Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 12-May-15 | |
Document Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | CYNI | |
Entity Registrant Name | CYAN INC | |
Entity Central Index Key | 1391636 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 48,445,483 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (Unaudited) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $53,870 | $47,740 |
Restricted cash | 4,165 | 4,165 |
Accounts receivable (net of allowance for doubtful accounts of $76 and $227 at March 31, 2015 and December 31, 2014) | 17,794 | 23,511 |
Inventories | 9,267 | 12,362 |
Deferred costs | 1,305 | 1,317 |
Prepaid expenses and other | 2,546 | 3,079 |
Total current assets | 88,947 | 92,174 |
Long-term restricted cash | 7,868 | 7,868 |
Property and equipment, net | 12,129 | 11,896 |
Other assets | 3,186 | 3,737 |
Total assets | 112,130 | 115,675 |
Current liabilities: | ||
Accounts payable | 12,756 | 12,058 |
Accrued liabilities | 7,638 | 6,775 |
Accrued compensation | 5,317 | 4,146 |
Deferred revenue | 5,503 | 5,646 |
Deferred rent | 35 | 181 |
Other liabilities | 842 | 0 |
Total current liabilities | 32,091 | 28,806 |
Convertible debt, net of discount | 18,917 | 18,498 |
Derivative and warrant liabilities | 77,565 | 36,280 |
Deferred revenue | 1,589 | 1,845 |
Deferred rent | 342 | 302 |
Total liabilities | 130,504 | 85,731 |
Commitments and contingencies (Note 6) | ||
Stockholders’ equity (deficit): | ||
Preferred stock, $0.0001 par value, 20,000,000 shares authorized and no shares issued or outstanding as of March 31, 2015 and December 31, 2014. | 0 | 0 |
Common stock, $0.0001 par value: 1,000,000,000 shares authorized as of March 31, 2015 and December 31, 2014; 48,296,114 and 47,305,129 shares issued and outstanding as of March 31, 2015 and December 31, 2014. | 5 | 5 |
Additional paid in-capital | 221,305 | 216,607 |
Accumulated other comprehensive loss | -287 | -162 |
Accumulated deficit | -239,397 | -186,506 |
Total stockholders’ equity (deficit) | -18,374 | 29,944 |
Total liabilities and stockholders’ equity (deficit) | $112,130 | $115,675 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $76 | $227 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 48,296,114 | 47,305,129 |
Common stock, shares outstanding | 48,296,114 | 47,305,129 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Income Statement [Abstract] | ||
Revenue | $36,005 | $19,038 |
Cost of revenue | 20,974 | 11,615 |
Gross profit | 15,031 | 7,423 |
Operating expenses: | ||
Research and development | 8,941 | 9,472 |
Sales and marketing | 11,436 | 11,029 |
General and administrative | 5,082 | 4,563 |
Total operating expenses | 25,459 | 25,064 |
Loss from operations | -10,428 | -17,641 |
Change in fair value of derivative and warrant liabilities | -41,285 | 0 |
Interest expense | -1,546 | -47 |
Other income (expense), net | 419 | -62 |
Total other income (expense), net | -42,412 | -109 |
Loss before provision for income taxes | -52,840 | -17,750 |
Provision for income taxes | 51 | 50 |
Net loss | ($52,891) | ($17,800) |
Basic and diluted net loss per share (usd per share) | ($1.11) | ($0.38) |
Weighted-average number of shares used in computing basic and diluted net loss per share (shares) | 47,818 | 46,636 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Statement of Comprehensive Income [Abstract] | ||
Net loss | ($52,891) | ($17,800) |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | -125 | 127 |
Unrealized gains on available for sale securities, net of tax | 0 | 9 |
Total other comprehensive income (loss) | -125 | 136 |
Comprehensive loss | ($53,016) | ($17,664) |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Operating activities | ||
Net loss | ($52,891) | ($17,800) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 1,177 | 889 |
Stock-based compensation | 4,403 | 2,515 |
Change in fair value of derivative and warrant liabilities | 41,285 | 0 |
Accretion of debt discount | 419 | 0 |
Loss on disposal of assets | 114 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 5,717 | 293 |
Lease receivable | 0 | 604 |
Inventories | 2,812 | 1,395 |
Deferred costs | 12 | 2,679 |
Prepaid expenses and other assets | 123 | 83 |
Accounts payable | 454 | -1,577 |
Accrued and other liabilities | 1,704 | -448 |
Accrued compensation | 1,171 | -694 |
Deferred revenue | -399 | -2,789 |
Deferred rent | -106 | -27 |
Net cash provided by (used in) operating activities | 5,995 | -14,877 |
Investing activities | ||
Purchases of property and equipment | -843 | -2,284 |
Purchase of available for sale securities | 0 | -11,498 |
Maturity of available for sale securities | 0 | 1,000 |
Sale of available for sale securities | 0 | 11,750 |
Sale of other investment | 807 | 0 |
Net cash used in investing activities | -36 | -1,032 |
Financing activities | ||
Proceeds from stock-based compensation programs | 1,358 | 236 |
Taxes paid related to net-share settlements of restricted stock units | -1,060 | -92 |
Repayments of borrowings under term loan | 0 | -396 |
Payments on capital leases | 0 | -39 |
Net cash provided by (used in) financing activities | 298 | -291 |
Effect of exchange rate changes on cash and cash equivalents | -127 | 137 |
Net increase (decrease) in cash and cash equivalents | 6,130 | -16,063 |
Cash and cash equivalents at beginning of period | 47,740 | 32,509 |
Cash and cash equivalents at end of period | 53,870 | 16,446 |
Supplemental disclosures of cash flow information | ||
Cash paid for interest | 0 | 47 |
Non-cash Investing and financing activities | ||
Property and equipment included in accounts payable | $244 | $215 |
Organization_and_Significant_A
Organization and Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
Organization and Significant Accounting Policies | Organization and Significant Accounting Policies |
Description of the Business — Cyan, Inc. (Cyan or the Company) was incorporated on October 25, 2006, in the state of Delaware and its principal executive offices are located in Petaluma, California. The Company has pioneered innovative, carrier-grade networking solutions that transform disparate and inefficient legacy networks into open, high-performance networks. The Company’s solutions include high-capacity, multi-layer switching and transport platforms as well as a carrier-grade software-defined networking platform and applications. The Company’s solutions enable its customers to virtualize their networks, accelerate service delivery and increase scalability and performance while reducing costs. The Company designed its solutions to provide a variety of existing and emerging premium applications including business Ethernet, wireless backhaul, broadband backhaul and cloud connectivity. The Company’s customers range from service providers to high-performance data center and large, private network operators. | |
Unaudited Interim Condensed Consolidated Financial Statements — The Company has prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with Generally Accepted Accounting Principles (GAAP), and with Securities and Exchange Commission (SEC) rules and regulations, which allow for certain information and footnote disclosures that are normally included in annual financial statements prepared in accordance with GAAP to be condensed or omitted. In the Company's opinion, these unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements for the fiscal year ended December 31, 2014 and include all adjustments necessary for fair presentation, consisting only of normal recurring adjustments. The Condensed Consolidated Balance Sheet at December 31, 2014 has been derived from the audited financial statements at that date. | |
The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company's consolidated financial statements for the fiscal year ended December 31, 2014 which are included in the Company's Annual Report on Form 10-K filed with the SEC. | |
Events in 2015 required the Company to make additions to the Company's accounting policies for stock based compensation and customer credits, as more fully set forth below. There have been no other changes in the significant accounting policies as described in the audited consolidated financial statements for 2014 included in the Annual Report. | |
The results for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for any subsequent quarterly or annual financial period, including the fiscal year ending December 31, 2015. | |
Principles of Consolidation — The Company's consolidated financial statements include its accounts and the accounts of its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated. | |
Fiscal Periods — The Company operates on fiscal periods ending on the last day of the respective calendar quarter. | |
Use of Estimates — The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the reporting period. For the Company, these estimates include, but are not limited to, allowances for doubtful accounts, inventory valuation, excess and obsolete inventory, allowances for obligations to its contract manufacturer, useful lives assigned to long-lived assets, sales returns reserve, the fair value of stock awards, the fair value of a contingent conversion feature, make-whole conversion adjustment, and certain interest features related to the Company's 8.0% convertible senior notes issued in December 2014 and due December 15, 2019 (the “Notes”) which are accounted for as a single compound embedded derivative (the “Compound Embedded Derivative”) and warrants associated with the Notes, warranty costs, contingencies, accounting for income taxes, including the determination of the timing of the establishment or release of the Company's valuation allowance related to the Company's deferred tax asset balances and reserves for uncertain tax positions, and the fair value of stock awards and the probability that specified goals underlying performance based awards will be achieved. Actual results could differ from those estimates, and such differences could be material to the Company’s consolidated financial position and results of operations. | |
Stock-based Compensation — The Company granted restricted stock units (RSUs) to its employees and performance based restricted stock units (PBRSUs) to members of the executive team in the three months ended March 31, 2015. The stock-based compensation expense related to RSUs is recognized on a ratable basis over the requisite service period of the grant. The stock-based compensation expense related to PBRSUs is recognized based on the attainment of specified goals over a graded vesting period of two years. The fair value of RSUs and PBRSUs is determined using the fair value of the Company’s common stock on the date of grant. | |
Customer credits — In limited instances, the Company issues credits to its customers that can be applied against future purchases. The Company has recorded its customer credits obligations within Other liabilities. The Company estimates these credits, which increase as the level of business with the customer increases, based on the customer's historic and projected revenue for the year. | |
