Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 04, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-36089 | |
Entity Registrant Name | RingCentral, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 94-3322844 | |
Entity Address, Address Line One | 20 Davis Drive | |
Entity Address, City or Town | Belmont | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94002 | |
City Area Code | 650 | |
Local Phone Number | 472-4100 | |
Title of 12(b) Security | Class A Common Stock | |
Trading Symbol | RNG | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001384905 | |
Current Fiscal Year End Date | --12-31 | |
Class A common stock | ||
Document Information [Line Items] | ||
Entity Common Stock Outstanding (in shares) | 79,327,759 | |
Class B common stock | ||
Document Information [Line Items] | ||
Entity Common Stock Outstanding (in shares) | 10,303,948 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 745,558 | $ 343,606 |
Accounts receivable, net | 153,583 | 129,990 |
Deferred and prepaid sales commission costs | 53,212 | 36,589 |
Prepaid expenses and other current assets | 40,251 | 25,354 |
Total current assets | 992,604 | 535,539 |
Property and equipment, net | 132,967 | 89,230 |
Operating lease right-of-use assets | 50,414 | 39,269 |
Long-term investments | 173,641 | 132,188 |
Deferred and prepaid sales commission costs, non-current | 599,759 | 462,344 |
Goodwill | 56,223 | 55,278 |
Acquired intangibles, net | 101,894 | 127,338 |
Other assets | 8,812 | 9,561 |
Total assets | 2,116,314 | 1,450,747 |
Current liabilities | ||
Accounts payable | 38,002 | 34,612 |
Accrued liabilities | 189,555 | 138,729 |
Current portion of convertible senior notes, net | 14,156 | 0 |
Deferred revenue | 127,500 | 107,372 |
Total current liabilities | 369,213 | 280,713 |
Convertible senior notes, net | 1,394,898 | 386,889 |
Operating lease liabilities | 37,973 | 28,516 |
Other long-term liabilities | 14,555 | 8,929 |
Total liabilities | 1,816,639 | 705,047 |
Commitments and contingencies (Note 8) | ||
Temporary equity (Note 6) | 1,934 | 0 |
Stockholders' equity | ||
Common stock | 9 | 9 |
Additional paid-in capital | 664,689 | 1,033,053 |
Accumulated other comprehensive income | 3,522 | 1,948 |
Accumulated deficit | (370,479) | (289,310) |
Total stockholders' equity | 297,741 | 745,700 |
Total liabilities, temporary equity and stockholders’ equity | $ 2,116,314 | $ 1,450,747 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues | ||||
Total revenues | $ 303,624 | $ 233,352 | $ 849,121 | $ 649,993 |
Cost of revenues | ||||
Total cost of revenues | 82,314 | 59,705 | 232,395 | 164,170 |
Gross profit | 221,310 | 173,647 | 616,726 | 485,823 |
Operating expenses | ||||
Research and development | 48,481 | 35,286 | 132,910 | 97,705 |
Sales and marketing | 152,986 | 109,882 | 421,931 | 313,023 |
General and administrative | 49,513 | 39,142 | 146,381 | 100,401 |
Total operating expenses | 250,980 | 184,310 | 701,222 | 511,129 |
Loss from operations | (29,670) | (10,663) | (84,496) | (25,306) |
Other income (expense), net | ||||
Interest expense | (12,680) | (5,160) | (32,780) | (15,280) |
Other income, net | 21,824 | 2,926 | 36,910 | 9,118 |
Other income (expense), net | 9,144 | (2,234) | 4,130 | (6,162) |
Loss before income taxes | (20,526) | (12,897) | (80,366) | (31,468) |
Provision for (benefit from) income taxes | 431 | (148) | 803 | (3,118) |
Net loss | $ (20,957) | $ (12,749) | $ (81,169) | $ (28,350) |
Net loss per common share | ||||
Basic and diluted (in dollars per share) | $ (0.24) | $ (0.15) | $ (0.92) | $ (0.34) |
Weighted-average number of shares used in computing net loss per share | ||||
Basic and diluted (in shares) | 89,173 | 83,283 | 88,259 | 82,348 |
Subscriptions | ||||
Revenues | ||||
Total revenues | $ 279,639 | $ 210,906 | $ 779,781 | $ 588,406 |
Cost of revenues | ||||
Total cost of revenues | 60,531 | 40,930 | 169,685 | 114,343 |
Other | ||||
Revenues | ||||
Total revenues | 23,985 | 22,446 | 69,340 | 61,587 |
Cost of revenues | ||||
Total cost of revenues | $ 21,783 | $ 18,775 | $ 62,710 | $ 49,827 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (20,957) | $ (12,749) | $ (81,169) | $ (28,350) |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustments | 2,420 | (1,742) | 1,574 | (1,875) |
Comprehensive loss | $ (18,537) | $ (14,491) | $ (79,595) | $ (30,225) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit |
Stockholders' equity, beginning balance (in shares) at Dec. 31, 2018 | 81,046 | ||||
Stockholders' equity, beginning balance at Dec. 31, 2018 | $ 317,609 | $ 8 | $ 551,078 | $ 2,226 | $ (235,703) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock in connection with Equity Incentive and Employee Stock Purchase plans, net of tax withholdings (in shares) | 782 | ||||
Issuance of common stock in connection with Equity Incentive and Employee Stock Purchase plans, net of tax withholdings | 732 | 732 | |||
Share-based compensation | 19,616 | 19,616 | |||
Changes in other comprehensive loss | (375) | (375) | |||
Net loss | (6,358) | (6,358) | |||
Stockholders' equity, ending balance (in shares) at Mar. 31, 2019 | 81,828 | ||||
Stockholders' equity, ending balance at Mar. 31, 2019 | 331,224 | $ 8 | 571,426 | 1,851 | (242,061) |
Stockholders' equity, beginning balance (in shares) at Dec. 31, 2018 | 81,046 | ||||
Stockholders' equity, beginning balance at Dec. 31, 2018 | 317,609 | $ 8 | 551,078 | 2,226 | (235,703) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (28,350) | ||||
Stockholders' equity, ending balance (in shares) at Sep. 30, 2019 | 83,776 | ||||
Stockholders' equity, ending balance at Sep. 30, 2019 | 369,494 | $ 8 | 633,188 | 351 | (264,053) |
Stockholders' equity, beginning balance (in shares) at Mar. 31, 2019 | 81,828 | ||||
Stockholders' equity, beginning balance at Mar. 31, 2019 | 331,224 | $ 8 | 571,426 | 1,851 | (242,061) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock in connection with Equity Incentive and Employee Stock Purchase plans, net of tax withholdings (in shares) | 1,046 | ||||
Issuance of common stock in connection with Equity Incentive and Employee Stock Purchase plans, net of tax withholdings | 7,730 | 7,730 | |||
Share-based compensation | 25,614 | 25,614 | |||
Changes in other comprehensive loss | 242 | 242 | |||
Net loss | (9,243) | (9,243) | |||
Stockholders' equity, ending balance (in shares) at Jun. 30, 2019 | 82,874 | ||||
Stockholders' equity, ending balance at Jun. 30, 2019 | 355,567 | $ 8 | 604,770 | 2,093 | (251,304) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock in connection with Equity Incentive and Employee Stock Purchase plans, net of tax withholdings (in shares) | 902 | ||||
Issuance of common stock in connection with Equity Incentive and Employee Stock Purchase plans, net of tax withholdings | (1,116) | (1,116) | |||
Share-based compensation | 29,534 | 29,534 | |||
Changes in other comprehensive loss | (1,742) | (1,742) | |||
Net loss | (12,749) | (12,749) | |||
Stockholders' equity, ending balance (in shares) at Sep. 30, 2019 | 83,776 | ||||
Stockholders' equity, ending balance at Sep. 30, 2019 | 369,494 | $ 8 | 633,188 | 351 | (264,053) |
Stockholders' equity, beginning balance (in shares) at Dec. 31, 2019 | 86,940 | ||||
Stockholders' equity, beginning balance at Dec. 31, 2019 | 745,700 | $ 9 | 1,033,053 | 1,948 | (289,310) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock in connection with Equity Incentive and Employee Stock Purchase plans, net of tax withholdings (in shares) | 875 | ||||
Issuance of common stock in connection with Equity Incentive and Employee Stock Purchase plans, net of tax withholdings | (5,549) | (5,549) | |||
Share-based compensation | 37,001 | 37,001 | |||
Equity component from partial repurchase of 2023 convertible senior notes | (355,932) | (355,932) | |||
Purchase of capped calls related to convertible senior notes | (60,900) | (60,900) | |||
Equity component of convertible senior notes, net of issuance costs | 192,442 | 192,442 | |||
Changes in other comprehensive loss | (1,617) | (1,617) | |||
Net loss | (60,721) | (60,721) | |||
Stockholders' equity, ending balance (in shares) at Mar. 31, 2020 | 87,815 | ||||
Stockholders' equity, ending balance at Mar. 31, 2020 | 490,424 | $ 9 | 840,115 | 331 | (350,031) |
Stockholders' equity, beginning balance (in shares) at Dec. 31, 2019 | 86,940 | ||||
Stockholders' equity, beginning balance at Dec. 31, 2019 | 745,700 | $ 9 | 1,033,053 | 1,948 | (289,310) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (81,169) | ||||
Stockholders' equity, ending balance (in shares) at Sep. 30, 2020 | 89,585 | ||||
Stockholders' equity, ending balance at Sep. 30, 2020 | 297,741 | $ 9 | 664,689 | 3,522 | (370,479) |
Stockholders' equity, beginning balance (in shares) at Mar. 31, 2020 | 87,815 | ||||
Stockholders' equity, beginning balance at Mar. 31, 2020 | 490,424 | $ 9 | 840,115 | 331 | (350,031) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock in connection with Equity Incentive and Employee Stock Purchase plans, net of tax withholdings (in shares) | 870 | ||||
Issuance of common stock in connection with Equity Incentive and Employee Stock Purchase plans, net of tax withholdings | 8,550 | 8,550 | |||
Share-based compensation | 52,129 | 52,129 | |||
Equity component from partial repurchase of 2023 convertible senior notes | (4,051) | (4,051) | |||
Temporary equity reclassification | (6,756) | (6,756) | |||
Changes in other comprehensive loss | 771 | 771 | |||
Net loss | 509 | 509 | |||
Stockholders' equity, ending balance (in shares) at Jun. 30, 2020 | 88,685 | ||||
Stockholders' equity, ending balance at Jun. 30, 2020 | 541,576 | $ 9 | 889,987 | 1,102 | (349,522) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock in connection with Equity Incentive and Employee Stock Purchase plans, net of tax withholdings (in shares) | 580 | ||||
Issuance of common stock in connection with Equity Incentive and Employee Stock Purchase plans, net of tax withholdings | (6,576) | (6,576) | |||
Share-based compensation | 53,640 | 53,640 | |||
Equity component of convertible senior notes, net of issuance costs (in shares) | 320 | ||||
Equity component from partial repurchase of 2023 convertible senior notes | (372,227) | (372,227) | |||
Purchase of capped calls related to convertible senior notes | (41,795) | (41,795) | |||
Equity component of convertible senior notes, net of issuance costs | 136,838 | 136,838 | |||
Temporary equity reclassification | 4,822 | 4,822 | |||
Changes in other comprehensive loss | 2,420 | 2,420 | |||
Net loss | (20,957) | (20,957) | |||
Stockholders' equity, ending balance (in shares) at Sep. 30, 2020 | 89,585 | ||||
Stockholders' equity, ending balance at Sep. 30, 2020 | $ 297,741 | $ 9 | $ 664,689 | $ 3,522 | $ (370,479) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities | ||
Net loss | $ (81,169) | $ (28,350) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 53,563 | 26,060 |
Share-based compensation | 137,410 | 71,690 |
Amortization of deferred and prepaid sales commission costs | 33,060 | 21,189 |
Amortization of debt discount and issuance costs | 32,613 | 15,149 |
Loss on early extinguishment of debt | 12,323 | 0 |
Repayment of convertible senior notes attributable to debt discount | (32,640) | 0 |
Reduction of operating lease right-of-use assets | 11,478 | 10,166 |
Unrealized gain and other related costs on investments | (41,453) | 0 |
Foreign currency remeasurement (gain) loss | 63 | 61 |
Provision for bad debt | 3,909 | 2,339 |
Deferred income taxes | (267) | (632) |
Tax benefit from release of valuation allowance | 0 | (3,210) |
Other | 203 | 1,925 |
Changes in assets and liabilities: | ||
Accounts receivable | (27,502) | (24,845) |
Deferred and prepaid sales commission costs | (183,745) | (51,467) |
Prepaid expenses and other current assets | (14,613) | (8,125) |
Other assets | 322 | 400 |
Accounts payable | 5,180 | 10,626 |
Accrued liabilities | 41,530 | 22,432 |
Deferred revenue | 20,128 | 16,632 |
Operating lease liabilities | (11,019) | (10,507) |
Other liabilities | 7,919 | (525) |
Net cash (used in) provided by operating activities | (32,707) | 71,008 |
Cash flows from investing activities | ||
Purchases of property and equipment | (33,992) | (21,355) |
Capitalized internal-use software | (28,049) | (11,472) |
Cash paid for business combination, net of cash acquired | 0 | (27,870) |
Net cash used in investing activities | (62,041) | (60,697) |
Cash flows from financing activities | ||
Proceeds from issuance of convertible senior notes, net of issuance costs | 1,627,209 | 0 |
Payments for 2023 convertible senior notes partial repurchase | (1,019,813) | 0 |
Payments for capped calls and transaction costs | (102,695) | 0 |
Proceeds from issuance of stock in connection with stock plans | 24,123 | 17,590 |
Payments for taxes related to net share settlement of equity awards | (27,698) | (10,244) |
Payment for contingent consideration for business acquisition | (3,548) | 0 |
Repayment of financing obligations | (1,215) | (943) |
Net cash provided by financing activities | 496,363 | 6,403 |
Effect of exchange rate changes | 337 | (380) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 401,952 | 16,334 |
Cash, cash equivalents and restricted cash | ||
Beginning of period | 343,606 | 566,329 |
End of period | 745,558 | 582,663 |
Supplemental disclosure of cash flow data | ||
Cash paid for interest | 190 | 189 |
Cash paid for income taxes, net of refunds | 512 | 718 |
Non-cash investing and financing activities | ||
Cash held for future indemnity claims and other potential future payments | 0 | 7,148 |
Equipment and capitalized internal-use software purchased and unpaid at period end | $ 7,879 | $ 4,861 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | Description of Business and Summary of Significant Accounting Policies Description of Business RingCentral, Inc. (the “Company”) is a provider of software-as-a-service (“SaaS”) solutions that enables businesses to communicate, collaborate and connect. The Company was incorporated in California in 1999 and was reincorporated in Delaware on September 26, 2013. Basis of Presentation and Consolidation The Company's unaudited condensed consolidated financial statements and accompanying notes reflect all adjustments (all of which are normal, recurring in nature and those discussed in these notes) that are, in the opinion of management, necessary for a fair presentation of the interim periods presented. All intercompany balances and transactions have been eliminated in consolidation. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending December 31, 2020. Certain information and note disclosures normally included in annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted under the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 26, 2020. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The significant estimates made by management affect revenues, the allowance for doubtful accounts, valuation of long-term investments, deferred sales commission costs, goodwill, useful lives of intangible assets, share-based compensation, capitalization of internally developed software, liability and equity allocation of convertible senior notes, return reserves, provision for income taxes, uncertain tax positions, loss contingencies, sales tax liabilities, and accrued liabilities. Management periodically evaluates these estimates and will make adjustments prospectively based upon the results of such periodic evaluations. Actual results may differ from these estimates. In March 2020, the World Health Organization declared the outbreak of the novel strain of coronavirus (“COVID-19”) as a global pandemic with widespread and detrimental effect on the global economy. The extent of the impact of COVID-19 on the Company's operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on the Company's customers and sales cycles, and its employees, all of which are uncertain and cannot be predicted. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require updating significant estimates or judgments or revising the carrying value of the Company's assets or liabilities as presented in the unaudited interim condensed consolidated financial statements. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates. Recent Accounting Pronouncements Not Yet Adopted In December 2019, the Financial Accounting Standard Board ("FASB") issued Accounting Standard Update ("ASU") No. 2019-12, Accounting Standards Update (Topic 740): Simplifying the Accounting for Income Taxes. The ASU removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for goodwill and allocating taxes to members of a consolidated group. The ASU is effective for calendar year-end public entities on January 1, 2021. Entities may early adopt the ASU in any interim period for which financial statements have not yet been issued (or made available for issuance). The Company has not yet adopted the new guidance. The adoption is not expected to have a material impact on the Company's condensed consolidated financial statements. In March 2020, the FASB issued optional guidance for a limited time to ease the potential burden in accounting for or recognizing the effects of reference rate reform, particularly, the risk of cessation of the London Interbank Offered Rate ("LIBOR") on financial reporting. The guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments are elective and are effective upon issuance for all entities through December 31, 2022. The Company is currently evaluating the impact of the new guidance. In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity , which simplifies the accounting for certain convertible instruments, amends the guidance on derivative scope exceptions for contracts in an entity's own equity, and modifies the guidance on diluted earnings per share calculations as a result of these changes. This new standard is effective for public entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. The amendment is to be adopted through either a fully retrospective or modified retrospective method of transition. Early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its condensed consolidated financial statements. |
