Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | Apr. 30, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Entity Registrant Name | VONAGE HOLDINGS CORP | |
Entity Central Index Key | 1,272,830 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 222,038,983 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | [1] |
Current assets: | |||
Cash and cash equivalents | $ 26,220 | $ 29,078 | |
Marketable securities | 300 | 601 | |
Accounts receivable, net of allowance of $2,446 and $2,093, respectively | 32,108 | 36,688 | |
Inventory, net of allowance of $61 and $117, respectively | 3,644 | 4,116 | |
Deferred customer acquisition costs, current | 1,660 | 2,610 | |
Prepaid expenses and other current assets | 30,895 | 29,188 | |
Total current assets | 94,827 | 102,281 | |
Property and equipment, net | 45,722 | 48,415 | |
Goodwill | 362,424 | 360,363 | |
Software, net | 22,966 | 21,971 | |
Deferred customer acquisition costs, non-current | 524 | 526 | |
Debt issuance costs, net | 2,162 | 2,333 | |
Restricted cash | 1,799 | 1,851 | |
Intangible assets, net | 191,250 | 199,256 | |
Deferred tax assets, non-current | 198,502 | 184,210 | |
Other assets | 13,950 | 14,460 | |
Total assets | 934,126 | 935,666 | |
Current liabilities: | |||
Accounts payable | 39,014 | 30,751 | |
Accrued expenses | 82,713 | 109,195 | |
Deferred revenue, current portion | 31,172 | 32,442 | |
Current maturities of capital lease obligations | 2,184 | 3,288 | |
Current portion of notes payable | 18,750 | 18,750 | |
Total current liabilities | 173,833 | 194,426 | |
Indebtedness under revolving credit facility | 224,000 | 209,000 | |
Notes payable, net of debt related costs and current portion | 86,541 | 91,124 | |
Deferred revenue, net of current portion | 392 | 450 | |
Capital lease obligations, net of current maturities | 81 | 140 | |
Other liabilities, net of current portion in accrued expenses | 3,931 | 3,985 | |
Total liabilities | 488,778 | 499,125 | |
Commitments and Contingencies | |||
Stockholders’ Equity | |||
Common stock, par value $0.001 per share; 596,950 shares authorized at March 31, 2017 and December 31, 2016; 288,810 and 282,319 shares issued at March 31, 2017 and December 31, 2016, respectively; 221,783 and 219,001 shares outstanding at March 31, 2017 and December 31, 2016, respectively | 289 | 282 | |
Additional paid-in capital | 1,331,062 | 1,310,847 | |
Accumulated deficit | (632,715) | (641,869) | |
Treasury stock, at cost, 67,027 shares at March 31, 2017 and 63,318 shares at December 31, 2016 | (242,762) | (219,125) | |
Accumulated other comprehensive loss | (10,526) | (13,594) | |
Total stockholders’ equity | 445,348 | 436,541 | [2] |
Total liabilities and stockholders’ equity | $ 934,126 | $ 935,666 | |
[1] | (1) see Note 2 Correction of Prior Period Financial Statements. | ||
[2] | (1) see Note 2 Correction of Prior Period Financial Statements. |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance | $ 2,446 | $ 2,093 |
Inventory, allowance | $ 61 | $ 117 |
Common stock, par value (USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 596,950,000 | 596,950,000 |
Common stock, shares issued | 288,810,000 | 282,319,000 |
Common stock, shares outstanding | 221,783,000 | 219,001,000 |
Treasury stock, shares | 67,027,000 | 63,318,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||
Total revenues | $ 243,347 | $ 226,824 |
Operating Expenses: | ||
Cost of service (excluding depreciation and amortization of $6,782 and $6,833 respectively) | 87,596 | 69,150 |
Cost of goods sold | 7,293 | 9,066 |
Sales and marketing | 81,931 | 79,601 |
Engineering and development | 8,370 | 6,834 |
General and administrative | 35,086 | 26,670 |
Depreciation and amortization | 17,947 | 16,979 |
Total operating expenses | 238,223 | 208,300 |
Income from operations | 5,124 | 18,524 |
Other Income (Expense): | ||
Interest income | 5 | 21 |
Interest expense | (3,703) | (2,446) |
Other income (expense), net | (220) | 154 |
Total other income (expense) | (3,918) | (2,271) |
Income before income tax expense | 1,206 | 16,253 |
Income tax benefit (expense) | 4,707 | (8,322) |
Net income | $ 5,913 | $ 7,931 |
Net income per common share: | ||
Earnings Per Share, Basic (usd per share) | $ 0.03 | $ 0.04 |
Earnings Per Share, Diluted (usd per share) | $ 0.02 | $ 0.04 |
Weighted-average common shares outstanding: | ||
Basic (in shares) | 220,371 | 214,039 |
Diluted (in shares) | 239,486 | 224,225 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||
Depreciation and Amortization | $ 6,782 | $ 6,833 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 5,913 | $ 7,931 |
Other comprehensive income: | ||
Foreign currency translation adjustment | 3,047 | (22) |
Unrealized gain on available-for-sale securities | 21 | 22 |
Total other comprehensive income | 3,068 | 0 |
Comprehensive income | $ 8,981 | $ 7,931 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | [1] | |
Cash flows from operating activities: | |||
Net income | $ 5,913 | $ 7,931 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization and impairment charges | 8,569 | 9,317 | |
Amortization of intangibles | 9,378 | 7,662 | |
Deferred tax expense | (5,803) | 7,439 | |
Allowance for doubtful accounts | 343 | 0 | |
Allowance for obsolete inventory | 138 | 0 | |
Amortization of debt issuance costs | 276 | 251 | |
Loss on disposal of fixed assets | 240 | 0 | |
Share-based expense | 11,106 | 6,303 | |
Changes in operating assets and liabilities, net of acquisitions: | |||
Accounts receivable | 4,425 | (910) | |
Inventory | 340 | (25) | |
Prepaid expenses and other current assets | (1,672) | (3,079) | |
Deferred customer acquisition costs | 956 | 1,084 | |
Other assets | 510 | 356 | |
Accounts payable | 8,189 | 4,122 | |
Accrued expenses | (24,219) | (22,199) | |
Deferred revenue | (1,374) | (933) | |
Other liabilities | (54) | 149 | |
Net cash provided by operating activities | 17,261 | 17,468 | |
Cash flows from investing activities: | |||
Capital expenditures | (3,701) | (8,895) | |
Purchase of marketable securities | 0 | (3,618) | |
Maturities and sales of marketable securities | 322 | 3,948 | |
Acquisition and development of software assets | (3,380) | (2,312) | |
Net cash used in investing activities | (6,759) | (10,877) | |
Cash flows from financing activities: | |||
Principal payments on capital lease obligations and other financing obligations | (3,663) | (5,225) | |
Principal payments on notes and revolving credit facility | (4,688) | (13,750) | |
Proceeds received from draw down of revolving credit facility and issuance of notes payable | 15,000 | 0 | |
Common stock repurchases | (9,542) | (7,590) | |
Employee taxes paid on withholding shares | (14,095) | (2,896) | |
Proceeds from exercise of stock options | 3,448 | 466 | |
Net cash used in financing activities | (13,540) | (28,995) | |
Effect of exchange rate changes on cash | 128 | (160) | |
Net change in cash, cash equivalents, and restricted cash | (2,910) | (22,564) | |
Cash, cash equivalents, and restricted cash, beginning of period | 30,929 | 60,313 | |
Cash, cash equivalents, and restricted cash, end of period | 28,019 | 37,749 | |
Cash paid during the periods for: | |||
Interest | 3,210 | 2,190 | |
Income taxes | 740 | 1,624 | |
Non-cash transactions during the periods for: | |||
Common stock repurchases | $ 0 | $ 443 | |
[1] | (1) See Note 1 Recent Accounting Pronouncements reclassification due to the adoptions of new Accounting Standard Updates. |
Condensed Consolidated Stateme8
Condensed Consolidated Statement Of Stockholders' Equity - 3 months ended Mar. 31, 2017 - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | |||
Balance at Dec. 31, 2016 | [2] | $ 436,541 | [1] | $ 282 | $ 1,310,847 | $ (641,869) | $ (219,125) | $ (13,594) | |
Common stock, shares outstanding (in shares) at Dec. 31, 2016 | 219,001 | 219,001 | [2] | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Cumulative effect adjustment upon the adoption of ASU 2016-09 | $ 8,909 | 5,668 | 3,241 | ||||||
Stock option exercises | 3,448 | $ 7 | 3,441 | ||||||
Stock option exercises (in shares) | 6,491 | ||||||||
Share-based expense | 11,106 | 11,106 | |||||||
Employee taxes paid on withholding shares | (14,095) | (14,095) | |||||||
Common stock repurchases (in shares) | (2,110) | ||||||||
Common stock repurchases | (9,542) | (9,542) | |||||||
Common stock repurchases (in shares) | (1,599) | ||||||||
Foreign currency translation adjustment | 3,047 | 3,047 | |||||||
Unrealized gain on available-for-sale securities | 21 | 21 | |||||||
Net income | $ 5,913 | 5,913 | |||||||
Common stock, shares outstanding (in shares) at Mar. 31, 2017 | 221,783 | 221,783 | |||||||
Balance at Mar. 31, 2017 | $ 445,348 | $ 289 | $ 1,331,062 | $ (632,715) | $ (242,762) | $ (10,526) | |||
[1] | (1) see Note 2 Correction of Prior Period Financial Statements. | ||||||||
[2] | (1) see Note 2 Correction of Prior Period Financial Statements. |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies Nature of Operations Vonage Holdings Corp. (“Vonage”, “Company”, “we”, “our”, “us”) is incorporated as a Delaware corporation. We are a leading provider of cloud communications services for business. We transform the way people work and businesses operate through a portfolio of cloud-based communications solutions that enable internal collaboration among employees, while also keeping companies closely connected with their customers, across any mode of communication, on any device. Through our Nexmo subsidiary which was acquired on June 3, 2016, we are a global leader in the Communications-Platform-as-a-Service ("CPaaS") segment of the cloud communications market, providing innovative communication application program interfaces ("APIs") for text messaging and voice communications, allowing developers and enterprises to embed contextual communications into mobile apps, websites and business workflows via text, social media, chat apps and voice. With just few lines of code, developers can send and receive text messages and build programmable voice applications. Nexmo, the Vonage API Platform can scale from one API call to billions. The platform makes it easy for any of our developers to access communication services via software and APIs. Through Nexmo we have a global network of interconnected carriers delivering our API-based communications platform, enabling businesses to communicate with their customers reliably and with ease, no matter where in the world they are located. The addition of our Nexmo products to our business offering allows our customers to address their full communications needs, from employee to employee communications through business to customer communications. We also provide a robust suite of feature-rich residential communication solutions. Customers in the United States represented 88% and 96% of our consolidated revenues at March 31, 2017 and 2016 , respectively, with the balance in Canada, the United Kingdom, and other countries. Nexmo Inc. ("Nexmo") has operations in the United States, United Kingdom, Hong Kong, and Singapore, and provides CPaaS solutions to our customers located in many countries around the world. Unaudited Interim Financial Information The accompanying unaudited interim condensed consolidated financial statements and information have been prepared in accordance with accounting principles generally accepted in the United States and in accordance with the instructions for Form 10-Q. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, these financial statements contain all normal and recurring adjustments considered necessary to present fairly the financial position, results of operations, cash flows, and statement of stockholders’ equity for the periods presented. The results for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the full year. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission on February 28, 2017 . Significant Accounting Policies Principles of Consolidation The condensed consolidated financial statements include the accounts of Vonage and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. We also consolidate a majority owned entity in Brazil where we have the ability to exercise controlling influence. The results of companies acquired or disposed of are included in the condensed consolidated financial statements from the effective date of the acquisition or up to the date of disposal. Use of Estimates Our condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States, which require management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including the following: • the useful lives of property and equipment, software costs, and intangible assets; • assumptions used for the purpose of determining share-based compensation using the Black-Scholes option pricing model and Monte Carlo simulation model (“Models”), and various other assumptions that we believe to be reasonable; the key inputs for these Models include our stock price at valuation date, exercise price, the dividend yield, risk-free interest rate, life in years, and historical volatility of our common stock; • assumptions used in determining the need for, and amount of, a valuation allowance on net deferred tax assets; and • assumptions used in determining the contingent consideration in connection with the Nexmo acquisition. We base our estimates on historical experience, available market information, appropriate valuation methodologies, and on various other assumptions that we believe to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Revenue Recognition Operating revenues consist of services revenues and customer equipment (which enables our services) and shipping revenues. The point in time at which revenues are recognized is determined in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104, Revenue Recognition, and Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605, Revenue Recognition . At the time a customer signs up for our services, there are the following deliverables: • Providing equipment, if any, to the customer that enables our services; and • Providing services. The equipment is generally provided free of charge to our customers and in most instances there are no fees collected at sign-up. We record the fees collected for shipping the equipment to the customer, if any, as shipping and handling revenue at the time of shipment. Services Revenue Substantially all of our revenues are services revenues, which are derived primarily from monthly subscription fees that customers are charged under our service plans. We also derive services revenues from per minute fees for international calls if not covered under a plan, including calls made via applications for mobile devices and other stand-alone products, and for any calling minutes in excess of a customer’s monthly plan limits. Monthly subscription fees are automatically charged to customers’ credit cards, debit cards or electronic check payments ("ECP"), in advance and are recognized over the following month when services are provided. Revenues generated from international calls and from customers exceeding allocated call minutes under limited minute plans are recognized as services are provided, that is, as minutes are used, and are billed to a customer's credit cards, debit cards or ECP in arrears. As a result of multiple billing cycles each month, we estimate the amount of revenues earned from international calls and from customers exceeding allocated call minutes under limited minute plans but not billed from the end of each billing cycle to the end of each reporting period and record these amounts as accounts receivable. These estimates are based primarily upon historical minutes and have been consistent with our actual results. In the United States, we charge regulatory, compliance, E-911, and intellectual property-related fees on a monthly basis to defray costs, and to cover taxes that we are charged by the suppliers of telecommunications services. In addition, we charge customers Federal Universal Service Fund (“USF”) fees. We recognize revenue on a gross basis for USF and related fees. We record these fees as revenue when billed. All other taxes are recorded on a net basis. Our recently acquired subsidiary, Nexmo, provides CPaaS solutions to our customers. Through Nexmo, we provide innovative communication APIs for text messaging and voice communications, allowing developers and enterprises to embed contextual communications into mobile apps, websites and business workflows via text, social media, chat apps and voice. Nexmo has a global network of interconnected carriers delivering its API-based communications platform, enabling businesses to communicate with their customers reliably and with ease, no matter where in the world they are located. Nexmo has two types of revenue activities: Revenue is primarily derived from supplying messaging (SMS and Voice) services to customers. Revenue is recognized in the period when messages are sent by the customer. Revenue is recognized based on the price on the website pricing page or as otherwise agreed with the customer. Our trading customers operate within the communications industry as service providers or bulk SMS aggregators. With our trading business, we sell to trading specialists who are delivering voice or SMS messages on behalf of their customers. Typically, trade is based on single supply route and margins, which are effectively fixed at a deal level, represent the value of the transaction to us. As such, for the trading business we record revenue on a net basis as service providers deliver messages. Customer Equipment and Shipping Revenue Customer equipment and shipping revenues consist of revenues from sales of customer equipment to wholesalers or directly to customers for replacement devices, or for upgrading their device at the time of customer sign-up for which we charge an additional fee. In addition, customer equipment and shipping revenues include revenues from the sale of VoIP telephones in order to access our small and medium business services. Customer equipment and shipping revenues also include the fees that customers are charged for shipping their customer equipment to them. Customer equipment and shipping revenues include sales to our retailers, who subsequently resell this customer equipment to customers. Revenues are reduced for payments to retailers and rebates to customers, who purchased their customer equipment through these retailers, to the extent of customer equipment and shipping revenues. Cost of Service Cost of service consists of costs that we pay to third parties in order to provide services. These costs include access and interconnection charges that we pay to other companies to terminate domestic and international phone calls on the public switched telephone network. In addition, these costs include the cost to lease phone numbers, to co-locate in other companies’ facilities, to provide enhanced emergency dialing capabilities to transmit 911 calls, and to provide local number portability. These costs also include taxes that we pay on telecommunications services from our suppliers or are imposed by government agencies such as federal universal service fund (“USF”) contributions and royalties for use of third parties’ intellectual property. In addition, these costs include certain personnel and related costs for network operations and technical support that are attributable to revenue generating activities. Cost of Goods Sold Cost of goods sold consists primarily of costs that we incur when a customer signs up for our service. These costs include the cost of customer equipment for customers who subscribe through the direct sales channel in excess of activation fees. In addition, these costs include the amortization of deferred customer equipment, the cost of shipping and handling for customer equipment, the installation manual that accompanies the customer equipment, and the cost of certain promotions. Sales and Marketing Expenses Sales and marketing expenses consist primarily of personnel and related costs for employees and contractors directly associated with our sales and marketing activities, internet advertising fees, radio and billboard advertising, public relations, commissions paid to employees, resellers and other third parties, trade shows, marketing and promotional activities, customer support, credit card fees, collections, and systems and information technology support. Engineering and Development Expenses Engineering and development expenses primarily include personnel and related costs for developers responsible for new products, and software engineers maintaining and enhancing existing products. Research and development costs related to new product development included in engineering and development were $6,346 and $4,908 for the three months ended March 31, 2017 and 2016 , respectively. Costs for research, including predevelopment efforts prior to establishing technological feasibility of software expected to be marketed, are expensed as incurred. Development costs are capitalized when technological feasibility has been established and anticipated future revenues support the recoverability of the capitalized amounts. Capitalization stops when the product is available for general release to customers. Due to the short time period between achieving technological feasibility and product release and the insignificant amount of costs incurred during such periods, we have not capitalized any software development, and have expensed these costs as incurred. General and Administrative Expenses General and administrative expenses primarily relate to our executive, finance, human resources, legal, and information technology organizations. General and administrative expenses primarily consist of personnel costs, stock compensation, board of directors' costs, professional fees for legal, accounting, tax, compliance and information systems, travel, recruiting expense and, rent and related expenses. Advertising Expenses Advertising costs are expensed as incurred. Segment Reporting ASC 280 " Segment Reporting " establishes reporting standards for an enterprise's business segments and related disclosures about its products, services, geographic areas and major customers. Under ASC 280, the method for determining what information to report is based upon the way management organizes the operating segments within the Company for making operating decisions and assessing financial performance. Our chief operating decision-makers review revenue and gross margin information for each of our reportable segments, but do not review operating expenses on a segment by segment basis. In addition, with the exception of goodwill and intangible assets, we do not identify or allocate our assets by the reportable segments. Cash, Cash Equivalents and Marketable Securities We maintain cash with several investment grade financial institutions. Highly liquid investments, which are readily convertible into cash, with original maturities of three months or less, are recorded as cash equivalents. Management determines the appropriate classification of our investments in debt and marketable equity securities at the time of purchase and reevaluates such designation at each balance sheet date. Our debt and marketable equity securities have been classified and accounted for as available for sale. We may or may not hold securities with stated maturities until maturity. In response to changes in the availability of and the yield on alternative investments as well as liquidity requirements, we may sell these securities prior to their stated maturities. These securities are carried at fair value, with the unrealized gains and losses reported as a component of other comprehensive income (loss). Any realized gains or losses on the sale of marketable securities are determined on a specific identification method, and such gains and losses are reflected as a component of other income or expense. Certain Risks and Concentrations Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash equivalents, marketable securities, and accounts receivable. They are subject to fluctuations in both market value and yield based upon changes in market conditions, including interest rates, liquidity, general economic conditions, and conditions specific to the issuers. Accounts receivable are typically unsecured and are derived from revenues earned from customers primarily located in the United States. A portion of our accounts receivable represents the timing difference between when a customer’s credit card is billed and the subsequent settlement of that transaction with our credit card processors. This timing difference is generally three days for substantially all of our credit card receivables. We have never experienced any accounts receivable write-offs due to this timing difference. In addition, we collect subscription fees in advance, minimizing our accounts receivable and bad debt exposure. If a customer’s credit card, debit card or ECP is declined, we generally suspend international calling capabilities as well as their ability to incur domestic usage charges in excess of their plan minutes. Generally, if the customer’s credit card, debit card or ECP could not be successfully processed during three billing cycles (i.e., the current and two subsequent monthly billing cycles), we terminate the account. In addition, we automatically charge any per minute fees to our customers’ credit card, debit card or ECP monthly in arrears. To further mitigate our bad debt exposure, a customer’s credit card, debit card or ECP will be charged in advance of their monthly billing if their international calling or overage charges exceed a certain dollar threshold. Inventory Inventory consists of the cost of customer equipment and is stated at the lower of cost or market, with cost determined using the average cost method. We provide an inventory allowance for customer equipment that has been returned by customers but may not be able to be reissued to new customers or returned to the