expired (3,212) 5.95 Forfeited (5,792) 13.30 Balance at December 31, 2018 1,081,212 12.98 Exercisable options at December 31, 2018 1,031,239 13.16 4.6 Vested and expected to vest at December 31, 2018 1,081,212 12.98 4.6 The following table summarizes information about stock options outstanding and exercisable at December 31, 2018: 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) $ - 6.18 286,951 2.6 282,443 2.5 $ - 10.54 280,219 5.2 234,876 5.0 $ - 15.60 281,973 5.8 281,851 5.8 $ - 21.15 232,069 5.1 232,069 5.1 1,081,212 1,031,239 The total fair value of stock option awards vested during the years ended December 31, 2018, 2017, and 2016 was $1.9 million, $3.9 million and $5.4 million, respectively. The following table summarizes the aggregate intrinsic‑value of options exercised, outstanding and exercisable (in thousands): For the Years Ended and as of December 31, 2018 2017 2016 Options Exercised $ 18,616 $ 19,966 $ 3,312 Options Exercisable 5,420 31,841 6,089 Options Vested and Expected to Vest 5,836 36,489 6,280 The Company did not grant any option awards during 2018 or 2017. The fair value of each option awarded during the year ended December 31, 2016, was estimated using an expected volatility of 62%, no expected dividends, an expected term of 6.1 years, and a risk-free rate of 1.1%. Restricted stock units A summary of restricted stock unit activity for the years ended December 31, 2018, 2017, and 2016 is presented below: Number of Weighted Average Shares Grant Date Fair Value Non-vested balance at December 31, 2015 425,000 $ 8.18 Awarded 1,147,946 7.40 Vested (35,340) 7.85 Forfeited (141,219) 7.66 Non-vested balance at December 31, 2016 1,396,387 7.60 Awarded 783,060 11.28 Vested (823,620) 7.62 Forfeited (65,167) 8.82 Non-vested balance at December 31, 2017 1,290,660 9.75 Awarded 461,350 28.46 Vested (866,515) 9.97 Forfeited (61,130) 12.71 Non-vested balance at December 31, 2018 824,365 19.77 The total fair value of awards vested during the years ended December 31, 2018, 2017 and 2016 was $22.2 million, $16.0 million and $0.4 million, respectively. During the year ended December 31, 2018, 866,515 restricted stock units vested of which 287,050 shares were withheld for tax purposes resulting in the issuance of 579,465 shares of common stock. The aggregate intrinsic value of unvested restricted stock at December 31, 2018 was $14.5 million. The aggregate intrinsic value represents the total pretax intrinsic value, based on the Company’s stock price of $17.60 as of December 31, 2018, which would have been received by the restricted stock unit participants had all restricted stock units been vested as of that date. Stock-based compensation expense Total stock‑based compensation expense has been classified as follows in the accompanying Consolidated Statements of Operations (in thousands): Years Ended December 31, 2018 2017 2016 Cost of revenue $ 247 $ 251 $ 171 Research and development 4,379 4,242 3,256 Sales and marketing 3,770 3,662 2,273 General and administrative 5,115 3,950 2,670 Total stock-based compensation expense $ 13,511 $ 12,105 $ 8,370 For the years ended December 31, 2018, 2017 and 2016, we recognized tax benefits on total stock-based compensation expense, which are reflected in the provision for income taxes in the Consolidated Statements of Operations, of $10.1 million, $0.6 million, and $0.1 million, respectively. For the year ended December 31, 2018, we recognized $4.5 million in tax benefits from stock option awards exercised. At December 31, 2018, there was $0.7 million of total unrecognized compensation cost related to non‑vested stock option awards that will be recognized over a weighted‑average period of 0.4 years. At December 31, 2018, there was $10.5 million of total unrecognized compensation cost related to non-vested restricted stock units that will be recognized over a weighted-average period of 1.7 years. Company Matching Contribution to 401(k) Plan The Company offers a 401(k) Plan and in November 2016, the Board of Directors authorized a matching contribution by the Company starting in 2017. Matching contributions are as follows: the Company will match 100% of the first 1% of salary contributed by a participant, and 50% of the next 5% of salary contributed by a participant, for a maximum matching contribution of 3.5% of the salary of a participant up to the limit on contributions imposed by the IRS. Currently, the Company funds its match in contribution with shares of Control4’s common stock. During the years ended December 31, 2018 and 2017, the Company contributed 62,230 and 65,171 shares of stock, respectively, to employees under this plan and recorded $1.5 million and $1.4 million of expenses, respectively, associated with this contribution.

Share Repurchases

Share Repurchases	12 Months Ended
	Dec. 31, 2018
Share Repurchases
Share Repurchases	10. Share Repurchases From time to time, the Company’s Board of Directors has authorized the repurchase of Control4 common stock on the open market. In February 2018, the Company’s Board of Directors authorized the expansion of the repurchase program providing approval for the Company to repurchase up to $20 million in Control4 common stock from time to time on the open market until June 2019. In October 2018, the Board of Directors increased the approval limit by another $20 million. During the years ended December 31, 2018 and 2017, the Company repurchased 937,264 and 119,007 shares of common stock for $23.9 million and $1.8 million, respectively. As of December 31, 2018, the Company is authorized to purchase up to an additional $16.1 million in Control4 common stock through June 2019.

Commitments and Contingencies

Commitments and Contingencies	12 Months Ended
	Dec. 31, 2018
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 2019 and 2025. 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 lease term and has accrued for rental expense recorded but not paid. Rental expense was approximately $3.8 million, $2.9 million and $2.5 million, for the years ended December 31, 2018, 2017 and 2016, 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 December 31, 2018 (in thousands): 2019 $ 4,865 2020 4,634 2021 2,420 2022 864 2023 612 Thereafter 699 $ 14,094 Purchase Commitments The Company had non‑cancellable purchase commitments for the purchase of inventory, which extend through October 2019 totaling approximately $59.6 million as of December 31, 2018. 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 December 31, 2018, as there were no outstanding claims. Legal Matters From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. The Company is not presently a party to any legal proceedings, that if determined adversely to Control4, would individually or in the aggregate have a material adverse effect on the business, results of operations, financial condition or cash flows.

Subsequent Events

Subsequent Events	12 Months Ended
	Dec. 31, 2018
Subsequent Events.
Subsequent Events	12. Subsequent Events On February 1, 2019, Control4 acquired all the outstanding shares of common stock of the Switzerland-based company, NEEO AG. In accordance with the terms and conditions of the stock purchase agreement, Control4 agreed to acquire all the outstanding shares of common stock for a purchase price of $11.0 million in cash. Control4 will hold 15% of the purchase price, less the amount paid to satisfy convertible loan debt, in escrow for up to 18 months to cover any of the sellers’ post-closing obligations, including without limitation any indemnification obligations that may arise. In addition, Control4 granted retention RSUs to certain key employees of NEEO upon their acceptance of employment offers with Control4. These RSUs will be granted pursuant to Control4’s 2013 Stock Option and Incentive Plan and will vest over three years. The Company is in the process of determining the fair values of the net assets acquired and will include NEEO’s results of operations in its financial statements with effect from the purchase date. Due to the timing of the acquisition, it is not currently practicable to include any preliminary disclosures of estimated fair values or pro forma information.

