Acquisitions (Notes) | 9 Months Ended |
Apr. 30, 2014 |
Business Combinations [Abstract] | ' |
Acquisitions | ' |
Acquisitions |
Business Combinations |
Cyvera Ltd. |
On April 9, 2014, we completed our acquisition of Cyvera Ltd. (“Cyvera”), a privately-held cybersecurity company located in Tel Aviv, Israel. The acquisition extends our next-generation security platform with an innovative approach to preventing attacks on the endpoint. We have accounted for this transaction as a business combination in exchange for total consideration of approximately $177,647,000, which consisted of the following (in thousands): |
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| Amount | | | | | | | | | | | | |
Cash | $ | 90,170 | | | | | | | | | | | | | |
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Common stock (1,281,000 shares) | 87,477 | | | | | | | | | | | | | |
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Total | $ | 177,647 | | | | | | | | | | | | | |
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As part of the acquisition, we agreed to replace Cyvera's unvested options with our restricted stock units with an estimated fair value of $6,353,000. Of the total estimated fair value, a portion was allocated to the purchase consideration and the remainder was allocated to future services and will be expensed over the remaining service periods on a straight-line basis as share-based compensation. |
In addition, we issued 276,000 shares of restricted common stock with a total fair value of $17,612,000 to certain Cyvera employees. The restriction on these shares will be released over a period of three years from the acquisition date, subject to continued employment. These shares were excluded from the purchase consideration and are being expensed over the remaining service periods on a straight-line basis as share-based compensation. |
We expensed the related acquisition costs in the amount of $3,583,000 in general and administrative expenses in the three and nine months ended April 30, 2014. |
The following table summarizes our preliminary allocation of the purchase consideration based on the fair value of assets acquired and liabilities assumed (in thousands): |
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| Amount | | | | | | | | | | | | |
Cash | $ | 6,930 | | | | | | | | | | | | | |
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Goodwill | 144,992 | | | | | | | | | | | | | |
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Identified intangible assets | 42,300 | | | | | | | | | | | | | |
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Accrued and other liabilities, net | (6,950 | ) | | | | | | | | | | | | |
Long-term deferred tax liability, net | (9,625 | ) | | | | | | | | | | | | |
Total | $ | 177,647 | | | | | | | | | | | | | |
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We expect to finalize the valuation as soon as practicable, but not later than 12 months from the acquisition date. |
The following table presents details of the identified intangible assets acquired (in thousands, except years): |
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| Fair Value | | Estimated Useful Life | | | | | | | | | | |
Developed technology | $ | 34,500 | | | 7 years | | | | | | | | | | |
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In-process research and development | 7,600 | | | N/A | | | | | | | | | | |
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Other | 200 | | | 2 years | | | | | | | | | | |
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Total | $ | 42,300 | | | | | | | | | | | | | |
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Goodwill generated from this business combination is primarily attributable to the assembled workforce and synergies from combined selling opportunities of both network security products and endpoint security products. The goodwill is not tax deductible for Israeli income tax purposes. |
Cyvera’s operating results are included in our Condensed Consolidated Statements of Operations from the date of the acquisition and are considered immaterial for purposes of financial disclosures. |
The following table presents the unaudited pro forma financial information for the three and nine months ended April 30, 2014 and 2013, as though the companies were combined as of August 1, 2012 (in thousands): |
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| Three Months Ended April 30, | | Nine Months Ended April 30, |
| 2014 | | 2013 | | 2014 | | 2013 |
Total revenue | $ | 150,732 | | | $ | 101,295 | | | $ | 420,023 | | | $ | 283,739 | |
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Net loss | $ | (149,776 | ) | | $ | (10,744 | ) | | $ | (210,276 | ) | | $ | (23,502 | ) |
The pro forma financial information for the three and nine months ended April 30, 2014 and 2013 has been calculated after adjusting the results of Cyvera to reflect the business combination accounting effects resulting from this acquisition as though the acquisition occurred as of August 1, 2012, including the amortization expense from acquired intangible assets and post-acquisition share-based compensation expense related to restricted common stock and the replacement of unvested Cyvera options. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of our fiscal 2013. |
The pro forma financial information for the three and nine months ended April 30, 2014 and 2013 combines the historical results of the Company for the three and nine months ended April 30, 2014 and 2013 and the adjusted historical results of Cyvera for the three and nine months ended March 31, 2014 and 2013, due to differences in reporting periods and considering the date the Company acquired Cyvera. |
Morta Security, Inc. |
On December 26, 2013, we completed our acquisition of Morta Security, Inc. ("Morta"), a privately-held cybersecurity company. We have accounted for this transaction as a business combination and exchanged total cash consideration of $10,345,000, of which $2,500,000 was withheld for Morta's indemnification obligations. Morta brings us a team of cybersecurity experts which will enhance the proven detection and prevention capabilities of our WildFire offering. |
The following table summarizes our preliminary allocation of the purchase consideration based on the fair value of assets acquired and liabilities assumed (in thousands): |
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| Amount | | | | | | | | | | | | |
Goodwill | $ | 10,094 | | | | | | | | | | | | | |
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Identified intangible assets | 2,200 | | | | | | | | | | | | | |
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Net liabilities assumed | (1,949 | ) | | | | | | | | | | | | |
Total | $ | 10,345 | | | | | | | | | | | | | |
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The following table presents details of the identified intangible assets acquired (in thousands, except years): |
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| Fair Value | | Estimated Useful Life | | | | | | | | | | |
In-process research and development held for defensive purposes | $ | 1,900 | | | 3 years | | | | | | | | | | |
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Other | 300 | | | 2 years | | | | | | | | | | |
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Total | $ | 2,200 | | | | | | | | | | | | | |
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Morta’s operating results are included in our Condensed Consolidated Statements of Operations from the date of the acquisition and are considered immaterial for purposes of pro forma financial disclosures. Goodwill generated from this business combination is primarily attributable to human capital with threat intelligence experience and capabilities, and is not tax deductible for U.S. federal income tax purposes. |
Other Purchased Intangible Assets |
On September 4, 2013 we entered into an agreement to purchase intellectual property for $5,000,000, which is being amortized over a weighted-average period of 13 years. |