Cover
Cover - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Feb. 17, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2021 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 001-35108 | ||
Entity Registrant Name | SERVICESOURCE INTERNATIONAL, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 81-0578975 | ||
Entity Address, Address Line One | 707 17th Street, 25th Floor | ||
Entity Address, City or Town | Denver, | ||
Entity Address, State or Province | CO | ||
Entity Address, Postal Zip Code | 80202 | ||
City Area Code | 720 | ||
Local Phone Number | 889-8500 | ||
Title of 12(b) Security | Common Stock, $0.0001 Par Value | ||
Trading Symbol | SREV | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Small Business | true | ||
Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 107.3 | ||
Entity Common stock, shares outstanding | 99,112,032 | ||
Documents Incorporated by Reference | Portions of the registrant’s definitive proxy statement for its 2022 annual meeting of stockholders are incorporated by reference in Part III of this annual report on Form 10-K. Such proxy statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates. Except with respect to information specifically incorporated by reference in this Form 10-K, the proxy statement is not deemed to be filed as part of this Form 10-K. | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001310114 | ||
Current Fiscal Year End Date | --12-31 | ||
Auditor Name | Ernst & Young LLP | ||
Auditor Firm ID | 42 | ||
Auditor Location | Denver, Colorado |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 28,507 | $ 34,006 |
Accounts receivable, net | 43,571 | 38,890 |
Prepaid expenses and other | 8,995 | 9,275 |
Total current assets | 81,073 | 82,171 |
Property and equipment, net | 18,721 | 29,948 |
ROU assets | 23,043 | 29,798 |
Contract acquisition costs | 558 | 872 |
Goodwill | 6,334 | 6,334 |
Other assets | 2,719 | 3,490 |
Total assets | 132,448 | 152,613 |
Current liabilities: | ||
Accounts payable | 832 | 1,204 |
Accrued expenses | 4,152 | 3,217 |
Accrued compensation and benefits | 19,999 | 18,342 |
Revolver | 10,000 | 15,000 |
Operating lease liabilities | 8,614 | 10,797 |
Other current liabilities | 793 | 1,209 |
Total current liabilities | 44,390 | 49,769 |
Operating lease liabilities, net of current portion | 19,869 | 25,975 |
Other long-term liabilities | 1,155 | 1,593 |
Total liabilities | 65,414 | 77,337 |
Commitments and contingencies (Note 11) | ||
Stockholders' equity: | ||
Preferred stock, $0.0001 par value; 20,000 shares authorized and none issued and outstanding | ||
Common stock, $0.0001 par value; 1,000,000 shares authorized; 99,233 shares issued and 99,112 shares outstanding as of December 31, 2021; 97,248 shares issued and 97,127 shares outstanding as of December 31, 2020 | 10 | 10 |
Treasury stock | (441) | (441) |
Additional paid-in capital | 385,827 | 379,696 |
Accumulated deficit | (319,328) | (304,607) |
Accumulated other comprehensive income | 966 | 618 |
Total stockholders' equity | 67,034 | 75,276 |
Total liabilities and stockholders' equity | $ 132,448 | $ 152,613 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Consolidated Balance Sheets | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 20,000 | 20,000 |
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 | 1,000,000 |
Common stock, shares issued (in shares) | 99,233 | 97,248 |
Common stock, shares outstanding (in shares) | 99,112 | 97,127 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Consolidated Statements of Operations | ||
Net revenue | $ 195,704 | $ 194,601 |
Cost of revenue | 140,002 | 137,041 |
Gross profit | 55,702 | 57,560 |
Operating expenses: | ||
Sales and marketing | 17,056 | 24,999 |
Research and development | 5,183 | 5,602 |
General and administrative | 45,051 | 41,970 |
Restructuring and other related costs | 1,071 | 1,542 |
Total operating expenses | 68,361 | 74,113 |
Loss from operations | (12,659) | (16,553) |
Interest and other expense, net | (1,784) | (1,279) |
Loss before provision for income taxes | (14,443) | (17,832) |
Provision for income tax expense | (278) | (709) |
Net loss | $ (14,721) | $ (18,541) |
Net loss per common share: | ||
Basic (in dollars per share) | $ (0.15) | $ (0.19) |
Diluted (in dollars per share) | $ (0.15) | $ (0.19) |
Weighted-average common shares outstanding: | ||
Basic (in shares) | 98,050 | 95,787 |
Diluted (in shares) | 98,050 | 95,787 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Consolidated Statements of Comprehensive Loss | ||
Net loss | $ (14,721) | $ (18,541) |
Other comprehensive income: | ||
Foreign currency translation adjustments | 348 | 208 |
Other comprehensive income: | 348 | 208 |
Comprehensive loss | $ (14,373) | $ (18,333) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Common Stock | Treasury Shares/Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total |
Beginning balance (in shares) at Dec. 31, 2019 | 94,972 | (121) | ||||
Beginning balance at Dec. 31, 2019 | $ 9 | $ (441) | $ 374,525 | $ (286,066) | $ 410 | $ 88,437 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (18,541) | (18,541) | ||||
Other comprehensive income | 208 | 208 | ||||
Stock-based compensation | 4,919 | 4,919 | ||||
Issuance of common stock, RSUs (in shares) | 1,845 | |||||
Issuance of common stock, RSUs | $ 1 | (1) | ||||
Proceeds from the exercise of stock options and ESPP (in shares) | 431 | |||||
Proceeds from the exercise of stock options and ESPP | 414 | 414 | ||||
Net cash paid for payroll taxes on RSU releases | (161) | (161) | ||||
Ending balance (in shares) at Dec. 31, 2020 | 97,248 | (121) | ||||
Ending balance at Dec. 31, 2020 | $ 10 | $ (441) | 379,696 | (304,607) | 618 | 75,276 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (14,721) | (14,721) | ||||
Other comprehensive income | 348 | 348 | ||||
Stock-based compensation | 6,169 | 6,169 | ||||
Issuance of common stock, RSUs (in shares) | 1,812 | |||||
Proceeds from the exercise of stock options and ESPP (in shares) | 173 | |||||
Proceeds from the exercise of stock options and ESPP | 154 | 154 | ||||
Net cash paid for payroll taxes on RSU releases | (192) | (192) | ||||
Ending balance (in shares) at Dec. 31, 2021 | 99,233 | (121) | ||||
Ending balance at Dec. 31, 2021 | $ 10 | $ (441) | $ 385,827 | $ (319,328) | $ 966 | $ 67,034 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | ||
Net loss | $ (14,721) | $ (18,541) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 14,667 | 13,925 |
Amortization of contract acquisition costs | 541 | 1,003 |
Amortization of ROU assets | 9,399 | 9,841 |
Stock-based compensation | 6,127 | 4,865 |
Restructuring and other related costs | 1,007 | 1,460 |
Loss on disposal of fixed assets and other, net | 377 | |
Other | 51 | 71 |
Net changes in operating assets and liabilities: | ||
Accounts receivable, net | (4,983) | 3,232 |
Prepaid expenses and other assets | 420 | (82) |
Contract acquisition costs | (229) | (266) |
Accounts payable | (355) | (3,213) |
Accrued compensation and benefits | 1,092 | (97) |
Operating lease liabilities | (10,758) | (10,195) |
Accrued expenses | 1,193 | (107) |
Other liabilities | (223) | (1,495) |
Net cash provided by operating activities | 3,605 | 401 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (3,932) | (7,855) |
Net cash used in investing activities | (3,932) | (7,855) |
Cash flows from financing activities: | ||
Repayment on finance lease obligations | (608) | (952) |
Debt issuance costs | (97) | |
Proceeds from Revolver | 13,500 | 27,000 |
Repayment of Revolver | (18,500) | (12,000) |
Proceeds from issuance of common stock | 154 | 414 |
Payments related to minimum tax withholdings on RSU releases | (192) | (161) |
Net cash (used in) provided by financing activities | (5,743) | 14,301 |
Effect of exchange rate changes on cash and cash equivalents and restricted cash | 545 | 96 |
Net change in cash and cash equivalents and restricted cash | (5,525) | 6,943 |
Cash and cash equivalents and restricted cash, beginning of period | 36,326 | 29,383 |
Cash and cash equivalents and restricted cash, end of period | 30,801 | 36,326 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 386 | 517 |
Income taxes paid, net | 690 | 448 |
Supplemental disclosures of non-cash activities: | ||
Purchases of property and equipment accrued in accounts payable and accrued expenses | 23 | 8 |
ROU assets obtained in exchange for new lease liabilities | $ 3,507 | $ 2,271 |
The Company
The Company | 12 Months Ended |
Dec. 31, 2021 | |
The Company | |
The Company | Note 1 — The Company ServiceSource is a leading provider of BPaaS solutions that enable the transformation of go-to-market organizations and functions for global technology clients. We design, deploy, and operate a suite of innovative solutions and complex processes that support and augment our clients’ B2B customer acquisition, engagement, expansion and retention activities. Our clients – ranging from Fortune 500 technology titans to high-growth disruptors and innovators – rely on our holistic customer engagement methodology and process excellence, global scale and delivery footprint, and data analytics and business insights to deliver trusted business outcomes that have a meaningful and material positive impact to their long-term revenue and profitability objectives. Through our unique integration of people, process and technology – leveraged against our more than 20 years of experience and domain expertise in the cloud, software, hardware, medical device and diagnostic equipment, and industrial IoT sectors – we effect and transact billions of dollars of B2B commerce in more than 175 countries on our clients’ behalf annually. “ServiceSource,” “the Company,” “we,” “us,” or “our”, as used herein, refer to ServiceSource International, Inc. and its wholly owned subsidiaries, unless the context indicates otherwise. For a summary of commonly used industry terms and abbreviations used in this annual report on Form 10-K, see the Glossary of Terms. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2 — Summary of Significant Accounting Policies Basis of Presentation The accompanying Consolidated Financial Statements include the accounts of ServiceSource International, Inc. and its wholly owned subsidiaries and have been prepared in accordance with GAAP and with the instructions to Form 10-K. All intercompany balances and transactions have been eliminated in consolidation. 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. Use of Estimates The preparation of the Consolidated Financial Statements in accordance with 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 bases its estimates and judgments on historical experience and on various assumptions that it believes are reasonable under the circumstances. The Company has considered the effects of the COVID-19 pandemic in determining its estimates. However, future events are difficult to predict and subject to change, especially with the risks and uncertainties related to the impact of the COVID-19 pandemic, which could cause estimates and judgments to require adjustment. Actual results and outcomes may differ from our estimates. Significant Risks and Uncertainties Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company is also exposed to 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. 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: 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 and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses and other current liabilities approximate their fair value due to their short-term maturities. Cash Equivalents and Restricted Cash Cash equivalents consist of highly liquid investments with original maturities of three months or less at the time of purchase and are classified as a Level 1 investment. Restricted cash consists of cash in money market accounts that are used to secure letters of credit in connection with two of our leased facilities. Restricted cash is recorded within “Prepaid expenses and other” and “Other assets” in the Consolidated Balance Sheets and is classified as a Level 1 investment. The Company had restricted cash of $2.3 million as of December 31, 2021 and 2020. 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. For non-U.S. subsidiaries whose functional currency is the U.S. dollar, transactions that are denominated in foreign currencies are remeasured in U.S. dollars, and any resulting gains and losses are reported in “Interest and other expense, net” in the Consolidated Statements of Operations. Foreign currency transaction losses were approximately $1.0 million and $0.9 million for the years ended December 31, 2021 and 2020, respectively. Accounts Receivable and Allowance for Doubtful Accounts 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. Accounts receivable are stated at their carrying values net of an allowance for doubtful accounts, if applicable. 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 allowance for doubtful accounts as of December 31, 2021 and 2020, and recoveries and reductions to revenue for the years ended December 31, 2021 and 2020, were insignificant. 