Description of Business and S_2

Description of Business and Summary of Significant Accounting Policies (Policies)	12 Months Ended
	Dec. 31, 2018
Description of Business and Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation The consolidated financial statements include the accounts of the Company and its wholly‑owned subsidiaries. All intercompany balances and transactions have been eliminated in the 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 is 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 December 31, 2018 and 2017. No dealer or distributor accounted for more than 10% of total revenue for the years ended December 31, 2018, 2017 and 2016. 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.
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, three, or ten years depending on product type and brand. 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 (in thousands): Years Ended December 31, 2018 2017 2016 Balance at the beginning of the period $ 2,032 $ 1,945 $ 1,415 Warranty costs accrued 4,040 3,147 2,458 Warranty claims (3,548) (3,060) (1,928) Balance at the end of the period $ 2,524 $ 2,032 $ 1,945
Net Income Per Share	Net Income Per Share Basic net income per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period that have a dilutive effect on net income per share. Potentially dilutive common shares result from the assumed exercise of outstanding stock options and 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 per share (in thousands): Years Ended December 31, 2018 2017 2016 Numerator: Net income $ 43,840 $ 15,455 $ 12,298 Denominator: Weighted average common stock outstanding for basic net income per common share 26,235 24,803 23,402 Effect of dilutive securities—stock options and restricted stock units 1,249 1,972 958 Weighted average common shares and dilutive securities outstanding 27,484 26,775 24,360 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 per share (in thousands): Years Ended December 31, 2018 2017 2016 Options to purchase common stock — 660 2,328 Restricted stock units 98 5 17 Total 98 665 2,345
Cost of Revenue	Cost of Revenue Cost of revenue includes the following: the cost of inventory sold during the period, inventory write‑down costs, payroll, purchasing costs, royalty obligations, shipping expenses to dealers and distributors and warehousing costs, which include inbound freight costs from manufacturers, rent, payroll and benefit costs, acquisition-related costs, amortization of intangible assets and depreciation.
Cash and Cash Equivalents	Cash and Cash Equivalents The Company considers all highly liquid short‑term investments with original maturities of three months or less at the time of purchase to be cash equivalents. Cash equivalents consist primarily of money market funds.
Restricted Cash	Restricted Cash Restricted cash as of December 31, 2018 and 2017, is composed of a guarantee made by the Company’s subsidiary in the United Kingdom to HM Revenue & Customs related to a customs duty deferment account.
Inventories	Inventories Inventories consist primarily of hardware and related component parts and are stated at the lower of cost or net realizable value using the first‑in, first‑out method. The Company periodically assesses the recoverability of its inventory and reduces the carrying value of the inventory when items are determined to be obsolete, defective or in excess of forecasted sales requirements. Inventory write‑downs for excess, defective and obsolete inventory are recorded as a cost of revenue and totaled $4.2 million, $4.1 million, and $3.1 million, for the years ended December 31, 2018, 2017 and 2016, respectively.
Property and Equipment	Property and Equipment Property and equipment are recorded at historical cost, less accumulated depreciation. Depreciation is computed using the straight‑line method over the following estimated useful lives: Computer equipment and software - 4 years Manufacturing tooling and test equipment - 4 years Lab and warehouse equipment - 5 years Furniture and fixtures - 5 years Other - 3 years Maintenance and repairs that do not extend the life of or improve the asset are expensed in the year incurred. Leasehold improvements are depreciated over the estimated useful life (usually 3‑8 years) or the life of the associated lease, whichever is less.
Intangible Assets	Intangible Assets Intangible assets primarily consist of acquired technology, customer relationships and trademarks/trade names. The Company amortizes, to cost of revenue and operating expenses, definite‑lived intangible assets on a straight‑line basis over the life of the asset.
Impairment of Long-Lived Assets and Goodwill	Impairment of Long‑Lived Assets and Goodwill The carrying value of long‑lived assets is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. An impairment loss is recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded is calculated by the excess of the asset’s carrying value over its fair value. Fair value is generally determined using a discounted cash flow analysis. The Company tests goodwill for impairment annually as of October 1, or whenever events or changes in circumstances indicate that goodwill may be impaired. The Company initially assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, the Company determines it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then the Company compares the reporting unit’s carrying amount to its fair value. If the reporting unit’s carrying amount exceeds its fair value, an impairment charge is recorded based on that difference. There was no impairment of long-lived assets or goodwill during the years ended December 31, 2018, 2017 and 2016.
Foreign Currency Translation	Foreign Currency Translation The functional currency of the Company’s subsidiaries in the United Kingdom, Germany and Serbia, Australia, China, and India are the pound sterling, the euro, the Australian dollar, the Chinese yuan, and the Indian rupee, respectively. The subsidiary’s assets and liabilities have been translated to U.S. dollars using the exchange rates in effect at the balance sheet dates. Statements of operations amounts have been translated using the monthly average exchange rate for each year. Resulting gains or losses from translating foreign currency financial statements are recorded as other comprehensive income (loss). Foreign currency transaction gains and losses resulting from exchange rate fluctuations on transactions denominated in a currency other than the local currency are primarily included in other income (expense). The Company enters 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 recognized a foreign exchange loss, net of the foreign currency derivatives, of $1.6 million, $0.1 million and $0.6 million for the years ended December 31, 2018, 2017 and 2016, respectively.
Stock-Based Compensation	Stock‑Based Compensation The Company recognizes compensation expense for all stock‑based awards issued to employees and directors based on estimated grant date fair values. Stock-based awards issued to non-employees in exchange for goods or services are recognized and expensed using the same methodology. The Company selected the Black‑Scholes option‑pricing model to determine the estimated fair value at the date of grant for stock options. The Black‑Scholes option‑pricing model requires management assumptions regarding various factors that require extensive use of accounting judgment and financial estimates. The Company estimates the expected term for options using the simplified method, which utilizes the weighted average expected life of each tranche of the stock option, determined based on the sum of each tranche’s vesting period plus one‑half of the period from the vesting date of each tranche to the stock option’s expiration, because the Company’s options are considered “plain vanilla.” The Company computed the expected volatility using multiple peer companies for a period approximating the expected term. The risk‑free interest rate was determined using the implied yield on U.S. Treasury issues with a remaining term within the expected life of the award. The fair value of each restricted stock unit award is based on the number of shares granted and the closing price of the Company’s common stock as reported on the NASDAQ Global Select Market. The Company elected to amortize compensation expense using the straight‑line attribution method, under which stock‑based compensation expense is recognized on a straight‑line basis over the period the employee performs the related services, generally the vesting period, net of estimated forfeitures. The Company has elected to recognize forfeitures as they occur.
Income Taxes	Income Taxes The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to the differences between the financial statement carrying value of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the fiscal year in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company operates in various tax jurisdictions and is subject to audit by various tax authorities. The Company provides for tax contingencies whenever it is deemed probable that a tax asset has been impaired or a tax liability has been incurred for events such as tax claims or changes in tax laws. Tax contingencies are based upon their technical merits, relative tax law and the specific facts and circumstances as of each reporting period. Changes in facts and circumstances could result in material changes to the amounts recorded for such tax contingencies. The Company recognizes uncertain income tax positions taken on income tax returns at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. The Company’s policy for recording interest and penalties associated with uncertain tax positions is to record such items as a component of its income tax provision. During the years ended December 31, 2018, 2017 and 2016, the Company did not record any material interest income, interest expense or penalties related to uncertain tax positions or the settlement of audits for prior periods.
Presentation of Certain Taxes	Presentation of Certain Taxes The Company collects various taxes from dealers and distributors and remits these amounts to the applicable taxing authorities. The Company’s accounting policy is to exclude these taxes from revenue and cost of revenue.
Research and Development	Research and Development Research and development expenses consist primarily of personnel costs, including incentive compensation, depreciation associated with research and development equipment, contract labor and consulting services, facilities‑related costs, and travel‑related costs. Research and development costs are expensed as incurred.
Sales and Marketing	Sales and Marketing Sales and marketing expenses consist primarily of personnel costs and related travel expenses for sales and marketing personnel, including non-cash stock-based compensation expense. Sales and marketing expenses also include expenses associated with trade shows, marketing events, advertising, training and other marketing-related programs. Advertising and other promotional costs are expensed as incurred and were $1.9 million, $1.3 million, and $1.2 million, for the years ended December 31, 2018, 2017, and 2016, respectively.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, “Disclosure Update and Simplification,” amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. This analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule is effective as of November 5, 2018. The adoption of this final rule will not have a material impact on the interim condensed consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting,” which expands the scope of Topic 718 to include all share-based payment transactions for acquiring goods and services from non-employees. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company elected to early-adopt this standard in the current period; the adoption of this standard did not impact the consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “ Statement of Cash Flows (Topic 230): Restricted Cash ,” which provides amendments to current guidance to address the classifications and presentation of changes in restricted cash in the statement of cash flows. The effective date for the standard is for fiscal years beginning after December 15, 2017. The Company adopted the standard effective January 1, 2018; the adoption of this standard did not have a material impact on the consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, “ Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory .” The amendments in this update will require recognition of current and deferred income taxes resulting from an intra-entity transfer of an asset other than inventory when the transfer occurs. This update is effective for annual and interim periods beginning after December 15, 2017. The Company adopted the standard effective January 1, 2018; the adoption of this standard did not have a material impact on the consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326)” which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. For trade receivables, the Company will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The guidance is effective for fiscal years beginning after December 31, 2019, including interim periods within those years. Early application of the guidance is permitted for all entities for fiscal years beginning after December 15, 2018, including the interim periods within those fiscal years. Application of the amendments is through a cumulative-effect adjustment to retained earnings as of the effective date. The Company is currently evaluating the impact of this update on the consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842 ) ,” which supersedes the guidance in ASC 840, “Leases .” The purpose of the new standard is to improve transparency and comparability related to the accounting and reporting of leasing arrangements. The guidance will require balance sheet recognition for assets and liabilities associated with rights and obligations created by leases with terms greater than twelve months. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. Although the standard initially required the modified retrospective approach for adoption, in July 2018, the FASB issued ASU 2018-18, allowing companies to initially apply the new lease requirements at the effective date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Early adoption is permitted. The Company expects the standard will have a material impact on the Company’s consolidated balance sheets but will not have a material impact on the consolidated statements of operations. The most significant impact will be the recognition of right of use assets and lease liabilities for operating leases. In connection with the adoption of the new lease accounting standard, the Company has completed scoping reviews and continues to make progress implementing new processes, systems, accounting policies and internal controls relevant to the standard. The Company will adopt this standard on January 1, 2019 using the prospective adoption approach and has elected to use the practical expedients allowed under the standard.

