Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2021 | Jul. 31, 2021 | |
Entity Addresses [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-36350 | |
Entity Registrant Name | Q2 Holdings, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-2706637 | |
Entity Address, Address Line One | 10355 Pecan Park Boulevard | |
Entity Address, City or Town | Austin, | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 78729 | |
City Area Code | 833 | |
Local Phone Number | 444-3469 | |
Title of 12(b) Security | Common Stock, $0.0001 par value | |
Trading Symbol | QTWO | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Smaller Reporting Company | false | |
Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock Shares Outstanding | 56,463,947 | |
Entity Central Index Key | 0001410384 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Former Address | ||
Entity Addresses [Line Items] | ||
Entity Address, Address Line One | 13785 Research Blvd | |
Entity Address, Address Line Two | Suite 150 | |
Entity Address, City or Town | Austin | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 78750 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 317,949 | $ 407,703 |
Restricted cash | 2,978 | 3,482 |
Investments | 93,342 | 131,352 |
Accounts receivable, net | 38,692 | 36,430 |
Contract assets, current portion, net | 1,234 | 1,088 |
Prepaid expenses and other current assets | 9,435 | 8,861 |
Deferred solution and other costs, current portion | 24,499 | 19,042 |
Deferred implementation costs, current portion | 7,230 | 8,258 |
Total current assets | 495,359 | 616,216 |
Property and equipment, net | 65,448 | 49,558 |
Right of use assets | 57,323 | 34,709 |
Deferred solution and other costs, net of current portion | 31,504 | 32,782 |
Deferred implementation costs, net of current portion | 17,865 | 15,184 |
Intangible assets, net | 179,797 | 184,859 |
Goodwill | 512,869 | 462,274 |
Contract assets, net of current portion and allowance | 21,189 | 18,694 |
Other long-term assets | 2,245 | 2,426 |
Total assets | 1,383,599 | 1,416,702 |
Current liabilities: | ||
Accounts payable | 11,357 | 7,887 |
Accrued liabilities | 24,814 | 22,444 |
Accrued compensation | 19,863 | 26,716 |
Deferred revenues, current portion | 89,159 | 81,935 |
Lease liabilities, current portion | 7,842 | 6,844 |
Total current liabilities | 153,035 | 145,826 |
Convertible notes, net of current portion | 537,895 | 557,468 |
Deferred revenues, net of current portion | 24,740 | 29,203 |
Lease liabilities, net of current portion | 66,280 | 36,739 |
Other long-term liabilities | 4,154 | 4,102 |
Total liabilities | 786,104 | 773,338 |
Commitments and contingencies (Note 7) | ||
Stockholders' equity: | ||
Preferred stock: $0.0001 par value; 5,000 shares authorized; no shares issued or outstanding as of June 30, 2021 and December 31, 2020 | 0 | 0 |
Common stock: $0.0001 par value; 150,000 shares authorized; 56,464 issued and outstanding as of June 30, 2021 and 55,562 shares issued and outstanding as of December 31, 2020 | 6 | 6 |
Additional paid-in capital | 1,034,520 | 1,024,577 |
Accumulated other comprehensive loss | (62) | (32) |
Accumulated deficit | (436,969) | (381,187) |
Total stockholders' equity | 597,495 | 643,364 |
Total liabilities and stockholders' equity | $ 1,383,599 | $ 1,416,702 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 56,464,000 | 55,562,000 |
Common stock, shares outstanding (in shares) | 56,464,000 | 55,562,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | ||
Income Statement [Abstract] | |||||
Revenues | $ 123,573 | $ 97,581 | $ 240,093 | $ 189,961 | |
Cost of revenues | [1] | 68,233 | 53,203 | 131,552 | 106,310 |
Gross profit | 55,340 | 44,378 | 108,541 | 83,651 | |
Operating expenses: | |||||
Sales and marketing | [1] | 20,587 | 16,310 | 40,403 | 36,194 |
Research and development | [1] | 29,429 | 23,642 | 56,224 | 48,600 |
General and administrative | [1] | 18,704 | 17,203 | 37,538 | 36,313 |
Acquisition related costs | 1,188 | 1,127 | 2,038 | (840) | |
Amortization of acquired intangibles | 4,563 | 4,491 | 8,982 | 8,982 | |
Partnership termination charges | 0 | 13,244 | 0 | 13,244 | |
Unoccupied lease charges | 812 | 668 | 812 | 668 | |
Total operating expenses | 75,283 | 76,685 | 145,997 | 143,161 | |
Loss from operations | (19,943) | (32,307) | (37,456) | (59,510) | |
Other income (expense): | |||||
Interest and other income | 212 | 265 | 391 | 721 | |
Interest and other expense | (8,705) | (6,864) | (16,891) | (13,785) | |
Loss on extinguishment of debt | (1,513) | 0 | (1,513) | 0 | |
Total other income (expense), net | (10,006) | (6,599) | (18,013) | (13,064) | |