Revenue and Cost of Revenue
Revenue and Cost of Revenue | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue and Cost of Revenue | Revenue and Cost of Revenue The Company derives its revenues primarily from subscriptions, sale of products, and professional services. Revenues are recognized when control of these products and services are transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products and services. Disaggregation of revenue The following table provides information about disaggregated revenue by primary geographical markets: Three Months Ended Nine Months Ended 2020 2019 2020 2019 Primary geographical markets North America 92 % 94 % 92 % 94 % Others 8 6 8 6 Total revenues 100 % 100 % 100 % 100 % The Company derived over 90% of subscription revenues from RingCentral Office product for both of the three and nine months ended September 30, 2020 and 2019. Deferred revenue During the three and nine months ended September 30, 2020, the Company recognized revenue of $14.5 million and $102.5 million, respectively, that was included in the corresponding deferred revenue balance at the beginning of the year. Remaining performance obligations The typical subscription term ranges from one month to five years. Contracted revenue as of September 30, 2020 that has not yet been recognized was approximately $1.2 billion. This excludes contracts with an original expected length of less than one year. Of these remaining performance obligations, the Company expects to recognize revenue of 54% of this balance over the next 12 months and 46% thereafter. Other revenues and cost of revenues Other revenues are primarily comprised of product revenue from the sale of pre-configured phones, professional services, and phone rentals. Product revenues were $11.3 million and $11.5 million for the three months ended September 30, 2020 and 2019, respectively, and $31.5 million and $30.1 million for the nine months ended September 30, 2020 and 2019, respectively. Cost of product revenues were $10.2 million and $10.4 million for the three months ended September 30, 2020 and 2019, respectively, and $29.8 million and $27.4 million for the nine months ended September 30, 2020 and 2019, respectively. |
Financial Statement Components
Financial Statement Components | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Financial Statement Components | Financial Statement Components Cash and cash equivalents consisted of the following (in thousands): September 30, 2020 December 31, 2019 Cash $ 102,431 $ 46,295 Money market funds 643,127 297,311 Total cash and cash equivalents $ 745,558 $ 343,606 Accounts receivable, net consisted of the following (in thousands): September 30, 2020 December 31, 2019 Accounts receivable $ 133,363 $ 114,745 Unbilled accounts receivable 25,433 17,603 Allowance for doubtful accounts (5,213) (2,358) Accounts receivable, net $ 153,583 $ 129,990 Prepaid expenses and other current assets consisted of the following (in thousands): September 30, 2020 December 31, 2019 Prepaid expenses $ 19,759 $ 16,249 Inventory 673 401 Other current assets 19,819 8,704 Total prepaid expenses and other current assets $ 40,251 $ 25,354 Property and equipment, net consisted of the following (in thousands): September 30, 2020 December 31, 2019 Computer hardware and software $ 159,970 $ 120,841 Internal-use software development costs 79,277 48,419 Furniture and fixtures 8,131 7,690 Leasehold improvements 12,662 11,327 Total property and equipment, gross 260,040 188,277 Less: accumulated depreciation and amortization (127,073) (99,047) Property and equipment, net $ 132,967 $ 89,230 Total depreciation and amortization expense related to property and equipment was $10.5 million and $7.3 million for the three months ended September 30, 2020 and 2019, respectively, and $27.8 million and $19.6 million for the nine months ended September 30, 2020 and 2019, respectively. During the nine months ended September 30, 2020, the Company financed $4.7 million of property, equipment and software licenses through vendor financing arrangements at interest rates ranging up to 3.95% to be repaid over a three-year term. As of September 30, 2020, $3.2 million of the related equipment is collateralized under the vendor financing arrangement. The financing arrangements and the assets purchased under these arrangements are non-cash investing and financing activities. The carrying value of goodwill is as follows (in thousands): Balance at December 31, 2019 $ 55,278 Foreign currency translation adjustments 945 Balance at September 30, 2020 $ 56,223 The carrying values of intangible assets are as follows (in thousands): September 30, 2020 December 31, 2019 Estimated Lives Cost Accumulated Acquired Cost Accumulated Acquired Customer relationships 2 to 5 years $ 21,636 $ 11,138 $ 10,498 $ 21,245 $ 8,178 $ 13,067 Developed technology 3 to 5 years 123,681 32,285 91,396 123,547 9,276 114,271 Total acquired intangible assets $ 145,317 $ 43,423 $ 101,894 $ 144,792 $ 17,454 $ 127,338 Amortization expense from acquired intangible assets for the three months ended September 30, 2020 and 2019 was $8.6 million and $2.3 million, respectively, and $25.8 million and $6.5 million for the nine months ended September 30, 2020 and 2019, respectively. Amortization of developed technology is included in cost of revenues and amortization of customer relationships is included in sales and marketing expenses in the Condensed Consolidated Statements of Operations. As of September 30, 2020, the weighted-average amortization period for developed technology is approximately 3.1 years and for customer relationships is approximately 2.2 years. Estimated amortization expense for acquired intangible assets for the following fiscal years is as follows (in thousands): 2020 (remaining) $ 8,532 2021 34,128 2022 28,522 2023 16,542 2024 onwards 14,170 Total estimated amortization expense $ 101,894 Accrued liabilities consisted of the following (in thousands): September 30, 2020 December 31, 2019 Accrued compensation and benefits $ 37,890 $ 30,541 Accrued sales, use, and telecom related taxes 28,354 25,757 Accrued marketing 29,485 17,505 Operating lease liabilities, short-term 16,407 14,249 Other accrued expenses 77,419 50,677 Total accrued liabilities $ 189,555 $ 138,729 Deferred and Prepaid Sales Commission Costs Amortization expense for the deferred and prepaid sales commission costs was $12.4 million and $8.0 million for the three months ended September 30, 2020 and 2019, respectively, and $33.1 million and $21.2 million for the nine months ended September 30, 2020 and 2019, respectively. There was no impairment loss in relation to the costs capitalized for the periods presented. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company measures and reports certain cash equivalents, including money market funds and certificates of deposit, at fair value in accordance with the provisions of the authoritative accounting guidance that addresses fair value measurements. This guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy is broken down into three levels based on the reliability of the inputs as follows: Level 1: Observable inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Other inputs, such as quoted prices for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. Level 3: Unobservable inputs that are supported by little or no market activity and that are based on management’s assumptions, including fair value measurements determined by using pricing models, discounted cash flow methodologies or similar techniques. The financial assets carried at fair value were determined using the following inputs (in thousands): Fair Value at September 30, 2020 Level 1 Level 2 Level 3 Cash equivalents: Money market funds $ 643,127 $ 643,127 $ — $ — Noncurrent assets: Long-term investments $ 173,641 $ — $ — $ 173,641 Fair Value at December 31, 2019 Level 1 Level 2 Level 3 Cash equivalents: Money market funds $ 297,311 $ 297,311 $ — $ — Noncurrent assets: Long-term investments $ 132,188 $ — $ — $ 132,188 The Company’s other financial instruments, including accounts receivable, accounts payable, and other current liabilities, are carried at cost, which approximates fair-value due to the relatively short maturity of those instruments. Convertible Senior Notes During the three months ended September 30, 2020, the Company issued $650 million aggregate principal amount 0% convertible senior notes due 2026 (the “2026 Notes”) as described in Note 6. As of September 30, 2020, the fair value of the 0% convertible senior notes due 2026 was approximately $644.6 million. The fair value was determined based on the quoted price for the 2026 Notes in an inactive market on the last trading day of the reporting period and is considered as Level 2 in the fair value hierarchy. As of September 30, 2020, the fair value of the 0% convertible senior notes due 2025 (the “2025 Notes”) was approximately $1.1 billion. The fair value was determined based on the quoted price for the 2025 Notes in an inactive market on the last trading day of the reporting period and is considered as Level 2 in the fair value hierarchy. As of September 30, 2020, the fair value of the 0% convertible senior notes due 2023 (the “2023 Notes”) was approximately $341.9 million. The fair value was determined based on the quoted price for the 2023 Notes in an inactive market on the last trading day of the reporting period and is considered as Level 2 in the fair value hierarchy. Long-Term Investments As of September 30, 2020, the fair value of the Company's long-term investments in convertible and redeemable preferred stock was $173.6 million. The Company classifies its long-term investments as Level 3 in the fair value hierarchy based on the nature of the fair value inputs and judgment involved in the valuation process. The Company uses a lattice model to value these investments and relies on observable inputs including share-price, credit spread, and volatility. The model also incorporates judgments relating to the probability of special redemption triggers, the expected holding period of the investment and interest rates. These investments are reported at fair value in long-term investments in the Condensed Consolidated Balance Sheets. The Company's total net unrealized gain recorded in other income (expense), net, was $23.3 million and $38.6 million for the three and nine months ended September 30, 2020, respectively. Volatility in the global economic climate and financial markets, including the effects of COVID-19, could result in a significant change in the underlying share-price of the Company’s investees, resulting in a material change in the value of the long-term investments. |
Business Combinations, Strategi
Business Combinations, Strategic Partnerships, and Asset Acquisitions | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Business Combinations, Strategic Partnerships, and Asset Acquisitions | Business Combinations, Strategic Partnerships, and Asset Acquisitions Connect First Acquisition On January 14, 2019, the Company acquired the equity interests of Connect First, Inc. (“Connect First”), a cloud-based outbound/blended customer engagement platform for midsize and enterprise companies. The acquisition complements the Company’s current Customer Engagement portfolio to provide differentiated customer experiences. The total purchase price of approximately $36.4 million consisted of cash of $29.3 million and $7.1 million held to cover indemnity claims made by the Company after the closing date. In connection with the acquisition, the Company granted $4.0 million in restricted stock units, which vests over four years. The allocation of the purchase price of the assets acquired and liabilities assumed based on their estimated fair values was as follows (in thousands): Cash and cash equivalents $ 1,427 Other tangible assets acquired 2,266 Acquired intangible assets 13,300 Goodwill 24,465 Total assets acquired 41,458 Liabilities assumed (5,013) Total consideration $ 36,445 The amortizable intangible assets have a weighted average useful life of three years. The purchase price exceeded the estimated fair value of the tangible and identifiable intangible assets and liabilities acquired and, as a result of the allocation, the Company recorded goodwill of $24.5 million, which is not deductible for tax purposes. The goodwill recognized is attributable primarily to contributions of the entity's technology to the overall corporate strategy, enhancements to the Company's contact center product offerings, and assembled workforce of the acquired business. Strategic Partnerships and Asset Purchases In October 2019, the Company entered into certain agreements for a strategic partnership with Avaya Holdings Corp. (“Avaya”) and its subsidiaries, including Avaya Inc. In connection with the strategic partnership, the Company purchased $125.0 million aggregate principal amount of 3% convertible and redeemable preferred stock, with a conversion price of $16.00 per share, representing an approximately 6% position in Avaya on an as-converted basis. The Company also paid Avaya $345.0 million in the Company's Class A Common Stock, predominantly for future fees, which was capitalized and will be amortized over the expected benefit period. The transaction closed on October 31, 2019. The investment in preferred securities in which the Company does not have a controlling interest or significant influence are measured at fair value with changes recorded through other income (expense) in the Condensed Consolidated Statement of Operations. The advance payment represents prepayment for cost to obtain contracts with customers. The Company also purchased intellectual property rights, which have been capitalized as an intangible asset and will be amortized over the useful life of three years. In the fourth quarter of 2019, the Company also entered into a strategic partnership with Atos SE ("Atos") and its subsidiary, Unify Software and Solutions GmbH & CO. KG ("Unify"), which, among other things, provided for a one-time upfront consideration towards the acquisition of certain intellectual property rights and a commercial arrangement. Under the commercial agreement Unify is engaged in the marketing and sale of the Company's product, which represents advance payment for cost to obtain contracts with customers. In addition to the above transactions, the Company also separately entered into arrangements with unrelated third parties to acquire intellectual property rights during the fourth quarter of 2019. In connection with the above transactions, the Company recorded in aggregate $105.5 million in acquired intangible assets relating to developed technology on the Condensed Consolidated Balance Sheet, which will be amortized over their respective useful life of three In July 2020, the Company entered into a strategic partnership with Alcatel-Lucent Enterprise, a provider of communications, networking, and cloud solutions in Europe. The parties intend to introduce a new co-branded solution, which will be the exclusive Unified Communications as a Service ("UCaaS") solution marketed and sold by the strategic partner. Under the agreement, the Company paid an upfront consideration of $100.0 million in cash, which was included in deferred and prepaid sales commission costs on the Company's Condensed Consolidated Balance Sheets. |
