Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 23, 2018 | Jun. 30, 2017 | |
Document and Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | SREV | ||
Entity Registrant Name | SERVICESOURCE INTERNATIONAL, INC. | ||
Entity Central Index Key | 1,310,114 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 90,425,232 | ||
Entity Public Float | $ 291,566,216 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 51,389 | $ 47,692 |
Short-term investments | 137,181 | 137,881 |
Accounts receivable, net | 56,516 | 63,289 |
Prepaid expenses and other | 6,112 | 7,607 |
Total current assets | 251,198 | 256,469 |
Property and equipment, net | 34,119 | 38,180 |
Deferred income taxes, net of current portion | 70 | 64 |
Goodwill and intangible assets, net | 6,419 | 7,932 |
Other assets | 3,566 | 3,445 |
Total assets | 295,372 | 306,090 |
Current liabilities: | ||
Accounts payable | 4,574 | 1,916 |
Accrued taxes | 651 | 1,388 |
Accrued compensation and benefits | 19,257 | 21,579 |
Convertible notes, net | 144,167 | 0 |
Deferred revenue | 1,282 | 4,152 |
Accrued expenses | 6,625 | 5,891 |
Other current liabilities | 2,104 | 2,958 |
Total current liabilities | 178,660 | 37,884 |
Convertible notes, net | 0 | 134,775 |
Other long-term liabilities | 4,603 | 6,495 |
Total liabilities | 183,263 | 179,154 |
Commitments and contingencies (Note 8) | ||
Stockholders’ equity: | ||
Preferred stock, $0.001 par value; 20,000 shares authorized and none issued and outstanding | 0 | 0 |
Common stock; $0.0001 par value; 1,000,000 shares authorized; 90,380 shares issued and 90,259 shares outstanding as of December 31, 2017; 88,304 shares issued and 88,183 shares outstanding as of December 31, 2016 | 8 | 8 |
Treasury stock | (441) | (441) |
Additional paid-in capital | 359,347 | 344,521 |
Accumulated deficit | (246,207) | (216,361) |
Accumulated other comprehensive loss | (598) | (791) |
Total stockholders’ equity | 112,109 | 126,936 |
Total liabilities and stockholders’ equity | $ 295,372 | $ 306,090 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 90,380,000 | 88,304,000 |
Common stock, shares outstanding (in shares) | 90,259,000 | 88,183,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | |||
Net revenue | $ 239,127 | $ 252,887 | $ 252,203 |
Cost of revenue | 163,709 | 165,069 | 171,369 |
Gross profit | 75,418 | 87,818 | 80,834 |
Operating expenses: | |||
Sales and marketing | 33,001 | 41,972 | 44,086 |
Research and development | 5,729 | 8,344 | 16,480 |
General and administrative | 53,087 | 52,995 | 46,299 |
Restructuring and other | 7,308 | 0 | 3,662 |
Total operating expenses | 99,125 | 103,311 | 110,527 |
Loss from operations | (23,707) | (15,493) | (29,693) |
Interest expense and other, net | (9,886) | (8,704) | (9,316) |
Impairment loss on cost basis equity investment | 0 | (4,500) | 0 |
Gain on sale of cost basis equity investment | 2,100 | 0 | 0 |
Loss before income taxes | (31,493) | (28,697) | (39,009) |
Provision for income tax benefit (expense) | 1,647 | (3,429) | (1,584) |
Net loss | $ (29,846) | $ (32,126) | $ (40,593) |
Net loss per common share: | |||
Basic and diluted (in dollars per share) | $ (0.33) | $ (0.37) | $ (0.48) |
Weighted-average common shares outstanding: | |||
Basic and diluted (in shares) | 89,234 | 86,318 | 85,417 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (29,846) | $ (32,126) | $ (40,593) |
Other comprehensive income (loss), net of tax: | |||
Foreign currency translation adjustments | 710 | (1,236) | 12 |
Unrealized gain (loss) on short-term investments | (517) | 18 | (698) |
Other comprehensive income (loss), net of tax | 193 | (1,218) | (686) |
Comprehensive loss, net of tax | $ (29,653) | $ (33,344) | $ (41,279) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Treasury Shares/Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Beginning Balance (in shares) at Dec. 31, 2014 | 83,928,000 | (121,000) | ||||
Beginning Balance at Dec. 31, 2014 | $ 169,349 | $ 8 | $ (441) | $ 312,017 | $ (143,348) | $ 1,113 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Proceeds from the exercise of stock options and employee stock purchase plan (in shares) | 1,505,000 | |||||
Proceeds from the exercise of stock options and employee stock purchase plan | 5,761 | 5,761 | ||||
Vested restricted stock units converted to shares (in shares) | 1,755,000 | |||||
Net cash paid for payroll taxes on restricted stock unit releases | (974) | (974) | ||||
Share repurchases (in shares) | (295,000) | |||||
Share repurchases | (1,212) | (1,212) | ||||
Stock-based compensation | 13,751 | 13,751 | ||||
Acceleration of stock-based compensation expense due to restructuring | 2,579 | 2,579 | ||||
Net loss | (40,593) | (40,593) | ||||
Other comprehensive income | (686) | (686) | ||||
Ending Balance (in shares) at Dec. 31, 2015 | 86,893,000 | (121,000) | ||||
Ending Balance at Dec. 31, 2015 | 147,975 | $ 8 | $ (441) | 331,922 | (183,941) | 427 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Cumulative effect of stock compensation standard adoption | 294 | (294) | ||||
Proceeds from the exercise of stock options and employee stock purchase plan (in shares) | 2,434,000 | |||||
Proceeds from the exercise of stock options and employee stock purchase plan | 10,866 | 10,866 | ||||
Vested restricted stock units converted to shares (in shares) | 1,240,000 | |||||
Net cash paid for payroll taxes on restricted stock unit releases | $ (947) | (947) | ||||
Share repurchases (in shares) | (2,300,000) | (2,263,000) | ||||
Share repurchases | $ (8,921) | (8,921) | ||||
Stock-based compensation | 11,307 | 11,307 | ||||
Net loss | (32,126) | (32,126) | ||||
Other comprehensive income | (1,218) | (1,218) | ||||
Ending Balance (in shares) at Dec. 31, 2016 | 88,304,000 | (121,000) | ||||
Ending Balance at Dec. 31, 2016 | 126,936 | $ 8 | $ (441) | 344,521 | (216,361) | (791) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Proceeds from the exercise of stock options and employee stock purchase plan (in shares) | 321,000 | |||||
Proceeds from the exercise of stock options and employee stock purchase plan | $ 1,062 | 1,062 | ||||
Vested restricted stock units converted to shares (in shares) | 1,755,000 | |||||
Net cash paid for payroll taxes on restricted stock unit releases | (775) | |||||
Share repurchases (in shares) | 0 | |||||
Stock-based compensation | $ 14,187 | 14,187 | ||||
Acceleration of stock-based compensation expense due to restructuring | 352 | 352 | ||||
Net loss | (29,846) | (29,846) | ||||
Other comprehensive income | 193 | 193 | ||||
Ending Balance (in shares) at Dec. 31, 2017 | 90,380,000 | (121,000) | ||||
Ending Balance at Dec. 31, 2017 | $ 112,109 | $ 8 | $ (441) | $ 359,347 | $ (246,207) | $ (598) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net loss | $ (29,846) | $ (32,126) | $ (40,593) |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation and amortization | 22,588 | 16,052 | 13,736 |
Amortization of debt discount and issuance costs | 9,392 | 8,724 | 8,048 |
Amortization of premium on short-term investments | (12) | 1,091 | (101) |
Deferred income taxes | (1,999) | 1,924 | 969 |
Stock-based compensation | 13,683 | 10,752 | 13,387 |
Restructuring and other | 3,063 | 0 | 2,579 |
Impairment loss on cost basis equity investment | 0 | 4,500 | 0 |
Gain on sale of cost basis equity investment | (2,100) | 0 | 0 |
Other | 184 | 0 | 0 |
Changes in operating assets and liabilities: | |||
Accounts receivable, net | 9,060 | (7,156) | 12,002 |
Deferred revenue | (2,872) | (1,589) | (1,204) |
Prepaid expenses and other | 1,670 | (673) | (1,825) |
Accounts payable | 2,487 | 872 | (1,562) |
Accrued taxes | (762) | 269 | (539) |
Accrued compensation and benefits | (2,940) | (119) | 2,706 |
Accrued expenses | (972) | 1,182 | (3,940) |
Other liabilities | (827) | 749 | (66) |
Net cash provided by operating activities | 19,797 | 4,452 | 3,597 |
Cash flows from investing activities: | |||
Acquisition of property and equipment | (17,110) | (26,337) | (11,975) |
Restricted cash | 0 | 0 | (1,244) |
Proceeds from sale of cost basis equity investment | 2,100 | 0 | 0 |
Purchases of short-term investments | (56,626) | (102,130) | (95,421) |
Sales of short-term investments | 53,315 | 98,028 | 82,351 |
Maturities of short-term investments | 3,506 | 1,525 | 1,095 |
Net cash used in investing activities | (14,815) | (28,914) | (25,194) |
Cash flows from financing activities: | |||
Repayment on capital lease obligations | (71) | (131) | (170) |
Repurchase of common stock | 0 | (8,921) | (1,212) |
Proceeds from issuance of common stock | 1,062 | 10,866 | 5,703 |
Tax benefit (deficit) from stock-based compensation | (775) | (877) | (974) |
Net cash provided by financing activities | 216 | 937 | 3,347 |
Net increase (decrease) in cash and cash equivalents | 5,198 | (23,525) | (18,250) |
Effect of exchange rate changes on cash and cash equivalents | (1,501) | (1,117) | 202 |
Cash and cash equivalents, beginning of period | 47,692 | 72,334 | 90,382 |
Cash and cash equivalents, end of period | 51,389 | 47,692 | 72,334 |
Supplemental disclosures of cash flow information | |||
Cash paid for interest | 2,255 | 2,260 | 2,286 |
Income taxes paid, net | 1,400 | 1,544 | 854 |
Supplemental disclosure of non-cash activities: | |||
Acquisition of property and equipment accrued in accounts payable and accrued expenses | $ 108 | $ 98 | $ 111 |
The Company
The Company | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company | The Company ServiceSource International, Inc. is a global leader in outsourced, performance-based customer success and revenue growth solutions. Through our people, processes and technology, we grow and retain revenue on behalf of our clients-some of the world’s leading business-to-business companies - in more than 45 languages. Our solutions help our clients strengthen their customer relationships, drive improved customer adoption, expansion and retention and minimize churn. Our technology platform and best-practice business processes combined with our highly-trained, client-focused revenue delivery professionals and data from nearly 20 years of operating experience enable us to provide our clients greater value for our customer success services than attained by our clients' in-house customer success teams. “ServiceSource,” “the Company,” “we,” “us,” or “our”, as used herein, refer to ServiceSource International, Inc. and its subsidiaries, unless the context indicates otherwise. The Company’s pay-for-performance model allows its clients to pay for the services through either flat-rate or variable commissions based on the revenue generated by the Company on their behalf. Fixed-fee arrangements are typically used in quick deployments to address discrete target areas of our clients’ needs. The Company also earns revenue through its professional services teams, who assist clients with data optimization. The Company’s corporate headquarters is located in Denver, Colorado. The Company has additional U.S. offices in California and Tennessee, and international offices in Bulgaria, Ireland, Japan, Malaysia, Philippines, Singapore and the United Kingdom. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Consolidation The accompanying Consolidated Financial Statements include the accounts of ServiceSource and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of the Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amount of net revenue and expenses during the reporting period. The Company’s significant accounting judgments and estimates include, but are not limited to: revenue recognition, the valuation and recognition of stock-based compensation, the recognition and measurement of current and deferred income tax assets and liabilities and uncertain tax positions, and the provision for bad debts. The Company bases its estimates and judgments on historical experience and on various assumptions that it believes are reasonable under the circumstances. However, future events are subject to change and estimates and judgments routinely require adjustment. Actual results may differ from these estimates, and these differences may be material. Significant Risks and Uncertainties The Company is subject to certain risks and uncertainties that could have a material and adverse effect on its future financial position or results of operations. The Company’s clients are primarily high technology companies and a downturn in these industries, changes in clients’ sales strategies, or widespread shift away from end customers purchasing maintenance and support contracts could have an adverse impact on the Company’s consolidated results of operations and financial condition. Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, cash equivalents, short-term investments, accounts receivable and the Note Hedges. See "Note 7 – Debt" for additional information. The Company is also exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates and interest rates. Cash is maintained in demand deposit accounts at U.S., European and Asian financial institutions that management believes are credit worthy. Deposits in these institutions may exceed the amount of insurance provided on these deposits. Accounts receivable are derived from services performed for clients located primarily in the U.S., Europe and Asia. The Company attempts to mitigate the credit risk in its trade receivables through its ongoing credit evaluation process and historical collection experience. The Company maintains an allowance for doubtful accounts based upon the expected collectability of its accounts receivable, which takes into consideration an analysis of historical bad debts and other available information. Two customers represented 17% , and 15% of accounts receivable as of December 31, 2017 . Three customers represented 15% , 14% and 12% , of accounts receivable as of December 31, 2016 . Fair Value of Financial Instruments The Company accounts for certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value guidance establishes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. An asset or liability’s level is based upon the lowest level of input that is significant to the fair value measurement. The guidance requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories: Level 1: Quoted prices in active markets for identical assets or liabilities; Level 2: Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; Level 3: Inputs that are generally unobservable and typically reflect management's estimates or assumptions that market participants would use in pricing the asset or liability. The carrying amount of financial instruments including cash, restricted cash recorded in other assets, accounts receivable, accounts payable, accrued taxes, accrued expenses and other accrued liabilities approximate carrying value due to their short-term maturities. See "Note 4 – Fair value of Financial Instruments" for additional information on the convertible note. Foreign Currency Translation and Remeasurement Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment, where that local currency is the functional currency, are translated to U.S. dollars at exchange rates at the balance sheet date. Net revenue and expenses are translated at monthly average exchange rates. The Company accumulates net translation adjustments in equity as a component of accumulated other comprehensive income (loss). For non-U.S. subsidiaries whose functional currency is the U.S. dollar, transactions that are denominated in foreign currencies have been remeasured in U.S. dollars, and any resulting gains and losses are reported in "Interest expense and other, net" in the Consolidated Statements of Operations. For the years ended December 31, 2017, 2016, and 2015, we recorded foreign currency transaction (gains) losses of approximately $1.1 million , $0.5 million and ($0.9) million , respectively. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at their carrying values net of an allowance for doubtful accounts. The Company evaluates the ongoing collectability of its accounts receivable based on a number of factors such as the credit quality of its clients, the age of accounts receivable balances, collections experience, current economic conditions and other factors that may affect a client’s ability to pay. In circumstances where the Company is aware of a specific client’s inability to meet its financial obligations to the Company, a specific allowance for doubtful accounts is estimated and recorded, which reduces the recognized receivable to the estimated amount that management believes will ultimately be collected. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. The following table presents changes in the allowance for doubtful accounts (in thousands): For the Year Ended December 31, 2017 2016 2015 Balance, beginning of year $ — $ 137 $ 37 Charged to expense — 392 137 Recoveries — (529 ) (37 ) Balance, end of year $ — $ — $ 137 Property and Equipment The Company records property and equipment at cost, less accumulated depreciation and amortization. Depreciation is recorded using the straight-line method over the estimated useful lives for owned assets as follows: seven years for office furniture and equipment, three to five years for network equipment, two to three years for computer hardware and three to seven years for software. Leasehold improvements are amortized on a straight-line basis over the lesser of the related lease term or the estimated useful life of the related assets, ranging from three to fifteen years. When assets are disposed, the cost and related accumulated depreciation and amortization are removed from their respective accounts and any gain or loss on sale or disposal is reported in "General and administrative expense" in the Consolidated Statement of Operations. Lease Asset Retirement Obligations The fair value of a liability for an asset retirement obligation (“ARO”) is recognized in the period in which it is incurred. The Company’s AROs associated with leasehold improvements at our international office locations, which, at the end of a lease, are contractually obligated to be removed. Our AROs were approximately $1.0 million and $1.2 million as of December 31, 2017 and 2016 , respectively. Accretion expense was insignificant for the years ended December 31, 2017 , 2016 and 2015 . Capitalized Internal-Use Software Expenditures related to software developed or obtained for internal use are capitalized and amortized over a period of two to five years on a straight-line basis. The Company capitalizes direct external costs associated with developing or obtaining internal-use software. In addition, the Company also capitalizes certain payroll and payroll-related costs for employees or professional fees for consultants who are directly associated with the development of such applications. Costs associated with preliminary project stage activities, training, maintenance and all other post-implementation stage activities are expensed as incurred and are recorded in "Research and development" in the Consolidated Statements of Operations. Capitalized costs related to internal-use software under development are treated as construction-in-progress until the program, feature or functionality is ready for its intended use, at which time amortization commences. Goodwill We evaluate goodwill and indefinite-lived intangible assets for possible impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company does not have intangible assets with indefinite useful lives other than goodwill. To assess if goodwill is impaired a qualitative assessment, referred to as the simplified method, is first performed to determine whether further quantitative impairment testing is necessary. This qualitative analysis evaluates factors including, but not limited to, macro-economic conditions such as deterioration in the entity's operating environment or industry or market considerations; entity-specific events such as increasing costs, declining financial performance, or loss of key personnel; or other events such as an expectation that a reporting unit will be sold or a sustained decrease in the stock price on either an absolute basis or relative to peers. If, as a result of the qualitative assessment, the Company considers it more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then a two-step quantitative impairment test is performed. The first step requires comparing the fair value of the reporting unit to its net book value, including goodwill. A potential impairment exists if the fair value of the reporting unit is lower than its net book value. The second step of the process, which is performed only if a potential impairment exists, involves determining the difference between the fair value of the reporting unit's net assets other than goodwill and the fair value of the reporting unit. If this difference is less than the net book value of goodwill, an impairment is recorded. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. Significant judgments are required to estimate the fair value of reporting units which includes estimating future cash flows and determining appropriate discount rates, growth rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit which could trigger impairment. If a two-step quantitative impairment test is required, the fair value of each reporting unit is determined based upon the income approach. Under the income approach, the Company estimates the fair value of the reporting unit based upon the present value of estimated future cash flows. Cash flow projections are determined by management to be commensurate with the risk inherent in our current business model. Key assumptions used to estimate the fair value of the reporting unit includes the discount rate, compounded annual revenue growth rates, operating expense assumptions and terminal value capitalization rate. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the reporting unit's ability to execute on the projected cash flows. The discount rate and terminal value capitalization rate are derived from the use of market data which are Level 3 inputs within the fair value hierarchy. No impairment was recorded for the years ended December 31, 2017 , 2016 , and 2015 . The carrying value of goodwill for the years ended December 31, 2017 and 2016 was $6.3 million . Impairment of Long-Lived Assets Including Intangible Assets The Company evaluates the recoverability of its long-lived assets whenever events or changes in circumstances indicate the carrying amount of the long-lived asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If the long-lived asset is impaired, an impairment is recognized for the amount by which the carrying value of the asset exceeds its fair value. No impairment was recorded for the years ended December 31, 2017 , 2016 , and 2015 . Acquired intangible assets are amortized over their useful lives on a straight-line basis which represents the pattern in which the Company derives benefit from the asset. Cost Basis Equity Investment In 2013, the Company made an equity investment in a private company for $4.5 million , which represented less than 5% of the outstanding equity of that company. Based on unfavorable growth trends and declining financial performance of this private company, the Company determined that its investment was fully impaired and recorded a $4.5 million impairment during the year ended December 31, 2016 . The impairment is included in "Impairment loss on cost basis equity investment" in the Consolidated Statement of Operations. During 2017 , the Company sold this investment for $2.1 million in cash and recorded the proceeds as a gain in "Gain on sale of cost basis equity investment" in our Consolidated Statements of Operations. Operating Leases The Company’s operating lease agreements for office facilities include provisions for certain rent holidays, tenant incentives and escalations in the base price of the rent payment. The Company records rent holidays and rent escalations on a straight-line basis over the lease term and records the difference between expense and cash payments as deferred rent. Tenant incentives are recorded as deferred rent and amortized on a straight-line basis over the lease term. Deferred rent is included in "Other current liabilities and Other long-term liabilities" in the Consolidated Balance Sheets. Deferred Debt Issuance Costs The Company defers debt issuance costs, which consist of the debt discount on the convertible notes and issuances costs related to the Notes. Discounts and debt issuance costs are included in the carrying value of the convertible notes and amortized to “Interest expense and other, net” in our Consolidated Statement of Operations over the remaining life of the convertible notes. See "Note 7 - Debt" for additional information. Comprehensive Loss We report comprehensive loss in our Consolidated Statements of Comprehensive Loss. Amounts reported in “Accumulated other comprehensive loss” consist of foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency and unrealized gains and losses on available-for-sale securities. Revenue Recognition The Company’s revenue is derived primarily from recurring revenue management. Other revenues include subscriptions to the Company’s cloud applications and professional services. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured from clients and no significant obligations remain unfulfilled by the Company. Recurring Revenue Management Revenue from recurring revenue management consists of fees earned from the sales of services contracts on behalf of the Company’s customers, which are referred to as clients, or assisting in their sales process. The Company’s contract obligations include administering and managing the sales and/or renewal processes for client contracts; providing adequately trained staff; reporting; and holding periodic business reviews with clients. Client obligations include providing a detailed listing of sales prospects, access to their databases or systems and sales or marketing materials. Fees are generally based on a fixed percentage of the overall sales value associated with the service contracts. Some client contracts include performance-based fees determined by the achievement of specified performance metrics. Recurring revenue management contracts entitle the Company to additional fees and adjustments which are invoked in various circumstances including a client’s failure to provide the Company with a specified minimum value of sales prospects, untimely delivery of client sales prospect data or other obligations inhibiting the Company’s ability to perform its obligations. In addition, many client contracts contain early termination fees. Recurring revenue management services are deemed delivered when clients accept purchased orders from their sales prospects (the end customer) and no significant post-delivery obligations remain for the Company. Fees from recurring revenue management services are recognized on a net basis since the Company acts as an agent on behalf of its clients. The Company does not provide the services being renewed by the end customers, nor does it determine pricing, terms or scope of services to the end customers. Performance incentive fees and early termination fees are recorded in the period when either the performance criteria have been met or a triggering event has occurred. Subscriptions Subscription revenue is comprised of subscriptions fees to access the Company’s cloud based applications. Subscription revenue is recognized ratably over the contract term, generally over a period of one to three years , commencing when the cloud applications are made available. The Company's subscription service arrangements are generally non-cancelable and do not contain refund-type provisions. Professional Services Professional services revenue is generated from implementation services. Professional services are deemed delivered upon the successful completion of implementation projects or when project milestones have been achieved and accepted by the client. Multiple Element Arrangements The Company enters into multiple element arrangements when clients utilize a combination of recurring revenue management services, subscriptions and professional services. Deliverables are separated at the inception of the arrangement if each deliverable has stand-alone value to the client. The Company believes that it has stand-alone value for professional services. Arrangement consideration is allocated based on the relative best selling prices of each deliverable. However, most fees earned from recurring revenue management services are contingent in nature as the fees earned by the Company are based on performance against the specific terms of each contract. Therefore, contingent fees from recurring revenue management services are excluded from the allocation of relative best selling prices at inception of multiple element arrangements. Selling prices for each deliverable is determined based on the selling price hierarchy of vendor-specific objective evidence ("VSOE"), third-party evidence ("TPE") and best estimated selling price ("BESP"). Generally, the Company has not been able to establish VSOE for its deliverables as the items have not been sold separately. The Company has not been able to reliably determine the stand-alone selling prices of competitors’ products and services, and therefore cannot rely on TPE for its deliverables. Therefore, the Company utilizes BESP to determine the selling prices of its deliverables. The objective of BESP is to determine the price at which the Company would price a product or service if it were sold on a stand-alone basis. BESP is generally used for offerings that are not typically sold separately or for new offerings. BESP is determined by considering multiple factors including, but not limited to, pricing practices, market conditions, competitive landscape, internal costs, geographies and gross margin. The determination of BESP is made through consultation with and formal approval with management, taking into consideration the Company’s marketing strategy. As these marketing strategies evolve, the Company may modify its pricing practices in the future, which could result in changes to selling prices. Once arrangement consideration is allocated to the various deliverables in a multiple element arrangement, revenue is recognized when all other revenue recognition criteria has been achieved. Advertising Costs Advertising costs are expensed as incurred and are reported in "Sales and marketing expenses" in the Consolidated Statements of Operations. Advertising expense for the years ended December 31, 2017 , 2016 and 2015 was approximately $0.2 million , $0.1 million , and $0.1 million , respectively. Income Taxes The Company accounts for income taxes using an asset and liability method, which requires the recognition of taxes payable or refundable for the current year and deferred tax assets and liabilities for the expected future tax consequences of temporary differences that currently exist between the tax basis and the financial reporting basis of our taxable subsidiaries’ assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in operations in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realized. The Company files U.S. federal and state and foreign income tax returns in jurisdictions with varying statutes of limitations. In the normal course of business the Company is subject to examination by taxing authorities throughout the world. These audits include questioning the timing and amount of deductions, the allocation of income among various tax jurisdictions and compliance with federal, state, local and foreign tax laws. The Company accounts for unrecognized tax benefits using a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. The Company records an income tax liability, if any, for the difference between the benefit recognized and measured and the tax position taken or expected to be taken on our tax returns. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in the income tax provision. Stock-Based Compensation The Company issues share-based awards to employees and directors. Awards are measured at fair value on the grant date and amortized to compensation expense over the service period during which the awards fully vest. Such expense is included in in our Consolidated Statements of Operations, see "Note 9 - Share Repurchase Program and Stock-Based Compensation" for additional information. Forfeitures are recognized as incurred. Options issued are valued using the Black-Scholes option-pricing model, which relies on assumptions we make related to the expected term of the options, volatility, dividend yield and risk-free interest rate. Net Income (Loss) Per Common Share Basic net income (loss) per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, shares to be purchased under the Company’s employee stock purchase plan and unvested restricted stock units (“RSUs”). The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities. Potential shares of common stock that are not included in the determination of diluted net loss per share because they are anti-dilutive consist of stock options, non-vested restricted stock and shares to be purchased under our Employee Stock Purchase Plan. The Company excluded from diluted earnings per share the weighted-average common share equivalents related to 7.1 million, 7.7 million and 9.5 million shares for the years ended December 31, 2017 , 2016 and 2015 , respectively, because their effect would be anti-dilutive. New Accounting Standards Issued but not yet Adopted Revenue Recognition In May 2014, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”) which amended the existing FASB Accounting Standards Codification. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. The standard also specifies that the incremental costs of obtaining a contract with a customer and the costs of fulfilling a contract with a customer (if those costs are not within the scope of another Topic or Sub-Topic) would be deferred and recognized over the appropriate period of contract performance if they are expected to be recovered. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method, also known as the cumulative catch-up transition method). The Company will adopt the standard effective January 1, 2018 utilizing the modified retrospective method. The Company has completed its analysis of this standard and the adoption of this guidance will not have a material impact on our Consolidated Financial Statements or our internal controls over financial reporting. Leases In February 2016, the FASB issued an ASU that modifies existing accounting standards for lease accounting. The new standard requires a lessee to record a lease asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. Leases in which the Company is the lessee will generally be accounted for as operating leases and we will record a lease asset and a lease liability. The guidance is effective for fiscal years beginning after December 15, 2018, with early adoption permitted for fiscal years beginning after December 15, 2018. The standard requires a modified retrospective transition approach for all capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with an option to use certain transition relief. The Company expects to adopt this standard effective January 1, 2019, and is in the process of assessing the impact of this standard. Restricted Cash In November 2016, the FASB issued an ASU that requires companies to combine restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning and end of period total amounts on the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company will adopt the standard effective January 1, 2018 utilizing the retrospective transition method. The adoption of this guidance will not have a significant impact on our Consolidated Financial Statements. Comprehensive Income In February 2018, the FASB issued an ASU that allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted. The guidance should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. We are currently evaluating this guidance. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets Intangible assets consisted of the following (in thousands): Gross Carrying Amount Accumulated Amortization Net Balance as of December 31, 2015 $ 6,050 $ (2,940 ) $ 3,110 Amortization expense — (1,512 ) (1,512 ) Balance as of December 31, 2016 6,050 (4,452 ) 1,598 Amortization expense — (1,512 ) (1,512 ) Balance as of December 31, 2017 $ 6,050 $ (5,964 ) $ 86 Amortization expense for intangibles assets was approximately $1.5 million for each of the years ended December 31, 2017 , 2016 and 2015 , respectively. The remaining net book value of $0.1 million will be amortized during the first quarter of 2018. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Cash, Cash Equivalents and Short-Term Investments Cash equivalents consist of highly liquid fixed-income investments with original maturities of three months or less at the time of purchase. Short-term investments consist of readily marketable securities with a remaining maturity of more than three months from time of purchase. The Company classifies its cash equivalents and short-term investments as “available for sale,” as these investments are free of trading restrictions and are available for use in the Company's daily operations. These marketable securities are carried at fair value, with the unrealized gains and losses, net of tax, reported as accumulated other comprehensive loss and included as a separate component of stockholders’ equity. Gains and losses are recognized when realized. When the Company determines that an other-than-temporary decline in fair value occurred, the amount of the decline that is related to a credit loss is recognized in earnings. Gains and losses are determined using the specific identification method. The Company’s realized gains and losses in the years ended December 31, 2017 and 2016 were insignificant. There were no transfers between levels during the years ended December 31, 2017 and 2016 . The following tables present the Company's cash and cash equivalents and short-term investments by significant investment category (in thousands) measured at fair value on a recurring basis: For the Year Ended December 31, 2017 : Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Level 1: Cash $ 48,712 $ — $ — $ 48,712 Cash equivalents: Money market mutual funds 2,677 — — 2,677 Total cash and cash equivalents 51,389 — — 51,389 Level 2: Short-term investments: Corporate bonds 55,763 1 (346 ) 55,418 U.S. agency securities 34,640 — (410 ) 34,230 Asset-backed securities 21,739 — (127 ) 21,612 U.S. Treasury securities 26,292 — (371 ) 25,921 Total short-term investments 138,434 1 (1,254 ) 137,181 Cash, cash equivalents and short-term investments $ 189,823 $ 1 $ (1,254 ) $ 188,570 For the Year Ended December 31, 2016 : Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Level 1: Cash $ 47,060 $ — $ — $ 47,060 Cash equivalents: Money market mutual funds 632 — — 632 Total cash and cash equivalents 47,692 — — 47,692 Level 2: Short-term investments: Corporate bonds 54,827 19 (188 ) 54,658 U.S. agency securities 34,658 — (281 ) 34,377 Asset-backed securities 26,431 25 (23 ) 26,433 U.S. Treasury securities 22,701 — (288 ) 22,413 Total short-term investments 138,617 44 (780 ) 137,881 Cash, cash equivalents and short-term investments $ 186,309 $ 44 $ (780 ) $ 185,573 The following table presents the amortized cost and estimated fair value of money market mutual funds and short-term fixed income securities classified as short-term investments based on stated maturities as of December 31, 2017 (in thousands): Amortized Cost Estimated Fair Value Less than 1 year $ 14,315 $ 14,295 Due in 1 to 3 years 126,796 125,563 Total $ 141,111 $ 139,858 The Company considers the declines in market value of its marketable securities investment portfolio to be temporary in nature. The Company typically invests in highly-rated securities, and its investment policy generally limits the amount of credit exposure to any one issuer. The policy generally requires investments to be investment grade, with the primary objective of minimizing the potential risk of principal loss. Fair values were determined for each individual security in the investment portfolio. When evaluating an investment for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates and the Company’s intent to sell, or whether it is more likely than not it will be required to sell the investment before recovery of the investment’s cost basis. As of December 31, 2017 , the Company does not consider any of its investments to be other-than-temporarily impaired. The Company had restricted cash of $1.2 million in "Other assets" in the Consolidated Balance Sheets as of December 31, 2017 and 2016 . The restricted cash is classified within Level 1. The convertible notes issued by the Company in August 2013 are included in the Consolidated Balance Sheets at their original issuance value, net of unamortized discount and issuance costs, and are not marked to market each period. The approximate fair value of the convertible notes was approximately $145.9 million and $143.8 million as of December 31, 2017 and 2016 , respectively. The fair value of the convertible notes was determined using quoted market prices for similar securities and are considered Level 2 inputs due to limited trading activity. The Company did not have any other financial instruments or debt measured at fair value as of December 31, 2017 and 2016 , respectively. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net were comprised of the following (in thousands): For the Year Ended December 31, 2017 2016 Computers and equipment $ 22,186 $ 19,930 Software 72,147 59,453 Leasehold improvements 19,574 18,092 Furniture and fixtures 11,606 10,947 Property and equipment 125,513 108,422 Less: accumulated depreciation and amortization (91,394 ) (70,242 ) Property and equipment, net $ 34,119 $ 38,180 Depreciation and amortization expense, which includes amortization expense related to capital leases, was approximately $21.1 million , $16.1 million and $13.7 million , respectively, during the years ended December 31, 2017 , 2016 and 2015 . The Company capitalized costs of approximately $12.6 million , $13.1 million and $7.2 million during the years ended December 31, 2017 , 2016 and 2015 , respectively, related to internal-use software. As of December 31, 2017 and 2016 , the carrying value of capitalized costs related to internal-use software, net of accumulated amortization, was $16.5 million and $17.2 million , respectively. Amortization expense related to internal-use software was approximately $13.3 million , $7.6 million and $5.0 million during the years ended December 31, 2017 , 2016 and 2015 , respectively. |
Other Current Liabilities
Other Current Liabilities | 12 Months Ended |
Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
Other Current Liabilities | Other Current Liabilities Other current liabilities were comprised of the following (in thousands): For the Year Ended December 31, 2017 2016 Accrued interest – convertible notes $ 938 $ 938 Deferred rent 748 1,359 ESPP withholding 418 661 Total $ 2,104 $ 2,958 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt Senior Convertible Notes In August 2013, the Company issued senior convertible notes (the "Notes") in exchange for gross proceeds of $150.0 million . The Notes mature on August 1, 2018 and are recorded as a current liability in "Convertible notes" in our Consolidated Balance Sheet as of December 31, 2017 . The Notes are governed by an Indenture, dated August 13, 2013 (the "Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee. The notes bear interest at a rate of 1.50% per year payable semi-annually in arrears on February 1 and August 1, beginning February 1, 2014. The Notes are convertible at an initial conversion rate of 61.6770 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $16.21 per share of common stock, subject to anti-dilution adjustments upon certain specified events, as defined in the Indenture. Upon conversion, the Notes will be settled in cash, shares of the Company’s common stock, or any combination thereof, at the Company’s option. The Notes were not subject to conversion or repurchase as of December 31, 2017 . However, holders of the Notes may convert their Notes at any time on or after February 1, 2018, until the close of business on the second schedule trading day immediately preceding the maturity date, regardless of the foregoing circumstances. To account for the Notes at issuance, the Company separated the Notes into debt and equity components pursuant to the accounting standards for convertible debt instruments that may be fully or partially settled in cash upon conversion. The fair value of debt component was estimated using an interest rate for nonconvertible debt, with terms similar to the Notes, excluding the conversion feature. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The excess of the principal amount of the Notes over the fair value of the debt component was recorded as a debt discount and a corresponding increase in additional paid-in capital. The debt discount is accreted to interest expense over the term of the Notes using the interest method. The amount recorded to additional paid-in capital is not to be remeasured as long as it continues to meet the conditions of equity classification. Upon issuance of the $150.0 million of Notes, the Company recorded $111.5 million to debt and $38.5 million to additional paid-in capital. The net carrying amount of the liability component of the Notes consists of the following (in thousands): For the Year Ended December 31, 2017 2016 Principal amount $ 150,000 $ 150,000 Unamortized debt discount (5,336 ) (13,928 ) Unamortized debt issuance costs (497 ) (1,297 ) Net carrying amount $ 144,167 $ 134,775 Estimated future amortization of deferred issuance costs is approximately $5.8 million for the year ended December 31, 2018 . The following table presents interest expense recognized related to the Notes (in thousands): For the Year Ended December 31, 2017 2016 2015 Contractual interest expense at 1.5% per annum $ 2,250 $ 2,250 $ 2,250 Amortization of debt issuance costs 800 743 686 Accretion of debt discount 8,592 7,981 7,362 Total $ 11,642 $ 10,974 $ 10,298 Note Hedges Concurrent with the issuance of the Notes, the Company entered into note hedges ("Note Hedges") with certain bank counterparties, with respect to its common stock. The Company paid $31.4 million for the Note Hedges. The Note Hedges cover approximately 9.25 million shares of the Company's common stock at a strike price of $16.21 per share. The Note Hedges will expire upon the maturity of the Notes. The Note Hedges are intended to reduce the potential dilution to the Company's common stock upon conversion of the Notes and/or offset the cash payment in excess of the principal amount of the Notes the Company is required to make in the event that the market value per share of the Company's common stock at the time of exercise is greater than the conversion price of the Notes. Warrants Separately, the Company entered into warrant transactions, whereby it sold warrants to the same bank counterparties as the Note Hedges to acquire approximately 9.25 million shares of the Company's common stock at an initial strike price of $21.02 per share ("Warrants"), subject to anti-dilution adjustments. The Company received proceeds of approximately $21.8 million from the sale of the Warrants. If the fair value per share of the Company's common stock exceeds the strike price of the Warrants, the Warrants will have a dilutive effect on earnings per share, unless the Company elects, subject to certain conditions, to settle the Warrants in cash. The amounts paid and received for the Note Hedges and the Warrants have been recorded in additional paid-in capital. The fair value of the Note Hedges and the Warrants are not remeasured through earnings each reporting period. Letter of Credit On February 3, 2015, the Company issued a $1.2 million letter of credit in connection with a lease for a new San Francisco office facility. The letter of credit is secured by $1.2 million of cash in a money market account which is classified as restricted cash in "Other assets" in the Consolidated Balance Sheets. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases The Company leases its office space and certain equipment under non-cancelable operating lease agreements with various expiration dates through December 2022 . Rent expense during the years ended December 31, 2017 , 2016 and 2015 was approximately $10.6 million , $11.3 million and $9.4 million , respectively. The Company recognizes rent expense on a straight-line basis over the lease period and accrues for rent expense incurred but not paid. Future annual minimum lease payments under non-cancelable operating leases as of December 31, 2017 were as follows (in thousands): Fiscal Year 2018 $ 11,354 2019 9,600 2020 8,362 2021 7,819 2022 4,616 Thereafter — Total $ 41,751 In January 2018, the Company entered into a sublease with a third-party for the Company's San Francisco office space for the remaining term of the lease. The future minimum payments through November 30, 2022 under the original lease total approximately $9.3 million and future sublease rental income totals approximately $8.9 million over the same period. Other Purchase Commitments The Company had $14.1 million in non-cancelable purchase commitments with our suppliers as of December 31, 2017 . Litigation The Company is subject to various legal proceedings and claims arising in the ordinary course of our business, including the cases discussed below. Although the results of litigation and claims cannot be predicted with certainty, the Company is currently not aware of any litigation or threats of litigation in which the final outcome could have a material adverse effect on our business, operating results, financial position, or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. The Company records a contingent liability when it is probable that a loss has been incurred and the amount is reasonably estimable in accordance with accounting for contingencies. As of December 31, 2017 and 2016 , the Company accrued a $1.5 million reserve relating to our potential liability for currently pending disputes, reflected in "Accrued expenses" in the Consolidated Balance Sheets. On August 23, 2016, the United States District Court for the Middle District of Tennessee granted conditional class certification in a lawsuit originally filed on September 21, 2015 by three former senior sales representatives. The lawsuit, Sarah Patton, et al v. ServiceSource Delaware, Inc., asserts a claim under the Fair Labor Standards Act alleging that certain sales account representatives and senior sales representatives in our Nashville location were not paid for all hours worked and were not properly paid for overtime hours worked. The complaint also asserts claims under Tennessee state law for breach of contract and unjust enrichment, however, the plaintiffs have not yet filed a motion to certify the state law breach of contract and unjust enrichment claims as a class action. The Company will continue to vigorously defend itself against these claims. |
Share Repurchase Program, Stock
Share Repurchase Program, Stock-Based Compensation and ESPP | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share Repurchase Program, Stock-Based Compensation and ESPP | Share Repurchase Program, Stock-Based Compensation and ESPP Share Repurchase Program In August 2015, our Board of Directors authorized a stock repurchase program (the "program") to repurchase up to $30.0 million of our common stock. The program expired August 2017. During the year ended December 31, 2016 , the Company repurchased 2.3 million shares of common stock at a weighted-average price of $3.94 per share for an aggregate purchase price of $8.9 million . No shares were repurchased under this program during the year ended December 31, 2017 . Equity Plans The Company maintains the 2011 Equity Incentive Plan (the “2011 Plan”) and the 2011 Employee Stock Purchase Plan. The Company’s Board of Directors, by delegation to its compensation committee, administers the 2011 Plan and has authority to determine the directors, officers, employees and consultants to whom options, restricted stock units or restricted stock awards may be granted, the option price or restricted stock purchase price, the timing of when each share is exercisable and the duration of the exercise period and the nature of any restrictions or vesting periods applicable to an option or restricted stock grant At the end of each fiscal year, the share reserve under the 2011 Plan automatically increases, to the lessor of an amount equal to 4% of the outstanding shares as of the end of that fiscal year or 3,840,000 shares. As of December 31, 2017 , there were approximately 12.4 million shares available for grant under the 2011 Plan. On January 1, 2018 , 3.6 million additional shares were reserved under the 2011 Equity Incentive Plan pursuant to the automatic increase. Stock options are recorded at fair value on the date of grant date using the Black-Scholes option-pricing model and generally vest ratably over a four -year period. Vested options may be exercised up to ten years from the grant date, as defined in the 2011 Plan. Vested but unexercised options expire 90 days after termination of employment with the Company. Compensation expense is amortized on a straight-line basis over the service period during which the right to exercise such options fully vests. Restricted stock units are recorded at fair value on the date of grant and amortized on a straight-line basis over the service period during which the stock vests. Restricted stock units generally vest ratably over four years with vesting contingent upon employment of the Company. 2017 PSU Awards During the second quarter of 2017, the Company granted performance-based restricted stock unit awards under the Company’s 2011 Equity Incentive Plan to certain key executives (the “2017 PSU Awards”). For each 2017 PSU Award, a number of restricted stock units became eligible to vest based on the levels of achievement of the performance-based conditions, and those restricted stock units that became eligible to vest will vest 50% on the first anniversary of the grant date and 50% on the second anniversary of the grant date, except as otherwise provided under certain termination and change-in-control provisions in each award agreement. The aggregate target number of restricted stock units subject to the 2017 PSU Awards was 1.0 million , with an aggregate grant date fair value of $3.7 million . The performance-based conditions are based upon the Company’s revenue and adjusted EBITDA performance in fiscal year 2017 against the target goals for such metrics under the Company’s 2017 corporate incentive plan (in each case, “Performance Achievement”), which will each be determined on the date the Company files its Annual Report on Form 10-K for fiscal year 2017. The target number of restricted stock units for each 2017 PSU Award will be divided equally between the two performance metrics. For each performance metric, the number of restricted stock units that become eligible to vest will be: (i) if the applicable Performance Achievement is less than 90% of the target revenue goal or less than 69% of the target EBITDA goal, no restricted stock units for such performance metric, (ii) if the applicable Performance Achievement is equal to 90% of the target revenue goal or 69% of the target EBITDA goal, 50% of the target number of restricted stock units for such performance metric, (iii) if the applicable Performance Achievement is equal to 100% of the target revenue and EBITDA goals, 100% of the target number of restricted stock units for such performance metric, or (iv) if the applicable Performance Achievement is at least 107% of the target revenue goal or 146% of the target EBITDA goal, 150% of the target number of restricted stock units for such performance metric. For each performance metric, if the applicable Performance Achievement falls between any of the thresholds (ii), (iii), and (iv) specified in the previous sentence, the number of restricted stock units that become eligible to vest for such performance metric will be determined via linear interpolation. Under the time-based vesting condition, 50% of the restricted stock units that have become eligible to vest will vest on the first anniversary of the grant date, and 50% of the restricted stock units that have become eligible to vest will vest on the second anniversary of the grant date, except as otherwise provided under certain termination and change-in-control provisions in each award agreement governing a 2017 PSU Award. Such provisions will determine the number of restricted stock units that become eligible to vest and when and how many restricted stock units will actually vest in connection with the specified terminations of employment and changes in-control. 