Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 06, 2017 | |
Document And Entity Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | RNG | |
Entity Registrant Name | RingCentral Inc | |
Entity Central Index Key | 1,384,905 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Class A common stock | ||
Document And Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 64,926,208 | |
Class B common stock | ||
Document And Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 12,425,998 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 172,306 | $ 160,355 |
Accounts receivable, net | 39,731 | 30,243 |
Prepaid expenses and other current assets | 22,185 | 15,313 |
Total current assets | 234,222 | 205,911 |
Property and equipment, net | 41,638 | 31,994 |
Goodwill | 9,393 | 9,393 |
Acquired intangibles, net | 1,612 | 2,244 |
Other assets | 2,575 | 3,087 |
Total assets | 289,440 | 252,629 |
Current liabilities | ||
Accounts payable | 9,956 | 7,810 |
Accrued liabilities | 53,668 | 48,322 |
Current portion of capital lease obligation | 181 | |
Current portion of long-term debt | 14,528 | |
Deferred revenue | 57,696 | 45,159 |
Total current liabilities | 121,320 | 116,000 |
Long-term debt | 312 | |
Sales tax liability | 2,767 | 3,077 |
Other long-term liabilities | 3,409 | 3,199 |
Total liabilities | 127,496 | 122,588 |
Commitments and contingencies (Note 8) | ||
Stockholders' equity | ||
Common stock | 8 | 7 |
Additional paid-in capital | 418,588 | 366,800 |
Accumulated other comprehensive income | 2,903 | 2,737 |
Accumulated deficit | (259,555) | (239,503) |
Total stockholders' equity | 161,944 | 130,041 |
Total liabilities and stockholders' equity | $ 289,440 | $ 252,629 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues | ||||
Software subscriptions | $ 119,401,000 | $ 91,853,000 | $ 333,501,000 | $ 257,898,000 |
Other | 10,363,000 | 4,986,000 | 27,490,000 | 17,323,000 |
Total revenues | 129,764,000 | 96,839,000 | 360,991,000 | 275,221,000 |
Cost of revenues | ||||
Software subscriptions | 22,912,000 | 19,211,000 | 64,970,000 | 54,107,000 |
Other | 7,872,000 | 4,244,000 | 22,681,000 | 13,452,000 |
Total cost of revenues | 30,784,000 | 23,455,000 | 87,651,000 | 67,559,000 |
Gross profit | 98,980,000 | 73,384,000 | 273,340,000 | 207,662,000 |
Operating expenses | ||||
Research and development | 19,082,000 | 16,490,000 | 54,786,000 | 48,097,000 |
Sales and marketing | 67,071,000 | 50,306,000 | 186,759,000 | 137,796,000 |
General and administrative | 19,073,000 | 13,649,000 | 52,885,000 | 41,114,000 |
Total operating expenses | 105,226,000 | 80,445,000 | 294,430,000 | 227,007,000 |
Loss from operations | (6,246,000) | (7,061,000) | (21,090,000) | (19,345,000) |
Other income (expense), net | ||||
Interest expense | (6,000) | (176,000) | (94,000) | (585,000) |
Other income (expense), net | 613,000 | (696,000) | 1,313,000 | (2,280,000) |
Other income (expense), net | 607,000 | (872,000) | 1,219,000 | (2,865,000) |
Loss before income taxes | (5,639,000) | (7,933,000) | (19,871,000) | (22,210,000) |
Provision for income taxes | 73,000 | 46,000 | 181,000 | 153,000 |
Net loss | $ (5,712,000) | $ (7,979,000) | $ (20,052,000) | $ (22,363,000) |
Net loss per common share | ||||
Basic and diluted | $ (0.07) | $ (0.11) | $ (0.26) | $ (0.31) |
Weighted-average number of shares used in computing net loss per share | ||||
Basic and diluted | 76,915 | 73,285 | 75,815 | 72,669 |
CONDENSED CONSOLIDATED STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net loss | $ (5,712) | $ (7,979) | $ (20,052) | $ (22,363) |
Other comprehensive loss | ||||
Foreign currency translation adjustments | 88 | 665 | 166 | 2,341 |
Comprehensive loss | $ (5,624) | $ (7,314) | $ (19,886) | $ (20,022) |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities | ||
Net loss | $ (20,052) | $ (22,363) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 11,929 | 10,749 |
Share-based compensation | 30,504 | 22,603 |
Foreign currency remeasurement (gain) loss | (700) | 2,450 |
Provision for bad debt | 1,508 | 458 |
Deferred income taxes | (18) | (4) |
Other | 123 | 464 |
Changes in assets and liabilities: | ||
Accounts receivable | (10,996) | (4,878) |
Prepaid expenses and other current assets | (6,872) | (2,434) |
Other assets | 1,419 | 201 |
Accounts payable | 2,168 | (2,470) |
Accrued liabilities | 9,426 | 13,737 |
Deferred revenue | 12,537 | 6,080 |
Other liabilities | (100) | (2,157) |
Net cash provided by operating activities | 30,876 | 22,436 |
Cash flows from investing activities | ||
Purchases of property and equipment | (15,886) | (9,634) |
Capitalized internal-use software | (5,432) | (1,515) |
Restricted investments | 530 | |
Net cash used in investing activities | (20,788) | (11,149) |
Cash flows from financing activities | ||
Proceeds from issuance of stock in connection with stock plans | 19,685 | 8,268 |
Payment of holdback from Glip acquisition | (1,500) | |
Taxes paid related to net share settlement of equity awards | (2,125) | (131) |
Repayment of debt | (14,840) | (2,813) |
Repayment of capital lease obligations | (181) | (269) |
Net cash provided by financing activities | 2,539 | 3,555 |
Effect of exchange rate changes on cash and cash equivalents | (676) | (40) |
Net increase in cash and cash equivalents | 11,951 | 14,802 |
Cash and cash equivalents | ||
Beginning of period | 160,355 | 137,588 |
End of period | 172,306 | 152,390 |
Supplemental disclosure of cash flow data | ||
Cash paid for interest | 116 | 568 |
Cash paid for income taxes | 188 | 190 |
Non-cash investing and financing activities | ||
Equipment and capitalized internal-use software purchased and unpaid at period end | 1,204 | 2,617 |
Glip, Inc. | ||
Non-cash investing and financing activities | ||
Issuance of common stock for business combination | $ 3,260 | $ 1,080 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | Note 1. 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 for business communications and collaboration. The Company was incorporated in California in 1999 and was reincorporated in Delaware on September 26, 2013. Basis of Presentation and Consolidation The unaudited condensed consolidated financial statements and accompanying notes of the Company 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, 2017. 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, 2016. 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, goodwill, share-based compensation, capitalization of internally developed software, 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 could differ from these estimates. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), The Company continues to evaluate the potential changes from adopting the new standard on its financial statements and disclosures. The Company is in the process of implementing appropriate changes to its business processes, systems and controls to support revenue recognition and disclosures under the new standard. Based on this evaluation, the Company will adopt the requirements of the new standard in the first quarter of 2018. The Company currently anticipates adopting the standard using the full retrospective transition method. Additionally, as the Company continues to assess the new standard along with industry trends and internal progress, the Company may adjust its implementation plan and methodology accordingly. Under the new standard, the Company expects in some cases to recognize revenue earlier for subscription plans with free periods and products sold at discounts. The impact of adopting the new standard on the Company’s total revenues is not expected to be material. The Company anticipates the most significant impact of adopting the new standard primarily relates to the deferral of sales commissions due to capitalization of certain sales commissions, which previously were expensed as incurred and to the incremental disclosure requirements. Under the new standard, certain commissions will be capitalized and amortized over the expected period of benefit. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory In November 2016, the FASB issued ASU 2016-18, Restricted Cash In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting Compensation-Stock Compensation Reclassification Cer tain immaterial items previously reported have been reclassified to conform to the current year’s reporting presentation. |
Agency Agreement with Westcon G
Agency Agreement with Westcon Group | 9 Months Ended |
Sep. 30, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Agency Agreement with Westcon Group | Note 2. Agency Agreement with Westcon Group In January 2016, the Company entered into a sales agency agreement with Westcon Group, Inc. (“Westcon”), a global distributor of communications devices, to provide the phones purchased by customers. Under this agreement, the Company was an agent of Westcon and received a commission for its services, which primarily included referring phone sales to Westcon. Westcon provided phones directly to the Company’s customers instead of the Company purchasing phones from third-party vendors and reselling the phones to the Company’s customers. Commission revenues from the arrangement were recorded as the Company was the agent for these sales. The Company completed its transition of direct phone sales to Westcon during the three months ended June 30, 2016, which excluded carriers’ phone sales. The Company did not transition the carrier partners to the agency model as the billing relationships to these customers are through the carriers. The Company’s sales of phones that are provided free or significantly discounted to customers were not part of the sales agency agreement with Westcon. The Company recognizes revenue and costs from these sales as the Company is the primary obligor and has latitude in determining pricing. In December 2016, the Company terminated the Westcon sales agency agreement and entered into a reseller (direct sale) agreement with Westcon. Effective January 1, 2017, the Company switched from the agency model to the direct sale model whereby the Company will no longer serve as an agent for referring phone sales to Westcon and will no longer receive commissions for its services. Under the reseller agreement, the Company will purchase phones directly from Westcon for resale to its customers and will recognize revenues and costs for phone sales based on the following criteria: • The Company is the primary obligor in the arrangement and customer contracts for sales of phones are entered into with the Company; • The Company has latitude in determining pricing with customers; • The Company assumes the general inventory risk; and • The Company has collection risk for phones sold to customers. |
Other Revenue and Cost of Reven
Other Revenue and Cost of Revenue | 9 Months Ended |
Sep. 30, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Other Revenue and Cost of Revenue | Note 3. Other Revenue and Cost of Revenue For the three and nine months ended September 30, 2017 and 2016, the majority of other revenues consisted of product revenues from sales of phones. Product revenues were $6.9 million and $2.2 million for the three months ended September 30, 2017 and 2016, respectively, and $19.1 million and $10.0 million for the nine months ended September 30, 2017 and 2016. Product cost of revenues were $6.2 million and $3.4 million for the three months ended September 30, 2017 and 2016, respectively, and $18.2 million and $11.6 million for the nine months ended September 30, 2017 and 2016, respectively. |
Financial Statement Components
Financial Statement Components | 9 Months Ended |
Sep. 30, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Financial Statement Components | Note 4. Financial Statement Components Cash and cash equivalents consisted of the following (in thousands): September 30, December 31, 2017 2016 Cash $ 62,283 $ 40,908 Money market funds 110,023 119,447 Total cash and cash equivalents $ 172,306 $ 160,355 Accounts receivable, net consisted of the following (in thousands): September 30, December 31, 2017 2016 Accounts receivable $ 36,594 $ 25,687 Unbilled accounts receivable 3,970 4,990 Allowance for doubtful accounts (833 ) (434 ) Accounts receivable, net $ 39,731 $ 30,243 Prepaid expenses and other current assets consisted of the following (in thousands): September 30, December 31, 2017 2016 Prepaid expenses $ 14,473 $ 9,780 Inventory 158 63 Other current assets 7,554 5,470 Total prepaid expenses and other current assets $ 22,185 $ 15,313 Property and equipment, net consisted of the following (in thousands): September 30, December 31, 2017 2016 Computer hardware and software $ 71,312 $ 61,546 Internal-use software development costs 16,047 9,931 Furniture and fixtures 5,977 4,508 Leasehold improvements 4,252 2,596 Total property and equipment 97,588 78,581 Less: accumulated depreciation and amortization (55,950 ) (46,587 ) Property and equipment, net $ 41,638 $ 31,994 Accrued liabilities consisted of the following (in thousands): September 30, December 31, 2017 2016 Accrued compensation and benefits $ 18,483 $ 14,041 Accrued sales, use and telecom related taxes 8,698 7,220 Accrued marketing 7,397 5,082 Other accrued expenses 19,090 21,979 Total accrued liabilities $ 53,668 $ 48,322 The carrying values of intangible assets are as follows (in thousands): September 30, 2017 December 31, 2016 Estimated Lives Cost Accumulated Amortization Acquired Intangibles, Net Accumulated Amortization Acquired Intangibles, Net Customer relationships 2 years $ 840 $ 840 — $ 660 $ 180 Developed technology 5 years 3,010 1,398 1,612 946 2,064 Total acquired intangible assets $ 3,850 $ 2,238 $ 1,612 $ 1,606 $ 2,244 Amortization expense from acquired intangible assets for the three months ended September 30, 2017 and 2016 was $0.2 million and $0.3 million, respectively. Amortization expense from acquired intangible assets for the nine months ended September 30, 2017 and 2016 was $0.6 million and $0.8 million, 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. At September 30, 2017, the weighted average amortization period for developed technology was approximately 2.7 years. Estimated amortization expense for acquired intangible assets for the following five fiscal years and thereafter is as follows (in thousands): 2017 (remaining) 150 2018 602 2019 602 2020 258 Total estimated amortization