manufacturer for credit. Property and Equipment Property and equipment includes acquired assets and those accounted for under capital leases and consist principally of network equipment and computer hardware, software, furniture, and leasehold improvements. Company-owned equipment in use at customer premises is also included in property and equipment. In addition, the lease of our corporate headquarters has been accounted for as a capital lease and is included in property and equipment. Network equipment and computer hardware and furniture are stated at cost with depreciation provided using the straight-line method over the estimated useful lives of the related assets, which range from three to five years . Leasehold improvements are amortized over their estimated useful life of the related assets or the life of the lease, whichever is shorter. The cost of renewals and substantial improvements is capitalized while the cost of maintenance and repairs is charged to operating expenses as incurred. Company-owned customer premises equipment is depreciated on a straight-line basis over three years. Our network equipment and computer hardware, which consists of routers, gateways, and servers that enable our telephony services, is subject to technological risks and rapid market changes due to new products and services and changing customer demand. These changes may result in future adjustments to the estimated useful lives or the carrying value of these assets, or both . Software Costs We capitalize certain costs, such as purchased software and internally developed software that we use for customer acquisition and customer care automation tools, in accordance with FASB ASC 350-40, “Internal-Use Software”. Computer software is stated at cost less accumulated amortization and the estimated useful life is two to five years . Goodwill Goodwill acquired in the acquisition of a business is accounted for based upon the excess fair value of consideration transferred over the fair value of net assets acquired in the business combination. Goodwill is tested for impairment on an annual basis on October 1st and, when specific circumstances dictate, between annual tests. When impaired, the carrying value of goodwill is written down to fair value. The goodwill impairment test involves evaluating qualitative information to determine if it is more than 50% likely that the fair value of a reporting unit is less than its carrying value. If such a determination is made, then the traditional two-step goodwill impairment test described below must be applied. The first step, identifying a potential impairment, compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying value of the reporting unit exceeds its fair value, the second step would need to be conducted; otherwise, no further steps are necessary as no potential impairment exists. The second step, measuring the impairment loss, compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. Any excess of the reporting unit goodwill carrying value over the respective implied fair value is recognized as an impairment loss. There were no impairments of goodwill for the three months ended March 31, 2017 and 2016 , respectively. Intangible Assets Intangible assets acquired in the settlement of litigation or by direct purchase are accounted for based upon the fair value of assets received. Purchased-intangible assets are accounted for based upon the fair value of assets received. Purchased-intangible assets are amortized on a straight-line or accelerated basis over the periods of benefit, ranging from two to ten years. We perform a review of purchased-intangible assets whenever events or changes in circumstances indicate that the useful life is shorter than we had originally estimated or that the carrying amount of assets may not be recoverable. If such facts and circumstances exist, we assess the recoverability of purchased-intangible assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets. If the useful life of the asset is shorter than originally estimated, we accelerate the rate of amortization and amortize the remaining carrying value over the new shorter useful life. There were no impairments of purchased-intangible assets identified for the three months ended March 31, 2017 and 2016 , respectively. Patents and Patent Licenses Patent rights acquired in the settlement of litigation or by direct purchase are accounted for based upon the fair value of assets received. Long-Lived Assets We evaluate impairment losses on long-lived assets used in operations when events and changes in circumstances indicate that the assets might be impaired. If our review indicates that the carrying value of an asset will not be recoverable, based on a comparison of the carrying value of the asset to the undiscounted future cash flows, the impairment will be measured by comparing the carrying value of the asset to its fair value. Fair value will be determined based on quoted market values, discounted cash flows or appraisals. Impairments of property and equipment are recorded in the statement of income as part of depreciation expense. Debt Issuance Costs Costs incurred in raising debt are deferred and amortized as interest expense using the effective interest method over the life of the debt. A portion of these costs are netted against the underlying term note in accordance with ASU 2015-15, "Interest-Imputation of Interest". The remaining portion of the costs attributable to our revolving credit facility are recorded as an asset. Derivatives We do not hold or issue derivative instruments for trading purposes. However, in accordance with FASB ASC 815, “Derivatives and Hedging” (“FASB ASC 815”), we review our contractual obligations to determine whether there are terms that possess the characteristics of derivative financial instruments that must be accounted for separately from the financial instrument in which they are embedded. We recognize these features as liabilities in our condensed consolidated balance sheet at fair value each period and recognize any change in the fair value in our statement of operations in the period of change. We estimate the fair value of these liabilities using available market information and appropriate valuation methodologies. Income Taxes We recognize deferred tax assets and liabilities at enacted income tax rates for the temporary differences between the financial reporting bases and the tax bases of our assets and liabilities. Any effects of changes in income tax rates or tax laws are included in the provision for income taxes in the period of enactment. Our net deferred tax assets primarily consist of net operating loss carry forwards (“NOLs”). We are required to record a valuation allowance against our net deferred tax assets if we conclude that it is more likely than not that taxable income generated in the future will be insufficient to utilize the future income tax benefit from our net deferred tax assets (namely, the NOLs) prior to expiration. We periodically review this conclusion, which requires significant management judgment. If we are able to conclude in a future period that a future income tax benefit from our net deferred tax assets has a greater than 50 percent likelihood of being realized, we are required in that period to reduce the related valuation allowance with a corresponding decrease in income tax expense. This would result in a non-cash benefit to our net income in the period of the determination. We periodically review this conclusion, which requires significant management judgment. In the future, if available evidence changes our conclusion that it is more likely than not that we will utilize our net deferred tax assets prior to their expiration, we will make an adjustment to the related valuation allowance and income tax expense at that time. In subsequent periods, we would expect to recognize income tax expense equal to our pre-tax income multiplied by our effective income tax rate, an expense that was not recognized prior to the reduction of the valuation allowance. Our effective rate may differ from the federal statutory rate due, in part, to our foreign operations and certain discrete period items. The 2017 estimated annual effective tax rate is expected to approximate 43.5% , but may fluctuate due to the timing of other discrete period transactions. We file income tax returns in the U.S. on a federal basis and in U.S. state and foreign jurisdictions. Our federal tax return remains subject to examination by the Internal Revenue Service from 2013 to present, our New Jersey tax returns remain open from 2012 to present, our Canada tax return remains open from 2014 to present, and other domestic and foreign tax returns remain open for all periods to which those filings relate. Our consolidated corporate income tax return for 2013 has been selected for examination by the Internal Revenue Service. Our Canadian corporate income tax returns for 2012 and 2013 have been selected for examination by the Canada Revenue Agency. The Canada Revenue Agency concluded their audit and there were no changes. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. We have not had any unrecognized tax benefits. We recognize interest and penalties accrued related to unrecognized tax benefits as components of our income tax provision. We have not had any interest and penalties accrued related to unrecognized tax benefits. Business Combinations We account for business combinations using the acquisition method of accounting. The acquisition method of accounting requires that the purchase price, including the fair value of contingent consideration, of the acquisition be allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the acquisition date, the Company’s estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill to the extent the Company identifies adjustments to the preliminary purchase price allocation. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the condensed consolidated statements of operations. We include the results of all acquisitions in our condensed consolidated financial statements from the date of acquisition. Acquisition related transaction costs, such as banking, legal, accounting and other costs incurred in connection with an acquisition, are expensed as incurred in general and administrative expense. Acquisition related integration costs include costs associated with exit or disposal activities, which do not meet the criteria of discontinued operations, including costs for employee, lease, and contract terminations, facility closing or other exit activities. Additionally, these costs include expenses directly related to integrating and reorganizing acquired businesses and include items such as employee retention costs, recruiting costs, certain moving costs, certain duplicative costs during integration and asset impairments. These costs are expensed as incurred in general and administrative expense. Acquisition related consideration accounted for as compensation expense, such as restricted cash, restricted stock and option related costs incurred in connection with an acquisition are included in general and administrative expense. Fair Value of Financial Instruments Effective January 1, 2008, we adopted FASB ASC 820-10-25, “Fair Value Measurements and Disclosures”. This standard establishes a framework for measuring fair value and expands disclosure about fair value measurements. We did not elect fair value accounting for any assets and liabilities allowed by FASB ASC 825, “Financial Instruments”. FASB ASC 820-10 defines fair value as the amount that would be received for an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. FASB ASC 820-10 describes the following three levels of inputs that may be used: • Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. • Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data. • Level 3: Unobservable inputs when there is little or no market data available, thereby requiring an entity to develop its own assumptions. The fair value hierarchy gives the lowest priority to Level 3 inputs. Although management believes its valuation methods were appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could have resulted in a different fair value measurement at the reporting date. The following table presents the assets and liabilities that are measured and recognized a |
Correction of Prior Period Fina
Correction of Prior Period Financial Statements | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
Correction of Prior Period Financial Statements | Correction of Prior Period Financial Statements In connection with the preparation of our condensed consolidated financial statements for the quarter ended March 31, 2017, and our remediation efforts related to the material weakness in our internal control over financial reporting related to our controls over the preparation of the annual tax provision, we identified an error as of December 31, 2016 in our recognition of a deferred tax asset related to contingent consideration with vesting requirements paid in connection with the acquisition of Nexmo. Based in part upon the vesting requirements of contingent consideration, we recorded the consideration as compensation expense in general and administrative expense in our consolidated statements of operations. However, for tax purposes the contingent consideration should have been recorded as merger consideration and not deductible compensation. The correction of this error requires the reversal of the deferred tax asset on the consolidated balance sheets and related tax benefits of $4,756 as of December 31, 2016. In accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, we evaluated the error and determined that the related impact was not material to our results of operations or financial position for any prior annual or interim period, but that correcting the $4,756 cumulative impact of the error would be material to our results of operations for the three months ended March 31, 2017. Accordingly, we have corrected the consolidated balance sheets as of December 31, 2016 and will correct this error in all prior periods presented by revising the appropriate condensed consolidated financial statements. This error had no impact on the three months ended March 31, 2016. The impact to the consolidated balance sheet as of December 31, 2016 and the consolidated statements of income for the three and six months ended June 30, 2016, the three and nine months ended September 30, 2016, and the three months and year ended December 31, 2016 is as follows: Consolidated Balance Sheets As of December 31, 2016 As Reported Adjustment As Revised Deferred tax assets, non-current $ 188,966 $ 4,756 $ 184,210 Total assets 940,422 4,756 935,666 Accumulated deficit (637,113 ) 4,756 (641,869 ) Total stockholders' equity 441,297 4,756 436,541 Total liabilities and stockholders' equity 940,422 4,756 935,666 Condensed Consolidated Statements of Income Three Months Ended Six Months Ended June 30, 2016 June 30, 2016 As Reported Adjustment As Revised As Reported Adjustment As Revised Income tax expense $ (1,562 ) $ 679 $ (2,241 ) $ (9,884 ) $ 679 $ (10,563 ) Net income 897 679 218 8,828 679 8,149 Net income per common share: Basic $ — $ — $ — $ 0.04 $ — $ 0.04 Diluted $ — $ — $ — $ 0.04 $ — $ 0.04 Three Months Ended Nine Months Ended September 30, 2016 September 30, 2016 As Reported Adjustment As Revised As Reported Adjustment As Revised Income tax expense $ (1,501 ) $ 2,038 $ (3,539 ) $ (11,385 ) $ 2,717 $ (14,102 ) Net income 9,078 2,038 7,040 17,906 2,717 15,189 Net income per common share: Basic $ 0.04 $ 0.01 $ 0.03 $ 0.08 $ 0.01 $ 0.07 Diluted $ 0.04 $ 0.01 $ 0.03 $ 0.08 $ 0.01 $ 0.07 Three Months Ended Year Ended December 31, 2016 December 31, 2016 As Reported Adjustment As Revised As Reported Adjustment As Revised Income tax expense $ (1,553 ) $ 2,039 $ (3,592 ) $ (12,938 ) $ 4,756 $ (17,694 ) Net income 1 2,039 (2,038 ) 17,907 4,756 13,151 Net income per common share: Basic $ — $ 0.01 $ (0.01 ) $ 0.08 $ 0.02 $ 0.06 Diluted $ — $ 0.01 $ (0.01 ) $ 0.08 $ 0.02 $ 0.06 |
Supplemental Balance Sheet Acco
Supplemental Balance Sheet Account Information | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Balance Sheet Account Information | Supplemental Balance Sheet Account Information Cash, cash equivalents, and restricted cash March 31, December 31, 2016 Cash and cash equivalents $ 26,220 $ 29,078 Cash collateralized letter of credit-lease deposits $ 1,579 $ 1,578 Cash reserves 220 273 Restricted cash $ 1,799 $ 1,851 Cash, cash equivalents, and restricted cash $ 28,019 $ 30,929 Prepaid expenses and other current assets March 31, December 31, 2016 Nontrade receivables $ 1,974 $ 3,147 Services 11,701 10,854 Telecommunications 3,235 3,239 Insurance 427 935 Marketing 4,113 1,307 Prepaid hosting 7,978 8,453 Other prepaids 1,467 1,253 Prepaid expenses and other current assets $ 30,895 $ 29,188 Property and equipment, net March 31, December 31, 2016 Building (under capital lease) $ 25,709 $ 25,709 Network equipment and computer hardware 94,681 93,437 Leasehold improvements 45,064 44,293 Customer premise equipment 10,430 9,700 Furniture 4,300 4,239 Vehicles 203 203 180,387 177,581 Less: accumulated depreciation and amortization (134,665 ) (129,166 ) Property and equipment, net $ 45,722 $ 48,415 Customer premise equipment, net March 31, December 31, 2016 Customer premise equipment $ 10,430 $ 9,700 Less: accumulated depreciation (4,824 ) (4,248 ) Customer premise equipment, net $ 5,606 $ 5,452 Software, net March 31, December 31, 2016 Purchased $ 76,854 $ 73,509 Internally developed 36,088 36,088 112,942 109,597 Less: accumulated amortization (89,976 ) (87,626 ) Software, net $ 22,966 $ 21,971 Debt issuance costs, net March 31, December 31, 2016 Debt related costs related to Revolving Credit Facility $ 5,965 $ 5,965 Less: accumulated amortization (3,803 ) (3,632 ) Debt related costs, net $ 2,162 $ 2,333 Intangible assets, net March 31, December 31, 2016 Customer relationships $ 174,400 $ 173,187 Developed technology 88,804 88,609 Patents and patent licenses 20,214 20,214 Trade names 1,836 1,820 Non-compete agreements 3,859 3,845 Intangible assets, gross 289,113 287,675 Customer relationships (44,785 ) (39,413 ) Developed technology (34,532 ) (31,364 ) Patents and patent licenses (15,046 ) (14,667 ) Trade names (983 ) (787 ) Non-compete agreements (2,517 ) (2,188 ) Less: accumulated amortization (97,863 ) (88,419 ) Customer relationships 129,615 133,774 Developed technology 54,272 57,245 Patents and patent licenses 5,168 5,547 Trade names 853 1,033 Non-compete agreements 1,342 1,657 Intangible assets, net $ 191,250 $ 199,256 Other assets March 31, December 31, 2016 Deposits 1,749 1,329 Tax credits 6,623 6,623 Long-term prepaid hosting 4,132 5,244 Others 1,446 1,264 Other assets $ 13,950 $ 14,460 Accrued expenses March 31, December 31, 2016 Compensation and related taxes and temporary labor $ 21,463 $ 35,308 Marketing 10,944 11,979 Taxes and fees 12,855 18,976 Acquisition related consideration accounted for as compensation — 6,608 Telecommunications 16,665 14,724 Settlement — 5,000 Other accruals 15,596 11,383 Customer credits 1,506 2,074 Professional fees 1,809 1,680 Accrued interest 157 66 Inventory 1,538 1,168 Credit card fees 180 229 Accrued expenses $ 82,713 $ 109,195 Accumulated other comprehensive income (loss) March 31, December 31, 2016 Foreign currency translation adjustment (10,526 ) (13,593 ) Unrealized gain (loss) on available-for sale securities — (1 ) Accumulated other comprehensive income (loss) $ (10,526 ) $ (13,594 ) |
Supplemental Income Statement A
Supplemental Income Statement Account Information | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Income Statement Account Information | Supplemental Income Statement Account Information Amounts included in revenues Three Months Ended March 31, 2017 2016 USF fees $ 18,376 $ 19,520 Disconnect fees, net of credits and bad debt $ 318 $ 214 Initial activation fees $ 133 $ 368 Customer equipment rental $ 1,540 $ 1,102 Customer equipment fees $ 2,307 $ 2,081 Equipment recovery fees $ 13 $ 18 Shipping and handling fees $ 556 $ 608 Access revenues $ 10,254 $ 9,667 Professional service fees $ 433 $ 685 Amount included in cost of services Three Months Ended March 31, 2017 2016 USF costs $ 18,376 $ 19,520 Access costs $ 7,609 $ 7,284 Professional services costs $ 317 $ 413 Amount included in cost of goods sold Three Months Ended March 31, 2017 2016 Shipping and handling cost $ 1,055 $ 1,462 Amount included in sales and marketing Three Months Ended March 31, 2017 2016 Advertising costs $ 17,343 $ 16,879 Amounts included in general and administrative expense Three Months Ended March 31, 2017 2016 Acquisition related transaction costs $ 139 $ 93 Acquisition related consideration accounted for as compensation $ 6,763 $ — Depreciation and amortization expense Three Months Ended March 31, 2017 2016 Network equipment and computer hardware $ 3,554 $ 3,833 Software 2,347 2,729 Capital leases 550 550 Other leasehold improvements 1,093 1,355 Customer premise equipment 742 629 Furniture 226 162 Vehicles 17 18 Patents 379 682 Trademarks — 18 Customer relationships 5,334 3,849 Acquired technology 3,148 2,805 Trade names 191 54 Non-compete agreements 326 254 17,907 16,938 Property and equipment impairments — 41 Software impairments 40 — Depreciation and amortization expense $ 17,947 $ 16,979 Amount included in interest expense Three Months Ended March 31, 2017 2016 Debt related costs amortization $ 276 $ 251 Amount included in other income (expense), net Three Months Ended March 31, 2017 2016 Net (loss) gain resulting from foreign exchange transactions $ (216 ) $ 156 |
Long-Term Note and Revolving Cr
Long-Term Note and Revolving Credit Facility | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Note and Revolving Credit Facility | Long-Term Note and Revolving Credit Facility A schedule of long-term note and revolving credit facility at March 31, 2017 and December 31, 2016 is as follows: March 31, December 31, 2.50-3.25% Term note - due 2020, net of debt related costs 86,541 91,124 2.50-3.25% Revolving credit facility - due 2020 224,000 209,000 Total Long-term note and revolving credit facility $ 310,541 $ 300,124 At March 31, 2017 , future payments under term note obligations over each of the next five years and thereafter were as follows: Term Note 2017 $ 14,062 2018 18,750 2019 18,750 2020 54,688 Minimum future payments of principal 106,250 Less: unamortized debt related costs 959 current portion 18,750 Long-term portion $ 86,541 2016 Financing On June 3, 2016, we entered into Amendment No. 1 to the Amended and Restated Credit Agreement (the “2016 Credit Facility”) consisting of a $125,000 term note and a $325,000 revolving credit facility. The co-borrowers under the 2016 Credit Facility are the Company and Vonage America Inc., the Company’s wholly owned subsidiary. Obligations under the 2016 Credit Facility are guaranteed, fully and unconditionally, by the Company’s other United States material subsidiaries and are secured by substantially all of the assets of each borrower and each guarantor. The lenders under the 2016 Credit Facility are JPMorgan Chase Bank, N.A., Citizens Bank, N.A., Fifth Third Bank, MUFG Union Bank, N.A., Silicon Valley Bank, SunTrust Bank, Keybank National Association, Santander Bank, N.A., Capital One National Association, and First Niagara Bank, N.A. J.P. Morgan Securities LLC and Citizens Bank, N.A. acted as joint lead bookrunners, and J.P. Morgan Securities LLC, Citizens Bank, N.A., Fifth Third Bank, MUFG Union Bank, N.A., Silicon Valley Bank, and SunTrust Robinson Humphrey Inc. acted as joint lead arrangers. Use of Proceeds We used $197,750 of the net available proceeds of the 2016 Credit Facility to retire all of the debt under our 2015 Credit Facility. We used $179,000 from our 2016 Credit Facility in connection with the acquisition of Nexmo on June 3, 2016. Remaining proceeds from the term note and the undrawn revolving credit facility under the 2016 Credit Facility will be used for general corporate purposes. We also incurred fees of $1,316 in connection with the 2016 Credit Facility, of which $395 was allocated to the term note and $921 was allocated to the revolving credit facility. The unamortized fees of $2,740 in connection with the 2015 Credit Facility were allocated as follows: $930 to the term note and $1,810 to the revolving credit facility. In adopting ASU 2015-03, fees allocated to the term note were reported in the balance sheet as a direct deduction from the face amount of the liability and in adopting ASU 2015-15, fees allocated to the revolving credit facility were reported in the balance sheet as an asset. These fees are amortized to interest expenses over the life of the debt using the effective interest method for the term note and straight line method for the revolving credit facility. Repayments We made mandatory repayments of $4,688 under the term note for the three months ended March 31, 2017 . Borrowings We borrowed $15,000 under the revolving credit facility for the three months ended March 31, 2017 . 