2016 PSU Awards During the third quarter of 2016, the Company granted performance-based restricted stock unit awards under the Company’s 2011 Equity Incentive Plan to certain key executives (the “2016 PSU Awards”). The 2016 PSU Awards contain similar performance and vesting conditions as the 2017 PSU Awards. The aggregate target number of restricted stock units subject to the 2016 PSU Awards was 1.0 million with an aggregate grant date fair value of $5.1 million . Upon the filing of the Company’s 2016 form 10-K on March 6, 2017, an additional 0.2 million shares with a grant date fair value of $1.2 million became eligible to vest under the 2016 PSU Awards. The 2016 PSU Awards are expensed over the two -year vesting term using the accelerated attribution method. Fair Value of Stock Options and Restricted Units The estimated fair value of stock options and restricted stock units granted during the years ended December 31, 2017 , 2016 and 2015 , was approximately $11.5 million , $13.3 million , and $18.6 million , respectively. The fair value of each grant of options during 2017 , 2016 and 2015 was determined by the Company using the methods and assumptions discussed below. The Company stratifies its population of outstanding share options into two relatively homogeneous groups to estimate the expected term of options grants. Each of these inputs is subjective and generally requires significant judgment to determine. Expected Term —The expected term represents the period that the Company’s share-based awards are expected to be outstanding. The Company calculated the expected term of share options using four data points: options exercised, options expired, options forfeited and options outstanding. The weighted-average of the four data points were used to calculate the expected term. Expected Volatility —The expected volatility is based on the historical stock volatility of the Company's own common shares. Risk-Free Interest Rate —The risk-free interest rate was based on the implied yield on U.S. Treasury zero-coupon issues for each option grant date with maturities approximately equal to the option’s contractual term. Expected Dividend Yield —The Company has not paid dividends on its common shares nor does it expect to pay dividends in the foreseeable future. The weighted average Black-Scholes option-pricing model assumptions were as follows: For the Year Ended December 31, 2017 2016 2015 Expected term (in years) 5.0 5.0 5.0 Expected volatility 59 % 58 % 34 % Risk-free interest rate 1.87 % 1.23 % 1.64 % Expected dividend yield 0.00 % 0.00 % 0.00 % Employee Stock Purchase Plan The Company’s 2011 Employee Stock Purchase Plan (the “ESPP”) is intended to qualify under Section 423 of the Internal Revenue Code of 1986. Under the ESPP, employees are eligible to purchase common stock through payroll deductions of up to 10% of their eligible compensation, subject to any plan limitations. The purchase price of the shares on each purchase date is equal to 85% of the lower of the fair market value of the Company’s common stock on the first and last trading days of each six -month offering period. The Company estimates the fair value of purchase rights under the ESPP using the Black-Scholes option-pricing model and the straight-line attribution approach. The following weighted-average assumptions were as follows: For the Year Ended December 31, 2017 2016 2015 Expected term (in years) 0.5 -1.0 0.5 -1.0 0.5 -1.0 Expected volatility 29%-66% 38%-52% 25%-35% Risk-free interest rate 0.65%-1.21% 0.42%-0.56% 0.07%-0.37% Expected dividend yield 0.00 % 0.00 % 0.00 % The expected term represents the period of time from the beginning of the offering period to the purchase date. The Company uses its historical volatility for a period equivalent to the expected term of the options to estimate the expected volatility. The risk-free interest rate the Company uses in the Black-Scholes option valuation model is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term. The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and, therefore, used an expected dividend yield of zero in the valuation model. The ESPP provides that additional shares are reserved annually on the first day of each fiscal year in an amount equal to the lesser of (i) 1.5 million shares, (ii) one percent of the outstanding shares of common stock on the last day of the immediately preceding fiscal year, or (iii) an amount determined by the board of directors and/or the compensation committee of the board of directors. As of December 31, 2017 , 2.1 million shares had been issued under the ESPP and 3.7 million shares were available for future issuance. On January 1, 2018 , 0.9 million additional shares were reserved under the 2011 ESPP. Stock Awards Issued to Employees The following table presents total options outstanding, granted, exercised, expired or forfeited, as well as total options exercisable (shares and aggregate intrinsic value in thousands): Shares Weighted-Average Option Price Per Share Weighted-Average Fair Value of Options Granted During the Year Weighted-Average Remaining Contractual Life (Years) Intrinsic Value Issued and outstanding as of December 31, 2014 10,070 $ 5.08 Granted 4,206 $ 4.45 $ 1.45 Options exercised (1,126) $ 4.13 $ 1,312 Expired and/or Forfeited (2,534) $ 5.65 Issued and outstanding as of December 31, 2015 10,616 $ 4.79 Granted 709 $ 4.11 $ 2.05 Options exercised (2,111) $ 4.62 $ 1,455 Expired and/or Forfeited (1,719) $ 5.43 Issued and outstanding as of December 31, 2016 7,495 $ 4.63 Granted 173 $ 3.63 $ 1.86 Options exercised (14) $ 4.86 $ 8 Expired and/or Forfeited (1,143) $ 5.31 Issued and outstanding as of December 31, 2017 6,511 $ 4.48 6.54 $ 6,571 Options exercisable as of December 31, 2017 4,619 $ 4.61 6.13 $ 4,889 The total estimated fair value of options vested during the years ended December 31, 2017 , 2016 , and 2015 was $2.5 million , $3.7 million and $2.7 million , respectively. The following table summarizes additional information concerning our vested restricted stock units and performance stock units (shares in thousands): Shares Weighted-Average Grant Date Fair Value Unvested as of December 31, 2016 4,236 $ 4.77 Granted 3,458 $ 3.58 Vested (1) (1,963) $ 4.89 Forfeited (704) $ 4.30 Unvested as of December 31, 2017 5,027 $ 3.98 (1) 1,755 shares of common stock were issued for restricted stock units vested and the remaining 208 shares were withheld for taxes. The total estimated fair value of restricted stock units and PSU awards vested during the years ended December 31, 2017 , 2016 and 2015 was $7.3 million , $6.2 million and $8.5 million . The following table presents stock-based compensation expense as allocated within the Company’s Consolidated Statements of Operations (in thousands): For the Year Ended December 31, 2017 2016 2015 Stock-based compensation included in operating expenses: Cost of revenue $ 1,335 $ 1,484 $ 2,666 Sales and marketing 3,774 3,004 3,393 Research and development 149 586 1,299 General and administrative 8,425 5,678 6,029 Restructuring and other 352 — 2,579 Total stock-based compensation $ 14,035 $ 10,752 $ 15,966 The above table does not include approximately $0.5 million , $0.6 million and $0.4 million of capitalized stock-based compensation related to internal-use software for the years ended December 31, 2017 , 2016 and 2015 , respectively. As of December 31, 2017 , there was approximately $15.9 million of unrecognized compensation expense related to non-vested share-based compensation arrangements granted under the 2011 Plan, which is expected to be recognized over a weighted-average period of 1.96 years. |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2017 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Employee Benefit Plan | Employee Benefit Plan The Company maintains a 401(k) defined contribution plan that covers domestic employees who have attained 21 years of age and provide at least 20 hours of service per week. This plan allows U.S. employees to contribute up to 90% of their pre-tax salary into investments at the discretion of the employee, up to maximum annual contribution limits established by the U.S. Department of Treasury. During the years ended December 31, 2017 , 2016 and 2015 , the Company matched up to 50% of an employee's contributions up to an annual limit of $2,000 . Matching contributions by the Company are fully vested upon completion of the first year of employment. Employer matching contributions, which may be discontinued at the Company’s discretion, were approximately $1.5 million , $1.7 million and $2.1 million , during 2017 , 2016 and 2015 , respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Loss from continuing operations before provision for income taxes for the Company’s domestic and international operations was as follows (in thousands): For the Year Ended December 31, 2017 2016 2015 U.S. $ (28,463 ) $ (32,499 ) $ (40,720 ) International (3,030 ) 3,802 1,711 Loss before provision for income taxes $ (31,493 ) $ (28,697 ) $ (39,009 ) The income tax provision consisted of the following (in thousands): For the Year Ended December 31, 2017 2016 2015 Current: Federal $ 94 $ 279 $ — Foreign 46 1,112 632 State and local 212 89 (32 ) Total current income tax provision 352 1,480 600 Deferred: Federal (1,645 ) 129 160 Foreign (5 ) (54 ) 52 State and local (349 ) 1,874 772 Total deferred income tax provision (benefit) (1,999 ) 1,949 984 Income tax provision (benefit) $ (1,647 ) $ 3,429 $ 1,584 The following table provides a reconciliation of income taxes provided at the federal statutory rate of 35% to the income tax provision (in thousands): For the Year Ended December 31, 2017 2016 2015 U.S. income tax at federal statutory rate $ (11,012 ) $ (10,046 ) $ (13,388 ) State income taxes, net of federal benefit (650 ) (170 ) 342 Section 956 inclusion — 2,976 — Foreign tax rate differential (21 ) (882 ) (85 ) Share-based compensation 1,748 5,038 — Permanent differences 926 383 254 Tax cuts and jobs act 37,042 — — Tax credits (5 ) (111 ) (405 ) Federal rate change — (1,954 ) — Return to provision (407 ) 1,068 — Adjustments to opening deferreds — 2,009 — Valuation allowance (29,334 ) 4,458 14,529 Other, net 66 660 337 Income tax provision (benefit) $ (1,647 ) $ 3,429 $ 1,584 In November 2015, the Philippine Economic Zone Authority granted a four year tax holiday to the Company's Philippine affiliate, commencing with its fiscal year beginning January 1, 2016. The earnings per share benefit in 2017 , 2016 , and 2015 was not material. In December 2013, Malaysia granted a ten year tax holiday to the Company’s Malaysia affiliate, commencing with its fiscal year beginning January 1, 2014. This resulted in a tax benefit in fiscal 2013 of approximately $0.2 million from the elimination of the Malaysia subsidiary’s deferred tax liabilities. The earnings per share benefit in 2017 , 2016 and 2015 was not material. The following table provides the effect of temporary differences that created deferred income taxes as of December 31, 2017 and 2016 . Deferred tax assets and liabilities represent the future effects on income taxes resulting from temporary differences and carryforwards at the end of the respective periods (in thousands): For the Year Ended December 31, 2017 2016 Deferred tax assets: Accrued liabilities $ 3,847 $ 3,540 Share-based compensation expense 3,904 4,961 Net operating loss carryforwards 65,958 92,087 Tax credits 6,860 5,676 Amortization of tax intangibles 2,842 5,957 Investments — 1,774 Other, net 355 351 Total deferred tax assets 83,766 114,346 Deferred tax liabilities: Property and equipment (811 ) (3,607 ) Convertible debt costs (263 ) (1,041 ) Total deferred tax liabilities (1,074 ) (4,648 ) Net deferred tax assets 82,692 109,698 Less: Valuation allowance (82,923 ) (111,935 ) Net deferred tax liabilities $ (231 ) $ (2,237 ) As of December 31, 2017 and 2016 , management assessed the realizability of deferred tax assets and evaluated the need for a valuation allowance for deferred tax assets on a jurisdictional basis. This evaluation utilizes the framework contained in ASC 740, Income Taxes, wherein management analyzes all positive and negative evidence available at the balance sheet date to determine whether all or some portion of the Company's deferred tax assets will not be realized. Under this guidance, a valuation allowance must be established for deferred tax assets when it is more-likely-than-not (a probability level of more than 50 percent) that the asset will not be realized. In assessing the realization of the Company's deferred tax assets, management considers all available evidence, both positive and negative. In concluding on the evaluation, management placed significant emphasis on guidance in ASC 740, which states that “a cumulative loss in recent years is a significant piece of negative evidence that is difficult to overcome.” Based upon available evidence, it was concluded on a more-likely-than-not basis that all deferred tax assets were not realizable as of December 31, 2017 . Accordingly, a valuation allowance of $82.9 million has been recorded to offset this deferred tax asset. The change in valuation allowance for the years ended December 31, 2017 and 2016 was a decrease of $29.0 million and an increase of $24.3 million , respectively. Management also concluded on a more-likely-than-not basis that its Singapore deferred tax assets were not realizable, using the analysis prescribed in ASC 740. Other factors were considered but provided neither positive nor negative objectively-verifiable evidence as to the realization of our deferred tax assets. The remaining deferred tax assets as of December 31, 2017 relate to jurisdictions in which the Company has net adjusted historical pretax profits and sufficient forecast profitability to assure future realization of such deferred tax assets. The Tax Cuts and Jobs Act (the "Act") was enacted on December 22, 2017. The Act reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. In accordance with Staff Accounting Bulletin 118, we have not completed our accounting for the tax effects of enactment of the Act; however, in certain cases, as described below, we have made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. In other cases, we have not been able to make a reasonable estimate and continue to account for those items based on our existing accounting under ASC 740, Income Taxes, and the provisions of the tax laws that were in effect immediately prior to enactment. For the items for which we were able to determine a reasonable estimate, we recognized a provisional benefit of $2.1 million , which is included as a component of income tax expense from continuing operations. In all cases, we will continue to make and refine our calculations as additional analysis is completed. In addition, our estimates may also be affected as we gain a more thorough understanding of the tax law. We remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, we are still analyzing certain aspects of the Act and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. The provisional amount recorded related to the remeasurement of our deferred tax balance was $37.0 million , which was offset by a decrease in our valuation allowance of $39.1 million . We recognized a $2.1 million tax benefit related to remeasurement of indefinite-lived deferred tax liabilities and the release of valuation allowance associated with tax reform changes in net operating loss carryforwards. Future net operating losses generated will have an indefinite carryover as opposed to a 20-year carryover. Therefore, we expect the reversal of our deferred tax assets to result in indefinite lived deferreds (future net operating losses) which can be used as an offset in our valuation allowance calculations. The non-recurring transition tax is based on the total post-1986 earnings and profits ("E&P") previously deferred from U.S. income taxes. In aggregate, the Company has a deficit in post-1986 E&P from its foreign subsidiaries resulting in no transition tax liability. The Company considers its undistributed earnings of ServiceSource Europe, Ltd & ServiceSource International Singapore Pte. Ltd permanently reinvested in foreign operations and has not provided for U.S. income taxes on such earnings. As of December 31, 2017 , the Company's had no unremitted earnings from its foreign subsidiaries. As of December 31, 2017 , the Company had net operating loss carryforwards of approximately $249.6 million for federal income tax purposes and approximately $416.5 million for state income tax purposes. These losses are available to reduce taxable income and expire at various dates beginning in 2024 for federal income tax purposes and 2021 for state income tax purposes. The Company also has foreign net operating loss carryforwards of approximately $10.4 million which are indefinitely available to reduce taxable income and do not expire. As of December 31, 2017 , the Company had $2.5 million of U.S. federal research and development credits which expire beginning in 2031 , and $3.7 million of California research and development credits which do not expire. The Company also has $0.5 million of California Enterprise Zone Credits which expire beginning in 2023 if not utilized, and $1.6 million of other state tax credits which expire beginning in 2024 if not utilized. Utilization of the Company’s net operating loss and tax credit carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration or elimination of the net operating loss and tax credit carryforwards before utilization. Management believes that the limitation will not limit utilization of the carryforwards prior to their expiration. The Company acquired U.S. federal net operating loss carryforwards of Scout Analytics, Inc. upon the acquisition of that entity in January 2014, subject to the ownership change limitations. Acquired U.S. federal net operating losses from Scout total approximately $30.2 million net of amounts unavailable due to ownership change limitations, which is included in the total U.S. federal net operating loss above. The Company files U.S. federal and state and foreign income tax returns in jurisdictions with varying statutes of limitations. In the normal course of business the Company is subject to examination by taxing authorities throughout the world. These audits could include examining the timing and amount of deductions, the allocation of income among various tax jurisdictions and compliance with federal, state, local and foreign tax laws. Our 2005 through 2016 tax years generally remain subject to examination by federal, state and foreign tax authorities. The Company has implemented the provisions of ASC 740-10, Accounting for Uncertainty in Income Taxes. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): For the Year Ended December 31, 2017 2016 2015 Beginning balance $ 926 $ 937 $ 948 Additions based on tax positions related to the current year 1 24 62 Reductions for tax positions of prior years 5 (35 ) (73 ) Ending balance $ 932 $ 926 $ 937 As of December 31, 2017 , the Company had a liability for unrecognized tax benefits of $0.9 million , none of which, if recognized, would affect the Company’s effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the year ended December 31, 2017 , the interest and penalties recognized were insignificant. During the years ended December 31, 2016 and 2015, the Company recognized and accrued an insignificant amount of interest or penalties related to unrecognized tax benefits. |