Convertible Senior Notes
Convertible Senior Notes | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Convertible Senior Notes | Convertible Senior Notes 2026 Convertible Senior Notes In September 2020, the Company issued $650 million aggregate principal amount of 0% convertible senior notes due 2026 in a private placement to qualified institutional buyers (the "2026 Notes"). The 2026 Notes are senior, unsecured obligations that do not bear regular interest, and the principal amount of the 2026 Notes does not accrete. The 2026 Notes may bear special interest under specified circumstances relating to the Company's failure to comply with its reporting obligations under the indenture governing the 2026 Notes (the "2026 Indenture") or if the 2026 Notes are not freely tradeable as required by the 2026 Indenture. The 2026 Notes will mature on March 15, 2026, unless earlier repurchased or redeemed by the Company or converted pursuant to their terms. The total net proceeds from the debt offering, after deducting initial purchase discounts and debt issuance costs, were approximately $640.2 million. Each $1,000 principal amount of the 2026 Notes is initially convertible into 2.3583 shares of the Company’s Class A common stock par value $0.0001 (“Class A Common Stock”), which is equivalent to an initial conversion price of approximately $424.03 per share. The conversion rate is subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid special interest. In addition, upon the occurrence of a make-whole fundamental change or a redemption period, each as defined in the 2026 Indenture, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2026 Notes in connection with such make-whole fundamental change or during the relevant redemption period. Prior to the close of business on the business day immediately preceding December 15, 2025, the 2026 Notes will be convertible only under the following circumstances: (1) during any calendar quarter commencing after December 31, 2020, and only during such calendar quarter, if the last reported sale price of the Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five-business day period after any five consecutive trading day period in which, for each trading day of that period, the trading price per $1,000 principal amount of 2026 Notes for such trading day was less than 98% of the product of the last reported sale price of the Class A Common Stock and the conversion rate for the 2026 Notes on each such trading day; (3) upon the Company’s notice that it is redeeming any or all of the 2026 Notes, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after December 15, 2025, until the close of business on the scheduled trading day immediately preceding the maturity date, holders of the 2026 Notes may convert all or a portion of their 2026 Notes regardless of the foregoing conditions. Upon conversion, the Company will pay or deliver, as the case may be, either cash, shares of Class A Common Stock or a combination of cash and shares of Class A Common Stock, at the Company’s election. It is the Company’s current intent to settle the principal amount of the 2026 Notes with cash. During the three months ended September 30, 2020, the conditions allowing holders of the 2026 Notes to convert were not met. The Company may redeem the 2026 Notes, at its option, on or after March 20, 2023, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid special interest if the last reported sale price of the Company’s Class A Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides written notice of redemption. No sinking fund is provided for the 2026 Notes. Upon the occurrence of a fundamental change (as defined in the 2026 Indenture) prior to the maturity date, holders may require the Company to repurchase all or a portion of the 2026 Notes for cash at a price equal to 100% of the principal amount of the 2026 Notes to be repurchased, plus any accrued and unpaid special interest to, but excluding, the fundamental change repurchase date. The 2026 Notes are senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2026 Notes; equal in right of payment with the Company’s existing and future liabilities that are not so subordinated, including the 2023 Notes and the 2025 Notes; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of current or future subsidiaries of the Company. In accounting for the issuance of the 2026 Notes, the Company separated the 2026 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was $138.9 million and was determined by deducting the fair value of the liability component from the par value of the 2026 Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) is amortized to interest expense at an effective interest rate over the contractual terms of the 2026 Notes. In accounting for the transaction costs related to the 2026 Notes, the Company allocated the total amount incurred to the liability and equity components of the 2026 Notes based on the proportion of the proceeds allocated to the debt and equity components. Issuance costs attributable to the liability component recorded as additional debt discount were $7.7 million and will be amortized to interest expense using the effective interest method over the contractual terms of the 2026 Notes. Issuance costs attributable to the equity component of $2.1 million were netted with the equity component in stockholders’ equity. The net carrying amount of the liability component of the 2026 Notes was as follows (in thousands): September 30, 2020 Principal $ 650,000 Unamortized discount (137,991) Unamortized issuance cost (7,627) Net carrying amount $ 504,382 The net carrying amount of the equity component of the 2026 Notes was as follows (in thousands): September 30, 2020 Proceeds allocated to the conversion option (debt discount) $ 138,923 Issuance cost (2,085) Net carrying amount $ 136,838 The following table sets forth the interest expense recognized related to the 2026 Notes (in thousands): Three Months Ended September 30, 2020 Amortization of debt discount $ 932 Amortization of debt issuance costs 43 Total interest expense related to the 2026 Notes $ 975 2026 Capped Calls In connection with the offering of the 2026 Notes, the Company entered into privately-negotiated capped call transactions with certain counterparties (the “2026 Capped Calls”). The 2026 Capped Calls each have an initial strike price of approximately $424.03 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2026 Notes. The 2026 Capped Calls have initial cap prices of approximately $556.10 per share, subject to certain adjustments. The 2026 Capped Calls cover, subject to anti-dilution adjustments, approximately 1.5 million shares of Class A Common Stock. The 2026 Capped Calls are generally intended to reduce or offset the potential dilution to the Class A Common Stock upon any conversion of the 2026 Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. The 2026 Capped Calls settle in components commencing on February 13, 2025 with the last component scheduled to expire on March 13, 2025. The 2026 Capped Calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting the Company, including a merger event; a tender offer; and a nationalization, insolvency or delisting involving the Company. In addition, the 2026 Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the 2026 Capped Calls, including changes in law; insolvency filings; and hedging disruptions. The 2026 Capped Call transactions are recorded in stockholders’ equity and are not accounted for as derivatives. The net cost of $41.8 million incurred to purchase the Capped Call transactions was recorded as a reduction to additional paid-in capital on the Company's Condensed Consolidated Balance Sheets. 2025 Convertible Senior Notes In March 2020, the Company issued $1.0 billion aggregate principal amount of 0% convertible senior notes due 2025 in a private placement to qualified institutional buyers (the "2025 Notes"). The 2025 Notes are senior, unsecured obligations that do not bear regular interest, and the principal amount of the 2025 Notes does not accrete. The 2025 Notes may bear special interest under specified circumstances relating to the Company's failure to comply with its reporting obligations under the indenture governing the 2025 Notes (the "2025 Indenture") or if the 2025 Notes are not freely tradeable as required by the 2025 Indenture. The 2025 Notes will mature on March 1, 2025, unless earlier repurchased or redeemed by the Company or converted pursuant to their terms. The total net proceeds from the debt offering, after deducting initial purchase discounts and debt issuance costs, were approximately $986.5 million. Each $1,000 principal amount of the 2025 Notes is initially convertible into 2.7745 shares of Class A Common Stock, which is equivalent to an initial conversion price of approximately $360.43 per share. The conversion rate is subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid special interest. In addition, upon the occurrence of a make-whole fundamental change or a redemption period, each as defined in the 2025 Indenture, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2025 Notes in connection with such make-whole fundamental change or during the relevant redemption period. Prior to the close of business on the business day immediately preceding December 1, 2024, the 2025 Notes will be convertible only under the following circumstances: (1) during any calendar quarter commencing after June 30, 2020, and only during such calendar quarter, if the last reported sale price of the Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five-business day period after any five consecutive trading day period in which, for each trading day of that period, the trading price per $1,000 principal amount of 2025 Notes for such trading day was less than 98% of the product of the last reported sale price of the Class A Common Stock and the conversion rate for the 2025 Notes on each such trading day; (3) upon the Company’s notice that it is redeeming any or all of the 2025 Notes, but only with respect to the 2025 Notes called for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after December 1, 2024, until the close of business on the scheduled trading day immediately preceding the maturity date, holders of the 2025 Notes may convert all or a portion of their 2025 Notes regardless of the foregoing conditions. Upon conversion, the Company will pay or deliver, as the case may be, either cash, shares of Class A Common Stock or a combination of cash and shares of Class A Common Stock, at the Company’s election. It is the Company’s current intent to settle the principal amount of the 2025 Notes with cash. During the three months ended September 30, 2020, the conditions allowing holders of the 2025 Notes to convert were not met. The Company may redeem the 2025 Notes, at its option, on or after March 5, 2022, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid special interest if the last reported sale price of the Company’s Class A Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides written notice of redemption. No sinking fund is provided for the 2025 Notes. Upon the occurrence of a fundamental change (as defined in the 2025 Indenture) prior to the maturity date, holders may require the Company to repurchase all or a portion of the 2025 Notes for cash at a price equal to 100% of the principal amount of the 2025 Notes to be repurchased, plus any accrued and unpaid special interest to, but excluding, the fundamental change repurchase date. The 2025 Notes are senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2025 Notes; equal in right of payment with the Company’s existing and future liabilities that are not so subordinated, including the 2023 Notes; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of current or future subsidiaries of the Company. In accounting for the issuance of the 2025 Notes, the Company separated the 2025 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was $195.1 million and was determined by deducting the fair value of the liability component from the par value of the 2025 Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) is amortized to interest expense at an effective interest rate over the contractual terms of the 2025 Notes. In accounting for the transaction costs related to the 2025 Notes, the Company allocated the total amount incurred to the liability and equity components of the 2025 Notes based on the proportion of the proceeds allocated to the debt and equity components. Issuance costs attributable to the liability component recorded as additional debt discount were $10.9 million and will be amortized to interest expense using the effective interest method over the contractual terms of the 2025 Notes. Issuance costs attributable to the equity component of $2.6 million were netted with the equity component in stockholders’ equity. The net carrying amount of the liability component of the 2025 Notes was as follows (in thousands): September 30, 2020 Principal $ 1,000,000 Unamortized discount (174,624) Unamortized issuance cost (9,856) Net carrying amount $ 815,520 The net carrying amount of the equity component of the 2025 Notes was as follows (in thousands): September 30, 2020 Proceeds allocated to the conversion option (debt discount) $ 195,074 Issuance cost (2,632) Net carrying amount $ 192,442 The following table sets forth the interest expense recognized related to the 2025 Notes (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2020 Amortization of debt discount $ 8,912 20,451 Amortization of debt issuance costs 442 1,004 Total interest expense related to the 2025 Notes $ 9,354 $ 21,455 2025 Capped Calls In connection with the offering of the 2025 Notes, the Company entered into privately-negotiated capped call transactions with certain counterparties (the “2025 Capped Calls”). The 2025 Capped Calls each have an initial strike price of approximately $360.43 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2025 Notes. The 2025 Capped Calls have initial cap prices of approximately $480.56 per share, subject to certain adjustments. The 2025 Capped Calls cover, subject to anti-dilution adjustments, approximately 2.8 million shares of Class A Common Stock. The 2025 Capped Calls are generally intended to reduce or offset the potential dilution to the Class A Common Stock upon any conversion of the 2025 Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. The 2025 Capped Calls settle in components commencing on January 31, 2024 with the last component scheduled to expire on February 28, 2024. The 2025 Capped Calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting the Company, including a merger event; a tender offer; and a nationalization, insolvency or delisting involving the Company. In addition, the 2025 Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the 2025 Capped Calls, including changes in law; insolvency filings; and hedging disruptions. The Capped Call transactions are recorded in stockholders’ equity and are not accounted for as derivatives. The net cost of $60.9 million incurred to purchase the Capped Call transactions was recorded as a reduction to additional paid-in capital on the Company's Condensed Consolidated Balance Sheets. 