2016 Credit Facility Terms The following description summarizes the material terms of the 2016 Credit Facility: The loans under the 2016 Credit Facility mature in June 2020. Principal amounts under the 2016 Credit Facility are repayable in quarterly installments of approximately $4,688 for the term note. The unused portion of our revolving credit facility incurs a 0.45% commitment fee. Such commitment fee will be reduced to 0.40% if our consolidated leverage ratio is greater than or equal to 1.50 to 1.00 and less than 2.50 to 1.00, 0.375% if our consolidated leverage ratio is greater than or equal to 0.75 to 1.00 and less than 1.50 to 1.00, and to 0.35% if our consolidated leverage ratio is less than 0.75 to 1.00. Outstanding amounts under the 2016 Credit Facility, at our option, will bear interest at: • LIBOR (applicable to one-, two-, three-, six-, or twelve-month periods) plus an applicable margin equal to 2.50% if our consolidated leverage ratio is less than 0.75 to 1.00, 2.75% if our consolidated leverage ratio is greater than or equal to 0.75 to 1.00 and less than 1.50 to 1.00, 3.00% if our consolidated leverage ratio is greater than or equal to 1.50 to 1.00 and less than 2.5 to 1.00, and 3.25% if our consolidated leverage ratio is greater than or equal to 2.50 to 1.00, payable on the last day of each relevant interest period or, if the interest period is longer than three months, each day that is three months after the first day of the interest period, or • the base rate determined by reference to the highest of (a) the prime rate of JPMorgan Chase Bank, N.A., (b) the federal funds effective rate from time to time plus 0.50% , and (c) the adjusted LIBO rate applicable to one month interest periods plus 1.00% , plus an applicable margin equal to 1.50% if our consolidated leverage ratio is less than 0.75 to 1.00, 1.75% if our consolidated leverage ratio is greater than or equal to 0.75 to 1.00 and less than 1.50 to 1.00, 2.00% if our consolidated leverage ratio is greater than or equal to 1.50 to 1.00 and less than 2.50 to 1.00, and 2.25% if our consolidated leverage ratio is greater than or equal to 2.5 to 1.00, payable on the last business day of each March, June, September, and December and the maturity date of the 2016 Credit Facility. The effective interest rate was 4% as of March 31, 2017 . The 2016 Credit Facility provides greater flexibility to us in funding acquisitions and restricted payments, such as stock buybacks, than did the 2015 Credit Facility. We may prepay the 2016 Credit Facility at our option at any time without premium or penalty. The 2016 Credit Facility is subject to mandatory prepayments in amounts equal to: • 100% of the net cash proceeds from any non-ordinary course sale or other disposition of our property and assets for consideration in excess of a certain amount subject to customary reinvestment provisions and certain other exceptions and • 100% of the net cash proceeds received in connection with other non-ordinary course transactions, including insurance proceeds not otherwise applied to the relevant insurance loss. Subject to certain restrictions and exceptions, the 2016 Credit Facility permits us to obtain one or more incremental term notes and/or revolving credit facilities in an aggregate principal amount of up to $100,000 plus an amount equal to repayments of the term note upon providing documentation reasonably satisfactory to the administrative agent. The 2016 Credit Facility includes customary representations and warranties and affirmative covenants of the borrowers. In addition, the 2016 Credit Facility contains customary negative covenants, including, among other things, restrictions on the ability of us and our subsidiaries to consolidate or merge, create liens, incur additional indebtedness, dispose of assets, consummate acquisitions, make investments, and pay dividends and other distributions. We must also comply with the following financial covenants: • a consolidated leverage ratio of no greater than 3.25 to 1.00 as of the end of the fiscal quarter ending June 30, 2016 and for each of the three consecutive fiscal quarters ending immediately thereafter; and a consolidated leverage ratio of no less than 2.75 to 1.00 as of the end of any fiscal quarter, commencing with the fiscal quarter ending June 30, 2017, with a limited step-up to 3.25 to 1.00 for a period of four consecutive quarters, in connection with an acquisition; • a consolidated fixed coverage charge ratio of no less than 1.75 to 1.00 subject to adjustment to exclude up to $80,000 in specified restricted payments; • minimum cash of $25,000 including the unused portion of the revolving credit facility; and • maximum capital expenditures not to exceed $55,000 during any fiscal year, provided that the unused amount of any permitted capital expenditures in any fiscal year may be carried forward to the next following fiscal year. In addition, annual excess cash flow increases permitted capital expenditures. As of March 31, 2017 , we were in compliance with all covenants, including financial covenants, for the 2016 Credit Facility. The 2016 Credit Facility contains customary events of default that may permit acceleration of the debt. During the continuance of a payment default, interest will accrue on overdue amounts at a default interest rate of 2% above the interest rate which would otherwise be applicable, in the case of loans, and at a rate equal to the rate applicable to base rate loans plus 2% , in the case of all other amounts. 2015 Financing On July 27, 2015, we entered into a credit agreement (the “2015 Credit Facility”) consisting of a $100,000 term note and a $250,000 revolving credit facility. The co-borrowers under the 2015 Credit Facility were the Company and Vonage America Inc., the Company’s wholly owned subsidiary. Obligations under the 2015 Credit Facility were guaranteed, fully and unconditionally, by the Company’s other United States material subsidiaries and were secured by substantially all of the assets of each borrower and each guarantor. The lenders under the 2015 Credit Facility were JPMorgan Chase Bank, N.A., Citizens Bank, N.A., Fifth Third Bank, MUFG Union Bank, N.A., Silicon Valley Bank, SunTrust Bank, Keybank National Association, Santander Bank, N.A., Capital One National Association, and First Niagara Bank, N.A. JPMorgan Chase Bank, N.A. was a party to the agreement as administrative agent, Citizens Bank, N.A. as syndication agent, and Fifth Third Bank, MUFG Union Bank, N.A., Silicon Valley Bank, and SunTrust Bank as documentation agents. J.P. Morgan Securities LLC and Citizens Bank, N.A. acted as joint lead bookrunners, and J.P. Morgan Securities LLC, Citizens Bank, N.A., Fifth Third Bank, MUFG Union Bank, N.A., Silicon Valley Bank, and SunTrust Robinson Humphrey Inc. acted as joint lead arrangers. Use of Proceeds We used $167,000 of the net available proceeds of the 2015 Credit Facility to retire all of the debt under our 2014 Credit Facility. Remaining proceeds from the term note and the undrawn revolving credit facility under the 2015 Credit Facility were used for general corporate purposes. We also incurred fees of $2,007 in connection with the 2015 Credit Facility, of which $602 was allocated to the term note and $1,405 was allocated to the revolving credit facility. The unamortized fees of $1,628 in connection with the 2014 Credit Facility were allocated as follows: $733 to the term note and $895 to the revolving credit facility. In adopting ASU 2015-03, fees allocated to the term note were reported in the balance sheet as a direct deduction from the face amount of the liability and in adopting ASU ASU 2015-15, fees allocated to the revolving credit facility were reported in the balance sheet as as asset. These fees are amortized to interest expenses over the life of the debt using the effective interest method for the term note and straight line method for the revolving credit facility. Repayments We made mandatory repayments of $3,750 under the term note in 2016. In addition, we repaid the $10,000 outstanding under the revolving credit facility in 2016. Borrowings We borrowed $82,000 under the revolving credit facility in 2015. |
Common Stock
Common Stock | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Common Stock | Common Stock Net Operating Loss Rights Agreement On June 7, 2012, we entered into a Tax Benefits Preservation Plan ("Preservation Plan") designed to preserve stockholder value and tax assets. Our ability to use our tax attributes to offset tax on U.S. taxable income would be substantially limited if there were an "ownership change" as defined under Section 382 of the U.S. Internal Revenue Code. In general, an ownership change would occur if one or more "5-percent shareholders," as defined under Section 382, collectively increase their ownership in us by more than 50 percent over a rolling three-year period. In connection with the adoption of the Preservation Plan, our board of directors declared a dividend of one preferred share purchase right for each outstanding share of the Company’s common stock. The preferred share purchase rights were distributed to stockholders of record as of June 18, 2012, as well as to holders of the Company's common stock issued after that date, but will only be activated if certain triggering events under the Preservation Plan occur. Under the Preservation Plan, preferred share purchase rights will work to impose significant dilution upon any person or group which acquires beneficial ownership of 4.9% or more of the outstanding common stock, without the approval of our board of directors, from and after June 7, 2012. Stockholders that own 4.9% or more of the outstanding common stock as of the opening of business on June 7, 2012, will not trigger the preferred share purchase rights so long as they do not (i) acquire additional shares of common stock or (ii) fall under 4.9% ownership of common stock and then re-acquire shares that in the aggregate equal 4.9% or more of the common stock. The Preservation Plan was set to expire no later than the close of business June 7, 2013, unless extended by our board of directors. On June 6, 2013, at the Vonage 2013 annual meeting of stockholders, stockholders ratified the extension of the Preservation Plan through June 7, 2015. On April 2, 2015, after consultation with our advisors, our board of directors determined to extend the Preservation Plan through June 30, 2017, subject to ratification of the extension by stockholders at our 2015 annual meeting of stockholders. On June 3, 2015, at the Vonage 2015 annual meeting of stockholders, stockholders ratified the extension of the Preservation Plan through June 30, 2018. Common Stock Repurchases On July 25, 2012, our board of directors authorized a program to repurchase up to $50,000 of Vonage common stock (the " $50,000 repurchase program") through December 31, 2013. On February 7, 2013, our board of directors discontinued the remainder of the $50,000 repurchase program effective at the close of business on February 12, 2013 with $16,682 of availability remaining, and authorized a new program to repurchase up to $100,000 of Vonage common stock (the "2012 $100,000 repurchase program") by December 31, 2014. As of December 31, 2014, approximately $219 remained of our 2012 $100,000 repurchase program. The repurchase program expired on December 31, 2014. On December 9, 2014, Vonage's Board of Directors authorized a new program for the Company to repurchase up to $100,000 of its outstanding common stock (the "2014 $100,000 repurchase program"). Repurchases under the 2014 $100,000 repurchase program program are expected to be made over a four -year period ending on December 31, 2018. Under the 2014 $100,000 repurchase program, the timing and amount of repurchases will be determined by management based on its evaluation of market conditions, the trading price of the stock and will vary based on available capital resources and other financial and operational performance, market conditions, securities law limitations, and other factors. Repurchases may be made in the open market or through private transactions from time to time. The repurchases will be made using available cash balances. In any period, under each repurchase program, cash used in financing activities related to common stock repurchases may differ from the comparable change in stockholders' equity, reflecting timing differences between the recognition of share repurchase transactions and their settlement for cash. We repurchased the following shares of common stock with cash resources under the 2014 $100,000 repurchase program during the three and three months ended March 31, 2017 and 2016 : Three Months Ended March 31, 2017 2016 (1) Shares of common stock repurchased 1,599 1,653 Value of common stock repurchased $ 9,510 $ 8,008 (1) include 98 shares, or $441 , of common stock repurchases settled in April 2016; excluding commission of $2 . As of March 31, 2017 , $42,533 remained of our 2014 $100,000 repurchase program. The repurchase program expires on December 31, 2018 but may be suspended or discontinued at any time without notice. In any period under the 2014 $100,000 repurchase program, cash used in financing activities related to common stock repurchases may differ from the comparable change in stockholders' equity, reflecting timing differences between the recognition of share repurchase transactions and their settlement for cash. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation IP Matters Bear Creek Technologies, Inc. On February 22, 2011, Bear Creek Technologies, Inc. (“Bear Creek”) filed a lawsuit against Vonage Holdings Corp., Vonage America Inc., Vonage Marketing LLC, and Aptela Inc. (the latter two entities being former subsidiaries of Vonage Holdings Corp. now merged into Vonage America Inc. and Vonage Business Inc., respectively) in the United States District Court for the Eastern District of Virginia alleging that Vonage’s and Aptela’s products and services are covered by United States Patent No. 7,889,722, entitled “System for Interconnecting Standard Telephony Communications Equipment to Internet Protocol Networks” (the “'722 Patent”). The suit also named numerous other defendants. On August 17, 2011, the Court dismissed Bear Creek’s case against the Vonage entities and Aptela, and all but one of the other defendants. Later, on August 17, 2011, Bear Creek re-filed its complaint in the United States District Court for the District of Delaware against the same Vonage entities; and re-filed its complaint against Aptela in the United States District Court for the Eastern District of Virginia. On May 2, 2012, the litigations against Vonage and Aptela were consolidated for pretrial proceedings with twelve other actions in the District of Delaware. Vonage filed an answer to Bear Creek’s complaint, including counterclaims of non-infringement and invalidity of the ‘722 patent. Aptela, which filed a motion to dismiss Bear Creek’s complaint on September 27, 2011, has not yet answered, as its motion remains pending. On November 5, 2012, Bear Creek filed an answer to Vonage’s counterclaims. On July 17, 2013, the Court stayed the case pending resolution of the reexamination of the ‘722 patent requested by Cisco Systems, Inc. (“Cisco”), described below. On May 5, 2015, the Court closed the case, with leave to reopen if further attention by the Court is required. A request for reexamination of the validity of the ‘722 Patent was filed on September 12, 2012 by Cisco. Cisco’s request was granted on November 28, 2012. On March 24, 2014, the United States Patent and Trademark Office issued an Action Closing Prosecution, confirming its rejection of all claims of the ‘722 patent. Bear Creek’s November 14, 2014 appeal of that decision to the Patent Trial and Appeal Board ("PTAB") was denied on December 29, 2015; the Federal Circuit affirmed the PTAB’s denial on March 15, 2017. Barring extraordinary circumstances, Bear Creek’s ability to assert its patent has been nullified. RPost Holdings, Inc. On August 24, 2012, RPost Holdings, Inc., RPost Communications Limited, and RMail Limited (collectively, “RPost”) filed a lawsuit against StrongMail Systems, Inc. (“StrongMail”) in the United States District Court for the Eastern District of Texas alleging that StrongMail’s products and services, including its electronic mail marketing services, are covered by United States Patent Nos. 8,224,913, 8,209,389, 8,161,104, 7,966,372, and 6,182,219. On February 11, 2013, RPost filed an amended complaint, adding 27 new defendants, including Vonage America Inc. RPost’s amended complaint alleges willful infringement of the RPost patents by Vonage and each of the other new defendants because they are customers of StrongMail. StrongMail has agreed to fully defend and indemnify Vonage in this lawsuit. Vonage answered the complaint on May 7, 2013. On September 17, 2015, the Court ordered the consolidation for pre-trial purposes of this case with other cases by RPost. The lead case has been administratively closed and stayed since January 30, 2014 due to multiple pending actions by third parties regarding ownership of the patents at issue. On March 1, 2017, the parties in the consolidated actions filed a joint notice regarding status of the co-pending actions. Plaintiffs requested that the stay be lifted, while defendants maintain that the stay should remain in place. AIP Acquisition LLC . On January 3, 2014, AIP Acquisition LLC (“AIP”), filed a lawsuit against Vonage Holdings Corp., Vonage America, Inc., and Vonage Marketing LLC in the U.S. District Court for the District of Delaware alleging that Vonage’s products and services are covered by United States Patent No. 7,269,247. Vonage filed an answer and counterclaims on February 25, 2014. AIP filed an amended complaint on March 18, 2014, which Vonage answered on April 4, 2014. On April 8, 2014, the Court stayed the case pending final resolution of non-party Level 3’s inter partes review request of United States Patent No. 7,724,879, which is a continuation of the ‘247 patent. On October 8, 2014, the Patent Office issued a Final Written Decision, finding all challenged claims of the ‘879 patent to be invalid. On November 10, 2015, the Federal Circuit rejected AIP’s appeal and affirmed the Patent Office’s rejection of the ‘879 patent. Cisco petitioned for inter partes review of the ‘247 patent on November 25, 2014, which was granted on May 20, 2015. On May 18, 2016, the Patent Office issued a Final Written Decision, finding all challenged claims of the ‘247 patent to be invalid. AIP appealed to the Federal Circuit, filing its opening brief on December 15, 2016. On December 20, 2016, the Patent Office filed a notice of intervention in the appellate proceedings. Briefing on the appeal is complete, with oral argument to be scheduled. Commercial Litigation Merkin & Smith, et al . On September 27, 2013, Arthur Merkin and James Smith filed a putative class action lawsuit against Vonage America, Inc. in the Superior Court of the State of California, County of Los Angeles, alleging that Vonage violated California’s Unfair Competition Law by charging its customers fictitious 911 taxes and fees. On October 30, 2013, Vonage filed a notice removing the case to the United States District Court for the Central District of California. On November 26, 2013, Vonage filed its Answer to the Complaint. On December 4, 2013, Vonage filed a Motion to Compel Arbitration, which the Court denied on February 4, 2014. On March 5, 2014, Vonage appealed that decision to the United States Court of Appeals for the Ninth Circuit. On March 26, 2014, the district court proceedings were stayed pending the appeal. On February 29, 2016, the Ninth Circuit reversed the district court’s ruling and remanded with instructions to grant the motion to compel arbitration. On March 22, 2016, Merkin and Smith filed a petition for rehearing. On May 4, 2016, the Ninth Circuit withdrew its February 29, 2016 decision and issued a new order reversing the district court’s order and remanded with instructions to compel arbitration. The Ninth Circuit also declared as moot the petition for rehearing. On June 27, 2016, the lower court stayed the case pending arbitration. A joint status report was filed with the District Court on December 23, 2016. A second joint status report was filed with the District Court on March 23, 2017. From time to time, in addition to those identified above, we are subject to legal proceedings, claims, investigations, and proceedings in the ordinary course of business, including claims of alleged infringement of third-party patents and other intellectual property rights, commercial, employment, and other matters. From time to time we receive letters or other communications from third parties inviting us to obtain patent licenses that might be relevant to our business or alleging that our services infringe upon third party patents or other intellectual property. In accordance with generally accepted accounting principles, we make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss or range of loss can be reasonably estimated. These provisions, if any, are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Litigation is inherently unpredictable. We believe that we have valid defenses with respect to the legal matters pending against us and are vigorously defending these matters. Given the uncertainty surrounding litigation and our inability to assess the likelihood of a favorable or unfavorable outcome in the above noted matters and our inability to reasonably estimate the amount of loss or range of loss, it is possible that the resolution of one or more of these matters could have a material adverse effect on our condensed consolidated financial position, cash flows or results of operations. Regulation Telephony services are subject to a broad spectrum of state and federal regulations. Because of the uncertainty over whether Voice over Internet Protocol (“VoIP”) should be treated as a telecommunications or information service, we have been involved in a substantial amount of state and federal regulatory activity. Implementation and interpretation of the existing laws and regulations is ongoing and is subject to litigation by various federal and state agencies and courts. Due to the uncertainty over the regulatory classification of VoIP service, there can be no assurance that we will not be subject to new regulations or existing regulations under new interpretations, and that such change would not introduce material additional costs to our business. Federal - Net Neutrality Clear and enforceable net neutrality rules make it more difficult for broadband Internet service providers to block or discriminate against Vonage service. In addition, explicitly applying net neutrality rules to wireless broadband Internet service providers could create greater opportunities for VoIP applications that run on wireless broadband Internet service. In December 2010, the FCC adopted net neutrality rules that applied strong net neutrality rules to wired broadband Internet service providers and limited rules to wireless broadband Internet service providers. On January 14, 2014, the D.C. Circuit Court of Appeals vacated a significant portion of the 2010 rules. On May 15, 2014, the FCC issued a Notice of Proposed Rulemaking (NPRM) proposing new net neutrality rules. After public response to the NPRM, the FCC adopted new neutrality rules on February 26, 2015. These rules prohibit broadband Internet service providers from: (1) blocking or throttling lawful content applications, or services; (2) imposing paid prioritization arrangements; and (3) unreasonably interfering or unreasonably disadvantaging consumers or edge providers. In addition, broadband Internet service providers are required to make certain disclosures regarding their network management practices, network performance, and commercial terms. These net neutrality rules apply the same requirements to wired and wireless broadband Internet service providers. Several parties filed appeals which are pending at the D.C. Circuit Court of Appeals. Oral arguments at the D.C. Circuit Court of Appeals were held on December 4, 2015. On June 14, 2016, the D.C. Circuit of Appeals denied the appeals. Several parties filed a petition for rehearing en banc on July 29, 2016. The petition is pending. Federal - Rural Call Completion Issues On February 7, 2013, the FCC released a Notice of Proposed Rulemaking (NPRM) on rural call completion issues. The NPRM proposed new detailed reporting requirements to gauge rural call completion performance. Rural carriers have argued that VoIP provider call completion performance to rural areas is generally poor. On October 28, 2013, the FCC adopted an order on rural call completion imposing new reporting obligations and restricting certain call signaling practices. The call signaling rules went into effect on January 31, 2014. We filed for extensions of the rules, which the FCC granted, and as of April 17, 2014, we were compliant with the FCC call signaling rules. The effective date for the reporting requirements was April 1, 2015. We could be subject to an FCC enforcement action in the future in the event the FCC took the position that our rural call completion performance is inadequate or we were not compliant with the FCC’s order. Federal - Numbering Rights On April 18, 2013, the FCC issued a Notice of Proposed Rulemaking (NPRM) that proposed to modify FCC rules to allow VoIP providers to directly access telephone numbers. In addition, the FCC granted a waiver from its existing rules to allow Vonage to conduct a trial of direct access to telephone numbers. The trial would allow the FCC to obtain real-world data on direct access to telephone numbers by VoIP providers to inform consideration of the NPRM. Direct access to telephone numbers would facilitate IP to IP interconnection, which may allow VoIP providers to provide higher quality, lower cost services, promote the deployment of innovative new voice services, and experience reductions in the cost of telephony services. Vonage successfully completed the trial in certain markets and filed the required reports on the trial with the FCC. On January 31, 2014, the FCC Wireline Competition Bureau issued a positive report on the trial, concluding that Vonage's successful trial confirmed the technical feasibility of interconnected VoIP providers obtaining telephone numbers directly from the numbering administrators. On June 18, 2015, the FCC adopted an order that modifies its rules to allow interconnected VoIP providers to directly access telephone numbers. Part of the order required approval from the Office of Management and Budget ("OMB") prior to the rule change becoming effective. On February 4, 2016, the FCC announced that OMB had approved the order and would begin accepting applications