Geographical Information
Geographical Information | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Geographical Information | Geographical Information The Company’s business is geographically diverse. During 2017 , 63% of net revenue was earned in North America and Latin America (“NALA”), 26% in Europe, Middle East and Africa (“EMEA”) and 11% in Asia Pacific-Japan (“APJ”). Net revenue for a particular geography generally reflects commissions earned from sales of service contracts managed from revenue delivery centers in that geography and subscription sales and professional services to deploy the Company's solutions. Predominantly all of the service contracts sold and managed by the revenue delivery centers relate to end customers located in the same geography. All of NALA net revenue represents revenue generated in the U.S. The CEO manages and allocates resources on a company-wide basis as a single segment that is focused on service offerings which integrate data, processes and cloud technologies. Net revenue by geographic region, is summarized as follows (in thousands): For the Year Ended December 31, 2017 2016 2015 Net revenue NALA $ 151,015 $ 163,371 $ 166,511 EMEA 60,941 62,479 59,708 APJ 27,171 27,037 25,984 Total net revenue $ 239,127 $ 252,887 $ 252,203 During the year ended December 31, 2017 , the Company's top ten clients accounted for 66% of our net revenue. Three of our clients, Cisco, VMWare, and Dell, represented 15% , 12% and 11% of our revenue, respectively, for the year ended December 31, 2017 . The majority of the Company’s assets as of December 31, 2017 and 2016 were attributable to its U.S. operations. Property and equipment information is based on the physical location of the assets. The following table presents the long-lived assets, consisting of property and equipment, by geographic location (in thousands): For the Year Ended December 31, 2017 2016 NALA $ 24,520 $ 28,916 EMEA 2,189 2,297 APJ 7,410 6,967 Total property and equipment, net $ 34,119 $ 38,180 |
Restructuring and Other
Restructuring and Other | 12 Months Ended |
Dec. 31, 2017 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other | Restructuring and Other In May 2017, the Company announced a restructuring effort to better align its cost structure with current business and market conditions, including a headcount reduction and the reduction of office space in four locations. The restructuring plan is accounted for in accordance with ASC 420, Exit or Disposal Cost Obligations. The Company recognized restructuring and other charges of approximately $7.3 million during the year ended December 31, 2017 . Severance and other employee costs include stock compensation related to the accelerated vesting of certain equity awards, severance payments, related employee benefits and employee-related legal fees. Lease and other contract termination costs include charges related to lease consolidation and abandonment of spaces no longer utilized and the cancellation of certain contracts with outside vendors. Asset impairments include charges related to leasehold improvements and furniture in spaces vacated or no longer in use. The Company expects to incur additional restructuring charges in the first half of 2018 related to the relocation and decommissioning of our current San Francisco office space. Future cash outlays related to restructuring activities are expected to total approximately $1.8 million . These amounts are reported in “Accounts payable, Accrued compensation and benefits and Accrued expenses" in our Consolidated Balance Sheet as of December 31, 2017 . Restructuring and other reserve activities are summarized as follows (in thousands): Severance and Other Employee Costs Lease and Other Contract Termination Costs Asset Impairments Total Restructuring and other liability as of December 31, 2016 $ — $ — $ — $ — Restructuring and other charges 3,483 2,939 886 7,308 Cash paid (3,060 ) (1,185 ) — (4,245 ) Non-cash impairment charges — — (886 ) (886 ) Acceleration of stock-based compensation expense in additional paid-in capital (352 ) — — (352 ) Restructuring and other liability as of December 31, 2017 $ 71 $ 1,754 $ — $ 1,825 |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Selected Quarterly Financial Information [Abstract] | |
Selected Quarterly Financial Data (Unaudited) | Selected Quarterly Financial Data (Unaudited) The following table presents data derived from our unaudited quarterly Condensed Consolidated Statement of Operations data for each quarter during the years ended December 31, 2017 and 2016 . Quarterly amounts may not total to annual amounts due to rounding. For the Quarter Ended Dec. 31, 2017 Sep. 30, 2017 Jun. 30, 2017 Mar. 31, 2017 Dec. 31, 2016 Sep. 30, 2016 Jun. 30, 2016 Mar. 31, 2016 (in thousands, except per share amounts) Net revenue $ 66,024 $ 58,132 $ 58,262 $ 56,708 $ 68,654 $ 62,514 $ 61,969 $ 59,750 Gross profit $ 24,044 $ 17,329 $ 18,745 $ 15,299 $ 26,152 $ 21,725 $ 21,625 $ 18,316 Income (loss) from operations $ 531 $ (4,636 ) $ (10,338 ) $ (9,264 ) $ (2,168 ) $ (3,712 ) $ (3,269 ) $ (6,344 ) Loss before income taxes $ (1,800 ) $ (5,375 ) $ (12,984 ) $ (11,334 ) $ (7,572 ) $ (8,303 ) $ (4,969 ) $ (7,853 ) Net income (loss) $ 74 $ (5,195 ) $ (13,101 ) $ (11,624 ) $ (8,496 ) $ (9,271 ) $ (5,218 ) $ (9,141 ) Net loss per common share: Basic and diluted $ 0.00 $ (0.06 ) $ (0.15 ) $ (0.13 ) $ (0.10 ) $ (0.11 ) $ (0.06 ) $ (0.11 ) |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events GAAP requires an entity to disclose events that occur after the balance sheet date but before financial statements are issued or are available to be issued (“subsequent events”) as well as the date through which an entity has evaluated subsequent events. There are two types of subsequent events. The first type consists of events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, (“recognized subsequent events”). The second type consists of events that provide evidence about conditions that did not exist at the date of the balance sheet but arose subsequent to that date (“nonrecognized subsequent events”). No significant recognized or nonrecognized subsequent events were noted other than those mentioned in “Note 8 - Commitments and Contingencies.” |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Consolidation | Basis of Consolidation The accompanying Consolidated Financial Statements include the accounts of ServiceSource and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amount of net revenue and expenses during the reporting period. The Company’s significant accounting judgments and estimates include, but are not limited to: revenue recognition, the valuation and recognition of stock-based compensation, the recognition and measurement of current and deferred income tax assets and liabilities and uncertain tax positions, and the provision for bad debts. The Company bases its estimates and judgments on historical experience and on various assumptions that it believes are reasonable under the circumstances. However, future events are subject to change and estimates and judgments routinely require adjustment. Actual results may differ from these estimates, and these differences may be material. |
Significant Risks and Uncertainties | Significant Risks and Uncertainties The Company is subject to certain risks and uncertainties that could have a material and adverse effect on its future financial position or results of operations. The Company’s clients are primarily high technology companies and a downturn in these industries, changes in clients’ sales strategies, or widespread shift away from end customers purchasing maintenance and support contracts could have an adverse impact on the Company’s consolidated results of operations and financial condition. Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, cash equivalents, short-term investments, accounts receivable and the Note Hedges. See "Note 7 – Debt" for additional information. The Company is also exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates and interest rates. Cash is maintained in demand deposit accounts at U.S., European and Asian financial institutions that management believes are credit worthy. Deposits in these institutions may exceed the amount of insurance provided on these deposits. Accounts receivable are derived from services performed for clients located primarily in the U.S., Europe and Asia. The Company attempts to mitigate the credit risk in its trade receivables through its ongoing credit evaluation process and historical collection experience. The Company maintains an allowance for doubtful accounts based upon the expected collectability of its accounts receivable, which takes into consideration an analysis of historical bad debts and other available information. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company accounts for certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value guidance establishes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. An asset or liability’s level is based upon the lowest level of input that is significant to the fair value measurement. The guidance requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories: Level 1: Quoted prices in active markets for identical assets or liabilities; Level 2: Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; Level 3: Inputs that are generally unobservable and typically reflect management's estimates or assumptions that market participants would use in pricing the asset or liability. The carrying amount of financial instruments including cash, restricted cash recorded in other assets, accounts receivable, accounts payable, accrued taxes, accrued expenses and other accrued liabilities approximate carrying value due to their short-term maturities. |
Foreign Currency Translation and Remeasurement | Foreign Currency Translation and Remeasurement Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment, where that local currency is the functional currency, are translated to U.S. dollars at exchange rates at the balance sheet date. Net revenue and expenses are translated at monthly average exchange rates. The Company accumulates net translation adjustments in equity as a component of accumulated other comprehensive income (loss). For non-U.S. subsidiaries whose functional currency is the U.S. dollar, transactions that are denominated in foreign currencies have been remeasured in U.S. dollars, and any resulting gains and losses are reported in "Interest expense and other, net" in the Consolidated Statements of Operations. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at their carrying values net of an allowance for doubtful accounts. The Company evaluates the ongoing collectability of its accounts receivable based on a number of factors such as the credit quality of its clients, the age of accounts receivable balances, collections experience, current economic conditions and other factors that may affect a client’s ability to pay. In circumstances where the Company is aware of a specific client’s inability to meet its financial obligations to the Company, a specific allowance for doubtful accounts is estimated and recorded, which reduces the recognized receivable to the estimated amount that management believes will ultimately be collected. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. |
Property and Equipment | Property and Equipment The Company records property and equipment at cost, less accumulated depreciation and amortization. Depreciation is recorded using the straight-line method over the estimated useful lives for owned assets as follows: seven years for office furniture and equipment, three to five years for network equipment, two to three years for computer hardware and three to seven years for software. Leasehold improvements are amortized on a straight-line basis over the lesser of the related lease term or the estimated useful life of the related assets, ranging from three to fifteen years. When assets are disposed, the cost and related accumulated depreciation and amortization are removed from their respective accounts and any gain or loss on sale or disposal is reported in "General and administrative expense" in the Consolidated Statement of Operations. |
Lease Asset Retirement Obligations | Lease Asset Retirement Obligations The fair value of a liability for an asset retirement obligation (“ARO”) is recognized in the period in which it is incurred. The Company’s AROs associated with leasehold improvements at our international office locations, which, at the end of a lease, are contractually obligated to be removed. |
Capitalized Internal-Use Software | Capitalized Internal-Use Software Expenditures related to software developed or obtained for internal use are capitalized and amortized over a period of two to five years on a straight-line basis. The Company capitalizes direct external costs associated with developing or obtaining internal-use software. In addition, the Company also capitalizes certain payroll and payroll-related costs for employees or professional fees for consultants who are directly associated with the development of such applications. Costs associated with preliminary project stage activities, training, maintenance and all other post-implementation stage activities are expensed as incurred and are recorded in "Research and development" in the Consolidated Statements of Operations. Capitalized costs related to internal-use software under development are treated as construction-in-progress until the program, feature or functionality is ready for its intended use, at which time amortization commences. |
Goodwill | Goodwill We evaluate goodwill and indefinite-lived intangible assets for possible impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company does not have intangible assets with indefinite useful lives other than goodwill. To assess if goodwill is impaired a qualitative assessment, referred to as the simplified method, is first performed to determine whether further quantitative impairment testing is necessary. This qualitative analysis evaluates factors including, but not limited to, macro-economic conditions such as deterioration in the entity's operating environment or industry or market considerations; entity-specific events such as increasing costs, declining financial performance, or loss of key personnel; or other events such as an expectation that a reporting unit will be sold or a sustained decrease in the stock price on either an absolute basis or relative to peers. If, as a result of the qualitative assessment, the Company considers it more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then a two-step quantitative impairment test is performed. The first step requires comparing the fair value of the reporting unit to its net book value, including goodwill. A potential impairment exists if the fair value of the reporting unit is lower than its net book value. The second step of the process, which is performed only if a potential impairment exists, involves determining the difference between the fair value of the reporting unit's net assets other than goodwill and the fair value of the reporting unit. If this difference is less than the net book value of goodwill, an impairment is recorded. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. Significant judgments are required to estimate the fair value of reporting units which includes estimating future cash flows and determining appropriate discount rates, growth rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit which could trigger impairment. If a two-step quantitative impairment test is required, the fair value of each reporting unit is determined based upon the income approach. Under the income approach, the Company estimates the fair value of the reporting unit based upon the present value of estimated future cash flows. Cash flow projections are determined by management to be commensurate with the risk inherent in our current business model. Key assumptions used to estimate the fair value of the reporting unit includes the discount rate, compounded annual revenue growth rates, operating expense assumptions and terminal value capitalization rate. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the reporting unit's ability to execute on the projected cash flows. The discount rate and terminal value capitalization rate are derived from the use of market data which are Level 3 inputs within the fair value hierarchy. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Including Intangible Assets The Company evaluates the recoverability of its long-lived assets whenever events or changes in circumstances indicate the carrying amount of the long-lived asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If the long-lived asset is impaired, an impairment is recognized for the amount by which the carrying value of the asset exceeds its fair value. No impairment was recorded for the years ended December 31, 2017 , 2016 , and 2015 . Acquired intangible assets are amortized over their useful lives on a straight-line basis which represents the pattern in which the Company derives benefit from the asset. |
Cost Basis Equity Investment | Cost Basis Equity Investment In 2013, the Company made an equity investment in a private company for $4.5 million , which represented less than 5% of the outstanding equity of that company. Based on unfavorable growth trends and declining financial performance of this private company, the Company determined that its investment was fully impaired and recorded a $4.5 million impairment during the year ended December 31, 2016 . The impairment is included in "Impairment loss on cost basis equity investment" in the Consolidated Statement of Operations. During 2017 , the Company sold this investment for $2.1 million in cash and recorded the proceeds as a gain in "Gain on sale of cost basis equity investment" in our Consolidated Statements of Operations. |
Operating Leases | Operating Leases The Company’s operating lease agreements for office facilities include provisions for certain rent holidays, tenant incentives and escalations in the base price of the rent payment. The Company records rent holidays and rent escalations on a straight-line basis over the lease term and records the difference between expense and cash payments as deferred rent. Tenant incentives are recorded as deferred rent and amortized on a straight-line basis over the lease term. Deferred rent is included in "Other current liabilities and Other long-term liabilities" in the Consolidated Balance Sheets. |