expense $ 1,612 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Note 5. Fair Value of Financial Instruments Fair value is based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 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: Valuations based on observable inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Valuations based on observable inputs other than Level 1 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: Valuations based on 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): Balance at September 30, 2017 (Level 1) (Level 2) (Level 3) Cash equivalents: Money market funds $ 110,023 $ 110,023 $ — $ — Balance at December 31, 2016 (Level 1) (Level 2) (Level 3) Cash equivalents: Money market funds $ 119,447 $ 119,447 $ — $ — Other assets: Certificates of deposit $ 530 $ — $ 530 $ — The On February 10, 2017, the Company paid off its debt in full, which was held by Silicon Valley Bank. At December 31, 2016, the Company estimated the fair value of its debt using an expected present value technique, which was based on observable market inputs using interest rates available to companies of similar credit standing for similar terms and remaining maturities. The estimated fair value of the Company’s current and non-current debt obligations was $14.9 million at December 31, 2016, compared to its carrying amount of $14.8 million at that date. If the debt was measured at fair value in th |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Business Combinations | Note 6. Business Combinations In June 2015, the Company acquired Glip, Inc. (“Glip”), a cloud messaging and collaboration company based in Boca Raton, Florida. Glip is a provider of team messaging services, integrated with project management, group calendars, notes, annotations, and file sharing. The consideration for the acquisition, net of cash acquired, which also included the fair value of contingent consideration payable upon achievement of certain earn out milestones and the fair value of common stock issuable to the sellers, was $11.9 million. Of this total consideration, $1.5 million of cash was held back by the Company upon closing as security for certain indemnification obligations of such sellers. In June 2016, the Company paid the $1.5 million in full. The initial fair value of the milestone based earn out liability was determined to be $2.3 million using various estimates, including probabilities of achievement and discount rates. During the nine months ended September 30, 2017 and the year ended December 31, 2016, the Company issued 40,113 shares and 45,893 shares of the Company’s Class A common stock, respectively, to settle certain milestones achieved. Based on the completion of milestones for the nine months ended September 30, 2017, the estimated fair value of the remaining milestones based earn out liability was $0.5 million and $1.9 million at September 30, 2017 and December 31, 2016, respectively, which is classified as a current liability in the condensed consolidated balance sheets. Additionally, under the terms of the acquisition, the Company may also pay up to $2.0 million in payments at the end of a two-year period to certain Glip employees, who continue to be employees of the Company, which were accounted for as a post-combination expense. The Company paid the bonus in full during the three months ended June 30, 2017. At December 31, 2016, the contingent payment liability was $1.4 million and was classified as a current liability in the condensed consolidated balance sheet. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Note 7. Debt As of December 31, 2016, the Company’s debt was comprised of borrowings under the Third Amended and Restated Loan and Security Agreement dated March 30, 2015 (“SVB Agreement”), as amended, with Silicon Valley Bank (“SVB”). On February 10, 2017, the Company paid off its 2013 Term Loan and revolving line of credit balances of $14.8 million to SVB. Upon repayment, the SVB Agreement was terminated. The Company had pledged substantially all of its assets, excluding intellectual property, as collateral to secure its obligations under the SVB Agreement. With the repayment of the debt, the lien on the assets has been removed. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 8. Commitments and Contingencies Leases The Company leases facilities for office space under non-cancelable operating leases for its U.S. and international locations with lease periods expiring through December 2023. In addition, the Company leases space from third-party datacenter hosting facilities under co-location agreements to support its cloud infrastructure. The Company leases space for its corporate headquarters in Belmont, California through July 2021. Sales Tax Liability The Company regularly increases its sales and marketing activities in various states within the U.S., which may create nexus in those states to collect sales taxes on sales to customers. Although the Company is diligent in collecting and remitting such taxes, there is uncertainty as to what constitutes sufficient in-state presence for a state to levy taxes, fees, and surcharges for sales made over the Internet. As of September 30, 2017 and December 31, 2016, the Company had a long-term sales tax liability of $2.8 million and $3.1 million, respectively, based on its best estimate of the probable liability for the loss contingency incurred as of those dates. The Company’s estimate of a probable outcome under the loss contingency is based on analysis of its sales and marketing activities, revenues subject to sales tax, and applicable regulations in each state in each period. No significant adjustments to the long-term sales tax liability have been recognized in the accompanying condensed consolidated financial statements for changes to the assumptions underlying the estimate. However, changes in management’s assumptions may occur in the future as the Company obtains new information which can result in adjustments to the recorded liability. Increases and decreases to the long-term sales tax liability are recorded as general and administrative expense. The Company recorded a current sales tax liability for non-contingent amounts expected to be remitted in the next twelve months of $8.2 million and $6.0 million as of September 30, 2017 and December 31, 2016, respectively, which is included in accrued liabilities in the condensed consolidated balance sheets. Legal Matters From time to time, the Company 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. The results of complex legal proceedings are difficult to predict and the Company's view of these matters may change in the future as the litigation and events related thereto unfold. Legal fees are expensed in the period in which they are incurred. TCPA Matter On April 21, 2016, Supply Pro Sorbents, LLC (“SPS”) filed a putative class action against the Company in the United States District Court for the Northern District of California, alleging common law conversion and violations of the federal Telephone Consumer Protection Act (“TCPA”) arising from fax cover sheets used by the Company’s customers when sending facsimile transmissions