Liquidity — The accompanying financial statements as of and for the three months ended March 31, 2015 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business for the foreseeable future. Since inception, the Company has incurred net losses in each quarterly and annual period. In the three months ended March 31, 2015 the Company incurred net losses of $52.9 million. As of March 31, 2015, the Company had an accumulated deficit of $239.4 million. | |
The Company requires a significant amount of cash resources to operate its business. The Company provided approximately $6.1 million of cash in the three months ended March 31, 2015, including $6.0 million provided by operating activities. This was the first quarter during which the Company generated positive cash flow from operations. The Company ended the quarter with cash and cash equivalents, of $53.9 million, excluding $12.0 million in restricted cash. The Company's liquidity is affected by many factors including, among others, fluctuations in revenue, gross margin and operating expenses, as well as changes in operating assets and liabilities. At forecasted levels of revenue, expenses and capital expenditures, the Company believes that its existing cash and cash equivalents, together with its cash collections will be sufficient to meet its projected operating and capital expenditure requirements through the first quarter of 2016. However, as early as January 15, 2016 the Notes (see footnote 5) may be converted. Unless and until the Company obtains stockholder approval to issue additional shares, it will be required (i) to settle Notes purchased by the Company's officers, directors and their affiliated entities and any other Notes settled on the same date solely in cash and (ii) to settle all conversions of Notes (other than those purchased by the Company's officers, directors and their affiliated entities and only if settled on a date different from the date of settlement of the Notes purchased by the Company's officers, directors and their affiliated entities) by paying cash in an amount equal to at least the principal amount of Notes converted together with any combination of cash or shares of common stock, as selected by the Company, for the conversion value in excess of the principal amount, if any, subject to a share cap on the overall number of shares issued. The Company intends to seek stockholder approval at its 2015 annual stockholders meeting to permit the Company to settle the Notes including the notes purchased by the Company's officers, directors, and their affiliated entities, using shares of common stock, cash or a combination of both, at the Company's election and without a cap on the number of shares issued. The Company's 2015 annual meeting of stockholders has been postponed to accommodate additional agenda items associated with the proposed business combination with Ciena. There is no guarantee that such stockholder approval will be obtained. Were a material amount of the Notes to be converted prior to receiving the stockholder approval to include shares of the Company's common stock in the settlement, the Company's liquidity could be materially adversely affected and, if enough Notes were converted, the Company would not have sufficient capital resources to settle them entirely in cash. | |
The accompanying financial statements do not include any adjustments relating to the recoverability of the carrying amounts of recorded assets or the amount of liabilities that might result from the outcome of uncertainties. | |
New Accounting Pronouncements — In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, "Revenue from Contracts with Customers", (Topic 606) (ASU 2014-09), which provides guidance for revenue recognition. ASU 2014-09 supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. Additionally, it supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts, and creates new Subtopic 340-40, Other Assets and Deferred Costs-Contracts with Customers. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the previous guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 requires retrospective application by either a “full retrospective” adoption in which the standard is applied to all of the periods presented or a “modified retrospective” adoption for fiscal years beginning after December 15, 2016. The standard will be effective for the Company in the first quarter of fiscal 2017. Early adoption is not permitted. The Company has not selected a transition method and is currently assessing the potential impact on its financial statements from adopting this new guidance. The FASB has indicated that there may be certain future changes to the revenue guidance and on April 29, 2015, the FASB issued an exposure draft proposing the deferral of the effective date by one year. | |
In April 2015, the FASB issued ASU 2015-03, "Interest - Imputation of Interest", (Subtopic 835-30), to simplify the presentation of debt issuance costs. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. The standard will be effective for the Company in the first quarter of fiscal 2016. Early adoption is permitted. The Company is currently assessing the potential impact on its financial statements from adopting this new guidance. The Company does not believe the adoption of this guidance will have a material impact on its Consolidated Financial Statements as the impact is classification only. |
Net_Loss_Per_Share
Net Loss Per Share | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Net Loss Per Share | Net Loss Per Share | |||||||
The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data): | ||||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Net loss | $ | (52,891 | ) | $ | (17,800 | ) | ||
Weighted-average shares used to compute basic and diluted net loss per share | 47,818 | 46,636 | ||||||
Basic and diluted net loss per share | $ | (1.11 | ) | $ | (0.38 | ) | ||
As the Company experienced losses for all periods presented, basic net loss per share is the same as diluted net loss per share for all the periods. The following potential common stock equivalents that could potentially dilute net loss per share in the future were excluded from the computation of diluted net loss per share because including them would have been anti-dilutive for the periods presented (in thousands): | ||||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Employee stock options | 11,283 | 12,973 | ||||||
Restricted stock units | 3,620 | 2,788 | ||||||
Shares underlying the Notes | 20,470 | — | ||||||
Common stock warrants | 11,250 | — | ||||||
46,623 | 15,761 | |||||||
Fair_Value_Disclosure
Fair Value Disclosure | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Fair Value Disclosure | Fair Value Disclosure | ||||||||||||||||
Assets and liabilities recorded at fair value in the consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The Company categorizes its financial instruments into a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). | |||||||||||||||||
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Hierarchical levels that are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities are as follows: | |||||||||||||||||
Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. | |||||||||||||||||
Level 2: Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. | |||||||||||||||||
Level 3: Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. | |||||||||||||||||
Fair Value Hierarchy | |||||||||||||||||
The following tables set forth by level within the fair value hierarchy the Company’s assets and liabilities at fair value as of March 31, 2015 (in thousands): | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Liabilities: | |||||||||||||||||
Derivative and warrant liabilities | $ | — | $ | — | $ | 77,565 | $ | 77,565 | |||||||||
The following tables set forth by level within the fair value hierarchy the Company’s assets and liabilities at fair value as of December 31, 2014 (in thousands): | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Assets: | |||||||||||||||||
Cash equivalents: | |||||||||||||||||
Money market funds | $ | 4,110 | $ | — | $ | — | $ | 4,110 | |||||||||
Liabilities: | |||||||||||||||||
Derivative and warrant liabilities | $ | — | $ | — | $ | 36,280 | $ | 36,280 | |||||||||
There were no transfers of assets or liabilities measured at fair value between levels within the fair value hierarchy during any of the periods presented. | |||||||||||||||||
The Notes include a conversion option, including contingent conversion, a make-whole conversion adjustment, and certain interest features which are accounted for as a single compound embedded derivative (the “Compound Embedded Derivative”). The fair value of the Compound Embedded Derivative was determined based on a binomial lattice model. The liability is classified within Level 3 as the volatility assumption was based on the weighting of observable and implied volatilities and the estimated weighting and implied volatility are unobservable inputs used to value the Compound Embedded Derivative. During the three months ended March 31, 2015, there were no changes to the valuation methodology used to estimate the fair value of the Compound Embedded Derivative. At March 31, 2015, the weighting of the observable and implied volatilities were updated to apply no weighting associated with the implied volatility and 50% to each of the observable volatilities, due to limited transactions associated with the implied volatility for the three months ended March 31, 2015. | |||||||||||||||||
In December 2014, the Company issued detachable warrants, in conjunction with issuing the Notes. The fair value of each warrant is estimated by utilizing a Black-Scholes option-pricing model. The liability is classified within Level 3 as the volatility assumption was based on the weighting of observable and implied volatilities and the estimated weighting and implied volatility are unobservable inputs used to value the Compound Embedded Derivative. During the three months ended March 31, 2015, there were no changes to the valuation methodology used to estimate the fair value of the Compound Embedded Derivative. At March 31, 2015, the weighting of the observable and implied volatilities were updated to apply no weighting associated with the implied volatility and 50% to each of the observable volatilities, due to limited transactions which would provide implied volatility during the three months ended March 31, 2015. | |||||||||||||||||
The following table summarizes the changes in the liabilities classified in Level 3 for the three months ended March 31, 2015 (in thousands): | |||||||||||||||||
Three Months Ended March 31, 2015 | |||||||||||||||||
Beginning balance | $ | 36,280 | |||||||||||||||
Change in fair value of derivative and warrant liabilities | 41,285 | ||||||||||||||||
Ending balance | $ | 77,565 | |||||||||||||||