Deferred Debt Issuance Costs | Deferred Debt Issuance Costs The Company defers debt issuance costs, which consist of the debt discount on the convertible notes and issuances costs related to the Notes. Discounts and debt issuance costs are included in the carrying value of the convertible notes and amortized to “Interest expense and other, net” in our Consolidated Statement of Operations over the remaining life of the convertible notes. See "Note 7 - Debt" for additional information. |
Comprehensive Income (Loss) | Comprehensive Loss We report comprehensive loss in our Consolidated Statements of Comprehensive Loss. Amounts reported in “Accumulated other comprehensive loss” consist of foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency and unrealized gains and losses on available-for-sale securities. |
Revenue Recognition | Revenue Recognition The Company’s revenue is derived primarily from recurring revenue management. Other revenues include subscriptions to the Company’s cloud applications and professional services. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured from clients and no significant obligations remain unfulfilled by the Company. Recurring Revenue Management Revenue from recurring revenue management consists of fees earned from the sales of services contracts on behalf of the Company’s customers, which are referred to as clients, or assisting in their sales process. The Company’s contract obligations include administering and managing the sales and/or renewal processes for client contracts; providing adequately trained staff; reporting; and holding periodic business reviews with clients. Client obligations include providing a detailed listing of sales prospects, access to their databases or systems and sales or marketing materials. Fees are generally based on a fixed percentage of the overall sales value associated with the service contracts. Some client contracts include performance-based fees determined by the achievement of specified performance metrics. Recurring revenue management contracts entitle the Company to additional fees and adjustments which are invoked in various circumstances including a client’s failure to provide the Company with a specified minimum value of sales prospects, untimely delivery of client sales prospect data or other obligations inhibiting the Company’s ability to perform its obligations. In addition, many client contracts contain early termination fees. Recurring revenue management services are deemed delivered when clients accept purchased orders from their sales prospects (the end customer) and no significant post-delivery obligations remain for the Company. Fees from recurring revenue management services are recognized on a net basis since the Company acts as an agent on behalf of its clients. The Company does not provide the services being renewed by the end customers, nor does it determine pricing, terms or scope of services to the end customers. Performance incentive fees and early termination fees are recorded in the period when either the performance criteria have been met or a triggering event has occurred. Subscriptions Subscription revenue is comprised of subscriptions fees to access the Company’s cloud based applications. Subscription revenue is recognized ratably over the contract term, generally over a period of one to three years , commencing when the cloud applications are made available. The Company's subscription service arrangements are generally non-cancelable and do not contain refund-type provisions. Professional Services Professional services revenue is generated from implementation services. Professional services are deemed delivered upon the successful completion of implementation projects or when project milestones have been achieved and accepted by the client. Multiple Element Arrangements The Company enters into multiple element arrangements when clients utilize a combination of recurring revenue management services, subscriptions and professional services. Deliverables are separated at the inception of the arrangement if each deliverable has stand-alone value to the client. The Company believes that it has stand-alone value for professional services. Arrangement consideration is allocated based on the relative best selling prices of each deliverable. However, most fees earned from recurring revenue management services are contingent in nature as the fees earned by the Company are based on performance against the specific terms of each contract. Therefore, contingent fees from recurring revenue management services are excluded from the allocation of relative best selling prices at inception of multiple element arrangements. Selling prices for each deliverable is determined based on the selling price hierarchy of vendor-specific objective evidence ("VSOE"), third-party evidence ("TPE") and best estimated selling price ("BESP"). Generally, the Company has not been able to establish VSOE for its deliverables as the items have not been sold separately. The Company has not been able to reliably determine the stand-alone selling prices of competitors’ products and services, and therefore cannot rely on TPE for its deliverables. Therefore, the Company utilizes BESP to determine the selling prices of its deliverables. The objective of BESP is to determine the price at which the Company would price a product or service if it were sold on a stand-alone basis. BESP is generally used for offerings that are not typically sold separately or for new offerings. BESP is determined by considering multiple factors including, but not limited to, pricing practices, market conditions, competitive landscape, internal costs, geographies and gross margin. The determination of BESP is made through consultation with and formal approval with management, taking into consideration the Company’s marketing strategy. As these marketing strategies evolve, the Company may modify its pricing practices in the future, which could result in changes to selling prices. Once arrangement consideration is allocated to the various deliverables in a multiple element arrangement, revenue is recognized when all other revenue recognition criteria has been achieved. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred and are reported in "Sales and marketing expenses" in the Consolidated Statements of Operations. |
Income Taxes | Income Taxes The Company accounts for income taxes using an asset and liability method, which requires the recognition of taxes payable or refundable for the current year and deferred tax assets and liabilities for the expected future tax consequences of temporary differences that currently exist between the tax basis and the financial reporting basis of our taxable subsidiaries’ assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in operations in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realized. The Company files U.S. federal and state and foreign income tax returns in jurisdictions with varying statutes of limitations. In the normal course of business the Company is subject to examination by taxing authorities throughout the world. These audits include questioning the timing and amount of deductions, the allocation of income among various tax jurisdictions and compliance with federal, state, local and foreign tax laws. The Company accounts for unrecognized tax benefits using a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. The Company records an income tax liability, if any, for the difference between the benefit recognized and measured and the tax position taken or expected to be taken on our tax returns. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in the income tax provision. |
Stock-Based Compensation | Stock-Based Compensation The Company issues share-based awards to employees and directors. Awards are measured at fair value on the grant date and amortized to compensation expense over the service period during which the awards fully vest. Such expense is included in in our Consolidated Statements of Operations, see "Note 9 - Share Repurchase Program and Stock-Based Compensation" for additional information. Forfeitures are recognized as incurred. Options issued are valued using the Black-Scholes option-pricing model, which relies on assumptions we make related to the expected term of the options, volatility, dividend yield and risk-free interest rate. |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share Basic net income (loss) per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, shares to be purchased under the Company’s employee stock purchase plan and unvested restricted stock units (“RSUs”). The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities. |
Recent Accounting Pronouncements | New Accounting Standards Issued but not yet Adopted Revenue Recognition In May 2014, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”) which amended the existing FASB Accounting Standards Codification. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. The standard also specifies that the incremental costs of obtaining a contract with a customer and the costs of fulfilling a contract with a customer (if those costs are not within the scope of another Topic or Sub-Topic) would be deferred and recognized over the appropriate period of contract performance if they are expected to be recovered. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method, also known as the cumulative catch-up transition method). The Company will adopt the standard effective January 1, 2018 utilizing the modified retrospective method. The Company has completed its analysis of this standard and the adoption of this guidance will not have a material impact on our Consolidated Financial Statements or our internal controls over financial reporting. Leases In February 2016, the FASB issued an ASU that modifies existing accounting standards for lease accounting. The new standard requires a lessee to record a lease asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. Leases in which the Company is the lessee will generally be accounted for as operating leases and we will record a lease asset and a lease liability. The guidance is effective for fiscal years beginning after December 15, 2018, with early adoption permitted for fiscal years beginning after December 15, 2018. The standard requires a modified retrospective transition approach for all capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with an option to use certain transition relief. The Company expects to adopt this standard effective January 1, 2019, and is in the process of assessing the impact of this standard. Restricted Cash In November 2016, the FASB issued an ASU that requires companies to combine restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning and end of period total amounts on the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company will adopt the standard effective January 1, 2018 utilizing the retrospective transition method. The adoption of this guidance will not have a significant impact on our Consolidated Financial Statements. Comprehensive Income In February 2018, the FASB issued an ASU that allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted. The guidance should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. We are currently evaluating this guidance. |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Changes in Allowance for Doubtful Accounts | The following table presents changes in the allowance for doubtful accounts (in thousands): For the Year Ended December 31, 2017 2016 2015 Balance, beginning of year $ — $ 137 $ 37 Charged to expense — 392 137 Recoveries — (529 ) (37 ) Balance, end of year $ — $ — $ 137 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Intangible Assets | Intangible assets consisted of the following (in thousands): Gross Carrying Amount Accumulated Amortization Net Balance as of December 31, 2015 $ 6,050 $ (2,940 ) $ 3,110 Amortization expense — (1,512 ) (1,512 ) Balance as of December 31, 2016 6,050 (4,452 ) 1,598 Amortization expense — (1,512 ) (1,512 ) Balance as of December 31, 2017 $ 6,050 $ (5,964 ) $ 86 |
Fair Value of Financial Instr26
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Summary of Fair Value Measurement of Financial Instruments | The following tables present the Company's cash and cash equivalents and short-term investments by significant investment category (in thousands) measured at fair value on a recurring basis: For the Year Ended December 31, 2017 : Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Level 1: Cash $ 48,712 $ — $ — $ 48,712 Cash equivalents: Money market mutual funds 2,677 — — 2,677 Total cash and cash equivalents 51,389 — — 51,389 Level 2: Short-term investments: Corporate bonds 55,763 1 (346 ) 55,418 U.S. agency securities 34,640 — (410 ) 34,230 Asset-backed securities 21,739 — (127 ) 21,612 U.S. Treasury securities 26,292 — (371 ) 25,921 Total short-term investments 138,434 1 (1,254 ) 137,181 Cash, cash equivalents and short-term investments $ 189,823 $ 1 $ (1,254 ) $ 188,570 For the Year Ended December 31, 2016 : Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Level 1: Cash $ 47,060 $ — $ — $ 47,060 Cash equivalents: Money market mutual funds 632 — — 632 Total cash and cash equivalents 47,692 — — 47,692 Level 2: Short-term investments: Corporate bonds 54,827 19 (188 ) 54,658 U.S. agency securities 34,658 — (281 ) 34,377 Asset-backed securities 26,431 25 (23 ) 26,433 U.S. Treasury securities 22,701 — (288 ) 22,413 Total short-term investments 138,617 44 (780 ) 137,881 Cash, cash equivalents and short-term investments $ 186,309 $ 44 $ (780 ) $ 185,573 The following table presents the amortized cost and estimated fair value of money market mutual funds and short-term fixed income securities classified as short-term investments based on stated maturities as of December 31, 2017 (in thousands): Amortized Cost Estimated Fair Value Less than 1 year $ 14,315 $ 14,295 Due in 1 to 3 years 126,796 125,563 Total $ 141,111 $ 139,858 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment | Property and equipment, net were comprised of the following (in thousands): For the Year Ended December 31, 2017 2016 Computers and equipment $ 22,186 $ 19,930 Software 72,147 59,453 Leasehold improvements 19,574 18,092 Furniture and fixtures 11,606 10,947 Property and equipment 125,513 108,422 Less: accumulated depreciation and amortization (91,394 ) (70,242 ) Property and equipment, net $ 34,119 $ 38,180 |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of Other Current Liabilities | Other current liabilities were comprised of the following (in thousands): For the Year Ended December 31, 2017 2016 Accrued interest – convertible notes $ 938 $ 938 Deferred rent 748 1,359 ESPP withholding 418 661 Total $ 2,104 $ 2,958 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Net Carrying Amount of Liability Component of Notes | The net carrying amount of the liability component of the Notes consists of the following (in thousands): For the Year Ended December 31, 2017 2016 Principal amount $ 150,000 $ 150,000 Unamortized debt discount (5,336 ) (13,928 ) Unamortized debt issuance costs (497 ) (1,297 ) Net carrying amount $ 144,167 $ 134,775 |
Schedule of Interest Expense Recognized on Notes | The following table presents interest expense recognized related to the Notes (in thousands): For the Year Ended December 31, 2017 2016 2015 Contractual interest expense at 1.5% per annum $ 2,250 $ 2,250 $ 2,250 Amortization of debt issuance costs 800 743 686 Accretion of debt discount 8,592 7,981 7,362 Total $ 11,642 $ 10,974 $ 10,298 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of Future Annual Minimum Lease Payments Under All Noncancelable Operating Leases | Future annual minimum lease payments under non-cancelable operating leases as of December 31, 2017 were as follows (in thousands): Fiscal Year 2018 $ 11,354 2019 9,600 2020 8,362 2021 7,819 2022 4,616 Thereafter — Total $ 41,751 |
Share Repurchase Program, Sto31
Share Repurchase Program, Stock-Based Compensation and ESPP (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Weighted Average Assumptions | The weighted average Black-Scholes option-pricing model assumptions were as follows: For the Year Ended December 31, 2017 2016 2015 Expected term (in years) 5.0 5.0 5.0 Expected volatility 59 % 58 % 34 % Risk-free interest rate 1.87 % 1.23 % 1.64 % Expected dividend yield 0.00 % 0.00 % 0.00 % The Company estimates the fair value of purchase rights under the ESPP using the Black-Scholes option-pricing model and the straight-line attribution approach. The following weighted-average assumptions were as follows: For the Year Ended December 31, 2017 2016 2015 Expected term (in years) 0.5 -1.0 0.5 -1.0 0.5 -1.0 Expected volatility 29%-66% 38%-52% 25%-35% Risk-free interest rate 0.65%-1.21% 0.42%-0.56% 0.07%-0.37% Expected dividend yield 0.00 % 0.00 % 0.00 % |
Summary of Option and RSU Activity | The following table presents total options outstanding, granted, exercised, expired or forfeited, as well as total options exercisable (shares and aggregate intrinsic value in thousands): Shares Weighted-Average Option Price Per Share Weighted-Average Fair Value of Options Granted During the Year Weighted-Average Remaining Contractual Life (Years) Intrinsic Value Issued and outstanding as of December 31, 2014 10,070 $ 5.08 Granted 4,206 $ 4.45 $ 1.45 Options exercised (1,126) $ 4.13 $ 1,312 Expired and/or Forfeited (2,534) $ 5.65 Issued and outstanding as of December 31, 2015 10,616 $ 4.79 Granted 709 $ 4.11 $ 2.05 Options exercised (2,111) $ 4.62 $ 1,455 Expired and/or Forfeited (1,719) $ 5.43 Issued and outstanding as of December 31, 2016 7,495 $ 4.63 Granted 173 $ 3.63 $ 1.86 Options exercised (14) $ 4.86 $ 8 Expired and/or Forfeited (1,143) $ 5.31 Issued and outstanding as of December 31, 2017 6,511 $ 4.48 6.54 $ 6,571 Options exercisable as of December 31, 2017 4,619 $ 4.61 6.13 $ 4,889 |
Schedule of Other Than Options Activity | The following table summarizes additional information concerning our vested restricted stock units and performance stock units (shares in thousands): Shares Weighted-Average Grant Date Fair Value Unvested as of December 31, 2016 4,236 $ 4.77 Granted 3,458 $ 3.58 Vested (1) (1,963) $ 4.89 Forfeited (704) $ 4.30 Unvested as of December 31, 2017 5,027 $ 3.98 (1) 1,755 shares of common stock were issued for restricted stock units vested and the remaining 208 shares were withheld for taxes. |
