Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 30, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | AVLR | |
Entity Registrant Name | AVALARA, INC. | |
Entity Central Index Key | 0001348036 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 78,422,284 | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity File Number | 001-38525 | |
Entity Tax Identification Number | 91-1995935 | |
Entity Address, Address Line One | 255 South King Street | |
Entity Address, Address Line Two | Suite 1800 | |
Entity Address, City or Town | Seattle | |
Entity Address, State or Province | WA | |
Entity Address, Postal Zip Code | 98104 | |
City Area Code | 206 | |
Local Phone Number | 826-4900 | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | Common Stock, Par Value $0.0001 Per Share | |
Security Exchange Name | NYSE | |
Entity Incorporation, State or Country Code | WA | |
Document Quarterly Report | true | |
Document Transition Report | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 450,535 | $ 466,950 |
Trade accounts receivable—net of allowance for doubtful accounts of $2,233 and $1,179, respectively | 53,797 | 51,644 |
Deferred commissions | 9,676 | 9,279 |
Prepaid expenses and other current assets | 18,872 | 14,127 |
Total current assets before customer fund assets | 532,880 | 542,000 |
Funds held from customers | 28,096 | 24,383 |
Receivable from customers—net of allowance of $305 and $270, respectively | 588 | 420 |
Total current assets | 561,564 | 566,803 |
Noncurrent assets: | ||
Deferred commissions | 30,990 | 29,137 |
Operating lease right-of-use assets—net | 53,929 | 49,321 |
Property and equipment—net | 34,185 | 34,997 |
Intangible assets—net | 20,949 | 22,932 |
Goodwill | 101,035 | 101,224 |
Other noncurrent assets | 3,237 | 2,853 |
Total assets | 805,889 | 807,267 |
Current liabilities: | ||
Trade payables | 15,289 | 11,693 |
Accrued expenses | 45,187 | 62,104 |
Deferred revenue | 164,699 | 160,271 |
Accrued earnout liabilities | 3,671 | 4,120 |
Operating lease liabilities | 10,140 | 8,756 |
Total current liabilities before customer fund obligations | 238,986 | 246,944 |
Customer fund obligations | 28,817 | 24,783 |
Total current liabilities | 267,803 | 271,727 |
Noncurrent liabilities: | ||
Deferred revenue | 670 | 970 |
Accrued earnout liabilities | 0 | 9,835 |
Operating lease liabilities | 59,887 | 58,301 |
Deferred tax liability | 399 | 337 |
Other noncurrent liabilities | 836 | 2,375 |
Total liabilities | 329,595 | 343,545 |
Commitments and contingencies | 0 | 0 |
Shareholders' equity: | ||
Preferred stock, $0.0001 par value– no shares issued and outstanding at March 31, 2020 and December 31, 2019, and 20,000 shares authorized as of March 31, 2020 and December 31, 2019 | 0 | 0 |
Common stock, $0.0001 par value– 78,295 and 77,448 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively, and 600,000 shares authorized as of March 31, 2020 and December 31, 2019 | 8 | 8 |
Additional paid-in capital | 1,003,857 | 976,627 |
Accumulated other comprehensive loss | (2,094) | (2,719) |
Accumulated deficit | (525,477) | (510,194) |
Total shareholders’ equity | 476,294 | 463,722 |
Total liabilities and shareholders' equity | $ 805,889 | $ 807,267 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Statement Of Financial Position [Abstract] | ||
Trade accounts receivable, allowance for doubtful accounts | $ 2,233 | $ 1,179 |
Receivable from customers, allowance | $ 305 | $ 270 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares, issued | 78,295,000 | 77,448,000 |
Common stock, shares, outstanding | 78,295,000 | 77,448,000 |
Common stock, shares authorized | 600,000,000 | 600,000,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue: | ||
Revenues | $ 111,443 | $ 84,970 |
Cost of revenue: | ||
Cost of revenues | 34,254 | 25,307 |
Gross profit | 77,189 | 59,663 |
Operating expenses: | ||
Research and development | 25,847 | 15,956 |
Sales and marketing | 49,634 | 39,319 |
General and administrative | 21,388 | 15,234 |
Total operating expenses | 96,869 | 70,509 |
Operating loss | (19,680) | (10,846) |
Other (income) expense: | ||
Interest income | (1,442) | (767) |
Interest expense | 0 | 111 |
Other (income) expense, net | (3,372) | 48 |
Total other (income) expense, net | (4,814) | (608) |
Loss before income taxes | (14,866) | (10,238) |
Provision for (benefit from) income taxes | 417 | 116 |
Net loss | $ (15,283) | $ (10,354) |
Net loss per share attributable to common shareholders, basic and diluted | $ (0.20) | $ (0.15) |
Weighted average shares of common stock outstanding, basic and diluted | 77,904 | 68,381 |
Subscription and Returns | ||
Revenue: | ||
Revenues | $ 105,546 | $ 78,231 |
Cost of revenue: | ||
Cost of revenues | 29,517 | 20,978 |
Professional Services | ||
Revenue: | ||
Revenues | 5,897 | 6,739 |
Cost of revenue: | ||
Cost of revenues | $ 4,737 | $ 4,329 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Net loss | $ (15,283) | $ (10,354) |
Other comprehensive income (loss)—Foreign currency translation | 625 | (462) |
Total comprehensive loss | $ (14,658) | $ (10,816) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (15,283) | $ (10,354) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation | 9,731 | 6,560 |
Depreciation and amortization | 4,091 | 3,681 |
Deferred tax expense | 62 | 39 |
Non-cash operating lease costs | 1,956 | 1,054 |
Non-cash change in earnout liabilities | (2,509) | 0 |
Non-cash bad debt expense | 631 | 222 |
Other | 192 | 58 |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | (2,750) | (5,535) |
Prepaid expenses and other current assets | (4,745) | (1,705) |
Deferred commissions | (2,250) | (5,266) |
Other noncurrent assets | (384) | (236) |
Trade payables | 3,659 | 3,590 |
Accrued expenses | (18,568) | (10,373) |
Deferred revenue | 4,128 | 9,031 |
Operating lease liabilities | (2,230) | (1,187) |
Net cash used in operating activities | (24,269) | (10,421) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (1,600) | (2,114) |
Cash paid for acquisitions of businesses | 0 | (17,310) |
Cash paid for acquired intangible assets | 0 | (131) |
Net increase in customer fund assets | (3,915) | (7,224) |
Net cash used in investing activities | (5,515) | (26,779) |
Cash flows from financing activities: | ||
Payments of deferred financing costs | 0 | (39) |
Proceeds from exercise of stock options and common stock warrants | 7,928 | 27,311 |
Proceeds from purchases of stock under employee stock purchase plan | 5,716 | 7,664 |
Taxes paid related to net share settlement of stock-based awards | 0 | (93) |
Payment related to business combination earnouts | (3,760) | 0 |
Payment related to asset acquisition earnouts | (65) | 0 |
Net increase in customer fund obligations | 3,915 | 7,143 |
Net cash provided by financing activities | 13,734 | 41,986 |
Foreign currency effect on cash and cash equivalents | (365) | (230) |
Net change in cash and cash equivalents | (16,415) | 4,556 |
Cash and cash equivalents—Beginning of period | 466,950 | 142,322 |
Cash and cash equivalents—End of period | 450,535 | 146,878 |
Supplemental cash flow disclosures: | ||
Cash paid for interest expense | 0 | 63 |
Cash paid for operating lease liabilities | 3,108 | 2,110 |
Cash paid for income taxes | 320 | 77 |
Non-cash investing and financing activities: | ||
Stock issued related to business combinations | 3,750 | 0 |
Accrued purchase price related to acquisitions | 0 | 2,984 |
Accrued value of earnout related to acquisitions of businesses | 0 | 5,952 |
Property and equipment additions in accounts payable and accrued expenses | 743 | 938 |
Deferred financing costs in accounts payable and accrued expenses | 0 | 272 |
Fair value of common stock issued to purchase intangible assets | 87 | 50 |
Operating lease right-of-use assets in exchange for lease obligations | $ 6,562 | $ 2,388 |
Nature of Operations
Nature of Operations | 3 Months Ended |
Mar. 31, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Nature of Operations | 1. Nature of Operations Avalara, Inc. (the “Company”) provides software solutions that help businesses of all types and sizes comply with tax requirements for transactions worldwide. The Company offers a broad and growing suite of compliance solutions for transaction taxes, such as sales and use tax, value-added tax (VAT), fuel excise tax, beverage alcohol, cross-border taxes (including tariffs and duties), lodging tax, and communications tax. These solutions enable customers to automate the process of determining taxability, identifying applicable tax rates, determining and collecting taxes, preparing and filing returns, remitting taxes, maintaining tax records, and managing compliance documents. The Company, a Washington corporation, was originally incorporated in 1999 and is headquartered in Seattle, Washington. The Company has wholly owned subsidiaries in Brazil, Canada, Europe, and India that provide business development, software development, and support services. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. Significant Accounting Policies Interim Financial Information The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes for the year ended December 31, 2019, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Annual Report”) filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2020. The accompanying interim consolidated balance sheet as of March 31, 2020, the consolidated interim statements of operations for the three months ended March 31, 2020 and 2019, the consolidated statements of comprehensive loss for the three months ended March 31, 2020 and 2019, and the consolidated statements of cash flows for the three months ended March 31, 2020 and 2019, are unaudited. The unaudited interim consolidated financial statements have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and include, in the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the consolidated financial statements. The operating results for the three months ended March 31, 2020 are not necessarily indicative of the results expected for the full year ending December 31, 2020. Prior Period Restatements and Adjustments In preparing the 2019 annual consolidated financial statements, the Company discovered an immaterial error in recording deferred sales commissions for the first three quarters of 2019 impacting its previously reported quarterly financial results. The correction to sales commission expense resulted in an increase in sales and marketing expenses and accumulated deficit of $1.1 million and a $0.01 increase in net loss per share in the first quarter of 2019. The restatement of these prior period corrected amounts is presented in the accompanying unaudited consolidated statement of operations, consolidated statement of comprehensive loss, and consolidated statement of cash flows for the three-months ended March 31, 2019. Avalara adopted the new lease accounting standard as of January 1, 2019 in the 2019 Annual Report. Due to the timing of adoption, the Company’s 2019 interim financial statements did not reflect the new lease accounting standard. As a result, the presentation of cash flows from operating activities presented in the accompanying unaudited consolidated statement of cash flows for the quarter ended March 31, 2019 include adjustments for the adoption of the new lease accounting standard. The adjustments do not impact previously reported net cash used in operating activities. Principles of Consolidation The accompanying consolidated financial statements include those of the Company and its subsidiaries after elimination of all intercompany accounts and transactions. Segments The Company operates its business as one operating segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker, the Company’s Chief Executive Officer, in deciding how to allocate resources and assess performance. The Company’s chief operating decision maker allocates resources and assesses performance based upon discrete financial information at the consolidated level. Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates and judgments related to revenue are described below in the Revenue Recognition Accounting Policy. Significant estimates impacting expenses include: expected credit losses associated with the allowance for doubtful accounts; the measurement of fair values of stock-based compensation award grants; the expected earnout obligations in connection with acquisitions; the expected term of the customer relationship for capitalized contract cost amortization; the valuation of acquired intangible assets; and the valuation of the fair value of reporting units for analyzing goodwill. Actual results could materially differ from those estimates. Fair Value Measurements 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. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1 : Inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 : Inputs are quoted prices for similar assets and liabilities in active markets or quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 : Inputs are unobservable inputs based on the Company’s assumptions and valuation techniques used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation. The Company’s assessment of the significance of an input to the fair value measurement requires judgment, which may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. The carrying amounts reported in the consolidated financial statements approximate the fair value for cash equivalents, trade accounts receivable, trade payables, and accrued expenses, due to their short-term nature. Long-Lived Assets The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. An impairment is recognized in the event the carrying value of such assets is not recoverable. If the carrying value is not recoverable, the fair value is determined, and an impairment is recognized for the amount by which the carrying value exceeds the fair value. No impairment of long-lived assets occurred in the first three months of 2020. Self-Insurance Beginning August 1, 2019, the Company established a self-insured healthcare plan for eligible U.S. employees. Under the plan, the Company pays healthcare claims and fees to the plan administrator. Total claim payments are limited by stop-loss insurance policies. As there generally is a lag between the time a claim is incurred by a participant and the time the claim is submitted for payment, the Company has recorded a self-insurance reserve for estimated outstanding claims within accrued expenses in the consolidated balance sheets. Income Taxes The Company’s deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and income tax basis of assets and liabilities and are measured using the tax rates that will be in effect when the differences are expected to reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. The Company assesses its income tax positions and records tax benefits or expense based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequence of events that have been recognized in an entity’s financial statements or tax returns. The Company will recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Judgement is required in assessing the future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. Variations in the actual outcome of these future tax consequences could materially impact the consolidated financial statements. Stock-Based Compensation The Company accounts for stock-based compensation by calculating the fair value of each option, restricted stock unit (“RSU”), or purchase right issued under the Company’s 2018 Employee Stock Purchase Plan (“ESPP”) at the date of grant. The fair value of stock options and purchase rights issued under the ESPP is estimated by applying the Black-Scholes option-pricing model. This model uses the fair value of the Company’s underlying common stock at the measurement date, the expected or contractual term of the option or purchase right, the expected volatility of its common stock, risk-free interest rates, and expected dividend yield of its common stock. The fair value of an RSU is determined using the fair value of the Company’s underlying common stock on the date of grant. The Company accounts for forfeitures as they occur. Revenue Recognition The Company primarily generates revenue from fees paid for subscriptions to tax compliance solutions and fees paid for services performed in preparing and filing tax returns on behalf of its customers. Amounts that have been invoiced are recorded in trade accounts receivable and deferred revenue, contract liabilities, or revenue, depending upon whether the revenue recognition criteria have been met. Revenue is recognized once the customer is provisioned and services are provided in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Beginning January 1, 2019, the Company’s revenue recognition policy follows guidance from ASC 606, Revenue from Contracts with Customers The Company determines revenue recognition through the following five-step framework: • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, the Company satisfies a performance obligation. The Company identifies performance obligations in its contracts with customers, which primarily include subscription services and professional services. The transaction price is determined based on the amount which the Company expects to be entitled to in exchange for providing the promised services to the customer. The transaction price in the contract is allocated to each distinct performance obligation on a relative standalone selling price basis. Revenue is recognized when performance obligations are satisfied. Contract payment terms are typically