Losses reported in this table include changes in fair value that are attributable primarily to the change in value of the Company's stock price for the three months ended which is an observable input. During the quarter, the Company's stock price increased from $2.50 per share to $3.99 per share. | |||||||||||||||||
The Company held no marketable securities at March 31, 2015 or at December 31, 2014. |
Balance_Sheet_Components
Balance Sheet Components | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||
Balance Sheet Components | Balance Sheet Components | |||||||
Cash and Cash Equivalents | ||||||||
Cash and cash equivalents consisted of the following (in thousands): | ||||||||
31-Mar-15 | December 31, 2014 | |||||||
Cash | $ | 53,870 | $ | 43,630 | ||||
Money market funds | — | 4,110 | ||||||
Total cash and cash equivalents | $ | 53,870 | $ | 47,740 | ||||
Inventory | ||||||||
Inventories consisted primarily of finished goods purchased from the contract manufacturer and are stated at the lower of cost or market value (on a first-in, first-out basis). Inventory consisted of the following (in thousands): | ||||||||
31-Mar-15 | December 31, 2014 | |||||||
Raw materials | $ | 928 | $ | 1,202 | ||||
Finished goods | 8,339 | 11,160 | ||||||
Total Inventory | $ | 9,267 | $ | 12,362 | ||||
Property and Equipment, Net | ||||||||
Property and equipment, net consisted of the following (in thousands): | ||||||||
31-Mar-15 | December 31, 2014 | |||||||
Lab equipment and tooling | $ | 18,965 | $ | 18,303 | ||||
Software | 849 | 628 | ||||||
Leasehold improvements | 1,735 | 1,569 | ||||||
Furniture and fixtures | 1,112 | 987 | ||||||
Computer equipment | 730 | 720 | ||||||
23,391 | 22,207 | |||||||
Less accumulated depreciation and amortization | (11,262 | ) | (10,311 | ) | ||||
Property and equipment, net | $ | 12,129 | $ | 11,896 | ||||
For the three months ended March 31, 2015 and 2014 depreciation and amortization expense on property and equipment was $1.0 million and $0.9 million. | ||||||||
Accrued Liabilities | ||||||||
Accrued liabilities consisted of the following (in thousands): | ||||||||
31-Mar-15 | December 31, 2014 | |||||||
Inventory-in-transit | $ | 99 | $ | 1,516 | ||||
Warranty reserve (1) | 2,641 | 2,564 | ||||||
Sales returns reserve | 1,248 | 370 | ||||||
Professional fees | 1,525 | 1,137 | ||||||
Sales and use taxes | 224 | 201 | ||||||
Accrued interest | 1,187 | 18 | ||||||
Other | 714 | 969 | ||||||
Total accrued liabilities | $ | 7,638 | $ | 6,775 | ||||
(1) Activity related to warranties is as follows (in thousands): | ||||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Beginning balance | $ | 2,564 | $ | 1,374 | ||||
Charge to cost of sales | 361 | 473 | ||||||
Costs incurred | (284 | ) | (170 | ) | ||||
Closing balance | $ | 2,641 | $ | 1,677 | ||||
Convertible_Debt
Convertible Debt | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Debt Disclosure [Abstract] | ||||||||
Convertible Debt | Convertible Debt | |||||||
On December 12, 2014, the Company issued $50.0 million aggregate principal amount of 8.0% Convertible Senior Secured Notes due December 15, 2019 (the “Notes”) and related warrants to purchase up to an aggregate 11.25 million shares of the Company’s common stock, par value $0.0001 per share (the “Warrants”), in a private placement to qualified institutional buyers and accredited investors. | ||||||||
Aggregate offering expenses in connection with the transaction, including the placement agent's fee of $2.3 million, were $3.5 million, resulting in net proceeds of $46.5 million. $12.0 million of the offering proceeds were deposited into an escrow account which the Company will use to pay the first six scheduled semi-annual interest payments on the Notes. | ||||||||
The Company issued the Notes under an Indenture, dated December 12, 2014 (the “Indenture”), between the Company and U.S. Bank National Association, as Trustee and Collateral Agent. The Notes provide 8.0% interest per annum, payable semi-annually in arrears on June 15 and December 15 of each year, with interest beginning to accrue from December 12, 2014. The Notes will mature on December 15, 2019, unless earlier converted, redeemed or repurchased by the Company. The Notes are convertible into the Company’s common stock as described below. | ||||||||
The Notes are secured by a first-priority lien, subject only to certain permitted liens and certain excluded assets, on substantially all of the Company’s and the subsidiary guarantors’ assets, whether now owned or hereafter acquired, including license agreements, general intangibles, accounts instruments, investment property, intellectual property and any proceeds of the foregoing. The guarantees of each subsidiary guarantor will be a senior secured obligation of such subsidiary guarantor and will have the same ranking with respect to indebtedness of such subsidiary guarantor as the Notes will have with respect to the Company’s indebtedness. At March 31, 2015 and December 31, 2014, there are no subsidiary guarantors. | ||||||||
The Notes are the Company’s senior secured obligation 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 Notes; will rank effectively senior to any of the Company’s unsecured indebtedness to the extent of the value of the collateral securing the Notes; will rank equal in right of payment to the Company’s existing and future liabilities that is not so subordinated to the Notes; and will rank structurally junior to all indebtedness and other liabilities (including trade payable) of the Company’s existing and future subsidiaries that do not guarantee the Notes. | ||||||||
The initial conversion rate for the Notes is 409.3998 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $2.44 per share. Except in the case of certain specified corporate events, the Notes will not be convertible prior to January 15, 2016. Thereafter, until the close of business on June 15, 2019, the Notes will only be convertible under certain circumstances. On and after June 15, 2019, the Notes may be converted at any time prior to maturity. Unless and until the Company obtains stockholder approval to issue additional shares, it will be required (i) to settle Notes purchased by officers, directors and their affiliated entities and any other Notes settled on the same date solely in cash and (ii) to settle all conversions of Notes (other than those purchased by the Company's officers, directors and their affiliated entities and only if settled on a date different from the date of settlement of the Notes purchased by the Company's officers, directors and their affiliated entities) by paying cash in an amount equal to at least the principal amount of Notes converted together with any combination of cash or shares of common stock, as selected by the Company, for the conversion value in excess of the principal amount, if any, subject to a share cap on the overall number of shares issued. The Company intends to seek stockholder approval at its 2015 annual stockholders meeting to permit the Company to settle the Notes including the notes purchased by the Company's officers, directors, and their affiliated entities, using shares of common stock, cash or a combination of both, at the Company's election and without a cap on the number of shares issued. Upon conversion, in certain circumstances, the Company will also make an interest make-whole payment. | ||||||||
The Company may not redeem the Notes prior to December 20, 2017. On or after December 20, 2017, the Company may redeem the Notes at a redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, to, but excluding, the redemption date if the last reported sale price of its common stock for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending within three trading days prior to the date notice of redemption is delivered is at least 140% of the conversion price of the Notes on each applicable trading day. | ||||||||
In the event that the Company undergoes a fundamental change, the holders may require the Company to purchase for cash all or any portion of the Notes at a purchase price equal to the principal amount of the Notes to be purchased plus accrued and unpaid interest to, but excluding, the fundamental change purchase date. The Company will also increase the conversion rate, in certain circumstances, if a holder elects to convert Notes in connection with a fundamental change or a redemption of the Notes. It is anticipated that the proposed business combination with Ciena will constitute a fundamental change. | ||||||||
In addition to the Notes, the Company also issued warrants to purchase 225 shares of the Company's common stock for each $1,000 principal amount of Notes issued, resulting in issuing warrants exercisable for an aggregate of 11.25 million shares of common stock. The exercise price per share of common stock purchasable upon exercise of the Warrants is $3.62 per share of common stock. The exercise price is subject to appropriate anti-dilution adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Company’s common stock and also upon any distributions of assets, including cash, stock or other property to the Company’s stockholders. | ||||||||
The warrants are exercisable at any time on and after January 15, 2016 and expire on December 15, 2017. The warrants will be exercisable, at the option of each holder, in whole or in part by delivering to the Company a duly executed exercise notice and either by payment in full in immediately available funds for the number of shares of common stock purchased upon such exercise or through a cashless exercise, in which case the holder would receive upon such exercise the net number of shares of common stock determined according to the formula set forth in the warrant. If the proposed business combination with Ciena is completed, all of the warrants will be deemed automatically exercised on a cashless basis immediately prior to completion. No fractional shares of common stock will be issued in connection with the exercise of a warrant. In lieu of fractional shares, the Company will pay the holder an amount in cash equal to the fractional amount multiplied by the exercise price. Notwithstanding the foregoing, unless and until the Company has obtained the requisite stockholder approvals, the Company will be required to cash settle any exercises of the warrants according to the net value formula set forth in the warrants. | ||||||||
The conversion option and certain interest rate features, including contingent conversion and the make-whole interest, are embedded derivatives. These features are accounted for as a single compound embedded derivative (the “Compound Embedded Derivative”). The conversion option and warrants are not subject to the equity scope exception since explicit net cash settlement is required prior to receipt of approval of the stockholders to settle in shares. As such the Compound Embedded Derivative and warrants are accounted for at fair value with changes in fair value recorded in the Company’s consolidated statement of operations. | ||||||||