2023 Convertible Senior Notes In March 2018, the Company issued $460.0 million aggregate principal amount of 0% convertible senior notes due 2023 in a private placement, including the exercise in full of the over-allotment options of the initial purchasers (the "2023 Notes"). The 2023 Notes are senior unsecured obligations of the Company, do not bear regular interest, and the principal amount of the 2023 Notes does not accrete. The 2023 Notes may bear special interest under specified circumstances as outlined in the indenture governing the 2023 Notes (the “2023 Indenture”) or if the 2023 Notes are not freely tradeable as required by the 2023 Indenture. The 2023 Notes will mature on March 15, 2023, unless earlier repurchased or redeemed by the Company or converted pursuant to their terms. The total net proceeds from the debt offering, after deducting initial purchase discounts and debt issuance costs, were approximately $449.5 million. Each $1,000 principal amount of the 2023 Notes is initially convertible into 12.2782 shares of the Company’s Class A Common Stock, which is equivalent to an initial conversion price of approximately $81.45 per share. The conversion rate is subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid special interest. In addition, upon the occurrence of a make-whole fundamental change or a redemption period, each as defined in the 2023 Indenture, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2023 Notes in connection with such make-whole fundamental change or during the relevant redemption period. The 2023 Notes will be convertible at certain times and upon the occurrence of certain events in the future. Further, on or after December 15, 2022, until the close of business on the scheduled trading day immediately preceding the maturity date, holders of the 2023 Notes may convert all or a portion of their 2023 Notes regardless of these conditions. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of Class A Common Stock, or a combination of cash and shares of Class A Common Stock, at the Company’s election. It is the Company’s current intent to settle the principal amount of the 2023 Notes with cash. In March 2020, the Company used $509.6 million of the net proceeds from the offering of the 2025 Notes to repurchase $172.5 million aggregate principal amount of the 2023 Notes in cash through individual privately negotiated transactions (the “First Partial Repurchase of 2023 Notes”). Of the $509.6 million net proceeds, $153.7 million and $355.9 million were allocated to the debt and equity components, respectively, utilizing an effective interest rate to determine the fair value of the liability component. This interest rate reflected the Company’s incremental borrowing rate, adjusted for the Company’s credit standing on nonconvertible debt with similar maturity. As of the repurchase date, the carrying value of the 2023 Notes subject to the First Partial Repurchase of 2023 Notes, net of unamortized debt discount and issuance costs, was $146.4 million. The First Partial Repurchase of 2023 Notes resulted in a $7.3 million loss on early debt extinguishment. In September 2020, the Company used $452.6 million of the net proceeds from the offering of the 2026 Notes to repurchase $132.6 million aggregate principal amount of the 2023 Notes in cash through individual privately negotiated transactions (the “Second Partial Repurchase of 2023 Notes”). Of the $452.6 million net proceeds, $121.1 million and $331.5 million were allocated to the debt and equity components, respectively, utilizing an effective interest rate to determine the fair value of the liability component. This interest rate reflected the Company’s incremental borrowing rate, adjusted for the Company’s credit standing on nonconvertible debt with similar maturity. As of the repurchase date, the carrying value of the 2023 Notes subject to the Second Partial Repurchase of 2023 Notes, net of unamortized debt discount and issuance costs, was $115.6 million. The Second Partial Repurchase of 2023 Notes resulted in a $5.5 million loss on early debt extinguishment. During the three months ended September 30, 2020, the stock price condition allowing holders of the 2023 Notes to convert was met. As a result, holders have the option to convert their 2023 Notes at any time during the fiscal quarter ending December 31, 2020. The 2023 Notes may be convertible thereafter if one or more of the conversion conditions specified in the 2023 Indenture is satisfied during future measurement periods. During the three months ended September 30, 2020, the Company settled approximately $51.2 million principal amount of unsettled requests received as of June 30, 2020, and received additional conversion requests on the principal amount of the 2023 Notes totaling approximately $16.1 million, out of which an immaterial amount was settled during the quarter ended September 30, 2020. During the quarter ended September 30, 2020, the Company recognized an immaterial gain on these conversions representing the net carrying amount in excess of the fair value of the liability component of the converted notes on the respective settlement dates. During the nine months ended September 30, 2020, the Company settled approximately $53.1 million principal amount and recognized an immaterial gain on these conversions. The amount is included in other income (expense), net in the Condensed Consolidated Statement of Operations. In relation to the remaining $16.1 million principal amount of unsettled conversion requests, as of September 30, 2020, the Company reclassified the net carrying value of the debt of $14.2 million from long-term to short-term debt and a portion of equity of approximately $1.9 million representing the difference between the principal and net carrying amount of the liability component of the 2023 Notes requested for conversion, into temporary equity, as these requests will be settled during the fourth quarter of fiscal 2020. In addition, from October 1, 2020 to the date of this filing, the Company has received additional conversion requests for $5.5 million principal amounts, which are expected to be settled during the quarter ending December 31, 2020. The Company may redeem the 2023 Notes, at its option, on or after September 20, 2020, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid special interest to, but excluding the redemption date, subject to certain conditions. No sinking fund is provided for the 2023 Notes. Upon the occurrence of a fundamental change (as defined in the 2023 Indenture) prior to the maturity date, holders may require the Company to repurchase all or a portion of the 2023 Notes for cash at a price equal to 100% of the principal amount of the 2023 Notes to be repurchased, plus any accrued and unpaid special interest to, but excluding, the fundamental change repurchase date. The net carrying amount of the liability component of the 2023 Notes was as follows (in thousands): September 30, 2020 Principal $ 101,787 Unamortized discount (11,620) Unamortized issuance cost (1,015) Net carrying amount (1) $ 89,152 (1) As of September 30, 2020, $14.2 million net carrying amount of the liability component was classified as a current liability on the Condensed Consolidated Balance Sheets. The following table sets forth the interest expense recognized related to the 2023 Notes (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Amortization of debt discount $ 2,097 $ 4,759 $ 9,445 $ 14,102 Amortization of debt issuance costs 169 359 745 1,047 Total interest expense related to the 2023 Notes $ 2,266 $ 5,118 $ 10,190 $ 15,149 2023 Capped Calls |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | Leases The Company primarily leases facilities for office and datacenter space under non-cancelable operating leases for its U.S. and international locations. As of September 30, 2020, non-cancellable leases expire on various dates between 2020 and 2029. The components of leases are as follows (in thousands): Operating leases September 30, 2020 December 31, 2019 Operating lease right-of-use assets $ 50,414 $ 39,269 Accrued liabilities $ 16,407 $ 14,249 Operating lease liabilities 37,973 28,516 Total operating lease liabilities $ 54,380 $ 42,765 Nine Months Ended September 30, Supplemental Cash Flow Information 2020 2019 Operating cash flows resulting from operating leases: Cash paid for amounts included in the measurement of lease liabilities $ 12,713 $ 11,680 New ROU assets obtained in exchange of lease liabilities: Operating leases $ 22,509 $ 17,388 On August 6, 2020, the Company entered into a second amendment to its headquarters lease agreement (the “Lease Amendment”). The premises leased occupy approximately 84,148 rentable square feet of office building space, consisting of three office floors, located at 20 Davis Drive in Belmont, California. The Lease Amendment extends the Company’s right to occupy the premises commencing on August 1, 2021 and terminates on July 31, 2026, unless earlier terminated pursuant to the terms of the Lease Amendment. The Company has the right to extend the term for one additional five-year period under certain circumstances. The monthly base rent for the first year of the extended lease term is approximately $0.3 million and increases annually thereafter by three percent for the balance of the extended term. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Matters The Company is subject to certain legal proceedings described below, and from time to time may be involved in a variety of claims, lawsuits, investigations, and proceedings relating to contractual disputes, intellectual property rights, employment matters, regulatory compliance matters, and other litigation matters relating to various claims that arise in the normal course of business. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. The Company assesses its potential liability by analyzing specific litigation and regulatory matters using reasonably available information. The Company develops its views on estimated losses in consultation with inside and outside counsel, which involves a subjective analysis of potential results and outcomes, assuming various combinations of appropriate litigation and settlement strategies. Actual claims could settle or be adjudicated against the Company in the future for materially different amounts than the Company has accrued due to the inherently unpredictable nature of litigation. Legal fees are expensed in the period in which they are incurred. TCPA Matter On November 17, 2017, Joann Hurley (“Hurley”), filed a second amended complaint in an ongoing putative class action lawsuit pending in the United States District Court for the Southern District of West Virginia, adding the Company as a named defendant and alleging that the Company and other defendants violated the Telephone Consumer Protection Act (“TCPA”) and regulations promulgated thereunder by allegedly using an automated telephone dialing system to deliver prerecorded political messages to Hurley, an incumbent running for reelection, and others. Hurley alternatively alleged that the Company was vicariously liable for the actions of the other co-defendants. Hurley seeks statutory, compensatory, consequential, incidental and punitive damages, costs, and attorneys’ fees in connection with her claims. The Company was served with the second amended complaint on January 4, 2018. On March 23, 2018, the Company filed a motion to dismiss the complaint for lack of standing and failure to sufficiently state a claim on which relief may be granted. Hurley filed her opposition brief on April 6, 2018, and the Company filed its reply brief on April 13, 2018. On October 4, 2018, the district court issued its memorandum and opinion order granting in part and denying in part the Company’s motion to dismiss. The district court dismissed Hurley’s vicarious liability claim but allowed Hurley’s TCPA claim to proceed. The Company filed its answer and affirmative defenses to the second amended complaint on October 18, 2018. Hurley filed a motion to certify a class on July 9, 2019. The Company and another defendant filed oppositions to the motion, which have been fully briefed and is pending decision by the court. Discovery closed on October 25, 2019. The Company filed a motion for summary judgment on November 14, 2019. Hurley opposed the motion, which has been fully briefed and is pending decision by the court. The parties mediated the case before a private mediator on January 23, 2020, at which time a tentative settlement was achieved. The settlement will need to be approved by the court. Meanwhile, the court has issued an order holding the case in abeyance pending approval of the settlement. The condensed consolidated financial statements include an immaterial accrual for the estimated loss that is expected to occur. Patent Infringement Matter On April 25, 2017, Uniloc USA, Inc. and Uniloc Luxembourg, S.A. (together, “Uniloc”) filed in the U.S. District Court for the Eastern District of Texas two actions against the Company alleging infringement of U.S. Patent Nos. 7,804,948; 7,853,000; and 8,571,194 by RingCentral’s Glip unified communications application. The plaintiffs seek a declaration that the Company has infringed the patents, damages according to proof, injunctive relief, as well as their costs, attorney’s fees, expenses and interest. On October 9, 2017, the Company filed a motion to dismiss or transfer requesting that the case be transferred to the United States District Court for the Northern District of California. In response to the motion, plaintiffs filed a first amended complaint on October 24, 2017. The Company filed a renewed motion to dismiss or transfer on November 15, 2017. Although briefing on that motion has been completed, the motion has not yet been decided. On February 5, 2018, Uniloc moved to stay the litigation pending the resolution of certain third-party inter partes review proceedings (“IPRs”) before the United States Patent and Trademark Office. On February 9, 2018, the court stayed the litigation pending resolution of the IPRs without prejudice to or waiver of the Company’s motion to dismiss or transfer. This litigation is still in its earliest stages. Based on the information known by the Company as of the date of this filing and the rules and regulations applicable to the preparation of the Company’s condensed consolidated financial statements, it is not possible to provide an estimated amount of any such loss or range of loss that may occur. The Company intends to vigorously defend against this lawsuit. CIPA Matter On June 16, 2020, Plaintiff Meena Reuben (“Reuben”) filed a complaint against the Company for a putative class action lawsuit in California Superior Court for San Mateo County. The complaint alleges claims on behalf of a class of individuals for whom, while they were in California, the Company allegedly intercepted and recorded communications between individuals and the Company’s customers without the individual’s consent, in violation of the California Invasion of Privacy Act (“CIPA”) Sections 631 and 632.7. Reuben seeks statutory damages of $5,000 for each alleged violation of Sections 631 and 632.7, injunctive relief, and attorneys’ fees and costs, and other unspecified amount of damages. On July 7, 2020, the Court granted the parties’ stipulation to extend time for the Company to respond to the Reuben’s complaint. The Company has not responded to the complaint. This litigation is still in its earliest stages. Based on the information known by the Company as of the date of this filing and the rules and regulations applicable to the preparation of the Company’s condensed consolidated financial statements, it is not possible to provide an estimated amount of any such loss or range of loss that may occur. The Company intends to vigorously defend against this lawsuit. Other Matter On June 14, 2019, the Company filed suit in the Superior Court of California, County of Alameda against Bright Pattern, Inc. and two of its officers, alleging that the defendants negotiated a potential acquisition of Bright Pattern by RingCentral fraudulently and in bad faith. The Company seeks its costs incurred in negotiating under the Letter of Intent ("LOI") that the parties entered into and damages for lost opportunity as a result of forgoing another acquisition opportunity, |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity In connection with the Company’s initial public offering, the Company reincorporated in Delaware on September 26, 2013. The Delaware certificate of incorporation provides for two classes of common stock: Class A and Class B common stock, both with a par value of $0.0001 per share. In