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 life for each asset class. Depreciation for leasehold improvements is recorded using the straight-line method over the lesser of the estimated useful life or life of the lease. When assets are disposed, the cost and related accumulated depreciation and amortization are written-off and any gain or loss on sale or disposal is reported in “General and administrative” expense in the Consolidated Statements of Operations. Lease Asset Retirement Obligations The fair value of a liability for an ARO is recognized in the period in which it is incurred. The Company’s AROs are associated with leasehold improvements at our international office locations, which, at the end of a lease, are contractually obligated to be removed. AROs were approximately $1.0 million and $1.5 million as of December 31, 2021 and 2020, respectively. Approximately $0.5 million of liabilities were settled as of December 31, 2021. Accretion expense was insignificant for the years ended December 31, 2021 and 2020. Capitalized Internal-Use Software Expenditures related to software developed or obtained for internal use are capitalized and amortized over a period of two Goodwill Impairment Goodwill represents the excess of the purchase price over the estimated fair market value of net identifiable assets of acquired businesses. The Company evaluates goodwill for possible impairment at least annually or whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. This evaluation includes an assessment of qualitative factors to determine whether it is necessary to compare the fair value of the reporting unit with its carrying value. If there are indicators of impairment, the fair value of the reporting unit is compared to its carrying value. If the carrying value of the reporting unit exceeds its fair value, an impairment loss equal to the difference is recorded. The carrying value of goodwill for the years ended December 31, 2021 and 2020 was $6.3 million. No impairment was recorded for the years ended December 31, 2021 and 2020. Impairment of Long-Lived 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, 2021 and 2020. Comprehensive Loss We report comprehensive loss in our Consolidated Statements of Comprehensive Loss. Amounts reported in “Accumulated other comprehensive income” consist of foreign currency translation adjustments from subsidiaries with a functional currency other than the U.S. dollar. Revenue Recognition The Company provides a comprehensive suite of selling and professional services to its clients. Selling services consists of sales earned from the following categories of selling motions: ● Digital sales activities include demand qualification, demand conversion, and account management; ● Customer success and renewals activities include onboarding, adoption, and renewals management; and ● Channel management efforts include partner onboarding, partner enablement, and partner success management. Professional services involve providing data integration at scale with our systems and processes, combined with client data enhancement, enablement and optimization. The Company derives all of its revenue from contracts with clients. Revenue is measured based on the consideration specified in a contract. The Company’s contracts generally contain one to two distinct performance obligations that are sold on a variable and/or fixed consideration basis. These two distinct performance obligations are identified as selling services and professional services. Selling services are generally invoiced on a monthly or quarterly basis with standard 30-day payment terms over the length of the contract, typically one to three years . Professional services are generally invoiced upfront upon obtaining a client contract and are typically fulfilled within 90 days . The Company recognizes revenue when it satisfies the performance obligations identified in the contract, which is achieved through the transfer of control of the services to the client. The timing of satisfying performance obligations and the receipt of client consideration can be different and will give rise to contract assets and contract liabilities. Contract assets relate to the Company’s conditional rights to consideration for services provided but not yet billable at the reporting date. Accounts receivable balances reflected in the Consolidated Balance Sheet represent the Company’s unconditional rights to consideration for services provided. Contract asset amounts are transferred to accounts receivables when the rights become unconditional, typically in the same period control of services is transferred to the client and the amount is contractually billable. Contract liabilities primarily relate to the advance consideration received from clients for fixed consideration contracts where transfer of control of the services has not yet occurred. Contract liability balances generally convert to revenue upon either the satisfaction of professional services obligations or when services under fixed consideration contracts are transferred to the client, typically within six months of being recorded. These contract balances are reflected in "Prepaid expenses and other", "Other assets" and "Other current liabilities" in the Consolidated Balance Sheets. The Company accounts for individual services within a single contract separately if they are distinct. A service is distinct if it is separately identifiable from other services in the contract and if a client can benefit from the service on its own or with other resources that are readily available to the client. Determining whether these services are considered distinct performance obligations and qualify as a series of distinct performance obligations that represent a single performance obligation requires significant judgment. The total contract consideration, or transaction price, is allocated between the separate services identified in the contract based on their SSP. SSP is determined based on a cost-plus margin analysis for selling services and a standard hourly rate card for professional services. For professional services that are contractually priced differently from SSP, the Company estimates the SSP using a standard hourly rate card and allocates a portion of the total contract consideration to reflect professional services revenue at SSP. The Company’s performance obligations are satisfied over time and revenue is recognized based on monthly or quarterly time increments and the variable volume of closed bookings during the period at the contractual commission rates for selling services, or proportional performance during the period at SSP for professional services. Due to the continuous nature of providing services to our clients, judgment is required in determining when control of the services is transferred to the client. Because the client simultaneously receives and consumes the benefit of the Company’s selling and professional services as provided, the time increment output method depicts the measure of progress in transferring control of the services to the client. A significant portion of the Company’s contracts is based on a pay-for-performance model in which commission revenue is based on a volume of closed bookings each time period, which is recorded as a component of “Net revenue” in the Consolidated Statements of Operations. At each reporting period, the Company makes an estimate of this revenue for amounts that have yet to be invoiced, which was $15.8 million and $16.3 million as of December 31, 2021 and 2020, respectively. These accrued revenue balances are reflected in "Accounts Receivable” in the Consolidated Balance Sheets. While multiple selling motions in a contract are performed at various times and patterns throughout the month or quarter and the number of closed bookings vary in any given period, each time increment of a service activity is substantially the same and has the same pattern of transfer to the client, and therefore, represents a series of distinct performance obligations that form a single performance obligation. As a result, the Company allocates all variable consideration in a contract to the selling services performance obligation in accordance with the variable consideration allocation exception provisions in ASC 606, (less amounts for which it is probable a significant reversal of revenue will occur when the uncertainties related to the variability are resolved) and applies a single measure of progress to record revenue in the period based on when the output of the variable number of closed bookings occurs or when the variable performance metric is achieved. Judgment is required to estimate the amount of variable consideration to include when estimating the total contract consideration and how to allocate the consideration if one of the distinct performance obligations is not sold at SSP. In addition, judgment is required to determine if the variable consideration should be constrained, and to what extent, until the risk of a significant revenue reversal is not probable. The Company applies the optional disclosure exemptions related to variable consideration and the requirement to disclose the remaining transaction price allocated to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation. Significant estimates and judgments for revenue recognition include: (1) identifying and determining distinct performance obligations in contracts with clients, (2) determining the timing of the satisfaction of performance obligations, (3) estimating the timing and amount of variable consideration in a contract, (4) determining SSP for each performance obligations and the methodology to allocate the total contract consideration to the distinct performance obligations, and (5) determining and measuring variable revenue that has yet to be invoiced as of period end. Our revenue contracts often include promises to transfer services involving multiple selling motions to a client. Determining whether those services are considered distinct and qualify as a series of distinct services that represent a single performance obligation requires significant judgment. Also, due to the continuous nature of providing services to our clients, judgment is required in determining when control of the services is transferred to the client. We also enter into contracts with multiple performance obligations that incorporate fixed consideration, pay-for-performance commissions and variable bonus commissions. Judgment is required to estimate the amount of variable consideration to include when estimating the total contract consideration and how to allocate the consideration if one of the distinct performance obligations is not sold at SSP. Contract Acquisition Costs To obtain contracts with clients, the Company pays its sales team commissions partly based on the estimated value of the contract. Because these sales commissions are incurred and paid upon contract execution and would not have been incurred or payable otherwise, they are considered incremental costs to acquire the contract; and if recoverable, are capitalized as contract acquisition costs in the period the contract is executed. Capitalized sales commissions are amortized to “Sales and marketing" expense in the Consolidated Statements of Operations based on the transfer of services over the contract term, generally one Advertising Costs Advertising costs are expensed as incurred and are reported in "Sales and marketing" in the Consolidated Statements of Operations. Advertising costs was $0.2 million for the year ended December 31, 2021 and insignificant for the year ended December 31, 2020. Stock-Based Compensation The Company issues stock-based awards to employees and directors. The Company previously offered an ESPP until it expired in February 2021. 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 three RSUs 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. RSUs generally vest ratably over three years with vesting contingent upon employment of the Company. PSUs are stock-based awards in which the number of shares ultimately received by the employee varies depending on the Company’s achievement of specified targets. PSU expense is based on a fixed grant date fair value and adjusted based on the estimated achievement of the performance metrics and recognized on a straight-line basis over the vesting 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 fair value of stock options and purchase rights under the ESPP was determined by the Company using the methods and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment to determine. Expected Term - Expected Volatility - Risk-Free Interest Rate - Expected Dividend Yield - See "Note 7 — Stock-Based Compensation" for additional information. 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. Net Loss Per Common Share Basic net income (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income 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 ESPP, non-vested RSUs and PSUs. 