net 30 days. Collectability is assessed based on a number of factors including collection history and creditworthiness of the customer, and the Company may mitigate exposure to credit risk by requiring payments in advance. If collectability of substantially all consideration to which the Company is entitled under the contract is determined to be not probable, revenue is not recorded until collectability becomes probable at a later date. Revenue is recorded based on the transaction price excluding amounts collected on behalf of third parties , such as sales taxes co llected and remitted to governmental authorities. Subscription and Returns Revenue Subscription and returns revenue primarily consist of contractually agreed upon fees paid for using the Company’s cloud-based solutions, which include tax determination and compliance management services, and fees paid for preparing and filing transaction tax returns on behalf of customers. Under the Company’s subscription agreements, customers select a price plan that includes an allotted maximum number of transactions over the subscription term. Unused transactions are not carried over to the customer’s next subscription term, and customers are not entitled to refunds of fees paid or relief from fees due in the event they do not use the allotted number of transactions. If customers exceed the maximum transaction level within their price plan, the Company will generally upgrade the customer to a higher transaction price plan or, in some cases, charge overage fees on a per transaction basis. The Company’s subscription arrangements do not provide the customer with the right to take possession of the software supporting the cloud-based application services. The Company’s standard subscription contracts are non-cancelable except where contract terms provide rights to cancel in the first 60 days of the contract term. Cancellations under the Company’s standard subscription contracts are not material, and do not have a significant impact on revenue recognized. Tax returns processing services include collection of tax data and amounts, preparation of compliance forms, and submission to taxing authorities. Returns processing services are primarily charged on a subscription basis for an allotted number of returns to process within a given time period. Revenue is recognized ratably over the contractual term of the arrangement, beginning on the date that the service is made available to the customer. The Company invoices its subscription customers for the initial term at contract signing and at each subscription renewal. Initial terms generally range from 12 to 18 months, and renewal periods are typically one year. Amounts that are contractually billable and have been invoiced, or which have been collected as cash, are initially recorded as deferred revenue or contract liabilities. While most of the Company’s customers are invoiced once at the beginning of the term, a portion of customers are invoiced semi-annually, quarterly, or monthly. Included in the total subscription fee for cloud-based solutions are non-refundable upfront fees that are typically charged to new customers. These fees are associated with work performed to set up a customer with the Company’s services, and do not represent a distinct good or service. Instead, the fees are included within the transaction price and allocated to the remaining performance obligations in the contract. The Company recognizes revenue for these fees in accordance with the revenue recognition for those performance obligations. Also included in subscription and returns revenue is interest income on funds held for customers. The Company uses trust accounts at FDIC-insured institutions to provide tax remittance services to customers and collect funds from customers in advance of remittance to tax authorities. After collection and prior to remittance, the Company earns interest on these funds. Professional Services Revenue The Company invoices for professional service arrangements on a fixed fee, milestone, or time and materials basis. Professional services revenue includes fees from providing tax analysis, configurations, registrations, data migrations, integration, training, and other support services. The transaction price allocated to professional services performance obligations is recognized as revenue as services are performed or upon completion of work. Judgments and Estimates The Company’s contracts with customers often include obligations to provide multiple services to a customer. Determining whether services are considered distinct performance obligations that should be accounted for separately from one another requires judgment. Subscription services and professional services are both distinct performance obligations that are accounted for separately. Judgment is required to determine the standalone selling price (“SSP”) for each distinct performance obligation. The Company allocates revenue to each performance obligation based on the relative SSP. The Company determines SSP for performance obligations based on overall pricing objectives, which take into consideration observable prices, market conditions and entity-specific factors. This includes a review of historical data related to the services being sold and customer demographics. The Company uses a range of amounts to estimate SSP for performance obligations. There is typically more than one SSP for individual services due to the stratification of those services by information, such as size and type of customer. Assets Recognized from the Costs to Obtain a Contract with a Customer The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. The Company has determined that certain costs related to employee sales incentive programs (sales commissions) and partner commission programs represent incremental costs of obtaining a contract and therefore should be capitalized. Capitalized costs are included in deferred commissions on the consolidated balance sheets. These deferred commissions are amortized over an estimated period of benefit, generally six years. The Company determines the period of benefit by taking into consideration past experience with customers, the expected life of acquired technology that generates revenue, industry peers, and other available information. The period of benefit is generally longer than the term of the initial contract because of anticipated renewals. The Company elected to apply the practical expedient to recognize the incremental costs of obtaining a contract as an expense if the amortization period of the asset would have been one year or less. L eases Effective January 1, 2019, the Company’s lease accounting policy follows guidance from ASC 842, Leases Leases are classified at commencement as either operating or finance leases. As of March 31, 2020, all of the Company’s leases are classified as operating leases. Rent expense for operating leases is recognized on the straight-line method over the term of the agreement beginning on the lease commencement date. Operating lease costs are generally fixed payments. Lease-related costs, which are variable rather than fixed, are expensed in the period incurred. Variable lease costs consist primarily of common area maintenance and utilities costs for the Company’s office spaces that are due based on the actual costs incurred by the landlord. Lease payments that depend on an index or a rate are measured using the index or rate at the commencement date and are included in operating lease costs. Subsequent increases to lease payments due to a change in the index or rate are expensed as a variable lease cost. Recently Adopted Accounting Standards ASU No. 2016-13 In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, related to credit losses, which amends the current accounting guidance and requires the measurements of all expected losses based on historical experience, current conditions and reasonable and supportable forecasts. The new guidance replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. The guidance in ASU No. 2016-13 is required for annual periods, including interim periods within those annual periods, beginning after December 15, 2019 for public business entities. The Company adopted this guidance on January 1, 2020. The adoption, which impacted the Company’s allowance for doubtful accounts, did not have a significant impact on the consolidated financial statements. ASU No. 2018-15 In August 2018, the FASB issued ASU No. 2018-15, related to implementation costs incurred in a cloud computing arrangement that is a service contract. This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use-software. The guidance in ASU No. 2018-15 is required for annual reporting periods , including interim periods within those annual periods, The Company adopted this guidance on January 1, 2020 with prospective application, as permitted by the ASU. New Accounting Standards Not Yet Adopted ASU No. 2019-12 In December 2019, the FASB issued Accounting Standard Update No. 2019-12, which simplifies the accounting for income taxes. The guidance in ASU No. 2019-12 is required for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2020, for public business entities, with early adoption permitted. The Company will adopt this guidance on January 1, 2021. The Company is currently evaluating the impact this guidance will have on the Company’s consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 3. Fair Value Measurements Assets and liabilities measured at fair value on a recurring basis The following financial assets and liabilities are measured at fair value on a recurring basis. The fair values recognized in the accompanying consolidated balance sheets and the level within the fair value hierarchy in which the fair value measurements fall is as follows (in thousands): Fair Value Measurements Using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Fair Identical Assets Inputs Inputs March 31, 2020 Value (Level 1) (Level 2) (Level 3) Money market funds $ 443,936 $ 443,936 $ — $ — Earnout related to business combinations 3,599 — — 3,599 Fair Value Measurements Using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Fair Identical Assets Inputs Inputs December 31, 2019 Value (Level 1) (Level 2) (Level 3) Money market funds $ 458,248 $ 458,248 $ — $ — Earnout related to business combinations 13,808 — — 13,808 Earnout Liabilities Earnout liabilities recorded in connection with an acquisition accounted for as a business combination under ASC 805 are recorded at estimated fair value on a recurring basis. Business combinations are discussed in Note 5. Earnouts recorded in connection with asset acquisitions are recorded as earnout payments become known. As such, earnouts related to asset acquisitions are not included in these fair value disclosures. Earnout liabilities are classified as Level 3 liabilities because the Company uses unobservable inputs to value them, reflecting its assessment of the assumptions market participants would use to value these liabilities. Changes in the fair value of earnout liabilities are recorded in other (income) expense, net in the consolidated statements of operations. The Company generally estimates the fair value of earnout liabilities for business combinations using probability-weighted discounted cash flows and Monte Carlo simulations. As of March 31, 2020, the earnout liability associated with the 2019 acquisition of Portway International Inc. (“Portway”) was valued utilizing a discount rate of 8.0%. The Portway discount rate was calculated using the build-up method with a risk-free rate commensurate with the term of the earnout. The earnout periods for the 2019 acquisitions of Compli, Inc. (“Compli”) and Indix Corporation (“Indix”) ended as of January 31, 2020 and February 6, 2020, respectively. Additional information regarding payments of earnout liabilities that occurred during the quarter ended March 31, 2020 is included in Note 5. A reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying consolidated balance sheets using significant unobservable (Level 3) inputs, is as follows (in thousands): Three Months Ended March 31, 2020 2019 Earnout liabilities: Balance beginning of period $ 13,808 $ — Fair value recorded at acquisition — 5,952 Payments of earnout liabilities (7,700 ) — Total unrealized (gains) losses included in other (income) expense, net (2,509 ) — Balance end of period $ 3,599 $ 5,952 Assets and liabilities measured at fair value on a non-recurring basis The Company’s non-financial assets and liabilities, which include goodwill, intangible assets, and long-lived assets, are not required to be measured at fair value on a recurring basis. There were no fair value measurements of these assets during the first quarter of 2020. |
Balance Sheet Detail
Balance Sheet Detail | 3 Months Ended |
Mar. 31, 2020 | |
Balance Sheet Related Disclosures [Abstract] | |
Balance Sheet Detail | 4 . Balance Sheet Detail Property and equipment, net consisted of the following (in thousands): Useful March 31, December 31, Life (Years) 2020 2019 Computer equipment and software 3 to 5 $ 15,596 $ 15,636 Internally developed software 6 6,521 5,948 Furniture and fixtures 5 6,559 6,589 Office equipment 3 to 5 850 1,058 Leasehold improvements 1 to 10 29,030 28,984 58,556 58,215 Accumulated depreciation (24,371 ) (23,218 ) Property and equipment—net $ 34,185 $ 34,997 Depreciation expense was $2.3 million for the three months ended March 31, 2020 and $2.0 million for the three ended March 31, 2019, respectively. Prepaid expenses and other current assets consisted of the following (in thousands): March 31, December 31, 2020 2019 Prepaid expenses $ 16,154 $ 11,064 Accrued investment income 347 565 Deposits 229 197 Other 2,142 2,301 Total $ 18,872 $ 14,127 Accrued expenses consisted of the following (in thousands): March 31, December 31, 2020 2019 Accrued payroll and related taxes $ 6,748 $ 3,985 Accrued federal, state, and local taxes 3,237 2,635 Accrued bonus 3,117 20,206 Self-insurance reserves 2,240 2,238 Employee stock purchase plan contributions 2,582 4,716 Accrued sales commissions 2,423 5,397 Accrued partner commissions 7,321 7,043 Contract liabilities 6,330 5,197 Accrued purchase price related to acquisitions 3,341 2,763 Other 7,848 7,924 Total $ 45,187 $ 62,104 Contract liabilities represent amounts that are collected in advance of the satisfaction of performance obligations. See Contract Liabilities |
Acquisitions of Businesses
Acquisitions of Businesses | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Acquisitions of Businesses | 5 . Acquisitions of Businesses January 2019 Acquisition of Compli On January 22, 2019, the Company completed the acquisition of substantially all the assets of Compli under an Asset Purchase Agreement (the “Compli Purchase”). Compli is a provider of compliance services, technology, and software to producers, distributors, and importers of beverage alcohol in the United States. The Company accounted for the Compli Purchase as a business combination. As a result of the acquisition, the Company expanded its ability to provide transaction tax solutions and content for the beverage alcohol industry. The total consideration transferred related to this transaction was $17.1 million, consisting of $11.8 million paid in cash at closing, an additional $1.6 million of cash to be paid out after twelve months, and an earnout provision fair valued upon acquisition at $3.8 million. The earnout provision is for a one-time payment and has a maximum payout of $4.0 million based on revenue recognized by the Company from the acquired operating assets for the twelve-month period ended January 31, 2020. The earnout was originally recognized at fair value at the date of the business combination and $4.0 million was paid in the first quarter of 2020. Estimated fair values of the assets acquired and the liabilities assumed in the Compli Purchase as of the acquisition date are provided in the following table (in thousands): Assets acquired: Current assets $ 505 Developed technology, customer relationships, and other intangibles 4,288 Goodwill 12,807 Total assets acquired 17,600 Liabilities assumed: Current liabilities 482 Total liabilities assumed 482 Net assets acquired $ 17,118 The Company utilizes different valuation approaches and methodologies to determine the fair value of acquired intangible assets. A summary of the valuation methodologies, significant assumptions, and estimated useful lives of acquired intangible assets in the Compli Purchase are provided in the below table (in thousands): Intangible Assigned Value Valuation Methodology Discount Rate Estimated Useful Life Customer relationships $ 3,250 Multi-period excess earnings-income approach 13 % 6 years Trademarks and trade names 32 Relief from royalty- income approach 13 % 2 years Developed technology and customer database 910 Relief from royalty- income approach 13 % 6 years Noncompetition agreements 96 With-and-without valuation- income approach 13 % 3 years The excess of the purchase price over the net identified tangible and intangible assets of $12.8 million has been recorded as goodwill, which includes synergies expected from the combined service offerings and the value of the assembled workforce. The goodwill is expected to be deductible for tax purposes. February 2019 Acquisition of Indix On February 6, 2019, the Company completed the acquisition of substantially all the assets of Indix under an Asset Purchase Agreement (the “Indix Purchase”). Indix is an artificial intelligence company providing comprehensive product descriptions for more than one