over the Company’s system (“Lawsuit”). SPS seeks statutory damages, costs, attorneys’ fees and an injunction in connection with its TCPA claim, and unspecified damages and punitive damages in connection with its conversion claim. On July 6, 2016, the Company filed a Petition for Expedited Declaratory Ruling before the Federal Communications Commission (“FCC”), requesting that the FCC issue a ruling clarifying certain portions of its regulations promulgated under TCPA at issue in the Lawsuit (“Petition”). The Petition remains pending. On July 8, 2016, the Company filed a motion to dismiss the Lawsuit in its entirety, along with a collateral motion to dismiss or stay the Lawsuit pending a ruling by the FCC on the Company’s Petition. On October 7, 2016, the Court granted the Company’s motion to dismiss and gave SPS 20 days to amend its complaint. The Court concurrently dismissed the Company’s motion to dismiss or stay as moot. Plaintiff filed its amended complaint on October 27, 2016, alleging essentially the same theories and claims. On November 21, 2016, the Company filed a motion to dismiss the amended complaint, along with a renewed motion to dismiss or stay the case pending resolution of the FCC Petition. On July 17, 2017, the Court granted the Company’s motion to dismiss with prejudice and concurrently dismissed the Company’s motion to dismiss or stay as moot. SPS filed a notice of appeal to the Ninth Circuit Court of Appeals on July 28, 2017. SPS’s opening brief on appeal was due on November 6, 2017; however, SPS filed a request for a 30 day extension which was granted by the Court. SPS’s opening brief on appeal is now due on December 6, 2017. The Company’s opposition brief must be filed by January 5, 2018, and SPS’s optional reply brief must be filed within 21 days of the Company’s opposition brief. It is too early to predict the outcome of this Lawsuit. 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. Patent Infringement Matter On April 25, 2017, Uniloc USA, Inc. and Uniloc Luxembourg, S.A. 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. 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. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share-Based Compensation | Note 9. 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 September 30, September 30, 2017 2016 2017 2016 Cost of revenues $ 1,026 $ 859 $ 2,821 $ 2,324 Research and development 2,598 1,996 6,799 5,491 Sales and marketing 4,105 3,023 11,556 7,791 General and administrative 3,213 2,511 9,328 6,997 Total share-based compensation expense $ 10,942 $ 8,389 $ 30,504 $ 22,603 A summary of share-based compensation expense by award type is as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Options $ 1,489 $ 2,382 $ 5,632 $ 7,366 Employee stock purchase plan rights 494 527 1,473 1,375 Restricted stock units 8,959 5,480 23,399 13,862 Total share-based compensation expense $ 10,942 $ 8,389 $ 30,504 $ 22,603 Equity Incentive Plans As of September 30, 2017, a total of 10,639,562 shares remained available for grant under the 2013 Equity Incentive Plan (“2013 Plan”). A summary of option activity under all of the Company’s equity incentive plans at September 30, 2017 and changes during the period then ended is presented in the following table: Weighted- Number of Weighted- Average Aggregate Options Average Contractual Intrinsic Outstanding Exercise Price Term Value (in thousands) Per Share (in Years) (in thousands) Outstanding at December 31, 2016 7,384 $ 10.59 5.3 $ 74,065 Granted 25 23.99 Exercised (1,501 ) 10.66 Canceled/Forfeited (326 ) 16.16 Outstanding at September 30, 2017 5,582 $ 10.31 4.4 $ 175,619 Vested and expected to vest as of September 30, 2017 5,474 $ 10.18 4.4 $ 172,803 Exercisable as of September 30, 2017 4,673 $ 9.14 4.4 $ 152,402 The weighted average grant date fair value of options granted and the total intrinsic value of options exercised were as follows (in thousands, except weighted average grant date fair value): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Weighted average grant date fair value per share $ - $ 9.22 $ 9.08 $ 6.70 Total intrinsic value of options exercised $ 9,489 $ 2,561 $ 32,752 $ 6,956 The Company estimated the fair values of each option awarded on the date of grant using the Black-Scholes-Merton option pricing model, which requires inputs including the fair value of common stock, expected term, expected volatility, risk-free interest rate, and dividend yield. No options were granted for the three months ended September 30, 2017. The weighted-average assumptions used in the option pricing model in the periods presented were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Expected term for employees (in years) - 4.7 4.4 4.7 Expected term for non-employees (in years) 4.8 5.8 5.0 6.1 Risk-free interest rate 1.9 % 1.1 % 1.8 % 1.1 % Expected volatility 42.4 % 46.4 % 43.7 % 47.2 % Expected dividend yield 0 % 0 % 0 % 0 % As of September 30, 2017, there was approximately $5.0 million 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 1.6 years. Employee Stock Purchase Plan The 2013 Employee Stock Purchase Plan (“ESPP”) allows eligible employees to purchase shares of the Class A common stock at a discounted price, through payroll deductions of up to the lesser of 15% of their eligible compensation or the IRS allowable limit per calendar year. A participant may purchase a maximum of 3,000 shares during an offering period. The offering periods start on the first trading day on or after May 11th and November 11th of each year. At the end of the offering period, the discounted purchase price is set at the lower of: (i) 90% of the fair value of the Company’s Class A common stock at the beginning of the six month offering period and (ii) 90% of the fair value of the Company’s Class A common stock at the end of the six month offering period. As of September 30, 2017, there was a total of $0.2 million of unrecognized share-based compensation expense, net of estimated forfeitures, related to ESPP, which will be recognized on a straight-line basis over the remaining weighted-average vesting period of approximately 0.1 years. At September 30, 2017, a total of 2,853,424 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, 2017 and changes during the period then ended is presented in the following table: Number of Weighted- RSUs Average Aggregate Outstanding Grant Date Fair Intrinsic Value (in thousands) Value Per Share (in thousands) Outstanding at December 31, 2016 3,554 $ 18.01 $ 73,261 Granted 2,544 27.30 Released (1,255 ) 19.37 Canceled/Forfeited (461 ) 20.46 Outstanding at September 30, 2017 4,382 $ 22.73 $ 182,963 As of September 30, 2017, there was a total of $73.9 million of unrecognized share-based compensation expense, net of estimated forfeitures, related to restricted stock units, which will be recognized on a straight-line basis over the remaining weighted-average vesting period of approximately 2.8 years. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Reporting | Note 10. Segment Reporting The Company has determined 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 reporting segment. Concentrations Revenue by geographic location is based on the billing address of the customer. More than 90% Generally, over 70% of the Company’s total billings are collected through credit card payments. The Company’s accounts receivable balance of $39.7 million as of September 30, 2017 primarily consists of receivables due from larger customers and carriers who are billed on invoices at customary payment terms. As the Company moves up-market and acquires larger customers, the Company expects the accounts receivable balance to increase. At September 30, 2017 and December 31, 2016, one of the Company’s carriers accounted for 21% and 30% of the Company’s total accounts receivable, respectively. Long-lived assets by geographic location is based on the location of the legal entity that owns the asset. At September 30, 2017 and December 31, 2016, more than 85% and 87% of the Company’s consolidated long-lived assets, respectively, were located in the U.S. with no single country outside of the U. S. representing more than 10% of the Company’s consolidated long-lived assets. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 11. Income Taxes The provision for income taxes for the three 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, 2017 and December 31, 2016. 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, 2017, there have been no significant changes to the total amount of unrecognized tax benefits. |
Basic and Diluted Net Loss Per
Basic and Diluted Net Loss Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Net Loss Per Share | Note 12. Basic and Diluted Net Loss Per Share Basic 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, less the weighted-average unvested shares of common stock subject to repurchase or forfeiture as they are not deemed to be issued for accounting purposes. Diluted net loss per share is computed by giving effect to all potential shares of common stock, stock options, restricted stock units, and ESPP to the extent they are dilutive. For the three and nine months ended September 30, 2017 and 2016, 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 September 30, September 30, 2017 2016 2017 2016 Numerator Net loss $ (5,712 ) $ (7,979 ) $ (20,052 ) $ (22,363 ) Denominator Weighted-average common shares for basic and diluted net loss per share 76,915 73,285 75,815 72,669 Basic and diluted net loss per share $ (0.07 ) $ (0.11 ) $ (0.26 ) $ (0.31 ) 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 September 30, September 30, 2017 2016 2017 2016 Shares of common stock issuable under equity incentive awards outstanding 10,430 11,990 11,108 11,784 Potential common shares excluded from diluted net loss per share 10,430 11,990 11,108 11,784 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 13. Related Party Transactions In 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, 2017 and December 31, 2016 were $1.5 million and $1.0 million, respectively. Total expenses incurred from Google Inc. were $3.9 million and $11.0 million in the three and nine months ended September 30, 2017, respectively, and $3.8 million and $9.8 million in the three and nine months ended September 30, 2016, respectively. |
Description of Business and S19
Description of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The unaudited condensed consolidated financial statements and accompanying notes of the Company 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, 2017. 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, 2016. |
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, goodwill, share-based compensation, capitalization of internally developed software, 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 could differ from these estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), The Company continues to evaluate the potential changes from adopting the new standard on its financial statements and disclosures. The Company is in the process of implementing appropriate changes to its business processes, systems and controls to support revenue recognition and disclosures under the new standard. Based on this evaluation, the Company will adopt the requirements of the new standard in the first quarter of 2018. The Company currently anticipates adopting the standard using the full retrospective transition method. Additionally, as the Company continues to assess the new standard along with industry trends and internal progress, the Company may adjust its implementation plan and methodology accordingly. Under the new standard, the Company expects in some cases to recognize revenue earlier for subscription plans with free periods and products sold at discounts. The impact of adopting the new standard on the Company’s total revenues is not expected to be material. The Company anticipates the most significant impact of adopting the new standard primarily relates to the deferral of sales commissions due to capitalization of certain sales commissions, which previously were expensed as incurred and to the incremental disclosure requirements. Under the new standard, certain commissions will be capitalized and amortized over the expected period of benefit. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory In November 2016, the FASB issued ASU 2016-18, Restricted Cash In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting Compensation-Stock Compensation |
Reclassification | Reclassification Cer tain immaterial items previously reported have been reclassified to conform to the current year’s reporting presentation. |
Financial Statement Components
Financial Statement Components (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Statement Of Financial Position [Abstract] | |
Components of Cash and Cash Equivalents | Cash and cash equivalents consisted of the following (in thousands): September 30, December 31, 2017 2016 Cash $ 62,283 $ 40,908 Money market funds 110,023 119,447 Total cash and cash equivalents $ 172,306 $ 160,355 |
Components of Accounts Receivable, Net | Accounts receivable, net consisted of the following (in thousands): September 30, December 31, 2017 2016 Accounts receivable $ 36,594 $ 25,687 Unbilled accounts receivable 3,970 4,990 Allowance for doubtful accounts (833 ) (434 ) Accounts receivable, net $ 39,731 $ 30,243 |
Components of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consisted of the following (in thousands): September 30, December 31, 2017 2016 Prepaid expenses $ 14,473 $ 9,780 Inventory 158 63 Other current assets 7,554 5,470 Total prepaid expenses and other current assets $ 22,185 $ 15,313 |
Components of Property and Equipment, Net | Property and equipment, net consisted of the following (in thousands): September 30, December 31, 2017 2016 Computer hardware and software $ 71,312 $ 61,546 Internal-use software development costs 16,047 9,931 Furniture and fixtures 5,977 4,508 Leasehold improvements 4,252 2,596 Total property and equipment 97,588 78,581 Less: accumulated depreciation and amortization (55,950 ) (46,587 ) Property and equipment, net $ 41,638 $ 31,994 |