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 income per share because they are anti-dilutive for the periods presented consist of stock options, non-vested RSUs and PSUs, and shares to be purchased under our ESPP. The Company excluded from diluted earnings per share the weighted-average common share equivalents related to 1.7 million and 3.3 million shares for the years ended December 31, 2021 and 2020, respectively, because their effect would have been anti-dilutive. Government Assistance During 2020, ServiceSource received various grants from the Singapore government, including the Job Support Scheme, which assists enterprises in retaining their local employees during the COVID-19 pandemic. ServiceSource received and recognized income related to the grants of $0.3 million and $1.3 million for the years ended December 31, 2021 and 2020, respectively. There are no conditions to repay the grants. The Company does not expect to receive additional income related to these grants. Government grants are primarily recognized within “Cost of revenue” expense in the Company’s Consolidated Statements of Operations during the same period that the expenses related to the grant are incurred if there is reasonable assurance the grant will be received, and the Company has complied with any conditions attached to the grant. New Accounting Standards Issued but Not Yet Adopted Financial Instruments - Credit Losses In June 2016, the FASB issued an ASU that amends the measurement of credit losses on financial instruments and requires measurement and recognition of expected versus incurred credit losses for financial assets held. This ASU is effective for annual periods and interim periods for those annual periods beginning after December 15, 2022, with early adoption permitted. This standard will apply to the Company’s accounts receivable and contract assets. Based on our current analysis, the Company does not expect the adoption to have material impact on the Consolidated Financial Statements as credit losses from trade receivables have historically been insignificant. The Company expects to adopt this standard effective January 1, 2023. New Accounting Standards Adopted Income Taxes In December 2019, the FASB issued an ASU that simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This ASU is effective for annual periods and interim periods for those annual periods beginning after December 15, 2020, with early adoption permitted. The Company adopted this standard effective January 1, 2021. The adoption of this standard did not have an impact on the Company’s Consolidated Financial Statements. Government Assistance In November 2021, the FASB issued an ASU which requires and clarifies disclosures of government assistance received by business entities. This ASU is effective for annual periods beginning after December 15, 2021, with early adoption permitted. The Company adopted this standard retrospectively effective December 1, 2021. The adoption of this standard did not have an impact on the Company’s Consolidated Financial Statements. |
Consolidated Financial Statemen
Consolidated Financial Statement Details | 12 Months Ended |
Dec. 31, 2021 | |
Consolidated Financial Statement Details | |
Consolidated Financial Statement Details | Note 3 — Consolidated Financial Statement Details Property and equipment, net is comprised of the following: December 31, Depreciable Life 2021 2020 (in thousands) Computers and equipment 2 - 5 years $ 17,949 $ 17,904 Software (1) 2 - 7 years 45,683 60,771 Furniture and fixtures 2 - 7 years 8,766 10,727 Leasehold improvements Lesser of estimated useful life or life of lease 14,890 17,823 Finance leases 2,861 2,880 Property and equipment 90,149 110,105 Less: accumulated depreciation and amortization (71,428) (80,157) Property and equipment, net $ 18,721 $ 29,948 (1) Balance as of January 1, 2020 $ 19,417 Capitalized costs 5,076 Amortization expense (7,701) Balance as of December 31, 2020 16,792 Capitalized costs 2,864 Amortization expense (9,510) Balance as of December 31, 2021 $ 10,146 Depreciation and amortization expense related to property and equipment, which includes amortization expense for internally developed software and finance leases, was $14.7 million and $13.9 million during the years ended December 31, 2021 and 2020, respectively. The following table presents long-lived assets by geographic location: December 31, 2021 2020 (in thousands) NALA $ 15,947 $ 24,420 APJ 2,137 4,456 EMEA 637 1,072 Property and equipment, net $ 18,721 $ 29,948 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2021 | |
Debt | |
Debt | Note 4 — Debt Revolving Line of Credit In July 2018, ServiceSource, together with its wholly owned subsidiary, ServiceSource Delaware, Inc., entered into the 2018 Credit Agreement, providing for a $40.0 million revolving line of credit allowing each borrower to borrow against its domestic receivables as defined in the 2018 Credit Agreement. The Revolver in the 2018 Credit Agreement was scheduled to mature in July 2021 and was repaid in full in connection with the Company’s entry into the 2021 Credit Agreement. In July 2021, ServiceSource, together with its wholly owned subsidiary, ServiceSource Delaware, Inc., entered into the 2021 Credit Agreement, which provides for a $35.0 million revolving line of credit allowing each borrower to borrow against its receivables subject to the terms and conditions set forth in the 2021 Credit Agreement. At the Company’s request and subject to customary conditions, the aggregate commitments under the 2021 Credit Agreement may be increased up to an additional $10.0 million, for a total maximum commitment amount of $45.0 million. The Revolver in the 2021 Credit Agreement matures in July 2024 and bears interest at a rate equal to BSBY plus 2.00% to 2.50% per annum or, at our election, an alternate base rate plus 1.00% to 1.50% per annum. As of December 31, 2021, the Company had $10.0 million of borrowings under the Revolver in the 2021 Credit Agreement through a three-month BSBY borrowing at an effective interest rate of 2.40% maturing February 2022. An additional $18.0 million was available for borrowing under the Revolver as of December 31, 2021. The BSBY borrowings may be extended upon maturity, converted into a base rate borrowing upon maturity or require an incremental payment if the borrowing base decreases below the current amount outstanding during the term of the BSBY borrowing. The obligations under the 2021 Credit Agreement are secured by substantially all assets of ServiceSource and certain of its subsidiaries, including pledges of equity in certain of the Company’s subsidiaries. The 2021 Credit Agreement has financial covenants that the Company was in compliance with as of December 31, 2021. Subsequent to December 31, 2021, the $10.0 million BSBY borrowing was extended for a six-month term at an effective interest rate of 3.04% maturing August 2022. Interest Expense Unamortized debt issuance costs related to the 2021 Revolver was $0.1 million as of December 31, 2021. Interest expense related to the amortization of debt issuance costs and interest expense associated with the Company’s debt obligation was $0.4 million and $0.5 million for the years ended December 31, 2021 and 2020, respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2021 | |
Leases | |
Leases | Note 5 — Leases The Company has operating leases for office space and finance leases for certain equipment under non-cancelable agreements with various expiration dates through May 2030. Certain office leases include the option to extend the term between one During 2021, the Company extended its agreement to sublease one floor of office space at one of its locations in Manila, Philippines to a third-party through the end of the original lease term in September 2023, entered into an agreement to sublease two floors of office space at a second location in Manila, Philippines to a third-party through the end of the original lease term in December 2021, extended its lease for reduced office space at its location in Yokohama, Japan through May 2024, and extended its lease for reduced office space at its location in Manila, Philippines through December 2026. The Company recognizes rent expense and sublease income on a straight-line basis over the lease period and accrues for rent expense and sublease income incurred but not paid. Supplemental income statement information related to leases was as follows: For the Year Ended December 31, 2021 2020 (in thousands) Operating lease cost $ 11,346 $ 12,264 Finance lease cost: Amortization of leased assets 442 744 Interest on lease liabilities 25 88 Total finance lease cost 467 832 Sublease income (4,903) (3,599) Net lease cost $ 6,910 $ 9,497 Supplemental balance sheet information related to leases was as follows: December 31, 2021 2020 (in thousands) Operating leases: ROU assets $ 23,043 $ 29,798 Operating lease liabilities $ 8,614 $ 10,797 Operating lease liabilities, net of current portion 19,869 25,975 Total operating lease liabilities $ 28,483 $ 36,772 Finance leases: Property and equipment $ 2,861 $ 2,880 Accumulated depreciation (2,397) (1,963) Property and equipment, net $ 464 $ 917 Other current liabilities $ 63 $ 608 Other long-term liabilities — 63 Total finance lease liabilities $ 63 $ 671 Lease term and discount rate information was as follows: For the Year Ended December 31, 2021 2020 Weighted-average remaining lease term (in years): Operating lease 5.7 5.7 Finance lease 0.1 1.0 Weighted-average discount rate: Operating lease 6.0 % 6.2 % Finance lease 6.5 % 6.5 % Maturities of lease liabilities were as follows as of December 31, 2021: Operating Leases Operating Sublease Finance Leases Total (in thousands) 2022 $ 10,030 $ (3,588) $ 64 $ 6,506 2023 4,952 (1,410) — 3,542 2024 3,579 — — 3,579 2025 3,563 — — 3,563 2026 3,329 — — 3,329 Thereafter 8,468 — — 8,468 Total lease payments 33,921 (4,998) 64 28,987 Less: interest (5,438) — (1) (5,439) Total $ 28,483 $ (4,998) $ 63 $ 23,548 |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2021 | |
Revenue Recognition | |
Revenue Recognition | Note 6 — Revenue Recognition The following tables present the disaggregation of revenue from contracts with our clients: Revenue by Performance Obligation For the Year Ended December 31, 2021 2020 (in thousands) Selling services $ 192,525 $ 190,906 Professional services 3,179 3,695 Total revenue $ 195,704 $ 194,601 Revenue by Geography Revenue for each 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 the service contracts sold and managed by the revenue delivery centers relate to end customers located in the same geography. All NALA revenue represents revenue generated within the U.S. For the Year Ended December 31, 2021 2020 (in thousands) NALA $ 107,326 $ 111,085 EMEA 58,189 54,975 APJ 30,189 28,541 Total revenue $ 195,704 $ 194,601 Revenue by Contract Pricing For the Year Ended December 31, 2021 2020 (in thousands) Variable consideration $ 141,529 $ 142,355 Fixed consideration 54,175 52,246 Total revenue $ 195,704 $ 194,601 Four of our clients represented 16%, 16%, 15% and 12% of our revenue, respectively, for the year ended December 31, 2021. Contract Assets and Liabilities As of December 31, 2021, contract liabilities were $0.5 million. As of December 31, 2020, contract assets and liabilities were $0.5 million and $0.4 million, respectively. Transaction Price Allocated to Remaining Performance Obligations As of December 31, 2021, assuming none of the Company’s current contracts with fixed consideration are renewed, the Company estimates receiving approximately $36.6 million in future selling services fixed consideration and approximately $0.7 million in professional services fixed consideration. Contract Acquisition Costs As of December 31, 2021 and 2020, capitalized contract acquisition costs were $0.6 million and $0.9 million, respectively. The Company recorded amortization expense related to capitalized contract acquisition costs of $0.5 million and $0.8 million for the years ended December 31, 2021 and 2020, respectively. Impairment recognized on contract costs was insignificant for the years ended December 31, 2021 and 2020. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2021 | |
Stock-Based Compensation | |