Loss before income taxes | (29,949) | (38,906) | (55,469) | (72,574) | |
Provision for income taxes | (178) | (65) | (313) | (505) | |
Net loss | (30,127) | (38,971) | (55,782) | (73,079) | |
Other comprehensive loss: | |||||
Unrealized gain (loss) on available-for-sale investments | (14) | 108 | 5 | (14) | |
Foreign currency translation adjustment | (37) | 3 | (35) | (52) | |
Comprehensive loss | $ (30,178) | $ (38,860) | $ (55,812) | $ (73,145) | |
Net loss per common share, basic (usd per share) | $ (0.53) | $ (0.76) | $ (0.99) | $ (1.46) | |
Net loss per common share, diluted (usd per share) | $ (0.53) | $ (0.76) | $ (0.99) | $ (1.46) | |
Weighted average common shares outstanding: | |||||
Weighted-average common shares outstanding, basic (in shares) | 56,360 | 51,241 | 56,081 | 49,911 | |
Weighted-average common shares outstanding, diluted (in shares) | 56,360 | 51,241 | 56,081 | 49,911 | |
[1] | Includes stock-based compensation expense as follows: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Cost of revenues $ 2,763 $ 1,904 $ 5,298 $ 5,312 Sales and marketing 2,930 1,390 5,467 4,144 Research and development 3,506 3,109 6,651 6,879 General and administrative 4,428 4,380 9,306 8,984 Total stock-based compensation expense $ 13,627 $ 10,783 $ 26,722 $ 25,319 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Total stock-based compensation expense | $ 13,627 | $ 10,783 | $ 26,722 | $ 25,319 |
Cost of revenues | ||||
Total stock-based compensation expense | 2,763 | 1,904 | 5,298 | 5,312 |
Sales and marketing | ||||
Total stock-based compensation expense | 2,930 | 1,390 | 5,467 | 4,144 |
Research and development | ||||
Total stock-based compensation expense | 3,506 | 3,109 | 6,651 | 6,879 |
General and administrative | ||||
Total stock-based compensation expense | $ 4,428 | $ 4,380 | $ 9,306 | $ 8,984 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common stock and additional paid-in capital: | Accumulated deficit: | Accumulated deficit:Cumulative Effect, Period of Adoption, Adjustment | Accumulated other comprehensive income (loss): | Common stock |
Beginning balances at Dec. 31, 2019 | $ 379,412 | $ 622,697 | $ (243,299) | $ (268) | $ 14 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation expense | 26,065 | |||||
Exercise of stock options | 4,808 | |||||
Shares acquired to settle the exercise of stock options | (597) | |||||
Proceeds from issuance of common stock, net of issuance costs | 311,217 | |||||
Equity component of early extinguishment of convertible notes | 0 | |||||
Settlement of convertible note hedges | 0 | |||||
Settlement of warrants | 0 | |||||
Net loss | (73,079) | (73,079) | ||||
Other comprehensive income (loss) | (66) | |||||
Ending balances at Jun. 30, 2020 | 647,492 | 964,190 | (316,646) | (52) | ||
Common stock, beginning balance (in shares) at Dec. 31, 2019 | 48,386 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Shares acquired to settle exercise of stock options (in shares) | (7) | |||||
Exercise of stock options (in shares) | 292 | |||||
Shares issued for the vesting of restricted stock awards (in shares) | 527 | |||||
Proceeds from issuance of common stock, net of issuance costs (in shares) | 4,235 | |||||
Common stock, ending balance (in shares) at Jun. 30, 2020 | 53,433 | |||||
Beginning balances at Mar. 31, 2020 | 360,910 | 638,748 | (277,675) | 0 | (163) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation expense | 11,199 | |||||
Exercise of stock options | 3,359 | |||||
Shares acquired to settle the exercise of stock options | (333) | |||||
Proceeds from issuance of common stock, net of issuance costs | 311,217 | |||||
Equity component of early extinguishment of convertible notes | 0 | |||||
Settlement of convertible note hedges | 0 | |||||
Settlement of warrants | 0 | |||||
Net loss | (38,971) | (38,971) | ||||
Other comprehensive income (loss) | 111 | |||||
Ending balances at Jun. 30, 2020 | 647,492 | 964,190 | (316,646) | (52) | ||
Common stock, beginning balance (in shares) at Mar. 31, 2020 | 48,963 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Shares acquired to settle exercise of stock options (in shares) | (4) | |||||
Exercise of stock options (in shares) | 156 | |||||
Shares issued for the vesting of restricted stock awards (in shares) | 83 | |||||
Proceeds from issuance of common stock, net of issuance costs (in shares) | 4,235 | |||||
Common stock, ending balance (in shares) at Jun. 30, 2020 | 53,433 | |||||
Beginning balances at Dec. 31, 2020 | 643,364 | 1,024,583 | (381,187) | 0 | (32) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation expense | 27,392 | |||||