billion products sold and shipped worldwide. The Company accounted for the Indix Purchase as a business combination. As a result of the acquisition, the Company intends to use the Indix artificial intelligence to maintain and expand its tax content database. The total consideration transferred related to this transaction was $9.1 million, consisting of $5.5 million paid in cash at closing, an additional $1.4 million cash to be paid after eighteen months, and an earnout provision valued upon acquisition at $2.2 million. The earnout provision has a maximum payout of $3.0 million based on the successful transition and achievement of development milestones established in the purchase agreement. The earnout provides for interim payments based on milestones to be evaluated as follows: $0.5 million within three months of closing, $0.65 million within seven months of closing, $0.65 million within eight months of closing, and $1.2 million within 12 months of closing. The earnout was originally recognized at fair value at the date of the business combination and is adjusted to fair value quarterly (see Note 3). The first earnout milestone was achieved in the second quarter of 2019 and was paid in July 2019. The second and fourth milestones were not achieved. A portion of the third milestone was achieved and $0.03 million is recorded within current accrued earnout liabilities on the consolidated balance sheet as of March 31, 2020. Estimated fair values of the assets acquired and the liabilities assumed in the Indix Purchase as of the acquisition date are provided in the following table (in thousands): Assets acquired: Current assets $ 94 Developed technology 4,472 Goodwill 4,953 Total assets acquired 9,519 Liabilities assumed: Current liabilities 392 Total liabilities assumed 392 Net assets acquired $ 9,127 The Company utilizes different valuation approaches and methodologies to determine the fair value of acquired intangible assets. A summary of the valuation methodologies, significant assumptions, and estimated useful lives of acquired intangible assets in the Indix Purchase are provided in the below table (in thousands): Intangible Assigned Value Valuation Methodology Discount Rate Estimated Useful Life Developed technology $ 4,472 Relief from royalty- income approach 24.5% 6 years The excess of the purchase price over the net identified tangible and intangible assets of $5.0 million has been recorded as goodwill, which includes cost savings expected from the use of the acquired technology and the value of the assembled workforce. The goodwill is expected to be deductible for tax purposes. July 2019 Acquisition of Portway On July 31, 2019, the Company completed the acquisition of substantially all the assets of Portway under an Asset Purchase Agreement (the “Portway Purchase”). Portway is a provider of Harmonized System classifications and outsourced customs brokerage services. The Company accounted for the Portway Purchase as a business combination. As a result of the acquisition, the Company expanded its cross-border solutions. The total consideration transferrable related to this transaction was $24.3 million, consisting of $13.0 million paid in cash at closing, an additional $2.0 million of cash to be paid after eighteen months with an acquisition date fair value of $1.9 million, and an earnout provision fair valued upon acquisition at $9.4 million. The earnout is payable in the Company’s common stock no later than February 2021. The maximum number of shares of common stock that could be earned and transferred to the seller is 119,090 shares, which was based on a maximum payout value of $10.0 million and a per share value of $83.97 under the terms of the Portway Purchase. The earnout is based on the achievement of specific revenue and operating metrics through January 2021, and the shares (which were issued at closing and are held in escrow) will be forfeited and cancelled if the metrics are not achieved. The earnout is based, in part, on two operating metric targets with a maximum payout of $7.5 million. The remainder of the earnout is based on certain revenue targets with a maximum payout of $2.5 million. Pursuant to the Portway Purchase, the shares will be transferred to the seller when the criteria under each provision are satisfied. During the first quarter of 2020, 44,659 shares of common stock (with a $3.8 million value under the Portway Purchase) were transferred to the seller to settle one operating metric target of the earnout. In April 2020, 35,727 shares of common stock (with a $3.0 million value under the Portway Purchase) were transferred to the seller to settle a portion of the second operating metric target. The earnout was originally recognized at fair value at the date of the business combination and is adjusted to fair value quarterly (see Note 3). The remaining earnout liability is recorded in current accrued earnout liabilities on the consolidated balance sheet as of March 31, 2020. Estimated fair values of the assets acquired and the liabilities assumed in the Portway Purchase as of the acquisition date are provided in the following table (in thousands): Assets acquired: Property and equipment $ 76 Customer relationships and other intangibles 1,865 Goodwill 22,376 Total assets acquired 24,317 Liabilities assumed: Total liabilities assumed — Net assets acquired $ 24,317 The Company utilizes different valuation approaches and methodologies to determine the fair value of acquired intangible assets. A summary of the valuation methodologies, significant assumptions, and estimated useful lives of acquired intangible assets in the Portway Purchase are provided in the below table (in thousands): Intangible Assigned Value Valuation Methodology Discount Rate Estimated Useful Life Customer relationships $ 1,759 Multi-period excess earnings-income approach 12 % 6 years Noncompetition agreements 106 With-and-without valuation- income approach 12 % 4 years The excess of the purchase price over the net identified tangible and intangible assets of $22.4 million has been recorded as goodwill, which includes synergies expected from the expanded cross-border product functionality and customs brokerage services and the value of the assembled workforce. The goodwill is expected to be deductible for tax purposes. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Revenue | 6 . Revenue See Note 2 for a description of the Company’s revenue recognition accounting policy. Disaggregation of Revenue The following table disaggregates revenue generated within the United States (U.S.) from revenue generated from customers outside of the U.S. Revenue for transaction tax compliance in the U.S. is further disaggregated based on the solutions or services purchased by customers. Total revenues consisted of the following (in thousands): For the Three Months Ended March 31, 2020 2019 Revenue (U.S.): Subscription and returns Tax determination $ 58,971 $ 45,232 Tax returns and compliance management 39,433 26,686 Interest income on funds held for customers 525 729 Total subscription and returns 98,929 72,647 Professional services 5,462 5,735 Total revenue (U.S.) 104,391 78,382 Total revenue (non-U.S.) 7,052 6,588 Total revenue $ 111,443 $ 84,970 Disclosures Related to Contracts with Customers Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to contracts with customers. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations. To the extent a contract exists, as defined by ASC 606, these liabilities are classified as current and non-current deferred revenue. To the extent that a contract does not exist, as defined by ASC 606 (e.g. customer agreements with non-standard termination rights), these liabilities are classified as contract liabilities. Contract liabilities are transferred to deferred revenue at the point in time when the criteria that establish the existence of a contract are met. Contract Liabilities A summary of the activity impacting the contract liabilities during the three months ended March 31, 2020 is presented below (in thousands): Three Months Ended March 31, 2020 2019 Contract liabilities: Balance beginning of period $ 5,197 $ — Adoption of ASC 606 — 2,090 Contract liabilities transferred to deferred revenue (2,538 ) (1,257 ) Addition to contract liabilities 3,671 3,375 Balance end of period $ 6,330 $ 4,208 As of March 31, 2020, contract liabilities are expected to be transferred to deferred revenue within the next 12 months and therefore are included in accrued expenses on the consolidated balance sheets. Deferred Revenue A summary of the activity impacting deferred revenue balances during the three months ended March 31, 2020 is presented below (in thousands): Three Months Ended March 31, 2020 2019 Deferred revenue: Balance beginning of period $ 161,241 $ 134,653 Adoption of ASC 606 — (11,250 ) Revenue recognized (111,443 ) (84,970 ) Additional amounts deferred 115,571 94,281 Balance end of period $ 165,369 $ 132,714 Assets Recognized from the Costs to Obtain Contracts with Customers Assets are recognized for the incremental costs of obtaining a contract with a customer if the benefit of those costs is expected to be longer than one year. These deferred commissions are amortized over an expected period of benefit of generally six years. A summary of the activity impacting the deferred commissions during the three months ended March 31, 2020 is presented below (in thousands): Three Months Ended March 31, 2020 2019 Deferred commissions: Balance beginning of period $ 38,416 $ — Adoption of ASC 606 — 19,267 Additional commissions deferred 4,897 7,656 Amortization of deferred commissions (2,647 ) (1,279 ) Balance end of period $ 40,666 $ 25,644 As of March 31, 2020, $9.7 million of deferred commissions are expected to be amortized within the next 12 months and therefore are included in current assets on the consolidated balance sheets. The remaining amount of deferred commissions are included in noncurrent assets. There were no impairments of assets related to deferred commissions during the three months ended March 31, 2020. There were no assets recognized related to the costs to fulfill contracts during the three months ended March 31, 2020 as these costs were not material. Remaining Performance Obligations Contracts with customers include amounts allocated to performance obligations that will be satisfied at a later date. These amounts include additional performance obligations that are not yet recorded in the consolidated balance sheets. As of March 31, 2020, amounts allocated to these additional contractual obligations are $39.4 million, of which $39.0 million is expected to be recognized as revenue over the next 12 months with the remaining amount thereafter. |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 7 . Intangible Assets Finite-lived intangible assets Finite-lived intangible assets consisted of the following (in thousands): March 31, 2020 Average Useful Life (Years) Gross Accumulated Amortization Net Customer relationships 3 to 10 $ 20,270 $ (11,947 ) $ 8,322 Developed technology 3 to 8 36,121 (23,656 ) 12,465 Noncompete agreements 3 to 5 762 (614 ) 148 Tradename and trademarks 1 to 4 441 (428 ) 13 $ 57,594 $ (36,645 ) $ 20,949 December 31, 2019 Average Useful Life (Years) Gross Accumulated Amortization Net Customer relationships 3 to 10 $ 20,390 $ (11,403 ) $ 8,987 Developed technology 3 to 8 36,422 (22,659 ) 13,763 Noncompete agreements 3 to 5 777 (612 ) 165 Tradename and trademarks 1 to 4 452 (435 ) 17 $ 58,041 $ (35,109 ) $ 22,932 Finite-lived intangible assets are generally amortized on a straight-line basis over the remaining estimated useful life as management believes this reflects the expected benefit to be received from these assets. Finite-lived intangible assets amortization expense was $1.8 million for the three months ended March 31, 2020 and $1.7 million for the three months ended March 31, 2019. Goodwill Changes in the carrying amount of goodwill for the three months ended March 31, 2020 are summarized as follows (in thousands): Balance—December 31, 2019 $ 101,224 Cumulative translation adjustments (189 ) Balance—March 31, 2020 $ 101,035 Goodwill is tested for impairment annually on October 31 at the reporting unit level or whenever circumstances occur indicating goodwill might be impaired. The impairment test involves comparing the fair value of each reporting unit to its carrying value, including goodwill. Fair value reflects the price a market participant would be willing to pay in a potential sale of the reporting unit. If the fair value exceeds carrying value, the Company will conclude that no goodwill impairment has occurred. If the carrying value of the reporting unit exceeds its fair value, the Company will recognize an impairment loss in an amount equal to the excess, not to exceed the carrying value. The Company has three reporting units for goodwill impairment testing consisting of its U.S., European, and Brazilian operations. As of March 31, 2020, the Brazilian reporting unit had no associated goodwill. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases | 8. Leases Total lease cost, net of sublease income, was $3.8 million for the three months ended March 31, 2020 and $2.6 million for the three months ended March 31, 2019. Sublease income was $0.4 million for the three months ended March 31, 2020 and 2019. Leases that commenced in the first three months of 2020 increased operating lease right-of-use assets by $6.6 million. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9 . Commitments and Contingencies Contingencies Loss contingencies may arise in connection with the ordinary conduct of the Company’s business activities. The Company considers loss contingencies on a quarterly basis and based on known facts assesses whether potential losses are considered reasonably possible, probable, and estimable. The Company establishes an accrual for loss contingencies when the loss is both probable and reasonably estimable. If the estimated loss is a range of potential outcomes and there is no better estimate within the range, management accrues the amount at the low end of the range. These accruals represent management’s estimate of probable losses and, in such cases, there may be an exposure to loss in excess of the amounts accrued. Significant judgment is required to determine both likelihood of there being a probable loss and the estimated amount of a loss. If a loss contingency is not both probable and reasonably estimable, the Company does not establish an accrual, but will evaluate other disclosure requirements and continue to monitor the matter for developments that would make the loss contingency both probable and reasonably estimable. The ultimate outcome of any litigation relating to a loss contingency is uncertain and, regardless of outcome, litigation can have an adverse impact on the Company because of defense costs, negative publicity, diversion of management resources, and other factors. On October 22, 2018, PTP OneClick, LLC (“PTP”) filed a lawsuit against Avalara, Inc. in the United States District Court for the Eastern District of Wisconsin. The lawsuit alleges that making, using, offering to sell, and selling AvaTax, Avalara Returns, and TrustFile (the “Avalara Products”) infringe U.S. Patent No. 9,760,915 held by PTP and also alleges unspecified trade secret misappropriation, unfair competition, and breach of contract. PTP seeks judgments of willful patent infringement, willful trade secret misappropriation, unfair competition, and breach of contract. PTP requests preliminary and permanent injunctions to enjoin the Company from making, using, offering to sell, and selling the Avalara Products along with treble damages and attorneys’ fees. Based upon the Company’s review of the complaint and the specified patent, the Company believes that the Company has meritorious defenses to PTP’s claims. On November 7, 2018, the Company moved to dismiss the lawsuit and to have the patent held invalid, and also moved to transfer the matter to the United States District Court located in Seattle, Washington. On April 30, 2019, the United States District Court for the Eastern District of Wisconsin granted the Company’s motion to transfer, reserving resolution of the motion to dismiss for the United States District Court for the Western District of Washington. On October 7, 2019, the United States District Court for the Western District of Washington invalidated the patent and dismissed the patent and unfair competition claims with prejudice but did not dismiss the trade secret misappropriation or breach of contract claims. On March 5, 2020, we filed a motion for summary judgment, which remains pending. The court has set the trial date for October 26, 2020. The Company intends to continue to vigorously defend against PTP’s allegations. The Company has not recorded an accrual related this litigation. In its standard subscription agreements, the Company has agreed to indemnification provisions with respect to certain matters. Further, from time to time, the Company has also assumed indemnification obligations through its acquisition activity. These indemnification provisions can create a liability to the Company if its services do not appropriately calculate taxes due to tax jurisdictions, or if the Company is delinquent in the filing of returns on behalf of its customers. Although the Company’s agreements have disclaimers of warranties that limit its liability (beyond the amounts the Company agrees to pay pursuant to its indemnification obligations and guarantees, as applicable), a court could determine that such disclaimers and limitations are unenforceable as a matter of law and hold the Company liable for certain errors. Further, in some instances the Company has negotiated agreements with specific customers or assumed agreements in connection with the Company’s acquisitions that do not limit this liability or disclaim these warranties. Except as discussed below, it is not possible to reasonably estimate the potential loss under these indemnification arrangements. While the Company has never paid a material claim related to these indemnification provisions, the Company believes that, as of March 31, 2020, there is a reasonable possibility that a loss may be incurred pursuant to certain of these arrangements and estimates a range of loss of up to $2.0 million. The Company has not recorded an accrual related to these arrangements as of March 31, 2020 because it has not determined that a loss is probable. The ultimate outcome of these potential obligations is unknown, and it is possible that the actual losses could be higher than the estimated range. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | 10 . Debt Loan and Security Agreement The Company had a loan and security agreement with Silicon Valley Bank and Ally Bank that consisted of a $50.0 million revolving credit facility (the “Credit Facility”). On June 25, 2019, the Company terminated the Credit Facility. Prior to termination of the Credit Facility, the Company was required to pay a quarterly fee of 0.50% per annum on the undrawn portion available under the revolving credit facility plus the sum of outstanding letters of credit. Under the Credit Facility, the interest rate on the revolving credit facility was based on the greater of either 4.25% or the current prime rate, plus 1.75%. |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders Equity Note [Abstract] | |