Stock-Based Compensation | Note 7 — Stock-Based Compensation 2020 Equity Incentive Plan The 2020 Plan was approved by the Company’s stockholders on May 14, 2020 and expires March 4, 2025. The 2020 Plan provides for the Company’s common stock to be issued pursuant to permitted awards, which include, but are not limited to, options, stock appreciation rights, restricted stock units, performance stock units and other cash and stock-based awards. As of December 31, 2021, 8.5 million shares were available for grant under the 2020 Plan. On May 14, 2020, following the approval of the 2020 Plan, the Company’s board of directors terminated the 2011 Plan with the effect that no additional awards may be issued under the 2011 Plan and all outstanding awards under the 2011 Plan shall continue and be unaffected by the termination of the 2011 Plan. 2021 PSU Awards During March 2021, the Company granted PSUs under the 2020 Plan to certain executives in which the number of shares ultimately received depends on the Company’s achievement of two performance goals for fiscal year 2021 and a rTSR modifier based on the Company’s rTSR for fiscal years 2021, 2022, and 2023 compared to a peer group. The aggregate target number of shares subject to these awards is 0.8 million. The awards were valued on the grant date using a Monte Carlo simulation for the rTSR modifier and using the Company’s closing stock price for the performance metrics for an aggregate grant date fair value of $1.2 million. The number of shares ultimately received related to these awards will range from 0% to 173% of the participant’s target award and will vest on the third anniversary of the grant date. The Company’s expense will be recognized over the service period and adjusted based on estimated achievement of the performance goals. Additionally, certain of the Company’s senior leaders elected to receive a portion of their annual cash corporate incentive plan in PSUs. The Company granted the PSUs under the 2020 Plan during March 2021. The number of shares ultimately received depends on the Company’s achievement of specified revenue, Adjusted EBITDA, and free cash flow performance goals for fiscal year 2021. The aggregate target number of shares subject to these awards is 0.4 million. The awards were valued using the Company’s closing stock price on the grant date and had an aggregate grant date fair value of $0.6 million. The number of shares ultimately received related to these awards ranges from 0% to 200% of the participant’s target award and will vest on the first anniversary of the grant date. The Company’s expense will be recognized over the service period and adjusted based on estimated achievement of the performance targets. 2020 PSU Awards During May 2020 and prior to expiration of the 2011 Plan, the Company granted PSUs to certain executives under the 2011 Plan. The aggregate target number of shares outstanding as of December 31, 2020 subject to these awards is 0.7 million, with an aggregate grant date fair value of $0.9 million. The number of shares ultimately received related to these awards ranges from 0% to 150% of the executive's target award depending on the Company's achievement of specified Adjusted EBITDA and net bookings targets over a two-year performance period and will vest on the third anniversary of the grant date. Stock-Based Compensation Expense The following table presents stock-based compensation expense as allocated within the Company’s Consolidated Statements of Operations: For the Year Ended December 31, 2021 2020 (in thousands) Cost of revenue $ 512 $ 389 Sales and marketing 1,236 1,416 Research and development 74 57 General and administrative 4,305 3,003 Total stock-based compensation $ 6,127 $ 4,865 The above table does not include capitalized stock-based compensation related to internal-use software that was insignificant for the years ended December 31, 2021 and 2020. Fair Value of Equity Compensation The Black-Scholes option-pricing model assumptions for stock options were as follows: 2020 Expected term (in years) 5.0 Expected volatility 56% Risk-free interest rate 0.75% Expected dividend yield —% Weighted-average grant date fair value $0.63 The Black-Scholes option-pricing model assumptions for purchase rights under the ESPP were as follows: 2020 Expected term (in years) 0.5 - 1.0 Expected volatility 53% - 60% Risk-free interest rate 0.12% - 1.52% Expected dividend yield —% Stock Awards A summary of the Company’s stock option activity and related information was as follows: Weighted- Weighted- Average Average Remaining Exercise Contractual Shares Price Life (Years) Intrinsic Value (in thousands) (in thousands) Outstanding as of December 31, 2020 3,030 $ 2.09 $ 1,372 Exercised (292) $ 1.16 Expired and/or forfeited (862) $ 2.22 Outstanding as of December 31, 2021 1,876 $ 2.18 6.11 $ 16 Exercisable as of December 31, 2021 1,782 $ 2.24 6.03 $ 11 For the Year Ended December 31, 2021 2020 (in thousands) Fair value of options vested $ 96 $ 733 Intrinsic value of options exercised $ 127 $ 46 As of December 31, 2021, there was $0.04 million of unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 0.9 years. A summary of the Company’s RSU and PSU activity and related information was as follows: Weighted- Average Grant Units Date Fair Value (in thousands) Non-vested as of December 31, 2020 7,015 $ 1.55 Granted 4,831 $ 1.51 Vested (1) (1,950) $ 1.64 Forfeited (1,665) $ 1.60 Non-vested as of December 31, 2021 8,231 $ 1.49 (1) For the Year Ended December 31, 2021 2020 (in thousands) Fair value of RSUs and PSUs vested $ 2,837 $ 2,940 As of December 31, 2021, there was $6.5 million of unrecognized compensation expense related to RSUs and PSUs, which is expected to be recognized over a weighted-average period of 1.7 years. |
Restructuring and Other Related
Restructuring and Other Related Costs | 12 Months Ended |
Dec. 31, 2021 | |
Restructuring and Other Related Costs | |
Restructuring and Other Related Costs | Note 8 — Restructuring and Other Related Costs The Company has undergone restructuring efforts to better align its cost structure with its business and market conditions. These restructuring efforts include severance and other employee costs, lease and other contract termination costs and asset impairments. Severance and other employee costs include severance payments, related employee benefits, stock-based compensation related to the accelerated vesting of certain equity awards 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 restructuring plans and future cash outlays are recorded in "Accrued expenses," "Accrued compensation and benefits," and "Other long-term liabilities" in the Consolidated Balance Sheets as of December 31, 2020. There are no future restructuring plans and future cash outlays as of December 31, 2021. During 2020, the Company announced a restructuring effort to align with its virtual-first operating model and reduce the operating cost structure resulting in a reduction of headcount and office lease costs. The Company recognized charges related to this restructuring effort of $1.1 million and $0.8 million for the years ended December 31, 2021 and 2020, respectively. The Company does not expect to incur additional charges related to this restructuring effort as of December 31, 2021. The following table presents a reconciliation of the beginning and ending fair value liability balance related to the 2020 restructuring effort: Severance and Other Lease Termination Employee Costs Costs Total (in thousands) Balance as of January 1, 2020 $ — $ — $ — Restructuring and other related costs 780 59 839 Cash paid (442) — (442) Balance as of December 31, 2020 338 59 397 Restructuring and other related costs 897 174 1,071 Cash paid (1,235) (233) (1,468) Balance as of December 31, 2021 $ — $ — $ — |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Taxes | |
Income Taxes | Note 9 — Income Taxes Loss from continuing operations before provision for income taxes for the Company’s domestic and international operations was as follows: For the Year Ended December 31, 2021 2020 (in thousands) U.S. $ (12,150) $ (18,278) International (2,293) 446 Loss before provision for income taxes $ (14,443) $ (17,832) The income tax provision consisted of the following: For the Year Ended December 31, 2021 2020 (in thousands) Current: Federal $ 43 $ 121 Foreign 216 559 State and local 57 43 Total current income tax provision 316 723 Deferred: Federal (16) (13) Foreign (21) 7 State and local (1) (8) Total deferred income tax provision (38) (14) Income tax provision $ 278 $ 709 The following table provides a reconciliation of income taxes provided at the federal statutory rate of 21% for the years ended December 31, 2021 and 2020 to the income tax provision: For the Year Ended December 31, 2021 2020 (in thousands) U.S. income tax at federal statutory rate $ (3,032) $ (3,745) State income taxes, net of federal benefit (344) (1,575) Share-based compensation 409 277 Foreign tax rate differential 147 (1,749) Permanent differences (270) 3,355 Tax law change (256) — Valuation allowance 3,456 3,756 Other, net 168 390 Income tax provision $ 278 $ 709 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 and was initially set to expire on December 31, 2019. The Company applied for a one-year tax holiday extension and received notice during the year ended December 31, 2021 that the full exclusion for the year ended December 31, 2020 was granted. As the extension was not received before December 31, 2020 the tax expense accrued in 2020 was reversed in 2021. 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. The earnings per share benefit in 2021 and 2020 was not material. The following table provides the effect of temporary differences that created deferred income taxes as of December 31, 2021 and 2020. 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: December 31, 2021 2020 (in thousands) Deferred tax assets: Accrued liabilities $ 4,284 $ 5,710 Share-based compensation 1,188 864 Net operating loss carryforwards 87,431 84,450 Tax credits 7,527 7,310 Interest 265 187 Total deferred tax assets 100,695 98,521 Deferred tax liabilities: Property and equipment (2,254) (3,423) ROU assets (2,509) (3,704) Amortization of tax intangibles (1,577) (232) Other, net (247) (533) Total deferred tax liabilities (6,587) (7,892) Net deferred tax assets 94,108 90,629 Less: valuation allowance (94,341) (90,899) Net deferred tax liabilities $ (233) $ (270) As of December 31, 2021 and 2020, 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 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 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, 2021. Accordingly, a valuation allowance of $94.3 million has been recorded to offset this deferred tax asset. The valuation allowance increased $3.4 million for the year ended December 31, 2021 and decreased $3.8 million for the year ended December 31, 2020. The Company also maintains a deferred tax liability related to indefinite lived intangible assets in jurisdictions which the Company does not have indefinite lived deferred tax assets, as reversal of the taxable temporary difference cannot serve as a source of income for realization of the non-indefinite deferred tax assets, because the deferred tax liability will not reverse until the asset is sold or written down due to impairment. Deferred income taxes have not been provided for undistributed earnings of the Company’s consolidated foreign subsidiaries because the Parent entity is not required to include the distribution into income as the amount is tax free. As of December 31, 2021 and 2020, the Company had $0.5 million in withholding taxes accrued in long term payables for taxes that will be required when earnings are repatriated. The Tax Cuts and Jobs Act subjects a U.S. shareholder to tax on GILTI earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740 No. 5. Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. We have elected to account for GILTI in the year the tax is incurred. Operating Loss and Tax Credit Carryforwards As of December 31, 2021, the Company had $2.7 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. As of December 31, 2021, the Company had net operating loss carryforwards of approximately $325.4 million for federal income tax purposes of which $68.6 million can be carried forward indefinitely and the remaining $256.8 million will expire at various dates beginning in 2024. The Company has $234.7 million in state net operating losses. These losses are available to reduce taxable income and expire at various dates beginning in 2021. The Company also has foreign net operating loss carryforwards of approximately $26.8 million of which $26.5 million is indefinitely available to reduce taxable income and will expire in 2025. 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 IRC 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’s 2017 through 2021 tax years generally remain subject to examination by federal, state, and foreign tax authorities. As the Company has incurred losses in most jurisdictions, the taxing authorities can generally challenge 2006 through 2016 losses to determine either the amount of the carryforward deduction reported in the open year or the amount of a net operating loss deduction that is absorbed in a closed year and supports the determination of the available net operating loss deduction for the open year under examination. Uncertain Tax Positions A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): Balance as of January 1, 2020 $ 964 Additions based on tax positions related to the current year 12 Reductions for tax positions of prior years (11) Balance as of December 31, 2020 965 Additions based on tax positions related to the current year — Reductions for tax positions of prior years (11) Balance as of December 31, 2021 $ 954 As of December 31, 2021, the Company had a liability for unrecognized tax benefits of $1.0 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 years ended December 31, 2021 and 2020, interest and penalties recognized were insignificant. |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2021 | |
Employee Benefit Plan | |
Employee Benefit Plan | Note 10 — Employee Benefit Plan The Company maintains a 401(k) defined contribution plan that covers eligible employees. Employer matching contributions, which may be discontinued at the Company’s discretion, were approximately $1.4 million and $1.3 million during the years ended December 31, 2021 and 2020, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 11 — Commitments and Contingencies Letter of Credit In connection with two of our leased facilities, the Company is required to maintain two letters of credit totaling $2.3 million. The letters of credit are secured by $2.3 million of cash in money market accounts, which are classified as restricted cash in “Prepaid expenses and other” and "Other assets" in our Consolidated Balance Sheets. Non-cancelable Service Contract Commitments Future minimum payments under non-cancelable service contract commitments were as follows: December 31, 2021 (in thousands) 2022 $ 9,801 2023 7,871 2024 21 Thereafter — Total $ 17,693 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying Consolidated Financial Statements include the accounts of ServiceSource International, Inc. and its wholly owned subsidiaries and have been prepared in accordance with GAAP and with the instructions to Form 10-K. All intercompany balances and transactions have been eliminated in consolidation. 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. |