Components of Accrued Liabilities | Accrued liabilities consisted of the following (in thousands): September 30, December 31, 2017 2016 Accrued compensation and benefits $ 18,483 $ 14,041 Accrued sales, use and telecom related taxes 8,698 7,220 Accrued marketing 7,397 5,082 Other accrued expenses 19,090 21,979 Total accrued liabilities $ 53,668 $ 48,322 |
Summary of Carrying Values of Intangible Assets | The carrying values of intangible assets are as follows (in thousands): September 30, 2017 December 31, 2016 Estimated Lives Cost Accumulated Amortization Acquired Intangibles, Net Accumulated Amortization Acquired Intangibles, Net Customer relationships 2 years $ 840 $ 840 — $ 660 $ 180 Developed technology 5 years 3,010 1,398 1,612 946 2,064 Total acquired intangible assets $ 3,850 $ 2,238 $ 1,612 $ 1,606 $ 2,244 |
Summary of Estimated Amortization Expense for Acquired Intangible Assets | Estimated amortization expense for acquired intangible assets for the following five fiscal years and thereafter is as follows (in thousands): 2017 (remaining) 150 2018 602 2019 602 2020 258 Total estimated amortization expense $ 1,612 |
Fair Value of Financial Instr21
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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): Balance at September 30, 2017 (Level 1) (Level 2) (Level 3) Cash equivalents: Money market funds $ 110,023 $ 110,023 $ — $ — Balance at December 31, 2016 (Level 1) (Level 2) (Level 3) Cash equivalents: Money market funds $ 119,447 $ 119,447 $ — $ — Other assets: Certificates of deposit $ 530 $ — $ 530 $ — |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [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 September 30, September 30, 2017 2016 2017 2016 Cost of revenues $ 1,026 $ 859 $ 2,821 $ 2,324 Research and development 2,598 1,996 6,799 5,491 Sales and marketing 4,105 3,023 11,556 7,791 General and administrative 3,213 2,511 9,328 6,997 Total share-based compensation expense $ 10,942 $ 8,389 $ 30,504 $ 22,603 |
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 September 30, September 30, 2017 2016 2017 2016 Options $ 1,489 $ 2,382 $ 5,632 $ 7,366 Employee stock purchase plan rights 494 527 1,473 1,375 Restricted stock units 8,959 5,480 23,399 13,862 Total share-based compensation expense $ 10,942 $ 8,389 $ 30,504 $ 22,603 |
Summary of Stock Option Activity Plans | A summary of option activity under all of the Company’s equity incentive plans at September 30, 2017 and changes during the period then ended is presented in the following table: Weighted- Number of Weighted- Average Aggregate Options Average Contractual Intrinsic Outstanding Exercise Price Term Value (in thousands) Per Share (in Years) (in thousands) Outstanding at December 31, 2016 7,384 $ 10.59 5.3 $ 74,065 Granted 25 23.99 Exercised (1,501 ) 10.66 Canceled/Forfeited (326 ) 16.16 Outstanding at September 30, 2017 5,582 $ 10.31 4.4 $ 175,619 Vested and expected to vest as of September 30, 2017 5,474 $ 10.18 4.4 $ 172,803 Exercisable as of September 30, 2017 4,673 $ 9.14 4.4 $ 152,402 |
Weighted Average Grant Date Fair Value of Options Granted and Total Intrinsic Value of Options Exercised | The weighted average grant date fair value of options granted and the total intrinsic value of options exercised were as follows (in thousands, except weighted average grant date fair value): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Weighted average grant date fair value per share $ - $ 9.22 $ 9.08 $ 6.70 Total intrinsic value of options exercised $ 9,489 $ 2,561 $ 32,752 $ 6,956 |
Weighted Average Assumptions Used to Fair Value of Stock Options Granted | The weighted-average assumptions used in the option pricing model in the periods presented were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Expected term for employees (in years) - 4.7 4.4 4.7 Expected term for non-employees (in years) 4.8 5.8 5.0 6.1 Risk-free interest rate 1.9 % 1.1 % 1.8 % 1.1 % Expected volatility 42.4 % 46.4 % 43.7 % 47.2 % Expected dividend yield 0 % 0 % 0 % 0 % |
Summary of RSUs Activity | 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, 2017 and changes during the period then ended is presented in the following table: Number of Weighted- RSUs Average Aggregate Outstanding Grant Date Fair Intrinsic Value (in thousands) Value Per Share (in thousands) Outstanding at December 31, 2016 3,554 $ 18.01 $ 73,261 Granted 2,544 27.30 Released (1,255 ) 19.37 Canceled/Forfeited (461 ) 20.46 Outstanding at September 30, 2017 4,382 $ 22.73 $ 182,963 |
Basic and Diluted Net Loss Pe23
Basic and Diluted Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Computation of Company's Basic and Diluted Net Loss 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 September 30, September 30, 2017 2016 2017 2016 Numerator Net loss $ (5,712 ) $ (7,979 ) $ (20,052 ) $ (22,363 ) Denominator Weighted-average common shares for basic and diluted net loss per share 76,915 73,285 75,815 72,669 Basic and diluted net loss per share $ (0.07 ) $ (0.11 ) $ (0.26 ) $ (0.31 ) |
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 September 30, September 30, 2017 2016 2017 2016 Shares of common stock issuable under equity incentive awards outstanding 10,430 11,990 11,108 11,784 Potential common shares excluded from diluted net loss per share 10,430 11,990 11,108 11,784 |
Other Revenue and Cost of Rev24
Other Revenue and Cost of Revenue - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ||||
Product revenues | $ 6.9 | $ 2.2 | $ 19.1 | $ 10 |
Product cost of revenues | $ 6.2 | $ 3.4 | $ 18.2 | $ 11.6 |
Financial Statement Component25
Financial Statement Components - Components of Cash and Cash Equivalents (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Cash And Cash Equivalents [Abstract] | ||||
Cash | $ 62,283 | $ 40,908 | ||
Money market funds | 110,023 | 119,447 | ||
Total cash and cash equivalents | $ 172,306 | $ 160,355 | $ 152,390 | $ 137,588 |
Financial Statement Component26
Financial Statement Components - Components of Accounts Receivable, Net (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Receivables [Abstract] | ||
Accounts receivable | $ 36,594 | $ 25,687 |
Unbilled accounts receivable | 3,970 | 4,990 |
Allowance for doubtful accounts | (833) | (434) |
Accounts receivable, net | $ 39,731 | $ 30,243 |
Financial Statement Component27
Financial Statement Components - Components of Prepaid Expenses and Other Current Assets (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Prepaid Expense And Other Assets Current [Abstract] | ||
Prepaid expenses | $ 14,473 | $ 9,780 |
Inventory | 158 | 63 |
Other current assets | 7,554 | 5,470 |
Total prepaid expenses and other current assets | $ 22,185 | $ 15,313 |
Financial Statement Component28
Financial Statement Components - Components of Property and Equipment, Net (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Property Plant And Equipment [Line Items] | ||
Total property and equipment | $ 97,588 | $ 78,581 |
Less: accumulated depreciation and amortization | (55,950) | (46,587) |
Property and equipment, net | 41,638 | 31,994 |
Computer hardware and software | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment | 71,312 | 61,546 |
Internal-use software development costs | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment | 16,047 | 9,931 |