Summary of Stock-Based Compensation Expense | The following table presents stock-based compensation expense as allocated within the Company’s Consolidated Statements of Operations (in thousands): For the Year Ended December 31, 2017 2016 2015 Stock-based compensation included in operating expenses: Cost of revenue $ 1,335 $ 1,484 $ 2,666 Sales and marketing 3,774 3,004 3,393 Research and development 149 586 1,299 General and administrative 8,425 5,678 6,029 Restructuring and other 352 — 2,579 Total stock-based compensation $ 14,035 $ 10,752 $ 15,966 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Loss from Continuing Operations Before Provision for Income Taxes | Loss from continuing operations before provision for income taxes for the Company’s domestic and international operations was as follows (in thousands): For the Year Ended December 31, 2017 2016 2015 U.S. $ (28,463 ) $ (32,499 ) $ (40,720 ) International (3,030 ) 3,802 1,711 Loss before provision for income taxes $ (31,493 ) $ (28,697 ) $ (39,009 ) |
Summary of Income Tax Provision | The income tax provision consisted of the following (in thousands): For the Year Ended December 31, 2017 2016 2015 Current: Federal $ 94 $ 279 $ — Foreign 46 1,112 632 State and local 212 89 (32 ) Total current income tax provision 352 1,480 600 Deferred: Federal (1,645 ) 129 160 Foreign (5 ) (54 ) 52 State and local (349 ) 1,874 772 Total deferred income tax provision (benefit) (1,999 ) 1,949 984 Income tax provision (benefit) $ (1,647 ) $ 3,429 $ 1,584 |
Schedule of Reconciliation of Income Taxes Provided at Federal Statutory Rate to Income Tax Provision | The following table provides a reconciliation of income taxes provided at the federal statutory rate of 35% to the income tax provision (in thousands): For the Year Ended December 31, 2017 2016 2015 U.S. income tax at federal statutory rate $ (11,012 ) $ (10,046 ) $ (13,388 ) State income taxes, net of federal benefit (650 ) (170 ) 342 Section 956 inclusion — 2,976 — Foreign tax rate differential (21 ) (882 ) (85 ) Share-based compensation 1,748 5,038 — Permanent differences 926 383 254 Tax cuts and jobs act 37,042 — — Tax credits (5 ) (111 ) (405 ) Federal rate change — (1,954 ) — Return to provision (407 ) 1,068 — Adjustments to opening deferreds — 2,009 — Valuation allowance (29,334 ) 4,458 14,529 Other, net 66 660 337 Income tax provision (benefit) $ (1,647 ) $ 3,429 $ 1,584 |
Schedule of Effect of Temporary Differences that Created Deferred Income Taxes | The following table provides the effect of temporary differences that created deferred income taxes as of December 31, 2017 and 2016 . Deferred tax assets and liabilities represent the future effects on income taxes resulting from temporary differences and carryforwards at the end of the respective periods (in thousands): For the Year Ended December 31, 2017 2016 Deferred tax assets: Accrued liabilities $ 3,847 $ 3,540 Share-based compensation expense 3,904 4,961 Net operating loss carryforwards 65,958 92,087 Tax credits 6,860 5,676 Amortization of tax intangibles 2,842 5,957 Investments — 1,774 Other, net 355 351 Total deferred tax assets 83,766 114,346 Deferred tax liabilities: Property and equipment (811 ) (3,607 ) Convertible debt costs (263 ) (1,041 ) Total deferred tax liabilities (1,074 ) (4,648 ) Net deferred tax assets 82,692 109,698 Less: Valuation allowance (82,923 ) (111,935 ) Net deferred tax liabilities $ (231 ) $ (2,237 ) |
Schedule of Reconciliation of the Beginning and Ending Amount of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): For the Year Ended December 31, 2017 2016 2015 Beginning balance $ 926 $ 937 $ 948 Additions based on tax positions related to the current year 1 24 62 Reductions for tax positions of prior years 5 (35 ) (73 ) Ending balance $ 932 $ 926 $ 937 |
Geographical Information (Table
Geographical Information (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Net Revenue and Long-Lived Assets by Geographic Region | Net revenue by geographic region, is summarized as follows (in thousands): For the Year Ended December 31, 2017 2016 2015 Net revenue NALA $ 151,015 $ 163,371 $ 166,511 EMEA 60,941 62,479 59,708 APJ 27,171 27,037 25,984 Total net revenue $ 239,127 $ 252,887 $ 252,203 During the year ended December 31, 2017 , the Company's top ten clients accounted for 66% of our net revenue. Three of our clients, Cisco, VMWare, and Dell, represented 15% , 12% and 11% of our revenue, respectively, for the year ended December 31, 2017 . The majority of the Company’s assets as of December 31, 2017 and 2016 were attributable to its U.S. operations. Property and equipment information is based on the physical location of the assets. The following table presents the long-lived assets, consisting of property and equipment, by geographic location (in thousands): For the Year Ended December 31, 2017 2016 NALA $ 24,520 $ 28,916 EMEA 2,189 2,297 APJ 7,410 6,967 Total property and equipment, net $ 34,119 $ 38,180 |
Restructuring and Other (Tables
Restructuring and Other (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring and Other Reserve Activities | Restructuring and other reserve activities are summarized as follows (in thousands): Severance and Other Employee Costs Lease and Other Contract Termination Costs Asset Impairments Total Restructuring and other liability as of December 31, 2016 $ — $ — $ — $ — Restructuring and other charges 3,483 2,939 886 7,308 Cash paid (3,060 ) (1,185 ) — (4,245 ) Non-cash impairment charges — — (886 ) (886 ) Acceleration of stock-based compensation expense in additional paid-in capital (352 ) — — (352 ) Restructuring and other liability as of December 31, 2017 $ 71 $ 1,754 $ — $ 1,825 |
Selected Quarterly Financial 35
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Selected Quarterly Financial Information [Abstract] | |
Summary of Unaudited Quarterly Consolidated Statement of Operations Data | The following table presents data derived from our unaudited quarterly Condensed Consolidated Statement of Operations data for each quarter during the years ended December 31, 2017 and 2016 . Quarterly amounts may not total to annual amounts due to rounding. For the Quarter Ended Dec. 31, 2017 Sep. 30, 2017 Jun. 30, 2017 Mar. 31, 2017 Dec. 31, 2016 Sep. 30, 2016 Jun. 30, 2016 Mar. 31, 2016 (in thousands, except per share amounts) Net revenue $ 66,024 $ 58,132 $ 58,262 $ 56,708 $ 68,654 $ 62,514 $ 61,969 $ 59,750 Gross profit $ 24,044 $ 17,329 $ 18,745 $ 15,299 $ 26,152 $ 21,725 $ 21,625 $ 18,316 Income (loss) from operations $ 531 $ (4,636 ) $ (10,338 ) $ (9,264 ) $ (2,168 ) $ (3,712 ) $ (3,269 ) $ (6,344 ) Loss before income taxes $ (1,800 ) $ (5,375 ) $ (12,984 ) $ (11,334 ) $ (7,572 ) $ (8,303 ) $ (4,969 ) $ (7,853 ) Net income (loss) $ 74 $ (5,195 ) $ (13,101 ) $ (11,624 ) $ (8,496 ) $ (9,271 ) $ (5,218 ) $ (9,141 ) Net loss per common share: Basic and diluted $ 0.00 $ (0.06 ) $ (0.15 ) $ (0.13 ) $ (0.10 ) $ (0.11 ) $ (0.06 ) $ (0.11 ) |
The Company (Details)
The Company (Details) | 12 Months Ended |
Dec. 31, 2017language | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of languages | 45 |
Years of experience minimum | 20 years |
Summary of Significant Accoun37
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) shares in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2013 | |
Property, Plant and Equipment [Line Items] | ||||
Asset retirement obligation | $ 1,000,000 | $ 1,200,000 | ||
Goodwill impairment | 0 | 0 | $ 0 | |
Goodwill | 6,300,000 | 6,300,000 | ||
Impairment of long-lived assets | 0 | 0 | 0 | |
Cost method investment | $ 4,500,000 | |||
Recorded impairment | 4,500,000 | |||
Sale of investment | 2,100,000 | 0 | 0 | |
Advertising expense | $ 200,000 | $ 100,000 | $ 100,000 | |
Shares excluded from computation (in shares) | 7.1 | 7.7 | 9.5 | |
Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Subscription revenue period of recognition | 1 year | |||
Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Subscription revenue period of recognition | 3 years | |||
Office Furniture and Equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, estimated useful lives | 7 years | |||
Network Equipment | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, estimated useful lives | 3 years | |||
Network Equipment | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, estimated useful lives | 5 years | |||
Computer Hardware | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, estimated useful lives | 2 years | |||
Computer Hardware | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, estimated useful lives | 3 years | |||
Software | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, estimated useful lives | 3 years | |||
Software | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, estimated useful lives | 7 years | |||
Leasehold Improvements | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, estimated useful lives | 3 years | |||
Leasehold Improvements | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, estimated useful lives | 15 years | |||
Software Development | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, estimated useful lives | 2 years | |||
Software Development | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, estimated useful lives | 5 years | |||
Other (Expense) Income, Net | ||||
Property, Plant and Equipment [Line Items] | ||||
Foreign currency transaction (gain) losses | $ 1,100,000 | $ 500,000 | $ (900,000) | |
Accounts Receivable | Customer Concentration Risk | Customer 1 | ||||
Property, Plant and Equipment [Line Items] | ||||
Concentration risk | 17.00% | 15.00% | ||
Accounts Receivable | Customer Concentration Risk | Customer 2 | ||||
Property, Plant and Equipment [Line Items] | ||||
Concentration risk | 15.00% | 14.00% | ||
Accounts Receivable | Customer Concentration Risk | Customer 3 | ||||
Property, Plant and Equipment [Line Items] | ||||
Concentration risk | 12.00% |
Summary of Significant Accoun38
Summary of Significant Accounting Policies - Schedule of Changes in Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Balance, beginning of year | $ 0 | $ 137 | $ 37 |
Charged to expense | 0 | 392 | 137 |
Recoveries | 0 | (529) | (37) |
Balance, end of year | $ 0 | $ 0 | $ 137 |
Intangible Assets - Narrative (
Intangible Assets - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization expense | $ 1,512 | $ 1,512 | $ 1,500 |
Remaining net book value | $ 100 | $ 100 | $ 100 |
Intangible Assets - Summary of
Intangible Assets - Summary of Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Intangible Assets [Roll Forward] | |||
Gross carrying amount, beginning balance | $ 6,050 | $ 6,050 | |
Accumulated amortization, beginning balance | (4,452) | (2,940) | |
Net, beginning balance | 1,598 | 3,110 | |
Amortization expense for intangible assets | (1,512) | (1,512) | $ (1,500) |
Gross carrying amount, ending balance | 6,050 | 6,050 | 6,050 |
Accumulated amortization, ending balance | (5,964) | (4,452) | (2,940) |
Net, ending balance | $ 86 | $ 1,598 | $ 3,110 |
Fair Value of Financial Instr41
Fair Value of Financial Instruments - Summary of Financial Instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Cash equivalents: | ||||
Amortized Cost | $ 51,389 | $ 47,692 | $ 72,334 | $ 90,382 |
Fair Value, Measurements, Recurring | ||||
Short-term investments: | ||||
Amortized Cost | 189,823 | 186,309 | ||
Cash, cash equivalents and short-term investments, Unrealized Gains | 1 | 44 | ||
Cash, cash equivalents and short-term investments, Unrealized Losses | (1,254) | (780) | ||
Cash, cash equivalents and short-term investments, Estimated Fair Value | 188,570 | 185,573 | ||
Level 1 | Fair Value, Measurements, Recurring | ||||
Cash equivalents: | ||||
Amortized Cost | 51,389 | 47,692 | ||
Level 1 | Fair Value, Measurements, Recurring | Cash | ||||
Level 1: | ||||
Cash | 48,712 | 47,060 | ||
Level 1 | Fair Value, Measurements, Recurring | Money market mutual funds | ||||
Cash equivalents: | ||||
Amortized Cost | 2,677 | 632 | ||
Level 2 | Fair Value, Measurements, Recurring | ||||
Short-term investments: | ||||
Amortized Cost | 138,434 | 138,617 | ||
Unrealized Gains | 1 | 44 | ||
Unrealized Losses | (1,254) | (780) | ||
Estimated Fair Value | 137,181 | 137,881 | ||
Level 2 | Fair Value, Measurements, Recurring | Corporate bonds | ||||
Short-term investments: | ||||
Amortized Cost | 55,763 | 54,827 | ||
Unrealized Gains | 1 | 19 | ||
Unrealized Losses | (346) | (188) | ||
Estimated Fair Value | 55,418 | 54,658 | ||
Level 2 | Fair Value, Measurements, Recurring | U.S. agency securities | ||||
Short-term investments: | ||||
Amortized Cost | 34,640 | 34,658 | ||
Unrealized Gains | 0 | 0 | ||
Unrealized Losses | (410) | (281) | ||
Estimated Fair Value | 34,230 | 34,377 | ||
Level 2 | Fair Value, Measurements, Recurring | Asset-backed securities | ||||
Short-term investments: | ||||
Amortized Cost | 21,739 | 26,431 | ||
Unrealized Gains | 0 | 25 | ||
Unrealized Losses | (127) | (23) | ||
Estimated Fair Value | 21,612 | 26,433 | ||
Level 2 | Fair Value, Measurements, Recurring | U.S. Treasury securities | ||||
Short-term investments: | ||||
Amortized Cost | 26,292 | 22,701 | ||
Unrealized Gains | 0 | 0 | ||
Unrealized Losses | (371) | (288) | ||
Estimated Fair Value | $ 25,921 | $ 22,413 |
Fair Value of Financial Instr42
Fair Value of Financial Instruments - Amortized Cost and Estimated Fair Value (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Amortized Cost | |
Less than 1 year | $ 14,315 |
Due in 1 to 3 years | 126,796 |
Total | 141,111 |
Estimated Fair Value | |
Less than 1 year | 14,295 |
Due in 1 to 3 years | 125,563 |
Total | $ 139,858 |
Fair Value of Financial Instr43
Fair Value of Financial Instruments - Narrative (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Convertible Notes | Significant Other Observable Inputs (Level 2) | ||
Debt Instrument [Line Items] | ||
Convertible notes approximate fair value | $ 145.9 | $ 143.8 |
Other Assets | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Debt Instrument [Line Items] | ||
Restricted cash | $ 1.2 | $ 1.2 |
Property and Equipment, Net - S
Property and Equipment, Net - Summary of Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 125,513 | $ 108,422 |
Less: accumulated depreciation and amortization | (91,394) | (70,242) |
Property and equipment, net | 34,119 | 38,180 |
Computers and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 22,186 | 19,930 |
Software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 72,147 | 59,453 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 19,574 | 18,092 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 11,606 | $ 10,947 |
Property and Equipment, Net - N
Property and Equipment, Net - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation expense related to property and equipment | $ 21.1 | $ 16.1 | $ 13.7 |
Internal-use software development costs capitalized | 12.6 | 13.1 | 7.2 |
Carrying value of internal-use software, net of accumulated amortization | 16.5 | 17.2 | |
Amortization of capitalized costs related to internal-use software | $ 13.3 | $ 7.6 | $ 5 |
Other Current Liabilities (Deta
Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Accrued interest – convertible notes | $ 938 | $ 938 |
Deferred rent | 748 | 1,359 |
ESPP withholding | 418 | 661 |
Total | $ 2,104 | $ 2,958 |
Debt - Narrative (Details)
Debt - Narrative (Details) $ / shares in Units, shares in Thousands, $ in Thousands | Aug. 13, 2013USD ($)$ / sharesshares | Aug. 31, 2013USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Feb. 03, 2015USD ($) |
Debt Instrument [Line Items] | |||||
Deferred issuance cost | $ 5,800 | ||||
Payments of convertible note hedges | $ 31,400 | ||||
Shares covered under note hedges (in shares) | shares | 9,250 | ||||
Common stock strike price (in dollars per share) | $ / shares | $ 16.21 | ||||
Warrant | |||||
Debt Instrument [Line Items] | |||||
Warrants sold to acquire shares (in shares) | shares | 9,250 | ||||
Exercise price of warrant (in dollars per share) | $ / shares | $ 21.02 | ||||
Proceeds from the issuance of warrants | $ 21,800 | ||||
Senior Convertible Notes | |||||
Debt Instrument [Line Items] | |||||
Proceeds from issuance of debt | $ 150,000 | $ 150,000 | |||
Interest rate | 1.50% | 1.50% | |||
Conversion ratio | 0.061677 | ||||
Conversion price (in dollars per share) | $ / shares | $ 16.21 | ||||
Net carrying amount | $ 111,500 | $ 144,167 | $ 134,775 | ||
Additional paid in capital | $ 38,500 | ||||
Letter of Credit | |||||
Debt Instrument [Line Items] | |||||
Issuance of letters of credit | $ 1,200 | ||||
Money market mutual funds | Letter of Credit | |||||
Debt Instrument [Line Items] | |||||
Letter of credit secured | $ 1,200 |
Debt - Schedule of Net Carrying
Debt - Schedule of Net Carrying Amount of Liability Component of Notes (Details) - Senior Convertible Notes - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Aug. 13, 2013 |
Debt Instrument [Line Items] | |||
Principal amount | $ 150,000 | $ 150,000 | |
Unamortized debt discount | (5,336) | (13,928) | |
Unamortized debt issuance costs | (497) | (1,297) | |
Net carrying amount | $ 144,167 | $ 134,775 | $ 111,500 |
Debt - Schedule of Interest Exp
Debt - Schedule of Interest Expense Recognized on Notes (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Aug. 13, 2013 | |
Debt Instrument [Line Items] | ||||
Total | $ 9,886 | $ 8,704 | $ 9,316 | |
Senior Convertible Notes | ||||
Debt Instrument [Line Items] | ||||
Contractual interest expense at 1.5% per annum | $ 2,250 | 2,250 | 2,250 | |
Interest rate | 1.50% | 1.50% | ||
Amortization of debt issuance costs | $ 800 | 743 | 686 | |
Accretion of debt discount | 8,592 | 7,981 | 7,362 | |
Total | $ 11,642 | $ 10,974 | $ 10,298 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) $ in Thousands | Aug. 23, 2016plaintiff | Jan. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Operating Leased Assets [Line Items] | |||||
Rent expenses | $ 10,600 | $ 11,300 | $ 9,400 | ||
Total future annual minimum lease payment | 41,751 | ||||
Non-cancelable purchase commitments | 14,100 | ||||
Loss contingency accrual | $ 1,500 | ||||
Sarah Patton, et al v. ServiceSource Delaware, Inc | Pending Litigation | |||||
Operating Leased Assets [Line Items] | |||||
Number of plaintiffs | plaintiff | 3 | ||||
Subsequent Event | San Fransisco Office Space | |||||
Operating Leased Assets [Line Items] | |||||
Total future annual minimum lease payment | $ 9,300 | ||||
Operating Leases, Rent Expense, Sublease Rentals | $ 8,900 |
Commitments and Contingencies51
Commitments and Contingencies - Summary of Future Annual Minimum Lease Payments Under All Noncancelable Operating Leases (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 11,354 |
2,019 | 9,600 |
2,020 | 8,362 |
2,021 | 7,819 |
2,022 | 4,616 |
Thereafter | 0 |
Total | $ 41,751 |
Share Repurchase Program, Sto52
Share Repurchase Program, Stock-Based Compensation and ESPP - Narrative (Details) - USD ($) | Mar. 06, 2017 | Jan. 01, 2017 | Jun. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Aug. 31, 2015 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock repurchase program, maximum repurchase authorization (up to) | $ 30,000,000 | |||||||
Share repurchases (in shares) | 0 | 2,300,000 | ||||||
Weighted-average price per share (in dollars per share) | $ 3.94 | |||||||