Description of Business and S_3

Description of Business and Summary of Significant Accounting Policies (Tables)	12 Months Ended
	Dec. 31, 2018
Description of Business and Summary of Significant Accounting Policies
Schedule of changes in the product warranty liability	The following table presents the changes in the product warranty liability (in thousands): Years Ended December 31, 2018 2017 2016 Balance at the beginning of the period $ 2,032 $ 1,945 $ 1,415 Warranty costs accrued 4,040 3,147 2,458 Warranty claims (3,548) (3,060) (1,928) Balance at the end of the period $ 2,524 $ 2,032 $ 1,945
Schedule of reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per share	The following table presents the reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per share (in thousands): Years Ended December 31, 2018 2017 2016 Numerator: Net income $ 43,840 $ 15,455 $ 12,298 Denominator: Weighted average common stock outstanding for basic net income per common share 26,235 24,803 23,402 Effect of dilutive securities—stock options and restricted stock units 1,249 1,972 958 Weighted average common shares and dilutive securities outstanding 27,484 26,775 24,360
Schedule of anti-dilutive weighted-average common stock equivalents excluded from the calculation of diluted net income per share	The following weighted-average common stock equivalents were anti-dilutive and therefore were excluded from the calculation of diluted net income per share (in thousands): Years Ended December 31, 2018 2017 2016 Options to purchase common stock — 660 2,328 Restricted stock units 98 5 17 Total 98 665 2,345
Schedule of estimated useful lives of property and equipment	Computer equipment and software - 4 years Manufacturing tooling and test equipment - 4 years Lab and warehouse equipment - 5 years Furniture and fixtures - 5 years Other - 3 years

Balance Sheet Components (Table

Balance Sheet Components (Tables)	12 Months Ended
	Dec. 31, 2018
Balance Sheet Components
Schedule of inventories	Inventories consisted of the following (in thousands): December 31, December 31, 2018 2017 Finished goods $ 39,142 $ 33,050 Component parts 3,490 4,025 Work-in-process 52 96 $ 42,684 $ 37,171
Schedule of property and equipment, net	Property and equipment, net consisted of the following (in thousands): December 31, December 31, 2018 2017 Computer equipment and software $ 5,380 $ 5,030 Manufacturing tooling and test equipment 4,598 4,894 Lab and warehouse equipment 5,938 4,869 Leasehold improvements 5,954 3,960 Furniture and fixtures 4,670 3,698 Other 1,159 1,086 27,699 23,537 Less: accumulated depreciation (18,036) (16,200) $ 9,663 $ 7,337
Schedule of other assets	Other assets consisted of the following (in thousands): December 31, December 31, 2018 2017 Deferred tax asset $ 23,098 $ 464 Deposits 2,183 404 Other 175 750 $ 25,456 $ 1,618
Schedule of accrued liabilities	Accrued liabilities consisted of the following (in thousands): December 31, December 31, 2018 2017 Sales returns and current portion of warranty liability $ 2,539 $ 2,872 Compensation accruals 5,444 5,241 Other accrued liabilities 1,159 2,722 $ 9,142 $ 10,835
Schedule of other long-term liabilities	Other long-term liabilities consisted of the following (in thousands): December 31, December 31, 2018 2017 Deferred revenue $ 3,192 $ 3,143 Warranty 875 600 Other 1,272 199 $ 5,339 $ 3,942

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	12 Months Ended
	Dec. 31, 2018
Fair Value Measurements
Schedule of cash and available-for-sale investments' adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term investments	The following tables show the Company’s cash and available-for-sale investments’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term investments as of December 31, 2018 and December 31, 2017 (in thousands): December 31, 2018 Cash and Adjusted Unrealized Unrealized Cash Short-term Long-term Cost Gains Losses Fair Value Equivalents Investments Investments Cash $ 30,501 $ — $ — $ 30,501 $ 30,501 $ — $ — Level 1: Money market funds 6,903 — — 6,903 6,903 — — U.S. government notes 10,420 — (14) 10,406 — 10,406 — Subtotal 17,323 — (14) 17,309 6,903 10,406 — Level 2: Corporate bonds 21,612 1 (37) 21,576 — 21,576 — Commercial paper 23,803 — — 23,803 2,991 20,812 — Subtotal 45,415 1 (37) 45,379 2,991 42,388 — Total $ 93,239 $ 1 $ (51) $ 93,189 $ 40,395 $ 52,794 $ — December 31, 2017 Cash and Adjusted Unrealized Unrealized Cash Short-term Long-term Cost Gains Losses Fair Value Equivalents Investments Investments Cash $ 24,367 $ — $ — $ 24,367 $ 24,367 $ — $ — Level 1: Money market funds 5,394 — — 5,394 5,394 — — U.S. government notes 9,060 — (13) 9,047 — 4,098 4,949 Subtotal 14,454 — (13) 14,441 5,394 4,098 4,949 Level 2: Corporate bonds 24,943 — (49) 24,894 — 17,805 7,089 Commercial paper 22,154 — — 22,154 — 22,154 — Subtotal 47,097 — (49) 47,048 — 39,959 7,089 Total $ 85,918 $ — $ (62) $ 85,856 $ 29,761 $ 44,057 $ 12,038
Schedule of pre-tax income (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): Years Ended December 31, Income Statement Location 2018 2017 2016 Foreign exchange forward contracts Other income (expense), net $ 35 $ (1,662) $ 418

Goodwill and Intangible Assets

Goodwill and Intangible Assets (Tables)	12 Months Ended
	Dec. 31, 2018
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, 2017 $ 21,867 Measurement period adjustments (37) Foreign currency translation adjustment (300) Balance at December 31, 2018 $ 21,530
Schedule of company's intangible assets and related accumulated amortization	The Company’s intangible assets and related accumulated amortization consisted of the following as of December 31, 2018 and 2017 (in thousands): December 31, 2018 Gross Carrying Accumulated Amount Amortization Net Developed technology $ 17,495 $ (10,145) $ 7,350 Customer relationships 12,009 (4,050) 7,959 Trademark/trade name 6,776 (1,434) 5,342 Non-competition agreements 295 (295) — Total intangible assets $ 36,575 $ (15,924) $ 20,651 December 31, 2017 Gross Carrying Accumulated Amount Amortization Net Developed technology $ 19,626 $ (8,914) $ 10,712 Customer relationships 12,009 (2,556) 9,453 Trademark/trade name 6,776 (869) 5,907 Non-competition agreements 295 (286) 9 Total intangible assets $ 38,706 $ (12,625) $ 26,081
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): Years Ended December 31, 2018 2017 2016 Cost of revenue $ 3,397 $ 3,164 $ 3,052 Research and development 80 193 188 Sales and marketing 1,987 1,855 1,358 Total amortization of intangible assets $ 5,464 $ 5,212 $ 4,598
Schedule of amortization of finite lived intangible assets	Amortization of finite lived intangible assets as of December 31, 2018 is as follows for the next five years (in thousands): Amount 2019 $ 5,655 2020 4,604 2021 2,256 2022 2,093 2023 2,035 Thereafter 4,008 $ 20,651