Use of Estimates | Use of Estimates The preparation of the Consolidated Financial Statements in accordance with 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 bases its estimates and judgments on historical experience and on various assumptions that it believes are reasonable under the circumstances. The Company has considered the effects of the COVID-19 pandemic in determining its estimates. However, future events are difficult to predict and subject to change, especially with the risks and uncertainties related to the impact of the COVID-19 pandemic, which could cause estimates and judgments to require adjustment. Actual results and outcomes may differ from our estimates. |
Significant Risks and Uncertainties | Significant Risks and Uncertainties Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company is also exposed to 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. |
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: 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 and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses and other current liabilities approximate their fair value due to their short-term maturities. |
Cash Equivalents and Restricted Cash | Cash Equivalents and Restricted Cash Cash equivalents consist of highly liquid investments with original maturities of three months or less at the time of purchase and are classified as a Level 1 investment. Restricted cash consists of cash in money market accounts that are used to secure letters of credit in connection with two of our leased facilities. Restricted cash is recorded within “Prepaid expenses and other” and “Other assets” in the Consolidated Balance Sheets and is classified as a Level 1 investment. The Company had restricted cash of $2.3 million as of December 31, 2021 and 2020. |
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. For non-U.S. subsidiaries whose functional currency is the U.S. dollar, transactions that are denominated in foreign currencies are remeasured in U.S. dollars, and any resulting gains and losses are reported in “Interest and other expense, net” in the Consolidated Statements of Operations. Foreign currency transaction losses were approximately $1.0 million and $0.9 million for the years ended December 31, 2021 and 2020, respectively. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts 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. Accounts receivable are stated at their carrying values net of an allowance for doubtful accounts, if applicable. 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 allowance for doubtful accounts as of December 31, 2021 and 2020, and recoveries and reductions to revenue for the years ended December 31, 2021 and 2020, were insignificant. |
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 life for each asset class. Depreciation for leasehold improvements is recorded using the straight-line method over the lesser of the estimated useful life or life of the lease. When assets are disposed, the cost and related accumulated depreciation and amortization are written-off and any gain or loss on sale or disposal is reported in “General and administrative” expense in the Consolidated Statements of Operations. |
Lease Asset Retirement Obligations | Lease Asset Retirement Obligations The fair value of a liability for an ARO is recognized in the period in which it is incurred. The Company’s AROs are associated with leasehold improvements at our international office locations, which, at the end of a lease, are contractually obligated to be removed. AROs were approximately $1.0 million and $1.5 million as of December 31, 2021 and 2020, respectively. Approximately $0.5 million of liabilities were settled as of December 31, 2021. Accretion expense was insignificant for the years ended December 31, 2021 and 2020. |
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 |
Goodwill Impairment | Goodwill Impairment Goodwill represents the excess of the purchase price over the estimated fair market value of net identifiable assets of acquired businesses. The Company evaluates goodwill for possible impairment at least annually or whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. This evaluation includes an assessment of qualitative factors to determine whether it is necessary to compare the fair value of the reporting unit with its carrying value. If there are indicators of impairment, the fair value of the reporting unit is compared to its carrying value. If the carrying value of the reporting unit exceeds its fair value, an impairment loss equal to the difference is recorded. The carrying value of goodwill for the years ended December 31, 2021 and 2020 was $6.3 million. No impairment was recorded for the years ended December 31, 2021 and 2020. |
Impairment of Long-Lived Assets | Impairment of Long-Lived 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, 2021 and 2020. |
Comprehensive Loss | Comprehensive Loss We report comprehensive loss in our Consolidated Statements of Comprehensive Loss. Amounts reported in “Accumulated other comprehensive income” consist of foreign currency translation adjustments from subsidiaries with a functional currency other than the U.S. dollar. |
Revenue Recognition | Revenue Recognition The Company provides a comprehensive suite of selling and professional services to its clients. Selling services consists of sales earned from the following categories of selling motions: ● Digital sales activities include demand qualification, demand conversion, and account management; ● Customer success and renewals activities include onboarding, adoption, and renewals management; and ● Channel management efforts include partner onboarding, partner enablement, and partner success management. Professional services involve providing data integration at scale with our systems and processes, combined with client data enhancement, enablement and optimization. The Company derives all of its revenue from contracts with clients. Revenue is measured based on the consideration specified in a contract. The Company’s contracts generally contain one to two distinct performance obligations that are sold on a variable and/or fixed consideration basis. These two distinct performance obligations are identified as selling services and professional services. Selling services are generally invoiced on a monthly or quarterly basis with standard 30-day payment terms over the length of the contract, typically one to three years . Professional services are generally invoiced upfront upon obtaining a client contract and are typically fulfilled within 90 days . The Company recognizes revenue when it satisfies the performance obligations identified in the contract, which is achieved through the transfer of control of the services to the client. The timing of satisfying performance obligations and the receipt of client consideration can be different and will give rise to contract assets and contract liabilities. Contract assets relate to the Company’s conditional rights to consideration for services provided but not yet billable at the reporting date. Accounts receivable balances reflected in the Consolidated Balance Sheet represent the Company’s unconditional rights to consideration for services provided. Contract asset amounts are transferred to accounts receivables when the rights become unconditional, typically in the same period control of services is transferred to the client and the amount is contractually billable. Contract liabilities primarily relate to the advance consideration received from clients for fixed consideration contracts where transfer of control of the services has not yet occurred. Contract liability balances generally convert to revenue upon either the satisfaction of professional services obligations or when services under fixed consideration contracts are transferred to the client, typically within six months of being recorded. These contract balances are reflected in "Prepaid expenses and other", "Other assets" and "Other current liabilities" in the Consolidated Balance Sheets. The Company accounts for individual services within a single contract separately if they are distinct. A service is distinct if it is separately identifiable from other services in the contract and if a client can benefit from the service on its own or with other resources that are readily available to the client. Determining whether these services are considered distinct performance obligations and qualify as a series of distinct performance obligations that represent a single performance obligation requires significant judgment. The total contract consideration, or transaction price, is allocated between the separate services identified in the contract based on their SSP. SSP is determined based on a cost-plus margin analysis for selling services and a standard hourly rate card for professional services. For professional services that are contractually priced differently from SSP, the Company estimates the SSP using a standard hourly rate card and allocates a portion of the total contract consideration to reflect professional services revenue at SSP. The Company’s performance obligations are satisfied over time and revenue is recognized based on monthly or quarterly time increments and the variable volume of closed bookings during the period at the contractual commission rates for selling services, or proportional performance during the period at SSP for professional services. Due to the continuous nature of providing services to our clients, judgment is required in determining when control of the services is transferred to the client. Because the client simultaneously receives and consumes the benefit of the Company’s selling and professional services as provided, the time increment output method depicts the measure of progress in transferring control of the services to the client. A significant portion of the Company’s contracts is based on a pay-for-performance model in which commission revenue is based on a volume of closed bookings each time period, which is recorded as a component of “Net revenue” in the Consolidated Statements of Operations. At each reporting period, the Company makes an estimate of this revenue for amounts that have yet to be invoiced, which was $15.8 million and $16.3 million as of December 31, 2021 and 2020, respectively. These accrued revenue balances are reflected in "Accounts Receivable” in the Consolidated Balance Sheets. While multiple selling motions in a contract are performed at various times and patterns throughout the month or quarter and the number of closed bookings vary in any given period, each time increment of a service activity is substantially the same and has the same pattern of transfer to the client, and therefore, represents a series of distinct performance obligations that form a single performance obligation. As a result, the Company allocates all variable consideration in a contract to the selling services performance obligation in accordance with the variable consideration allocation exception provisions in ASC 606, (less amounts for which it is probable a significant reversal of revenue will occur when the uncertainties related to the variability are resolved) and applies a single measure of progress to record revenue in the period based on when the output of the variable number of closed bookings occurs or when the variable performance metric is achieved. Judgment is required to estimate the amount of variable consideration to include when estimating the total contract consideration and how to allocate the consideration if one of the distinct performance obligations is not sold at SSP. In addition, judgment is required to determine if the variable consideration should be constrained, and to what extent, until the risk of a significant revenue reversal is not probable. The Company applies the optional disclosure exemptions related to variable consideration and the requirement to disclose the remaining transaction price allocated to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation. Significant estimates and judgments for revenue recognition include: (1) identifying and determining distinct performance obligations in contracts with clients, (2) determining the timing of the satisfaction of performance obligations, (3) estimating the timing and amount of variable consideration in a contract, (4) determining SSP for each performance obligations and the methodology to allocate the total contract consideration to the distinct performance obligations, and (5) determining and measuring variable revenue that has yet to be invoiced as of period end. Our revenue contracts often include promises to transfer services involving multiple selling motions to a client. Determining whether those services are considered distinct and qualify as a series of distinct services that represent a single performance obligation requires significant judgment. Also, due to the continuous nature of providing services to our clients, judgment is required in determining when control of the services is transferred to the client. We also enter into contracts with multiple performance obligations that incorporate fixed consideration, pay-for-performance commissions and variable bonus commissions. Judgment is required to estimate the amount of variable consideration to include when estimating the total contract consideration and how to allocate the consideration if one of the distinct performance obligations is not sold at SSP. |