addition, the certificate of incorporation authorizes shares of undesignated preferred stock with a par value of $0.0001 per share. The terms of preferred stock are described below. Preferred Stock The board of directors may, without further action by the stockholders, fix the rights, preferences, privileges and restrictions of up to an aggregate of 100,000,000 shares of preferred stock in one or more series and authorizes their issuance. These rights, preferences, and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of the Class A and Class B common stock. As of September 30, 2020 and December 31, 2019, there were 100,000,000 shares of preferred stock authorized and no shares issued or outstanding. Class A and Class B Common Stock The Company has authorized 1,000,000,000 and 250,000,000 shares of Class A common stock and Class B common stock for issuance. Holders of Class A common stock and Class B common stock have identical rights for matters submitted to a vote of the Company’s stockholders. Holders of Class A common stock are entitled to one vote per share of Class A common stock and holders of Class B common stock are entitled to 10 votes per share of Class B common stock. Holders of shares of Class A common stock and Class B common stock vote together as a single class on all matters (including the election of directors) except for specific circumstances that would adversely affect the powers, preferences, or rights of a particular class of common stock. Subject to preferences that may apply to any shares of preferred stock outstanding at the time, holders of Class A and Class B common stock share equally, identically and ratably, on a per share basis, with respect to any dividend or distribution of cash, property or shares of the Company’s capital stock. Holders of Class A and Class B common stock also share equally, identically, and ratably in all assets remaining after the payment of any liabilities and liquidation preferences and any accrued or declared but unpaid dividends, if any, with respect to any outstanding preferred stock at the time. Each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. In addition, each share of Class B common stock will convert automatically to Class A common stock upon: (i) the date specified by an affirmative vote or written consent of holders of at least 67% of the outstanding shares of Class B common stock, or (ii) the date on which the number of outstanding shares of Class B common stock represents less than 10% of the aggregate combined number of outstanding shares of Class A common stock and Class B common stock, or (iii) any time seven years after the Company's initial public offering (October 2, 2020), when a stockholder owns less than 50% of the shares of Class B common stock that such holder owned immediately prior to completion of the initial public offering. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | Share-Based Compensation A summary of share-based compensation expense recognized in the Company’s Condensed Consolidated Statements of Operations is as follows (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Cost of revenues $ 3,847 $ 2,351 $ 10,419 $ 6,112 Research and development 10,679 6,230 27,918 16,000 Sales and marketing 17,552 10,182 45,165 27,589 General and administrative 19,488 8,613 53,908 21,989 Total share-based compensation expense $ 51,566 $ 27,376 $ 137,410 $ 71,690 A summary of share-based compensation expense by award type is as follows (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Options $ 8 $ 137 $ 41 $ 876 Employee stock purchase plan rights 1,719 868 4,954 2,810 Restricted stock units 49,839 26,371 132,415 68,004 Total share-based compensation expense $ 51,566 $ 27,376 $ 137,410 $ 71,690 Equity Incentive Plans As of September 30, 2020, a total of 17,605,478 shares remained available for grant under the RingCentral, Inc. Amended and Restated 2013 Equity Incentive Plan (“2013 Plan”). A summary of option activity under all of the Company’s equity incentive plans at September 30, 2020 and changes during the period then ended is presented in the following table: Number of Weighted- Weighted- Aggregate Outstanding at December 31, 2019 2,257 $ 13.13 2.5 $ 351,428 Granted — — Exercised (956) 13.36 Canceled/Forfeited — — Outstanding at September 30, 2020 1,301 $ 12.96 1.8 $ 340,420 Vested and expected to vest as of September 30, 2020 1,301 $ 12.96 1.8 $ 340,416 Exercisable as of September 30, 2020 1,300 $ 12.96 1.8 $ 340,264 There were no options granted during the three and nine months ended September 30, 2020 and 2019. The total intrinsic value of options exercised during the three months ended September 30, 2020 and 2019 were $43.9 million and $57.3 million, respectively, and $219.7 million and $137.6 million, during the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, there was an immaterial amount of unrecognized share-based compensation expense, net of estimated forfeitures, related to non-vested stock option grants, which will be recognized on a straight-line basis over the remaining weighted-average vesting period of approximately 0.3 years. Employee Stock Purchase Plan The Company's Employee Stock Purchase Plan (“ESPP”) allows eligible employees to purchase shares of the Company’s Class A Common Stock at a discounted price through payroll deductions. As of September 30, 2020, there was a total of $1.0 million of unrecognized share-based compensation expense, net of estimated forfeitures, related to the ESPP, which will be recognized on a straight-line basis over the remaining weighted-average vesting period of approximately 0.1 years. As of September 30, 2020, a total of 4,713,290 shares were available for issuance under the ESPP. Restricted Stock Units The 2013 Plan provides for the issuance of restricted stock units (“RSUs”) to employees, directors, and consultants. RSUs issued under the 2013 Plan generally vest over four years. A summary of activity of RSUs under the 2013 Plan at September 30, 2020, and changes during the period then ended is presented in the following table: Number of Weighted- Aggregate Outstanding at December 31, 2019 3,249 $ 85.39 $ 548,145 Granted 1,253 217.88 Released (1,397) 95.97 Canceled/Forfeited (198) 107.71 Outstanding at September 30, 2020 2,907 $ 135.88 $ 798,357 As of September 30, 2020, there was a total of $278.9 million of unrecognized share-based compensation expense, net of estimated forfeitures, related to RSUs, which will be recognized on a straight-line basis over the remaining weighted-average vesting period of approximately 2.3 years. Bonus Plan In December 2018, the Company's board of directors (the "Board") adopted the Selective 2019 Key Employee Equity Bonus Plan (the "2019 KEEB Plan”), which became effective on January 1, 2019, and in December 2019, the Board adopted the Selective 2020 Key Employee Equity Bonus Plan (the "2020 KEEB Plan" and together with the 2019 KEEB Plan the "KEEB Plans"), which became effective on January 1, 2020. Both KEEB Plans allow the recipients to earn fully vested shares of the Company’s Class A Common Stock upon the achievement of quarterly service and performance conditions. During the three and nine months ended September 30, 2020, the Company issued 22,685 and 71,541 RSUs, respectively, under the KEEB Plans. The total requisite service period of each quarterly award is approximately 0.4 years. The unrecognized share-based compensation expense was approximately $2.1 million, which will be recognized over the remaining service period of 0.1 years. The shares issued under the KEEB Plans will be issued from the reserve of shares available for issuance under the 2013 Plan. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company has determined that the chief executive officer is the chief operating decision maker. The Company’s chief executive officer reviews financial information presented on a consolidated basis for purposes of assessing performance and making decisions on how to allocate resources. Accordingly, the Company has determined that it operates in a single reportable segment. Concentrations At September 30, 2020 and December 31, 2019, none of the Company’s customers accounted for more than 10% of the Company’s total accounts receivable. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for (benefit from) income taxes for the three months ended September 30, 2020 and 2019, was $0.4 million and $(0.1) million, respectively, and was $0.8 million and $(3.1) million for the nine months ended September 30, 2020 and 2019, respectively. The provision for (benefit from) income taxes for the three and nine months ended September 30, 2020 and 2019 consisted primarily of state minimum taxes and foreign income taxes. The provision for (benefit from) income taxes for the nine months ended September 30, 2019 also included a one-time benefit from the release of valuation allowance as a result of the ConnectFirst acquisition. For the three and nine months ended September 30, 2020 and 2019, the provision for income taxes differed from the U.S. federal statutory rate primarily due to state and foreign taxes currently payable. Due to the Connect First acquisition in January 2019, a deferred tax liability was established for the book-tax basis difference related to identifiable acquired intangibles. The net deferred tax liability from acquisitions is considered an additional source of income to support the realizability of the Company's pre-existing deferred tax asset, and as a result the Company released a portion of the valuation allowance that was established in the previous year and recorded a one-time tax benefit of $3.2 million for the nine months ended September 30, 2019. The Company realized no benefit for the current year losses due to a full valuation allowance against the U.S. and foreign net deferred tax assets. The realization of tax benefits of net deferred tax assets is dependent upon future levels of taxable income, of an appropriate character, in the periods the items are expected to be deductible or taxable. Based on the available objective evidence, the Company does not believe it is more likely than not that the net deferred tax assets will be realizable. Accordingly, the Company has provided a full valuation allowance against the entire domestic and the majority of the foreign net deferred tax assets as of September 30, 2020 and December 31, 2019. The Company intends to maintain the full valuation allowance on the U.S. net deferred tax assets until sufficient positive evidence exists to support a reversal of, or decrease in, the valuation allowance. During the three and nine months ended September 30, 2020, there were no material changes to the total amount of unrecognized tax benefits. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was passed into law and amended portions of relevant tax laws. The CARES Act did not have any significant impact on the provision for income taxes for the three and nine months ended September 30, 2020. The Company will continue to monitor future guidance issued regarding the CARES Act. |
Basic and Diluted Net Loss Per
Basic and Diluted Net Loss Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Net Loss Per Share | Basic and Diluted Net Loss Per ShareBasic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of common stock, stock options, restricted stock units, ESPP, and convertible senior notes, to the extent dilutive. For the three and nine months ended September 30, 2020 and 2019, all such common stock equivalents have been excluded from diluted net loss per share as the effect to net loss per share would be anti-dilutive. The following table sets forth the computation of the Company’s basic and diluted net loss per share of common stock (in thousands, except per share data): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Numerator Net loss $ (20,957) $ (12,749) $ (81,169) $ (28,350) Denominator: Weighted-average common shares outstanding for basic and diluted net loss per share 89,173 83,283 88,259 82,348 Basic and diluted net loss per share $ (0.24) $ (0.15) $ (0.92) $ (0.34) The following table summarizes the potentially dilutive common shares that were excluded from diluted weighted-average common shares outstanding because including them would have had an anti-dilutive effect (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Shares of common stock issuable under equity incentive awards outstanding 4,590 6,677 5,000 7,146 Shares of common stock related to convertible senior notes 1,378 2,139 1,963 1,587 Potential common shares excluded from diluted net loss per share 5,968 8,816 6,963 8,733 Since the Company expects to settle the principal amount on its outstanding 2023, 2025, and 2026 Notes in cash and any excess in cash or shares of the Company’s Class A Common Stock, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread will have a dilutive impact on diluted net income per share of common stock when the average market price of the Company’s Class A Common Stock for a given period exceeds the conversion price of $81.45, $360.43, and $424.03 per share for the 2023, 2025, and 2026 Notes, respectively. The denominator for diluted net income per share does not include any effect from the capped call transactions the Company entered into concurrently with the issuance of the 2023, 2025, and 2026 Notes as this effect would be anti-dilutive. In the event of conversion of a 2023, 2025, or 2026 Note, if shares are delivered to the Company under the capped call, they will offset the dilutive effect of the shares that the Company would issue under the Notes. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party TransactionsIn the ordinary course of business, the Company made purchases from Google Inc., at which one of the Company’s directors serves as President, Americas. Total payables to Google Inc. at September 30, 2020 and December 31, 2019 were $2.3 million and $1.5 million, respectively. Total expenses incurred from Google Inc. were $5.7 million and $4.7 million in the three months ended September 30, 2020 and 2019, respectively, and $18.2 million and $14.0 million in the nine months ended September 30, 2020 and 2019, respectively. |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The Company's unaudited condensed consolidated financial statements and accompanying notes reflect all adjustments (all of which are normal, recurring in nature and those discussed in these notes) that are, in the opinion of management, necessary for a fair presentation of the interim periods presented. All intercompany balances and transactions have been eliminated in consolidation. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending December 31, 2020. Certain information and note disclosures normally included in annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted under the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 26, 2020. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The significant estimates made by management affect revenues, the allowance for doubtful accounts, valuation of long-term investments, deferred sales commission costs, goodwill, useful lives of intangible assets, share-based compensation, capitalization of internally developed software, liability and equity allocation of convertible senior notes, return reserves, provision for income taxes, uncertain tax positions, loss contingencies, sales tax liabilities, and accrued liabilities. Management periodically evaluates these estimates and will make adjustments prospectively based upon the results of such periodic evaluations. Actual results may differ from these estimates. In March 2020, the World Health Organization declared the outbreak of the novel strain of coronavirus (“COVID-19”) as a global pandemic with widespread and detrimental effect on the global economy. The extent of the impact of COVID-19 on the Company's operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on the Company's customers and sales cycles, and its employees, all of which are uncertain and cannot be predicted. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require updating significant estimates or judgments or revising the carrying value of the Company's assets or liabilities as presented in the unaudited interim condensed consolidated financial statements. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates. |
Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted In December 2019, the Financial Accounting Standard Board ("FASB") issued Accounting Standard Update ("ASU") No. 2019-12, Accounting Standards Update (Topic 740): Simplifying the Accounting for Income Taxes. The ASU removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for goodwill and allocating taxes to members of a consolidated group. The ASU is effective for calendar year-end public entities on January 1, 2021. Entities may early adopt the ASU in any interim period for which financial statements have not yet been issued (or made available for issuance). The Company has not yet adopted the new guidance. The adoption is not expected to have a material impact on the Company's condensed consolidated financial statements. In March 2020, the FASB issued optional guidance for a limited time to ease the potential burden in accounting for or recognizing the effects of reference rate reform, particularly, the risk of cessation of the London Interbank Offered Rate ("LIBOR") on financial reporting. The guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments are elective and are effective upon issuance for all entities through December 31, 2022. The Company is currently evaluating the impact of the new guidance. In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity , which simplifies the accounting for certain convertible instruments, amends the guidance on derivative scope exceptions for contracts in an entity's own equity, and modifies the guidance on diluted earnings per share calculations as a result of these changes. This new standard is effective for public entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. The amendment is to be adopted through either a fully retrospective or modified retrospective method of transition. Early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its condensed consolidated financial statements. |
Revenue and Cost of Revenue (Ta
Revenue and Cost of Revenue (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table provides information about disaggregated revenue by primary geographical markets: Three Months Ended Nine Months Ended 2020 2019 2020 2019 Primary geographical markets North America 92 % 94 % 92 % 94 % Others 8 6 8 6 Total revenues 100 % 100 % 100 % 100 % |
Financial Statement Components
Financial Statement Components (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Components of Cash and Cash Equivalents | Cash and cash equivalents consisted of the following (in thousands): September 30, 2020 December 31, 2019 Cash $ 102,431 $ 46,295 Money market funds 643,127 297,311 Total cash and cash equivalents $ 745,558 $ 343,606 |
Components of Accounts Receivable, Net | Accounts receivable, net consisted of the following (in thousands): September 30, 2020 December 31, 2019 Accounts receivable $ 133,363 $ 114,745 Unbilled accounts receivable 25,433 17,603 Allowance for doubtful accounts (5,213) (2,358) Accounts receivable, net $ 153,583 $ 129,990 |
Components of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consisted of the following (in thousands): September 30, 2020 December 31, 2019 Prepaid expenses $ 19,759 $ 16,249 Inventory 673 401 Other current assets 19,819 8,704 Total prepaid expenses and other current assets $ 40,251 $ 25,354 |
Components of Property and Equipment, Net | Property and equipment, net consisted of the following (in thousands): September 30, 2020 December 31, 2019 Computer hardware and software $ 159,970 $ 120,841 Internal-use software development costs 79,277 48,419 Furniture and fixtures 8,131 7,690 Leasehold improvements 12,662 11,327 Total property and equipment, gross 260,040 188,277 Less: accumulated depreciation and amortization (127,073) (99,047) Property and equipment, net $ 132,967 $ 89,230 |
Schedule of Goodwill | The carrying value of goodwill is as follows (in thousands): Balance at December 31, 2019 $ 55,278 Foreign currency translation adjustments 945 Balance at September 30, 2020 $ 56,223 |
Summary of Carrying Values of Intangible Assets | The carrying values of intangible assets are as follows (in thousands): September 30, 2020 December 31, 2019 Estimated Lives Cost Accumulated Acquired Cost Accumulated Acquired Customer relationships 2 to 5 years $ 21,636 $ 11,138 $ 10,498 $ 21,245 $ 8,178 $ 13,067 Developed technology 3 to 5 years 123,681 32,285 91,396 123,547 9,276 114,271 Total acquired intangible assets $ 145,317 $ 43,423 $ 101,894 $ 144,792 $ 17,454 $ 127,338 |
Summary of Estimated Amortization Expense for Acquired Intangible Assets | Estimated amortization expense for acquired intangible assets for the following fiscal years is as follows (in thousands): 2020 (remaining) $ 8,532 2021 34,128 2022 28,522 2023 16,542 2024 onwards 14,170 Total estimated amortization expense $ 101,894 |
Components of Accrued Liabilities | Accrued liabilities consisted of the following (in thousands): September 30, 2020 December 31, 2019 Accrued compensation and benefits $ 37,890 $ 30,541 Accrued sales, use, and telecom related taxes 28,354 25,757 Accrued marketing 29,485 17,505 Operating lease liabilities, short-term 16,407 14,249 Other accrued expenses 77,419 50,677 Total accrued liabilities $ 189,555 $ 138,729 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Financial Assets Carried at Fair Value | The financial assets carried at fair value were determined using the following inputs (in thousands): Fair Value at September 30, 2020 Level 1 Level 2 Level 3 Cash equivalents: Money market funds $ 643,127 $ 643,127 $ — $ — Noncurrent assets: Long-term investments $ 173,641 $ — $ — $ 173,641 Fair Value at December 31, 2019 Level 1 Level 2 Level 3 Cash equivalents: Money market funds $ 297,311 $ 297,311 $ — $ — Noncurrent assets: Long-term investments $ 132,188 $ — $ — $ 132,188 |
Business Combinations, Strate_2
Business Combinations, Strategic Partnerships, and Asset Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of Allocation of the Purchase Price of the Assets Acquired and Liabilities Assumed | The allocation of the purchase price of the assets acquired and liabilities assumed based on their estimated fair values was as follows (in thousands): Cash and cash equivalents $ 1,427 Other tangible assets acquired 2,266 Acquired intangible assets 13,300 Goodwill 24,465 Total assets acquired 41,458 Liabilities assumed (5,013) Total consideration $ 36,445 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Summary of Net Carrying Amount of Liability Component and Equity Component of Notes | The net carrying amount of the liability component of the 2026 Notes was as follows (in thousands): September 30, 2020 Principal $ 650,000 Unamortized discount (137,991) Unamortized issuance cost (7,627) Net carrying amount $ 504,382 The net carrying amount of the liability component of the 2025 Notes was as follows (in thousands): September 30, 2020 Principal $ 1,000,000 Unamortized discount (174,624) Unamortized issuance cost (9,856) Net carrying amount $ 815,520 The net carrying amount of the liability component of the 2023 Notes was as follows (in thousands): September 30, 2020 Principal $ 101,787 Unamortized discount (11,620) Unamortized issuance cost (1,015) Net carrying amount (1) $ 89,152 (1) As of September 30, 2020, $14.2 million net carrying amount of the liability component was classified as a current liability on the Condensed Consolidated Balance Sheets. |
Schedule of Equity Component of Convertible Debt | The net carrying amount of the equity component of the 2026 Notes was as follows (in thousands): September 30, 2020 Proceeds allocated to the conversion option (debt discount) $ 138,923 Issuance cost (2,085) Net carrying amount $ 136,838 The net carrying amount of the equity component of the 2025 Notes was as follows (in thousands): September 30, 2020 Proceeds allocated to the conversion option (debt discount) $ 195,074 Issuance cost (2,632) Net carrying amount $ 192,442 |
Schedule of Interest Expense Recognized Related to Notes | The following table sets forth the interest expense recognized related to the 2026 Notes (in thousands): Three Months Ended September 30, 2020 Amortization of debt discount $ 932 Amortization of debt issuance costs 43 Total interest expense related to the 2026 Notes $ 975 The following table sets forth the interest expense recognized related to the 2025 Notes (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2020 Amortization of debt discount $ 8,912 20,451 Amortization of debt issuance costs 442 1,004 Total interest expense related to the 2025 Notes $ 9,354 $ 21,455 The following table sets forth the interest expense recognized related to the 2023 Notes (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Amortization of debt discount $ 2,097 $ 4,759 $ 9,445 $ 14,102 Amortization of debt issuance costs 169 359 745 1,047 Total interest expense related to the 2023 Notes $ 2,266 $ 5,118 $ 10,190 $ 15,149 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Components of Leases | The components of leases are as follows (in thousands): Operating leases September 30, 2020 December 31, 2019 Operating lease right-of-use assets $ 50,414 $ 39,269 Accrued liabilities $ 16,407 $ 14,249 Operating lease liabilities 37,973 28,516 Total operating lease liabilities $ 54,380 $ 42,765 |
Lease Cost | Nine Months Ended September 30, Supplemental Cash Flow Information 2020 2019 Operating cash flows resulting from operating leases: Cash paid for amounts included in the measurement of lease liabilities $ 12,713 $ 11,680 New ROU assets obtained in exchange of lease liabilities: Operating leases $ 22,509 $ 17,388 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Share-Based Compensation Expense Recognized to Statements of Operations | A summary of share-based compensation expense recognized in the Company’s Condensed Consolidated Statements of Operations is as follows (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Cost of revenues $ 3,847 $ 2,351 $ 10,419 $ 6,112 Research and development 10,679 6,230 27,918 16,000 Sales and marketing 17,552 10,182 45,165 27,589 General and administrative 19,488 8,613 53,908 21,989 Total share-based compensation expense $ 51,566 $ 27,376 $ 137,410 $ 71,690 |
Summary of Share-Based Compensation Expense by Award Type | A summary of share-based compensation expense by award type is as follows (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Options $ 8 $ 137 $ 41 $ 876 Employee stock purchase plan rights 1,719 868 4,954 2,810 Restricted stock units 49,839 26,371 132,415 68,004 Total share-based compensation expense $ 51,566 $ 27,376 $ 137,410 $ 71,690 |
Summary of Stock Option Activity Plans | A summary of option activity under all of the Company’s equity incentive plans at September 30, 2020 and changes during the period then ended is presented in the following table: Number of Weighted- Weighted- Aggregate Outstanding at December 31, 2019 2,257 $ 13.13 2.5 $ 351,428 Granted — — Exercised (956) 13.36 Canceled/Forfeited — — Outstanding at September 30, 2020 1,301 $ 12.96 1.8 $ 340,420 Vested and expected to vest as of September 30, 2020 1,301 $ 12.96 1.8 $ 340,416 Exercisable as of September 30, 2020 1,300 $ 12.96 1.8 $ 340,264 |
Summary of RSUs Activity | A summary of activity of RSUs under the 2013 Plan at September 30, 2020, and changes during the period then ended is presented in the following table: Number of Weighted- Aggregate Outstanding at December 31, 2019 3,249 $ 85.39 $ 548,145 Granted 1,253 217.88 Released (1,397) 95.97 Canceled/Forfeited (198) 107.71 Outstanding at September 30, 2020 2,907 $ 135.88 $ 798,357 |
Basic and Diluted Net Loss Pe_2
Basic and Diluted Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Computation of Company's Basic and Diluted Net (Loss) Income Per Share of Common Stock | The following table sets forth the computation of the Company’s basic and diluted net loss per share of common stock (in thousands, except per share data): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Numerator Net loss $ (20,957) $ (12,749) $ (81,169) $ (28,350) Denominator: Weighted-average common shares outstanding for basic and diluted net loss per share 89,173 83,283 88,259 82,348 Basic and diluted net loss per share $ (0.24) $ (0.15) $ (0.92) $ (0.34) |
Potential Shares of Common Stock Excluded from Diluted Weighted-Average Common Shares Outstanding | The following table summarizes the potentially dilutive common shares that were excluded from diluted weighted-average common shares outstanding because including them would have had an anti-dilutive effect (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Shares of common stock issuable under equity incentive awards outstanding 4,590 6,677 5,000 7,146 Shares of common stock related to convertible senior notes 1,378 2,139 1,963 1,587 Potential common shares excluded from diluted net loss per share 5,968 8,816 6,963 8,733 |
Revenue and Cost of Revenue - A
Revenue and Cost of Revenue - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Percentage of revenue (as a percent) | 100.00% | 100.00% | 100.00% | 100.00% |
Percentage of subscriptions (as a percent) | 90.00% | 90.00% | 90.00% | 90.00% |
Revenue recognized | $ 14,500 | $ 102,500 | ||
Revenue, remaining performance obligation, amount | 1,200,000 | 1,200,000 | ||
Product revenues | 303,624 | $ 233,352 | 849,121 | $ 649,993 |
Product cost of revenues | 82,314 | 59,705 | 232,395 | 164,170 |
Product | ||||
Disaggregation of Revenue [Line Items] | ||||
Product revenues | 11,300 | 11,500 | 31,500 | 30,100 |
Product cost of revenues | $ 10,200 | $ 10,400 | $ 29,800 | $ 27,400 |
Minimum | ||||
Disaggregation of Revenue [Line Items] | ||||
Remaining performance obligations subscription term | 1 month | |||
Maximum | ||||
Disaggregation of Revenue [Line Items] | ||||
Remaining performance obligations subscription term | 5 years | |||
North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of revenue (as a percent) | 92.00% | 94.00% | 92.00% | 94.00% |
Others | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of revenue (as a percent) | 8.00% | 6.00% | 8.00% | 6.00% |
Revenue and Cost of Revenue - P
Revenue and Cost of Revenue - Performance Obligation, Timing of Satisfaction (Details) | Sep. 30, 2020 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation, percentage | 54.00% |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-10-01 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation, percentage | 46.00% |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, expected timing of satisfaction, period |
Financial Statement Component_2
Financial Statement Components - Components of Cash and Cash Equivalents (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Cash | $ 102,431 | $ 46,295 |
Money market funds | 643,127 | 297,311 |
Total cash and cash equivalents | $ 745,558 | $ 343,606 |
Financial Statement Component_3
Financial Statement Components - Components of Accounts Receivable, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts receivable | $ 133,363 | $ 114,745 |
Unbilled accounts receivable | 25,433 | 17,603 |
Allowance for doubtful accounts | (5,213) | (2,358) |
Accounts receivable, net | $ 153,583 | $ 129,990 |
Financial Statement Component_4
Financial Statement Components - Components of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Prepaid expenses | $ 19,759 | $ 16,249 |
Inventory | 673 | 401 |
Other current assets | 19,819 | 8,704 |
Total prepaid expenses and other current assets | $ 40,251 | $ 25,354 |
Financial Statement Component_5
Financial Statement Components - Components of Property and Equipment, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 260,040 | $ 188,277 |
Less: accumulated depreciation and amortization | (127,073) | (99,047) |
Property and equipment, net | 132,967 | 89,230 |
Computer hardware and software | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 159,970 | 120,841 |
Internal-use software development costs | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 79,277 | 48,419 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 8,131 | 7,690 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 12,662 | $ 11,327 |
Financial Statement Component_6
Financial Statement Components - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Depreciation and amortization | $ 10,500,000 | $ 7,300,000 | $ 27,800,000 | $ 19,600,000 |
Property, equipment and software licenses financed through vendor financing arrangement | 4,700,000 | |||