The fair value of the Compound Embedded Derivative was computed using a Binomial Lattice approach of a similar note with and without the Compound Embedded Derivative. The Warrants were valued using the Black-Scholes Option-pricing model. At March 31, 2015, the break out of the Compound Embedded Derivative and Warrants within Derivative and warrant liabilities was $61.4 million and $16.2 million, respectively. At December 31, 2014, the break out of the Compound Embedded Derivative and Warrants within Derivative and warrant liabilities was $30.6 million and $5.7 million, respectively. | ||||||||
The initial discounted value of the Notes of $18.4 million (after allocation of proceeds to the warrants and bifurcation of the Compound Embedded Derivative) is accreted to its $50.0 million principal amount over the term of the Notes under the effective interest rate method. The aggregate amount of issuance costs is deferred and amortized to interest expense under the effective interest method over the term of the Notes. The effective interest rate is 48.9%. | ||||||||
The following summarizes the activity of the Notes from issuance to March 31, 2015 (in thousands): | ||||||||
Gross Proceeds | $ | 50,000 | ||||||
Initial value of Compound Embedded Derivative reported as debt discount | (26,965 | ) | ||||||
Initial value of common stock warrants reported as debt discount | (4,605 | ) | ||||||
Accretion of debt discount | 68 | |||||||
31-Dec-14 | 18,498 | |||||||
Accretion of debt discount | 419 | |||||||
31-Mar-15 | $ | 18,917 | ||||||
The following summarizes the amount of interest expense recognized relating to the contractual interest, amortization of the debt discount and amortization of debt issuance costs of the Notes (in thousands): | ||||||||
31-Mar-15 | 31-Mar-14 | |||||||
Contractual interest | $ | 973 | $ | — | ||||
Amortization of debt discount | 419 | — | ||||||
Amortization of debt issuance costs | $ | 154 | $ | — | ||||
Total interest expense | $ | 1,546 | $ | — | ||||
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended | |||
Mar. 31, 2015 | ||||
Commitments and Contingencies Disclosure [Abstract] | ||||
Commitments and Contingencies | Commitments and Contingencies | |||
Facility Lease | ||||
In April 2007 the Company entered into a lease for the Company's headquarters facility in Petaluma, California. As amended to date, the 2007 lease provides for the lease of 18,895 square feet and expires in 2025. As of March 31, 2015, the Company's total remaining obligations under the 2007 lease were $5.9 million. In July 2013, the Company entered into a lease for an additional 20,005 square feet of space in Petaluma, California, increasing by a further 18,773 square feet in 2016. The 2013 lease expires concurrently with the 2007 lease in 2025. As of March 31, 2015, the Company's total remaining obligations under the 2013 lease are $11.4 million. The Company has an option to extend the term of both leases for an additional five-year period. | ||||
In relation to these lease agreements, an executive officer, who is also a member of the Company’s Board of Directors, owns approximately 40% of the limited liability company from which the Company is leasing the office premises. As of March 31, 2015 and December 31, 2014 no amounts were included in accounts payable or accrued expenses under these agreements. | ||||
As of March 31, 2015 and December 31, 2014 total deferred rent was $0.4 million and $0.5 million. For the three months ended March 31, 2015 and 2014 rent expense was $0.3 million and $0.2 million. | ||||
Future minimum annual obligations under non-cancellable lease agreements as of March 31, 2015 are approximately as follows (in thousands): | ||||
Year ending December 31: | ||||
2015 (remainder of year) | $ | 985 | ||
2016 | 1,449 | |||
2017 | 1,768 | |||
2018 | 1,804 | |||
2019 | 1,799 | |||
Thereafter | 9,950 | |||
Total | $ | 17,755 | ||
Contingencies | ||||
From time to time, the Company may be involved in various legal proceedings arising from the normal course of business. On April 1, 2014 a purported stockholder class action lawsuit was filed in the Superior Court of California, County of San Francisco, against the Company, the members of the Company's Board of Directors, the Company's former Chief Financial Officer and the underwriters of the Company's IPO. On April 30, 2014 a substantially similar lawsuit was filed in the same court against the same defendants. The two cases have been consolidated under the caption Beaver County Employees Retirement Fund, et al. v. Cyan, Inc. et al., Case No. CGC-14-539008. The consolidated complaint alleges violations of federal securities laws on behalf of a purported class consisting of purchasers of the Company's common stock pursuant or traceable to the registration statement and prospectus for the Company's IPO, and seek unspecified compensatory damages and other relief. In July 2014, the defendants filed a demurrer to (motion to dismiss) the consolidated complaint. On October 22, 2014, the court overruled the demurrer and allowed the case to proceed. The Company intends to defend the litigation vigorously. Based on information currently available, the Company has determined that the amount of any possible loss or range of possible loss is not reasonably estimable. | ||||
Guarantees | ||||
The Company from time to time enters into certain types of contracts that contingently require it to indemnify various parties against claims from third parties. These contracts primarily relate to (i) certain real estate leases, under which the Company may be required to indemnify property owners for environmental and other liabilities, and other claims arising from the Company’s use of the applicable premises; (ii) certain agreements with the Company’s officers, directors, and employees, under which the Company may be required to indemnify such persons for liabilities arising out of their relationship with the Company; (iii) contracts under which the Company may be required to indemnify customers against third-party claims that a Company product infringes a patent, copyright, or other intellectual property right; and (iv) procurement or license agreements, under which the Company may be required to indemnify licensors or vendors for certain claims that may be brought against them arising from the Company’s acts or omissions with respect to the supplied products or technology. | ||||
Generally, a maximum obligation under these contracts is not explicitly stated. Because the obligated amounts associated with these types of agreements are not explicitly stated, the overall maximum amount of the obligation cannot be reasonably estimated. Historically, the Company has not been required to make payments under these obligations, and no liabilities have been recorded for these obligations in the Company’s consolidated balance sheet. | ||||
Contract Manufacturer | ||||
As of March 31, 2015 and December 31, 2014 the Company has commitments to its contract manufacturer of $19.1 million and $9.7 million. These commitments include raw materials, work in progress and scheduled future orders, which are relatively short term. Should the Company be required to make payments under these commitments, the Company has the right to obtain and liquidate the related inventory to recover amounts paid under these commitments. |
Stockholders_Equity_and_Stockb
Stockholders' Equity and Stock-based Compensation | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||
Stockholders' Equity and Stock-based Compensation | Stockholders' Equity and Stock-based Compensation | |||||||||||||
Stock-based Compensation | ||||||||||||||
The following table summarizes the allocation of stock-based compensation in the accompanying consolidated statements of operations (in thousands): | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2015 | 2014 | |||||||||||||
Cost of revenue | $ | 224 | $ | 60 | ||||||||||
Research and development | 1,530 | 915 | ||||||||||||
Sales and marketing | 1,485 | 798 | ||||||||||||
General and administrative | 1,164 | 742 | ||||||||||||
Total stock-based compensation | $ | 4,403 | $ | 2,515 | ||||||||||
Equity Plans | ||||||||||||||
In January 2015 an additional 2,128,731 shares of common stock were reserved for future issuance under the 2013 Equity Incentive Plan in accordance with the annual increase provision of the plan. | ||||||||||||||
Stock Options | ||||||||||||||
A summary of the activity and changes during the three months ended March 31, 2015 and a summary of information related to options exercisable and vested and expected to vest are presented below: | ||||||||||||||
Number of | Weighted | Weighted | Aggregate | |||||||||||
Shares | Average | Average | Intrinsic | |||||||||||
Exercise | Remaining | Value (in | ||||||||||||
Price | Contractual | thousands) | ||||||||||||
Life (Years) | ||||||||||||||
Balance at December 31, 2014 | 12,141,629 | $ | 3.99 | 6.57 | $ | 3,499 | ||||||||
Options granted | 62,000 | 3.72 | ||||||||||||
Options exercised | (583,528 | ) | 2.23 | |||||||||||
Options forfeited | (336,747 | ) | 6.62 | |||||||||||
Balance at March 31, 2015 | 11,283,354 | $ | 4 | 6.79 | $ | 13,084 | ||||||||
Options vested and expected to vest - March 31, 2015 | 10,631,822 | $ | 3.92 | 6.72 | $ | 12,761 | ||||||||
Options exercisable - March 31, 2015 | 7,663,734 | $ | 3.36 | 6.26 | $ | 11,293 | ||||||||
The Company determined the fair value of each option grant on the date of grant using the Black-Scholes option-pricing model using the following factors: | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2015 | 2014 | |||||||||||||
Expected term (years) | 6.08 | 6.08 | ||||||||||||
Volatility | 50 | % | 44 | % | ||||||||||
Risk-free interest rate | 1.32 | % | 1.49 - 1.73% | |||||||||||
Dividend yield | — | — | ||||||||||||
Restricted Stock Units | ||||||||||||||
In the three months ended March 31, 2015 the Compensation Committee of the Company's board of directors (the "Board") awarded RSUs to employees. The stock-based compensation expense related to RSUs is recognized on a ratable basis over the requisite service period of the grant. The fair value of RSUs is determined using the fair value of the Company’s common stock on the date of grant. In addition, the Compensation Committee of the Board of Directors awarded PBRSUs to members of the executive team. These are subject to performance based requirements as well as additional time based vesting requirements. They will become eligible to vest 50% if the performance objectives are satisfied and then the remaining 50% will vest only if the additional time-based vesting requirements are satisfied. The fair value of PBRSUs is determined using the fair value of the Company’s common stock on the date of grant. | ||||||||||||||
The following table shows a summary of RSU activity, which includes PBRSUs, for the three months ended March 31, 2015 (unaudited): | ||||||||||||||