Exercise of stock options | 4,565 | |||||
Shares acquired to settle the exercise of stock options | (200) | |||||
Proceeds from issuance of common stock, net of issuance costs | 0 | |||||
Equity component of early extinguishment of convertible notes | (28,454) | |||||
Settlement of convertible note hedges | 26,295 | |||||
Settlement of warrants | (19,655) | |||||
Net loss | (55,782) | (55,782) | ||||
Other comprehensive income (loss) | (30) | |||||
Ending balances at Jun. 30, 2021 | $ 597,495 | 1,034,526 | (436,969) | (62) | ||
Common stock, beginning balance (in shares) at Dec. 31, 2020 | 55,562 | 55,562 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Shares acquired to settle exercise of stock options (in shares) | (2) | |||||
Exercise of stock options (in shares) | 209 | |||||
Shares issued for the vesting of restricted stock awards (in shares) | 695 | |||||
Proceeds from issuance of common stock, net of issuance costs (in shares) | 0 | |||||
Common stock, ending balance (in shares) at Jun. 30, 2021 | 56,464 | 56,464 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | |||||
Beginning balances at Mar. 31, 2021 | $ 632,974 | 1,039,827 | (406,842) | $ 0 | (11) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation expense | 13,929 | |||||
Exercise of stock options | 2,663 | |||||
Shares acquired to settle the exercise of stock options | (79) | |||||
Proceeds from issuance of common stock, net of issuance costs | 0 | |||||
Equity component of early extinguishment of convertible notes | (28,454) | |||||
Settlement of convertible note hedges | 26,295 | |||||
Settlement of warrants | (19,655) | |||||
Net loss | (30,127) | (30,127) | ||||
Other comprehensive income (loss) | (51) | |||||
Ending balances at Jun. 30, 2021 | $ 597,495 | $ 1,034,526 | $ (436,969) | $ (62) | ||
Common stock, beginning balance (in shares) at Mar. 31, 2021 | 56,280 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Shares acquired to settle exercise of stock options (in shares) | (1) | |||||
Exercise of stock options (in shares) | 94 | |||||
Shares issued for the vesting of restricted stock awards (in shares) | 91 | |||||
Proceeds from issuance of common stock, net of issuance costs (in shares) | 0 | |||||
Common stock, ending balance (in shares) at Jun. 30, 2021 | 56,464 | 56,464 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash flows from operating activities: | ||
Net loss | $ (55,782) | $ (73,079) |
Adjustments to reconcile net loss to net cash from operating activities: | ||
Amortization of deferred implementation, solution and other costs | 11,614 | 8,608 |
Depreciation and amortization | 26,498 | 26,046 |
Amortization of debt issuance costs | 1,045 | 945 |
Amortization of debt discount | 13,054 | 10,177 |
Amortization of premiums on investments | 458 | 83 |
Stock-based compensation expense | 27,392 | 26,065 |
Realized gain on sale of marketable securities | 0 | (14) |
Deferred income taxes | 72 | 311 |
Allowance for credit losses | (19) | 292 |
Allowance for sales credits | 59 | (9) |
Loss on disposal of long-lived assets | 369 | 3 |
Loss on extinguishment of debt | 1,513 | 0 |
Unoccupied lease charges | 812 | 668 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (1,810) | (11,693) |
Prepaid expenses and other current assets | 1,640 | (2,516) |
Deferred solution and other costs | (10,623) | (9,383) |
Deferred implementation costs | (6,829) | (9,028) |
Contract assets, net | (2,640) | (3,015) |
Other long-term assets | 3,521 | 1,896 |
Accounts payable | 2,790 | (3,471) |
Accrued liabilities | (4,045) | (6,228) |
Deferred revenues | 1,782 | 10,458 |
Deferred rent and other long-term liabilities | (4,862) | 5,670 |
Net cash provided by (used in) operating activities | 6,009 | (27,214) |
Cash flows from investing activities: | ||
Purchases of investments | (53,566) | 0 |
Maturities of investments | 91,124 | 19,556 |
Purchases of property and equipment | (14,379) | (14,775) |
Business combinations, net of cash acquired | (64,652) | 0 |
Capitalized software development costs | (2,307) | (398) |
Net cash provided by (used in) investing activities | (43,780) | 4,383 |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock, net of issuance costs | 0 | 311,636 |
Payments for repurchases of convertible notes | (63,692) | 0 |
Proceeds from bond hedges related to convertible notes | 26,295 | 0 |
Payments for warrants related to convertible notes | (19,655) | 0 |
Proceeds from exercise of stock options to purchase common stock | 4,565 | |
Proceeds from exercise of stock options to purchase common stock | 4,216 | |
Payment of contingent consideration | 0 | (16,862) |