for authorization beginning on February 18, 2016. Vonage applied for authorization, and on March 31, 2016 received authorization. On December 23, 2015, the National Association of Regulatory Utility Commissioners filed an appeal of the June 18, 2015 FCC order at the D.C. Circuit Court of Appeals, which was denied on March 24, 2017. Federal - Privacy Rules On April 1, 2016, the FCC issued a Notice of Proposed Rulemaking (NPRM) that proposed the adoption of privacy rules for providers of broadband Internet access service and updating its rules for voice services to make them consistent with the proposed privacy rules for broadband Internet access services. In addition to regulating customer proprietary network information (CPNI), a category of information that the FCC has traditionally regulated for voice services, the FCC proposed to regulate use of customer personal information (PI), a broader set of information than CPNI, by broadband and voice service providers. Further, the NPRM would regulate voice and broadband provider privacy policies and data security practices, including imposing vicarious liability for vendors who handle PI and CPNI on behalf of a broadband or voice provider. Finally, the NPRM would impose another data breach reporting notification obligation on voice and broadband providers on top of existing state data breach notification requirements. The FCC adopted its new privacy rules at its October 27, 2016 open meeting. On April 3, 2017, President Trump signed a repeal of the new privacy rules. State Telecommunications Regulation In general, the focus of interconnected VoIP telecommunications regulation is at the federal level. On November 12, 2004, the FCC issued a declaratory ruling providing that our service is subject to federal regulation and preempted the Minnesota Public Utilities Commission (“MPUC”) from imposing certain of its regulations on us. The FCC's decision was based on its conclusion that our service is interstate in nature and cannot be separated into interstate and intrastate components. On March 21, 2007, the United States Court of Appeals for the 8th Circuit affirmed the FCC's declaratory ruling preempting state regulation of our service. While this ruling does not exempt us from all state oversight of our service, it effectively prevents state telecommunications regulators from imposing certain burdensome and inconsistent market entry requirements and certain other state utility rules and regulations on our service. State regulators continue to probe the limits of federal preemption in their attempts to apply state telecommunications regulation to interconnected VoIP service. On July 16, 2009, the Nebraska Public Service Commission and the Kansas Corporation Commission filed a petition with the FCC seeking a declaratory ruling or, alternatively, adoption of a rule declaring that state authorities may apply universal service funding requirements to nomadic VoIP providers. We participated in the FCC proceedings on the petition. On November 5, 2010, the FCC issued a declaratory ruling that allowed states to assess state USF on nomadic VoIP providers on a going forward basis provided that the states comply with certain conditions to ensure that imposing state USF does not conflict with federal law or policy. More recently on July 28, 2015, the MPUC found that it has authority to regulate Charter’s fixed, interconnected VoIP service. Charter challenged the MPUC’s order at the U.S. District Court for Minnesota. This challenge is currently pending. We expect that state public utility commissions and state legislators will continue their attempts to apply state telecommunications regulations to nomadic VoIP service. Stand-by Letters of Credit We had stand-by letters of credit totaling $1,579 and $1,578 , as of March 31, 2017 and December 31, 2016 , respectively. End-User Commitments We are obligated to provide telephone services to our registered end-users. The costs related to the potential utilization of minutes sold are expensed as incurred. Our obligation to provide this service is dependent on the proper functioning of systems controlled by third-party service providers. We do not have a contractual service relationship with some of these providers. Vendor Commitments We have committed to purchase software maintenance from a vendor. We have committed to pay this vendor approximately $681 in 2017 and $908 in 2018 and 2019, and $152 in 2020, respectively. State and Municipal Taxes In accordance with generally accepted accounting principles, we make a provision for a liability for taxes when it is both probable that a liability has been incurred and the amount of the liability or range of liability can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. For a period of time, we did not collect or remit state or municipal taxes (such as sales, excise, utility, use, and ad valorem taxes), fees or surcharges (“Taxes”) on the charges to our customers for our services, except that we historically complied with the New Jersey sales tax. We have received inquiries or demands from a number of state and municipal taxing and 911 agencies seeking payment of Taxes that are applied to or collected from customers of providers of traditional public switched telephone network services. Although we have consistently maintained that these Taxes do not apply to our service for a variety of reasons depending on the statute or rule that establishes such obligations, we are now collecting and remitting sales taxes in certain of those states including a number of states that have changed their statutes to expressly include VoIP. In addition, many states address how VoIP providers should contribute to support public safety agencies, and in those states we remit fees to the appropriate state agencies. We could also be contacted by state or municipal taxing and 911 agencies regarding Taxes that do explicitly apply to VoIP and these agencies could seek retroactive payment of Taxes. As such, we have reserves of $963 and $1,763 as of March 31, 2017 and December 31, 2016 , respectively, as our best estimate of the potential tax exposure for any retroactive assessment. We believe the maximum estimated exposures for retroactive assessments are approximately $1,800 and $2,600 as of March 31, 2017 and December 31, 2016 , respectively. |
Acquisition of Business
Acquisition of Business | 3 Months Ended |
Mar. 31, 2017 | |
Business Combinations [Abstract] | |
Acquisition of Business | Acquisition of Business Acquisition of Nexmo Nexmo is a global leader in the Communications-Platform-as-a-Service (“CPaaS”) segment of the cloud communications market. Nexmo provides innovative communication application program interfaces (“APIs”) for text messaging and voice communications, allowing developers and enterprises to embed contextual communications into mobile apps, websites and business workflows via text, social media, chat apps and voice. Pursuant to the Agreement and Plan of Merger dated May 5, 2016, by and among the Company, Neptune Acquisition Corp., a Delaware corporation and newly formed indirect, wholly owned subsidiary of Vonage (“Merger Sub”), Nexmo, a Delaware corporation, and Shareholder Representative Services LLC, a Colorado limited liability company, as representative of the security holders of Nexmo, on June 3, 2016, Merger Sub, on the terms and subject to the conditions thereof, merged with and into Nexmo, and Nexmo became a wholly owned indirect subsidiary of Vonage . On June 2, 2016, Vonage, Merger Sub, Nexmo and the Representative entered into Amendment No. 1 to the Merger Agreement (the “ Amendment”). The Amendment amended the Merger Agreement to, among other things, (1) increase the purchase price payable to the Nexmo securityholders by the amount of unrestricted cash and cash equivalents of Nexmo in lieu of the declaration of a dividend or other distribution of such unrestricted cash and cash equivalents to the Nexmo securityholders, (2) clarify the treatment of enterprise management incentive options issued by Nexmo to certain of its employees located in the United Kingdom, and (3) add certain technical provisions with respect to deposits made to the escrow agent and the exchange agent in connection with the closing of the transactions contemplated by the Merger Agreement. Under the agreement, Nexmo shareholders are receiving consideration of $231,122 , with an additional earn-out opportunity (the "contingent consideration") of up to $20,000 contingent upon Nexmo achieving certain performance targets. Of the consideration, $194,684 (net of cash acquired of $16,094 ) was paid at close, consisting of $163,093 of cash (net of $16,094 of cash acquired) and 6,823 in shares of Vonage common stock valued at $31,591 . The remaining $36,438 of the $231,122 purchase price is in the form of restricted cash, restricted stock and options held by Nexmo management and employees (the "Employee Payout Amount"), subject to vesting requirements over time and to be amortized to compensation expense quarterly until vested. We financed the transaction with $179,000 from our 2016 Credit Facility. The purchase price is subject to adjustments pursuant to the merger agreement for closing cash and working capital of Nexmo, reductions for indebtedness and transaction expenses of Nexmo that remained unpaid as of closing, and escrow fund deposits. The aggregate consideration will be allocated among Nexmo equityholders. The consideration was allocated to acquisition cost as follows: Cash paid at closing (inclusive of cash acquired of $16,094) $ 179,186 Stock paid at closing 31,591 Contingent consideration (described below) 16,472 Employee Payout Amount (described below) 4,779 Acquisition Cost $ 232,028 In addition, Nexmo shareholders were eligible to earn a Variable Payout Amount of up to $20,000 , subject to the achievement of certain performance targets during the 12 month period following the closing of the transaction. The contingent consideration payable to the holders of Nexmo stock is determined based on (i) the achievement of certain revenue targets for the calendar year 2016, and (ii) Nexmo’s revenues received from its top customers following the closing. The contingent consideration may be in the form of cash, a number of shares of Vonage common stock or a combination thereof, at our sole discretion. We estimated using probability weighting that the value of the contingent consideration is $17,840 at the acquisition date and included that amount in acquisition cost at the net present value amount of $16,472 . As of December 31, 2016, Nexmo did not achieve the performance targets necessary to earn the Variable Payout Amount but the parties agreed to a $5,000 settlement that the parties were paid in the first quarter of 2017. The $5,000 settlement has also been reflected in accrued expenses within the condensed consolidated balance sheets and in general and administrative expenses in the condensed consolidated statements of income. In addition, Nexmo management and employees may earn an Employee Payout Amount of $36,438 attributable to restricted cash, restricted stock and assumed options, of which $4,779 is included in acquisition cost as service had been provided pre-acquisition and $31,659 will be recorded as post-acquisition expense assuming all amounts vest, of which $31,087 will be recorded as compensation expense and $572 will be recorded as interest expense as continued employment is a condition of receiving consideration. The post-acquisition expense will be recorded as follows: Restricted Stock Restricted Cash Assumed Options Interest Expense Total 2016 $ 7,380 $ 6,353 $ 2,700 $ 255 $ 16,688 2017 6,197 5,383 1,293 271 13,144 2018 661 620 424 46 1,751 2019 — — 76 — 76 Total $ 14,238 $ 12,356 $ 4,493 $ 572 $ 31,659 Pursuant to the merger agreement, $20,372 of the cash consideration and $5,081 of the stock consideration were placed in escrow for unknown liabilities that may have existed as of the acquisition date. For the three months ended ended March 31, 2017 and March 31, 2016 , we incurred approximately $24 and $10 , respectively, in acquisition related transaction costs, which were recorded in general and administrative expense in the accompanying condensed consolidated statements of income. For the full year 2016, we incurred approximately $5,500 acquisition related transaction costs. The acquisition was accounted for using the acquisition method of accounting under which assets and liabilities of Nexmo were recorded at their respective fair values including an amount for goodwill representing the difference between the acquisition consideration and the fair value of the identifiable net assets. We do not expect any portion of this goodwill to be deductible for tax purposes. The goodwill attributable to the acquisition has been recorded as a non-current asset and is not amortized, but is subject to an annual review for impairment. The acquisition price was allocated to the tangible and identified intangible assets acquired and liabilities assumed as of the closing date. The fair values assigned to identifiable intangible assets assumed were based on management’s current estimates and assumptions and is considered preliminary. The estimated fair values of the identified current assets, property and equipment, software and other assets acquired and current liabilities assumed are also considered preliminary and are based on the most recent information available. We believe that the most recent information available provides a reasonable basis for assigning fair value, but we anticipate receiving additional information on income taxes, and, as such, the provisional measurements of fair value set forth below are subject to change. We expect to finalize the valuation on income taxes as soon as practicable, but not later than one year from the acquisition date. The table below summarizes the Nexmo assets acquired and liabilities assumed as of June 3, 2016: Estimated Fair Value Assets Current assets: Cash and cash equivalents $ 16,094 Accounts receivable 8,764 Prepaid expenses and other current assets 3,507 Total current assets 28,365 Property and equipment 757 Software, net 242 Intangible assets 101,770 Restricted cash 51 Total assets acquired 131,185 Liabilities Current liabilities: Accounts payable 1,841 Accrued expenses 9,299 Deferred revenue, current portion 1,735 Total current liabilities 12,875 Deferred tax liabilities, net, non-current 29,355 Total liabilities assumed 42,230 Net identifiable assets acquired 88,955 Goodwill 143,073 Total purchase price $ 232,028 The intangible assets as of the closing date of the acquisition included: Amount Customer relationships $ 85,900 Developed technologies 13,768 Non-compete agreements 972 Trade names 1,130 $ 101,770 Indications of fair value of the intangible assets acquired in connection with the acquisition were determined using either the income, market or replacement cost methodologies. The intangible assets are being amortized over periods which reflect the pattern in which economic benefits of the assets are expected to be realized. The customer relationships are being amortized on an accelerated basis over an estimated useful life of twelve years, the developed technologies are being amortized on an accelerated basis over an estimated useful life of eight years, the non-compete agreements are being amortized on a straight-line basis over three years, and trade names are being amortized on a straight-line basis over two years. In addition, we recorded a deferred tax liability of $37,507 related to the $101,770 of identified intangible assets that will be amortized for financial reporting purposes but not for tax purposes and a deferred tax asset of $7,686 related to NOLs. The excess of purchase price over the fair value amounts assigned to the assets acquired and liabilities assumed represents the amount of goodwill resulting from the acquisition. We do not expect any portion of this goodwill to be deductible for tax purposes. The goodwill attributable to the acquisition has been recorded as a non-current asset and is not amortized, but is subject to an annual review for impairment. We believe the factors that contributed to goodwill include synergies that are specific to our consolidated business, the acquisition of a talented workforce that provides us with expertise in the small and medium business market, as well as other intangible assets that do not qualify for separate recognition. Goodwill The following table provides a summary of the changes in the carrying amounts of goodwill which is attributable to our business segment: Balance at December 31, 2016 $ 360,363 Currency translation adjustments 2,061 Balance at March 31, 2017 $ 362,424 |
Industry Segment and Geographic
Industry Segment and Geographic Information | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Industry Segment and Geographic Information | Industry Segment and Geographic Information ASC 280 "Segment Reporting" establishes reporting standards for an enterprise's business segments and related disclosures about its products, services, geographic areas and major customers. Under ASC 280, the method for determining what information to report is based upon the way management organizes the operating segments within the Company for making operating decisions and assessing financial performance. Our chief operating decision-makers review revenue and gross margin information for each of our reportable segments, but do not review operating expenses on a segment by segment basis. In addition, with the exception of goodwill and intangible assets, we do not identify or allocate our assets by the reportable segments. Historically, we have had two operating segments that we have aggregated for reporting purposes. In 2016, as a result of the acquisition of Nexmo, we no longer meet the aggregation criteria for operating segments and now have the following two reportable segments: Business For our Business customers, we provide innovative, cloud-based Unified Communications as a Service, or UCaaS, solutions, comprised of integrated voice, text, video, data, collaboration, and mobile applications over our flexible, scalable Session Initiation Protocol (SIP) based Voice over Internet Protocol, or VoIP, network. Through Nexmo, the Vonage API Platform, we also offer Communications Platform as a Service, or CPaaS, solutions designed to enhance the way businesses communicate with their customers embedding communications into apps, websites and business processes. Together we have a robust set of product families tailored to serve the full range of the business value chain, from the small and medium business, or SMB, market, through mid-market and enterprise markets. We provide customers with multiple deployment options, designed to provide the reliability and quality of service they demand. We provide customers the ability to integrate our cloud communications platform with many cloud-based productivity and CRM solutions, including Google’s G Suite, Zendesk, Salesforce’s Sales Cloud, Oracle, Clio, and other CRM solutions. In combination, our products and services permit our business customers to communicate with their customers and employees through any cloud-connected device, in any place, at any time without the often costly investment required with on-site equipment. Consumer For our Consumer customers, we enable users to access and utilize our UCaaS services and features, via a single “identity,” either a number or user name, regardless of how they are connected to the Internet, including over 3G, LTE, Cable, or DSL broadband networks. This technology enables us to offer our Consumer customers attractively priced voice and messaging services and other features around the world on a variety of devices. For our segments we categorize revenues as follows: Services revenues . Services revenues consists primarily of revenue attributable to our communication services for Consumer and UCaaS and CPaaS services for Business, Product revenues. Product revenues includes equipment sold to customers, shipping and handling, professional services, and broadband access. USF revenues. USF revenues represent contributions to the Federal Universal Service Fund (“USF”) and related fees. For our segments we categorize cost of revenues as follows: Services cost of revenues. Services cost of revenues consists of costs associated with network operations and technical support personnel, communication origination, and termination services provided by third party carriers and excludes depreciation and amortization. Product cost of revenues . Product cost of revenues includes equipment sold to customers, shipping and handling, professional services, cost of certain products including equipment or services that we give customers as promotions, and broadband access. USF cost of revenues. USF cost of revenues represent contributions to the Federal Universal Service Fund (“USF”) and related fees. Information about our segment results for the three months ended March 31, 2017 were as follows: Three Months Ended March 31, 2017 Business Consumer Total Revenues Service revenues $ 92,291 $ 119,117 $ 211,408 Product revenues (1) 13,360 203 13,563 Service and product revenues 105,651 119,320 224,971 USF revenues 6,151 12,225 18,376 Total revenues 111,802 131,545 243,347 Cost of revenues Service cost of revenues (2) 39,195 22,100 61,295 Product cost of revenues (1) 13,202 2,016 15,218 Service and product cost of revenues 52,397 24,116 76,513 USF cost of revenues 6,151 12,225 18,376 Total cost of revenues 58,548 36,341 94,889 Gross margin Service margin 53,096 97,017 150,113 Product margin 158 (1,813 ) (1,655 ) Gross margin ex-USF (Service and product margin) 53,254 95,204 148,458 USF margin — — — Gross margin $ 53,254 $ 95,204 $ 148,458 Gross margin % Service margin % 57.5 % 81.4 % 71.0 % Gross margin ex-USF (Service and product margin %) 50.4 % 79.8 % 66.0 % Gross margin % 47.6 % 72.4 % 61.0 % (1) Includes customer premise equipment, access, professional services, and shipping and handling. (2) Excludes depreciation and amortization of $4,875 and $1,907 , respectively. Information about our segment results for the three months ended March 31, 2016 were as follows: Three Months Ended March 31, 2016 Business Consumer Total Revenues Service revenues $ 56,473 $ 137,772 $ 194,245 Product revenues (1) 12,912 147 13,059 Service and product revenues 69,385 137,919 207,304 USF revenues 4,435 15,085 19,520 Total revenues 73,820 153,004 226,824 Cost of revenues Service cost of revenues (2) 15,403 26,520 41,923 Product cost of revenues (1) 12,462 4,301 16,763 Service and product cost of revenues 27,865 30,821 58,686 USF cost of revenues 4,445 15,085 19,530 Total cost of revenues 32,310 45,906 78,216 Gross margin Service margin 41,070 111,252 152,322 Product margin 450 (4,154 ) (3,704 ) Gross margin ex-USF (Service and product margin) 41,520 107,098 148,618 USF margin (10 ) — (10 ) Gross margin $ 41,510 $ 107,098 $ 148,608 Gross margin % Service margin % 72.7 % 80.8 % 78.4 % Gross margin ex-USF (Service and product margin %) 59.8 % 77.7 % 71.7 % Gross margin % 56.2 % 70.0 % 65.5 % (1) Includes customer premise equipment, access, professional services, and shipping and handling. (2) Excludes depreciation and amortization of $4,319 and $2,514 , respectively. Information about our operations by geographic location is as follows: Three Months Ended March 31, 2017 2016 Revenues: United States $ 213,324 $ 217,217 Canada 7,445 6,073 United Kingdom 5,345 3,534 Other Countries (1) 17,233 — $ 243,347 $ 226,824 (1) No individual other international country represented greater than 7% of total revenue during the periods presented. March 31, 2017 December 31, 2016 Long-lived assets: United States $ 621,651 $ 629,269 United Kingdom 425 450 Israel 286 286 $ 622,362 $ 630,005 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Sale of Hosted Infrastructure Product Line On May 4, 2017, we entered into a definitive agreement to sell our Hosted Infrastructure product line for up to $4,000 . We will receive $1,000 at closing which is expected to occur in the second quarter of 2017, $500 six months from closing, and up to $2,500 based on the achievement of financial objectives for net sales during the 18 months following closing. The results of our Hosted Infrastructure product line are reported within our business segment. This disposal does not represent a strategic shift in operations and, therefore, does not qualify for presentation as discontinued operations. |
Basis of Presentation and Sig19
Basis of Presentation and Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The accompanying unaudited interim condensed consolidated financial statements and information have been prepared in accordance with accounting principles generally accepted in the United States and in accordance with the instructions for Form 10-Q. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, these financial statements contain all normal and recurring adjustments considered necessary to present fairly the financial position, results of operations, cash flows, and statement of stockholders’ equity for the periods presented. The results for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the full year. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission on February 28, 2017 . |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of Vonage and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. We also consolidate a majority owned entity in Brazil where we have the ability to exercise controlling influence. The results of companies acquired or disposed of are included in the condensed consolidated financial statements from the effective date of the acquisition or up to the date of disposal. |