Shares | Weighted-Average Grant Date Fair Value | |||||||||||||
Unvested as of December 31, 2014 | 3,067,728 | $ | 3.13 | |||||||||||
Granted | 3,094,243 | 3.59 | ||||||||||||
Vested | (672,568 | ) | 2.95 | |||||||||||
Forfeited | (15,888 | ) | 3.69 | |||||||||||
Unvested as of March 31, 2015 | 5,473,515 | $ | 3.41 | |||||||||||
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes |
The Company’s provision for income taxes is based on the estimated annual effective tax rate, adjusted for discrete tax items recorded in the period. The effective tax rate for the three months ended March 31, 2015 and 2014 was less than one percent primarily as a result of the estimated tax losses for those fiscal periods for which no benefit is recorded due to the full valuation allowance recorded against the Company’s net deferred tax assets. The Company’s tax expense relates to state minimum taxes and foreign income taxes associated with the Company’s non-US operations. | |
As of March 31, 2015, based on the available objective evidence, management believes it is not more likely than not that the tax benefits of the US losses incurred during the three months ended March 31, 2015 will be realized. Accordingly, the Company did not record a tax benefit from the US losses incurred during the three months ended March 31, 2015. | |
The primary difference between the effective tax rate and the federal statutory tax rate relates to the valuation allowance on the Company’s net deferred tax assets, foreign tax rate differences and permanent differences for non-deductible stock-based compensation expense. |
Concentration
Concentration | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Risks and Uncertainties [Abstract] | |||||||||||||
Concentration | Concentration | ||||||||||||
Customers comprising revenue for the three months ended and/or a receivable balance as of each reporting period of 10% or greater are as follows: | |||||||||||||
Percentage of Revenue | Percentage of Receivables | ||||||||||||
Three Months Ended March 31, | March 31, | December 31, | |||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||
Customer A | 47 | % | * | 33 | % | 59 | % | ||||||
Customer B | * | 17 | % | * | * | ||||||||
Customer C | * | 14 | % | * | * | ||||||||
Customer D | * | 10 | % | * | * | ||||||||
Customer E | * | 10 | % | * | * | ||||||||
Customer F | 14 | % | * | 22 | % | * | |||||||
*Represents less than 10% |
Segment_Information
Segment Information | 3 Months Ended |
Mar. 31, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information |
The Company considers operating segments to be components of the Company in which separate financial information is available and is evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and in assessing performance. The chief operating decision maker ("CODM") for the Company is the Chief Executive Officer. | |
The Company operates as a single operating segment. This reflects the fact that the Company's CODM evaluates the Company’s financial information and resources, and assesses performance on a consolidated basis. Since the Company operates as one operating segment, all required financial segment information is included in the consolidated financial statements. |
Related_Parties
Related Parties | 3 Months Ended |
Mar. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Parties | Related Parties |
Certain parties affiliated with the Company purchased $17.0 million in aggregate principal amount of Notes and related Warrants. Mark Floyd, chief executive officer of the Company and chairman of the Board purchased $2.0 million in aggregate principal amount of Notes and related Warrants, Michael Hatfield, president of the Company and a member of the Board purchased $4.0 million in aggregate principal amount of Notes and related Warrants, and affiliated funds of Norwest Venture Partners, with whom Promod Haque, a member of the Board, is affiliated, purchased $11.0 million in aggregate principal amount of Notes and related Warrants. | |
In addition, an executive officer, who is also a member of the Board, owns approximately 40% of the limited liability company from which the Company is leasing the office premises (see footnote 6). |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events |
On May 3, 2015, the Company entered into a definitive agreement to be acquired by Ciena Corporation ("Ciena") for an aggregate purchase price of approximately $400 million. Upon the closing of the transaction, Cyan stockholders will receive consideration equal to the value of 0.224 shares of Ciena common stock per share of Cyan common stock (89% of which will be delivered in Ciena common stock and 11% will be delivered in cash based on the value of Ciena common stock at closing). Based on the structure of the transaction, Cyan’s outstanding warrants will be deemed to have been automatically exercised upon closing and the notes will become convertible. In addition, Ciena will also assume Cyan’s outstanding equity awards. |
Organization_and_Significant_A1
Organization and Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
Description of the Business | Description of the Business — Cyan, Inc. (Cyan or the Company) was incorporated on October 25, 2006, in the state of Delaware and its principal executive offices are located in Petaluma, California. The Company has pioneered innovative, carrier-grade networking solutions that transform disparate and inefficient legacy networks into open, high-performance networks. The Company’s solutions include high-capacity, multi-layer switching and transport platforms as well as a carrier-grade software-defined networking platform and applications. The Company’s solutions enable its customers to virtualize their networks, accelerate service delivery and increase scalability and performance while reducing costs. The Company designed its solutions to provide a variety of existing and emerging premium applications including business Ethernet, wireless backhaul, broadband backhaul and cloud connectivity. The Company’s customers range from service providers to high-performance data center and large, private network operators. |
Unaudited Interim Condensed Consolidated Financial Statements | Unaudited Interim Condensed Consolidated Financial Statements — The Company has prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with Generally Accepted Accounting Principles (GAAP), and with Securities and Exchange Commission (SEC) rules and regulations, which allow for certain information and footnote disclosures that are normally included in annual financial statements prepared in accordance with GAAP to be condensed or omitted. In the Company's opinion, these unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements for the fiscal year ended December 31, 2014 and include all adjustments necessary for fair presentation, consisting only of normal recurring adjustments. The Condensed Consolidated Balance Sheet at December 31, 2014 has been derived from the audited financial statements at that date. |
The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company's consolidated financial statements for the fiscal year ended December 31, 2014 which are included in the Company's Annual Report on Form 10-K filed with the SEC. | |
Events in 2015 required the Company to make additions to the Company's accounting policies for stock based compensation and customer credits, as more fully set forth below. There have been no other changes in the significant accounting policies as described in the audited consolidated financial statements for 2014 included in the Annual Report. | |
The results for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for any subsequent quarterly or annual financial period, including the fiscal year ending December 31, 2015. | |
Principles of Consolidation | Principles of Consolidation — The Company's consolidated financial statements include its accounts and the accounts of its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated. |
Fiscal Periods | Fiscal Periods — The Company operates on fiscal periods ending on the last day of the respective calendar quarter. |
Use of Estimates | Use of Estimates — The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the reporting period. For the Company, these estimates include, but are not limited to, allowances for doubtful accounts, inventory valuation, excess and obsolete inventory, allowances for obligations to its contract manufacturer, useful lives assigned to long-lived assets, sales returns reserve, the fair value of stock awards, the fair value of a contingent conversion feature, make-whole conversion adjustment, and certain interest features related to the Company's 8.0% convertible senior notes issued in December 2014 and due December 15, 2019 (the “Notes”) which are accounted for as a single compound embedded derivative (the “Compound Embedded Derivative”) and warrants associated with the Notes, warranty costs, contingencies, accounting for income taxes, including the determination of the timing of the establishment or release of the Company's valuation allowance related to the Company's deferred tax asset balances and reserves for uncertain tax positions, and the fair value of stock awards and the probability that specified goals underlying performance based awards will be achieved. Actual results could differ from those estimates, and such differences could be material to the Company’s consolidated financial position and results of operations. |
Stock-based Compensation | Stock-based Compensation — The Company granted restricted stock units (RSUs) to its employees and performance based restricted stock units (PBRSUs) to members of the executive team in the three months ended March 31, 2015. The stock-based compensation expense related to RSUs is recognized on a ratable basis over the requisite service period of the grant. The stock-based compensation expense related to PBRSUs is recognized based on the attainment of specified goals over a graded vesting period of two years. The fair value of RSUs and PBRSUs is determined using the fair value of the Company’s common stock on the date of grant. |
Customer credits | Customer credits — In limited instances, the Company issues credits to its customers that can be applied against future purchases. The Company has recorded its customer credits obligations within Other liabilities. The Company estimates these credits, which increase as the level of business with the customer increases, based on the customer's historic and projected revenue for the year. |
Liquidity | Liquidity — The accompanying financial statements as of and for the three months ended March 31, 2015 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business for the foreseeable future. Since inception, the Company has incurred net losses in each quarterly and annual period. In the three months ended March 31, 2015 the Company incurred net losses of $52.9 million. As of March 31, 2015, the Company had an accumulated deficit of $239.4 million. |