Furniture and fixtures | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment | 5,977 | 4,508 |
Leasehold improvements | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment | $ 4,252 | $ 2,596 |
Financial Statement Component29
Financial Statement Components - Components of Accrued Liabilities (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Payables And Accruals [Abstract] | ||
Accrued compensation and benefits | $ 18,483 | $ 14,041 |
Accrued sales, use and telecom related taxes | 8,698 | 7,220 |
Accrued marketing | 7,397 | 5,082 |
Other accrued expenses | 19,090 | 21,979 |
Total accrued liabilities | $ 53,668 | $ 48,322 |
Financial Statement Component30
Financial Statement Components - Summary of Carrying Values of Intangible Assets (Detail) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Finite Lived Intangible Assets [Line Items] | ||
Cost | $ 3,850 | $ 3,850 |
Accumulated Amortization | 2,238 | 1,606 |
Acquired Intangibles, Net | $ 1,612 | $ 2,244 |
Customer Relationships | ||
Finite Lived Intangible Assets [Line Items] | ||
Estimated Lives | 2 years | 2 years |
Cost | $ 840 | $ 840 |
Accumulated Amortization | $ 840 | 660 |
Acquired Intangibles, Net | $ 180 | |
Developed Technology | ||
Finite Lived Intangible Assets [Line Items] | ||
Estimated Lives | 5 years | 5 years |
Cost | $ 3,010 | $ 3,010 |
Accumulated Amortization | 1,398 | 946 |
Acquired Intangibles, Net | $ 1,612 | $ 2,064 |
Financial Statement Component31
Financial Statement Components - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Finite Lived Intangible Assets [Line Items] | ||||
Amortization expense of Intangible Assets | $ 0.2 | $ 0.3 | $ 0.6 | $ 0.8 |
Developed Technology | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Weighted average amortization periods | 2 years 8 months 13 days |
Financial Statement Component32
Financial Statement Components - Summary of Estimated Amortization Expense for Acquired Intangible Assets (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Finite Lived Intangible Assets Future Amortization Expense [Abstract] | ||
2017 (remaining) | $ 150 | |
2,018 | 602 | |
2,019 | 602 | |
2,020 | 258 | |
Acquired Intangibles, Net | $ 1,612 | $ 2,244 |
Fair Value of Financial Instr33
Fair Value of Financial Instruments - Financial Assets Carried at Fair Value (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Money market funds | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Money market funds | $ 110,023 | $ 119,447 |
Money market funds | Level 1 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Money market funds | $ 110,023 | 119,447 |
Certificates of deposit | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Certificates of deposit | 530 | |
Certificates of deposit | Level 2 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Certificates of deposit | $ 530 |
Fair Value of Financial Instr34
Fair Value of Financial Instruments - Additional Information (Detail) $ in Millions | Dec. 31, 2016USD ($) |
Fair Value Disclosures [Abstract] | |
Fair value of debt obligation | $ 14.9 |
Carrying value of debt obligation | $ 14.8 |
Business Combinations - Additio
Business Combinations - Additional Information (Detail) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Business Acquisition [Line Items] | |||||
Business combination, contingent consideration paid in full | $ 1,500,000 | ||||
Glip, Inc. | |||||
Business Acquisition [Line Items] | |||||
Business combination, consideration payable in combination of cash and common stock | $ 11,900,000 | ||||
Business combination, fair value of milestone based earn out liability | 2,300,000 | ||||
Business combination, fair value of milestone based earn out liability, current | $ 500,000 | $ 1,900,000 | |||
Business combination contingent consideration maximum potential cash payment | $ 2,000,000 | ||||
Business combination earn out period of contingent consideration | 2 years | ||||
Business combination, contingent payment liability | $ 1,400,000 | ||||
Glip, Inc. | Class A common stock | |||||
Business Acquisition [Line Items] | |||||
Business combination, consideration common stock issued | 40,113 | 45,893 | |||
Glip, Inc. | Asset purchase agreement | |||||
Business Acquisition [Line Items] | |||||
Business combination, contingent consideration paid in full | $ 1,500,000 | ||||
Business combination, fair value of milestone based earn out liability | $ 1,500,000 |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) $ in Thousands | Feb. 10, 2017 | Sep. 30, 2017 | Sep. 30, 2016 |
Debt Instrument [Line Items] | |||
Term loan and revolving line of credit paid | $ 14,840 | $ 2,813 | |
SVB Agreement | 2013 Capital Growth Term Loan | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Term loan and revolving line of credit paid | $ 14,800 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Loss Contingencies [Line Items] | ||
Long-term sales tax liability | $ 2,767 | $ 3,077 |
Current sales tax liability for non-contingent amounts | $ 8,200 | $ 6,000 |
Office space | U.S. and international locations | ||
Loss Contingencies [Line Items] | ||
Lease expiration period | 2023-12 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Share-Based Compensation Expense Recognized to Statements of Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | $ 10,942 | $ 8,389 | $ 30,504 | $ 22,603 |
Cost of Revenues | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 1,026 | 859 | 2,821 | 2,324 |
Research and Development | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 2,598 | 1,996 | 6,799 | 5,491 |
Sales and Marketing | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 4,105 | 3,023 | 11,556 | 7,791 |
General and Administrative | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | $ 3,213 | $ 2,511 | $ 9,328 | $ 6,997 |
Share-Based Compensation - Su39
Share-Based Compensation - Summary of Share-Based Compensation Expense by Award Type (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 10,942 | $ 8,389 | $ 30,504 | $ 22,603 |
Options | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Share-based compensation expense | 1,489 | 2,382 | 5,632 | 7,366 |
Restricted Stock Units | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Share-based compensation expense | 8,959 | 5,480 | 23,399 | 13,862 |
Employee Stock Purchase Plan Rights | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 494 | $ 527 | $ 1,473 | $ 1,375 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Detail) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017USD ($)shares | Sep. 30, 2017USD ($)shares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Number of options granted | 25,000 | |
2013 Employee stock purchase plan | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Available for future grants | 2,853,424 | 2,853,424 |
Unrecognized share-based compensation expense, remaining weighted-average vesting periods | 1 month 7 days | |
Eligible compensation under the Employee Stock Purchase Plan | 15.00% | 15.00% |
Purchase of maximum shares by employees under Employee Stock Purchase Plan | 3,000 | |
Unrecognized share-based compensation expense | $ | $ 0.2 | $ 0.2 |