Revenue Recognition (Tables)

Revenue Recognition (Tables)	12 Months Ended
	Dec. 31, 2018
Revenue Recognition
Schedule of adoption of ASC 606 impacted the Company’s previously reported results	The adoption of ASC 606 impacted the Company’s previously reported results as follows (in thousands, except per share data): Year Ended Year Ended December 31, December 31, 2017 2016 As previously reported ASC 606 adjustment As As previously reported ASC 606 adjustment As Revenue $ 244,725 $ (550) $ 244,175 $ 208,802 $ (672) $ 208,130 Income tax benefit (1,542) (26) (1,568) (8,784) (16) (8,800) Net income 15,979 (524) 15,455 12,954 (656) 12,298 Basic earnings per share $ 0.64 $ (0.02) $ 0.62 $ 0.55 $ (0.02) $ 0.53 Diluted earnings per share $ 0.60 $ (0.02) $ 0.58 $ 0.53 $ (0.03) $ 0.50 December 31, 2017 As previously reported ASC 606 adjustment As Other assets $ 1,576 $ 42 $ 1,618 Current portion of deferred revenue 2,311 2,227 4,538 Other long-term liabilities 882 3,060 3,942 Stockholders’ equity 174,773 (5,245) 169,528
Schedule of revenue from United States, Canada and all other international dealers and distributors combined	The following table sets forth revenue from the United States, Canada and all other international dealers and distributors combined (in thousands, except percentages): Years Ended December 31, 2018 2017 2016 Revenue-United States $ 187,852 $ 169,547 $ 147,713 Revenue-Canada 22,700 20,765 16,694 Revenue-all other international sources 61,906 53,863 43,723 Total revenue $ 272,458 $ 244,175 $ 208,130 International revenue (excluding Canada) as a percent of total revenue % % %
Summary of changes in the allowance for doubtful accounts	The following table presents the changes in the allowance for doubtful accounts (in thousands): Years Ended December 31, 2018 2017 2016 Balance at beginning of period $ 1,147 $ 981 $ 824 Provision 839 815 345 Write-offs (457) (649) (188) Balance at end of period $ 1,529 $ 1,147 $ 981
Schedule of changes in deferred revenue	The following table presents the changes in deferred revenue (in thousands): Years Ended December 31, 2018 2017 2016 Balance at the beginning of the period $ 7,681 $ 6,390 $ 5,164 Deferred revenue 8,640 6,320 4,979 Recognition of deferred revenue (7,622) (5,029) (3,753) Balance at the end of the period $ 8,699 $ 7,681 $ 6,390

Income Taxes (Tables)

Income Taxes (Tables)	12 Months Ended
	Dec. 31, 2018
Income Taxes
Schedule of domestic and foreign components of net income before income tax expense	The domestic and foreign components of net income before income tax expense consists of the following for the periods shown below (in thousands): Years Ended December 31, 2018 2017 2016 Income before income taxes: Domestic $ 20,553 $ 10,848 $ 5,619 Foreign 296 3,039 (2,121) Total income before income taxes $ 20,849 $ 13,887 $ 3,498
Schedule of components of provision for income taxes	The provision for income taxes consisted of the following components (in thousands): Years Ended December 31, 2018 2017 2016 Current: Domestic Federal $ (687) $ (511) $ 400 State 77 121 232 Foreign 308 490 522 Total current tax expense (302) 100 1,154 Deferred: Domestic Federal 1,817 6,322 1,313 State 669 (1,136) (458) Foreign (219) 896 (1,068) Valuation allowance (24,956) (7,750) (9,741) Total deferred tax benefit (22,689) (1,668) (9,954) Total income tax benefit $ (22,991) $ (1,568) $ (8,800)
Schedule of reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate	Years Ended December 31, 2018 2017 2016 Federal income tax rate 21.0 % 34.0 % 35.0 % State taxes, net of federal benefit (20.1) (1.8) (21.9) Stock-based compensation (27.0) (56.6) 26.0 162(m) deductible compensation limitation 5.1 — — Research and development credits (1.4) (2.5) (1.1) Change in valuation allowance (95.5) (58.9) (294.6) Non-deductible acquisition costs 0.2 0.3 4.0 Return to provision adjustments 2.9 (2.1) (6.5) Permanent items 3.8 4.2 3.3 Capital loss write-off - 5.4 - Deferred tax rate changes - US income tax reform - 67.3 - Differences in foreign tax rates 0.3 (1.8) (0.6) Other, net 0.4 1.2 4.8 Effective income tax rate (110.3) % (11.3) % (251.6) %
Schedule of deferred tax assets and (liabilities)	Deferred tax assets and (liabilities) are comprised of the following (in thousands): December 31, 2018 2017 Deferred tax assets: Reserves and accruals $ 2,757 $ 3,443 Inventories 1,095 1,906 Net operating loss carryforwards 14,621 17,354 Property, plant and equipment 1,491 1,073 Stock-based compensation 1,853 2,283 Research and development credit carryforwards 5,300 5,435 Other 111 — Total deferred tax assets 27,228 31,494 Valuation allowance (354) (25,346) Total deferred tax assets 26,874 6,148 Deferred tax liabilities: Undistributed earnings of foreign subsidiaries — (190) Intangible assets (3,776) (5,493) Other — (1) Total deferred tax liabilities (3,776) (5,684) Net deferred tax asset $ 23,098 $ 464
Schedule of net operating loss and tax credit carryforwards	Net operating loss and tax credit carryforwards as of December 31, 2018 are as follows (in thousands): Amount Expiration Years Net operating losses, federal $ 57,054 2026 - 2037 Net operating losses, state 61,087 2020 - 2037 Tax credit carryforwards, federal 6,449 2023 -2034 Tax credit carryforwards, state 2,788 2019 - 2028 Net operating losses, foreign 535 None
Schedule of reconciliation of the changes in the gross balance of unrecognized tax benefits, excluding interest and penalties	The following is a reconciliation of the changes in the gross balance of unrecognized tax benefits, excluding interest and penalties (in thousands): Years Ended December 31, 2018 2017 2016 Balance at the beginning of the period $ 3,583 $ 3,583 $ 3,583 Current year additions — — — Balance at the end of the period $ 3,583 $ 3,583 $ 3,583

Equity Compensation (Tables)