Use of Estimates | Use of Estimates Our condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States, which require management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including the following: • the useful lives of property and equipment, software costs, and intangible assets; • assumptions used for the purpose of determining share-based compensation using the Black-Scholes option pricing model and Monte Carlo simulation model (“Models”), and various other assumptions that we believe to be reasonable; the key inputs for these Models include our stock price at valuation date, exercise price, the dividend yield, risk-free interest rate, life in years, and historical volatility of our common stock; • assumptions used in determining the need for, and amount of, a valuation allowance on net deferred tax assets; and • assumptions used in determining the contingent consideration in connection with the Nexmo acquisition. We base our estimates on historical experience, available market information, appropriate valuation methodologies, and on various other assumptions that we believe to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. |
Revenue Recognition | Revenue Recognition Operating revenues consist of services revenues and customer equipment (which enables our services) and shipping revenues. The point in time at which revenues are recognized is determined in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104, Revenue Recognition, and Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605, Revenue Recognition . At the time a customer signs up for our services, there are the following deliverables: • Providing equipment, if any, to the customer that enables our services; and • Providing services. The equipment is generally provided free of charge to our customers and in most instances there are no fees collected at sign-up. We record the fees collected for shipping the equipment to the customer, if any, as shipping and handling revenue at the time of shipment. Services Revenue Substantially all of our revenues are services revenues, which are derived primarily from monthly subscription fees that customers are charged under our service plans. We also derive services revenues from per minute fees for international calls if not covered under a plan, including calls made via applications for mobile devices and other stand-alone products, and for any calling minutes in excess of a customer’s monthly plan limits. Monthly subscription fees are automatically charged to customers’ credit cards, debit cards or electronic check payments ("ECP"), in advance and are recognized over the following month when services are provided. Revenues generated from international calls and from customers exceeding allocated call minutes under limited minute plans are recognized as services are provided, that is, as minutes are used, and are billed to a customer's credit cards, debit cards or ECP in arrears. As a result of multiple billing cycles each month, we estimate the amount of revenues earned from international calls and from customers exceeding allocated call minutes under limited minute plans but not billed from the end of each billing cycle to the end of each reporting period and record these amounts as accounts receivable. These estimates are based primarily upon historical minutes and have been consistent with our actual results. In the United States, we charge regulatory, compliance, E-911, and intellectual property-related fees on a monthly basis to defray costs, and to cover taxes that we are charged by the suppliers of telecommunications services. In addition, we charge customers Federal Universal Service Fund (“USF”) fees. We recognize revenue on a gross basis for USF and related fees. We record these fees as revenue when billed. All other taxes are recorded on a net basis. Our recently acquired subsidiary, Nexmo, provides CPaaS solutions to our customers. Through Nexmo, we provide innovative communication APIs for text messaging and voice communications, allowing developers and enterprises to embed contextual communications into mobile apps, websites and business workflows via text, social media, chat apps and voice. Nexmo has a global network of interconnected carriers delivering its API-based communications platform, enabling businesses to communicate with their customers reliably and with ease, no matter where in the world they are located. Nexmo has two types of revenue activities: Revenue is primarily derived from supplying messaging (SMS and Voice) services to customers. Revenue is recognized in the period when messages are sent by the customer. Revenue is recognized based on the price on the website pricing page or as otherwise agreed with the customer. Our trading customers operate within the communications industry as service providers or bulk SMS aggregators. With our trading business, we sell to trading specialists who are delivering voice or SMS messages on behalf of their customers. Typically, trade is based on single supply route and margins, which are effectively fixed at a deal level, represent the value of the transaction to us. As such, for the trading business we record revenue on a net basis as service providers deliver messages. Customer Equipment and Shipping Revenue Customer equipment and shipping revenues consist of revenues from sales of customer equipment to wholesalers or directly to customers for replacement devices, or for upgrading their device at the time of customer sign-up for which we charge an additional fee. In addition, customer equipment and shipping revenues include revenues from the sale of VoIP telephones in order to access our small and medium business services. Customer equipment and shipping revenues also include the fees that customers are charged for shipping their customer equipment to them. Customer equipment and shipping revenues include sales to our retailers, who subsequently resell this customer equipment to customers. Revenues are reduced for payments to retailers and rebates to customers, who purchased their customer equipment through these retailers, to the extent of customer equipment and shipping revenues. |
Cost of Services and Goods Sold | Cost of Service Cost of service consists of costs that we pay to third parties in order to provide services. These costs include access and interconnection charges that we pay to other companies to terminate domestic and international phone calls on the public switched telephone network. In addition, these costs include the cost to lease phone numbers, to co-locate in other companies’ facilities, to provide enhanced emergency dialing capabilities to transmit 911 calls, and to provide local number portability. These costs also include taxes that we pay on telecommunications services from our suppliers or are imposed by government agencies such as federal universal service fund (“USF”) contributions and royalties for use of third parties’ intellectual property. In addition, these costs include certain personnel and related costs for network operations and technical support that are attributable to revenue generating activities. Cost of Goods Sold Cost of goods sold consists primarily of costs that we incur when a customer signs up for our service. These costs include the cost of customer equipment for customers who subscribe through the direct sales channel in excess of activation fees. In addition, these costs include the amortization of deferred customer equipment, the cost of shipping and handling for customer equipment, the installation manual that accompanies the customer equipment, and the cost of certain promotions. |
Sales and Marketing Expense | Sales and Marketing Expenses Sales and marketing expenses consist primarily of personnel and related costs for employees and contractors directly associated with our sales and marketing activities, internet advertising fees, radio and billboard advertising, public relations, commissions paid to employees, resellers and other third parties, trade shows, marketing and promotional activities, customer support, credit card fees, collections, and systems and information technology support. |
Engineering and Development Expenses | Engineering and Development Expenses Engineering and development expenses primarily include personnel and related costs for developers responsible for new products, and software engineers maintaining and enhancing existing products. Research and development costs related to new product development included in engineering and development were $6,346 and $4,908 for the three months ended March 31, 2017 and 2016 , respectively. Costs for research, including predevelopment efforts prior to establishing technological feasibility of software expected to be marketed, are expensed as incurred. Development costs are capitalized when technological feasibility has been established and anticipated future revenues support the recoverability of the capitalized amounts. Capitalization stops when the product is available for general release to customers. Due to the short time period between achieving technological feasibility and product release and the insignificant amount of costs incurred during such periods, we have not capitalized any software development, and have expensed these costs as incurred. |
General and Administrative Expenses | General and Administrative Expenses General and administrative expenses primarily relate to our executive, finance, human resources, legal, and information technology organizations. General and administrative expenses primarily consist of personnel costs, stock compensation, board of directors' costs, professional fees for legal, accounting, tax, compliance and information systems, travel, recruiting expense and, rent and related expenses. |
Advertising Expenses | Advertising Expenses Advertising costs are expensed as incurred. |
Segment reporting | Segment Reporting ASC 280 " Segment Reporting " establishes reporting standards for an enterprise's business segments and related disclosures about its products, services, geographic areas and major customers. Under ASC 280, the method for determining what information to report is based upon the way management organizes the operating segments within the Company for making operating decisions and assessing financial performance. Our chief operating decision-makers review revenue and gross margin information for each of our reportable segments, but do not review operating expenses on a segment by segment basis. In addition, with the exception of goodwill and intangible assets, we do not identify or allocate our assets by the reportable segments. |
Cash, Cash Equivalents and Marketable Securities | Cash, Cash Equivalents and Marketable Securities We maintain cash with several investment grade financial institutions. Highly liquid investments, which are readily convertible into cash, with original maturities of three months or less, are recorded as cash equivalents. |
Debt and Marketable Equity Securities | Management determines the appropriate classification of our investments in debt and marketable equity securities at the time of purchase and reevaluates such designation at each balance sheet date. Our debt and marketable equity securities have been classified and accounted for as available for sale. We may or may not hold securities with stated maturities until maturity. In response to changes in the availability of and the yield on alternative investments as well as liquidity requirements, we may sell these securities prior to their stated maturities. These securities are carried at fair value, with the unrealized gains and losses reported as a component of other comprehensive income (loss). Any realized gains or losses on the sale of marketable securities are determined on a specific identification method, and such gains and losses are reflected as a component of other income or expense. |
Certain Risks and Concentrations | Certain Risks and Concentrations Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash equivalents, marketable securities, and accounts receivable. They are subject to fluctuations in both market value and yield based upon changes in market conditions, including interest rates, liquidity, general economic conditions, and conditions specific to the issuers. Accounts receivable are typically unsecured and are derived from revenues earned from customers primarily located in the United States. A portion of our accounts receivable represents the timing difference between when a customer’s credit card is billed and the subsequent settlement of that transaction with our credit card processors. This timing difference is generally three days for substantially all of our credit card receivables. We have never experienced any accounts receivable write-offs due to this timing difference. In addition, we collect subscription fees in advance, minimizing our accounts receivable and bad debt exposure. If a customer’s credit card, debit card or ECP is declined, we generally suspend international calling capabilities as well as their ability to incur domestic usage charges in excess of their plan minutes. Generally, if the customer’s credit card, debit card or ECP could not be successfully processed during three billing cycles (i.e., the current and two subsequent monthly billing cycles), we terminate the account. In addition, we automatically charge any per minute fees to our customers’ credit card, debit card or ECP monthly in arrears. To further mitigate our bad debt exposure, a customer’s credit card, debit card or ECP will be charged in advance of their monthly billing if their international calling or overage charges exceed a certain dollar threshold. |
Trade and Other Accounts Receivable | A portion of our accounts receivable represents the timing difference between when a customer’s credit card is billed and the subsequent settlement of that transaction with our credit card processors. This timing difference is generally three days for substantially all of our credit card receivables. We have never experienced any accounts receivable write-offs due to this timing difference. In addition, we collect subscription fees in advance, minimizing our accounts receivable and bad debt exposure. If a customer’s credit card, debit card or ECP is declined, we generally suspend international calling capabilities as well as their ability to incur domestic usage charges in excess of their plan minutes. Generally, if the customer’s credit card, debit card or ECP could not be successfully processed during three billing cycles (i.e., the current and two subsequent monthly billing cycles), we terminate the account. In addition, we automatically charge any per minute fees to our customers’ credit card, debit card or ECP monthly in arrears. To further mitigate our bad debt exposure, a customer’s credit card, debit card or ECP will be charged in advance of their monthly billing if their international calling or overage charges exceed a certain dollar threshold. |
Inventory | Inventory Inventory consists of the cost of customer equipment and is stated at the lower of cost or market, with cost determined using the average cost method. We provide an inventory allowance for customer equipment that has been returned by customers but may not be able to be reissued to new customers or returned to the manufacturer for credit. |
Property and Equipment | Property and Equipment Property and equipment includes acquired assets and those accounted for under capital leases and consist principally of network equipment and computer hardware, software, furniture, and leasehold improvements. Company-owned equipment in use at customer premises is also included in property and equipment. In addition, the lease of our corporate headquarters has been accounted for as a capital lease and is included in property and equipment. Network equipment and computer hardware and furniture are stated at cost with depreciation provided using the straight-line method over the estimated useful lives of the related assets, which range from three to five years . Leasehold improvements are amortized over their estimated useful life of the related assets or the life of the lease, whichever is shorter. The cost of renewals and substantial improvements is capitalized while the cost of maintenance and repairs is charged to operating expenses as incurred. Company-owned customer premises equipment is depreciated on a straight-line basis over three years. Our network equipment and computer hardware, which consists of routers, gateways, and servers that enable our telephony services, is subject to technological risks and rapid market changes due to new products and services and changing customer demand. These changes may result in future adjustments to the estimated useful lives or the carrying value of these assets, or both . |
Software Costs | Software Costs We capitalize certain costs, such as purchased software and internally developed software that we use for customer acquisition and customer care automation tools, in accordance with FASB ASC 350-40, “Internal-Use Software”. Computer software is stated at cost less accumulated amortization and the estimated useful life is two to five years . |
Goodwill | Goodwill Goodwill acquired in the acquisition of a business is accounted for based upon the excess fair value of consideration transferred over the fair value of net assets acquired in the business combination. Goodwill is tested for impairment on an annual basis on October 1st and, when specific circumstances dictate, between annual tests. When impaired, the carrying value of goodwill is written down to fair value. The goodwill impairment test involves evaluating qualitative information to determine if it is more than 50% likely that the fair value of a reporting unit is less than its carrying value. If such a determination is made, then the traditional two-step goodwill impairment test described below must be applied. The first step, identifying a potential impairment, compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying value of the reporting unit exceeds its fair value, the second step would need to be conducted; otherwise, no further steps are necessary as no potential impairment exists. The second step, measuring the impairment loss, compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. Any excess of the reporting unit goodwill carrying value over the respective implied fair value is recognized as an impairment loss. There were no impairments of goodwill for the three months ended March 31, 2017 and 2016 , respectively. |
Intangible Assets and Patents | Intangible Assets Intangible assets acquired in the settlement of litigation or by direct purchase are accounted for based upon the fair value of assets received. Purchased-intangible assets are accounted for based upon the fair value of assets received. Purchased-intangible assets are amortized on a straight-line or accelerated basis over the periods of benefit, ranging from two to ten years. We perform a review of purchased-intangible assets whenever events or changes in circumstances indicate that the useful life is shorter than we had originally estimated or that the carrying amount of assets may not be recoverable. If such facts and circumstances exist, we assess the recoverability of purchased-intangible assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets. If the useful life of the asset is shorter than originally estimated, we accelerate the rate of amortization and amortize the remaining carrying value over the new shorter useful life. There were no impairments of purchased-intangible assets identified for the three months ended March 31, 2017 and 2016 , respectively. Patents and Patent Licenses Patent rights acquired in the settlement of litigation or by direct purchase are accounted for based upon the fair value of assets received. |
Long-Lived Assets | Patent rights acquired in the settlement of litigation or by direct purchase are accounted for based upon the fair value of assets received. Long-Lived Asset |
Debt Related Costs | Debt Issuance Costs Costs incurred in raising debt are deferred and amortized as interest expense using the effective interest method over the life of the debt. A portion of these costs are netted against the underlying term note in accordance with ASU 2015-15, "Interest-Imputation of Interest". The remaining portion of the costs attributable to our revolving credit facility are recorded as an asset. |
Derivatives | Derivatives We do not hold or issue derivative instruments for trading purposes. However, in accordance with FASB ASC 815, “Derivatives and Hedging” (“FASB ASC 815”), we review our contractual obligations to determine whether there are terms that possess the characteristics of derivative financial instruments that must be accounted for separately from the financial instrument in which they are embedded. We recognize these features as liabilities in our condensed consolidated balance sheet at fair value each period and recognize any change in the fair value in our statement of operations in the period of change. We estimate the fair value of these liabilities using available market information and appropriate valuation methodologies. |
Income Taxes | Income Taxes We recognize deferred tax assets and liabilities at enacted income tax rates for the temporary differences between the financial reporting bases and the tax bases of our assets and liabilities. Any effects of changes in income tax rates or tax laws are included in the provision for income taxes in the period of enactment. Our net deferred tax assets primarily consist of net operating loss carry forwards (“NOLs”). We are required to record a valuation allowance against our net deferred tax assets if we conclude that it is more likely than not that taxable income generated in the future will be insufficient to utilize the future income tax benefit from our net deferred tax assets (namely, the NOLs) prior to expiration. We periodically review this conclusion, which requires significant management judgment. If we are able to conclude in a future period that a future income tax benefit from our net deferred tax assets has a greater than 50 percent likelihood of being realized, we are required in that period to reduce the related valuation allowance with a corresponding decrease in income tax expense. This would result in a non-cash benefit to our net income in the period of the determination. We periodically review this conclusion, which requires significant management judgment. In the future, if available evidence changes our conclusion that it is more likely than not that we will utilize our net deferred tax assets prior to their expiration, we will make an adjustment to the related valuation allowance and income tax expense at that time. In subsequent periods, we would expect to recognize income tax expense equal to our pre-tax income multiplied by our effective income tax rate, an expense that was not recognized prior to the reduction of the valuation allowance. Our effective rate may differ from the federal statutory rate due, in part, to our foreign operations and certain discrete period items. The 2017 estimated annual effective tax rate is expected to approximate 43.5% , but may fluctuate due to the timing of other discrete period transactions. We file income tax returns in the U.S. on a federal basis and in U.S. state and foreign jurisdictions. Our federal tax return remains subject to examination by the Internal Revenue Service from 2013 to present, our New Jersey tax returns remain open from 2012 to present, our Canada tax return remains open from 2014 to present, and other domestic and foreign tax returns remain open for all periods to which those filings relate. Our consolidated corporate income tax return for 2013 has been selected for examination by the Internal Revenue Service. Our Canadian corporate income tax returns for 2012 and 2013 have been selected for examination by the Canada Revenue Agency. The Canada Revenue Agency concluded their audit and there were no changes. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. We have not had any unrecognized tax benefits. We recognize interest and penalties accrued related to unrecognized tax benefits as components of our income tax provision. We have not had any interest and penalties accrued related to unrecognized tax benefits. |