Net cash provided by (used in) financing activities | (52,487) | 298,990 |
Net decrease in cash, cash equivalents, and restricted cash | (90,258) | 276,159 |
Cash, cash equivalents, and restricted cash, beginning of period | 411,185 | 103,562 |
Cash, cash equivalents, and restricted cash, end of period | 320,927 | 379,721 |
Supplemental disclosures of cash flow information: | ||
Cash paid for taxes, net of refund | 577 | 193 |
Cash paid for interest | 1,658 | 2,048 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Shares acquired to settle the exercise of stock options | (200) | (597) |
Data center assets acquired under deferred payment arrangements or financing arrangements | $ 449 | $ 2,356 |
Organization and Description of
Organization and Description of Business | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | Organization and Description of BusinessQ2 Holdings, Inc. and its wholly-owned subsidiaries, collectively the Company, is a leading provider of secure, cloud-based digital solutions that transform the ways in which traditional and emerging financial services providers engage with account holders and end users, or End Users. The Company sells its solutions to financial institutions, alternative finance and leasing companies, and financial technology companies. The Company's solutions enable customers to deliver robust suites of digital banking, lending, leasing, and banking as a service, or BaaS, services that make it possible for account holders and End Users to transact and engage anytime, anywhere and on any device. The Company delivers its solutions to the substantial majority of its customers using a software-as-a-service, or SaaS, model under which its customers pay subscription fees for the use of the Company's solutions. The Company was incorporated in Delaware in March 2005 and is a holding company that owns 100% of the outstanding capital stock of Q2 Software, Inc. The Company's headquarters are located in Austin, Texas. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation These interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, and Securities and Exchange Commission, or SEC, requirements for interim financial statements. The interim unaudited condensed consolidated financial statements include the accounts of Q2 Holdings, Inc. and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. In the Company's opinion, the accompanying interim unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, consisting of normal, recurring adjustments, necessary for a fair presentation. Certain information and disclosures normally included in the notes to the annual consolidated financial statements prepared in accordance with GAAP have been omitted from these interim unaudited condensed consolidated financial statements pursuant to the rules and regulations of the SEC. Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes for the fiscal year ended December 31, 2020, which are included in the Company's Annual Report on Form 10-K, filed with the SEC on February 19, 2021. The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other period. Use of Estimates The preparation of the accompanying interim unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the interim unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses. Significant items subject to such estimates include: revenue recognition including determining the nature and timing of satisfaction of performance obligations, variable consideration, standalone selling price, and other revenue items requiring significant judgment; estimate of credit losses; stock-based compensation; the carrying value of goodwill; the fair value of acquired intangibles; the capitalization of software development costs; the useful lives of property and equipment and long-lived intangible assets; fair value of contingent consideration; fair value of the conversion features of convertible notes; and, income taxes. In accordance with GAAP, management bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Management regularly evaluates its estimates and assumptions using historical experience and other factors; however, actual results could differ significantly from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments acquired with an original maturity of ninety days or less at the date of purchase to be cash equivalents. Cash equivalents are stated at cost or fair value based on the underlying security. Restricted Cash Restricted cash consists of deposits held as collateral for the Company's secured letters of credit or bank guarantees issued in place of security deposits for the Company's corporate headquarters and various other leases. Investments Investments typically include U.S. government securities, corporate bonds, commercial paper, certificates of deposit and money market funds. All investments are considered available for sale and are carried at fair value. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, restricted cash, investments, accounts receivable and contract assets. The Company's cash and cash equivalents, restricted cash and investments are placed with high credit quality financial institutions and issuers, and at times may exceed federally-insured limits. The Company has not experienced any loss relating to cash and cash equivalents or restricted cash in these accounts. The Company provides credit, in the normal course of business, to a majority of its customers. The Company performs periodic credit evaluations of its customers' financial condition and generally does not require collateral. No individual customer accounted for 10% or more of revenues for each of the three and six months ended June 30, 2021 and 2020. No individual customer accounted for 10% or more of accounts receivable, net, as of June 30, 2021 and December 31, 2020. Contract Balances The timing of revenue recognition, billings and cash collections can result in billed accounts receivable, unbilled receivables or contract assets, and deferred revenues, or contract liabilities. Billings scheduled to occur after the performance obligation has been satisfied and revenue recognition has occurred result in contract assets. Contract assets that are expected to be billed during the succeeding twelve-month period are recorded in contract assets, current portion, and the remaining portion is recorded in contract assets, net of current portion on the accompanying condensed consolidated balance sheets at the end of each reporting period. A contract liability results when the Company receives prepayments or deposits from customers in advance for implementation, maintenance and other services, as well as initial subscription fees. Customer prepayments are generally applied against invoices issued to customers when services are performed and billed. The Company recognizes contract liabilities as revenues when the services are performed, and the corresponding revenue recognition criteria are met. Contract liabilities that are expected to be recognized as revenues during the succeeding twelve-month period are recorded in deferred revenues, current portion, and the remaining portion is recorded in deferred revenues, net of current portion, on the accompanying condensed consolidated balance sheets at the end of each reporting period. The Company is exposed to credit losses primarily through sales of products and services. The Company assesses the collectability of outstanding contract assets on an ongoing basis and maintains a reserve which is included in the allowance for credit losses for contract assets deemed uncollectable. Under ASU 2016-13, the Company analyzes the contract asset portfolio for significant risks by considering historical collection experience and forecasting future collectability to determine the amount of revenues that will ultimately be collected from its customers. Customer type has been identified as the primary specific risk affecting the Company's contract assets, and the estimate for losses is analyzed quarterly and adjusted as necessary. Future collectability is contingent upon current and anticipated macroeconomic conditions that could impact the Company's customers such as unemployment, inflation and regulatory matters. Additionally, specific allowance amounts may be established to record the appropriate provision for customers that have a higher probability of default. The Company has provisioned $0.02 million and $0.2 million for expected losses for the six months ended June 30, 2021 and 2020, respectively, and zero has been written off and charged against the allowance at each of June 30, 2021 and December 31, 2020. The allowance for credit losses related to contract assets was $0.3 million as of June 30, 2021 and December 31, 2020. Accounts Receivable Accounts receivable are stated at net realizable value, including both billed and unbilled receivables to customers. Unbilled receivable balances arise primarily when the Company provides services in advance of billing for those services. Generally, billing for revenues related to the number of End Users and the number of transactions processed by the Company's End Users that are included in the Company's minimum subscription fee occurs in the month the revenue is