Class A common stock | 2013 Employee stock purchase plan | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Discounted purchase price of Employee Stock Purchase Plan as a percentage of fair value | 90.00% | |
Employee Stock Option | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Unrecognized share-based compensation expense | $ | 5 | $ 5 |
Unrecognized share-based compensation expense, remaining weighted-average vesting periods | 1 year 7 months 6 days | |
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 9 months 19 days | |
Vesting period contractual term | 4 years | |
Unrecognized share-based compensation expense | $ | $ 73.9 | $ 73.9 |
2013 Equity Incentive Plan | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Available for future grants | 10,639,562 | 10,639,562 |
Number of options granted | 0 |
Share-Based Compensation - Su41
Share-Based Compensation - Summary of Stock Option Activity Plans (Detail) $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | |
Number of Options Outstanding | ||
Number of Options Outstanding, Beginning Balance | shares | 7,384 | |
Number of Options Outstanding, Granted | shares | 25 | |
Number of Options Outstanding, Exercised | shares | (1,501) | |
Number of Options Outstanding, Canceled/Forfeited | shares | (326) | |
Number of Options Outstanding, Ending Balance | shares | 5,582 | 7,384 |
Number of Options Outstanding, Vested and expected to vest | shares | 5,474 | |
Number of Options Outstanding, Exercisable | shares | 4,673 | |
Weighted-Average Exercise Price Per Share | ||
Weighted-Average Exercise Price Per Share, Beginning Balance | $ / shares | $ 10.59 | |
Weighted-Average Exercise Price Per Share, Granted | $ / shares | 23.99 | |
Weighted-Average Exercise Price Per Share, Exercised | $ / shares | 10.66 | |
Weighted-Average Exercise Price Per Share, Canceled/Forfeited | $ / shares | 16.16 | |
Weighted-Average Exercise Price Per Share, Ending Balance | $ / shares | 10.31 | $ 10.59 |
Weighted-Average Exercise Price Per Share, Vested and expected to vest | $ / shares | 10.18 | |
Weighted-Average Exercise Price Per Share, Exercisable | $ / shares | $ 9.14 | |
Weighted-Average Contractual Term | ||
Weighted-Average Contractual Term | 4 years 4 months 24 days | 5 years 3 months 18 days |
Weighted-Average Contractual Term, Vested and expected to vest | 4 years 4 months 24 days | |
Weighted-Average Contractual Term, Exercisable | 4 years 4 months 24 days | |
Aggregate Intrinsic Value | ||
Aggregate Intrinsic Value, Outstanding | $ | $ 175,619 | $ 74,065 |
Aggregate Intrinsic Value, Vested and expected to vest | $ | 172,803 | |
Aggregate Intrinsic Value, Exercisable | $ | $ 152,402 |
Share-Based Compensation - Weig
Share-Based Compensation - Weighted Average Grant Date Fair Value of Options Granted and Total Intrinsic Value of Options Exercised (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||||
Weighted average grant date fair value per share | $ 9.22 | $ 9.08 | $ 6.70 | |
Total intrinsic value of options exercised | $ 9,489 | $ 2,561 | $ 32,752 | $ 6,956 |
Share-Based Compensation - We43
Share-Based Compensation - Weighted Average Assumptions Used to Fair Value of Stock Options Granted (Detail) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Risk-free interest rate | 1.90% | 1.10% | 1.80% | 1.10% |
Expected volatility | 42.40% | 46.40% | 43.70% | 47.20% |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Options | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Expected term (in years) | 4 years 8 months 12 days | 4 years 4 months 24 days | 4 years 8 months 12 days | |
Non Employee Stock Option | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Expected term (in years) | 4 years 9 months 18 days | 5 years 9 months 18 days | 5 years | 6 years 1 month 6 days |
Share-Based Compensation - Su44
Share-Based Compensation - Summary of RSUs Activity (Detail) - Restricted Stock Units - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Number of RSUs Outstanding, Beginning Balance | 3,554 | |
Number of RSUs Outstanding, Granted | 2,544 | |
Number of RSUs Outstanding, Released | (1,255) | |
Number of RSUs Outstanding, Canceled/Forfeited | (461) | |
Number of RSUs Outstanding, Ending Balance | 4,382 | |
Weighted-Average Grant Date Fair Value Per Share, Beginning Balance | $ 18.01 | |
Weighted-Average Grant Date Fair Value Per Share, Granted | 27.30 | |
Weighted-Average Grant Date Fair Value Per Share, Released | 19.37 | |
Weighted-Average Grant Date Fair Value Per Share, Canceled/Forfeited | 20.46 | |
Weighted-Average Grant Date Fair Value Per Share, Ending Balance | $ 22.73 | |
Aggregate Intrinsic Value, Outstanding | $ 182,963 | $ 73,261 |
Segment Reporting - Additional
Segment Reporting - Additional Information (Detail) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017USD ($)Country | Sep. 30, 2016 | Sep. 30, 2017USD ($)SegmentCountry | Sep. 30, 2016 | Dec. 31, 2016USD ($)Country | |
Concentration Risk [Line Items] | |||||
Number of reporting segment | Segment | 1 | ||||
Percentage of total billings collected through credit cards | 70.00% | ||||
Accounts receivable | $ | $ 39,731 | $ 39,731 | $ 30,243 | ||
Accounts Receivable | Customer Concentration Risk | |||||
Concentration Risk [Line Items] | |||||
Concentration risk | 21.00% | 30.00% | |||
Non-US [Member] | Long-lived Assets | Geographic Concentration Risk | |||||
Concentration Risk [Line Items] | |||||
Number of foreign countries representing more than ten percent | Country | 0 | 0 | 0 | ||
Minimum | U.S. | Sales Revenue, Segment | Geographic Concentration Risk | |||||
Concentration Risk [Line Items] | |||||
Concentration risk | 90.00% | 90.00% | 90.00% | 90.00% | |
Minimum | U.S. | Long-lived Assets | Geographic Concentration Risk | |||||
Concentration Risk [Line Items] | |||||
Concentration risk | 85.00% | 87.00% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Provision (benefit) for income taxes | $ 73,000 | $ 46,000 | $ 181,000 | $ 153,000 |
Unrecognized tax benefits | $ 0 | $ 0 |
Basic and Diluted Net Loss Pe47
Basic and Diluted Net Loss Per Share - Computation of Company's Basic and Diluted Net Loss Per Share of Common Stock (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Numerator | ||||
Net loss | $ (5,712) | $ (7,979) | $ (20,052) | $ (22,363) |
Denominator | ||||
Weighted-average common shares for basic and diluted net loss per share | 76,915 | 73,285 | 75,815 | 72,669 |
Basic and diluted net loss per share | $ (0.07) | $ (0.11) | $ (0.26) | $ (0.31) |
Basic and Diluted Net Loss Pe48
Basic and Diluted Net Loss Per Share - Potential Shares of Common Stock Excluded from Diluted Weighted-Average Common Shares Outstanding (Detail) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Potential common shares excluded from diluted net loss per share | 10,430 | 11,990 | 11,108 | 11,784 |
Equity Incentive Awards | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Potential common shares excluded from diluted net loss per share | 10,430 | 11,990 | 11,108 | 11,784 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) - Google Inc. - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | |||||
Total payables to related party | $ 1.5 | $ 1.5 | $ 1 | ||
Total expenses incurred from related party | $ 3.9 | $ 3.8 | $ 11 | $ 9.8 |