The Company requires a significant amount of cash resources to operate its business. The Company provided approximately $6.1 million of cash in the three months ended March 31, 2015, including $6.0 million provided by operating activities. This was the first quarter during which the Company generated positive cash flow from operations. The Company ended the quarter with cash and cash equivalents, of $53.9 million, excluding $12.0 million in restricted cash. The Company's liquidity is affected by many factors including, among others, fluctuations in revenue, gross margin and operating expenses, as well as changes in operating assets and liabilities. At forecasted levels of revenue, expenses and capital expenditures, the Company believes that its existing cash and cash equivalents, together with its cash collections will be sufficient to meet its projected operating and capital expenditure requirements through the first quarter of 2016. However, as early as January 15, 2016 the Notes (see footnote 5) may be converted. Unless and until the Company obtains stockholder approval to issue additional shares, it will be required (i) to settle Notes purchased by the Company's officers, directors and their affiliated entities and any other Notes settled on the same date solely in cash and (ii) to settle all conversions of Notes (other than those purchased by the Company's officers, directors and their affiliated entities and only if settled on a date different from the date of settlement of the Notes purchased by the Company's officers, directors and their affiliated entities) by paying cash in an amount equal to at least the principal amount of Notes converted together with any combination of cash or shares of common stock, as selected by the Company, for the conversion value in excess of the principal amount, if any, subject to a share cap on the overall number of shares issued. The Company intends to seek stockholder approval at its 2015 annual stockholders meeting to permit the Company to settle the Notes including the notes purchased by the Company's officers, directors, and their affiliated entities, using shares of common stock, cash or a combination of both, at the Company's election and without a cap on the number of shares issued. The Company's 2015 annual meeting of stockholders has been postponed to accommodate additional agenda items associated with the proposed business combination with Ciena. There is no guarantee that such stockholder approval will be obtained. Were a material amount of the Notes to be converted prior to receiving the stockholder approval to include shares of the Company's common stock in the settlement, the Company's liquidity could be materially adversely affected and, if enough Notes were converted, the Company would not have sufficient capital resources to settle them entirely in cash. | |
The accompanying financial statements do not include any adjustments relating to the recoverability of the carrying amounts of recorded assets or the amount of liabilities that might result from the outcome of uncertainties. | |
New Accounting Pronouncements | New Accounting Pronouncements — In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, "Revenue from Contracts with Customers", (Topic 606) (ASU 2014-09), which provides guidance for revenue recognition. ASU 2014-09 supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. Additionally, it supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts, and creates new Subtopic 340-40, Other Assets and Deferred Costs-Contracts with Customers. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the previous guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 requires retrospective application by either a “full retrospective” adoption in which the standard is applied to all of the periods presented or a “modified retrospective” adoption for fiscal years beginning after December 15, 2016. The standard will be effective for the Company in the first quarter of fiscal 2017. Early adoption is not permitted. The Company has not selected a transition method and is currently assessing the potential impact on its financial statements from adopting this new guidance. The FASB has indicated that there may be certain future changes to the revenue guidance and on April 29, 2015, the FASB issued an exposure draft proposing the deferral of the effective date by one year. |
In April 2015, the FASB issued ASU 2015-03, "Interest - Imputation of Interest", (Subtopic 835-30), to simplify the presentation of debt issuance costs. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. The standard will be effective for the Company in the first quarter of fiscal 2016. Early adoption is permitted. The Company is currently assessing the potential impact on its financial statements from adopting this new guidance. The Company does not believe the adoption of this guidance will have a material impact on its Consolidated Financial Statements as the impact is classification only. | |
Net_Loss_Per_Share_Tables
Net Loss Per Share (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Calculation of Basic and Diluted Net Loss Per Share | The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data): | |||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Net loss | $ | (52,891 | ) | $ | (17,800 | ) | ||
Weighted-average shares used to compute basic and diluted net loss per share | 47,818 | 46,636 | ||||||
Basic and diluted net loss per share | $ | (1.11 | ) | $ | (0.38 | ) | ||
Securities Excluded from Calculation of Diluted Net Loss Per Share | The following potential common stock equivalents that could potentially dilute net loss per share in the future were excluded from the computation of diluted net loss per share because including them would have been anti-dilutive for the periods presented (in thousands): | |||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Employee stock options | 11,283 | 12,973 | ||||||
Restricted stock units | 3,620 | 2,788 | ||||||
Shares underlying the Notes | 20,470 | — | ||||||
Common stock warrants | 11,250 | — | ||||||
46,623 | 15,761 | |||||||
Fair_Value_Disclosure_Tables
Fair Value Disclosure (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Fair Value Measurement on Company's Assets and Liabilities | The following tables set forth by level within the fair value hierarchy the Company’s assets and liabilities at fair value as of March 31, 2015 (in thousands): | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Liabilities: | |||||||||||||||||
Derivative and warrant liabilities | $ | — | $ | — | $ | 77,565 | $ | 77,565 | |||||||||
The following tables set forth by level within the fair value hierarchy the Company’s assets and liabilities at fair value as of December 31, 2014 (in thousands): | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Assets: | |||||||||||||||||
Cash equivalents: | |||||||||||||||||
Money market funds | $ | 4,110 | $ | — | $ | — | $ | 4,110 | |||||||||
Liabilities: | |||||||||||||||||
Derivative and warrant liabilities | $ | — | $ | — | $ | 36,280 | $ | 36,280 | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table summarizes the changes in the liabilities classified in Level 3 for the three months ended March 31, 2015 (in thousands): | ||||||||||||||||
Three Months Ended March 31, 2015 | |||||||||||||||||
Beginning balance | $ | 36,280 | |||||||||||||||
Change in fair value of derivative and warrant liabilities | 41,285 | ||||||||||||||||
Ending balance | $ | 77,565 | |||||||||||||||
Balance_Sheet_Components_Table
Balance Sheet Components (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||
Schedule of Cash and Cash Equivalents | Cash and cash equivalents consisted of the following (in thousands): | |||||||
31-Mar-15 | December 31, 2014 | |||||||
Cash | $ | 53,870 | $ | 43,630 | ||||
Money market funds | — | 4,110 | ||||||
Total cash and cash equivalents | $ | 53,870 | $ | 47,740 | ||||
Schedule of Inventories | Inventories consisted primarily of finished goods purchased from the contract manufacturer and are stated at the lower of cost or market value (on a first-in, first-out basis). Inventory consisted of the following (in thousands): | |||||||
31-Mar-15 | December 31, 2014 | |||||||
Raw materials | $ | 928 | $ | 1,202 | ||||
Finished goods | 8,339 | 11,160 | ||||||
Total Inventory | $ | 9,267 | $ | 12,362 | ||||
Schedule of Property and Equipment, Net | Property and equipment, net consisted of the following (in thousands): | |||||||
31-Mar-15 | December 31, 2014 | |||||||
Lab equipment and tooling | $ | 18,965 | $ | 18,303 | ||||
Software | 849 | 628 | ||||||
Leasehold improvements | 1,735 | 1,569 | ||||||
Furniture and fixtures | 1,112 | 987 | ||||||
Computer equipment | 730 | 720 | ||||||
23,391 | 22,207 | |||||||
Less accumulated depreciation and amortization | (11,262 | ) | (10,311 | ) | ||||
Property and equipment, net | $ | 12,129 | $ | 11,896 | ||||
Schedule of Accrued Liabilities | Accrued liabilities consisted of the following (in thousands): | |||||||
31-Mar-15 | December 31, 2014 | |||||||
Inventory-in-transit | $ | 99 | $ | 1,516 | ||||
Warranty reserve (1) | 2,641 | 2,564 | ||||||
Sales returns reserve | 1,248 | 370 | ||||||
Professional fees | 1,525 | 1,137 | ||||||
Sales and use taxes | 224 | 201 | ||||||
Accrued interest | 1,187 | 18 | ||||||
Other | 714 | 969 | ||||||
Total accrued liabilities | $ | 7,638 | $ | 6,775 | ||||
(1) Activity related to warranties is as follows (in thousands): | ||||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Beginning balance | $ | 2,564 | $ | 1,374 | ||||
Charge to cost of sales | 361 | 473 | ||||||
Costs incurred | (284 | ) | (170 | ) | ||||
Closing balance | $ | 2,641 | $ | 1,677 | ||||
Convertible_Debt_Tables
Convertible Debt (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Debt Disclosure [Abstract] | ||||||||
Convertible Debt | The following summarizes the activity of the Notes from issuance to March 31, 2015 (in thousands): | |||||||
Gross Proceeds | $ | 50,000 | ||||||
Initial value of Compound Embedded Derivative reported as debt discount | (26,965 | ) | ||||||
Initial value of common stock warrants reported as debt discount | (4,605 | ) | ||||||
Accretion of debt discount | 68 | |||||||
31-Dec-14 | 18,498 | |||||||
Accretion of debt discount | 419 | |||||||
31-Mar-15 | $ | 18,917 | ||||||
The following summarizes the amount of interest expense recognized relating to the contractual interest, amortization of the debt discount and amortization of debt issuance costs of the Notes (in thousands): | ||||||||
31-Mar-15 | 31-Mar-14 | |||||||
Contractual interest | $ | 973 | $ | — | ||||
Amortization of debt discount | 419 | — | ||||||
Amortization of debt issuance costs | $ | 154 | $ | — | ||||
Total interest expense | $ | 1,546 | $ | — | ||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 3 Months Ended | |||
Mar. 31, 2015 | ||||
Commitments and Contingencies Disclosure [Abstract] | ||||