Aggregate repurchase price | $ 8,900,000 | |||||||
Value of stock options and awards granted | $ 11,500,000 | 13,300,000 | $ 18,600,000 | |||||
Percentage of payroll deductions | 10.00% | |||||||
Percentage of purchase price of the shares on each purchase date is equal to the fair market value | 85.00% | |||||||
Common stock on the first and last trading days on offering period | 6 months | |||||||
Share issued under employee stock purchase plan (in shares) | 2,114,413 | |||||||
Estimated fair value of share options vested | $ 2,500,000 | 3,700,000 | 2,700,000 | |||||
Shares withheld for taxes (in shares) | 208 | |||||||
Fair value of instruments other than option | $ 7,300,000 | 6,200,000 | 8,500,000 | |||||
Stock-based compensation capitalization costs | $ 500,000 | $ 600,000 | $ 400,000 | |||||
Restricted Stock Units | Tranche 1 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percent | 50.00% | |||||||
Restricted Stock Units | Tranche 2 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percent | 50.00% | |||||||
Performance Shares | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting period | 2 years | |||||||
Performance-based restricted stock units subject for PSU award (in shares) | 200,000 | 1,000,000 | 1,000,000 | |||||
Aggregate grant date fair value | $ 1,200,000 | $ 3,700,000 | $ 5,100,000 | |||||
Percentage of performance achievement target goal, condition one | 90.00% | |||||||
Percent of target EBITDA | 69.00% | |||||||
Percentage of performance achievement target goal, condition two | 90.00% | |||||||
Percent of target EBITDA, condition two | 69.00% | |||||||
Percentage of restricted stock units eligible to vest, condition two | 50.00% | |||||||
Percentage of performance achievement target goal, condition three | 100.00% | |||||||
Percentage of restricted stock units eligible to vest, condition three | 100.00% | |||||||
Percentage of performance achievement target goal, condition four | 107.00% | |||||||
Percent of target EBITDA, condition four | 146.00% | |||||||
Percentage of restricted stock units eligible to vest, condition four | 150.00% | |||||||
Performance Shares | Tranche 1 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percent | 50.00% | |||||||
Performance Shares | Tranche 2 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percent | 50.00% | |||||||
2011 Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Percentage of common stock outstanding | 4.00% | |||||||
Common stock reserved but unissued (in shares) | 3,600,000 | 3,840,000 | ||||||
Shares available for future issuance (in shares) | 12,400,000 | |||||||
Unrecognized compensation expense | $ 15,900,000 | |||||||
Unrecognized compensation expense, weighted-average period recognized | 1 year 11 months 16 days | |||||||
2011 Plan | Employee Stock Option | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting period | 4 years | |||||||
Vested option expiring period | 10 years | |||||||
Vested but unexercised option expiring period | 90 days | |||||||
2011 Plan | Restricted Stock Units | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting period | 4 years | |||||||
Vesting percent | 25.00% | |||||||
ESPP | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Shares available for future issuance (in shares) | 902,530 | 3,679,533 | ||||||
Share issued under employee stock purchase plan (in shares) | 1,500,000 | |||||||
Percentage of outstanding common stock shares | 1.00% |
Share Repurchase Program, Sto53
Share Repurchase Program, Stock-Based Compensation and ESPP - Summary of Weighted Average Assumptions (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock Option Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (in years) | 5 years | 5 years | 5 years |
Expected volatility | 59.00% | 58.00% | 34.00% |
Risk-free interest rate | 1.87% | 1.23% | 1.64% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
ESPP | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected dividend yield | 0.00% | 0.00% | 0.00% |
ESPP | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (in years) | 6 months | 6 months | 6 months |
Expected volatility | 29.00% | 38.00% | 25.00% |
Risk-free interest rate | 0.65% | 0.42% | 0.07% |
ESPP | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (in years) | 1 year | 1 year | 1 year |
Expected volatility | 66.00% | 52.00% | 35.00% |
Risk-free interest rate | 1.21% | 0.56% | 0.37% |
Share Repurchase Program, Sto54
Share Repurchase Program, Stock-Based Compensation and ESPP - Summary of Option and RSU Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Employee Stock Option | |||
Options Outstanding, Number of Shares [Roll Forward] | |||
Number of Shares, Outstanding, Beginning balance (in shares) | 7,495 | 10,616 | 10,070 |
Number of Shares, Granted (in shares) | 173 | 709 | 4,206 |
Number of Shares, Options exercised (in shares) | (14) | (2,111) | (1,126) |
Number of Shares, Expired/Forfeited (in shares) | (1,143) | (1,719) | (2,534) |
Number of Shares, Outstanding, Ending balance (in shares) | 6,511 | 7,495 | 10,616 |
Options exercisable (in shares) | 4,619 | ||
Options Outstanding, Weighted-Average Exercise Price [Roll Forward] | |||
Weighted-Average Exercise Price, Outstanding, Beginning balance (in dollars per share) | $ 4.63 | $ 4.79 | $ 5.08 |
Weighted-Average Exercise Price, Granted (in dollars per share) | 3.63 | 4.11 | 4.45 |
Weighted-Average Exercise Price, Options exercised (in dollars per share) | 4.86 | 4.62 | 4.13 |
Weighted-Average Exercise Price, Expired/Forfeited (in dollars per share) | 5.31 | 5.43 | 5.65 |
Weighted-Average Exercise Price, Outstanding, Ending balance (in dollars per share) | 4.48 | 4.63 | 4.79 |
Options exercisable (in dollars per share) | 4.61 | ||
Weighted-Average Fair Value of Options Granted During the Year (in dollars per share) | $ 1.86 | $ 2.05 | $ 1.45 |
Issued and outstanding contractual life | 6 years 6 months 15 days | ||
Options exercisable contractual life | 6 years 1 month 17 days | ||
Options exercised intrinsic value | $ 8 | $ 1,455 | $ 1,312 |
Issued and outstanding intrinsic value | 6,571 | ||
Options exercisable intrinsic value | $ 4,889 | ||
Restricted Stock Units | |||
Restricted Stock Outstanding, Number of Shares [Roll Forward] | |||
Number of Shares, Outstanding, Beginning balance (in shares) | 4,236 | ||
Number of Shares, Granted (in shares) | 3,458 | ||
Number of Shares, Vested (in shares) | (1,963) | ||
Number of Shares, Forfeited (in shares) | (704) | ||
Number of Shares, Outstanding, Ending balance (in shares) | 5,027 | 4,236 | |
Weighted-Average Grant Date Fair Value | |||
Weighted-Average Exercise Price, Outstanding, Beginning balance (in dollars per share) | $ 4.77 | ||
Weighted-Average Exercise Price, Granted (in dollars per share) | 3.58 | ||
Weighted-Average Exercise Price, Options vested (in dollars per share) | 4.89 | ||
Weighted-Average Exercise Price, Forfeited (in dollars per share) | 4.30 | ||
Weighted-Average Exercise Price, Outstanding, Ending balance (in dollars per share) | $ 3.98 | $ 4.77 | |
Common Stock | |||
Options Outstanding, Number of Shares [Roll Forward] | |||
Number of Shares, Options exercised (in shares) | (321) | (2,434) | (1,505) |
Weighted-Average Grant Date Fair Value | |||
Vested restricted stock units converted to shares (in shares) | 1,755 | 1,240 | 1,755 |
Share Repurchase Program, Sto55
Share Repurchase Program, Stock-Based Compensation and ESPP - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total stock-based compensation | $ 14,035 | $ 10,752 | $ 15,966 |
Cost of revenue | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total stock-based compensation | 1,335 | 1,484 | 2,666 |
Sales and marketing | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total stock-based compensation | 3,774 | 3,004 | 3,393 |
Research and development | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total stock-based compensation | 149 | 586 | 1,299 |
General and administrative | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total stock-based compensation | 8,425 | 5,678 | 6,029 |
Restructuring and other | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total stock-based compensation | $ 352 | $ 0 | $ 2,579 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Employee contribution of pre-tax salary percentage | 90.00% | ||
Maximum percentage of employee contributions matched | 50.00% | 50.00% | 50.00% |
Annual limit on company's matching contribution | $ 2,000 | $ 2,000 | $ 2,000 |
Employers' discretionary contribution, amount | $ 1,500,000 | $ 1,700,000 | $ 2,100,000 |
Minimum | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Eligible domestic employees attainable age | 21 years | ||
Hours of services eligible | 20 hours |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | Dec. 22, 2017 | Nov. 30, 2015 | Dec. 31, 2013 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2013 | Dec. 31, 2014 | Jan. 31, 2014 |
Operating Loss Carryforwards [Line Items] | |||||||||
Current Fiscal Year End Date | --12-31 | ||||||||
Federal statutory rate | 35.00% | ||||||||
Tax benefit | $ 1,647 | $ (3,429) | $ (1,584) | $ 200 | |||||
Deferred tax assets, valuation allowance | (82,923) | (111,935) | |||||||
Increase (decrease) in the valuation allowance | 29,000 | 24,300 | |||||||
Provisional tax benefit | $ 2,100 | ||||||||
Deferred tax balance | 37,000 | ||||||||
Decrease in valuation allowance | $ 39,100 | ||||||||
Unrecognized tax benefits | 932 | $ 926 | $ 937 | $ 948 | |||||
Foreign Tax Authority | |||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Net operating loss carryforwards | 10,400 | ||||||||
Domestic Tax Authority | |||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Net operating loss carryforwards | 249,600 | ||||||||
Domestic Tax Authority | Scout | |||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Net operating loss carryforwards | $ 30,200 | ||||||||
Domestic Tax Authority | Research And Development Tax Credit Carryforward | |||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Tax credits carryforward | 2,500 | ||||||||
State and Local Jurisdiction | |||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Net operating loss carryforwards | 416,500 | ||||||||
State and Local Jurisdiction | Research And Development Tax Credit Carryforward | |||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Tax credits carryforward | 3,700 | ||||||||
State and Local Jurisdiction | California Enterprise Zone Credits Expiring 2024 | |||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Tax credits carryforward | 500 | ||||||||
State and Local Jurisdiction | Other Tax Credit Carryforward | |||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Tax credits carryforward | $ 1,600 | ||||||||
Malaysia | Foreign Tax Authority | |||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Income tax holiday period | 10 years | ||||||||
Philippine Economic Zone Authority | Foreign Tax Authority | |||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Income tax holiday period | 4 years |
Income Taxes - Schedule of Loss
Income Taxes - Schedule of Loss from Continuing Operations Before Provision for Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||||||||||
U.S. | $ (28,463) | $ (32,499) | $ (40,720) | ||||||||
International | (3,030) | 3,802 | 1,711 | ||||||||
Loss before income taxes | $ (1,800) | $ (5,375) | $ (12,984) | $ (11,334) | $ (7,572) | $ (8,303) | $ (4,969) | $ (7,853) | $ (31,493) | $ (28,697) | $ (39,009) |
Income Taxes - Summary of Incom
Income Taxes - Summary of Income Tax Provision (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2013 | |
Current: | ||||
Federal | $ 94 | $ 279 | $ 0 | |
Foreign | 46 | 1,112 | 632 | |
State and local | 212 | 89 | (32) | |
Total current income tax provision | 352 | 1,480 | 600 | |
Deferred: | ||||
Federal | (1,645) | 129 | 160 | |
Foreign | (5) | (54) | 52 | |
State and local | (349) | 1,874 | 772 | |
Total deferred income tax provision (benefit) | (1,999) | 1,949 | 984 | |
Income tax provision (benefit) | $ (1,647) | $ 3,429 | $ 1,584 | $ (200) |
Income Taxes - Schedule of Reco
Income Taxes - Schedule of Reconciliation of Income Taxes Provided at Federal Statutory Rate to Income Tax Provision (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | ||||
U.S. income tax at federal statutory rate | $ (11,012) | $ (10,046) | $ (13,388) | |
State income taxes, net of federal benefit | (650) | (170) | 342 | |
Section 956 inclusion | 0 | 2,976 | 0 | |
Foreign tax rate differential | (21) | (882) | (85) | |
Share-based compensation | 1,748 | 5,038 | 0 | |
Permanent differences | 926 | 383 | 254 | |
Tax cuts and jobs act | 37,042 | 0 | 0 | |
Tax credits | (5) | (111) | (405) | |
Federal rate change | 0 | (1,954) | 0 | |
Return to provision | (407) | 1,068 | 0 | |
Adjustments to opening deferreds | 0 | 2,009 | 0 | |
Valuation allowance | (29,334) | 4,458 | 14,529 | |
Other, net | 66 | 660 | 337 | |
Income tax provision (benefit) | $ (1,647) | $ 3,429 | $ 1,584 | $ (200) |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effect of Temporary Differences that Created Deferred Income Taxes (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Accrued liabilities | $ 3,847 | $ 3,540 |
Share-based compensation expense | 3,904 | 4,961 |
Net operating loss carryforwards | 65,958 | 92,087 |
Tax credits | 6,860 | 5,676 |
Amortization of tax intangibles | 2,842 | 5,957 |
Investments | 0 | 1,774 |
Other, net | 355 | 351 |
Total deferred tax assets | 83,766 | 114,346 |
Deferred tax liabilities: | ||
Property and equipment | (811) | (3,607) |
Convertible debt costs | (263) | (1,041) |
Total deferred tax liabilities | (1,074) | (4,648) |
Net deferred tax assets | 82,692 | 109,698 |
Less: Valuation allowance | (82,923) | (111,935) |
Net deferred tax liabilities | $ (231) | $ (2,237) |
Income Taxes - Schedule of Re62
Income Taxes - Schedule of Reconciliation of the Beginning and Ending Amount of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Beginning balance | $ 926 | $ 937 | $ 948 |
Additions based on tax positions related to the current year | 1 | 24 | 62 |
Increase for tax positions of prior years | 5 | ||
Reductions for tax positions of prior years | (35) | (73) | |
Ending balance | $ 932 | $ 926 | $ 937 |
Geographical Information - Narr
Geographical Information - Narrative (Details) - Sales Revenue, Net | 12 Months Ended |
Dec. 31, 2017 | |
Geographic Concentration Risk | NALA | |
Segment Reporting Information [Line Items] | |
Concentration risk | 63.00% |
Geographic Concentration Risk | EMEA | |
Segment Reporting Information [Line Items] | |
Concentration risk | 26.00% |
Geographic Concentration Risk | APJ | |
Segment Reporting Information [Line Items] | |
Concentration risk | 11.00% |
Top Ten Clients | Customer Concentration Risk | |
Segment Reporting Information [Line Items] | |
Concentration risk | 66.00% |
Cisco | Customer Concentration Risk | |
Segment Reporting Information [Line Items] | |
Concentration risk | 15.00% |
VMWare | Customer Concentration Risk | |
Segment Reporting Information [Line Items] | |
Concentration risk | 12.00% |
Dell | Customer Concentration Risk | |
Segment Reporting Information [Line Items] | |
Concentration risk | 11.00% |
Geographical Information - Sche
Geographical Information - Schedule of Net Revenue by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||||||||||
Total net revenue | $ 66,024 | $ 58,132 | $ 58,262 | $ 56,708 | $ 68,654 | $ 62,514 | $ 61,969 | $ 59,750 | $ 239,127 | $ 252,887 | $ 252,203 |
NALA | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total net revenue | 151,015 | 163,371 | 166,511 | ||||||||
EMEA | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total net revenue | 60,941 | 62,479 | 59,708 | ||||||||
APJ | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total net revenue | $ 27,171 | $ 27,037 | $ 25,984 |
Geographical Information - Sc65
Geographical Information - Schedule of Long-Lived Assets by Geographic Location (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | $ 34,119 | $ 38,180 |
NALA | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 24,520 | 28,916 |
EMEA | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 2,189 | 2,297 |
APJ | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | $ 7,410 | $ 6,967 |
Restructuring and Other - Narra
Restructuring and Other - Narrative (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
May 31, 2017location | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Restructuring and Related Activities [Abstract] | ||||
Reduction in headcount and office space due to restructuring | location | 4 | |||
Restructuring and other charges | $ 7,308 | $ 0 | $ 3,662 | |
Future cash outlays related to these restructuring activities | $ 1,825 | $ 0 |
Restructuring and Other - Restr
Restructuring and Other - Restructuring and Other Reserve Activities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | $ 0 | ||
Restructuring and other charges | 7,308 | $ 0 | $ 3,662 |
Cash paid | (4,245) | ||
Non-cash impairment charges | (886) | ||
Acceleration of stock-based compensation expense in additional paid-in capital | (352) | ||
Ending Balance | 1,825 | 0 | |
Severance and Other Employee Costs | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 0 | ||
Restructuring and other charges | 3,483 | ||
Cash paid | (3,060) | ||
Non-cash impairment charges | 0 | ||
Acceleration of stock-based compensation expense in additional paid-in capital | (352) | ||
Ending Balance | 71 | 0 | |
Lease and Other Contract Termination Costs | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 0 | ||
Restructuring and other charges | 2,939 | ||
Cash paid | (1,185) | ||
Non-cash impairment charges | 0 | ||
Acceleration of stock-based compensation expense in additional paid-in capital | 0 | ||
Ending Balance | 1,754 | 0 | |
Asset Impairments | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 0 | ||
Restructuring and other charges | 886 | ||
Cash paid | 0 | ||
Non-cash impairment charges | (886) | ||
Acceleration of stock-based compensation expense in additional paid-in capital | 0 | ||
Ending Balance | $ 0 | $ 0 |
Selected Quarterly Financial 68
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Selected Quarterly Financial Information [Abstract] | |||||||||||
Net revenue | $ 66,024 | $ 58,132 | $ 58,262 | $ 56,708 | $ 68,654 | $ 62,514 | $ 61,969 | $ 59,750 | $ 239,127 | $ 252,887 | $ 252,203 |
Gross profit | 24,044 | 17,329 | 18,745 | 15,299 | 26,152 | 21,725 | 21,625 | 18,316 | 75,418 | 87,818 | 80,834 |
Income (loss) from operations | 531 | (4,636) | (10,338) | (9,264) | (2,168) | (3,712) | (3,269) | (6,344) | (23,707) | (15,493) | (29,693) |
Loss before income taxes | (1,800) | (5,375) | (12,984) | (11,334) | (7,572) | (8,303) | (4,969) | (7,853) | (31,493) | (28,697) | (39,009) |
Net loss | $ 74 | $ (5,195) | $ (13,101) | $ (11,624) | $ (8,496) | $ (9,271) | $ (5,218) | $ (9,141) | $ (29,846) | $ (32,126) | $ (40,593) |
Net loss per common share: | |||||||||||
Basic and diluted (in dollars per share) | $ 0 | $ (0.06) | $ (0.15) | $ (0.13) | $ (0.10) | $ (0.11) | $ (0.06) | $ (0.11) |