Contract Acquisition Costs | Contract Acquisition Costs To obtain contracts with clients, the Company pays its sales team commissions partly based on the estimated value of the contract. Because these sales commissions are incurred and paid upon contract execution and would not have been incurred or payable otherwise, they are considered incremental costs to acquire the contract; and if recoverable, are capitalized as contract acquisition costs in the period the contract is executed. Capitalized sales commissions are amortized to “Sales and marketing" expense in the Consolidated Statements of Operations based on the transfer of services over the contract term, generally one |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred and are reported in "Sales and marketing" in the Consolidated Statements of Operations. Advertising costs was $0.2 million for the year ended December 31, 2021 and insignificant for the year ended December 31, 2020. |
Stock-Based Compensation | Stock-Based Compensation The Company issues stock-based awards to employees and directors. The Company previously offered an ESPP until it expired in February 2021. 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 three RSUs 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. RSUs generally vest ratably over three years with vesting contingent upon employment of the Company. PSUs are stock-based awards in which the number of shares ultimately received by the employee varies depending on the Company’s achievement of specified targets. PSU expense is based on a fixed grant date fair value and adjusted based on the estimated achievement of the performance metrics and recognized on a straight-line basis over the vesting 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 fair value of stock options and purchase rights under the ESPP was determined by the Company using the methods and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment to determine. Expected Term - Expected Volatility - Risk-Free Interest Rate - Expected Dividend Yield - See "Note 7 — Stock-Based Compensation" for additional information. |
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. |
Net Loss Per Common Share | Net Loss Per Common Share Basic net income (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income 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 ESPP, non-vested RSUs and PSUs. 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 income per share because they are anti-dilutive for the periods presented consist of stock options, non-vested RSUs and PSUs, and shares to be purchased under our ESPP. The Company excluded from diluted earnings per share the weighted-average common share equivalents related to 1.7 million and 3.3 million shares for the years ended December 31, 2021 and 2020, respectively, because their effect would have been anti-dilutive. |
Government Assistance | Government Assistance During 2020, ServiceSource received various grants from the Singapore government, including the Job Support Scheme, which assists enterprises in retaining their local employees during the COVID-19 pandemic. ServiceSource received and recognized income related to the grants of $0.3 million and $1.3 million for the years ended December 31, 2021 and 2020, respectively. There are no conditions to repay the grants. The Company does not expect to receive additional income related to these grants. Government grants are primarily recognized within “Cost of revenue” expense in the Company’s Consolidated Statements of Operations during the same period that the expenses related to the grant are incurred if there is reasonable assurance the grant will be received, and the Company has complied with any conditions attached to the grant. |
New Accounting Standards Issued But Not Yet Adopted And New Accounting Standards Adopted | New Accounting Standards Issued but Not Yet Adopted Financial Instruments - Credit Losses In June 2016, the FASB issued an ASU that amends the measurement of credit losses on financial instruments and requires measurement and recognition of expected versus incurred credit losses for financial assets held. This ASU is effective for annual periods and interim periods for those annual periods beginning after December 15, 2022, with early adoption permitted. This standard will apply to the Company’s accounts receivable and contract assets. Based on our current analysis, the Company does not expect the adoption to have material impact on the Consolidated Financial Statements as credit losses from trade receivables have historically been insignificant. The Company expects to adopt this standard effective January 1, 2023. New Accounting Standards Adopted Income Taxes In December 2019, the FASB issued an ASU that simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This ASU is effective for annual periods and interim periods for those annual periods beginning after December 15, 2020, with early adoption permitted. The Company adopted this standard effective January 1, 2021. The adoption of this standard did not have an impact on the Company’s Consolidated Financial Statements. Government Assistance In November 2021, the FASB issued an ASU which requires and clarifies disclosures of government assistance received by business entities. This ASU is effective for annual periods beginning after December 15, 2021, with early adoption permitted. The Company adopted this standard retrospectively effective December 1, 2021. The adoption of this standard did not have an impact on the Company’s Consolidated Financial Statements. |
Consolidated Financial Statem_2
Consolidated Financial Statement Details (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Consolidated Financial Statement Details | |
Summary of Property and Equipment, Net | December 31, Depreciable Life 2021 2020 (in thousands) Computers and equipment 2 - 5 years $ 17,949 $ 17,904 Software (1) 2 - 7 years 45,683 60,771 Furniture and fixtures 2 - 7 years 8,766 10,727 Leasehold improvements Lesser of estimated useful life or life of lease 14,890 17,823 Finance leases 2,861 2,880 Property and equipment 90,149 110,105 Less: accumulated depreciation and amortization (71,428) (80,157) Property and equipment, net $ 18,721 $ 29,948 (1) Balance as of January 1, 2020 $ 19,417 Capitalized costs 5,076 Amortization expense (7,701) Balance as of December 31, 2020 16,792 Capitalized costs 2,864 Amortization expense (9,510) Balance as of December 31, 2021 $ 10,146 |
Long- Lived Assets By Geographic Areas | December 31, 2021 2020 (in thousands) NALA $ 15,947 $ 24,420 APJ 2,137 4,456 EMEA 637 1,072 Property and equipment, net $ 18,721 $ 29,948 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases | |
Summary of Supplemental Income Statement Information and Other Information | Supplemental income statement information related to leases was as follows: For the Year Ended December 31, 2021 2020 (in thousands) Operating lease cost $ 11,346 $ 12,264 Finance lease cost: Amortization of leased assets 442 744 Interest on lease liabilities 25 88 Total finance lease cost 467 832 Sublease income (4,903) (3,599) Net lease cost $ 6,910 $ 9,497 Lease term and discount rate information was as follows: For the Year Ended December 31, 2021 2020 Weighted-average remaining lease term (in years): Operating lease 5.7 5.7 Finance lease 0.1 1.0 Weighted-average discount rate: Operating lease 6.0 % 6.2 % Finance lease 6.5 % 6.5 % |
Summary of Supplemental Balance Sheet Information | Supplemental balance sheet information related to leases was as follows: December 31, 2021 2020 (in thousands) Operating leases: ROU assets $ 23,043 $ 29,798 Operating lease liabilities $ 8,614 $ 10,797 Operating lease liabilities, net of current portion 19,869 25,975 Total operating lease liabilities $ 28,483 $ 36,772 Finance leases: Property and equipment $ 2,861 $ 2,880 Accumulated depreciation (2,397) (1,963) Property and equipment, net $ 464 $ 917 Other current liabilities $ 63 $ 608 Other long-term liabilities — 63 Total finance lease liabilities $ 63 $ 671 |
Summary of Maturities of Operating Lease Liabilities | Maturities of lease liabilities were as follows as of December 31, 2021: Operating Leases Operating Sublease Finance Leases Total (in thousands) 2022 $ 10,030 $ (3,588) $ 64 $ 6,506 2023 4,952 (1,410) — 3,542 2024 3,579 — — 3,579 2025 3,563 — — 3,563 2026 3,329 — — 3,329 Thereafter 8,468 — — 8,468 Total lease payments 33,921 (4,998) 64 28,987 Less: interest (5,438) — (1) (5,439) Total $ 28,483 $ (4,998) $ 63 $ 23,548 |
Operating Lease, Lease Income | Maturities of lease liabilities were as follows as of December 31, 2021: Operating Leases Operating Sublease Finance Leases Total (in thousands) 2022 $ 10,030 $ (3,588) $ 64 $ 6,506 2023 4,952 (1,410) — 3,542 2024 3,579 — — 3,579 2025 3,563 — — 3,563 2026 3,329 — — 3,329 Thereafter 8,468 — — 8,468 Total lease payments 33,921 (4,998) 64 28,987 Less: interest (5,438) — (1) (5,439) Total $ 28,483 $ (4,998) $ 63 $ 23,548 |
Summary of Maturities of Finance Lease Liabilities | Maturities of lease liabilities were as follows as of December 31, 2021: Operating Leases Operating Sublease Finance Leases Total (in thousands) 2022 $ 10,030 $ (3,588) $ 64 $ 6,506 2023 4,952 (1,410) — 3,542 2024 3,579 — — 3,579 2025 3,563 — — 3,563 2026 3,329 — — 3,329 Thereafter 8,468 — — 8,468 Total lease payments 33,921 (4,998) 64 28,987 Less: interest (5,438) — (1) (5,439) Total $ 28,483 $ (4,998) $ 63 $ 23,548 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Revenue Recognition | |
Disaggregation of Revenue from Contracts with Clients | The following tables present the disaggregation of revenue from contracts with our clients: Revenue by Performance Obligation For the Year Ended December 31, 2021 2020 (in thousands) Selling services $ 192,525 $ 190,906 Professional services 3,179 3,695 Total revenue $ 195,704 $ 194,601 Revenue by Geography Revenue for each 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 the service contracts sold and managed by the revenue delivery centers relate to end customers located in the same geography. All NALA revenue represents revenue generated within the U.S. For the Year Ended December 31, 2021 2020 (in thousands) NALA $ 107,326 $ 111,085 EMEA 58,189 54,975 APJ 30,189 28,541 Total revenue $ 195,704 $ 194,601 Revenue by Contract Pricing For the Year Ended December 31, 2021 2020 (in thousands) Variable consideration $ 141,529 $ 142,355 Fixed consideration 54,175 52,246 Total revenue $ 195,704 $ 194,601 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Stock-Based Compensation | |
Summary of Stock-Based Compensation Expense | The following table presents stock-based compensation expense as allocated within the Company’s Consolidated Statements of Operations: For the Year Ended December 31, 2021 2020 (in thousands) Cost of revenue $ 512 $ 389 Sales and marketing 1,236 1,416 Research and development 74 57 General and administrative 4,305 3,003 Total stock-based compensation $ 6,127 $ 4,865 |
Schedule of Valuation Assumptions Used for Options | The Black-Scholes option-pricing model assumptions for stock options were as follows: 2020 Expected term (in years) 5.0 Expected volatility 56% Risk-free interest rate 0.75% Expected dividend yield —% Weighted-average grant date fair value $0.63 |
Schedule of Valuation Assumptions Used for ESPP | The Black-Scholes option-pricing model assumptions for purchase rights under the ESPP were as follows: 2020 Expected term (in years) 0.5 - 1.0 Expected volatility 53% - 60% Risk-free interest rate 0.12% - 1.52% Expected dividend yield —% |
Summary of Option and Restricted Stock Activity | A summary of the Company’s stock option activity and related information was as follows: Weighted- Weighted- Average Average Remaining Exercise Contractual Shares Price Life (Years) Intrinsic Value (in thousands) (in thousands) Outstanding as of December 31, 2020 3,030 $ 2.09 $ 1,372 Exercised (292) $ 1.16 Expired and/or forfeited (862) $ 2.22 Outstanding as of December 31, 2021 1,876 $ 2.18 6.11 $ 16 Exercisable as of December 31, 2021 1,782 $ 2.24 6.03 $ 11 For the Year Ended December 31, 2021 2020 (in thousands) Fair value of options vested $ 96 $ 733 Intrinsic value of options exercised $ 127 $ 46 |
Summary of Additional Information Concerning Vested RSUs and PSUs | A summary of the Company’s RSU and PSU activity and related information was as follows: Weighted- Average Grant Units Date Fair Value (in thousands) Non-vested as of December 31, 2020 7,015 $ 1.55 Granted 4,831 $ 1.51 Vested (1) (1,950) $ 1.64 Forfeited (1,665) $ 1.60 Non-vested as of December 31, 2021 8,231 $ 1.49 (1) For the Year Ended December 31, 2021 2020 (in thousands) Fair value of RSUs and PSUs vested $ 2,837 $ 2,940 |
Restructuring and Other Relat_2