Future Minimum Annual Obligations under Non-Cancellable Lease Agreements | Future minimum annual obligations under non-cancellable lease agreements as of March 31, 2015 are approximately as follows (in thousands): | |||
Year ending December 31: | ||||
2015 (remainder of year) | $ | 985 | ||
2016 | 1,449 | |||
2017 | 1,768 | |||
2018 | 1,804 | |||
2019 | 1,799 | |||
Thereafter | 9,950 | |||
Total | $ | 17,755 | ||
Stockholders_Equity_and_Stockb1
Stockholders' Equity and Stock-based Compensation (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||
Allocation of Stock-Based Compensation Expense to Statements of Operations | The following table summarizes the allocation of stock-based compensation in the accompanying consolidated statements of operations (in thousands): | |||||||||||||
Three Months Ended March 31, | ||||||||||||||
2015 | 2014 | |||||||||||||
Cost of revenue | $ | 224 | $ | 60 | ||||||||||
Research and development | 1,530 | 915 | ||||||||||||
Sales and marketing | 1,485 | 798 | ||||||||||||
General and administrative | 1,164 | 742 | ||||||||||||
Total stock-based compensation | $ | 4,403 | $ | 2,515 | ||||||||||
Black-Scholes-Merton Option-Pricing Model | The Company determined the fair value of each option grant on the date of grant using the Black-Scholes option-pricing model using the following factors: | |||||||||||||
Three Months Ended March 31, | ||||||||||||||
2015 | 2014 | |||||||||||||
Expected term (years) | 6.08 | 6.08 | ||||||||||||
Volatility | 50 | % | 44 | % | ||||||||||
Risk-free interest rate | 1.32 | % | 1.49 - 1.73% | |||||||||||
Dividend yield | — | — | ||||||||||||
Summary of Stock Options Activity | A summary of the activity and changes during the three months ended March 31, 2015 and a summary of information related to options exercisable and vested and expected to vest are presented below: | |||||||||||||
Number of | Weighted | Weighted | Aggregate | |||||||||||
Shares | Average | Average | Intrinsic | |||||||||||
Exercise | Remaining | Value (in | ||||||||||||
Price | Contractual | thousands) | ||||||||||||
Life (Years) | ||||||||||||||
Balance at December 31, 2014 | 12,141,629 | $ | 3.99 | 6.57 | $ | 3,499 | ||||||||
Options granted | 62,000 | 3.72 | ||||||||||||
Options exercised | (583,528 | ) | 2.23 | |||||||||||
Options forfeited | (336,747 | ) | 6.62 | |||||||||||
Balance at March 31, 2015 | 11,283,354 | $ | 4 | 6.79 | $ | 13,084 | ||||||||
Options vested and expected to vest - March 31, 2015 | 10,631,822 | $ | 3.92 | 6.72 | $ | 12,761 | ||||||||
Options exercisable - March 31, 2015 | 7,663,734 | $ | 3.36 | 6.26 | $ | 11,293 | ||||||||
Nonvested Restricted Stock Shares Activity | The following table shows a summary of RSU activity, which includes PBRSUs, for the three months ended March 31, 2015 (unaudited): | |||||||||||||
Shares | Weighted-Average Grant Date Fair Value | |||||||||||||
Unvested as of December 31, 2014 | 3,067,728 | $ | 3.13 | |||||||||||
Granted | 3,094,243 | 3.59 | ||||||||||||
Vested | (672,568 | ) | 2.95 | |||||||||||
Forfeited | (15,888 | ) | 3.69 | |||||||||||
Unvested as of March 31, 2015 | 5,473,515 | $ | 3.41 | |||||||||||
Concentration_Tables
Concentration (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Risks and Uncertainties [Abstract] | |||||||||||||
Customers With 10% or Greater of Total Accounts Receivable and Net Revenue | Customers comprising revenue for the three months ended and/or a receivable balance as of each reporting period of 10% or greater are as follows: | ||||||||||||
Percentage of Revenue | Percentage of Receivables | ||||||||||||
Three Months Ended March 31, | March 31, | December 31, | |||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||
Customer A | 47 | % | * | 33 | % | 59 | % | ||||||
Customer B | * | 17 | % | * | * | ||||||||
Customer C | * | 14 | % | * | * | ||||||||
Customer D | * | 10 | % | * | * | ||||||||
Customer E | * | 10 | % | * | * | ||||||||
Customer F | 14 | % | * | 22 | % | * | |||||||
*Represents less than 10% |
Organization_and_Significant_A2
Organization and Significant Accounting Policies (Details) (USD $) | 3 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 12, 2014 | |
Debt Instrument [Line Items] | ||||
Net loss | $52,891,000 | $17,800,000 | ||
Accumulated deficit | 239,397,000 | 186,506,000 | ||
Cash, cash equivalents, and marketable securities used in period | 6,100,000 | |||
Net cash provided by operating activities | 5,995,000 | -14,877,000 | ||
Cash, cash equivalents, and marketable securities | 53,900,000 | |||
Restricted cash | $12,000,000 | |||
Performance Shares [Member] | ||||
Debt Instrument [Line Items] | ||||
Award vesting period | 2 years | |||
Convertible Debt [Member] | 8.0% Convertible Senior Notes, Mature 2019 [Member] | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate (percent) | 8.00% |
Net_Loss_Per_Share_Calculation
Net Loss Per Share - Calculation of Basic and Diluted Net Loss Per Share (Detail) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Earnings Per Share [Abstract] | ||
Net loss | ($52,891) | ($17,800) |
Weighted-average shares used to compute basic and diluted net loss per share (shares) | 47,818 | 46,636 |
Basic and diluted net loss per share (usd per share) | ($1.11) | ($0.38) |
Net_Loss_Per_Share_Securities_
Net Loss Per Share - Securities were excluded from Calculation of Diluted Net Loss Per Share (Detail) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities were excluded from calculation of diluted net loss per share | 46,623 | 15,761 |
Employee stock options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities were excluded from calculation of diluted net loss per share | 11,283 | 12,973 |
Unvested restricted stock units [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities were excluded from calculation of diluted net loss per share | 3,620 | 2,788 |
Convertible Debt Securities [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities were excluded from calculation of diluted net loss per share | 20,470 | 0 |
Common stock warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities were excluded from calculation of diluted net loss per share | 11,250 | 0 |
Fair_Value_Disclosure_Addition
Fair Value Disclosure - Additional Information (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Fair Value Disclosures [Abstract] | ||
Share price | $3.99 | $2.50 |
Marketable securities | $0 | $0 |
Fair_Value_Disclosure_Fair_Val
Fair Value Disclosure - Fair Value Measurement on Company's Assets and Liabilities (Detail) (Recurring [Member], USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Money market funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $4,110 | |
Level 1 [Member] | Money market funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 4,110 | |
Level 2 [Member] | Money market funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | |
Level 3 [Member] | Money market funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | |
Derivative and Warrant Liabilities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Liability | 77,565 | 36,280 |
Derivative and Warrant Liabilities [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Liability | 0 | 0 |
Derivative and Warrant Liabilities [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Liability | 0 | 0 |
Derivative and Warrant Liabilities [Member] | Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Liability | $77,565 | $36,280 |
Fair_Value_Disclosure_Fair_Val1
Fair Value Disclosure - Fair Value Liabilities Classified in Level 3 (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $36,280 |
Change in fair value of derivative and warrant liabilities | 41,285 |
Ending balance | $77,565 |
Balance_Sheet_Components_Sched
Balance Sheet Components - Schedule of Cash and Cash Equivalents (Detail) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash | $53,870 | $43,630 | ||
Money market funds | 0 | 4,110 | ||
Total cash and cash equivalents | $53,870 | $47,740 | $16,446 | $32,509 |
Balance_Sheet_Components_Sched1
Balance Sheet Components - Schedule of Inventories (Detail) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $928 | $1,202 |
Finished goods | 8,339 | 11,160 |
Total Inventory | $9,267 | $12,362 |
Balance_Sheet_Components_Sched2
Balance Sheet Components - Schedule of Property and Equipment, Net (Detail) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $23,391 | $22,207 |
Less accumulated depreciation and amortization | -11,262 | -10,311 |
Property and equipment, net | 12,129 | 11,896 |
Lab equipment and tooling [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 18,965 | 18,303 |
Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 849 | 628 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,735 | 1,569 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,112 | 987 |
Computer equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $730 | $720 |
Balance_Sheet_Components_Addit
Balance Sheet Components - Additional Information (Detail) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Depreciation and amortization expense on property and equipment | $1 | $0.90 |
Balance_Sheet_Components_Sched3
Balance Sheet Components - Schedule of Accrued Liabilities (Detail) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Inventory-in-transit | $99 | $1,516 | ||
Warranty reserve | 2,641 | 2,564 | 1,677 | 1,374 |
Sales returns reserve | 1,248 | 370 | ||
Professional fees | 1,525 | 1,137 | ||
Sales and use taxes | 224 | 201 | ||
Accrued interest | 1,187 | 18 | ||
Other | 714 | 969 | ||
Total accrued liabilities | $7,638 | $6,775 |
Balance_Sheet_Components_Sched4
Balance Sheet Components - Schedule of Activity Related to Warranties (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Beginning balance | $2,564 | $1,374 |
Charge to cost of sales | 361 | 473 |
Costs incurred | -284 | -170 |
Closing balance | $2,641 | $1,677 |
Convertible_Debt_Additional_In
Convertible Debt - Additional Information (Details) (USD $) | 0 Months Ended | ||
Dec. 12, 2014 | Mar. 31, 2015 | Dec. 31, 2014 | |
D | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount | $50,000,000 | ||
Common stock, par value | $0.00 | $0.00 | |
Convertible Debt [Member] | 8.0% Convertible Senior Notes, Mature 2019 [Member] | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount | 50,000,000 | ||
Stated interest rate (percent) | 8.00% | ||
Aggregate shares of common stock called by warrants | 11,250,000 | ||
Underwriters' fee | 2,300,000 | ||
Debt issuance cost | 3,500,000 | ||
Proceeds from debt, net of issuance costs | 46,500,000 | ||
Escrow deposits to pay for the first six schedule payments | 12,000,000 | ||
Notes conversion ratio | 0.4093998 | ||
Conversion price per share | $2.44 | ||
Debt redemption threshold trading days | 20 | ||
Debt redemption threshold consecutive trading days | 30 days | ||
Debt redemption threshold trading days prior to redemption notification | 3 days | ||
Debt redemption, threshold percentage of stock price trigger | 140.00% | ||