Amortization expense of Intangible Assets | 8,600,000 | 2,300,000 | 25,800,000 | 6,500,000 |
Amortization of deferred and prepaid sales commission costs | 12,400,000 | 8,000,000 | 33,060,000 | 21,189,000 |
Impairment loss in relation to costs capitalized | $ 0 | $ 0 | $ 0 | $ 0 |
Developed technology | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Weighted average amortization periods | 3 years 1 month 6 days | |||
Customer relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Weighted average amortization periods | 2 years 2 months 12 days | |||
Q2 2020 Property and Equipment Finance Agreement | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Debt instrument, interest rate (percentage) | 3.95% | 3.95% | ||
Arrangement term | 3 years | |||
Q2 2020 Property and Equipment Finance Agreement, Hardware and Software | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amount of equipment collateralized | $ 3,200,000 | $ 3,200,000 |
Financial Statement Component_7
Financial Statement Components - Components of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 55,278 |
Foreign currency translation adjustments | 945 |
Goodwill, ending balance | $ 56,223 |
Financial Statement Component_8
Financial Statement Components - Summary of Carrying Values of Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 145,317 | $ 144,792 |
Accumulated Amortization | 43,423 | 17,454 |
Total estimated amortization expense | 101,894 | 127,338 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 21,636 | 21,245 |
Accumulated Amortization | 11,138 | 8,178 |
Total estimated amortization expense | $ 10,498 | 13,067 |
Customer relationships | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Lives | 2 years | |
Customer relationships | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Lives | 5 years | |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 123,681 | 123,547 |
Accumulated Amortization | 32,285 | 9,276 |
Total estimated amortization expense | $ 91,396 | $ 114,271 |
Developed technology | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Lives | 3 years | |
Developed technology | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Lives | 5 years |
Financial Statement Component_9
Financial Statement Components - Summary of Estimated Amortization Expense for Acquired Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
2020 (remaining) | $ 8,532 | |
2021 | 34,128 | |
2022 | 28,522 | |
2023 | 16,542 | |
2024 onwards | 14,170 | |
Total estimated amortization expense | $ 101,894 | $ 127,338 |
Financial Statement Componen_10
Financial Statement Components - Components of Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued compensation and benefits | $ 37,890 | $ 30,541 |
Accrued sales, use, and telecom related taxes | 28,354 | 25,757 |
Accrued marketing | 29,485 | 17,505 |
Operating lease liabilities, short-term | 16,407 | 14,249 |
Other accrued expenses | 77,419 | 50,677 |
Total accrued liabilities | $ 189,555 | $ 138,729 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Financial Assets Carried at Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Noncurrent assets: | ||
Long-term investments | $ 173,641 | $ 132,188 |
Level 1 | ||
Noncurrent assets: | ||
Long-term investments | 0 | 0 |
Level 2 | ||
Noncurrent assets: | ||
Long-term investments | 0 | 0 |
Level 3 | ||
Noncurrent assets: | ||
Long-term investments | 173,641 | 132,188 |
Money market funds | ||
Cash equivalents: | ||
Money market funds | 643,127 | 297,311 |
Money market funds | Level 1 | ||
Cash equivalents: | ||
Money market funds | 643,127 | 297,311 |
Money market funds | Level 2 | ||
Cash equivalents: | ||
Money market funds | 0 | 0 |
Money market funds | Level 3 | ||
Cash equivalents: | ||
Money market funds | $ 0 | $ 0 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2018 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Long-term investments in convertible and redeemable preferred stock | $ 173,641,000 | $ 173,641,000 | $ 132,188,000 | ||
Unrealized gain | 23,300,000 | 38,600,000 | |||
Level 2 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Long-term investments in convertible and redeemable preferred stock | 0 | 0 | $ 0 | ||
Convertible senior notes due 2026 | Convertible Debt | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Principal | $ 650,000,000 | $ 650,000,000 | |||
Debt instrument, interest rate (percentage) | 0.00% | 0.00% | |||
Convertible senior notes due 2026 | Level 2 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Debt instrument, interest rate (percentage) | 0.00% | 0.00% | |||
Fair value of convertible senior notes | $ 644,600,000 | $ 644,600,000 | |||
Convertible senior notes due 2025 | Convertible Debt | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Principal | $ 1,000,000,000 | $ 1,000,000,000 | $ 1,000,000,000 | ||
Debt instrument, interest rate (percentage) | 0.00% | ||||
Convertible senior notes due 2025 | Level 2 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Debt instrument, interest rate (percentage) | 0.00% | 0.00% | |||
Fair value of convertible senior notes | $ 1,100,000,000 | $ 1,100,000,000 | |||
Convertible senior notes due 2023 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Principal | $ 101,787,000 | $ 101,787,000 | |||
Debt instrument, interest rate (percentage) | 0.00% | ||||
Convertible senior notes due 2023 | Level 2 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Debt instrument, interest rate (percentage) | 0.00% | 0.00% | |||
Fair value of convertible senior notes | $ 341,900,000 | $ 341,900,000 |
Business Combinations, Strate_3
Business Combinations, Strategic Partnerships, and Asset Acquisitions - Narrative (Details) | Jan. 14, 2019USD ($) | Jul. 31, 2020USD ($) | Oct. 31, 2019USD ($)$ / shares | Dec. 31, 2019USD ($) | Sep. 30, 2020USD ($) |
Business Acquisition [Line Items] | |||||
Goodwill | $ 55,278,000 | $ 56,223,000 | |||
Long-term investments | 132,188,000 | $ 173,641,000 | |||
Acquired intangible assets | 105,500,000 | ||||
Deferred sales commissions, noncurrent | $ 371,100,000 | ||||
Strategic partnership agreement, fee | $ 100,000,000 | ||||
Minimum | |||||
Business Acquisition [Line Items] | |||||
Weighted average amortization periods | 3 years | ||||
Maximum | |||||
Business Acquisition [Line Items] | |||||
Weighted average amortization periods | 5 years | ||||
Avaya | |||||
Business Acquisition [Line Items] | |||||
Long-term investments | $ 125,000,000 | ||||
Preferred stock, initial conversion price (in dollars per share) | $ / shares | $ 16 | ||||
Percentage interests acquired in Avaya upon conversion (percentage) | 6.00% | ||||
Consideration to be transferred | $ 345,000,000 | ||||
Avaya | Avaya | |||||
Business Acquisition [Line Items] | |||||
Preferred stock, dividend rate (percentage) | 0.03 | ||||
Connect First, Inc. | |||||
Business Acquisition [Line Items] | |||||
Total purchase consideration | $ 36,400,000 | ||||
Cash payments | 29,300,000 | ||||
Contingent consideration | $ 7,100,000 | ||||
Estimated lives | 3 years | ||||
Goodwill | $ 24,465,000 | ||||
Amount of goodwill expected to be tax deductible | 0 | ||||
Connect First, Inc. | Restricted stock units | |||||
Business Acquisition [Line Items] | |||||
Consideration, restricted stock unit | $ 4,000,000 | ||||
Consideration, restricted stock unit, vesting period | 4 years |
Business Combinations, Strate_4
Business Combinations, Strategic Partnerships, and Asset Acquisitions - Preliminary Purchase Price Allocation (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Jan. 14, 2019 |
Business Acquisition [Line Items] | |||
Goodwill | $ 56,223 | $ 55,278 | |
Connect First, Inc. | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 1,427 | ||
Other tangible assets acquired | 2,266 | ||
Acquired intangible assets | 13,300 | ||
Goodwill | 24,465 | ||
Total assets acquired | 41,458 | ||
Liabilities assumed | (5,013) | ||
Total consideration | $ 36,445 |
Convertible Senior Notes - Narr
Convertible Senior Notes - Narrative (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Nov. 09, 2020USD ($) | Sep. 30, 2020USD ($)d$ / sharesshares | Mar. 31, 2020USD ($)d$ / sharesshares | Mar. 31, 2018USD ($)$ / sharesshares | Sep. 30, 2020USD ($)$ / shares | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($)$ / shares | Sep. 30, 2020USD ($)d$ / shares | Sep. 30, 2019USD ($) | |
Debt Instrument [Line Items] | |||||||||
Proceeds from issuance debt, net of discounts and issuance costs | $ 1,627,209,000 | $ 0 | |||||||
Net cost incurred in connection with transaction | 102,695,000 | 0 | |||||||
Loss on early extinguishment of debt | $ 12,323,000 | $ 0 | |||||||
Temporary equity reclassification | $ 372,227,000 | $ 4,051,000 | $ 355,932,000 | ||||||
Class A common stock | |||||||||
Debt Instrument [Line Items] | |||||||||
Stock par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||
Convertible Debt | Period One | |||||||||
Debt Instrument [Line Items] | |||||||||
Convertible debt threshold trading days | d | 20 | 20 | |||||||
Convertible debt, threshold consecutive trading days | d | 30 | 30 | |||||||
Convertible debt, threshold percentage of stock price trigger (percent) | 130.00% | 130.00% | |||||||
Convertible Debt | Period Two | |||||||||
Debt Instrument [Line Items] | |||||||||
Convertible debt, threshold consecutive trading days | d | 5 | 5 | |||||||
Convertible debt, threshold percentage of principal amount trigger (percent) | 98.00% | 98.00% | |||||||
Convertible Debt | Period Three | |||||||||
Debt Instrument [Line Items] | |||||||||
Convertible debt threshold trading days | d | 20 | ||||||||
Convertible debt, threshold consecutive trading days | d | 30 | 30 | |||||||
Convertible debt, threshold percentage of stock price trigger (percent) | 130.00% | 130.00% | |||||||
Convertible senior notes due 2026 | |||||||||
Debt Instrument [Line Items] | |||||||||
Proceeds from issuance debt, net of discounts and issuance costs | $ 452,600,000 | ||||||||
Conversion price per share (in dollars per share) | $ / shares | $ 424.03 | $ 424.03 | $ 424.03 | ||||||
Proceeds allocated to the conversion option (debt discount) | $ 138,923,000 | $ 138,923,000 | $ 138,923,000 | ||||||
Issuance costs allocable to equity component | $ 2,085,000 | $ 2,085,000 | $ 2,085,000 | ||||||
Convertible senior notes due 2026 | Capped call | |||||||||
Debt Instrument [Line Items] | |||||||||
Conversion price per share (in dollars per share) | $ / shares | $ 556.10 | $ 556.10 | $ 556.10 | ||||||
Initial strike price (in dollars per share) | $ / shares | $ 424.03 | ||||||||
Net cost incurred in connection with transaction | $ 41,800,000 | ||||||||
Convertible senior notes due 2026 | Class A common stock | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt conversion, converted instrument, shares issued (in shares) | 0.0023583 | ||||||||
Convertible senior notes due 2026 | Class A common stock | Capped call | |||||||||
Debt Instrument [Line Items] | |||||||||
Option indexed to issuer's equity (in shares) | shares | 1,500,000 | ||||||||
Convertible senior notes due 2026 | Convertible Debt | |||||||||
Debt Instrument [Line Items] | |||||||||
Principal | $ 650,000,000 | $ 650,000,000 | $ 650,000,000 | ||||||
Debt instrument, interest rate (percentage) | 0.00% | 0.00% | 0.00% | ||||||
Proceeds from issuance debt, net of discounts and issuance costs | $ 640,200,000 | ||||||||
Proceeds allocated to the conversion option (debt discount) | 138,900,000 | $ 138,900,000 | $ 138,900,000 | ||||||
Debt issuance costs | 7,700,000 | 7,700,000 | 7,700,000 | ||||||
Issuance costs allocable to equity component | $ 2,100,000 | $ 2,100,000 | $ 2,100,000 | ||||||
Convertible senior notes due 2026 | Convertible Debt | Period Two | |||||||||
Debt Instrument [Line Items] | |||||||||
Convertible debt threshold trading days | d | 5 | ||||||||
Convertible senior notes due 2026 | Convertible Debt | Period Three | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt redemption price (percentage) | 100.00% | ||||||||
Convertible senior notes due 2026 | Convertible Debt | Class A common stock | |||||||||
Debt Instrument [Line Items] | |||||||||
Conversion price per share (in dollars per share) | $ / shares | $ 424.03 | $ 424.03 | $ 424.03 | ||||||
Convertible senior notes due 2025 | |||||||||
Debt Instrument [Line Items] | |||||||||
Proceeds from issuance debt, net of discounts and issuance costs | $ 509,600,000 | ||||||||
Conversion price per share (in dollars per share) | $ / shares | $ 360.43 | $ 360.43 | $ 360.43 | ||||||
Proceeds allocated to the conversion option (debt discount) | $ 195,074,000 | $ 195,074,000 | $ 195,074,000 | ||||||
Issuance costs allocable to equity component | 2,632,000 | 2,632,000 | 2,632,000 | ||||||
Convertible senior notes due 2025 | Capped call | |||||||||
Debt Instrument [Line Items] | |||||||||
Conversion price per share (in dollars per share) | $ / shares | $ 480.56 | $ 480.56 | |||||||
Initial strike price (in dollars per share) | $ / shares | $ 360.43 | ||||||||
Net cost incurred in connection with transaction | $ 60,900,000 | ||||||||
Convertible senior notes due 2025 | Class A common stock | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt conversion, converted instrument, shares issued (in shares) | 0.0027745 | ||||||||
Convertible senior notes due 2025 | Class A common stock | Capped call | |||||||||
Debt Instrument [Line Items] | |||||||||
Option indexed to issuer's equity (in shares) | shares | 2,800,000 | ||||||||
Convertible senior notes due 2025 | Convertible Debt | |||||||||
Debt Instrument [Line Items] | |||||||||
Principal | 1,000,000,000 | $ 1,000,000,000 | 1,000,000,000 | $ 1,000,000,000 | $ 1,000,000,000 | ||||
Debt instrument, interest rate (percentage) | 0.00% | 0.00% | |||||||
Proceeds from issuance debt, net of discounts and issuance costs | $ 986,500,000 | ||||||||
Proceeds allocated to the conversion option (debt discount) | 195,100,000 | $ 195,100,000 | |||||||
Debt issuance costs | 10,900,000 | 10,900,000 | |||||||
Issuance costs allocable to equity component | $ 2,600,000 | $ 2,600,000 | |||||||
Convertible senior notes due 2025 | Convertible Debt | Period Two | |||||||||
Debt Instrument [Line Items] | |||||||||
Convertible debt threshold trading days | d | 5 | ||||||||
Convertible senior notes due 2025 | Convertible Debt | Period Three | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt redemption price (percentage) | 100.00% | ||||||||
Convertible senior notes due 2025 | Convertible Debt | Class A common stock | |||||||||
Debt Instrument [Line Items] | |||||||||
Conversion price per share (in dollars per share) | $ / shares | $ 360.43 | $ 360.43 | |||||||
Convertible senior notes due 2023 | |||||||||
Debt Instrument [Line Items] | |||||||||
Principal | $ 101,787,000 | $ 101,787,000 | $ 101,787,000 | ||||||
Debt instrument, interest rate (percentage) | 0.00% | ||||||||
Proceeds from issuance debt, net of discounts and issuance costs | $ 449,500,000 | ||||||||
Conversion price per share (in dollars per share) | $ / shares | $ 81.45 | $ 81.45 | $ 81.45 | ||||||
Proceeds allocated to the conversion option (debt discount) | $ 331,500,000 | $ 355,900,000 | $ 331,500,000 | $ 355,900,000 | $ 331,500,000 | ||||
Debt instrument, repurchased face amount | 132,600,000 | 172,500,000 | 132,600,000 | 172,500,000 | 132,600,000 | ||||
Convertible debt, liability component | 121,100,000 | 153,700,000 | 121,100,000 | 153,700,000 | 121,100,000 | ||||
Long-term debt | 115,600,000 | 146,400,000 | 115,600,000 | $ 146,400,000 | 115,600,000 | ||||
Loss on early extinguishment of debt | $ 5,500,000 | $ 7,300,000 | |||||||
Principal converted amount | 51,200,000 | $ 53,100,000 | |||||||
Convertible debt, principal amount to be converted | 16,100,000 | ||||||||
Temporary equity reclassification | $ 1,900,000 | ||||||||
Convertible senior notes due 2023 | Subsequent Event | |||||||||
Debt Instrument [Line Items] | |||||||||
Convertible debt, principal amount to be converted | $ 5,500,000 | ||||||||
Convertible senior notes due 2023 | Capped call | |||||||||
Debt Instrument [Line Items] | |||||||||
Conversion price per share (in dollars per share) | $ / shares | $ 119.035 | ||||||||
Initial strike price (in dollars per share) | $ / shares | $ 81.45 | ||||||||
Net cost incurred in connection with transaction | $ 49,900,000 | ||||||||
Convertible senior notes due 2023 | Private Placement | |||||||||