Business Combinations | Business Combinations We account for business combinations using the acquisition method of accounting. The acquisition method of accounting requires that the purchase price, including the fair value of contingent consideration, of the acquisition be allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the acquisition date, the Company’s estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill to the extent the Company identifies adjustments to the preliminary purchase price allocation. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the condensed consolidated statements of operations. We include the results of all acquisitions in our condensed consolidated financial statements from the date of acquisition. Acquisition related transaction costs, such as banking, legal, accounting and other costs incurred in connection with an acquisition, are expensed as incurred in general and administrative expense. Acquisition related integration costs include costs associated with exit or disposal activities, which do not meet the criteria of discontinued operations, including costs for employee, lease, and contract terminations, facility closing or other exit activities. Additionally, these costs include expenses directly related to integrating and reorganizing acquired businesses and include items such as employee retention costs, recruiting costs, certain moving costs, certain duplicative costs during integration and asset impairments. These costs are expensed as incurred in general and administrative expense. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Effective January 1, 2008, we adopted FASB ASC 820-10-25, “Fair Value Measurements and Disclosures”. This standard establishes a framework for measuring fair value and expands disclosure about fair value measurements. We did not elect fair value accounting for any assets and liabilities allowed by FASB ASC 825, “Financial Instruments”. FASB ASC 820-10 defines fair value as the amount that would be received for an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. FASB ASC 820-10 describes the following three levels of inputs that may be used: • Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. • Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data. • Level 3: Unobservable inputs when there is little or no market data available, thereby requiring an entity to develop its own assumptions. The fair value hierarchy gives the lowest priority to Level 3 inputs. Although management believes its valuation methods were appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could have resulted in a different fair value measurement at the reporting date. The following table presents the assets and liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of March 31, 2017 and December 31, 2016 : March 31, 2017 December 31, 2016 Level 1 Assets Money market fund (1) $ 1 $ 300 Level 2 Assets Available-for-sale securities (2) $ 300 $ 601 (1) Included in cash and cash equivalents on our condensed consolidated balance sheet. (2) Included in marketable securities on our condensed consolidated balance sheet. Fair Value of Other Financial Instruments The carrying amounts of our financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable, approximate fair value because of their short maturities. The carrying amounts of our capital leases approximate fair value of these obligations based upon management’s best estimates of interest rates that would be available for similar debt obligations at March 31, 2017 and December 31, 2016 . We believe the fair value of our debt at March 31, 2017 was approximately the same as its carrying amount as market conditions, including available interest rates, credit spread relative to our credit rating, and illiquidity, remain relatively unchanged from the issuance date of our debt on June 3, 2016 for a similar debt instrument. |
Foreign Currency | Foreign Currency Generally, the functional currency of our non-United States subsidiaries is the local currency. However, the functional currency of Nexmo's United States's subsidiary is the euro. The financial statements of these subsidiaries are translated to United States dollars using month-end rates of exchange for assets and liabilities, and average rates of exchange for revenues, costs, and expenses. Translation gains and losses are deferred and recorded in accumulated other comprehensive income as a component of stockholders’ equity. |
Share-Based Compensation | Share-Based Compensation In March 2016 Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09 , "Improvements to Employee Share-Based Payment Accounting". This ASU is issued as part of its simplification initiative. The areas for simplification in this ASU involve several aspects of the accounting for share- based payment transactions, including the income tax consequences, recognition of share-based expense, classification of awards as either equity or liabilities, and classification on the statement of cash flows. We adopted this ASU in the first quarter of 2017. We elected to account for forfeitures when they occur versus our prior practice of estimating the number of awards that are expected to vest. The election of this new ASU resulted in a one-time adjustment in 2017 to accumulated deficit and to additional paid-in-capital of $5,668 and the corresponding benefit to our accumulated deficit and deferred tax asset of $2,285 related to the reversal of forfeiture rate as of December 31, 2016. In addition, a benefit to our accumulated deficit and deferred tax asset of $6,624 was recorded for excess tax benefits on equity compensation as of December 31, 2016. We also classified cash paid by us when directly withholding shares for tax-withholding purposes as a financing activity. As a result, $2,896 was reclassified from operating activity to financing activity for the three months ended March 31, 2016 . We account for share-based compensation in accordance with FASB ASC 718, “ Compensation-Stock Compensation ”. Under the fair value recognition provisions of this pronouncement, share-based compensation cost is measured at the grant date based on the fair value of the award, reduced as appropriate based on estimated forfeitures, and is recognized as expense over the applicable vesting period of the stock award using the accelerated method. The excess tax benefit associated with stock compensation deductions have not been recorded in additional paid-in capital. When evaluating whether an excess tax benefit has been realized, share based compensation deductions are not considered realized until NOLs are no longer sufficient to offset taxable income. Such excess tax benefits will be recorded when realized. |
Earnings per Share | Earnings per Share Net income per share has been computed according to FASB ASC 260, “ Earnings per Share” , which requires a dual presentation of basic and diluted earnings per share (“EPS”). Basic EPS represents net income divided by the weighted average number of common shares outstanding during a reporting period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock, including stock options and restricted stock units under our 2001 Stock Incentive Plan and 2006 Incentive Plan, were exercised or converted into common stock. The dilutive effect of outstanding stock options and restricted stock units is reflected in diluted earnings per share by application of the treasury stock method. In applying the treasury stock method for stock-based compensation arrangements, the assumed proceeds are computed as the sum of the amount the employee must pay upon exercise and the amounts of average unrecognized compensation cost attributed to future services. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income consists of net income (loss) and other comprehensive items. Other comprehensive items include foreign currency translation adjustments and unrealized gains (losses) on available for sale securities. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2017, FASB issued ASU 2017-04, "Intangibles - Goodwill and Other". The ASU simplifies the subsequent measurement of goodwill and eliminates Step 2 from the goodwill impairment test. This ASU is effective for an annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact of adopting ASU 2017-04 on our condensed consolidated financial statements and related disclosures. In May 2014, FASB issued ASU 2014-09, "Revenue from Contracts with Customers". In August 2015, FASB issued ASU 2015-14, "Deferral of the Effective Date". In March 2016, FASB issued ASU 2016-08, "Revenue from Contract with Customers - Principal versus Agent Considerations (Reporting Revenue Gross versus Net)". In April 2016, FASB issued ASU 2016-10, "Revenue from Contracts with Customers - Identifying Performance Obligations and Licensing". In May 2016, FASB issued ASU 2016-12, "Revenue from Contract with Customers - Narrow-Scope Improvements and Practical Expedients". In December 2016, FASB issued ASU 2016-20, "Revenue from Contract with Customers - Technical Corrections and Improvements to Topic 606". The core principle of these ASUs are that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is a comprehensive new revenue recognition model for revenue from contract with customers. ASU 2015-14 defers the effective date to annual and interim periods beginning on or after December 15, 2017, and early adoption will be permitted, but not earlier than the original effective date of annual and interim periods beginning on or after December 15, 2016, for public entities. The intention of the ASU 2016-08 is to improve the operability and understandability of the implementation guidance on principal versus agent considerations. ASU 2016-10 clarifies two aspects of the guidance: identifying performance obligations and the licensing implementation. The amendments in ASU 2016-12 affect only the narrow aspects of the guidance, such as assessing the collectibility criterion and accounting for contracts that do not meet the criterion, presentation of sales and other similar taxes collected from customers, non-cash consideration, and contract modifications at transition. We will adopt these ASUs when effective. We are currently evaluating the potential changes from adopting ASU 2014-09, ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU2016-20 on our financial statements and disclosures. We are in the process of identifying appropriate changes to our business processes, systems, and controls to support revenue recognition and disclosures under the new standard. We will adopt the requirements of the new standard in the first quarter of 2018 and anticipate using the modified retrospective transition method. Under the new standard, we expect in some cases to recognize revenue earlier for subscription plans with free periods and products sold at discounts and are assessing the impact to revenue of this change. We will also be impacted by the deferral of sales commissions due to capitalization of certain sales commissions, which previously were expensed as incurred and by the incremental disclosure requirements. Under the new standard, certain commissions may need to be capitalized and amortized over the expected period of benefit. In November 2016, FASB issued ASU 2016-18, "Statement of Cash Flows". This ASU requires that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. We adopted this ASU in the first quarter of 2017 and applied the retrospective transition method for each period presented. For the three months ended March 31, 2016 , $724 and $3 were reclassified from investing activity and effect of exchange rate changes on cash, respectively, and $2,587 and $1,860 were added to cash, cash equivalents, and restricted cash, Beginning of the period and end of the period balances, respectively. In October 2016, FASB issued ASU 2016-16, "Income Taxes". This ASU improves the accounting for income tax consequences of intra-entity transfers of assets other than inventory. This ASU is effective for fiscal years beginning after December 15, 2017 on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Early adoption is permitted as of the beginning of an annual reporting period for which financial statements have not been issued or made available for issuance. We are currently evaluating the impact of adopting ASU 2016-16 on our condensed consolidated financial statements and related disclosures. In August 2016, FASB issued ASU 2016-15, "Statement of Cash Flows". This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This ASU is effective for fiscal years beginning after December 15, 2017 on a retrospective basis. Early adoption is permitted, including adoption in an interim period. The adoption of ASU 2016-15 will not have a material impact on our condensed consolidated financial statements and related disclosures. In March 2016, FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting". This ASU is issued as part of its Simplification Initiative. The areas for simplification in this ASU involve several aspects of the accounting for share- based payment transactions, including the income tax consequences, recognition of share-based expense, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted for any entity in any interim or annual period. We adopted this ASU in the first quarter of 2017. In February 2016, FASB issued ASU 2016-02, "Leases". This ASU increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted for all entities. The adoption of this ASU will increase assets and liabilities for operating leases. We will adopt these ASUs when effective. We are currently evaluating the effect of adopting ASU 2016-02 on our condensed consolidated financial statements and related disclosures. In January 2016, FASB issued ASU 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities". This ASU provide guidance concerning certain matters involving the recognition, measurement, and disclosure of financial assets and financial liabilities. The guidance does not alter the basic framework for classifying debt instruments held as financial assets. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is not permitted, with some exceptions. The adoption of ASU 2016-01 will not have a material impact on our condensed consolidated financial statements and related disclosures. In July 2015, FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory". This ASU applies to inventory that is measured using first-in, first-out ("FIFO") or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predicable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, first-out ("LIFO") or the retail inventory. This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption on permitted at the beginning of an interim and annual reporting period. We adopted ASU 2015-11 in the first quarter of 2017 and the adoption of this ASU did not have a material impact on our condensed consolidated financial statements and related disclosures. |
Basis of Presentation and Sig20
Basis of Presentation and Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Assets measured at fair value on a recurring basis | The following table presents the assets and liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of March 31, 2017 and December 31, 2016 : March 31, 2017 December 31, 2016 Level 1 Assets Money market fund (1) $ 1 $ 300 Level 2 Assets Available-for-sale securities (2) $ 300 $ 601 (1) Included in cash and cash equivalents on our condensed consolidated balance sheet. (2) Included in marketable securities on our condensed consolidated balance sheet. |
Computation for basic and diluted net (loss) income per share | The following table sets forth the computation for basic and diluted net income per share for the three months ended March 31, 2017 and 2016 : Three Months Ended March 31, 2017 2016 Numerator Net income $ 5,913 $ 7,931 Denominator Basic weighted average common shares outstanding 220,371 214,039 Dilutive effect of stock options and restricted stock units 19,115 10,186 Diluted weighted average common shares outstanding 239,486 224,225 Basic net income per share Basic net income per share $ 0.03 $ 0.04 Diluted net income per share Diluted net income per share $ 0.02 $ 0.04 |
Securities excluded from calculation of diluted earnings per common share because of anti-dilutive effects | For the three months ended March 31, 2017 and 2016 , the following were excluded from the calculation of diluted earnings per common share because of their anti-dilutive effects: Three Months Ended March 31, 2017 2016 Restricted stock units 5,976 9,706 Stock options 6,802 13,300 12,778 23,006 |
Correction of Prior Period Fi21
Correction of Prior Period Financial Statements (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
Schedule of Error Corrections and Prior Period Adjustments | The impact to the consolidated balance sheet as of December 31, 2016 and the consolidated statements of income for the three and six months ended June 30, 2016, the three and nine months ended September 30, 2016, and the three months and year ended December 31, 2016 is as follows: Consolidated Balance Sheets As of December 31, 2016 As Reported Adjustment As Revised Deferred tax assets, non-current $ 188,966 $ 4,756 $ 184,210 Total assets 940,422 4,756 935,666 Accumulated deficit (637,113 ) 4,756 (641,869 ) Total stockholders' equity 441,297 4,756 436,541 Total liabilities and stockholders' equity 940,422 4,756 935,666 Condensed Consolidated Statements of Income Three Months Ended Six Months Ended June 30, 2016 June 30, 2016 As Reported Adjustment As Revised As Reported Adjustment As Revised Income tax expense $ (1,562 ) $ 679 $ (2,241 ) $ (9,884 ) $ 679 $ (10,563 ) Net income 897 679 218 8,828 679 8,149 Net income per common share: Basic $ — $ — $ — $ 0.04 $ — $ 0.04 Diluted $ — $ — $ — $ 0.04 $ — $ 0.04 Three Months Ended Nine Months Ended September 30, 2016 September 30, 2016 As Reported Adjustment As Revised As Reported Adjustment As Revised Income tax expense $ (1,501 ) $ 2,038 $ (3,539 ) $ (11,385 ) $ 2,717 $ (14,102 ) Net income 9,078 2,038 7,040 17,906 2,717 15,189 Net income per common share: Basic $ 0.04 $ 0.01 $ 0.03 $ 0.08 $ 0.01 $ 0.07 Diluted $ 0.04 $ 0.01 $ 0.03 $ 0.08 $ 0.01 $ 0.07 Three Months Ended Year Ended December 31, 2016 December 31, 2016 As Reported Adjustment As Revised As Reported Adjustment As Revised Income tax expense $ (1,553 ) $ 2,039 $ (3,592 ) $ (12,938 ) $ 4,756 $ (17,694 ) Net income 1 2,039 (2,038 ) 17,907 4,756 13,151 Net income per common share: Basic $ — $ 0.01 $ (0.01 ) $ 0.08 $ 0.02 $ 0.06 Diluted $ — $ 0.01 $ (0.01 ) $ 0.08 $ 0.02 $ 0.06 |
Supplemental Balance Sheet Ac22
Supplemental Balance Sheet Account Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of cash and cash equivalents | Cash, cash equivalents, and restricted cash March 31, December 31, 2016 Cash and cash equivalents $ 26,220 $ 29,078 Cash collateralized letter of credit-lease deposits $ 1,579 $ 1,578 Cash reserves 220 273 Restricted cash $ 1,799 $ 1,851 Cash, cash equivalents, and restricted cash $ 28,019 $ 30,929 |
Schedule of restricted cash | Cash, cash equivalents, and restricted cash March 31, December 31, 2016 Cash and cash equivalents $ 26,220 $ 29,078 Cash collateralized letter of credit-lease deposits $ 1,579 $ 1,578 Cash reserves 220 273 Restricted cash $ 1,799 $ 1,851 Cash, cash equivalents, and restricted cash $ 28,019 $ 30,929 |
Schedule of prepaid expenses and other current assets | Prepaid expenses and other current assets March 31, December 31, 2016 Nontrade receivables $ 1,974 $ 3,147 Services 11,701 10,854 Telecommunications 3,235 3,239 Insurance 427 935 Marketing 4,113 1,307 Prepaid hosting 7,978 8,453 Other prepaids 1,467 1,253 Prepaid expenses and other current assets $ 30,895 $ 29,188 |
Schedule of property, equipment and software, net | Property and equipment, net March 31, December 31, 2016 Building (under capital lease) $ 25,709 $ 25,709 Network equipment and computer hardware 94,681 93,437 Leasehold improvements 45,064 44,293 Customer premise equipment 10,430 9,700 Furniture 4,300 4,239 Vehicles 203 203 180,387 177,581 Less: accumulated depreciation and amortization (134,665 ) (129,166 ) Property and equipment, net $ 45,722 $ 48,415 Customer premise equipment, net March 31, December 31, 2016 Customer premise equipment $ 10,430 $ 9,700 Less: accumulated depreciation (4,824 ) (4,248 ) Customer premise equipment, net $ 5,606 $ 5,452 Software, net March 31, December 31, 2016 Purchased $ 76,854 $ 73,509 Internally developed 36,088 36,088 112,942 109,597 Less: accumulated amortization (89,976 ) (87,626 ) Software, net $ 22,966 $ 21,971 |
Schedule of debt related costs, net | Debt issuance costs, net March 31, December 31, 2016 Debt related costs related to Revolving Credit Facility $ 5,965 $ 5,965 Less: accumulated amortization (3,803 ) (3,632 ) Debt related costs, net $ 2,162 $ 2,333 |
Schedule of intangible assets, net | Intangible assets, net March 31, December 31, 2016 Customer relationships $ 174,400 $ 173,187 Developed technology 88,804 88,609 Patents and patent licenses 20,214 20,214 Trade names 1,836 1,820 Non-compete agreements 3,859 3,845 Intangible assets, gross 289,113 287,675 Customer relationships (44,785 ) (39,413 ) Developed technology (34,532 ) (31,364 ) Patents and patent licenses (15,046 ) (14,667 ) Trade names (983 ) (787 ) Non-compete agreements (2,517 ) (2,188 ) Less: accumulated amortization (97,863 ) (88,419 ) Customer relationships 129,615 133,774 Developed technology 54,272 57,245 Patents and patent licenses 5,168 5,547 Trade names 853 1,033 Non-compete agreements 1,342 1,657 Intangible assets, net $ 191,250 $ 199,256 |
Schedule of other assets | Other assets March 31, December 31, 2016 Deposits 1,749 1,329 Tax credits 6,623 6,623 Long-term prepaid hosting 4,132 5,244 Others 1,446 1,264 Other assets $ 13,950 $ 14,460 |
Schedule of accrued expenses | Accrued expenses March 31, December 31, 2016 Compensation and related taxes and temporary labor $ 21,463 $ 35,308 Marketing 10,944 11,979 Taxes and fees 12,855 18,976 Acquisition related consideration accounted for as compensation — 6,608 Telecommunications 16,665 14,724 Settlement — 5,000 Other accruals 15,596 11,383 Customer credits 1,506 2,074 Professional fees 1,809 1,680 Accrued interest 157 66 Inventory 1,538 1,168 Credit card fees 180 229 Accrued expenses $ 82,713 $ 109,195 |
Schedule of accumulated other comprehensive loss | Accumulated other comprehensive income (loss) March 31, December 31, 2016 Foreign currency translation adjustment (10,526 ) (13,593 ) Unrealized gain (loss) on available-for sale securities — (1 ) Accumulated other comprehensive income (loss) $ (10,526 ) $ (13,594 ) |
Supplemental Income Statement23
Supplemental Income Statement Account Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental income statement account information | Amounts included in revenues Three Months Ended March 31, 2017 2016 USF fees $ 18,376 $ 19,520 Disconnect fees, net of credits and bad debt $ 318 $ 214 Initial activation fees $ 133 $ 368 Customer equipment rental $ 1,540 $ 1,102 Customer equipment fees $ 2,307 $ 2,081 Equipment recovery fees $ 13 $ 18 Shipping and handling fees $ 556 $ 608 Access revenues $ 10,254 $ 9,667 Professional service fees $ 433 $ 685 Amount included in cost of services Three Months Ended March 31, 2017 2016 USF costs $ 18,376 $ 19,520 Access costs $ 7,609 $ 7,284 Professional services costs $ 317 $ 413 Amount included in cost of goods sold Three Months Ended March 31, 2017 2016 Shipping and handling cost $ 1,055 $ 1,462 Amount included in sales and marketing Three Months Ended March 31, 2017 2016 Advertising costs $ 17,343 $ 16,879 Amounts included in general and administrative expense Three Months Ended March 31, 2017 2016 Acquisition related transaction costs $ 139 $ 93 Acquisition related consideration accounted for as compensation $ 6,763 $ — Depreciation and amortization expense Three Months Ended March 31, 2017 2016 Network equipment and computer hardware $ 3,554 $ 3,833 Software 2,347 2,729 Capital leases 550 550 Other leasehold improvements 1,093 1,355 Customer premise equipment 742 629 Furniture 226 162 Vehicles 17 18 Patents 379 682 Trademarks — 18 Customer relationships 5,334 3,849 Acquired technology 3,148 2,805 Trade names 191 54 Non-compete agreements 326 254 17,907 16,938 Property and equipment impairments — 41 Software impairments 40 — Depreciation and amortization expense $ 17,947 $ 16,979 Amount included in interest expense Three Months Ended March 31, 2017 2016 Debt related costs amortization $ 276 $ 251 Amount included in other income (expense), net Three Months Ended March 31, 2017 2016 Net (loss) gain resulting from foreign exchange transactions $ (216 ) $ 156 |
Long-Term Note and Revolving 24
Long-Term Note and Revolving Credit Facility (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | A schedule of long-term note and revolving credit facility at March 31, 2017 and December 31, 2016 is as follows: March 31, December 31, 2.50-3.25% Term note - due 2020, net of debt related costs 86,541 91,124 2.50-3.25% Revolving credit facility - due 2020 224,000 209,000 Total Long-term note and revolving credit facility $ 310,541 $ 300,124 |
Future payments under long-term debt obligations | At March 31, 2017 , future payments under term note obligations over each of the next five years and thereafter were as follows: Term Note 2017 $ 14,062 2018 18,750 2019 18,750 2020 54,688 Minimum future payments of principal 106,250 Less: unamortized debt related costs 959 current portion 18,750 Long-term portion $ 86,541 |
Common Stock (Tables)
Common Stock (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Common stock repurchases | We repurchased the following shares of common stock with cash resources under the 2014 $100,000 repurchase program during the three and three months ended March 31, 2017 and 2016 : Three Months Ended March 31, 2017 2016 (1) Shares of common stock repurchased 1,599 1,653 Value of common stock repurchased $ 9,510 $ 8,008 (1) include 98 shares, or $441 , of common stock repurchases settled in April 2016; excluding commission of $2 . |
Acquisition of Business (Tables
Acquisition of Business (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Business Combinations [Abstract] | |
Schedule of consideration allocated to acquisition | The consideration was allocated to acquisition cost as follows: Cash paid at closing (inclusive of cash acquired of $16,094) $ 179,186 Stock paid at closing 31,591 Contingent consideration (described below) 16,472 Employee Payout Amount (described below) 4,779 Acquisition Cost $ 232,028 |
Schedule of post-acquisition expense | The post-acquisition expense will be recorded as follows: Restricted Stock Restricted Cash Assumed Options Interest Expense Total 2016 $ 7,380 $ 6,353 $ 2,700 $ 255 $ 16,688 2017 6,197 5,383 1,293 271 13,144 2018 661 620 424 46 1,751 2019 — — 76 — 76 Total $ 14,238 $ 12,356 $ 4,493 $ 572 $ 31,659 |
Estimated fair values of assets acquired and liabilities assumed | The table below summarizes the Nexmo assets acquired and liabilities assumed as of June 3, 2016: Estimated Fair Value Assets Current assets: Cash and cash equivalents $ 16,094 Accounts receivable 8,764 Prepaid expenses and other current assets 3,507 Total current assets 28,365 Property and equipment 757 Software, net 242 Intangible assets 101,770 Restricted cash 51 Total assets acquired 131,185 Liabilities Current liabilities: Accounts payable 1,841 Accrued expenses 9,299 Deferred revenue, current portion 1,735 Total current liabilities 12,875 Deferred tax liabilities, net, non-current 29,355 Total liabilities assumed 42,230 Net identifiable assets acquired 88,955 Goodwill 143,073 Total purchase price $ 232,028 |