Number of shares of common stock for each $1000 principal amount of Notes | 225 | ||
Exercise price of warrants | 3.62 | ||
Discounted amount on debt issuance | 18,400,000 | ||
Effective interest rate of debt instrument | 48.90% | ||
Convertible Debt [Member] | 8.0% Convertible Senior Notes, Mature 2019 [Member] | Embedded Derivative Financial Instruments [Member] | |||
Debt Instrument [Line Items] | |||
Fair value of Notes components | 61,400,000 | 30,600,000 | |
Convertible Debt [Member] | 8.0% Convertible Senior Notes, Mature 2019 [Member] | Warrant [Member] | |||
Debt Instrument [Line Items] | |||
Fair value of Notes components | $16,200,000 | $5,700,000 |
Convertible_Debt_Notes_Activit
Convertible Debt - Notes Activity (Details) (USD $) | 1 Months Ended | 3 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 12, 2014 |
Debt Disclosure [Abstract] | ||||
Gross Proceeds | $50,000 | |||
Initial value of Compound Embedded Derivative reported as debt discount | -26,965 | |||
Initial value of common stock warrants reported as debt discount | -4,605 | |||
Accretion of debt discount | 68 | 419 | 0 | |
Ending balance | $18,498 | $18,917 |
Convertible_Debt_Interest_Expe
Convertible Debt - Interest Expense (Details) (USD $) | 1 Months Ended | 3 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 |
Debt Disclosure [Abstract] | |||
Contractual interest | $973 | $0 | |
Amortization of debt discount | 68 | 419 | 0 |
Amortization of debt issuance costs | 154 | 0 | |
Total interest expense | $1,546 | $0 |
Commitments_and_Contingencies_1
Commitments and Contingencies - Additional Information (Detail) (USD $) | 3 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Jul. 31, 2013 | |
case | sqft | |||
Property Subject to or Available for Operating Lease [Line Items] | ||||
Total remaining obligations under the 2007 lease | $17,755,000 | |||
Accounts payable, related parties | 0 | 0 | ||
Accrued liabilities, related parties | 0 | 0 | ||
Percentage of interest in limited liability company from which the Company is leasing building | 40.00% | |||
Total deferred rent | 400,000 | 500,000 | ||
Rent expense | 300,000 | 200,000 | ||
Number of cases | 2 | |||
Commitments to contract manufacturer | 19,100,000 | 9,700,000 | ||
California [Member] | ||||
Property Subject to or Available for Operating Lease [Line Items] | ||||
Office premises for lease | 18,895 | |||
Total remaining obligations under the 2007 lease | 5,900,000 | |||
Total base rent payable | $11,400,000 | |||
Renewal term | 5 years | |||
California [Member] | Term 1 [Member] | Property Subject to Operating Lease [Member] | ||||
Property Subject to or Available for Operating Lease [Line Items] | ||||
Area of commercial building leased | 20,005 | |||
California [Member] | Term 2 [Member] | Property Subject to Operating Lease [Member] | ||||
Property Subject to or Available for Operating Lease [Line Items] | ||||
Additional area of real estate property | 18,773 |
Commitments_and_Contingencies_2
Commitments and Contingencies - Future Minimum Annual Obligations under Non-Cancellable Lease Agreements (Detail) (USD $) | Mar. 31, 2015 |
In Thousands, unless otherwise specified | |
Commitments and Contingencies Disclosure [Abstract] | |
2015 (remainder of year) | $985 |
2016 | 1,449 |
2017 | 1,768 |
2018 | 1,804 |
2019 | 1,799 |
Thereafter | 9,950 |
Total | $17,755 |
Stockholders_Equity_and_Stockb2
Stockholders' Equity and Stock-based Compensation - Allocation of Stock-Based Compensation Expense to Statements of Operations (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Employee stock-based compensation | $4,403 | $2,515 |
Cost of revenue [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Employee stock-based compensation | 224 | 60 |
Research and development [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Employee stock-based compensation | 1,530 | 915 |
Sales and marketing [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Employee stock-based compensation | 1,485 | 798 |
General and administrative [Member] | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Employee stock-based compensation | $1,164 | $742 |
Stockholders_Equity_and_Stockb3
Stockholders' Equity and Stock-based Compensation - Additional Information (Detail) | 3 Months Ended | 1 Months Ended |
Mar. 31, 2015 | Jan. 31, 2015 | |
Performance Shares [Member] | Once Performance Objectives Are Satisfied [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
PBRSU vesting rights, percentage | 50.00% | |
Performance Shares [Member] | If Additional Time-based Vesting Requirements Are Satisfied [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
PBRSU vesting rights, percentage | 50.00% | |
2013 Equity Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Additional shares of common stock reserved for future issuance | 2,128,731 |
Stockholders_Equity_and_Stockb4
Stockholders' Equity and Stock-based Compensation - Summary of Stock Options Activity (Detail) (USD $) | 3 Months Ended | 12 Months Ended |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Number of Shares Outstanding, Beginning of period | 12,141,629 | |
Number of Shares Outstanding, Options granted | 62,000 | |
Number of Shares Outstanding, Options exercised | -583,528 | |
Number of Shares Outstanding, Options forfeited | -336,747 | |
Number of Shares Outstanding, End of period | 11,283,354 | 12,141,629 |
Number of Shares Outstanding, Options vested and expected to vest, End of period | 10,631,822 | |
Number of Shares Outstanding, Options exercisable, End of period | 7,663,734 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Weighted Average Exercise Price, Beginning of period | $3.99 | |
Weighted Average Exercise Price, Options granted | $3.72 | |
Weighted Average Exercise Price, Options exercised | $2.23 | |
Weighted Average Exercise Price, Options forfeited | $6.62 | |
Weighted Average Exercise Price, End of period | $4 | $3.99 |
Weighted Average Exercise Price, Options vested and expected to vest, End of period | $3.92 | |
Weighted Average Exercise Price, Options exercisable, End of period | $3.36 | |
Weighted Average Remaining Contractual Life (Years) | 6 years 9 months 15 days | 6 years 6 months 26 days |
Weighted Average Remaining Contractual Life (Years) | 6 years 9 months 15 days | 6 years 6 months 26 days |
Weighted Average Remaining Contractual Life (Years), Options vested and expected to vest | 6 years 8 months 19 days | |
Weighted Average Remaining Contractual Life (Years), Options exercisable | 6 years 3 months 4 days | |
Aggregate Intrinsic Value, beginning of period | $3,499 | |
Aggregate Intrinsic Value, end of period | 13,084 | 3,499 |
Aggregate Intrinsic Value, Options vested and expected to vest, end of period | 12,761 | |
Aggregate Intrinsic Value, Options exercisable, end of period | $11,293 |
Stockholders_Equity_and_Stockb5
Stockholders' Equity and Stock-based Compensation - Black-Scholes-Merton Option-Pricing Model (Detail) (Employee Stock Option [Member]) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (years) | 6 years 0 months 29 days | 6 years 0 months 29 days |
Volatility | 50.00% | 44.00% |
Risk-free interest rate | 1.32% | |
Dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 1.49% | |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 1.73% |
Stockholders_Equity_and_Stockb6
Stockholders' Equity and Stock-based Compensation - Summary of RSU Activity (Details) (Restricted Stock Units (RSUs) [Member], USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Restricted Stock Units (RSUs) [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Unvested, Beginning Balance, Shares | 3,067,728 |
Granted, Shares | 3,094,243 |
Vested, Shares | -672,568 |
Forfeited, Shares | -15,888 |
Unvested, Ending Balance, Shares | 5,473,515 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Unvested, Beginning Balance, Weighted-Average Grant Date Fair Value | $3.13 |
Granted, Weighted-Average Grant Date Fair Value | $3.59 |
Vested, Weighted-Average Grant Date Fair Value | $2.95 |
Forfeited, Weighted-Average Grant Date Fair Value | $3.69 |
Unvested, Ending Balance, Weighted-Average Grant Date Fair Value | $3.41 |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate (less than) | 1.00% | 1.00% |
Concentration_Customers_With_1
Concentration - Customers With 10% or Greater of Total Accounts Receivable and Net Revenue (Detail) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Percentage of Revenue [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 47.00% | ||
Percentage of Revenue [Member] | Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 17.00% | ||
Percentage of Revenue [Member] | Customer C [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 14.00% | ||
Percentage of Revenue [Member] | Customer D [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 10.00% | ||
Percentage of Revenue [Member] | Customer E [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 10.00% | ||
Percentage of Revenue [Member] | Customer F [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 14.00% | ||
Percentage of Accounts Receivable [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 33.00% | 59.00% | |
Percentage of Accounts Receivable [Member] | Customer F [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 22.00% |
Segment_Information_Additional
Segment Information - Additional Information (Detail) | 3 Months Ended |
Mar. 31, 2015 | |
Segment | |
Segment Reporting [Abstract] | |
Number of reporting segment | 1 |
Related_Parties_Details
Related Parties (Details) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2015 |
Related Party Transaction [Line Items] | |
Limited Liability Company (LLC) or Limited Partnership (LP), Managing Member or General Partner, Ownership Interest | 40.00% |
Purchase of Notes and Related Warrants [Member] | |
Related Party Transaction [Line Items] | |
Related Party Transaction, Amounts of Transaction | 17 |
Chief Executive Officer [Member] | Purchase of Notes and Related Warrants [Member] | |
Related Party Transaction [Line Items] | |
Related Party Transaction, Amounts of Transaction | 2 |
President [Member] | Purchase of Notes and Related Warrants [Member] | |
Related Party Transaction [Line Items] | |
Related Party Transaction, Amounts of Transaction | 4 |
Norwest Venture Partners [Member] | Purchase of Notes and Related Warrants [Member] | |
Related Party Transaction [Line Items] | |
Related Party Transaction, Amounts of Transaction | 11 |
Subsequent_Events_Details
Subsequent Events (Details) (Subsequent Event [Member], Ciena [Member], Cyan, Inc. [Member], USD $) | 0 Months Ended |
In Millions, unless otherwise specified | 1-May-15 |
Subsequent Event [Line Items] | |
Aggregate purchase price | $400 |
Basis for determining value, share price multiple | 0.224 |
Basis for determining value, share price multiple, percent payable in cash | 11.00% |
Common Stock [Member] | |
Subsequent Event [Line Items] | |
Basis for determining value, share price multiple, percent payable in equity | 89.00% |