Shareholders' Equity | 1 1 . Shareholders’ Equity Authorized Capital—Common Stock and Preferred Stock Under the Amended and Restated Articles of Incorporation, which became effective in June 2018, the Company is authorized to issue two classes of stock designated as common stock and preferred stock. The Company’s total authorized capital stock is 620,000,000 shares, consisting of 600,000,000 shares of common stock, $0.0001 par value per share, and 20,000,000 shares of undesignated preferred stock, $0.0001 par value per share. In June 2019, the Company completed a follow-on public offering, in which the Company sold 4,133,984 shares of its common stock, including the full exercise of the underwriters’ option to purchase 539,215 additional shares of common stock, at a price of $69.40 per share. The Company received net proceeds of $274.7 million, after deducting underwriting discounts and commissions and before deducting offering expenses paid and payable by the Company of $1.2 million. The changes to the Company’s shareholders’ equity during the three months March 31, 2020 is as follows (in thousands, except share data): Accumulated Additional Other Total Common Stock Paid-In Comprehensive Accumulated Shareholders’ Shares Amount Capital Income (Loss) Deficit Equity Balance at January 1, 2020 77,447,620 $ 8 $ 976,627 $ (2,719 ) $ (510,194 ) $ 463,722 Exercise of stock options 532,848 7,928 7,928 Vesting of restricted stock units 186,475 Stock-based compensation cost 9,749 9,749 Shares issued under employee stock purchase plan 81,894 5,716 5,716 Shares issued related to business combination earnouts 44,659 3,750 3,750 Shares issued to purchase intangible assets 1,191 87 87 Gain on translation adjustment 625 625 Net loss (15,283 ) (15,283 ) Balance at March 31, 2020 78,294,687 $ 8 $ 1,003,857 $ (2,094 ) $ (525,477 ) $ 476,294 The changes to the Company’s shareholders’ equity f or the three mon ths ended March 31, 2019 is as follows (in thousands, except share data): Accumulated Additional Other Total Common Stock Paid-In Comprehensive Accumulated Shareholders’ Shares Amount Capital Income (Loss) Deficit Equity Balance at January 1, 2019 66,768,563 $ 7 $ 599,493 $ (2,345 ) $ (487,602 ) $ 109,553 Impact of adoption of new accounting pronouncements - ASC 606 (see Note 2) 27,622 27,622 Exercise of stock options 2,763,291 27,311 27,311 Shares tendered for cashless redemption of stock-based awards (2,805 ) (93 ) (93 ) Stock-based compensation cost 6,571 6,571 Shares issued under employee stock purchase plan 372,764 7,664 7,664 Shares issued to purchase intangible assets 1,634 50 50 Loss on translation adjustment (462 ) (462 ) Net loss (10,354 ) (10,354 ) Balance at March 31, 2019 69,903,447 $ 7 $ 640,996 $ (2,807 ) $ (470,334 ) $ 167,862 |
Equity Incentive Plans
Equity Incentive Plans | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Equity Incentive Plans | 1 2 . Equity Incentive Plans The Company has stock-based compensation plans that provide for the award of equity incentives, including stock options, stock awards, RSUs, and purchase rights. As of March 31, 2020, the Company had stock options outstanding under the 2018 Equity Incentive Plan (the “2018 Plan”) and the 2006 Equity Incentive Plan (the “2006 Plan”), had RSUs outstanding under the 2018 Plan, and had purchase rights issued under the ESPP. In April 2018, the 2018 Plan became effective in connection with the Company’s IPO. The 2018 Plan allows the Company to grant equity incentives to employees, directors, advisors, and consultants providing services to the Company. The total number of shares of common stock reserved for issuance under the 2018 Plan is equal to (1) 5,315,780 st Prior to the 2018 Plan, the Company awarded stock options under the 2006 Plan. The 2006 Plan was terminated in connection with the Company’s IPO. Outstanding awards under the 2006 Plan continue to be subject to the terms and conditions of the 2006 Plan. As of March 31, 2020, there were 4,154,956 shares subject to outstanding stock options under the 2006 Plan. Stock-Based Compensation The Company recognized total stock-based compensation cost related to equity incentive awards as follows (in thousands): For the Three Months Ended March 31, 2020 2019 Stock-based compensation cost: Stock options $ 3,849 $ 3,917 Restricted stock units 4,933 1,698 Employee stock purchase plan 967 956 Total stock-based compensation cost $ 9,749 $ 6,571 A small portion of stock-based compensation cost above is capitalized in accordance with the accounting guidance for internal-use software. The Company uses the straight-line attribution method for recognizing stock-based compensation expense. Stock Options The following table summarizes stock option activity for the Company’s stock-based compensation plans for the three months ended March 31, 2020: Weighted Weighted Average Aggregate Average Remaining Intrinsic Exercise Contractual Value Shares Price Life (Years) (in thousands) Options outstanding as of January 1, 2020 5,884,742 $ 20.09 7.22 $ 312,838 Options granted 211,243 68.61 Options exercised (532,848 ) 14.88 Options cancelled or expired (79,246 ) 15.77 Options outstanding as of March 31, 2020 5,483,891 22.53 7.11 285,564 Options exercisable as of March 31, 2020 2,997,298 $ 15.35 6.21 $ 177,582 A summary of options outstanding and vested as of March 31, 2020 is as follows: Options Outstanding Options Vested and Exercisable Exercise Number Weighted Average Number Vested Weighted Average Prices Outstanding Life (in Years) and Exercisable Life (in Years) $1.50 to $1.90 29,963 1.1 29,963 1.1 2.86 to 6.40 152,780 2.9 152,780 2.9 8.04 to 11.72 457,714 3.9 457,714 3.9 12.20 to 15.06 1,933,421 6.4 1,517,566 6.2 16.06 to 24.00 1,581,078 7.9 555,420 7.8 31.99 to 42.21 826,351 8.7 235,511 8.7 55.10 to 86.61 502,584 9.5 48,344 9.0 5,483,891 2,997,298 The total intrinsic value of options exercised during the three months ended March 31, 2020 and 2019 was $36.8 million and $109.5 million, respectively. The weighted average grant date fair value of options granted during the three months ended March 31, 2020 and 2019 was $28.99 and $17.93 per share, respectively. During the three months ended March 31, 2020, 585,475 options vested. There were 2,486,593 options unvested as of March 31, 2020. As of March 31, 2020, $31.9 million of total unrecognized compensation cost related to stock options was expected to be recognized over a weighted average period of approximately 2.6 years. All stock-based payments to participants, including employees and non-employee directors, are measured based on the grant date fair value of the awards and recognized in the consolidated statements of operations over the period during which the participant is required to perform services in exchange for the award. The vesting period is generally four years for employees and one year for non-employee directors. For the options granted during the periods presented, the fair value of options was estimated using the Black-Scholes option-pricing model with the following assumptions: For the Three Months Ended March 31, 2020 2019 Fair market value of common stock $67.27 - 86.61 $39.76 - 55.79 Volatility 43% 40% Expected term 6 years 6 years Expected dividend yield n/a n/a Risk-free interest rate 0.82% - 1.25% 2.31% - 2.65% The Board of Directors intends all options granted to be exercisable at a price per share not less than the per share fair market value of the Company’s common stock underlying those options on the date of grant. The fair market value per share of the Company’s common stock for purposes of determining stock-based compensation is the closing price of the Company’s common stock as reported on the applicable grant date. Beginning in 2020, expected volatility for stock options is based on a combination of annualized daily historical volatility of the Company’s stock price and the historical and implied volatility of comparable publicly traded companies over a similar expected term. Prior to 2020, expected volatility was based only on the historical and implied volatility of comparable publicly traded companies over a similar expected term. The expected term represents the period that the Company’s stock-based awards are expected to be outstanding. Given the Company’s relative inexperience of significant exercise activity, the expected term assumptions were determined based on application of the simplified method of expected term calculation by averaging the contractual life of option grants and the vesting period of such grants. This application, when coupled with the contractual life of ten years four years six years The Company has not paid and does not expect to pay dividends. The risk-free interest rate was based on the rate for a U.S. Treasury zero-coupon issue with a term that closely approximates the expected term of the option grant at the date nearest the option grant date. Restricted Stock Units The following table summarizes RSU activity for the Company’s stock-based compensation plans for the three months ended March 31, 2020: Weighted Average Grant Date Fair Restricted Stock Units Value Per Share RSUs outstanding as of January 1, 2020 1,508,281 $ 51.52 RSUs granted 945,698 68.89 RSUs vested (186,475 ) 43.89 RSUs cancelled (56,280 ) 49.45 RSUs outstanding as of March 31, 2020 2,211,224 $ 59.64 Stock-based compensation cost for RSUs is recognized on a straight-line basis in the consolidated statements of operations over the period during which the participant is required to perform services in exchange for the award, based on the fair value of the Company’s underlying common stock on the date of grant. The vesting period of each RSU grant is generally four years for employees and one year for non-employee directors. As of March 31, 2020, $123.9 million of total unrecognized compensation cost related to RSUs was expected to be recognized over a weighted average period of approximately 3.5 years. Employee Stock Purchase Plan The ESPP became effective on June 15, 2018, the first trading day of the Company’s common stock. The ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended. Purchases are accomplished through participation in discrete offering periods. The first offering period began on June 15, 2018 and ended on January 31, 2019. Subsequent offering periods begin on August 1 and February 1 (or such other date determined by our Board of Directors or our Compensation and Leadership Development Committee). Eligible employees can select a rate of payroll deduction for purchases under the ESPP of between 1% and 15% of their eligible compensation. The purchase price for shares of common stock purchased under the ESPP is 85% of the lesser of the fair market value of the Company’s common stock on (i) the first day of the applicable offering period or (ii) the last day of the purchase period in the applicable offering period. The Company initially reserved 996,709 shares of common stock for sale under the ESPP. The aggregate number of shares reserved for sale under the ESPP increases automatically on each January 1, beginning January 1, 2019, by the number of shares equal to the least of (i) 1,000,000 shares of common stock, (ii) 1% of the aggregate number of shares of common stock outstanding on December 31 st ten-year During the three months ended March 31, 2020, 81,894 shares of common stock were purchased under the ESPP. As of March 31, 2020, there was approximately $1.3 million For the periods presented, the fair value of ESPP purchase rights was estimated using the Black-Scholes option-pricing model with the following assumptions: For the Three Months Ended March 31, 2020 2019 Fair market value of common stock $85.14 $40.60 Volatility 32% 40% Expected term 0.5 years 0.5 years Expected dividend yield n/a n/a Risk-free interest rate 1.54% 2.59% Beginning in 2020, the expected volatility for ESPP purchase rights is based on daily historical volatility of the Company’s stock price. Prior to 2020, expected volatility was based only on the historical and implied volatility of comparable publicly traded companies over a similar expected term. |
Net Loss Per Share Attributable
Net Loss Per Share Attributable to Common Shareholders | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share Attributable to Common Shareholders | 1 3 . Net Loss Per Share Attributable to Common Shareholders The Company calculates basic and diluted net loss per share attributable to common shareholders in conformity with the two-class method required for companies with participating securities. The diluted net loss per share attributable to common shareholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposes of this calculation, all common stock equivalents have been excluded from the calculation of diluted net loss per share attributable to common shareholders as their effect is antidilutive. As a result, basic and diluted net loss per common share was the same for each period presented. The following table sets forth the computation of basic and diluted net loss per common share (in thousands, except per share amounts): For the Three Months Ended March 31, 2020 2019 Numerator: Net loss attributable to common shareholders $ (15,283 ) $ (10,354 ) Denominator: Weighted-average common shares outstanding-basic 77,904 68,381 Dilutive effect of share equivalents resulting from stock options, restricted stock units, and ESPP shares — — Weighted-average common shares outstanding-diluted 77,904 68,381 Net loss per common share, basic and diluted $ (0.20 ) $ (0.15 ) The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share attributable to common shareholders for the periods presented because the impact of including them would have been antidilutive (in thousands): For the Three Months Ended March 31, 2020 2019 Options to purchase common shares 5,664 10,237 Unvested restricted stock units 1,554 631 Employee stock purchase plan shares 9 14 Total 7,227 10,882 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Interim Financial Information | Interim Financial Information The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes for the year ended December 31, 2019, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Annual Report”) filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2020. The accompanying interim consolidated balance sheet as of March 31, 2020, the consolidated interim statements of operations for the three months ended March 31, 2020 and 2019, the consolidated statements of comprehensive loss for the three months ended March 31, 2020 and 2019, and the consolidated statements of cash flows for the three months ended March 31, 2020 and 2019, are unaudited. The unaudited interim consolidated financial statements have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and include, in the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the consolidated financial statements. The operating results for the three months ended March 31, 2020 are not necessarily indicative of the results expected for the full year ending December 31, 2020. |