Restructuring and Other Related Costs (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Restructuring and Other Related Costs | |
Schedule of Restructuring and Other Reserve Activities | The following table presents a reconciliation of the beginning and ending fair value liability balance related to the 2020 restructuring effort: Severance and Other Lease Termination Employee Costs Costs Total (in thousands) Balance as of January 1, 2020 $ — $ — $ — Restructuring and other related costs 780 59 839 Cash paid (442) — (442) Balance as of December 31, 2020 338 59 397 Restructuring and other related costs 897 174 1,071 Cash paid (1,235) (233) (1,468) Balance as of December 31, 2021 $ — $ — $ — |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Taxes | |
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: For the Year Ended December 31, 2021 2020 (in thousands) U.S. $ (12,150) $ (18,278) International (2,293) 446 Loss before provision for income taxes $ (14,443) $ (17,832) |
Summary of Income Tax Provision | The income tax provision consisted of the following: For the Year Ended December 31, 2021 2020 (in thousands) Current: Federal $ 43 $ 121 Foreign 216 559 State and local 57 43 Total current income tax provision 316 723 Deferred: Federal (16) (13) Foreign (21) 7 State and local (1) (8) Total deferred income tax provision (38) (14) Income tax provision $ 278 $ 709 |
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 21% for the years ended December 31, 2021 and 2020 to the income tax provision: For the Year Ended December 31, 2021 2020 (in thousands) U.S. income tax at federal statutory rate $ (3,032) $ (3,745) State income taxes, net of federal benefit (344) (1,575) Share-based compensation 409 277 Foreign tax rate differential 147 (1,749) Permanent differences (270) 3,355 Tax law change (256) — Valuation allowance 3,456 3,756 Other, net 168 390 Income tax provision $ 278 $ 709 |
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, 2021 and 2020. 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: December 31, 2021 2020 (in thousands) Deferred tax assets: Accrued liabilities $ 4,284 $ 5,710 Share-based compensation 1,188 864 Net operating loss carryforwards 87,431 84,450 Tax credits 7,527 7,310 Interest 265 187 Total deferred tax assets 100,695 98,521 Deferred tax liabilities: Property and equipment (2,254) (3,423) ROU assets (2,509) (3,704) Amortization of tax intangibles (1,577) (232) Other, net (247) (533) Total deferred tax liabilities (6,587) (7,892) Net deferred tax assets 94,108 90,629 Less: valuation allowance (94,341) (90,899) Net deferred tax liabilities $ (233) $ (270) |
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): Balance as of January 1, 2020 $ 964 Additions based on tax positions related to the current year 12 Reductions for tax positions of prior years (11) Balance as of December 31, 2020 965 Additions based on tax positions related to the current year — Reductions for tax positions of prior years (11) Balance as of December 31, 2021 $ 954 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies | |
Future Minimum Payments Under Non-cancelable Service Contract Commitments | Future minimum payments under non-cancelable service contract commitments were as follows: December 31, 2021 (in thousands) 2022 $ 9,801 2023 7,871 2024 21 Thereafter — Total $ 17,693 |
The Company (Details)
The Company (Details) | 12 Months Ended |
Dec. 31, 2021country | |
The Company | |
Years of operating experience | 20 years |
Number of countries in which company operates | 175 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) shares in Millions, $ in Millions | 12 Months Ended | |
Dec. 31, 2021USD ($)facilityitemshares | Dec. 31, 2020USD ($)shares | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Number of leased facilities | facility | 2 | |
Asset retirement obligation | $ 1 | $ 1.5 |
Asset retirement obligation, liabilities settled | 0.5 | |
Goodwill | 6.3 | 6.3 |
Goodwill impairment | 0 | 0 |
Impairment of long-lived assets | $ 0 | 0 |
Number of distinct performance obligation types | item | 2 | |
Period to convert to revenue | 6 months | |
Commission revenue not yet invoiced | $ 15.8 | $ 16.3 |
Advertising costs | $ 0.2 | |
Antidilutive shares excluded from diluted earnings per share calculation (in shares) | shares | 1.7 | 3.3 |
Proceeds received from grant | $ 0.3 | $ 1.3 |
Employee Stock Option | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Expiration period | 10 years | |
Termination period | 90 days | |
Restricted Stock Units (RSUs) | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Vesting period | 3 years | |
Long-standing client | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Capitalized contract, amortization period | 5 years | |
Maximum | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Number of distinct performance obligation types | item | 2 | |
Maximum | Employee Stock Option | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Vesting period | 4 years | |
Maximum | New client | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Capitalized contract, amortization period | 3 years | |
Maximum | Software Development | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Useful life | 7 years | |
Minimum | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Number of distinct performance obligation types | item | 1 | |
Minimum | Employee Stock Option | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Vesting period | 3 years | |
Minimum | New client | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Capitalized contract, amortization period | 1 year | |
Minimum | Software Development | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Useful life | 2 years | |
Other (Expense) Income, Net | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Foreign currency transaction losses | $ (1) | (0.9) |
Selling services | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Payment term | 30 days | |
Selling services | Maximum | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Contact term | 3 years | |
Selling services | Minimum | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Contact term | 1 year | |
Professional services | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Contact term | 90 days | |
Level 1 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Restricted cash | $ 2.3 | $ 2.3 |
Consolidated Financial Statem_3
Consolidated Financial Statement Details - Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Finance leases | $ 2,861 | $ 2,880 |
Property and equipment | 90,149 | 110,105 |
Less: accumulated depreciation and amortization | (71,428) | (80,157) |
Property, Plant, and Equipment and Finance Lease Right-of-Use Asset, after Accumulated Depreciation and Amortization, Total | 18,721 | 29,948 |
Property and equipment, net | 18,721 | 29,948 |
Movement in Property, Plant and Equipment [Roll Forward] | ||
Beginning of Balance | 16,792 | 19,417 |
Capitalized costs | 2,864 | 5,076 |
Amortization expense | (9,510) | (7,701) |
Ending of Balance | 10,146 | 16,792 |
Depreciation expense related to property and equipment | 14,700 | 13,900 |
Computers and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 17,949 | 17,904 |
Software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 45,683 | 60,771 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 8,766 | 10,727 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 14,890 | $ 17,823 |
Minimum | Computers and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Depreciable life | 2 years | |
Minimum | Software | ||
Property, Plant and Equipment [Line Items] | ||
Depreciable life | 2 years | |
Minimum | Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Depreciable life | 2 years | |
Maximum | Computers and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Depreciable life | 5 years | |
Maximum | Software | ||
Property, Plant and Equipment [Line Items] | ||
Depreciable life | 7 years | |
Maximum | Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Depreciable life | 7 years |
Consolidated Financial Statem_4
Consolidated Financial Statement Details - Long Lived Assets by Geographic Area (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | $ 18,721 | $ 29,948 |
NALA | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | 15,947 | 24,420 |
APJ | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | 2,137 | 4,456 |
EMEA | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | $ 637 | $ 1,072 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Jul. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Feb. 23, 2022 | Jul. 31, 2018 | |
Debt Instrument [Line Items] | |||||
Revolver | $ 10,000 | $ 15,000 | |||
BSBY | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread of interest rate | 2.00% | ||||
BSBY | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread of interest rate | 2.50% | ||||
Base rate | Minimum | |||||
Debt Instrument [Line Items] | |||||
Effective interest rate | 1.00% | ||||
Base rate | Maximum | |||||
Debt Instrument [Line Items] | |||||
Effective interest rate | 1.50% | ||||
Line of Credit | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Additional borrowing capacity | $ 10,000 | ||||
Revised maximum borrowing capacity | 45,000 | ||||
Effective interest rate | 2.40% | ||||
Line of Credit | Revolving Credit Facility | Subsequent Event | |||||
Debt Instrument [Line Items] | |||||
Revolver | $ 10,000 | ||||
Line of Credit | Revolving Credit Facility | BSBY | Subsequent Event | |||||
Debt Instrument [Line Items] | |||||
Effective interest rate | 3.04% | ||||
Line of Credit | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | $ 35,000 | $ 40,000 | |||
Revolver | $ 10,000 | ||||
Line of credit facility, remaining borrowing capacity | 18,000 | ||||
Unamortized debt issuance cost | 100 | ||||
Interest expense | $ 400 | $ 500 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021USD ($)floor | Dec. 31, 2020USD ($) | |
Lessee, Lease, Description [Line Items] | ||
Operating lease cost | $ | $ 11,346 | $ 12,264 |
Third-Party One [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Lessor, Operating Lease, Number Of Floors Leased | 1 | |
Third-Party Two [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Lessor, Operating Lease, Number Of Floors Leased | 2 | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Option to extend, term (in years) | 1 year | |
Option to terminate, term (in years) | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Option to extend, term (in years) | 7 years |
Leases - Supplemental Income St
Leases - Supplemental Income Statement Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Leases | ||
Operating lease cost | $ 11,346 | $ 12,264 |
Finance lease cost: | ||
Amortization of leased assets | 442 | 744 |
Interest on lease liabilities | 25 | 88 |
Total finance lease cost | 467 | 832 |
Sublease income | (4,903) | (3,599) |
Net lease cost | $ 6,910 | $ 9,497 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Operating leases: | ||
ROU assets | $ 23,043 | $ 29,798 |
Operating lease liabilities | 8,614 | 10,797 |
Operating lease liabilities, net of current portion | 19,869 | 25,975 |
Total operating lease liabilities | 28,483 | 36,772 |
Finance leases: | ||
Property and equipment | 2,861 | 2,880 |
Accumulated depreciation | (2,397) | (1,963) |
Property and equipment, net | 464 | 917 |
Other current liabilities | 63 | 608 |
Other long-term liabilities | 63 | |
Total finance lease liabilities | $ 63 | $ 671 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Property and equipment, net | Property and equipment, net |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other current liabilities | Other current liabilities |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other long-term liabilities | Other long-term liabilities |
Leases - Lease Term and Discoun
Leases - Lease Term and Discount Rate (Details) | Dec. 31, 2021 | Dec. 31, 2020 |
Weighted-average remaining lease term (in years): | ||
Operating lease | 5 years 8 months 12 days | 5 years 8 months 12 days |
Finance lease | 1 month 6 days | 1 year |
Weighted-average discount rate: | ||
Operating lease | 6.00% | 6.20% |
Finance lease | 6.50% | 6.50% |
Leases - Maturity of Lease Liab
Leases - Maturity of Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Operating Leases | ||
2022 | $ 10,030 | |
2023 | 4,952 | |
2024 | 3,579 | |
2025 | 3,563 | |
2026 | 3,329 | |
Thereafter | 8,468 | |
Total lease payments | 33,921 | |
Less: interest | (5,438) | |
Total | 28,483 | $ 36,772 |
Operating Sublease | ||
2022 | (3,588) | |
2023 | (1,410) | |
2024 | 0 | |
2025 | 0 | |
2026 | 0 | |
Thereafter | 0 | |
Total | (4,998) | |
Less: Interest | 0 | |
Finance Leases | ||
2022 | 64 | |
2023 | 0 | |
2024 | 0 | |
2025 | 0 | |
2026 | 0 | |
Thereafter | 0 | |
Total lease payments | 64 | |
Less: interest | (1) | |
Total | 63 | $ 671 |
Total | ||
2022 | 6,506 | |
2023 | 3,542 | |
2024 | 3,579 | |
2025 | 3,563 | |
2026 | 3,329 | |
Thereafter | 8,468 | |
Total lease payments | 28,987 | |
Less: interest | (5,439) | |
Total | $ 23,548 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 195,704 | $ 194,601 |
Variable consideration | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 141,529 | 142,355 |
Fixed consideration | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 54,175 | 52,246 |
NALA | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 107,326 | 111,085 |
EMEA | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 58,189 | 54,975 |