Intangible assets acquired | The intangible assets as of the closing date of the acquisition included: Amount Customer relationships $ 85,900 Developed technologies 13,768 Non-compete agreements 972 Trade names 1,130 $ 101,770 |
Schedule of goodwill | The following table provides a summary of the changes in the carrying amounts of goodwill which is attributable to our business segment: Balance at December 31, 2016 $ 360,363 Currency translation adjustments 2,061 Balance at March 31, 2017 $ 362,424 |
Industry Segment and Geograph27
Industry Segment and Geographic Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Revenue from External Customers by Geographic Areas | Information about our segment results for the three months ended March 31, 2017 were as follows: Three Months Ended March 31, 2017 Business Consumer Total Revenues Service revenues $ 92,291 $ 119,117 $ 211,408 Product revenues (1) 13,360 203 13,563 Service and product revenues 105,651 119,320 224,971 USF revenues 6,151 12,225 18,376 Total revenues 111,802 131,545 243,347 Cost of revenues Service cost of revenues (2) 39,195 22,100 61,295 Product cost of revenues (1) 13,202 2,016 15,218 Service and product cost of revenues 52,397 24,116 76,513 USF cost of revenues 6,151 12,225 18,376 Total cost of revenues 58,548 36,341 94,889 Gross margin Service margin 53,096 97,017 150,113 Product margin 158 (1,813 ) (1,655 ) Gross margin ex-USF (Service and product margin) 53,254 95,204 148,458 USF margin — — — Gross margin $ 53,254 $ 95,204 $ 148,458 Gross margin % Service margin % 57.5 % 81.4 % 71.0 % Gross margin ex-USF (Service and product margin %) 50.4 % 79.8 % 66.0 % Gross margin % 47.6 % 72.4 % 61.0 % (1) Includes customer premise equipment, access, professional services, and shipping and handling. (2) Excludes depreciation and amortization of $4,875 and $1,907 , respectively. Information about our segment results for the three months ended March 31, 2016 were as follows: Three Months Ended March 31, 2016 Business Consumer Total Revenues Service revenues $ 56,473 $ 137,772 $ 194,245 Product revenues (1) 12,912 147 13,059 Service and product revenues 69,385 137,919 207,304 USF revenues 4,435 15,085 19,520 Total revenues 73,820 153,004 226,824 Cost of revenues Service cost of revenues (2) 15,403 26,520 41,923 Product cost of revenues (1) 12,462 4,301 16,763 Service and product cost of revenues 27,865 30,821 58,686 USF cost of revenues 4,445 15,085 19,530 Total cost of revenues 32,310 45,906 78,216 Gross margin Service margin 41,070 111,252 152,322 Product margin 450 (4,154 ) (3,704 ) Gross margin ex-USF (Service and product margin) 41,520 107,098 148,618 USF margin (10 ) — (10 ) Gross margin $ 41,510 $ 107,098 $ 148,608 Gross margin % Service margin % 72.7 % 80.8 % 78.4 % Gross margin ex-USF (Service and product margin %) 59.8 % 77.7 % 71.7 % Gross margin % 56.2 % 70.0 % 65.5 % (1) Includes customer premise equipment, access, professional services, and shipping and handling. (2) Excludes depreciation and amortization of $4,319 and $2,514 , respectively. Information about our operations by geographic location is as follows: Three Months Ended March 31, 2017 2016 Revenues: United States $ 213,324 $ 217,217 Canada 7,445 6,073 United Kingdom 5,345 3,534 Other Countries (1) 17,233 — $ 243,347 $ 226,824 (1) No individual other international country represented greater than 7% of total revenue during the periods presented. |
Long-lived Assets by Geographic Areas | March 31, 2017 December 31, 2016 Long-lived assets: United States $ 621,651 $ 629,269 United Kingdom 425 450 Israel 286 286 $ 622,362 $ 630,005 |
Basis of Presentation and Sig28
Basis of Presentation and Significant Accounting Policies - Nature of Operation (Details) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
United States | ||
Concentration Risk [Line Items] | ||
Customer representation of revenue, percentage | 88.00% | 96.00% |
Basis of Presentation and Sig29
Basis of Presentation and Significant Accounting Policies - Engineering and Development Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Engineering and development | $ 8,370 | $ 6,834 |
Product revenues | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Engineering and development | $ 6,346 | $ 4,908 |
Basis of Presentation and Sig30
Basis of Presentation and Significant Accounting Policies - Certain Risks and Concentrations (Details) - Credit Card Receivable | 3 Months Ended |
Mar. 31, 2017billing_cycle | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Accounts receivable, settlement period | 3 days |
Threshold period past due | 3 |
Basis of Presentation and Sig31
Basis of Presentation and Significant Accounting Policies - Property and Equipment (Details) | 3 Months Ended |
Mar. 31, 2017 | |
Furniture | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Furniture | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Network equipment and computer hardware | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Network equipment and computer hardware | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Customer premise equipment | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 2 years |
Software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Basis of Presentation and Sig32
Basis of Presentation and Significant Accounting Policies - Intangible Assets (Details) | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Impairment of intangible assets | $ 0 |
Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life of intangible assets | 2 years |
Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life of intangible assets | 10 years |
Basis of Presentation and Sig33
Basis of Presentation and Significant Accounting Policies - Income Taxes (Details) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Effective income tax rate percent | 43.50% |
Basis of Presentation and Sig34
Basis of Presentation and Significant Accounting Policies - Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale securities | $ 300 | $ 601 | [1] | |
Fair value, measurements, recurring | Level 1 assets | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Money market fund | [2] | 1 | 300 | |
Fair value, measurements, recurring | Level 2 assets or liabilities | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Available-for-sale securities | [3] | $ 300 | $ 601 | |
[1] | (1) see Note 2 Correction of Prior Period Financial Statements. | |||
[2] | Included in cash and cash equivalents on our condensed consolidated balance sheet. | |||
[3] | Included in marketable securities on our condensed consolidated balance sheet. |
Basis of Presentation and Sig35
Basis of Presentation and Significant Accounting Policies - Share-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | [1] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Net cash provided by operating activities | $ 17,261 | $ 17,468 | |
Net cash provided by financing activities | (13,540) | $ (28,995) | |
Accounting Standards Update 2016-09 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Net cash provided by operating activities | (2,896) | ||
Net cash provided by financing activities | 2,896 | ||
Accumulated Deficit | Accounting Standards Update 2016-09 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
New accounting pronouncement or change in accounting principle, effect of adoption, quantification | 5,668 | ||
Effective income tax rate reconciliation sharebased compensation excess tax benefit amount | 2,285 | ||
Deferred Tax Assets | Accounting Standards Update 2016-09 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
New accounting pronouncement or change in accounting principle, effect of adoption, quantification | 6,624 | ||
Effective income tax rate reconciliation sharebased compensation excess tax benefit amount | $ 2,285 | ||
[1] | (1) See Note 1 Recent Accounting Pronouncements reclassification due to the adoptions of new Accounting Standard Updates. |
Basis of Presentation and Sig36
Basis of Presentation and Significant Accounting Policies - Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2016 | Sep. 30, 2016 | Dec. 31, 2016 | |
Numerator | ||||||||
Net income | $ 5,913 | $ (2,038) | $ 7,040 | $ 218 | $ 7,931 | $ 8,149 | $ 15,189 | $ 13,151 |
Denominator | ||||||||
Basic weighted average common shares outstanding (in shares) | 220,371 | 214,039 | ||||||
Dilutive effect of stock options and restricted stock units (in shares) | 19,115 | 10,186 | ||||||
Diluted weighted average common shares outstanding (in shares) | 239,486 | 224,225 | ||||||
Basic net income per share | ||||||||
Earnings Per Share, Basic (usd per share) | $ 0.03 | $ (0.01) | $ 0.03 | $ 0 | $ 0.04 | $ 0.04 | $ 0.07 | $ 0.06 |
Diluted net income per share | ||||||||
Earnings Per Share, Diluted (usd per share) | $ 0.02 | $ (0.01) | $ 0.03 | $ 0 | $ 0.04 | $ 0.04 | $ 0.07 | $ 0.06 |
Basis of Presentation and Sig37
Basis of Presentation and Significant Accounting Policies - Earnings Per Share, Antidilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Earnings per share, antidilutive securities: | ||
Antidilutive securities excluded from earnings per common share | 12,778 | 23,006 |
Restricted stock units | ||
Earnings per share, antidilutive securities: | ||
Antidilutive securities excluded from earnings per common share | 5,976 | 9,706 |
Stock options | ||
Earnings per share, antidilutive securities: | ||
Antidilutive securities excluded from earnings per common share | 6,802 | 13,300 |
Basis of Presentation and Sig38
Basis of Presentation and Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | 3 Months Ended | |||||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Net cash provided by operating activities | $ 17,261 | $ 17,468 | [1] | |||
Effect of exchange rate changes on cash | 128 | (160) | [1] | |||
Cash, cash equivalents, and restricted cash | $ 28,019 | 37,749 | [1] | $ 30,929 | $ 60,313 | [1] |
New Accounting Pronouncement, Early Adoption, Effect | Accounting Standards Update 2016-18 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Net cash provided by operating activities | 724 | |||||
Effect of exchange rate changes on cash | 3 | |||||
Cash, cash equivalents, and restricted cash | $ 1,860 | $ 2,587 | ||||
[1] | (1) See Note 1 Recent Accounting Pronouncements reclassification due to the adoptions of new Accounting Standard Updates. |
Basis of Presentation and Sig39
Basis of Presentation and Significant Accounting Policies - Goodwill (Details) | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Accounting Policies [Abstract] | |
Goodwill impairment loss | $ 0 |
Correction of Prior Period Fi40
Correction of Prior Period Financial Statements - Schedule of Impact (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2016 | Sep. 30, 2016 | Dec. 31, 2016 | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||||
Deferred tax assets, non-current | $ 198,502 | $ 184,210 | [1] | $ 184,210 | [1] | |||||
Total assets | 934,126 | 935,666 | [1] | 935,666 | [1] | |||||
Accumulated deficit | (632,715) | (641,869) | [1] | (641,869) | [1] | |||||
Total stockholders' equity | 445,348 | 436,541 | [1],[2] | 436,541 | [1],[2] | |||||
Total liabilities and stockholders’ equity | 934,126 | 935,666 | [1] | 935,666 | [1] | |||||
Income tax expense | 4,707 | (3,592) | $ (3,539) | $ (2,241) | $ (8,322) | $ (10,563) | $ (14,102) | (17,694) | ||
Net income | $ 5,913 | $ (2,038) | $ 7,040 | $ 218 | $ 7,931 | $ 8,149 | $ 15,189 | $ 13,151 | ||
Net income per common share: | ||||||||||
Earnings per share, basic (usd per share) | $ 0.03 | $ (0.01) | $ 0.03 | $ 0 | $ 0.04 | $ 0.04 | $ 0.07 | $ 0.06 | ||
Earnings per share, diluted (usd per share) | $ 0.02 | $ (0.01) | $ 0.03 | $ 0 | $ 0.04 | $ 0.04 | $ 0.07 | $ 0.06 | ||
Scenario, Previously Reported [Member] | ||||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||||
Deferred tax assets, non-current | $ 188,966 | $ 188,966 | ||||||||
Total assets | 940,422 | 940,422 | ||||||||
Accumulated deficit | (637,113) | (637,113) | ||||||||
Total stockholders' equity | 441,297 | 441,297 | ||||||||
Total liabilities and stockholders’ equity | 940,422 | 940,422 | ||||||||
Income tax expense | (1,553) | $ (1,501) | $ (1,562) | $ (9,884) | $ (11,385) | (12,938) | ||||
Net income | $ 1 | $ 9,078 | $ 897 | $ 8,828 | $ 17,906 | $ 17,907 | ||||
Net income per common share: | ||||||||||
Earnings per share, basic (usd per share) | $ 0 | $ 0.04 | $ 0 | $ 0.04 | $ 0.08 | $ 0.08 | ||||
Earnings per share, diluted (usd per share) | $ 0 | $ 0.04 | $ 0 | $ 0.04 | $ 0.08 | $ 0.08 | ||||
Restatement Adjustment [Member] | ||||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||||
Deferred tax assets, non-current | $ 4,756 | $ 4,756 | ||||||||
Total assets | 4,756 | 4,756 | ||||||||
Accumulated deficit | 4,756 | 4,756 | ||||||||
Total stockholders' equity | 4,756 | 4,756 | ||||||||
Total liabilities and stockholders’ equity | 4,756 | 4,756 | ||||||||
Income tax expense | 2,039 | $ 2,038 | $ 679 | $ 679 | $ 2,717 | 4,756 | ||||
Net income | $ 2,039 | $ 2,038 | $ 679 | $ 679 | $ 2,717 | $ 4,756 | ||||
Net income per common share: | ||||||||||
Earnings per share, basic (usd per share) | $ 0.01 | $ 0.01 | $ 0 | $ 0 | $ 0.01 | $ 0.02 | ||||
Earnings per share, diluted (usd per share) | $ 0.01 | $ 0.01 | $ 0 | $ 0 | $ 0.01 | $ 0.02 | ||||
[1] | (1) see Note 2 Correction of Prior Period Financial Statements. | |||||||||
[2] | (1) see Note 2 Correction of Prior Period Financial Statements. |
Correction of Prior Period Fi41
Correction of Prior Period Financial Statements - Narrative (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Deferred tax assets, non-current | $ 198,502 | $ 184,210 | [1] |
Accumulated deficit | $ (632,715) | (641,869) | [1] |
Restatement Adjustment [Member] | |||
Deferred tax assets, non-current | 4,756 | ||
Accumulated deficit | $ 4,756 | ||
[1] | (1) see Note 2 Correction of Prior Period Financial Statements. |
Supplemental Balance Sheet Ac42
Supplemental Balance Sheet Account Information - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | [2] | Dec. 31, 2015 | [2] | |
Cash, Cash Equivalents, and Restricted Cash [Line Items] | |||||||
Cash and cash equivalents | $ 26,220 | $ 29,078 | [1] | ||||
Restricted cash and cash equivalents | 1,799 | 1,851 | |||||
Cash, cash equivalents, and restricted cash | 28,019 | 30,929 | $ 37,749 | $ 60,313 | |||
Cash reserve | |||||||
Cash, Cash Equivalents, and Restricted Cash [Line Items] | |||||||
Restricted cash and cash equivalents | 220 | 273 | |||||
Standby letters of credit | |||||||
Cash, Cash Equivalents, and Restricted Cash [Line Items] | |||||||
Restricted cash and cash equivalents | $ 1,579 | $ 1,578 | |||||
[1] | (1) see Note 2 Correction of Prior Period Financial Statements. | ||||||
[2] | (1) See Note 1 Recent Accounting Pronouncements reclassification due to the adoptions of new Accounting Standard Updates. |
Supplemental Balance Sheet Ac43
Supplemental Balance Sheet Account Information - Prepaid expenses and other current assets (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Nontrade receivables | $ 1,974 | $ 3,147 | |
Services | 11,701 | 10,854 | |
Telecommunications | 3,235 | 3,239 | |
Insurance | 427 | 935 | |
Marketing | 4,113 | 1,307 | |
Prepaid hosting | 7,978 | 8,453 | |
Other prepaids | 1,467 | 1,253 | |
Prepaid expenses and other current assets | $ 30,895 | $ 29,188 | [1] |
[1] | (1) see Note 2 Correction of Prior Period Financial Statements. |
Supplemental Balance Sheet Ac44
Supplemental Balance Sheet Account Information - Property and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 180,387 | $ 177,581 | |
Less: accumulated depreciation and amortization | (134,665) | (129,166) | |
Property and equipment, net | 45,722 | 48,415 | [1] |
Building (under capital lease) | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 25,709 | 25,709 | |
Network equipment and computer hardware | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 94,681 | 93,437 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 45,064 | 44,293 | |
Customer premise equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 10,430 | 9,700 | |
Less: accumulated depreciation and amortization | (4,824) | (4,248) | |
Property and equipment, net | 5,606 | 5,452 | |
Furniture | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 4,300 | 4,239 | |
Vehicles | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 203 | $ 203 | |
[1] | (1) see Note 2 Correction of Prior Period Financial Statements. |
Supplemental Balance Sheet Ac45
Supplemental Balance Sheet Account Information - Software (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Line Items] | |||
Software, gross | $ 112,942 | $ 109,597 | |
Less: accumulated amortization | (89,976) | (87,626) | |
Software, net | 22,966 | 21,971 | [1] |
Purchased | |||
Property, Plant and Equipment [Line Items] | |||
Software, gross | 76,854 | 73,509 | |
Internally developed | |||
Property, Plant and Equipment [Line Items] | |||
Software, gross | $ 36,088 | $ 36,088 | |
[1] | (1) see Note 2 Correction of Prior Period Financial Statements. |
Supplemental Balance Sheet Ac46
Supplemental Balance Sheet Account Information - Debt Issuance costs, net (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Debt related costs related to Revolving Credit Facility | $ 5,965 | $ 5,965 | |
Less: accumulated amortization | (3,803) | (3,632) | |
Debt related costs, net | $ 2,162 | $ 2,333 | [1] |
[1] | (1) see Note 2 Correction of Prior Period Financial Statements. |
Supplemental Balance Sheet Ac47
Supplemental Balance Sheet Account Information - Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Finite-lived intangible assets: | |||
Intangible assets, gross | $ 289,113 | $ 287,675 | |
Less: accumulated amortization | (97,863) | (88,419) | |
Intangible assets, net | 191,250 | 199,256 | [1] |
Customer relationships | |||
Finite-lived intangible assets: | |||
Intangible assets, gross | 174,400 | 173,187 | |
Less: accumulated amortization | (44,785) | (39,413) | |
Intangible assets, net | 129,615 | 133,774 | |
Developed technology | |||
Finite-lived intangible assets: | |||
Intangible assets, gross | 88,804 | 88,609 | |
Less: accumulated amortization | (34,532) | (31,364) | |
Intangible assets, net | 54,272 | 57,245 | |
Patents and patent licenses | |||
Finite-lived intangible assets: | |||
Intangible assets, gross | 20,214 | 20,214 | |
Less: accumulated amortization | (15,046) | (14,667) | |
Intangible assets, net | 5,168 | 5,547 | |
Trade names | |||
Finite-lived intangible assets: | |||
Intangible assets, gross | 1,836 | 1,820 | |
Less: accumulated amortization | (983) | (787) | |
Intangible assets, net | 853 | 1,033 | |
Non-compete agreements | |||
Finite-lived intangible assets: | |||
Intangible assets, gross | 3,859 | 3,845 | |
Less: accumulated amortization | (2,517) | (2,188) | |
Intangible assets, net | $ 1,342 | $ 1,657 | |
[1] | (1) see Note 2 Correction of Prior Period Financial Statements. |
Supplemental Balance Sheet Ac48
Supplemental Balance Sheet Account Information - Other Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Deposits | $ 1,749 | $ 1,329 | |
Tax credits | 6,623 | 6,623 | |
Long-term prepaid hosting | 4,132 | 5,244 | |
Others | 1,446 | 1,264 | |
Other assets | $ 13,950 | $ 14,460 | [1] |
[1] | (1) see Note 2 Correction of Prior Period Financial Statements. |
Supplemental Balance Sheet Ac49
Supplemental Balance Sheet Account Information - Accrued expense (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Compensation and related taxes and temporary labor | $ 21,463 | $ 35,308 | |
Marketing | 10,944 | 11,979 | |
Taxes and fees | 12,855 | 18,976 | |
Acquisition related consideration accounted for as compensation | 0 | 6,608 | |
Telecommunications | 16,665 | 14,724 | |
Settlement | 0 | 5,000 | |
Other accruals | 15,596 | 11,383 | |
Customer credits | 1,506 | 2,074 | |
Professional fees | 1,809 | 1,680 | |
Accrued interest | 157 | 66 | |
Inventory | 1,538 | 1,168 | |
Credit card fees | 180 | 229 | |
Accrued expenses | $ 82,713 | $ 109,195 | [1] |
[1] | (1) see Note 2 Correction of Prior Period Financial Statements. |
Supplemental Balance Sheet Ac50
Supplemental Balance Sheet Account Information - Accumulated other comprehensive income (loss) (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Foreign currency translation adjustment | $ (10,526) | $ (13,593) | |
Unrealized gain (loss) on available-for sale securities | 0 | (1) | |
Accumulated other comprehensive income (loss) | $ (10,526) | $ (13,594) | [1] |
[1] | (1) see Note 2 Correction of Prior Period Financial Statements. |
Supplemental Income Statement51
Supplemental Income Statement Account Information - Revenues (Details) - Revenues - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Supplemental Income Statement Information [Line Items] | ||
USF fees | $ 18,376 | $ 19,520 |
Disconnect fees, net of credits and bad debt | 318 | 214 |
Initial activation fees | 133 | 368 |
Customer equipment rental | 1,540 | 1,102 |
Customer equipment fees | 2,307 | 2,081 |
Equipment recovery fees | 13 | 18 |
Shipping and handling fees | 556 | 608 |
Access revenues | 10,254 | 9,667 |
Professional service fees | $ 433 | $ 685 |
Supplemental Income Statement52
Supplemental Income Statement Account Information - Cost of Services (Details) - Cost of services - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Supplemental Income Statement Information [Line Items] | ||
USF costs | $ 18,376 | $ 19,520 |
Access costs | 7,609 | 7,284 |
Professional services costs | $ 317 | $ 413 |
Supplemental Income Statement53
Supplemental Income Statement Account Information - Cost of Goods Sold (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cost of goods sold | ||
Supplemental Income Statement Information [Line Items] | ||
Shipping and handling cost | $ 1,055 | $ 1,462 |
Supplemental Income Statement54
Supplemental Income Statement Account Information - Sales and Marketing (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Sales and marketing | ||
Supplemental Income Statement Information [Line Items] | ||
Advertising costs | $ 17,343 | $ 16,879 |
Supplemental Income Statement55
Supplemental Income Statement Account Information - General and Administrative (Details) - General and administrative expense - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Supplemental Income Statement Information [Line Items] | ||
Acquisition related transaction costs | $ 139 | $ 93 |
Acquisition related consideration accounted for as compensation | $ 6,763 | $ 0 |
Supplemental Income Statement56
Supplemental Income Statement Account Information - Deprecation and Amortization Expense (Details) - Depreciation and amortization expense - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Supplemental Income Statement Information [Line Items] | ||
Depreciation and amortization | $ 17,907 | $ 16,938 |
Depreciation and amortization expense | 17,947 | 16,979 |
Patents | ||
Supplemental Income Statement Information [Line Items] | ||
Depreciation and amortization | 379 | 682 |
Trademarks | ||
Supplemental Income Statement Information [Line Items] | ||
Depreciation and amortization | 0 | 18 |
Customer relationships | ||
Supplemental Income Statement Information [Line Items] | ||
Depreciation and amortization | 5,334 | 3,849 |
Acquired technology | ||
Supplemental Income Statement Information [Line Items] | ||
Depreciation and amortization | 3,148 | 2,805 |
Trade names | ||
Supplemental Income Statement Information [Line Items] | ||
Depreciation and amortization | 191 | 54 |
Non-compete agreements | ||
Supplemental Income Statement Information [Line Items] | ||
Depreciation and amortization | 326 | 254 |
Network equipment and computer hardware | ||
Supplemental Income Statement Information [Line Items] | ||
Depreciation and amortization | 3,554 | 3,833 |
Software | ||
Supplemental Income Statement Information [Line Items] | ||
Depreciation and amortization | 2,347 | 2,729 |
Property and equipment impairments | 40 | 0 |
Capital leases | ||
Supplemental Income Statement Information [Line Items] | ||
Depreciation and amortization | 550 | 550 |
Leasehold improvements | ||
Supplemental Income Statement Information [Line Items] | ||
Depreciation and amortization | 1,093 | 1,355 |
Customer premise equipment | ||
Supplemental Income Statement Information [Line Items] | ||
Depreciation and amortization | 742 | 629 |
Furniture | ||
Supplemental Income Statement Information [Line Items] | ||
Depreciation and amortization | 226 | 162 |
Vehicles | ||
Supplemental Income Statement Information [Line Items] | ||
Depreciation and amortization | 17 | 18 |
Property and equipment impairments | ||
Supplemental Income Statement Information [Line Items] | ||
Property and equipment impairments | $ 0 | $ 41 |
Supplemental Income Statement57
Supplemental Income Statement Account Information - Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Supplemental Income Statement Information [Line Items] | |||
Amortization of debt issuance costs | $ 276 | $ 251 | [1] |
Interest expense | |||
Supplemental Income Statement Information [Line Items] | |||
Amortization of debt issuance costs | $ 276 | $ 251 | |
[1] | (1) See Note 1 Recent Accounting Pronouncements reclassification due to the adoptions of new Accounting Standard Updates. |
Supplemental Income Statement58
Supplemental Income Statement Account Information - Other Income (Expense), Net (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Other income (expense), net | ||
Supplemental Income Statement Information [Line Items] | ||
Net (loss) gain resulting from foreign exchange transactions | $ (216) | $ 156 |
Long-Term Note and Revolving 59
Long-Term Note and Revolving Credit Facility - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 310,541 | $ 300,124 |
Term note | Secured debt | Term Note, Due 2020, 2.50% - 3.25% | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 86,541 | 91,124 |
Term note | Minimum | Secured debt | Term Note, Due 2020, 2.50% - 3.25% | ||
Debt Instrument [Line Items] | ||
Debt instrument, stated percentage | 2.50% | |
Term note | Maximum | Secured debt | Term Note, Due 2020, 2.50% - 3.25% | ||
Debt Instrument [Line Items] | ||
Debt instrument, stated percentage | 3.25% | |