Equity Compensation (Tables)	12 Months Ended
	Dec. 31, 2018
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 4,572,672 $ 10.72 Granted 50,000 $ 4.63 8.16 Exercised (685,798) 5.01 Expired (76,907) 14.96 Forfeited (83,562) 14.81 Balance at December 31, 2016 3,776,405 11.55 Exercised (1,617,659) 10.48 Expired (60,275) 17.51 Forfeited (28,669) 16.70 Balance at December 31, 2017 2,069,802 12.13 Exercised (979,586) 11.20 Expired (3,212) 5.95 Forfeited (5,792) 13.30 Balance at December 31, 2018 1,081,212 12.98 Exercisable options at December 31, 2018 1,031,239 13.16 4.6 Vested and expected to vest at December 31, 2018 1,081,212 12.98 4.6
Summary of stock options outstanding and exercisable	The following table summarizes information about stock options outstanding and exercisable at December 31, 2018: 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) $ - 6.18 286,951 2.6 282,443 2.5 $ - 10.54 280,219 5.2 234,876 5.0 $ - 15.60 281,973 5.8 281,851 5.8 $ - 21.15 232,069 5.1 232,069 5.1 1,081,212 1,031,239
Summary of aggregate intrinsic-value of options exercised, outstanding and exercisable	The following table summarizes the aggregate intrinsic‑value of options exercised, outstanding and exercisable (in thousands): For the Years Ended and as of December 31, 2018 2017 2016 Options Exercised $ 18,616 $ 19,966 $ 3,312 Options Exercisable 5,420 31,841 6,089 Options Vested and Expected to Vest 5,836 36,489 6,280
Summary of restricted stock unit activity	Number of Weighted Average Shares Grant Date Fair Value Non-vested balance at December 31, 2015 425,000 $ 8.18 Awarded 1,147,946 7.40 Vested (35,340) 7.85 Forfeited (141,219) 7.66 Non-vested balance at December 31, 2016 1,396,387 7.60 Awarded 783,060 11.28 Vested (823,620) 7.62 Forfeited (65,167) 8.82 Non-vested balance at December 31, 2017 1,290,660 9.75 Awarded 461,350 28.46 Vested (866,515) 9.97 Forfeited (61,130) 12.71 Non-vested balance at December 31, 2018 824,365 19.77
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 Consolidated Statements of Operations (in thousands): Years Ended December 31, 2018 2017 2016 Cost of revenue $ 247 $ 251 $ 171 Research and development 4,379 4,242 3,256 Sales and marketing 3,770 3,662 2,273 General and administrative 5,115 3,950 2,670 Total stock-based compensation expense $ 13,511 $ 12,105 $ 8,370

Commitments and Contingencies (

Commitments and Contingencies (Tables)	12 Months Ended
	Dec. 31, 2018
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 December 31, 2018 (in thousands): 2019 $ 4,865 2020 4,634 2021 2,420 2022 864 2023 612 Thereafter 699 $ 14,094

Description of Business and S_4

Description of Business and Summary of Significant Accounting Policies (Segment) (Details)	12 Months Ended
	Dec. 31, 2018segment
Segment Reporting
Number of operating segments	1

Description of Business and S_5

Description of Business and Summary of Significant Accounting Policies (Warranties) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Changes in the product warranty liability
Balance at the beginning of the period	$ 2,032	$ 1,945	$ 1,415
Warranty costs accrued	4,040	3,147	2,458
Warranty claims	(3,548)	(3,060)	(1,928)
Balance at the end of the period	$ 2,524	$ 2,032	$ 1,945
Alternate
Product Warranty
Product warranty period	3 years
Minimum
Product Warranty
Product warranty period	2 years
Maximum
Product Warranty
Product warranty period	10 years

Description of Business and S_6

Description of Business and Summary of Significant Accounting Policies (EPS) (Details) - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Numerator:
Net income	$ 43,840	$ 15,455	$ 12,298
Denominator:
Weighted average common stock outstanding for basic net income per common share (in shares)	26,235	24,803	23,402
Effect of dilutive securities—stock options and restricted stock units (in shares)	1,249	1,972	958
Weighted average common shares and dilutive securities outstanding (in shares)	27,484	26,775	24,360

Description of Business and S_7

Description of Business and Summary of Significant Accounting Policies (Anti-dilutive) (Details) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Anti-dilutive weighted-average common stock equivalents excluded from the calculation of diluted net income per share
Total (in shares)	98	665	2,345
Options | Common Stock
Anti-dilutive weighted-average common stock equivalents excluded from the calculation of diluted net income per share
Total (in shares)		660	2,328
Restricted stock units
Anti-dilutive weighted-average common stock equivalents excluded from the calculation of diluted net income per share
Total (in shares)	98	5	17

Description of Business and S_8

Description of Business and Summary of Significant Accounting Policies (Inventories) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Inventories
Inventory write-downs	$ 4.2	$ 4.1	$ 3.1

Description of Business and S_9

Description of Business and Summary of Significant Accounting Policies (PPE) (Details)	12 Months Ended
	Dec. 31, 2018
Computer equipment and software | Minimum
Property and equipment
Estimated useful lives	3 years
Computer equipment and software | Maximum
Property and equipment
Estimated useful lives	4 years
Manufacturing tooling and test equipment | Minimum
Property and equipment
Estimated useful lives	3 years
Manufacturing tooling and test equipment | Maximum
Property and equipment
Estimated useful lives	4 years
Lab and warehouse equipment | Minimum
Property and equipment
Estimated useful lives	2 years
Lab and warehouse equipment | Maximum
Property and equipment
Estimated useful lives	5 years
Furniture and fixtures | Minimum
Property and equipment
Estimated useful lives	2 years
Furniture and fixtures | Maximum
Property and equipment
Estimated useful lives	5 years
Other | Minimum
Property and equipment
Estimated useful lives	2 years
Other | Maximum
Property and equipment
Estimated useful lives	3 years
Leasehold improvements | Minimum
Property and equipment
Estimated useful lives	3 years
Leasehold improvements | Maximum
Property and equipment
Estimated useful lives	8 years

Description of Business and _10

Description of Business and Summary of Significant Accounting Policies (Impairment of Long-Lived Assets and Goodwill) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Description of Business and Summary of Significant Accounting Policies
Impairment of long lived assets	$ 0	$ 0	$ 0
Impairment of goodwill	$ 0	$ 0	$ 0

Description of Business and _11

Description of Business and Summary of Significant Accounting Policies (Foreign Currency Translation) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Description of Business and Summary of Significant Accounting Policies
Foreign exchange losses, net of the foreign currency derivatives	$ 1.6	$ 0.1	$ 0.6

Description of Business and _12

Description of Business and Summary of Significant Accounting Policies (SBC) (Details)	12 Months Ended
	Dec. 31, 2018
Stock-Based Compensation
Percentage of period from the vesting date added for determination of weighted average expected life	0.50%

Description of Business and _13

Description of Business and Summary of Significant Accounting Policies (Sales and Marketing) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Advertising
Advertising and other promotional cost	$ 1.9	$ 1.3	$ 1.2

Balance Sheet Components (Inven

Balance Sheet Components (Inventories, Property and Equipment) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Inventories
Finished goods	$ 39,142	$ 33,050
Component parts	3,490	4,025
Work-in-process	52	96
Total inventories	42,684	37,171
Property and equipment, net
Property and equipment, gross	27,699	23,537
Less: accumulated depreciation	(18,036)	(16,200)
Property and equipment, net	9,663	7,337
Computer equipment and software
Property and equipment, net
Property and equipment, gross	5,380	5,030
Manufacturing tooling and test equipment
Property and equipment, net
Property and equipment, gross	4,598	4,894
Lab and warehouse equipment
Property and equipment, net
Property and equipment, gross	5,938	4,869
Leasehold improvements
Property and equipment, net
Property and equipment, gross	5,954	3,960
Furniture and fixtures
Property and equipment, net
Property and equipment, gross	4,670	3,698
Other
Property and equipment, net
Property and equipment, gross	$ 1,159	$ 1,086

Balance Sheet Components (Other

Balance Sheet Components (Other Assets) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Other assets
Deferred tax asset	$ 23,098	$ 464
Deposits	2,183	404
Other	175	750
Total other assets	$ 25,456	$ 1,618

Balance Sheet Components (Accru

Balance Sheet Components (Accrued liabilities) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Accrued liabilities
Sales returns and current portion of warranty liability	$ 2,539	$ 2,872
Compensation accruals	5,444	5,241
Other accrued liabilities	1,159	2,722
Total accrued liabilities	$ 9,142	$ 10,835

Balance Sheet Components (Oth_2

Balance Sheet Components (Other long-term liabilities) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Balance Sheet Components
Deferred revenue	$ 3,192	$ 3,143
Warranty	875	600
Other	1,272	199
Total other long-term liabilities	$ 5,339	$ 3,942