Prior Period Restatements and Adjustments | Prior Period Restatements and Adjustments In preparing the 2019 annual consolidated financial statements, the Company discovered an immaterial error in recording deferred sales commissions for the first three quarters of 2019 impacting its previously reported quarterly financial results. The correction to sales commission expense resulted in an increase in sales and marketing expenses and accumulated deficit of $1.1 million and a $0.01 increase in net loss per share in the first quarter of 2019. The restatement of these prior period corrected amounts is presented in the accompanying unaudited consolidated statement of operations, consolidated statement of comprehensive loss, and consolidated statement of cash flows for the three-months ended March 31, 2019. Avalara adopted the new lease accounting standard as of January 1, 2019 in the 2019 Annual Report. Due to the timing of adoption, the Company’s 2019 interim financial statements did not reflect the new lease accounting standard. As a result, the presentation of cash flows from operating activities presented in the accompanying unaudited consolidated statement of cash flows for the quarter ended March 31, 2019 include adjustments for the adoption of the new lease accounting standard. The adjustments do not impact previously reported net cash used in operating activities. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include those of the Company and its subsidiaries after elimination of all intercompany accounts and transactions. |
Segments | Segments The Company operates its business as one operating segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker, the Company’s Chief Executive Officer, in deciding how to allocate resources and assess performance. The Company’s chief operating decision maker allocates resources and assesses performance based upon discrete financial information at the consolidated level. |
Use of Estimates | Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates and judgments related to revenue are described below in the Revenue Recognition Accounting Policy. Significant estimates impacting expenses include: expected credit losses associated with the allowance for doubtful accounts; the measurement of fair values of stock-based compensation award grants; the expected earnout obligations in connection with acquisitions; the expected term of the customer relationship for capitalized contract cost amortization; the valuation of acquired intangible assets; and the valuation of the fair value of reporting units for analyzing goodwill. Actual results could materially differ from those estimates. |
Fair Value Measurements | Fair Value Measurements 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. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1 : Inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 : Inputs are quoted prices for similar assets and liabilities in active markets or quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 : Inputs are unobservable inputs based on the Company’s assumptions and valuation techniques used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation. The Company’s assessment of the significance of an input to the fair value measurement requires judgment, which may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. The carrying amounts reported in the consolidated financial statements approximate the fair value for cash equivalents, trade accounts receivable, trade payables, and accrued expenses, due to their short-term nature. |
Long-Lived Assets | Long-Lived Assets The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. An impairment is recognized in the event the carrying value of such assets is not recoverable. If the carrying value is not recoverable, the fair value is determined, and an impairment is recognized for the amount by which the carrying value exceeds the fair value. No impairment of long-lived assets occurred in the first three months of 2020. |
Self-Insurance | Self-Insurance Beginning August 1, 2019, the Company established a self-insured healthcare plan for eligible U.S. employees. Under the plan, the Company pays healthcare claims and fees to the plan administrator. Total claim payments are limited by stop-loss insurance policies. As there generally is a lag between the time a claim is incurred by a participant and the time the claim is submitted for payment, the Company has recorded a self-insurance reserve for estimated outstanding claims within accrued expenses in the consolidated balance sheets. |
Income Taxes | Income Taxes The Company’s deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and income tax basis of assets and liabilities and are measured using the tax rates that will be in effect when the differences are expected to reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. The Company assesses its income tax positions and records tax benefits or expense based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequence of events that have been recognized in an entity’s financial statements or tax returns. The Company will recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Judgement is required in assessing the future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. Variations in the actual outcome of these future tax consequences could materially impact the consolidated financial statements. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation by calculating the fair value of each option, restricted stock unit (“RSU”), or purchase right issued under the Company’s 2018 Employee Stock Purchase Plan (“ESPP”) at the date of grant. The fair value of stock options and purchase rights issued under the ESPP is estimated by applying the Black-Scholes option-pricing model. This model uses the fair value of the Company’s underlying common stock at the measurement date, the expected or contractual term of the option or purchase right, the expected volatility of its common stock, risk-free interest rates, and expected dividend yield of its common stock. The fair value of an RSU is determined using the fair value of the Company’s underlying common stock on the date of grant. The Company accounts for forfeitures as they occur. |
Revenue Recognition | Revenue Recognition The Company primarily generates revenue from fees paid for subscriptions to tax compliance solutions and fees paid for services performed in preparing and filing tax returns on behalf of its customers. Amounts that have been invoiced are recorded in trade accounts receivable and deferred revenue, contract liabilities, or revenue, depending upon whether the revenue recognition criteria have been met. Revenue is recognized once the customer is provisioned and services are provided in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Beginning January 1, 2019, the Company’s revenue recognition policy follows guidance from ASC 606, Revenue from Contracts with Customers The Company determines revenue recognition through the following five-step framework: • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, the Company satisfies a performance obligation. The Company identifies performance obligations in its contracts with customers, which primarily include subscription services and professional services. The transaction price is determined based on the amount which the Company expects to be entitled to in exchange for providing the promised services to the customer. The transaction price in the contract is allocated to each distinct performance obligation on a relative standalone selling price basis. Revenue is recognized when performance obligations are satisfied. Contract payment terms are typically net 30 days. Collectability is assessed based on a number of factors including collection history and creditworthiness of the customer, and the Company may mitigate exposure to credit risk by requiring payments in advance. If collectability of substantially all consideration to which the Company is entitled under the contract is determined to be not probable, revenue is not recorded until collectability becomes probable at a later date. Revenue is recorded based on the transaction price excluding amounts collected on behalf of third parties , such as sales taxes co llected and remitted to governmental authorities. Subscription and Returns Revenue Subscription and returns revenue primarily consist of contractually agreed upon fees paid for using the Company’s cloud-based solutions, which include tax determination and compliance management services, and fees paid for preparing and filing transaction tax returns on behalf of customers. Under the Company’s subscription agreements, customers select a price plan that includes an allotted maximum number of transactions over the subscription term. Unused transactions are not carried over to the customer’s next subscription term, and customers are not entitled to refunds of fees paid or relief from fees due in the event they do not use the allotted number of transactions. If customers exceed the maximum transaction level within their price plan, the Company will generally upgrade the customer to a higher transaction price plan or, in some cases, charge overage fees on a per transaction basis. The Company’s subscription arrangements do not provide the customer with the right to take possession of the software supporting the cloud-based application services. The Company’s standard subscription contracts are non-cancelable except where contract terms provide rights to cancel in the first 60 days of the contract term. Cancellations under the Company’s standard subscription contracts are not material, and do not have a significant impact on revenue recognized. Tax returns processing services include collection of tax data and amounts, preparation of compliance forms, and submission to taxing authorities. Returns processing services are primarily charged on a subscription basis for an allotted number of returns to process within a given time period. Revenue is recognized ratably over the contractual term of the arrangement, beginning on the date that the service is made available to the customer. The Company invoices its subscription customers for the initial term at contract signing and at each subscription renewal. Initial terms generally range from 12 to 18 months, and renewal periods are typically one year. Amounts that are contractually billable and have been invoiced, or which have been collected as cash, are initially recorded as deferred revenue or contract liabilities. While most of the Company’s customers are invoiced once at the beginning of the term, a portion of customers are invoiced semi-annually, quarterly, or monthly. Included in the total subscription fee for cloud-based solutions are non-refundable upfront fees that are typically charged to new customers. These fees are associated with work performed to set up a customer with the Company’s services, and do not represent a distinct good or service. Instead, the fees are included within the transaction price and allocated to the remaining performance obligations in the contract. The Company recognizes revenue for these fees in accordance with the revenue recognition for those performance obligations. Also included in subscription and returns revenue is interest income on funds held for customers. The Company uses trust accounts at FDIC-insured institutions to provide tax remittance services to customers and collect funds from customers in advance of remittance to tax authorities. After collection and prior to remittance, the Company earns interest on these funds. Professional Services Revenue The Company invoices for professional service arrangements on a fixed fee, milestone, or time and materials basis. Professional services revenue includes fees from providing tax analysis, configurations, registrations, data migrations, integration, training, and other support services. The transaction price allocated to professional services performance obligations is recognized as revenue as services are performed or upon completion of work. Judgments and Estimates The Company’s contracts with customers often include obligations to provide multiple services to a customer. Determining whether services are considered distinct performance obligations that should be accounted for separately from one another requires judgment. Subscription services and professional services are both distinct performance obligations that are accounted for separately. Judgment is required to determine the standalone selling price (“SSP”) for each distinct performance obligation. The Company allocates revenue to each performance obligation based on the relative SSP. The Company determines SSP for performance obligations based on overall pricing objectives, which take into consideration observable prices, market conditions and entity-specific factors. This includes a review of historical data related to the services being sold and customer demographics. The Company uses a range of amounts to estimate SSP for performance obligations. There is typically more than one SSP for individual services due to the stratification of those services by information, such as size and type of customer. Assets Recognized from the Costs to Obtain a Contract with a Customer The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. The Company has determined that certain costs related to employee sales incentive programs (sales commissions) and partner commission programs represent incremental costs of obtaining a contract and therefore should be capitalized. Capitalized costs are included in deferred commissions on the consolidated balance sheets. These deferred commissions are amortized over an estimated period of benefit, generally six years. The Company determines the period of benefit by taking into consideration past experience with customers, the expected life of acquired technology that generates revenue, industry peers, and other available information. The period of benefit is generally longer than the term of the initial contract because of anticipated renewals. The Company elected to apply the practical expedient to recognize the incremental costs of obtaining a contract as an expense if the amortization period of the asset would have been one year or less. |
Leases | L eases Effective January 1, 2019, the Company’s lease accounting policy follows guidance from ASC 842, Leases Leases are classified at commencement as either operating or finance leases. As of March 31, 2020, all of the Company’s leases are classified as operating leases. Rent expense for operating leases is recognized on the straight-line method over the term of the agreement beginning on the lease commencement date. Operating lease costs are generally fixed payments. Lease-related costs, which are variable rather than fixed, are expensed in the period incurred. Variable lease costs consist primarily of common area maintenance and utilities costs for the Company’s office spaces that are due based on the actual costs incurred by the landlord. Lease payments that depend on an index or a rate are measured using the index or rate at the commencement date and are included in operating lease costs. Subsequent increases to lease payments due to a change in the index or rate are expensed as a variable lease cost. |
Recently Adopted Accounting Standard | Recently Adopted Accounting Standards ASU No. 2016-13 In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, related to credit losses, which amends the current accounting guidance and requires the measurements of all expected losses based on historical experience, current conditions and reasonable and supportable forecasts. The new guidance replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. The guidance in ASU No. 2016-13 is required for annual periods, including interim periods within those annual periods, beginning after December 15, 2019 for public business entities. The Company adopted this guidance on January 1, 2020. The adoption, which impacted the Company’s allowance for doubtful accounts, did not have a significant impact on the consolidated financial statements. ASU No. 2018-15 In August 2018, the FASB issued ASU No. 2018-15, related to implementation costs incurred in a cloud computing arrangement that is a service contract. This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use-software. The guidance in ASU No. 2018-15 is required for annual reporting periods , including interim periods within those annual periods, The Company adopted this guidance on January 1, 2020 with prospective application, as permitted by the ASU. |
New Accounting Standards Not Yet Adopted | New Accounting Standards Not Yet Adopted ASU No. 2019-12 In December 2019, the FASB issued Accounting Standard Update No. 2019-12, which simplifies the accounting for income taxes. The guidance in ASU No. 2019-12 is required for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2020, for public business entities, with early adoption permitted. The Company will adopt this guidance on January 1, 2021. The Company is currently evaluating the impact this guidance will have on the Company’s consolidated financial statements. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis | The following financial assets and liabilities are measured at fair value on a recurring basis. The fair values recognized in the accompanying consolidated balance sheets and the level within the fair value hierarchy in which the fair value measurements fall is as follows (in thousands): Fair Value Measurements Using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Fair Identical Assets Inputs Inputs March 31, 2020 Value (Level 1) (Level 2) (Level 3) Money market funds $ 443,936 $ 443,936 $ — $ — Earnout related to business combinations 3,599 — — 3,599 Fair Value Measurements Using Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Fair Identical Assets Inputs Inputs December 31, 2019 Value (Level 1) (Level 2) (Level 3) Money market funds $ 458,248 $ 458,248 $ — $ — Earnout related to business combinations 13,808 — — 13,808 |