recognized, resulting in accounts receivable. Billing for revenues relating to the number of End Users and the number of transactions processed by the Company's End Users that are in excess of the Company's minimum subscription fees are, generally, billed in the month following the month the revenues were earned, resulting in an unbilled receivable. Unbilled receivables of $5.0 million an d $2.1 million were included in the accounts receivable balance at June 30, 2021 and December 31, 2020, respectively. The Company assesses the collectability of outstanding accounts receivable on an ongoing basis and maintains an allowance for credit losses for accounts receivable deemed uncollectible. Under ASU 2016-13, the Company analyzes the accounts receivable portfolio for significant risks and considers prior periods and forecasts future collectability to determine the amount of revenues that will ultimately be collected from its customers. This estimate is analyzed quarterly and adjusted as necessary. Identified risks pertaining to the Company's accounts receivable include the delinquency level and customer type. Future collectability is contingent upon current and anticipated macroeconomic conditions that could impact the Company's customers such as unemployment, inflation and regulation matters. Due to the short-term nature of such receivables, the estimate of the amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances and the financial condition of customers. Historically, the Company's collection experience has not varied significantly, and bad debt expenses have been insignificant. The Company has provisioned $0.1 million and $0.9 million for expected losses for the six months ended June 30, 2021 and 2020, respectively, and $0.1 million and $0.6 million has been written off and charged against the allowance as of June 30, 2021 and December 31, 2020, respectively. The allowance for credit losses related to accounts receivable was $0.6 million as of June 30, 2021 and December 31, 2020. The Company maintains a reserve for estimated sales credits issued to customers for billing disputes or other service-related reasons. This allowance is recorded as a reduction against current period revenues and accounts receivable. In estimating this allowance, the Company analyzes prior periods to determine the amounts of sales credits issued to customers compared to the revenues in the period that related to the original customer invoice. This estimate is analyzed semi-annually and adjusted as necessary. The allowance for sales credits was $0.6 million and $0.5 million as of June 30, 2021 and December 31, 2020, respectively. Deferred Revenues Deferred revenues primarily consist of amounts that have been billed to or received from customers in advance of revenue recognition and prepayments received from customers in advance for implementation, maintenance and other services, as well as initial subscription fees. The Company recognizes deferred revenues as revenues when the services are performed and the corresponding revenue recognition criteria are met. Customer prepayments are generally applied against invoices issued to customers when services are performed and billed. The net increase in the deferred revenue balance for the six months ended June 30, 2021 is primarily driven by cash payments received or due in advance of satisfying the Company's performance obligations of $240.3 million for current year invoices, $2.6 million from the netting of contract assets and liabilities on a contract-by-contract basis, partially offset by the recognition of $187.7 million of revenue recognized from current year invoices and $52.4 million of revenue that was included in the deferred revenue balance as of December 31, 2020. Amounts recognized from deferred revenues represent primarily revenue from the sale of subscription and implementation services. The Company's payment terms vary by the type and location of its customer and the products or services offered. The period of time between invoicing and when payment is due is not significant. For certain products or services and customer types, the Company requires payment before the products or services are delivered to the customer. On June 30, 2021, the Company had $1.3 billion of remaining performance obligations, which represents contracted revenue minimums that have not yet been recognized, including amounts that will be invoiced and recognized as revenue in future periods. The Company expects to recognize approximately 48% percent of its remaining performance obligations as revenue in the next 24 months, an additional 