Fair Value Measurements (Detail

Fair Value Measurements (Details) - Measured on a recurring basis - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Fair Value Measurements
Adjusted Cost, assets	$ 93,239	$ 85,918
Fair Value, assets	93,189	85,856
Unrealized Gains, assets	1
Unrealized Losses, assets	(51)	(62)
Cash and Cash Equivalents
Fair Value Measurements
Fair Value, available-for-sale investments		29,761
Fair Value, assets	40,395
Short-term investments
Fair Value Measurements
Fair Value, assets	52,794	44,057
Long-term investments
Fair Value Measurements
Fair Value, assets		12,038
Cash
Fair Value Measurements
Fair value, cash and cash equivalents	30,501	24,367
Adjusted Cost, assets	30,501	24,367
Cash | Cash and Cash Equivalents
Fair Value Measurements
Fair value, cash and cash equivalents	30,501	24,367
Level 1
Fair Value Measurements
Adjusted Cost, assets	17,323	14,454
Fair Value, assets	17,309	14,441
Unrealized Losses, assets	(14)	(13)
Level 1 | Cash and Cash Equivalents
Fair Value Measurements
Fair Value, assets	6,903	5,394
Level 1 | Short-term investments
Fair Value Measurements
Fair Value, assets	10,406	4,098
Level 1 | Long-term investments
Fair Value Measurements
Fair Value, assets		4,949
Level 1 | Money market funds
Fair Value Measurements
Fair value, cash and cash equivalents	6,903	5,394
Adjusted Cost, assets	6,903	5,394
Level 1 | Money market funds | Cash and Cash Equivalents
Fair Value Measurements
Fair value, cash and cash equivalents	6,903	5,394
Level 1 | U.S. government notes
Fair Value Measurements
Adjusted Cost, available-for-sale securities	10,420	9,060
Unrealized Losses, available-for-sale securities	(14)	(13)
Fair Value, available-for-sale investments	10,406	9,047
Level 1 | U.S. government notes | Short-term investments
Fair Value Measurements
Fair Value, available-for-sale investments	10,406	4,098
Level 1 | U.S. government notes | Long-term investments
Fair Value Measurements
Fair Value, available-for-sale investments		4,949
Level 2
Fair Value Measurements
Adjusted Cost, available-for-sale securities	45,415	47,097
Unrealized Gains, available-for-sale securities	1
Unrealized Losses, available-for-sale securities	(37)	(49)
Fair Value, available-for-sale investments	45,379	47,048
Level 2 | Cash and Cash Equivalents
Fair Value Measurements
Fair Value, available-for-sale investments	2,991
Level 2 | Short-term investments
Fair Value Measurements
Fair Value, available-for-sale investments	42,388	39,959
Level 2 | Long-term investments
Fair Value Measurements
Fair Value, available-for-sale investments		7,089
Level 2 | Corporate bonds
Fair Value Measurements
Adjusted Cost, available-for-sale securities	21,612	24,943
Unrealized Gains, available-for-sale securities	1
Unrealized Losses, available-for-sale securities	(37)	(49)
Fair Value, available-for-sale investments	21,576	24,894
Level 2 | Corporate bonds | Short-term investments
Fair Value Measurements
Fair Value, available-for-sale investments	21,576	17,805
Level 2 | Corporate bonds | Long-term investments
Fair Value Measurements
Fair Value, available-for-sale investments		7,089
Level 2 | Commercial paper
Fair Value Measurements
Adjusted Cost, available-for-sale securities	23,803	22,154
Fair Value, available-for-sale investments	23,803	22,154
Level 2 | Commercial paper | Cash and Cash Equivalents
Fair Value Measurements
Fair Value, available-for-sale investments	2,991
Level 2 | Commercial paper | Short-term investments
Fair Value Measurements
Fair Value, available-for-sale investments	$ 20,812	$ 22,154

Fair Value Measurements (Invest

Fair Value Measurements (Investment and Derivative Information) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Fair Value Measurements
Assets related to derivative instruments	$ 0	$ 0
Liabilities related to derivative instruments	0	0
Foreign exchange contracts | Other income (expense), net | Not designated as hedging instrument
Fair Value Measurements
Foreign exchange forward contracts	$ 35	$ (1,662)	$ 418
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 (Details)

Acquisitions (Details) - USD ($) $ in Thousands	Feb. 27, 2017	Dec. 31, 2017	Sep. 30, 2017	Feb. 28, 2017
Business Acquisition [Line Items]
Cash acquired in acquisition	$ 300
Business acquisitions holdback liability				$ 1,400
Business acquisitions holdback liability		$ 1,414	$ 1,100
Triad Holdings, Inc.
Business Acquisition [Line Items]
Purchase price to acquire common stock	$ 9,200
Purchase agreement, portion of purchase price held, period from acquisition date (in months)	18 months

Goodwill and Intangible Asset_2

Goodwill and Intangible Assets (Goodwill) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018USD ($)
Business Combination - Goodwill
Balance at beginning of the period	$ 21,867
Measurement period adjustments	(37)
Foreign currency translation adjustment	300
Balance at end of the period	$ 21,530

Goodwill and Intangible Asset_3

Goodwill and Intangible Assets (Intangible Assets) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Intangible assets
Gross Carrying Amount	$ 36,575	$ 38,706
Accumulated Amortization	(15,924)	(12,625)
Intangible assets, net	$ 20,651	26,081
Weighted average amortization period	7 years 3 months 18 days
Developed technology
Intangible assets
Gross Carrying Amount	$ 17,495	19,626
Accumulated Amortization	(10,145)	(8,914)
Intangible assets, net	$ 7,350	10,712
Weighted average amortization period	6 years 10 months 24 days
Customer relationships
Intangible assets
Gross Carrying Amount	$ 12,009	12,009
Accumulated Amortization	(4,050)	(2,556)
Intangible assets, net	$ 7,959	9,453
Weighted average amortization period	8 years 4 months 24 days
Trademark/trade name
Intangible assets
Gross Carrying Amount	$ 6,776	6,776
Accumulated Amortization	(1,434)	(869)
Intangible assets, net	$ 5,342	5,907
Weighted average amortization period	12 years
Non-competition agreements
Intangible assets
Gross Carrying Amount	$ 295	295
Accumulated Amortization	$ (295)	(286)
Intangible assets, net		$ 9
Weighted average amortization period	2 years

Goodwill and Intangible Asset_4

Goodwill and Intangible Assets (Amortization Expense) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Amortization expense
Amortization of intangible assets	$ 5,464	$ 5,212	$ 4,598
Cost of revenue
Amortization expense
Amortization of intangible assets	3,397	3,164	3,052
Research and development
Amortization expense
Amortization of intangible assets	80	193	188
Sales and marketing
Amortization expense
Amortization of intangible assets	$ 1,987	$ 1,855	$ 1,358

Goodwill and Intangible Asset_5

Goodwill and Intangible Assets (Amortization) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Amortization of finite-lived intangible assets
2,019	$ 5,655
2,020	4,604
2,021	2,256
2,022	2,093
2,023	2,035
Thereafter	4,008
Intangible assets, net	$ 20,651	$ 26,081

Long-Term Obligations (Details)

Long-Term Obligations (Details) - USD ($) $ in Millions	Feb. 06, 2018	Dec. 31, 2018	Dec. 31, 2017
Long-Term Obligations
Maximum borrowing capacity		$ 40	$ 30
New credit facility
Long-Term Obligations
Outstanding borrowings		$ 0
Commitment fee for quarterly unused capacity (as a percent)	0.25%
Unused line of credit fee threshold	$ 15
Minimum | Prime Rate
Long-Term Obligations
Basis spread on variable rate (as a percent)		0.00%
Minimum | LIBOR
Long-Term Obligations
Basis spread on variable rate (as a percent)		2.50%
Maximum | Prime Rate
Long-Term Obligations
Basis spread on variable rate (as a percent)		0.25%
Maximum | LIBOR
Long-Term Obligations
Basis spread on variable rate (as a percent)		2.75%