Revolving credit facility | Line of credit | Revolving Credit Facility, Due 2020, 2.50% - 3.25% | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 224,000 | $ 209,000 |
Revolving credit facility | Minimum | Line of credit | Revolving Credit Facility, Due 2020, 2.50% - 3.25% | ||
Debt Instrument [Line Items] | ||
Debt instrument, stated percentage | 2.50% | |
Revolving credit facility | Maximum | Line of credit | Revolving Credit Facility, Due 2020, 2.50% - 3.25% | ||
Debt Instrument [Line Items] | ||
Debt instrument, stated percentage | 3.25% |
Long-Term Note and Revolving 60
Long-Term Note and Revolving Credit Facility - Future Payment Under Long-term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Long-term portion | $ 310,541 | $ 300,124 |
Term note | Secured debt | Term Note | ||
Debt Instrument [Line Items] | ||
2,017 | 14,062 | |
2,018 | 18,750 | |
2,019 | 18,750 | |
2,020 | 54,688 | |
Minimum future payments of principal | 106,250 | |
Less: unamortized debt related costs | 959 | |
current portion | 18,750 | |
Long-term portion | $ 86,541 | $ 91,124 |
Long-Term Note and Revolving 61
Long-Term Note and Revolving Credit Facility - Narrative (Details) - USD ($) | Jun. 03, 2016 | Jul. 27, 2015 | Mar. 31, 2017 | Mar. 31, 2016 | [1] | Dec. 31, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | |||||||
Proceeds received from draw down of revolving credit facility and issuance of notes payable | $ 15,000,000 | $ 0 | |||||
Term note | Secured debt | |||||||
Debt Instrument [Line Items] | |||||||
Repayments of debt | 4,688,000 | ||||||
Revolving credit facility | Secured debt | |||||||
Debt Instrument [Line Items] | |||||||
Proceeds received from draw down of revolving credit facility and issuance of notes payable | $ 15,000,000 | ||||||
2016 Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Repayments of debt | $ 197,750,000 | ||||||
Debt related costs | $ 1,316,000 | ||||||
Line of credit facility, interest rate at period end | 4.00% | ||||||
Prepayment percentage of net cash proceeds from disposition of assets | 100.00% | ||||||
Prepayment percentage of net cash proceeds received in connection with other non-ordinary course transaction | 100.00% | ||||||
Consolidated leverage ratio permitted by financial covenants | 325.00% | ||||||
Restricted payments adjusted amount for consolidated fixed coverage charge ratio requirement | $ 80,000,000 | ||||||
Additional interest rate applied in the event of default | 2.00% | ||||||
2016 Credit Facility | Nexmo | |||||||
Debt Instrument [Line Items] | |||||||
Payments to acquire businesses borrowed from credit facility | $ 179,000,000 | ||||||
2016 Credit Facility | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio permitted by financial covenants | 275.00% | ||||||
Consolidated fixed coverage charge ratio permitted by financial covenants | 175.00% | ||||||
Cash requirement for financial covenants | $ 25,000,000 | ||||||
2016 Credit Facility | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio permitted by financial covenants | 325.00% | ||||||
Annual capital expenditures permitted by financial covenants | $ 55,000,000 | ||||||
2016 Credit Facility | LIBOR rate option | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Duration of interest period used to determine interest rate | 3 months | ||||||
2016 Credit Facility | LIBOR rate option | Leverage ratio, term one | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate | 2.50% | ||||||
2016 Credit Facility | LIBOR rate option | Leverage ratio, term one | Maximum | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio limit | 75.00% | ||||||
2016 Credit Facility | LIBOR rate option | Leverage ratio, term two | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate | 2.75% | ||||||
2016 Credit Facility | LIBOR rate option | Leverage ratio, term two | Minimum | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio limit | 75.00% | ||||||
2016 Credit Facility | LIBOR rate option | Leverage ratio, term two | Maximum | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio limit | 150.00% | ||||||
2016 Credit Facility | LIBOR rate option | Leverage ratio, term three | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate | 3.00% | ||||||
2016 Credit Facility | LIBOR rate option | Leverage ratio, term three | Minimum | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio limit | 150.00% | ||||||
2016 Credit Facility | LIBOR rate option | Leverage ratio, term three | Maximum | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio limit | 250.00% | ||||||
2016 Credit Facility | LIBOR rate option | Leverage ratio, term four | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate | 3.25% | ||||||
2016 Credit Facility | LIBOR rate option | Leverage ratio, term four | Minimum | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio limit | 250.00% | ||||||
2016 Credit Facility | Base rate option | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate | 1.00% | ||||||
2016 Credit Facility | Base rate option | Federal funds rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate | 0.50% | ||||||
2016 Credit Facility | Base rate option | Leverage ratio, term one | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate | 1.50% | ||||||
2016 Credit Facility | Base rate option | Leverage ratio, term one | Maximum | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio limit | 75.00% | ||||||
2016 Credit Facility | Base rate option | Leverage ratio, term two | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate | 1.75% | ||||||
2016 Credit Facility | Base rate option | Leverage ratio, term two | Minimum | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio limit | 75.00% | ||||||
2016 Credit Facility | Base rate option | Leverage ratio, term two | Maximum | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio limit | 150.00% | ||||||
2016 Credit Facility | Base rate option | Leverage ratio, term three | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate | 2.00% | ||||||
2016 Credit Facility | Base rate option | Leverage ratio, term three | Minimum | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio limit | 150.00% | ||||||
2016 Credit Facility | Base rate option | Leverage ratio, term three | Maximum | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio limit | 250.00% | ||||||
2016 Credit Facility | Base rate option | Leverage ratio, term four | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate | 2.25% | ||||||
2016 Credit Facility | Base rate option | Leverage ratio, term four | Minimum | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio limit | 250.00% | ||||||
2016 Credit Facility | Term note | Secured debt | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | $ 125,000,000 | ||||||
Debt related costs | 395,000 | ||||||
Quarterly installment payment | 4,688,000 | ||||||
2016 Credit Facility | Revolving credit facility | Line of credit | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit, maximum borrowing capacity | 325,000,000 | ||||||
Debt related costs | $ 921,000 | ||||||
Unused portion commitment fee | 0.45% | ||||||
Additional borrowing capacity allowed | $ 100,000,000 | ||||||
2016 Credit Facility | Revolving credit facility | Line of credit | Leverage ratio, term one | |||||||
Debt Instrument [Line Items] | |||||||
Unused portion commitment fee | 0.40% | ||||||
2016 Credit Facility | Revolving credit facility | Line of credit | Leverage ratio, term one | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio limit | 150.00% | ||||||
2016 Credit Facility | Revolving credit facility | Line of credit | Leverage ratio, term one | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio limit | 250.00% | ||||||
2016 Credit Facility | Revolving credit facility | Line of credit | Leverage ratio, term two | |||||||
Debt Instrument [Line Items] | |||||||
Unused portion commitment fee | 0.375% | ||||||
2016 Credit Facility | Revolving credit facility | Line of credit | Leverage ratio, term two | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio limit | 75.00% | ||||||
2016 Credit Facility | Revolving credit facility | Line of credit | Leverage ratio, term two | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio limit | 150.00% | ||||||
2016 Credit Facility | Revolving credit facility | Line of credit | Leverage ratio, term three | |||||||
Debt Instrument [Line Items] | |||||||
Unused portion commitment fee | 0.35% | ||||||
2016 Credit Facility | Revolving credit facility | Line of credit | Leverage ratio, term three | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio limit | 75.00% | ||||||
2015 Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Repayments of debt | $ 167,000,000 | ||||||
Debt related costs | $ 2,740,000 | 2,007,000 | |||||
2015 Credit Facility | Term note | Secured debt | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | 100,000,000 | ||||||
Repayments of debt | $ 3,750,000 | ||||||
Debt related costs | 930,000 | 602,000 | |||||
2015 Credit Facility | Revolving credit facility | Secured debt | |||||||
Debt Instrument [Line Items] | |||||||
Proceeds received from draw down of revolving credit facility and issuance of notes payable | $ 82,000,000 | ||||||
2015 Credit Facility | Revolving credit facility | Line of credit | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit, maximum borrowing capacity | 250,000,000 | ||||||
Repayments of debt | $ 10,000,000 | ||||||
Debt related costs | $ 1,810,000 | 1,405,000 | |||||
2014 Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Debt related costs | 1,628,000 | ||||||
2014 Credit Facility | Term note | Secured debt | |||||||
Debt Instrument [Line Items] | |||||||
Debt related costs | 733,000 | ||||||
2014 Credit Facility | Revolving credit facility | Line of credit | |||||||
Debt Instrument [Line Items] | |||||||
Debt related costs | $ 895,000 | ||||||
[1] | (1) See Note 1 Recent Accounting Pronouncements reclassification due to the adoptions of new Accounting Standard Updates. |
Common Stock - Schedule of Comm
Common Stock - Schedule of Common Stock Repurchases (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | [1] | |
2014 repurchase program | |||
Common stock repurchases: | |||
Shares of common stock repurchased (in shares) | 1,599 | 1,653 | |
Value of common stock repurchased | $ 9,510 | $ 8,008 | |
Common Stock | Repurchase Program | |||
Common stock repurchases: | |||
Stock repurchased during period, unpaid (in shares) | 98 | ||
Stock repurchased during period, unpaid (in usd) | $ 441 | ||
Payments for repurchase of common stock commission costs | $ 2 | ||
[1] | include 98 shares, or $441, of common stock repurchases settled in April 2016; excluding commission of $2. |
Common Stock - Narrative (Detai
Common Stock - Narrative (Details) | Dec. 09, 2014USD ($) | Jun. 07, 2012 | Mar. 31, 2017USD ($) | Dec. 31, 2014USD ($) | Feb. 12, 2013USD ($) | Feb. 07, 2013USD ($) | Jul. 25, 2012USD ($) |
Common stock repurchases: | |||||||
Conversion of common to preferred shares under declared dividend right | 1 | ||||||
Maximum ownership percentage limit under the NOL Rights Agreement in which significant dilution would be imposed | 4.90% | ||||||
$50,000 repurchase program | |||||||
Common stock repurchases: | |||||||
Authorized amount of stock repurchased | $ 50,000,000 | $ 50,000,000 | |||||
Remaining authorized amount of stock repurchased program | $ 16,682,000 | ||||||
2012 repurchase program | |||||||
Common stock repurchases: | |||||||
Authorized amount of stock repurchased | $ 100,000,000 | ||||||
Remaining authorized amount of stock repurchased program | $ 219,000 | ||||||
Stock repurchase program, period in force | 4 years | ||||||
2014 repurchase program | |||||||
Common stock repurchases: | |||||||
Authorized amount of stock repurchased | $ 100,000,000 | ||||||
Remaining authorized amount of stock repurchased program | $ 42,533,000 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) $ in Thousands | Feb. 11, 2013Defendant | Aug. 17, 2011Defendant | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | May 02, 2012claim |
Loss Contingencies [Line Items] | |||||
Stand-by letters of credit | $ 1,799 | $ 1,851 | |||
Pending litigation | Bear Creek Technologies, Inc Vs. Vonage Corp., Vonage America Inc., Vonage Marketing LLC, and Aptela Inc. | Patent claims | |||||
Loss Contingencies [Line Items] | |||||
Number of defendants | Defendant | 1 | ||||
Pending claims | claim | 12 | ||||
Pending litigation | RPost Holdings, Inc. Vs. Vonage America Inc. | Patent claims | |||||
Loss Contingencies [Line Items] | |||||
Number of defendants | Defendant | 27 | ||||
Threatened litigation | Collection And Remittance Of State And Municipal Taxes | |||||
Loss Contingencies [Line Items] | |||||
Reserve for potential tax liability pending new requirements from state or municipal agencies | 963 | 1,763 | |||
Standby letters of credit | |||||
Loss Contingencies [Line Items] | |||||
Stand-by letters of credit | 1,579 | 1,578 | |||
Maximum | Threatened litigation | Collection And Remittance Of State And Municipal Taxes | |||||
Loss Contingencies [Line Items] | |||||
Estimated maximum potential exposure for retroactive tax assessments | 1,800 | $ 2,600 | |||
Software Service, Support and Maintenance Arrangement [Member] | |||||
Loss Contingencies [Line Items] | |||||
Purchase obligation, due in 2017 | 681 | ||||
Purchase obligation, due in 2018 | 908 | ||||
Purchase obligation, due in 2019 | 908 | ||||
Purchase obligation, due in 2020 | $ 152 |
Acquisition of Business - Narra
Acquisition of Business - Narrative (Details) - USD ($) shares in Thousands | Jun. 03, 2016 | May 05, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 |
Business Acquisition [Line Items] | |||||
Acquisition related consideration accounted for as compensation | $ 0 | $ 6,608,000 | |||
Settlement | 0 | 5,000,000 | |||
Nexmo | |||||
Business Acquisition [Line Items] | |||||
Business combination, consideration transferred | $ 232,028,000 | $ 231,122,000 | |||
Business acquisition, equity interest issued or Issuable (in shares) | 6,823 | ||||
Cash acquired | 16,094,000 | $ 16,094,000 | |||
Stock paid at closing | $ 31,591,000 | 31,591,000 | |||
Settlement | 5,000,000 | ||||
Business consideration, paid at closing excluding cash acquired | 194,684,000 | ||||
Acquisition of businesses, net of cash acquired | 163,093,000 | ||||
Business acquisition, contingent consideration, performance target period | 12 months | ||||
Escrow deposit, cash | $ 20,372,000 | ||||
Escrow deposit, stock | 5,081,000 | ||||
Acquisition related transaction costs | $ 24,000 | $ 10,000 | $ 5,500,000 | ||
Deferred tax liability | 37,507,000 | ||||
Identified intangible assets that will be amortized | 101,770,000 | ||||
Deferred tax assets, operating loss carryforwards | $ 7,686,000 | ||||
Customer relationships | Nexmo | |||||
Business Acquisition [Line Items] | |||||
Useful life of intangible assets | 12 years | ||||
Developed technology | Nexmo | |||||
Business Acquisition [Line Items] | |||||
Useful life of intangible assets | 8 years | ||||
Non-compete agreements | Nexmo | |||||
Business Acquisition [Line Items] | |||||
Useful life of intangible assets | 3 years | ||||
Trade names | Nexmo | |||||
Business Acquisition [Line Items] | |||||
Useful life of intangible assets | 2 years | ||||
2016 Credit Facility | Nexmo | |||||
Business Acquisition [Line Items] | |||||
Payments to acquire businesses borrowed from credit facility | $ 179,000,000 | ||||
Maximum | |||||
Business Acquisition [Line Items] | |||||
Useful life of intangible assets | 10 years | ||||
Services provided | Nexmo | |||||
Business Acquisition [Line Items] | |||||
Acquisition related consideration accounted for as compensation | 4,779,000 | ||||
Interest expense | Nexmo | |||||
Business Acquisition [Line Items] | |||||
Acquisition related consideration accounted for as compensation | 572,000 | ||||
General and administrative expense | Nexmo | |||||
Business Acquisition [Line Items] | |||||
Acquisition related consideration accounted for as compensation | 31,087,000 | ||||
Acquisition-related costs | Nexmo | |||||
Business Acquisition [Line Items] | |||||
Acquisition related consideration accounted for as compensation | 31,659,000 | ||||
General and administrative expense | |||||
Business Acquisition [Line Items] | |||||
Acquisition related transaction costs | $ 139,000 | $ 93,000 | |||
Reported Value Measurement | Nexmo | |||||
Business Acquisition [Line Items] | |||||
Acquisition related consideration accounted for as compensation | 17,840,000 | ||||
Estimate of Fair Value Measurement | Nexmo | |||||
Business Acquisition [Line Items] | |||||
Acquisition related consideration accounted for as compensation | 16,472,000 | ||||
Management | Maximum | Nexmo | |||||
Business Acquisition [Line Items] | |||||
Acquisition related consideration accounted for as compensation | 36,438,000 | 36,438,000 | |||
Shareholders | Maximum | Nexmo | |||||
Business Acquisition [Line Items] | |||||
Acquisition related consideration accounted for as compensation | $ 20,000,000 | $ 20,000,000 |
Acquisition of Business - Acqui
Acquisition of Business - Acquisition Cost (Details) - USD ($) $ in Thousands | Jun. 03, 2016 | May 05, 2016 | Mar. 31, 2017 | Dec. 31, 2016 |
Business Combination, Contingent Consideration, Liability [Abstract] | ||||
Business acquisition, contingent consideration | $ 0 | $ 6,608 | ||
Nexmo | ||||
Business Acquisition [Line Items] | ||||
Cash paid at closing (inclusive of cash acquired of $16,094) | $ 179,186 | |||
Stock paid at closing | 31,591 | $ 31,591 | ||
Contingent consideration | 16,472 | |||
Employee Payout Amounts | 4,779 | |||
Acquisition Cost | 232,028 | $ 231,122 | ||
Restricted Stock | Nexmo | ||||
Business Combination, Contingent Consideration, Liability [Abstract] | ||||
2,016 | 7,380 | |||
2,017 | 6,197 | |||
2,018 | 661 | |||
2,019 | 0 | |||
Business acquisition, contingent consideration | 14,238 | |||
Cash reserve | Nexmo | ||||
Business Combination, Contingent Consideration, Liability [Abstract] | ||||
2,016 | 6,353 | |||
2,017 | 5,383 | |||
2,018 | 620 | |||
2,019 | 0 | |||
Business acquisition, contingent consideration | 12,356 | |||
Assumed Options | Nexmo | ||||
Business Combination, Contingent Consideration, Liability [Abstract] | ||||
2,016 | 2,700 | |||
2,017 | 1,293 | |||
2,018 | 424 | |||
2,019 | 76 | |||
Business acquisition, contingent consideration | 4,493 | |||
Interest Expense | Nexmo | ||||
Business Combination, Contingent Consideration, Liability [Abstract] | ||||
2,016 | 255 | |||
2,017 | 271 | |||
2,018 | 46 | |||
2,019 | 0 | |||
Business acquisition, contingent consideration | 572 | |||
Acquisition-related costs | Nexmo | ||||
Business Combination, Contingent Consideration, Liability [Abstract] | ||||
2,016 | 16,688 | |||
2,017 | 13,144 | |||
2,018 | 1,751 | |||
2,019 | 76 | |||
Business acquisition, contingent consideration | $ 31,659 |
Acquisition of Business - Asset
Acquisition of Business - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | [1] | Jun. 03, 2016 | May 05, 2016 |
Current liabilities: | |||||
Goodwill | $ 362,424 | $ 360,363 | |||
Nexmo | |||||
Current assets: | |||||
Cash and cash equivalents | $ 16,094 | $ 16,094 | |||
Accounts receivable | 8,764 | ||||
Prepaid expenses and other current assets | 3,507 | ||||
Total current assets | 28,365 | ||||
Property and equipment | 757 | ||||
Software | 242 | ||||
Intangible assets | 101,770 | ||||
Restricted cash | 51 | ||||
Total assets acquired | 131,185 | ||||
Current liabilities: | |||||
Accounts payable | 1,841 | ||||
Accrued expenses | 9,299 | ||||
Deferred revenue, current portion | 1,735 | ||||
Total current liabilities | 12,875 | ||||
Deferred tax liabilities, net, non-current | 29,355 | ||||
Total liabilities assumed | 42,230 | ||||
Net identifiable assets acquired | 88,955 | ||||
Goodwill | 143,073 | ||||
Total purchase price | $ 232,028 | ||||
[1] | (1) see Note 2 Correction of Prior Period Financial Statements. |
Acquisition of Business - Intan
Acquisition of Business - Intangible Assets Acquired (Details) - Nexmo $ in Thousands | Jun. 03, 2016USD ($) |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Intangible assets acquired | $ 101,770 |
Customer relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Intangible assets acquired | 85,900 |
Developed technology | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Intangible assets acquired | 13,768 |
Non-compete agreements | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Intangible assets acquired | 972 |
Trade names | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Intangible assets acquired | $ 1,130 |
Acquisition of Business - Goodw
Acquisition of Business - Goodwill (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017USD ($) | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 360,363 | [1] |
Goodwill, ending balance | 362,424 | |
Nexmo | ||
Goodwill [Roll Forward] | ||
Currency translation adjustments | $ 2,061 | |
[1] | (1) see Note 2 Correction of Prior Period Financial Statements. |
Industry Segment and Geograph70
Industry Segment and Geographic Information - Schedule of Segment Results (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 243,347 | $ 226,824 |
Cost of revenues | 94,889 | 78,216 |
Gross margin | $ 148,458 | $ 148,608 |
Gross margin % | 61.00% | 65.50% |
Business | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 111,802 | $ 73,820 |
Cost of revenues | 58,548 | 32,310 |
Gross margin | $ 53,254 | $ 41,510 |
Gross margin % | 47.60% | 56.20% |
Consumer | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 131,545 | $ 153,004 |
Cost of revenues | 36,341 | 45,906 |
Gross margin | $ 95,204 | $ 107,098 |
Gross margin % | 72.40% | 70.00% |
Service revenues | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 211,408 | $ 194,245 |
Cost of revenues | 61,295 | 41,923 |
Gross margin | $ 150,113 | $ 152,322 |
Gross margin % | 71.00% | 78.40% |
Service revenues | Business | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 92,291 | $ 56,473 |
Cost of revenues | 39,195 | 15,403 |
Gross margin | $ 53,096 | $ 41,070 |
Gross margin % | 57.50% | 72.70% |
Depreciation | $ 4,875 | $ 4,319 |
Service revenues | Consumer | ||
Segment Reporting Information [Line Items] | ||
Revenues | 119,117 | 137,772 |
Cost of revenues | 22,100 | 26,520 |
Gross margin | $ 97,017 | $ 111,252 |
Gross margin % | 81.40% | 80.80% |
Depreciation | $ 1,907 | $ 2,514 |
Product revenues | ||
Segment Reporting Information [Line Items] | ||
Revenues | 13,563 | 13,059 |
Cost of revenues | 15,218 | 16,763 |
Gross margin | (1,655) | (3,704) |
Product revenues | Business | ||
Segment Reporting Information [Line Items] | ||
Revenues | 13,360 | 12,912 |
Cost of revenues | 13,202 | 12,462 |
Gross margin | 158 | 450 |
Product revenues | Consumer | ||
Segment Reporting Information [Line Items] | ||
Revenues | 203 | 147 |
Cost of revenues | 2,016 | 4,301 |
Gross margin | (1,813) | (4,154) |
Service and product revenues | ||
Segment Reporting Information [Line Items] | ||
Revenues | 224,971 | 207,304 |
Cost of revenues | 76,513 | 58,686 |
Gross margin | $ 148,458 | $ 148,618 |
Gross margin % | 66.00% | 71.70% |
Service and product revenues | Business | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 105,651 | $ 69,385 |
Cost of revenues | 52,397 | 27,865 |
Gross margin | $ 53,254 | $ 41,520 |
Gross margin % | 50.40% | 59.80% |
Service and product revenues | Consumer | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 119,320 | $ 137,919 |
Cost of revenues | 24,116 | 30,821 |
Gross margin | $ 95,204 | $ 107,098 |
Gross margin % | 79.80% | 77.70% |
USF revenues | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 18,376 | $ 19,520 |
Cost of revenues | 18,376 | 19,530 |
Gross margin | 0 | (10) |
USF revenues | Business | ||
Segment Reporting Information [Line Items] | ||
Revenues | 6,151 | 4,435 |
Cost of revenues | 6,151 | 4,445 |
Gross margin | 0 | (10) |
USF revenues | Consumer | ||
Segment Reporting Information [Line Items] | ||
Revenues | 12,225 | 15,085 |
Cost of revenues | 12,225 | 15,085 |
Gross margin | $ 0 | $ 0 |
Industry Segment and Geograph71
Industry Segment and Geographic Information - Schedule of Revenue by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 243,347 | $ 226,824 |
United States | ||
Segment Reporting Information [Line Items] | ||
Revenues | 213,324 | 217,217 |
Canada | ||
Segment Reporting Information [Line Items] | ||
Revenues | 7,445 | 6,073 |
United Kingdom | ||
Segment Reporting Information [Line Items] | ||
Revenues | 5,345 | 3,534 |
Other Countries | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 17,233 | $ 0 |
Maximum | Other Countries | ||
Segment Reporting Information [Line Items] | ||
Percentage of revenues | 7.00% |
Industry Segment and Geograph72
Industry Segment and Geographic Information - Schedule of Long Lived Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Segment Reporting Information [Line Items] | ||
Long-lived assets | $ 622,362 | $ 630,005 |
United States | ||
Segment Reporting Information [Line Items] | ||
Long-lived assets | 621,651 | 629,269 |
United Kingdom | ||
Segment Reporting Information [Line Items] | ||
Long-lived assets | 425 | 450 |
Israel | ||
Segment Reporting Information [Line Items] | ||
Long-lived assets | $ 286 | $ 286 |
Industry Segment and Geograph73
Industry Segment and Geographic Information - Narrative (Details) | 3 Months Ended |
Mar. 31, 2017segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Number of reportable segments | 2 |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) - Disposal Group, Disposed of by Sale, Not Discontinued Operations - Hosted Infrastructure Product Line - Subsequent Event | May 04, 2017USD ($) |
Subsequent Event [Line Items] | |
Consideration to be received at closing | $ 1,000,000 |
Consideration to be received six months from closing | 500,000 |
Consideration to be received based on achievement of financial objectives | 2,500,000 |
Maximum | |
Subsequent Event [Line Items] | |
Disposal price on product line | $ 4,000,000 |