Summary of Reconciliation of Beginning and Ending Balances of Recurring Fair Value Measurements | A reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying consolidated balance sheets using significant unobservable (Level 3) inputs, is as follows (in thousands): Three Months Ended March 31, 2020 2019 Earnout liabilities: Balance beginning of period $ 13,808 $ — Fair value recorded at acquisition — 5,952 Payments of earnout liabilities (7,700 ) — Total unrealized (gains) losses included in other (income) expense, net (2,509 ) — Balance end of period $ 3,599 $ 5,952 |
Balance Sheet Detail (Tables)
Balance Sheet Detail (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment, net consisted of the following (in thousands): Useful March 31, December 31, Life (Years) 2020 2019 Computer equipment and software 3 to 5 $ 15,596 $ 15,636 Internally developed software 6 6,521 5,948 Furniture and fixtures 5 6,559 6,589 Office equipment 3 to 5 850 1,058 Leasehold improvements 1 to 10 29,030 28,984 58,556 58,215 Accumulated depreciation (24,371 ) (23,218 ) Property and equipment—net $ 34,185 $ 34,997 |
Schedule of Prepaid Expense And Other Current Assets | Prepaid expenses and other current assets consisted of the following (in thousands): March 31, December 31, 2020 2019 Prepaid expenses $ 16,154 $ 11,064 Accrued investment income 347 565 Deposits 229 197 Other 2,142 2,301 Total $ 18,872 $ 14,127 |
Schedule of Accrued Expenses | Accrued expenses consisted of the following (in thousands): March 31, December 31, 2020 2019 Accrued payroll and related taxes $ 6,748 $ 3,985 Accrued federal, state, and local taxes 3,237 2,635 Accrued bonus 3,117 20,206 Self-insurance reserves 2,240 2,238 Employee stock purchase plan contributions 2,582 4,716 Accrued sales commissions 2,423 5,397 Accrued partner commissions 7,321 7,043 Contract liabilities 6,330 5,197 Accrued purchase price related to acquisitions 3,341 2,763 Other 7,848 7,924 Total $ 45,187 $ 62,104 |
Acquisitions of Businesses (Tab
Acquisitions of Businesses (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Compli, Inc. | |
Business Acquisition [Line Items] | |
Schedule of Estimated Fair Value of Assets Acquired and Liabilities Assumed | Estimated fair values of the assets acquired and the liabilities assumed in the Compli Purchase as of the acquisition date are provided in the following table (in thousands): Assets acquired: Current assets $ 505 Developed technology, customer relationships, and other intangibles 4,288 Goodwill 12,807 Total assets acquired 17,600 Liabilities assumed: Current liabilities 482 Total liabilities assumed 482 Net assets acquired $ 17,118 |
Summary of Valuation Methodologies, Significant Assumptions and Estimated Useful Lives | The Company utilizes different valuation approaches and methodologies to determine the fair value of acquired intangible assets. A summary of the valuation methodologies, significant assumptions, and estimated useful lives of acquired intangible assets in the Compli Purchase are provided in the below table (in thousands): Intangible Assigned Value Valuation Methodology Discount Rate Estimated Useful Life Customer relationships $ 3,250 Multi-period excess earnings-income approach 13 % 6 years Trademarks and trade names 32 Relief from royalty- income approach 13 % 2 years Developed technology and customer database 910 Relief from royalty- income approach 13 % 6 years Noncompetition agreements 96 With-and-without valuation- income approach 13 % 3 years |
Indix Corporation | |
Business Acquisition [Line Items] | |
Schedule of Estimated Fair Value of Assets Acquired and Liabilities Assumed | Estimated fair values of the assets acquired and the liabilities assumed in the Indix Purchase as of the acquisition date are provided in the following table (in thousands): Assets acquired: Current assets $ 94 Developed technology 4,472 Goodwill 4,953 Total assets acquired 9,519 Liabilities assumed: Current liabilities 392 Total liabilities assumed 392 Net assets acquired $ 9,127 |
Summary of Valuation Methodologies, Significant Assumptions and Estimated Useful Lives | The Company utilizes different valuation approaches and methodologies to determine the fair value of acquired intangible assets. A summary of the valuation methodologies, significant assumptions, and estimated useful lives of acquired intangible assets in the Indix Purchase are provided in the below table (in thousands): Intangible Assigned Value Valuation Methodology Discount Rate Estimated Useful Life Developed technology $ 4,472 Relief from royalty- income approach 24.5% 6 years |
Portway International, Inc | |
Business Acquisition [Line Items] | |
Schedule of Estimated Fair Value of Assets Acquired and Liabilities Assumed | Estimated fair values of the assets acquired and the liabilities assumed in the Portway Purchase as of the acquisition date are provided in the following table (in thousands): Assets acquired: Property and equipment $ 76 Customer relationships and other intangibles 1,865 Goodwill 22,376 Total assets acquired 24,317 Liabilities assumed: Total liabilities assumed — Net assets acquired $ 24,317 |
Summary of Valuation Methodologies, Significant Assumptions and Estimated Useful Lives | The Company utilizes different valuation approaches and methodologies to determine the fair value of acquired intangible assets. A summary of the valuation methodologies, significant assumptions, and estimated useful lives of acquired intangible assets in the Portway Purchase are provided in the below table (in thousands): Intangible Assigned Value Valuation Methodology Discount Rate Estimated Useful Life Customer relationships $ 1,759 Multi-period excess earnings-income approach 12 % 6 years Noncompetition agreements 106 With-and-without valuation- income approach 12 % 4 years |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Summary of Total Revenues | The following table disaggregates revenue generated within the United States (U.S.) from revenue generated from customers outside of the U.S. Revenue for transaction tax compliance in the U.S. is further disaggregated based on the solutions or services purchased by customers. Total revenues consisted of the following (in thousands): For the Three Months Ended March 31, 2020 2019 Revenue (U.S.): Subscription and returns Tax determination $ 58,971 $ 45,232 Tax returns and compliance management 39,433 26,686 Interest income on funds held for customers 525 729 Total subscription and returns 98,929 72,647 Professional services 5,462 5,735 Total revenue (U.S.) 104,391 78,382 Total revenue (non-U.S.) 7,052 6,588 Total revenue $ 111,443 $ 84,970 |
Summary of Activity Impacting Contract Liabilities | A summary of the activity impacting the contract liabilities during the three months ended March 31, 2020 is presented below (in thousands): Three Months Ended March 31, 2020 2019 Contract liabilities: Balance beginning of period $ 5,197 $ — Adoption of ASC 606 — 2,090 Contract liabilities transferred to deferred revenue (2,538 ) (1,257 ) Addition to contract liabilities 3,671 3,375 Balance end of period $ 6,330 $ 4,208 |
Summary of Activity Impacting Deferred Revenue | A summary of the activity impacting deferred revenue balances during the three months ended March 31, 2020 is presented below (in thousands): Three Months Ended March 31, 2020 2019 Deferred revenue: Balance beginning of period $ 161,241 $ 134,653 Adoption of ASC 606 — (11,250 ) Revenue recognized (111,443 ) (84,970 ) Additional amounts deferred 115,571 94,281 Balance end of period $ 165,369 $ 132,714 |
Summary of Activity Impacting Deferred Commissions | A summary of the activity impacting the deferred commissions during the three months ended March 31, 2020 is presented below (in thousands): Three Months Ended March 31, 2020 2019 Deferred commissions: Balance beginning of period $ 38,416 $ — Adoption of ASC 606 — 19,267 Additional commissions deferred 4,897 7,656 Amortization of deferred commissions (2,647 ) (1,279 ) Balance end of period $ 40,666 $ 25,644 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-lived Intangible Assets | Finite-lived intangible assets consisted of the following (in thousands): March 31, 2020 Average Useful Life (Years) Gross Accumulated Amortization Net Customer relationships 3 to 10 $ 20,270 $ (11,947 ) $ 8,322 Developed technology 3 to 8 36,121 (23,656 ) 12,465 Noncompete agreements 3 to 5 762 (614 ) 148 Tradename and trademarks 1 to 4 441 (428 ) 13 $ 57,594 $ (36,645 ) $ 20,949 December 31, 2019 Average Useful Life (Years) Gross Accumulated Amortization Net Customer relationships 3 to 10 $ 20,390 $ (11,403 ) $ 8,987 Developed technology 3 to 8 36,422 (22,659 ) 13,763 Noncompete agreements 3 to 5 777 (612 ) 165 Tradename and trademarks 1 to 4 452 (435 ) 17 $ 58,041 $ (35,109 ) $ 22,932 |
Schedule of Changes in Carrying Amount of Goodwill | Changes in the carrying amount of goodwill for the three months ended March 31, 2020 are summarized as follows (in thousands): Balance—December 31, 2019 $ 101,224 Cumulative translation adjustments (189 ) Balance—March 31, 2020 $ 101,035 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders Equity Note [Abstract] | |
Summary of Changes of Shareholders' Equity (Deficit) | The changes to the Company’s shareholders’ equity during the three months March 31, 2020 is as follows (in thousands, except share data): Accumulated Additional Other Total Common Stock Paid-In Comprehensive Accumulated Shareholders’ Shares Amount Capital Income (Loss) Deficit Equity Balance at January 1, 2020 77,447,620 $ 8 $ 976,627 $ (2,719 ) $ (510,194 ) $ 463,722 Exercise of stock options 532,848 7,928 7,928 Vesting of restricted stock units 186,475 Stock-based compensation cost 9,749 9,749 Shares issued under employee stock purchase plan 81,894 5,716 5,716 Shares issued related to business combination earnouts 44,659 3,750 3,750 Shares issued to purchase intangible assets 1,191 87 87 Gain on translation adjustment 625 625 Net loss (15,283 ) (15,283 ) Balance at March 31, 2020 78,294,687 $ 8 $ 1,003,857 $ (2,094 ) $ (525,477 ) $ 476,294 The changes to the Company’s shareholders’ equity f or the three mon ths ended March 31, 2019 is as follows (in thousands, except share data): Accumulated Additional Other Total Common Stock Paid-In Comprehensive Accumulated Shareholders’ Shares Amount Capital Income (Loss) Deficit Equity Balance at January 1, 2019 66,768,563 $ 7 $ 599,493 $ (2,345 ) $ (487,602 ) $ 109,553 Impact of adoption of new accounting pronouncements - ASC 606 (see Note 2) 27,622 27,622 Exercise of stock options 2,763,291 27,311 27,311 Shares tendered for cashless redemption of stock-based awards (2,805 ) (93 ) (93 ) Stock-based compensation cost 6,571 6,571 Shares issued under employee stock purchase plan 372,764 7,664 7,664 Shares issued to purchase intangible assets 1,634 50 50 Loss on translation adjustment (462 ) (462 ) Net loss (10,354 ) (10,354 ) Balance at March 31, 2019 69,903,447 $ 7 $ 640,996 $ (2,807 ) $ (470,334 ) $ 167,862 |
Equity Incentive Plans (Tables)
Equity Incentive Plans (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Summary of Stock-Based Compensation Expense Related to Equity Incentive Rewards | The Company recognized total stock-based compensation cost related to equity incentive awards as follows (in thousands): For the Three Months Ended March 31, 2020 2019 Stock-based compensation cost: Stock options $ 3,849 $ 3,917 Restricted stock units 4,933 1,698 Employee stock purchase plan 967 956 Total stock-based compensation cost $ 9,749 $ 6,571 |
Summary of Stock Option Activity | Stock Options The following table summarizes stock option activity for the Company’s stock-based compensation plans for the three months ended March 31, 2020: Weighted Weighted Average Aggregate Average Remaining Intrinsic Exercise Contractual Value Shares Price Life (Years) (in thousands) Options outstanding as of January 1, 2020 5,884,742 $ 20.09 7.22 $ 312,838 Options granted 211,243 68.61 Options exercised (532,848 ) 14.88 Options cancelled or expired (79,246 ) 15.77 Options outstanding as of March 31, 2020 5,483,891 22.53 7.11 285,564 Options exercisable as of March 31, 2020 2,997,298 $ 15.35 6.21 $ 177,582 |
Summary of Options Outstanding and Vested by Range of Exercise Prices | A summary of options outstanding and vested as of March 31, 2020 is as follows: Options Outstanding Options Vested and Exercisable Exercise Number Weighted Average Number Vested Weighted Average Prices Outstanding Life (in Years) and Exercisable Life (in Years) $1.50 to $1.90 29,963 1.1 29,963 1.1 2.86 to 6.40 152,780 2.9 152,780 2.9 8.04 to 11.72 457,714 3.9 457,714 3.9 12.20 to 15.06 1,933,421 6.4 1,517,566 6.2 16.06 to 24.00 1,581,078 7.9 555,420 7.8 31.99 to 42.21 826,351 8.7 235,511 8.7 55.10 to 86.61 502,584 9.5 48,344 9.0 5,483,891 2,997,298 |
Summary of Fair Value Estimated Using Black-Scholes Option Pricing Model Assumptions | For the options granted during the periods presented, the fair value of options was estimated using the Black-Scholes option-pricing model with the following assumptions: For the Three Months Ended March 31, 2020 2019 Fair market value of common stock $67.27 - 86.61 $39.76 - 55.79 Volatility 43% 40% Expected term 6 years 6 years Expected dividend yield n/a n/a Risk-free interest rate 0.82% - 1.25% 2.31% - 2.65% |
Summary of RSU Activity | The following table summarizes RSU activity for the Company’s stock-based compensation plans for the three months ended March 31, 2020: Weighted Average Grant Date Fair Restricted Stock Units Value Per Share RSUs outstanding as of January 1, 2020 1,508,281 $ 51.52 RSUs granted 945,698 68.89 RSUs vested (186,475 ) 43.89 RSUs cancelled (56,280 ) 49.45 RSUs outstanding as of March 31, 2020 2,211,224 $ 59.64 |
2018 Employee Stock Purchase Plan | |
Summary of Fair Value Estimated Using Black-Scholes Option Pricing Model Assumptions | For the Three Months Ended March 31, 2020 2019 Fair market value of common stock $85.14 $40.60 Volatility 32% 40% Expected term 0.5 years 0.5 years Expected dividend yield n/a n/a Risk-free interest rate 1.54% 2.59% |
Net Loss Per Share Attributab_2
Net Loss Per Share Attributable to Common Shareholders (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Net Loss Per Common Share | The following table sets forth the computation of basic and diluted net loss per common share (in thousands, except per share amounts): For the Three Months Ended March 31, 2020 2019 Numerator: Net loss attributable to common shareholders $ (15,283 ) $ (10,354 ) Denominator: Weighted-average common shares outstanding-basic 77,904 68,381 Dilutive effect of share equivalents resulting from stock options, restricted stock units, and ESPP shares — — Weighted-average common shares outstanding-diluted 77,904 68,381 Net loss per common share, basic and diluted $ (0.20 ) $ (0.15 ) |
Schedule of Potential Shares Not Included in the Computation of Diluted Earnings Per Share | The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share attributable to common shareholders for the periods presented because the impact of including them would have been antidilutive (in thousands): For the Three Months Ended March 31, 2020 2019 Options to purchase common shares 5,664 10,237 Unvested restricted stock units 1,554 631 Employee stock purchase plan shares 9 14 Total 7,227 10,882 |
Significant Accounting Polici_3
Significant Accounting Policies - Additional Information (Details) | 3 Months Ended | |
Mar. 31, 2020USD ($)Segment | Mar. 31, 2019USD ($)$ / shares | |
Accounting Policies [Line Items] | ||
Number of operating segment | Segment | 1 | |
Impairment of long-lived assets | $ 0 | |
Tax position likely of being realized upon ultimate settlement | greater than 50% | |
Percentage of likelihood of realization of tax position upon ultimate settlement, minimum | 50.00% | |
Contract payment net terms | 30 days | |
Concessions and cancellations period allowed for standard subscription contract prior to adoption | 60 days | |
Revenue recognition, contractual renewal period | 1 year | |
Deferred commission amortized period | 6 years | |
Other Noncurrent Assets | ASU 2018-15 | ||
Accounting Policies [Line Items] | ||
Implementation cost capitalized | $ 600,000 | |
Minimum | ||
Accounting Policies [Line Items] | ||
Revenue recognition initial contractual term | 12 months | |
Maximum | ||
Accounting Policies [Line Items] | ||
Revenue recognition initial contractual term | 18 months | |
Amortization period of asset | 1 year | |
Restatement Adjustment | ||
Accounting Policies [Line Items] | ||
Increase in sales and marketing expenses due to correction | $ 1,100,000 | |
Increase in net loss per share due to correction | $ / shares | $ 0.01 | |
Increase in accumulated deficit due to correction | $ 1,100,000 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Recurring Basis - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Earnout Related to Business Combinations | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair Value, Liabilities | $ 3,599 | $ 13,808 |
Significant Unobservable Inputs (Level 3) | Earnout Related to Business Combinations | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair Value, Liabilities | 3,599 | 13,808 |
Money Market Funds | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair Value, Assets | 443,936 | 458,248 |
Money Market Funds | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair Value, Assets | $ 443,936 | $ 458,248 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) | Mar. 31, 2020USD ($) |
Fair Value, Measurements, Non-Recurring | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Fair value measurements on a non-recurring basis | $ 0 |
Discount Rate | Discounted Cash Flow and Monte Carlo Simulations | Portway International, Inc | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