Debt Instrument [Line Items] | |||||||||
Principal | $ 460,000,000 | ||||||||
Convertible senior notes due 2023 | Scenario Three | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt redemption price (percentage) | 100.00% | ||||||||
Convertible senior notes due 2023 | Class A common stock | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt conversion, converted instrument, shares issued (in shares) | 0.0000122782 | ||||||||
Conversion price per share (in dollars per share) | $ / shares | $ 81.45 | $ 81.45 | $ 81.45 | ||||||
Convertible senior notes due 2023 | Class A common stock | Capped call | |||||||||
Debt Instrument [Line Items] | |||||||||
Option indexed to issuer's equity (in shares) | shares | 5,600,000 |
Convertible Senior Notes - Summ
Convertible Senior Notes - Summary of Net Carrying Amount of Liability Component of 2025 and 2026 Convertible Notes (Details) - Convertible Debt - USD ($) | Sep. 30, 2020 | Mar. 31, 2020 |
Convertible senior notes due 2026 | ||
Debt Instrument [Line Items] | ||
Principal | $ 650,000,000 | |
Unamortized discount | (137,991,000) | |
Unamortized issuance cost | (7,627,000) | |
Net carrying amount | 504,382,000 | |
Convertible senior notes due 2025 | ||
Debt Instrument [Line Items] | ||
Principal | 1,000,000,000 | $ 1,000,000,000 |
Unamortized discount | (174,624,000) | |
Unamortized issuance cost | (9,856,000) | |
Net carrying amount | $ 815,520,000 |
Convertible Senior Notes - Su_2
Convertible Senior Notes - Summary of Net Carrying Amount of Equity Component of 2025 and 2026 Notes (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Shares related to convertible senior notes due 2026 | |
Debt Instrument [Line Items] | |
Proceeds allocated to the conversion option (debt discount) | $ 138,923 |
Issuance cost | (2,085) |
Net carrying amount | 136,838 |
Shares related to convertible senior notes due 2025 | |
Debt Instrument [Line Items] | |
Proceeds allocated to the conversion option (debt discount) | 195,074 |
Issuance cost | (2,632) |
Net carrying amount | $ 192,442 |
Convertible Senior Notes - Su_3
Convertible Senior Notes - Summary of Interest Expense Recognized Related to 2025 and 2026 Notes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Debt Instrument [Line Items] | ||||
Total interest expense related to the 2025 Notes | $ 12,680 | $ 5,160 | $ 32,780 | $ 15,280 |
Convertible senior notes due 2026 | ||||
Debt Instrument [Line Items] | ||||
Amortization of debt discount | 932 | |||
Amortization of debt issuance costs | 43 | |||
Total interest expense related to the 2025 Notes | 975 | |||
Convertible senior notes due 2025 | ||||
Debt Instrument [Line Items] | ||||
Amortization of debt discount | 8,912 | 20,451 | ||
Amortization of debt issuance costs | 442 | 1,004 | ||
Total interest expense related to the 2025 Notes | $ 9,354 | $ 21,455 |
Convertible Senior Notes - Su_4
Convertible Senior Notes - Summary of Net Carrying Amount of Liability Component of 2023 Notes (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Current portion of convertible senior notes, net | $ 14,156,000 | $ 0 |
Convertible senior notes due 2023 | ||
Debt Instrument [Line Items] | ||
Principal | 101,787,000 | |
Unamortized discount | (11,620,000) | |
Unamortized issuance cost | (1,015,000) | |
Net carrying amount | 89,152,000 | |
Current portion of convertible senior notes, net | $ 14,200,000 |
Convertible Senior Notes - Sche
Convertible Senior Notes - Schedule of Interest Expense Recognized Related to 2023 Notes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Debt Instrument [Line Items] | ||||
Total interest expense related to the 2025 Notes | $ 12,680 | $ 5,160 | $ 32,780 | $ 15,280 |
Shares of common stock related to convertible senior notes due 2023 | ||||
Debt Instrument [Line Items] | ||||
Amortization of debt discount | 2,097 | 4,759 | 9,445 | 14,102 |
Amortization of debt issuance costs | 169 | 359 | 745 | 1,047 |
Total interest expense related to the 2025 Notes | $ 2,266 | $ 5,118 | $ 10,190 | $ 15,149 |
Leases - Components of Leases a
Leases - Components of Leases and Lease Costs (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Operating leases | ||
Operating lease right-of-use assets | $ 50,414 | $ 39,269 |
Accrued liabilities | 16,407 | 14,249 |
Operating lease liabilities | 37,973 | 28,516 |
Total operating lease liabilities | $ 54,380 | $ 42,765 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccountsPayableAndAccruedLiabilitiesCurrent |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Operating cash flows resulting from operating leases: | ||
Cash paid for amounts included in the measurement of lease liabilities | $ 12,713 | $ 11,680 |
New ROU assets obtained in exchange of lease liabilities: | ||
Operating leases | $ 22,509 | $ 17,388 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Millions | Aug. 06, 2020USD ($)ft²renewalofficeFloor |
Leases [Abstract] | |
Office building, square feet | ft² | 84,148 |
Number of office floors | officeFloor | 3 |
Number of renewals | renewal | 1 |
Renewal term | 5 years |
Annual base rent, first year | $ | $ 0.3 |
Annual base rent increase (percent) | 0.03 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) $ in Thousands | Aug. 26, 2019USD ($)defendent | Jun. 14, 2019defendent | Apr. 25, 2017action | Jun. 16, 2020USD ($) |
Loss Contingencies [Line Items] | ||||
Number of actions filed against the Company | action | 2 | |||
Damages sought per violation | $ | $ 5 | |||
Cross complaint, number of defendants | defendent | 2 | |||
RingCentral Suit Against Bright Pattern, Inc. And Officers | ||||
Loss Contingencies [Line Items] | ||||
Number of defendants | defendent | 2 | |||
Bright Pattern, Inc. Cross Complaint Against RingCentral | ||||
Loss Contingencies [Line Items] | ||||
Break up fee | $ | $ 5,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | 9 Months Ended | ||
Sep. 30, 2020vote$ / sharesshares | Dec. 31, 2019shares | Sep. 30, 2019shares | |
Class of Stock [Line Items] | |||
Preferred stock par value (in dollars per share) | $ / shares | $ 0.0001 | ||
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | |
Preferred stock, shares issued (in shares) | 0 | 0 | |
Preferred stock, shares outstanding (in shares) | 0 | ||
IPO Anniversary threshold | 7 years | ||
Class A common stock | |||
Class of Stock [Line Items] | |||
Stock par value (in dollars per share) | $ / shares | $ 0.0001 | ||
Common stock, shares authorized (in shares) | 1,000,000,000 | ||
Common stock, number of votes per share | vote | 1 | ||
Shares of Class A common stock issued upon conversion of Class B common stock (in shares) | 1 | ||
Class B common stock | |||
Class of Stock [Line Items] | |||
Stock par value (in dollars per share) | $ / shares | $ 0.0001 | ||
Common stock, shares authorized (in shares) | 250,000,000 | ||
Common stock, number of votes per share | vote | 10 | ||
Percentage of written consent of shareholders (percent) | 67.00% | ||
Common stock, number of shares outstanding as a percentage of total shares outstanding (percent) | 10.00% | ||
Common stock, shares beneficially owned as a percentage of shares beneficially owned immediately prior to completion of the initial public offering (percent) | 50.00% |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Share-Based Compensation Expense Recognized to Statements of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | $ 51,566 | $ 27,376 | $ 137,410 | $ 71,690 |
Cost of revenues | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | 3,847 | 2,351 | 10,419 | 6,112 |
Research and development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | 10,679 | 6,230 | 27,918 | 16,000 |
Sales and marketing | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | 17,552 | 10,182 | 45,165 | 27,589 |
General and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | $ 19,488 | $ 8,613 | $ 53,908 | $ 21,989 |
Share-Based Compensation - Su_2
Share-Based Compensation - Summary of Share-Based Compensation Expense by Award Type (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | $ 51,566 | $ 27,376 | $ 137,410 | $ 71,690 |
Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | 8 | 137 | 41 | 876 |
Employee stock purchase plan rights | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | 1,719 | 868 | 4,954 | 2,810 |
Restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | $ 49,839 | $ 26,371 | $ 132,415 | $ 68,004 |
Share-Based Compensation - Narr
Share-Based Compensation - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of options granted (in shares) | 0 | 0 | 0 | 0 |
Intrinsic value of options exercised | $ 43.9 | $ 57.3 | $ 219.7 | $ 137.6 |
Employee Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized share-based compensation expense, remaining weighted-average vesting periods | 3 months 18 days | |||
2013 Employee stock purchase plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Available for future grants (in shares) | 4,713,290 | 4,713,290 | ||
Unrecognized share-based compensation expense, remaining weighted-average vesting periods | 1 month 6 days | |||
Unrecognized share-based compensation expense | $ 1 | $ 1 | ||
Restricted Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized share-based compensation expense, remaining weighted-average vesting periods | 2 years 3 months 18 days | |||
Vesting period contractual term | 4 years | |||
Unrecognized share-based compensation expense | $ 278.9 | $ 278.9 | ||
2013 Equity Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Available for future grants (in shares) | 17,605,478 | 17,605,478 | ||
Key Employee Equity Bonus Plan | Restricted Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized share-based compensation expense, remaining weighted-average vesting periods | 1 month 6 days | |||
Unrecognized share-based compensation expense | $ 2.1 | $ 2.1 | ||
Number of shares issued (in shares) | 22,685 | 71,541 | ||
Share based compensation requisite service period recognition | 4 months 24 days |
Share-Based Compensation - Su_3
Share-Based Compensation - Summary of Stock Option Activity Plans (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Number of Options Outstanding (in thousands) | |||||
Number of Options Outstanding, Beginning balance (in shares) | 2,257,000 | ||||
Number of Options Outstanding, Granted (in shares) | 0 | 0 | 0 | 0 | |
Number of Options Outstanding, Exercised (in shares) | (956,000) | ||||
Number of Options Outstanding, Canceled/Forfeited (in shares) | 0 | ||||
Number of Options Outstanding, Ending balance (in shares) | 1,301,000 | 1,301,000 | 2,257,000 | ||
Number of Options Outstanding, Vested and expected to vest as of period end (in shares) | 1,301,000 | 1,301,000 | |||
Number of Options Outstanding, Exercisable as of period end (in shares) | 1,300,000 | 1,300,000 | |||
Weighted- Average Exercise Price Per Share | |||||
Weighted-Average Exercise Price, Beginning balance (in dollars per share) | $ 13.13 | ||||
Weighted-Average Exercise Price, Granted (in dollars per share) | 0 | ||||
Weighted-Average Exercise Price, Exercised (in dollars per share) | 13.36 | ||||
Weighted-Average Exercise Price, Canceled/Forfeited (in dollars per share) | 0 | ||||
Weighted-Average Exercise Price, Ending balance (in dollars per share) | $ 12.96 | 12.96 | $ 13.13 | ||
Weighted-Average Exercise Price, Outstanding (in dollars per share) | 12.96 | 12.96 | |||
Weighted-Average Exercise Price, Exercisable (in dollars per share) | $ 12.96 | $ 12.96 | |||
Weighted- Average Contractual Term (in Years) | |||||
Weighted-Average Contractual Term, Outstanding | 1 year 9 months 18 days | 2 years 6 months | |||
Weighted-Average Contractual Term, Vested and expected to vest as of period end | 1 year 9 months 18 days | ||||
Weighted-Average Contractual Term, Exercisable as of period end | 1 year 9 months 18 days | ||||
Aggregate Intrinsic Value (in thousands) | |||||
Aggregate Intrinsic Value, Outstanding | $ 340,420 | $ 340,420 | $ 351,428 | ||
Aggregate Intrinsic Value, Vested and expected to vest as of period end | 340,416 | 340,416 | |||
Aggregate Intrinsic Value, Exercisable as of period end | $ 340,264 | $ 340,264 |
Share-Based Compensation - Su_4
Share-Based Compensation - Summary of RSUs Activity (Details) - Restricted stock units $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($)$ / sharesshares | |
Number of RSUs Outstanding (in thousands) | |
Number of RSUs Outstanding, Beginning Balance (in shares) | shares | 3,249 |
Number of RSUs Outstanding, Granted (in shares) | shares | 1,253 |
Number of RSUs Outstanding, Released (in shares) | shares | (1,397) |
Number of RSUs Outstanding, Canceled/Forfeited (in shares) | shares | (198) |
Number of RSUs Outstanding, Ending Balance (in shares) | shares | 2,907 |
Weighted- Average Grant Date Fair Value Per Share | |
Weighted-Average Grant Date Fair Value Per Share, Beginning Balance (in dollars per share) | $ / shares | $ 85.39 |
Weighted-Average Grant Date Fair Value Per Share, Granted (in dollars per share) | $ / shares | 217.88 |
Weighted-Average Grant Date Fair Value Per Share, Released (in dollars per share) | $ / shares | 95.97 |
Weighted-Average Grant Date Fair Value Per Share, Canceled/Forfeited (in dollars per share) | $ / shares | 107.71 |
Weighted-Average Grant Date Fair Value Per Share, Ending Balance (in dollars per share) | $ / shares | $ 135.88 |
Aggregate Intrinsic Value (in thousands) | |
Aggregate Intrinsic Value, Beginning Balance (amount) | $ | $ 548,145 |
Aggregate Intrinsic Value, Outstanding, Ending Balance (amount) | $ | $ 798,357 |
Segment Reporting - Additional
Segment Reporting - Additional Information (Details) - segment | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Concentration Risk [Line Items] | ||
Number of reporting segment | 1 | |
Minimum | U.S. | Long-lived Assets | Geographic Concentration Risk | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percentage) | 89.00% | 89.00% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Tax Credit Carryforward [Line Items] | ||||
Provision for (benefit from) income taxes | $ 431 | $ (148) | $ 803 | $ (3,118) |
Connect First, Inc. | ||||
Tax Credit Carryforward [Line Items] | ||||
One time tax benefit from business acquisition | $ 3,200 |
Basic and Diluted Net Loss Pe_3
Basic and Diluted Net Loss Per Share - Computation of Company's Basic and Diluted Net (Loss) Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Numerator | ||||||||
Net loss | $ (20,957) | $ 509 | $ (60,721) | $ (12,749) | $ (9,243) | $ (6,358) | $ (81,169) | $ (28,350) |
Denominator: | ||||||||
Weighted-average number of shares outstanding for basic and diluted net loss per share (in shares) | 89,173 | 83,283 | 88,259 | 82,348 | ||||
Basic and diluted net loss per share (in dollars per share) | $ (0.24) | $ (0.15) | $ (0.92) | $ (0.34) |
Basic and Diluted Net Loss Pe_4
Basic and Diluted Net Loss Per Share - Potential Shares of Common Stock Excluded from Diluted Weighted-Average Common Shares Outstanding (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potential common shares excluded from diluted net loss per share (in shares) | 5,968 | 8,816 | 6,963 | 8,733 |
Shares of common stock issuable under equity incentive awards outstanding | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potential common shares excluded from diluted net loss per share (in shares) | 4,590 | 6,677 | 5,000 | 7,146 |
Shares of common stock related to convertible senior notes | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potential common shares excluded from diluted net loss per share (in shares) | 1,378 | 2,139 | 1,963 | 1,587 |
Basic and Diluted Net Loss Pe_5
Basic and Diluted Net Loss Per Share - Narrative (Details) | Sep. 30, 2020$ / shares |
Shares of common stock related to convertible senior notes due 2023 | |
Earnings Per Share [Line Items] | |
Conversion price per share (in dollars per share) | $ 81.45 |
Shares related to convertible senior notes due 2025 | |
Earnings Per Share [Line Items] | |
Conversion price per share (in dollars per share) | 360.43 |
Shares related to convertible senior notes due 2026 | |
Earnings Per Share [Line Items] | |
Conversion price per share (in dollars per share) | $ 424.03 |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) - Google Inc. - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | |||||
Total payables to related party | $ 2.3 | $ 2.3 | $ 1.5 | ||
Total expenses incurred from related party | $ 5.7 | $ 4.7 | $ 18.2 | $ 14 |