Revenue Recognition (ASC 606 Ad

Revenue Recognition (ASC 606 Adoption) (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue	$ 272,458	$ 244,175	$ 208,130
Income tax benefit	(22,991)	(1,568)	(8,800)
Net income	$ 43,840	$ 15,455	$ 12,298
Basic earnings per share (in dollars per share)	$ 1.67	$ 0.62	$ 0.53
Diluted earnings per share (in dollars per share)	$ 1.60	$ 0.58	$ 0.50
Other assets	$ 25,456	$ 1,618
Current portion of deferred revenue	5,507	4,538
Other long-term liabilities	5,339	3,942
Stockholders' equity	$ 206,347	169,528	$ 132,161	$ 115,445
Accounting Standards Update 2014-09 | As previously reported
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue		244,725	208,802
Income tax benefit		(1,542)	(8,784)
Net income		$ 15,979	$ 12,954
Basic earnings per share (in dollars per share)		$ 0.64	$ 0.55
Diluted earnings per share (in dollars per share)		$ 0.60	$ 0.53
Other assets		$ 1,576
Current portion of deferred revenue		2,311
Other long-term liabilities		882
Stockholders' equity		174,773
Accounting Standards Update 2014-09 | ASC 606 adjustment
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue		(550)	$ (672)
Income tax benefit		(26)	(16)
Net income		$ (524)	$ (656)
Basic earnings per share (in dollars per share)		$ (0.02)	$ (0.02)
Diluted earnings per share (in dollars per share)		$ (0.02)	$ (0.03)
Other assets		$ 42
Current portion of deferred revenue		2,227
Other long-term liabilities		3,060
Stockholders' equity		$ (5,245)

Revenue Recognition (Disaggrega

Revenue Recognition (Disaggregated) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Disaggregation of Revenue [Line Items]
Revenue	$ 272,458	$ 244,175	$ 208,130
United States
Disaggregation of Revenue [Line Items]
Revenue	187,852	169,547	147,713
Canada
Disaggregation of Revenue [Line Items]
Revenue	22,700	20,765	16,694
All other international sources
Disaggregation of Revenue [Line Items]
Revenue	$ 61,906	$ 53,863	$ 43,723
International revenue (excluding Canada) as a percent of total revenue	23.00%	22.00%	21.00%

Revenue Recognition (Contract B

Revenue Recognition (Contract Balances) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenue Recognition
Accounts receivable, net	$ 33,016	$ 29,925
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance at the beginning of the period	1,147	981	$ 824
Provision	839	815	345
Write-offs	(457)	(649)	(188)
Balance at the end of the period	$ 1,529	1,147	981
Payment term, general requirement for payment	30 days
Balance at the beginning of the period	$ 7,681	6,390	5,164
Deferred revenue	8,640	6,320	4,979
Recognition of deferred revenue	(7,622)	(5,029)	(3,753)
Balance at the end of the period	$ 8,699	$ 7,681	$ 6,390

Revenue Recognition (Performanc

Revenue Recognition (Performance obligation) (Details) $ in Millions	Dec. 31, 2018USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Contracted not recognized revenue	$ 9.8
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Expected timing of satisfaction	12 months
Percentage expected to be recognized	44.00%
Minimum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Expected timing of satisfaction	3 years
Maximum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Expected timing of satisfaction	4 years

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Tax Cuts and Jobs Act
One-time transition tax		$ 9,000
Valuation allowance decrease		9,000
Net tax expense or benefit		0
AMT credit carryforwards, one-time tax benefit		400
AMT valuation allowance decrease		400
Tax benefit arising from Tax Act		200
Transition tax, unrepatriated foreign earnings	$ 500
Unrepatriated foreign earnings, valuation allowance decrease	500
Income (loss) before income taxes:
Domestic	20,553	10,848	$ 5,619
Foreign	296	3,039	(2,121)
Income before income taxes	20,849	13,887	3,498
Domestic
Federal	(687)	(511)	400
State	77	121	232
Foreign	308	490	522
Total current tax expense	(302)	100	1,154
Domestic
Federal	1,817	6,322	1,313
State	669	(1,136)	(458)
Foreign	(219)	896	(1,068)
Valuation allowance	(24,956)	(7,750)	(9,741)
Total deferred tax benefit	(22,689)	(1,668)	(9,954)
Total income tax benefit	$ (22,991)	$ (1,568)	$ (8,800)
Reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate
Federal income tax rate (as a percent)	21.00%	34.00%	35.00%
State taxes, net of federal benefit (as a percent)	(20.10%)	(1.80%)	(21.90%)
Stock-based compensation (as a percent)	(27.00%)	(56.60%)	26.00%
162(m) deductible compensation limitation	5.10%
Research and development credits (as a percent)	(1.40%)	(2.50%)	(1.10%)
Change in valuation allowance (as a percent)	(95.50%)	(58.90%)	(294.60%)
Non-deductible acquisition costs (as percent)	0.20%	0.30%	4.00%
Return to provision adjustments (as a percent)	2.90%	(2.10%)	(6.50%)
Permanent items (as a percent)	3.80%	4.20%	3.30%
Capital loss write-off (as a percent)		5.40%
Deferred tax rate changes - US income tax reform (as a percent)		67.30%
Differences in foreign tax rates (as a percent)	0.30%	(1.80%)	(0.60%)
Other, net (as a percent)	0.40%	1.20%	4.80%
Effective income tax rate (as a percent)	(110.30%)	(11.30%)	(251.60%)
Deferred tax assets:
Reserves and accruals	$ 2,757	$ 3,443
Inventories	1,095	1,906
Net operating loss carryforwards	14,621	17,354
Property, plant and equipment	1,491	1,073
Stock-based compensation	1,853	2,283
Research and development credit carryforwards	5,300	5,435
Other	111
Total deferred tax assets	27,228	31,494
Valuation allowance	(354)	(25,346)
Total deferred tax assets, net	26,874	6,148
Deferred tax liabilities:
Undistributed earnings of foreign subsidiaries		(190)
Intangible assets	(3,776)	(5,493)
Other		(1)
Total deferred tax liabilities	(3,776)	(5,684)
Net deferred tax asset	23,098	464
Increase (decrease) in net valuation allowance	25,000	$ 100
Federal
Tax Cuts and Jobs Act
Net operating loss	57,054
Income tax examination, deferred tax expense	100
Income tax examination, deferred tax benefit	100
Income tax examination, net tax impact	0
Federal | Measurement period adjustment
Tax Cuts and Jobs Act
Net operating loss	(600)
State
Tax Cuts and Jobs Act
Net operating loss	61,087
Foreign
Tax Cuts and Jobs Act
Net operating loss	$ 535

Income Taxes (Carryforward) (De

Income Taxes (Carryforward) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Reconciliation of the changes in the gross balance of unrecognized tax benefits, excluding interest and penalties
Balance at the beginning of the period	$ 3,583	$ 3,583	$ 3,583
Current year additions
Balance at the end of the period	3,583	3,583	3,583
Additional unrecognized tax benefits	0	$ 0	$ 0
Change in unrecognized tax benefits	0
Unrecognized tax benefits that would, if recognized, impact the Company's effective income tax rate	3,600
Undistributed foreign earning	500
State
Net operating loss and tax credit carryforwards
Net operating loss	61,087
Tax credit carryforwards	2,788
Foreign
Net operating loss and tax credit carryforwards
Net operating loss	535
Federal
Net operating loss and tax credit carryforwards
Net operating loss	57,054
Tax credit carryforwards	$ 6,449

Equity Compensation (Activity)

Equity Compensation (Activity) (Details) - Stock options - $ / shares	Jan. 01, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Jun. 11, 2013
Shares Subject to Options Outstanding
Balance at the beginning of the period (in shares)	1,081,212	2,069,802	3,776,405	4,572,672
Granted (in shares)		0	0	50,000
Exercised (in shares)		(979,586)	(1,617,659)	(685,798)
Expired (in shares)		(3,212)	(60,275)	(76,907)
Forfeited (in shares)		(5,792)	(28,669)	(83,562)
Balance at the end of the period (in shares)		1,081,212	2,069,802	3,776,405
Exercisable options (in shares)		1,031,239
Vested and expected to vest at the end of the period (in shares)		1,081,212
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)	$ 12.98	$ 12.13	$ 11.55	10.72
Granted (in dollars per share)				8.16
Exercised (in dollars per share)		11.20	10.48	5.01
Expired (in dollars per share)		5.95	17.51	14.96
Forfeited (in dollars per share)		13.30	16.70	14.81
Balance at the end of the period (in dollars per share)		12.98	$ 12.13	$ 11.55
Exercisable options at the end of the period (in dollars per share)		13.16
Vested and expected to vest (in dollars per share)		$ 12.98
Weighted-Average Remaining Contractual Life
Exercisable options		4 years 7 months 6 days
Vested and expected to vest		4 years 7 months 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%
Increase in number of shares authorized for issuance	1,325,845