Discount rate utilized for valuation of earnout liability | 8.00% |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Reconciliation of Beginning and Ending Balances of Recurring Fair Value Measurements (Details) - Recurring Basis - Significant Unobservable Inputs (Level 3) - Earnout Related to Acquisitions - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnout liabilities: | ||
Balance beginning of period | $ 13,808 | $ 0 |
Fair value recorded at acquisition | 0 | 5,952 |
Payments of earnout liabilities | (7,700) | 0 |
Total unrealized (gains) losses included in other (income) expense, net | (2,509) | 0 |
Balance end of period | $ 3,599 | $ 5,952 |
Balance Sheet Detail - Property
Balance Sheet Detail - Property and Equipment, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 58,556 | $ 58,215 |
Accumulated depreciation | (24,371) | (23,218) |
Property and equipment—net | 34,185 | 34,997 |
Computer Equipment and Software | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 15,596 | 15,636 |
Computer Equipment and Software | Minimum | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, Useful Life | 3 years | |
Computer Equipment and Software | Maximum | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, Useful Life | 5 years | |
Internally Developed Software | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 6,521 | 5,948 |
Property and equipment, Useful Life | 6 years | |
Furniture and Fixtures | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 6,559 | 6,589 |
Property and equipment, Useful Life | 5 years | |
Office Equipment | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 850 | 1,058 |
Office Equipment | Minimum | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, Useful Life | 3 years | |
Office Equipment | Maximum | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, Useful Life | 5 years | |
Leasehold Improvements | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 29,030 | $ 28,984 |
Leasehold Improvements | Minimum | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, Useful Life | 1 year | |
Leasehold Improvements | Maximum | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, Useful Life | 10 years |
Balance Sheet Detail - Addition
Balance Sheet Detail - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Balance Sheet Related Disclosures [Abstract] | ||
Depreciation expense | $ 2.3 | $ 2 |
Balance Sheet Detail - Prepaid
Balance Sheet Detail - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Prepaid Expense And Other Assets Current [Abstract] | ||
Prepaid expenses | $ 16,154 | $ 11,064 |
Accrued investment income | 347 | 565 |
Deposits | 229 | 197 |
Other | 2,142 | 2,301 |
Total | $ 18,872 | $ 14,127 |
Balance Sheet Detail - Accrued
Balance Sheet Detail - Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Accrued Liabilities Current [Abstract] | ||||
Accrued payroll and related taxes | $ 6,748 | $ 3,985 | ||
Accrued federal, state, and local taxes | 3,237 | 2,635 | ||
Accrued bonus | 3,117 | 20,206 | ||
Self-insurance reserves | 2,240 | 2,238 | ||
Employee stock purchase plan contributions | 2,582 | 4,716 | ||
Accrued sales commissions | 2,423 | 5,397 | ||
Accrued partner commissions | 7,321 | 7,043 | ||
Contract liabilities | 6,330 | 5,197 | $ 4,208 | $ 0 |
Accrued purchase price related to acquisitions | 3,341 | 2,763 | ||
Other | 7,848 | 7,924 | ||
Total | $ 45,187 | $ 62,104 |
Acquisitions of Businesses - Ad
Acquisitions of Businesses - Additional Information (Details) $ / shares in Units, $ in Thousands | Jul. 31, 2019USD ($)OperatingMetric$ / sharesshares | Feb. 06, 2019USD ($) | Jan. 22, 2019USD ($) | Apr. 30, 2020USD ($)shares | Mar. 31, 2020USD ($)shares | Jan. 22, 2020USD ($) | Jan. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Mar. 31, 2019USD ($) |
Business Acquisition [Line Items] | |||||||||
Accrued value of earnout related to acquisition | $ 0 | $ 5,952 | |||||||
Goodwill | 101,035 | $ 101,224 | |||||||
Compli, Inc. | |||||||||
Business Acquisition [Line Items] | |||||||||
Total consideration transferred | $ 17,100 | ||||||||
Consideration in cash | 11,800 | $ 1,600 | |||||||
Accrued value of earnout related to acquisition | 3,800 | ||||||||
Maximum payout earned | $ 4,000 | ||||||||
Earnout recognized at fair value paid | 4,000 | ||||||||
Goodwill | $ 12,807 | ||||||||
Indix Corporation | |||||||||
Business Acquisition [Line Items] | |||||||||
Total consideration transferred | $ 9,100 | ||||||||
Consideration in cash | 5,500 | ||||||||
Accrued value of earnout related to acquisition | 2,200 | ||||||||
Maximum payout earned | 3,000 | ||||||||
Goodwill | 4,953 | ||||||||
Additional cash to be paid, as consideration, after eighteen months | 1,400 | ||||||||
Indix Corporation | Within Three Months from Closing Date of Acquisition | |||||||||
Business Acquisition [Line Items] | |||||||||
Maximum payout earned | 500 | ||||||||
Indix Corporation | Within Seven Months from Closing Date of Acquisition | |||||||||
Business Acquisition [Line Items] | |||||||||
Maximum payout earned | 650 | ||||||||
Indix Corporation | Within 8 Months from Closing Date of Acquisition | |||||||||
Business Acquisition [Line Items] | |||||||||
Maximum payout earned | 650 | ||||||||
Indix Corporation | Within 12 Months from Closing Date of Acquisition | |||||||||
Business Acquisition [Line Items] | |||||||||
Maximum payout earned | $ 1,200 | ||||||||
Indix Corporation | Current Accrued Earnout Liabilities | |||||||||
Business Acquisition [Line Items] | |||||||||
Portion of third milestone payment achieved | $ 30 | ||||||||
Portway International, Inc | |||||||||
Business Acquisition [Line Items] | |||||||||
Total consideration transferred | $ 24,300 | ||||||||
Consideration in cash | 13,000 | ||||||||
Accrued value of earnout related to acquisition | 9,400 | ||||||||
Maximum payout earned | 10,000 | ||||||||
Goodwill | 22,376 | ||||||||
Additional cash to be paid, as consideration, after eighteen months | 2,000 | ||||||||
Acquisition date fair value of cash consideration | $ 1,900 | ||||||||
Share price of common shares that could be earned and transferred to seller | $ / shares | $ 83.97 | ||||||||
Business combination number of operating metric targets used in earnout payment | OperatingMetric | 2 | ||||||||
Portway International, Inc | Operating Metrics Targets | |||||||||
Business Acquisition [Line Items] | |||||||||
Maximum payout earned | $ 7,500 | ||||||||
Portway International, Inc | Revenue Targets | |||||||||
Business Acquisition [Line Items] | |||||||||
Maximum payout earned | $ 2,500 | ||||||||
Portway International, Inc | Operating Metrics Targets One | |||||||||
Business Acquisition [Line Items] | |||||||||
Common stock transferred, shares | shares | 44,659 | ||||||||
Common stock transferred, value | $ 3,800 | ||||||||
Portway International, Inc | Operating Metrics Targets Two | Subsequent Event | |||||||||
Business Acquisition [Line Items] | |||||||||
Common stock transferred, shares | shares | 35,727 | ||||||||
Common stock transferred, value | $ 3,000 | ||||||||
Portway International, Inc | Maximum | Common Stock | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of common shares that could be earned and transferred to seller | shares | 119,090 |
Acquisitions of Businesses - Sc
Acquisitions of Businesses - Schedule of Estimated Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Jul. 31, 2019 | Feb. 06, 2019 | Jan. 22, 2019 |
Assets acquired: | |||||
Goodwill | $ 101,035 | $ 101,224 | |||
Compli, Inc. | |||||
Assets acquired: | |||||
Current assets | $ 505 | ||||
Developed technology, customer relationships, and other intangibles | 4,288 | ||||
Goodwill | 12,807 | ||||
Total assets acquired | 17,600 | ||||
Liabilities assumed: | |||||
Current liabilities | 482 | ||||
Total liabilities assumed | 482 | ||||
Net assets acquired | $ 17,118 | ||||
Indix Corporation | |||||
Assets acquired: | |||||
Current assets | $ 94 | ||||
Developed technology, customer relationships, and other intangibles | 4,472 | ||||
Goodwill | 4,953 | ||||
Total assets acquired | 9,519 | ||||
Liabilities assumed: | |||||
Current liabilities | 392 | ||||
Total liabilities assumed | 392 | ||||
Net assets acquired | $ 9,127 | ||||
Portway International, Inc | |||||
Assets acquired: | |||||
Property and equipment | $ 76 | ||||
Developed technology, customer relationships, and other intangibles | 1,865 | ||||
Goodwill | 22,376 | ||||
Total assets acquired | 24,317 | ||||
Liabilities assumed: | |||||
Net assets acquired | $ 24,317 |
Acquisitions of Businesses - Su
Acquisitions of Businesses - Summary of the Valuation Methodologies Significant Assumptions, and Estimated Useful Lives of Acquired Intangible Assets (Details) - USD ($) $ in Thousands | Jul. 31, 2019 | Feb. 06, 2019 | Jan. 22, 2019 |
Compli, Inc. | |||
Business Acquisition [Line Items] | |||
Intangible assets Assigned value | $ 4,288 | ||
Compli, Inc. | Customer Relationships | |||
Business Acquisition [Line Items] | |||
Intangible assets Assigned value | $ 3,250 | ||
Valuation Methodology | Multi-period excess earnings-income approach | ||
Discount Rate | 13.00% | ||
Intangible asset, useful life | 6 years | ||
Compli, Inc. | Tradename and Trademarks | |||
Business Acquisition [Line Items] | |||
Intangible assets Assigned value | $ 32 | ||
Valuation Methodology | Relief from royalty- income approach | ||
Discount Rate | 13.00% | ||
Intangible asset, useful life | 2 years | ||
Compli, Inc. | Developed Technology | |||
Business Acquisition [Line Items] | |||
Intangible assets Assigned value | $ 910 | ||
Valuation Methodology | Relief from royalty- income approach | ||
Discount Rate | 13.00% | ||
Intangible asset, useful life | 6 years | ||
Compli, Inc. | Noncompete Agreements | |||
Business Acquisition [Line Items] | |||
Intangible assets Assigned value | $ 96 | ||
Valuation Methodology | With-and-without valuation- income approach | ||
Discount Rate | 13.00% | ||
Intangible asset, useful life | 3 years | ||
Indix Corporation | |||
Business Acquisition [Line Items] | |||
Intangible assets Assigned value | $ 4,472 | ||
Indix Corporation | Developed Technology | |||
Business Acquisition [Line Items] | |||
Intangible assets Assigned value | $ 4,472 | ||
Valuation Methodology | Relief from royalty- income approach | ||
Discount Rate | 24.50% | ||
Intangible asset, useful life | 6 years | ||
Portway International, Inc | |||
Business Acquisition [Line Items] | |||
Intangible assets Assigned value | $ 1,865 | ||
Portway International, Inc | Customer Relationships | |||
Business Acquisition [Line Items] | |||
Intangible assets Assigned value | $ 1,759 | ||
Valuation Methodology | Multi-period excess earnings-income approach | ||
Discount Rate | 12.00% | ||
Intangible asset, useful life | 6 years | ||
Portway International, Inc | Noncompete Agreements | |||
Business Acquisition [Line Items] | |||
Intangible assets Assigned value | $ 106 | ||
Valuation Methodology | With-and-without valuation- income approach | ||
Discount Rate | 12.00% | ||
Intangible asset, useful life | 4 years |
Revenue - Summary of Total Reve
Revenue - Summary of Total Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Disaggregation Of Revenue [Line Items] | ||
Revenues | $ 111,443 | $ 84,970 |
U.S. | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | 104,391 | 78,382 |
Non-U.S. | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | 7,052 | 6,588 |
Subscription and Returns, Tax Determination | U.S. | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | 58,971 | 45,232 |
Subscription and Returns, Tax Returns and Compliance Management | U.S. | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | 39,433 | 26,686 |
Subscription and Returns,Interest Income on Funds Held for Customers | U.S. | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | 525 | 729 |
Subscription and Returns | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | 105,546 | 78,231 |
Subscription and Returns | U.S. | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | 98,929 | 72,647 |
Professional Services | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | 5,897 | 6,739 |
Professional Services | U.S. | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | $ 5,462 | $ 5,735 |
Revenue - Summary of Activity I
Revenue - Summary of Activity Impacting Contract Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Contract Liabilities [Rollforward] | ||
Balance beginning of period | $ 5,197 | $ 0 |
Contract liabilities transferred to deferred revenue | (2,538) | (1,257) |
Addition to contract liabilities | 3,671 | 3,375 |
Balance end of period | 6,330 | 4,208 |
ASC 606 | ||
Contract Liabilities [Rollforward] | ||
Adoption of ASC 606 | $ 0 | $ 2,090 |
Revenue - Summary of Activity_2
Revenue - Summary of Activity Impacting Deferred Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
ASC 606 | ||
Deferred Revenue Rollforward | ||
Adoption of ASC 606 | $ 0 | $ 2,090 |
Deferred Revenue | ||
Deferred Revenue Rollforward | ||
Balance beginning of period | 161,241 | 134,653 |
Revenue recognized | (111,443) | (84,970) |
Additional amounts deferred | 115,571 | 94,281 |
Balance end of period | 165,369 | 132,714 |
Deferred Revenue | ASC 606 | ||
Deferred Revenue Rollforward | ||
Adoption of ASC 606 | $ 0 | $ (11,250) |
Revenue - Additional Informatio
Revenue - Additional Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Revenue Initial Application Period Cumulative Effect Transition [Line Items] | ||
Deferred commissions amortization expected period | 6 years | |
Deferred contract costs, expected to be amortized within next 12 Months | $ 9,676,000 | $ 9,279,000 |
Impairments of deferred contract costs | 0 | |
Assets recognized related to costs to fulfill contracts | 0 | |
Additional contractual obligations | 39,400,000 | |
Prepaid Expenses and Other Current Assets | ||
Revenue Initial Application Period Cumulative Effect Transition [Line Items] | ||
Deferred contract costs, expected to be amortized within next 12 Months | $ 9,700,000 |
Revenue - Summary of Activity_3
Revenue - Summary of Activity Impacting Deferred Commissions (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
ASC 606 | ||
Capitalized Contract Cost [Line Items] | ||
Adoption of ASC 606 | $ 0 | $ 2,090 |
Deferred Commissions | ||
Capitalized Contract Cost [Line Items] | ||
Balance beginning of period | 38,416 | 0 |
Additional commissions deferred | 4,897 | 7,656 |
Amortization of deferred commissions | (2,647) | (1,279) |
Balance end of period | 40,666 | 25,644 |
Deferred Commissions | ASC 606 | ||
Capitalized Contract Cost [Line Items] | ||
Adoption of ASC 606 | $ 0 | $ 19,267 |
Revenue - Additional Informat_2
Revenue - Additional Information (Details 1) $ in Millions | Mar. 31, 2020USD ($) |
Revenue Initial Application Period Cumulative Effect Transition [Line Items] | |
Additional contractual obligations | $ 39.4 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-04-01 | |
Revenue Initial Application Period Cumulative Effect Transition [Line Items] | |
Additional contractual obligations | $ 39 |
Revenue expected to be recognized with remaining amount | 12 months |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Finite-lived Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Finite Lived Intangible Assets [Line Items] | ||
Gross | $ 57,594 | $ 58,041 |
Accumulated Amortization | (36,645) | (35,109) |
Net | 20,949 | 22,932 |
Customer Relationships | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross | 20,270 | 20,390 |
Accumulated Amortization | (11,947) | (11,403) |
Net | $ 8,322 | $ 8,987 |
Customer Relationships | Minimum | ||
Finite Lived Intangible Assets [Line Items] | ||
Average Useful Life (Years) | 3 years | 3 years |
Customer Relationships | Maximum | ||
Finite Lived Intangible Assets [Line Items] | ||
Average Useful Life (Years) | 10 years | 10 years |
Developed Technology | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross | $ 36,121 | $ 36,422 |
Accumulated Amortization | (23,656) | (22,659) |
Net | $ 12,465 | $ 13,763 |
Developed Technology | Minimum | ||
Finite Lived Intangible Assets [Line Items] | ||
Average Useful Life (Years) | 3 years | 3 years |
Developed Technology | Maximum | ||
Finite Lived Intangible Assets [Line Items] | ||
Average Useful Life (Years) | 8 years | 8 years |
Noncompete Agreements | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross | $ 762 | $ 777 |
Accumulated Amortization | (614) | (612) |
Net | $ 148 | $ 165 |
Noncompete Agreements | Minimum | ||
Finite Lived Intangible Assets [Line Items] | ||
Average Useful Life (Years) | 3 years | 3 years |
Noncompete Agreements | Maximum | ||
Finite Lived Intangible Assets [Line Items] | ||
Average Useful Life (Years) | 5 years | 5 years |
Tradename and Trademarks | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross | $ 441 | $ 452 |
Accumulated Amortization | (428) | (435) |
Net | $ 13 | $ 17 |
Tradename and Trademarks | Minimum | ||
Finite Lived Intangible Assets [Line Items] | ||
Average Useful Life (Years) | 1 year | 1 year |
Tradename and Trademarks | Maximum | ||
Finite Lived Intangible Assets [Line Items] | ||
Average Useful Life (Years) | 4 years | 4 years |
Intangible Assets - Additional
Intangible Assets - Additional Information (Details) | Oct. 31, 2018USD ($) | Mar. 31, 2020USD ($)Unit | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) |
Finite Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible assets, amortization expense | $ 1,800,000 | $ 1,700,000 | ||
Number of goodwill impairment reporting units | Unit | 3 | |||
Goodwill impairment charge | $ 0 | |||
Goodwill | $ 101,035,000 | $ 101,224,000 | ||
Brazilian Reporting Unit | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Goodwill | $ 0 |