APJ. | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 30,189 | 28,541 |
Selling services | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 192,525 | 190,906 |
Professional services | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 3,179 | $ 3,695 |
Revenue Recognition - Narrative
Revenue Recognition - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Contract asset | $ 0.5 | |
Contract liability | $ 0.5 | 0.4 |
Contract acquisition asset | 0.6 | 0.9 |
Amortization of contract acquisition costs | 0.5 | $ 0.8 |
Selling services | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Remaining performance obligation | 36.6 | |
Professional services | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Remaining performance obligation | $ 0.7 | |
Major customer 1 | Sales Revenue, Net | Customer Concentration Risk | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Concentration risk | 16.00% | |
Major customer 2 | Sales Revenue, Net | Customer Concentration Risk | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Concentration risk | 16.00% | |
Major customer 3 | Sales Revenue, Net | Customer Concentration Risk | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Concentration risk | 15.00% | |
Major customer 4 | Sales Revenue, Net | Customer Concentration Risk | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Concentration risk | 12.00% |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) shares in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | |
Mar. 31, 2021USD ($)itemshares | May 31, 2020USD ($)shares | Dec. 31, 2021USD ($)shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number Of Performance Goals | item | 2 | ||
2020 Equity Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares available for future issuance (in shares) | shares | 8,500 | ||
PSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted (in shares) | shares | 700 | ||
Fair value of shares granted | $ | $ 900 | ||
Award achievement performance period | 2 years | ||
PSUs | Certain Executives | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted (in shares) | shares | 800 | ||
Fair value of shares granted | $ | $ 1,200 | ||
PSUs | Certain Senior Leaders | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted (in shares) | shares | 400 | ||
Fair value of shares granted | $ | $ 600 | ||
Employee Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation expense, stock options | $ | $ 40 | ||
Unrecognized compensation expense, weighted-average period recognized | 10 months 24 days | ||
RSUs and PSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted (in shares) | shares | 4,831 | ||
Unrecognized compensation expense, weighted-average period recognized | 1 year 8 months 12 days | ||
Unrecognized compensation expense, RSUs and PSUs | $ | $ 6,500 | ||
Minimum | PSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares received from rewards, percent | 0.00% | ||
Minimum | PSUs | Certain Executives | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares received from rewards, percent | 0.00% | ||
Minimum | PSUs | Certain Senior Leaders | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares received from rewards, percent | 0.00% | ||
Maximum | PSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares received from rewards, percent | 150.00% | ||
Maximum | PSUs | Certain Executives | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares received from rewards, percent | 173.00% | ||
Maximum | PSUs | Certain Senior Leaders | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares received from rewards, percent | 200.00% |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation | $ 6,127 | $ 4,865 |
Cost of revenue. | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation | 512 | 389 |
Sales and marketing | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation | 1,236 | 1,416 |
Research and development | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation | 74 | 57 |
General and administrative | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation | $ 4,305 | $ 3,003 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Valuation Assumptions (Details) | 12 Months Ended |
Dec. 31, 2020$ / shares | |
Employee Stock Option | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (in years) | 5 years |
Expected volatility | 56.00% |
Risk-free interest rate | 0.75% |
Weighted-average fair value of options granted (in dollars per share) | $ 0.63 |
ESPP | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (in years) | 6 months |
Expected volatility | 53.00% |
Risk-free interest rate | 0.12% |
ESPP | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (in years) | 1 year |
Expected volatility | 60.00% |
Risk-free interest rate | 1.52% |
Stock-Based Compensation - Opti
Stock-Based Compensation - Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Weighted-Average Exercise Price | ||
Fair value of options vested | $ 96 | $ 733 |
Intrinsic value of options exercised | $ 127 | $ 46 |
Employee Stock Option | ||
Shares | ||
Outstanding, beginning balance (in shares) | 3,030 | |
Exercised (in shares) | (292) | |
Expired and/or forfeited (in shares) | (862) | |
Outstanding, ending balance (in shares) | 1,876 | 3,030 |
Exercisable (in shares) | 1,782 | |
Weighted-Average Exercise Price | ||
Outstanding, beginning balance (in dollars per share) | $ 2.09 | |
Exercised (in dollars per share) | 1.16 | |
Expired and/or forfeited (in dollars per share) | 2.22 | |
Outstanding, ending balance (in dollars per share) | 2.18 | $ 2.09 |
Exercisable (in dollars per share) | $ 2.24 | |
Outstanding, weighted average remaining contractual life (years) | 6 years 1 month 9 days | |
Exercisable, weighted average remaining contractual life (years) | 6 years 10 days | |
Outstanding, intrinsic value | $ 16 | $ 1,372 |
Exercisable, intrinsic value | $ 11 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Unit Activity (Details) - RSUs and PSUs - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Units | ||
Non-vested, beginning balance (in shares) | 7,015 | |
Granted (in shares) | 4,831 | |
Vested (in shares) | (1,950) | |
Forfeited (in shares) | (1,665) | |
Non-vested, ending balance (in shares) | 8,231 | 7,015 |
Weighted-Average Grant Date Fair Value | ||
Non-vested, weighted average grant date fair value, beginning balance (in dollars per share) | $ 1.55 | |
Granted, weighted average grant date fair value (in dollars per share) | 1.51 | |
Vested, weighted average grant date fair value (in dollars per share) | 1.64 | |
Forfeited, weighted average grant date fair value (in dollars per share) | 1.60 | |
Non-vested, weighted average grant date fair value, ending balance (in dollars per share) | $ 1.49 | $ 1.55 |
Common stock issued (in shares) | 1,812 | |
Shares withheld for tax purposes (in shares) | 138 | |
Fair value of RSUs and PSUs vested | $ 2,837 | $ 2,940 |
Restructuring and Other Relat_3
Restructuring and Other Related Costs - Narrative (Details) - Restructuring Effort 2020 - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 1,071 | $ 839 |
Other additional restructuring costs | $ 0 |
Restructuring and Other Relat_4
Restructuring and Other Related Costs - Restructuring and Other Reserve Activities (Details) - Restructuring Effort 2020 - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | $ 397 | $ 0 |
Restructuring and other related costs | 1,071 | 839 |
Cash paid | (1,468) | (442) |
Ending Balance | 0 | 397 |
Severance and Other Employee Costs | ||
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 338 | 0 |
Restructuring and other related costs | 897 | 780 |
Cash paid | (1,235) | (442) |
Ending Balance | 0 | 338 |
Lease Termination Costs | ||
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 59 | 0 |
Restructuring and other related costs | 174 | 59 |
Cash paid | (233) | 0 |
Ending Balance | $ 0 | $ 59 |
Income Taxes - Schedule of Loss
Income Taxes - Schedule of Loss from Continuing Operations Before Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes | ||
U.S. | $ (12,150) | $ (18,278) |
International | (2,293) | 446 |
Loss before provision for income taxes | $ (14,443) | $ (17,832) |
Income Taxes - Summary of Incom
Income Taxes - Summary of Income Tax Provision (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Current: | ||
Federal | $ 43 | $ 121 |
Foreign | 216 | 559 |
State and local | 57 | 43 |
Total current income tax provision | 316 | 723 |
Deferred: | ||
Federal | (16) | (13) |
Foreign | (21) | 7 |
State and local | (1) | (8) |
Total deferred income tax provision | (38) | (14) |
Income tax provision | $ 278 | $ 709 |
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, 2021 | Dec. 31, 2020 | |
Income Taxes | ||
U.S. income tax at federal statutory rate | $ (3,032) | $ (3,745) |
State income taxes, net of federal benefit | (344) | (1,575) |
Share-based compensation | 409 | 277 |
Foreign tax rate differential | 147 | (1,749) |
Permanent differences | (270) | 3,355 |
Tax law change | (256) | |
Valuation allowance | 3,456 | 3,756 |
Other, net | 168 | 390 |
Income tax provision | $ 278 | $ 709 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Nov. 30, 2015 | Dec. 31, 2013 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Operating Loss Carryforwards [Line Items] | |||||
Tax benefit | $ (278) | $ (709) | |||
Deferred tax assets, valuation allowance | 94,341 | 90,899 | |||
Increase (decrease) in valuation allowance | 3,400 | (3,800) | |||
Deferred Tax Liability Not Recognized, Amount of Unrecognized Deferred Tax Liability, Undistributed Earnings of Foreign Subsidiaries | 500 | 500 | |||
Unrecognized tax benefits | 954 | $ 965 | $ 964 | ||
Unrecognized tax benefits that would impact effective tax rate | $ 0 | ||||
Federal statutory rate | 21.00% | 21.00% | |||
Research And Development Tax Credit Carryforward | |||||
Operating Loss Carryforwards [Line Items] | |||||
Tax credits carryforward | $ 2,700 | ||||
California Enterprise Zone Credits Expiring 2024 | |||||
Operating Loss Carryforwards [Line Items] | |||||
Tax credits carryforward | 500 | ||||
Other Tax Credit Carryforward | |||||
Operating Loss Carryforwards [Line Items] | |||||
Tax credits carryforward | 1,600 | ||||
Foreign Tax Authority | |||||
Operating Loss Carryforwards [Line Items] | |||||
Net operating loss carryforwards | 26,800 | ||||
Net operating loss carryforwards, carried forward indefinitely | 26,500 | ||||
Domestic Tax Authority | |||||
Operating Loss Carryforwards [Line Items] | |||||
Net operating loss carryforwards | 325,400 | ||||
Net operating loss carryforwards, carried forward indefinitely | 68,600 | ||||
Net operating loss carryforwards, subject to expiration | 256,800 | ||||
Domestic Tax Authority | Scout | |||||
Operating Loss Carryforwards [Line Items] | |||||
Net operating loss carryforwards | 30,200 | ||||
State and Local Jurisdiction | |||||
Operating Loss Carryforwards [Line Items] | |||||
Net operating loss carryforwards | 234,700 | ||||
Malaysia | Foreign Tax Authority | |||||
Operating Loss Carryforwards [Line Items] | |||||
Income tax holiday period | 10 years | ||||
California | Research And Development Tax Credit Carryforward | |||||
Operating Loss Carryforwards [Line Items] | |||||
Tax credits carryforward | $ 3,700 | ||||
Philippine Economic Zone Authority | Foreign Tax Authority | |||||
Operating Loss Carryforwards [Line Items] | |||||
Income tax holiday period | 4 years | 1 year |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effect of Temporary Differences that Created Deferred Income Taxes (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets: | ||
Accrued liabilities | $ 4,284 | $ 5,710 |
Share-based compensation | 1,188 | 864 |
Net operating loss carryforwards | 87,431 | 84,450 |
Tax credits | 7,527 | 7,310 |
Interest | 265 | 187 |
Total deferred tax assets | 100,695 | 98,521 |
Deferred tax liabilities: | ||
Property and equipment | (2,254) | (3,423) |
ROU assets | (2,509) | (3,704) |
Amortization of tax intangibles | (1,577) | (232) |
Other, net | (247) | (533) |
Total deferred tax liabilities | (6,587) | (7,892) |
Net deferred tax assets | 94,108 | 90,629 |
Less: valuation allowance | (94,341) | (90,899) |
Net deferred tax liabilities | $ (233) | $ (270) |
Income Taxes - Schedule of Re_2
Income Taxes - Schedule of Reconciliation of the Beginning and Ending Amount of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Unrecognized Tax Benefits, Beginning Balance | $ 965 | $ 964 |
Additions based on tax positions related to the current year | 12 | |
Reductions for tax positions of prior years | (11) | (11) |
Unrecognized Tax Benefits, Ending Balance | $ 954 | $ 965 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Employee Benefit Plan | ||
Employers' discretionary contribution, amount | $ 1.4 | $ 1.3 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) $ in Millions | Dec. 31, 2021USD ($)facilityitem |
Other Commitments [Line Items] | |
Number of leased facilities | facility | 2 |
Number of letters of credit | item | 2 |
Money Market Mutual Funds | Letter of Credit | |
Other Commitments [Line Items] | |
Letters of credit | $ 2.3 |
Restricted cash | $ 2.3 |
Commitments and Contingencies_2
Commitments and Contingencies - Future Minimum Payments (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Non-cancelable Service Contract Commitments | |
2022 | $ 9,801 |
2023 | 7,871 |
2024 | 21 |
Thereafter | 0 |
Total | $ 17,693 |