Equity Compensation (Range) (De

Equity Compensation (Range) (Details) - Stock options	12 Months Ended
	Dec. 31, 2018$ / sharesshares
Options Outstanding
Number of Underlying Shares | shares	1,081,212
Options Exercisable
Number of Underlying Shares | shares	1,031,239
4.89-7.49
Equity compensation
Range of Exercise Price, low end of range (in dollars per share)	$ 4.89
Range of Exercise Price, high end of range (in dollars per share)	7.49
Options Outstanding
Weighted Average Exercise Price (in dollars per share)	$ 6.18
Number of Underlying Shares | shares	286,951
Weighted-Average Remaining Contractual Life	2 years 7 months 6 days
Options Exercisable
Number of Underlying Shares | shares	282,443
Weighted-Average Remaining Contractual Life	2 years 6 months
8.16-12.93
Equity compensation
Range of Exercise Price, low end of range (in dollars per share)	$ 8.16
Range of Exercise Price, high end of range (in dollars per share)	12.93
Options Outstanding
Weighted Average Exercise Price (in dollars per share)	$ 10.54
Number of Underlying Shares | shares	280,219
Weighted-Average Remaining Contractual Life	5 years 2 months 12 days
Options Exercisable
Number of Underlying Shares | shares	234,876
Weighted-Average Remaining Contractual Life	5 years
12.98-19.56
Equity compensation
Range of Exercise Price, low end of range (in dollars per share)	$ 12.98
Range of Exercise Price, high end of range (in dollars per share)	19.56
Options Outstanding
Weighted Average Exercise Price (in dollars per share)	$ 15.600
Number of Underlying Shares | shares	281,973
Weighted-Average Remaining Contractual Life	5 years 9 months 18 days
Options Exercisable
Number of Underlying Shares | shares	281,851
Weighted-Average Remaining Contractual Life	5 years 9 months 18 days
20.91-22.92
Equity compensation
Range of Exercise Price, low end of range (in dollars per share)	$ 20.91
Range of Exercise Price, high end of range (in dollars per share)	22.92
Options Outstanding
Weighted Average Exercise Price (in dollars per share)	$ 21.15
Number of Underlying Shares | shares	232,069
Weighted-Average Remaining Contractual Life	5 years 1 month 6 days
Options Exercisable
Number of Underlying Shares | shares	232,069
Weighted-Average Remaining Contractual Life	5 years 1 month 6 days

Equity Compensation (Fair Value

Equity Compensation (Fair Value) (Details) - Stock options - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Stock options
Total fair value for the awards vested during the period	$ 1,900	$ 3,900	$ 5,400
Stock options granted (in shares)	0	0	50,000
Intrinsic-value
Options Exercised	$ 18,616	$ 19,966	$ 3,312
Options Exercisable	5,420	31,841	6,089
Options Vested and Expected to Vest	$ 5,836	$ 36,489	$ 6,280
Assumptions used to estimate fair value of stock options
Expected volatility (as a percent)			62.00%
Expected dividends (as a percent)			0.00%
Expected term			6 years 1 month 6 days
Risk-free rate (as a percent)			1.10%

Equity Compensation (Restricted

Equity Compensation (Restricted Stock Units) (Details) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Equity Compensation
Aggregate intrinsic value of unvested restricted stock	$ 14.5
Common stock price (in dollars per share)	$ 17.60
Restricted stock units
Equity Compensation
Total fair value of awards vested	$ 22.2	$ 16	$ 0.4
Shares withheld for tax purposes (in shares)	287,050
Issuance of shares net of shares withheld (in shares)	579,465
Number of shares
Non-vested balance at beginning of period (in shares)	1,290,660	1,396,387	425,000
Awarded	461,350	783,060	1,147,946
Vested	(866,515)	(823,620)	(35,340)
Forfeited	(61,130)	(65,167)	(141,219)
Non-vested balance at end of period (in shares)	824,365	1,290,660	1,396,387
Weighted Average Grant Date Fair Value
Non-vested balance at beginning of period (in dollars per share)	$ 9.75	$ 7.60	$ 8.18
Awarded (in dollars per share)	28.46	11.28	7.40
Vested (in dollars per share)	9.97	7.62	7.85
Forfeited (in dollars per share)	12.71	8.82	7.66
Non-vested balance at end of period (in dollars per share)	$ 19.77	$ 9.75	$ 7.60

Equity Compensation (Expense) (

Equity Compensation (Expense) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Total stock-based compensation expense
Recognized tax benefits on total stock-based compensation expense	$ 10,100	$ 600	$ 100
Recognized tax benefits from stock option awards exercised	4,500
Stock options
Total stock-based compensation expense
Total stock-based compensation expense	13,511	12,105	8,370
Total unrecognized compensation cost related to non-vested stock option awards	$ 700
Weighted-average period over which unrecognized compensation cost will be recognized	4 months 24 days
Stock options | Cost of revenue
Total stock-based compensation expense
Total stock-based compensation expense	$ 247	251	171
Stock options | Research and development
Total stock-based compensation expense
Total stock-based compensation expense	4,379	4,242	3,256
Stock options | Sales and marketing
Total stock-based compensation expense
Total stock-based compensation expense	3,770	3,662	2,273
Stock options | General and administrative
Total stock-based compensation expense
Total stock-based compensation expense	5,115	$ 3,950	$ 2,670
Restricted stock units
Total stock-based compensation expense
Total unrecognized compensation cost related to non-vested stock option awards	$ 10,500
Weighted-average period over which unrecognized compensation cost will be recognized	1 year 8 months 12 days

Equity Compensation (401(k) Pla

Equity Compensation (401(k) Plan) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Defined Contribution Plan Disclosure [Line Items]
Maximum amount of employees' gross pay the employee may contribute (as a percent)	3.50%
Shares contributed (in shares)	62,230	65,171
Expenses associated with contribution	$ 1.5	$ 1.4
First 1% of employees' salary
Defined Contribution Plan Disclosure [Line Items]
Employer matching contribution (as a percent)	100.00%
Employees' gross pay for which the employer contributes a matching contribution (as a percent)	1.00%
Second 5% of employees' salary
Defined Contribution Plan Disclosure [Line Items]
Employer matching contribution (as a percent)	50.00%
Employees' gross pay for which the employer contributes a matching contribution (as a percent)	5.00%

Share Repurchases (Details)

Share Repurchases (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Oct. 31, 2018	Feb. 28, 2018
Equity, Class of Treasury Stock [Line Items]
Value of common stock repurchased	$ 23,872	$ 1,821	$ 3,242
Treasury Stock
Equity, Class of Treasury Stock [Line Items]
Number of common stock repurchased (in shares)	937,264	119,007	427,646
Maximum
Equity, Class of Treasury Stock [Line Items]
Common stock authorized for repurchase	$ 16,100			$ 20,000	$ 20,000

Commitments and Contingencies_2

Commitments and Contingencies (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018USD ($)claim	Dec. 31, 2017USD ($)	Dec. 31, 2016USD ($)
Operating Leases
Rental expense	$ 3,800	$ 2,900	$ 2,500
Future minimum rental payments
2,019	4,865
2,020	4,634
2,021	2,420
2,022	864
2,023	612
Thereafter	699
Total	14,094
Purchase Commitments
Non-cancellable purchase commitments	59,600
Indemnification agreements
Indemnification
Accrued liability	$ 0
Number of outstanding claims | claim	0
Minimum
Operating Leases
Extension term of leases	P3Y
Maximum
Operating Leases
Extension term of leases	P5Y

Subsequent Events (Details)

Subsequent Events (Details) - Subsequent events - NEEO AG $ in Millions	Feb. 01, 2019USD ($)
Subsequent Event [Line Items]
Purchase price to acquire common stock	$ 11
Purchase price held (as a percent)	15.00%
Purchase agreement, portion of purchase price held, period from acquisition date (in months)	18 months
Restricted stock units
Subsequent Event [Line Items]
Vesting period	3 years