Intangible Assets - Schedule _2
Intangible Assets - Schedule of Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Balance—December 31, 2019 | $ 101,224 |
Cumulative translation adjustments | (189) |
Balance—March 31, 2020 | $ 101,035 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases [Abstract] | ||
Total lease cost, net of sublease income | $ 3,800 | $ 2,600 |
Sublease income | 400 | 400 |
Increase in operating lease right-of-use assets | $ 6,562 | $ 2,388 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Loss Contingencies [Line Items] | |
Loss contingency, inestimable loss | The Company has not recorded an accrual related to these arrangements as of March 31, 2020 because it has not determined that a loss is probable. |
Maximum | |
Loss Contingencies [Line Items] | |
Estimated range of loss | $ 2,000,000 |
Debt - Additional Information (
Debt - Additional Information (Details) - Revolving Credit Facility - Loan and Security Agreement - Silicon Valley Bank and Ally Bank - USD ($) | Jun. 24, 2019 | Mar. 31, 2020 |
Line Of Credit Facility [Line Items] | ||
Credit facilities amount | $ 50,000,000 | |
Credit facilities, repayment date | Jun. 25, 2019 | |
Quarterly fee on undrawn portion available under credit facilities | 0.50% | |
Maximum | ||
Line Of Credit Facility [Line Items] | ||
Credit facilities, interest rate | 4.25% | |
Prime Rate | Maximum | ||
Line Of Credit Facility [Line Items] | ||
Credit facilities, variable rate | 1.75% |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | |
Jun. 30, 2019USD ($)$ / sharesshares | Mar. 31, 2020Class$ / sharesshares | Dec. 31, 2019$ / sharesshares | |
Class Of Stock [Line Items] | |||
Number of classes of stock | Class | 2 | ||
Capital stock, authorized shares | 620,000,000 | ||
Common stock, shares authorized | 600,000,000 | 600,000,000 | |
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | |
Preferred stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | |
Common Stock | Follow-on Public Offering | |||
Class Of Stock [Line Items] | |||
Follow-on public offering | 4,133,984 | ||
Common stock price per share | $ / shares | $ 69.40 | ||
Proceeds from common stock offering, net of underwriting discounts | $ | $ 274.7 | ||
Offering expenses paid and payable | $ | $ 1.2 | ||
Common Stock | Underwriters | |||
Class Of Stock [Line Items] | |||
Follow-on public offering | 539,215 |
Shareholders' Equity - Summary
Shareholders' Equity - Summary of Changes of Shareholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Class Of Stock [Line Items] | ||
Beginning balance | $ 463,722 | $ 109,553 |
Impact of adoption of new accounting pronouncements - ASC 606 (see Note 2) | 27,622 | |
Exercise of stock options | $ 7,928 | 27,311 |
Exercise of stock options, Shares | 532,848 | |
Shares tendered for cashless redemption of stock options | (93) | |
Stock-based compensation cost | $ 9,749 | 6,571 |
Shares issued under employee stock purchase plan | 5,716 | 7,664 |
Shares issued related to business combination earnouts | 3,750 | |
Shares issued to purchase intangible assets | 87 | 50 |
Gain (Loss) on translation adjustment | 625 | (462) |
Net loss | (15,283) | (10,354) |
Ending balance | 476,294 | 167,862 |
Common Stock | ||
Class Of Stock [Line Items] | ||
Beginning balance | $ 8 | $ 7 |
Beginning balance, Shares | 77,447,620 | 66,768,563 |
Exercise of stock options, Shares | 532,848 | 2,763,291 |
Vesting of restricted stock units | 186,475 | |
Shares tendered for cashless redemption of stock-based awards, Shares | (2,805) | |
Shares issued under employee stock purchase plan, Shares | 81,894 | 372,764 |
Shares issued related to business combination earnouts, Shares | 44,659 | |
Shares issued to purchase intangible assets, Shares | 1,191 | 1,634 |
Ending balance | $ 8 | $ 7 |
Ending balance, Shares | 78,294,687 | 69,903,447 |
Additional Paid-In Capital | ||
Class Of Stock [Line Items] | ||
Beginning balance | $ 976,627 | $ 599,493 |
Exercise of stock options | 7,928 | 27,311 |
Shares tendered for cashless redemption of stock options | (93) | |
Stock-based compensation cost | 9,749 | 6,571 |
Shares issued under employee stock purchase plan | 5,716 | 7,664 |
Shares issued related to business combination earnouts | 3,750 | |
Shares issued to purchase intangible assets | 87 | 50 |
Ending balance | 1,003,857 | 640,996 |
Accumulated Other Comprehensive Income (Loss) | ||
Class Of Stock [Line Items] | ||
Beginning balance | (2,719) | (2,345) |
Gain (Loss) on translation adjustment | 625 | (462) |
Ending balance | (2,094) | (2,807) |
Accumulated Deficit | ||
Class Of Stock [Line Items] | ||
Beginning balance | (510,194) | (487,602) |
Impact of adoption of new accounting pronouncements - ASC 606 (see Note 2) | 27,622 | |
Net loss | (15,283) | (10,354) |
Ending balance | $ (525,477) | $ (470,334) |
Equity Incentive Plans - Additi
Equity Incentive Plans - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Shares subject to outstanding awards | 5,483,891 | 5,884,742 | |
Total intrinsic value of options exercised | $ 36.8 | $ 109.5 | |
Weighted average grant date fair value of options granted | $ 28.99 | $ 17.93 | |
Number of shares, vested | 585,475 | ||
Number of options unvested | 2,486,593 | ||
Contractual life | 10 years | ||
Expected term | 6 years | 6 years | |
Employees | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock options, average vesting term | 4 years | ||
Expected term | 6 years | ||
Non Employee Directors | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock options, average vesting term | 1 year | ||
Expected term | 5 years | ||
Stock Options | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Total unrecognized compensation expense related to stock options | $ 31.9 | ||
Unrecognized compensation expense expected to be recognized over weighted average period | 2 years 7 months 6 days | ||
Stock Options | Employees | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock options vesting period | 4 years | ||
Stock Options | Non Employee Directors | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock options vesting period | 1 year | ||
Restricted Stock Units (RSUs) | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Unrecognized compensation expense expected to be recognized over weighted average period | 3 years 6 months | ||
Total unrecognized compensation expense expected to be recognized | $ 123.9 | ||
Restricted Stock Units (RSUs) | Employees | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock options vesting period | 4 years | ||
Restricted Stock Units (RSUs) | Non Employee Directors | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock options vesting period | 1 year | ||
2018 Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of shares of common stock reserved for issuance | 5,315,780 | ||
Automatically increase percentage of aggregate number of shares of common stock outstanding | 5.00% | ||
Shares subject to outstanding awards | 3,540,159 | ||
Shares available for future issuance | 9,204,822 | ||
2006 Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Shares subject to outstanding awards | 4,154,956 | ||
2018 Employee Stock Purchase Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of shares of common stock reserved for issuance | 996,709 | ||
Total unrecognized compensation expense related to stock options | $ 1.3 | ||
Contractual life | 10 years | ||
Expected term | 6 months | 6 months | |
Initial offering period | June 15, 2018 | ||
Description of offering period for ESPP | The first offering period began on June 15, 2018 and ended on January 31, 2019. Subsequent offering periods begin on August 1 and February 1 (or such other date determined by our Board of Directors or our Compensation and Leadership Development Committee). | ||
Description of purchase price for shares of common stock purchased under ESPP | The purchase price for shares of common stock purchased under the ESPP is 85% of the lesser of the fair market value of the Company’s common stock on (i) the first day of the applicable offering period or (ii) the last day of the purchase period in the applicable offering period. | ||
Percentage of purchase price for shares of common stock under fair value market | 85.00% | ||
Employee stock purchase plan number of shares initially authorized | 10,102,525 | ||
2018 Employee Stock Purchase Plan | Minimum | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Automatically increase percentage of aggregate number of shares of common stock outstanding | 1.00% | ||
Percentage of payroll deduction on eligible compensation | 1.00% | ||
Increase of common stock capital shares reserved for future issuance in each of calendar year | 1,000,000 | ||
2018 Employee Stock Purchase Plan | Maximum | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Percentage of payroll deduction on eligible compensation | 15.00% | ||
Employee Stock Purchase Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of shares of common stock reserved for issuance | 1,850,081 | ||
Common stock, shares purchased | 81,894 |
Equity Incentive Plans - Summar
Equity Incentive Plans - Summary of Stock-Based Compensation Expense Related to Equity Incentive Rewards (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock-based compensation cost | $ 9,749 | $ 6,571 |
Stock Options | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock-based compensation cost | 3,849 | 3,917 |
Restricted Stock Units (RSUs) | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock-based compensation cost | 4,933 | 1,698 |
Employee Stock Purchase Plan | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock-based compensation cost | $ 967 | $ 956 |
Equity Incentive Plans - Summ_2
Equity Incentive Plans - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Shares | ||
Options outstanding beginning balance | 5,884,742 | |
Options granted | 211,243 | |
Options exercised | (532,848) | |
Options cancelled or expired | (79,246) | |
Options outstanding ending balance | 5,483,891 | 5,884,742 |
Options exercisable | 2,997,298 | |
Weighted Average Exercise Price | ||
Options outstanding beginning balance | $ 20.09 | |
Options granted | 68.61 | |
Options exercised | 14.88 | |
Options cancelled or expired | 15.77 | |
Options outstanding ending balance | 22.53 | $ 20.09 |
Options exercisable | $ 15.35 | |
Weighted Average Remaining Contractual Life (Years) | ||
Options outstanding | 7 years 1 month 9 days | 7 years 2 months 19 days |
Options exercisable | 6 years 2 months 15 days | |
Aggregate Intrinsic Value | ||
Options outstanding | $ 285,564 | $ 312,838 |
Options exercisable | $ 177,582 |
Equity Incentive Plans - Summ_3
Equity Incentive Plans - Summary of Options Outstanding and Vested (Details) | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items] | |
Option Outstanding, Number Outstanding | 5,483,891 |
Options Vested and Exercisable, Number Vested and Exercisable | 2,997,298 |
Options Vested and Exercisable, Weighted Average Life (in Years) | 6 years 2 months 15 days |
$1.50 to $1.90 | |
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items] | |
Exercise Prices, Low | $ / shares | $ 1.50 |
Exercise Prices, High | $ / shares | $ 1.90 |
Option Outstanding, Number Outstanding | 29,963 |
Options Outstanding, Weighted Average Life (in Years) | 1 year 1 month 6 days |
Options Vested and Exercisable, Number Vested and Exercisable | 29,963 |
Options Vested and Exercisable, Weighted Average Life (in Years) | 1 year 1 month 6 days |
2.86 to 6.40 | |
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items] | |
Exercise Prices, Low | $ / shares | $ 2.86 |
Exercise Prices, High | $ / shares | $ 6.40 |
Option Outstanding, Number Outstanding | 152,780 |
Options Outstanding, Weighted Average Life (in Years) | 2 years 10 months 24 days |
Options Vested and Exercisable, Number Vested and Exercisable | 152,780 |
Options Vested and Exercisable, Weighted Average Life (in Years) | 2 years 10 months 24 days |
8.04 to 11.72 | |
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items] | |
Exercise Prices, Low | $ / shares | $ 8.04 |
Exercise Prices, High | $ / shares | $ 11.72 |
Option Outstanding, Number Outstanding | 457,714 |
Options Outstanding, Weighted Average Life (in Years) | 3 years 10 months 24 days |
Options Vested and Exercisable, Number Vested and Exercisable | 457,714 |
Options Vested and Exercisable, Weighted Average Life (in Years) | 3 years 10 months 24 days |
12.20 to 15.06 | |
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items] | |
Exercise Prices, Low | $ / shares | $ 12.20 |
Exercise Prices, High | $ / shares | $ 15.06 |
Option Outstanding, Number Outstanding | 1,933,421 |
Options Outstanding, Weighted Average Life (in Years) | 6 years 4 months 24 days |
Options Vested and Exercisable, Number Vested and Exercisable | 1,517,566 |
Options Vested and Exercisable, Weighted Average Life (in Years) | 6 years 2 months 12 days |
16.06 to 24.00 | |
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items] | |
Exercise Prices, Low | $ / shares | $ 16.06 |
Exercise Prices, High | $ / shares | $ 24 |
Option Outstanding, Number Outstanding | 1,581,078 |
Options Outstanding, Weighted Average Life (in Years) | 7 years 10 months 24 days |
Options Vested and Exercisable, Number Vested and Exercisable | 555,420 |
Options Vested and Exercisable, Weighted Average Life (in Years) | 7 years 9 months 18 days |
31.99 to 42.21 | |
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items] | |
Exercise Prices, Low | $ / shares | $ 31.99 |
Exercise Prices, High | $ / shares | $ 42.21 |
Option Outstanding, Number Outstanding | 826,351 |
Options Outstanding, Weighted Average Life (in Years) | 8 years 8 months 12 days |
Options Vested and Exercisable, Number Vested and Exercisable | 235,511 |
Options Vested and Exercisable, Weighted Average Life (in Years) | 8 years 8 months 12 days |
55.10 to 86.61 | |
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items] | |
Exercise Prices, Low | $ / shares | $ 55.10 |
Exercise Prices, High | $ / shares | $ 86.61 |
Option Outstanding, Number Outstanding | 502,584 |
Options Outstanding, Weighted Average Life (in Years) | 9 years 6 months |
Options Vested and Exercisable, Number Vested and Exercisable | 48,344 |
Options Vested and Exercisable, Weighted Average Life (in Years) | 9 years |
Equity Incentive Plans - Summ_4
Equity Incentive Plans - Summary of Fair Value Estimated Using Black-Scholes Option Pricing Model Assumptions (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Volatility | 43.00% | 40.00% |
Expected term | 6 years | 6 years |
Expected dividend yield | 0.00% | 0.00% |
Risk-free interest rate, minimum | 0.82% | 2.31% |
Risk-free interest rate, maximum | 1.25% | 2.65% |
Minimum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Fair market value of common stock | $ 67.27 | $ 39.76 |
Maximum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Fair market value of common stock | $ 86.61 | $ 55.79 |
Equity Incentive Plans - Summ_5
Equity Incentive Plans - Summary of RSU Activity (Details) - Restricted Stock Units (RSUs) | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
RSUs outstanding as of January 1, 2020, Shares | shares | 1,508,281 |
RSUs granted, Shares | shares | 945,698 |
RSUs vested, Shares | shares | (186,475) |
RSUs cancelled, Shares | shares | (56,280) |
RSUs outstanding as of March 31, 2020, Shares | shares | 2,211,224 |
RSUs outstanding as of January 1, 2020, Weighted average grant date fair value per share | $ / shares | $ 51.52 |
RSUs granted, Weighted average grant date fair value per share | $ / shares | 68.89 |
RSUs vested, Weighted average grant date fair value per share | $ / shares | 43.89 |
RSUs cancelled, Weighted average grant date fair value per share | $ / shares | 49.45 |
RSUs outstanding as of March 31, 2020, Weighted average grant date fair value per share | $ / shares | $ 59.64 |
Equity Incentive Plans - Summ_6
Equity Incentive Plans - Summary of Fair Value of ESPP Purchase Rights Was Estimated Using Black-Scholes Option-pricing Model (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Volatility | 43.00% | 40.00% |
Expected term | 6 years | 6 years |
Expected dividend yield | 0.00% | 0.00% |
2018 Employee Stock Purchase Plan | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Fair market value of common stock | $ 85.14 | $ 40.60 |
Volatility | 32.00% | 40.00% |
Expected term | 6 months | 6 months |
Risk-free interest rate | 1.54% | 2.59% |
Net Loss Per Share Attributab_3
Net Loss Per Share Attributable to Common Shareholders - Schedule of Computation of Basic and Diluted Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator: | ||
Net loss attributable to common shareholders | $ (15,283) | $ (10,354) |
Denominator: | ||
Weighted-average common shares outstanding-basic | 77,904 | 68,381 |
Dilutive effect of share equivalents resulting from stock options, restricted stock units, and ESPP shares | 0 | 0 |
Weighted-average common shares outstanding-diluted | 77,904 | 68,381 |
Net loss per common share, basic and diluted | $ (0.20) | $ (0.15) |
Net Loss Per Share Attributab_4
Net Loss Per Share Attributable to Common Shareholders - Schedule of Potential Shares Not Included in the Computation of Diluted Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share amount | 7,227 | 10,882 |
Options To Purchase Common Stock | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share amount | 5,664 | 10,237 |
Unvested Restricted Stock Units | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share amount | 1,554 | 631 |
Employee Stock Purchase Plan Shares | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share amount | 9 | 14 |