38% percent in the next 25 to 48 months, and the balance thereafter. Deferred Implementation Costs The Company capitalizes certain personnel and other costs such as employee salaries, benefits and the associated payroll taxes that are direct and incremental to the implementation of its solutions. The Company analyzes implementation costs that may be capitalized to assess their recoverability, and only capitalizes costs that it anticipates being recoverable through the terms of the associated contract. The Company begins amortizing the deferred implementation costs for an implementation once the revenue recognition criteria have been met, and the Company amortizes those deferred implementation costs ratably over the expected period of customer benefit. The Company has determined this period to be the estimated life of the technology, which is estimated to be five The portion of deferred implementation costs expected to be amortized during the succeeding twelve-month period is recorded in current assets as deferred implementation costs, current portion, and the remainder is recorded in long-term assets as deferred implementation costs, net of current portion on the condensed consolidated balance sheets. The Company capitalized implementation costs in the amount of $3.4 million and $5.0 million during the three months ended June 30, 2021 and 2020, respectively, and recognized $2.4 million of amortization during each of the three months ended June 30, 2021 and 2020. The Company capitalized implementation costs in the amount of $6.8 million and $9.0 million during the six months ended June 30, 2021 and 2020, respectively, and recognized $5.2 million and $4.5 million of amortization during the six months ended June 30, 2021 and 2020, respectively. Amortization expense is included in cost of revenues in the accompanying condensed consolidated statements of comprehensive loss. Deferred Solution and Other Costs The Company capitalizes sales commissions and other third-party costs such as third-party licenses and maintenance related to its customer agreements. The Company capitalizes sales commissions because the commission charges are considered incremental and recoverable costs of obtaining a contract with a customer. The Company capitalizes commissions and bonuses for those involved in the sale, including direct employees and indirect supervisors, as these are incremental to the sale. Historically, the Company typically paid commissions in two increments. The initial payment was made after the contract had been executed and the initial deposit had been received from the customer, and the final payment was made upon commencement date. The Company required that an individual remain employed to collect a commission when it was due. The service period between the first and second payment was considered a substantive service period and as a result, the Company expensed the final payment when made. Beginning in 2020, commissions were paid in a single payment once the contract had been executed and the initial deposit had been received from the customer. The Company begins amortizing deferred solution and other costs for a particular customer agreement once the revenue recognition criteria are met and amortizes those deferred costs over the expected period of customer benefit. The Company has determined this period to be the estimated life of the technology, which is estimated to be five The Company analyzes solution and other costs that may be capitalized to assess their recoverability and only capitalizes costs that it anticipates being recoverable. The portion of capitalized costs expected to be amortized during the succeeding twelve-month period is recorded in current assets as deferred solution and other costs, current portion, and the remainder is recorded in long-term assets as deferred solution and other costs, net of current portion. The Company capitalized $3.2 million and $2.9 million in deferred commissions costs during the three months ended June 30, 2021 and 2020, respectively, and recognized $3.1 million and $2.3 million of amortization during the three months ended June 30, 2021 and 2020, respectively. The Company capitalized $6.3 million and $8.5 million during the six months ended June 30, 2021 and 2020, respectively, and recognized $6.4 million and $4.1 million of amortization during the six months ended June 30, 2021 and 2020, respectively. Amortization expense is included in sales and marketing expenses in the accompanying condensed consolidated statements of comprehensive loss. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is calculated on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the related assets. Maintenance and repairs that do not extend the life of or improve an asset are expensed in the period incurred. The estimated useful lives of property and equipment are as follows: Computer hardware and equipment 3 - 5 years Purchased software and licenses 3 - 5 years Furniture and fixtures 7 years Leasehold improvements Lesser of estimated useful life or lease term Purchase Price Allocation, Intangible Assets, and Goodwill The purchase price allocation for business combinations and asset acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values. The Company determines whether substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the single asset or group of assets, as applicable, is not a business. If it is not met, the Company determines whether the single asset or group of assets, as applicable, meets the definition of a business. In connection with the Company's business combinations, the Company recorded certain intangible assets, including acquired technology, customer relationships, trademarks and non-compete agreements. Amounts allocated to the acquired intangible assets are being amortized on a straight-line basis over the estimated useful lives. The Company periodically reviews the estimated useful lives and fair values of its identifiable intangible assets, taking into consideration any events or circumstances which might result in a diminished fair value or revised useful life. The excess purchase price over the fair value of assets acquired is recorded as goodwill. The Company tests goodwill for impairment annually in October, or whenever events or changes in circumstances indicate an impairment may have occurred. Because the Company operates as a single reporting unit, the impairment test is performed at the consolidated entity level by comparing the estimated fair value of the Company to the carrying value of the Company. The Company estimates the fair value of the reporting unit using a "step one" analysis using a fair-value-based approach based on the market capitalization or a discounted cash flow analysis of projected future results to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Determining the fair value of goodwill is subjective in nature and often involves the use of estimates and assumptions including, without limitation, use of estimates of future prices and volumes for the Company's products, capital needs, economic trends and other factors which are inherently difficult to forecast. If actual results, or the plans and estimates used in future impairment analyses are lower than the original estimates used to assess the recoverability of these assets, the Company could incur impairment charges in a future period. Revenues Revenues are recognized when control of the promised goods or services is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services over the term of the agreement, generally when the Company's solutions are implemented and made available to the customers. The promised consideration may include fixed amounts, variable amounts or both. Revenues are recognized net of sales credits and allowances. Revenue-generating activities are directly related to the sale, implementation and support of the Company's solutions within a single operating segment. The Company derives the majority of its revenues from subscription fees for the use of its solutions hosted in either the Company's data centers or cloud-based hosting services, transactional revenue from bill-pay solutions and interchange fees, and revenues for customer support and implementation services related to the Company's solutions. The following table disaggregates the Company's revenue by major source: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Subscription $ 89,150 $ 70,174 $ 174,221 $ 136,406 Transactional 17,710 13,908 33,993 26,728 Services and Other 16,713 13,499 31,879 26,827 Total Revenues $ 123,573 $ 97,581 $ 240,093 $ 189,961 Subscription Revenues The Company's software solutions are available for use as hosted application arrangements under subscription fee agreements without licensing perpetual rights to the software. Subscription fees from these applications, including contractual periodic price increases, are recognized over time on a ratable basis over the customer agreement term beginning on the date the Company's solution is made available to the customer. Amounts that have been invoiced are recorded in accounts receivable and deferred revenues or revenues, depending on whether the revenue recognition criteria have been met. Periodic price increases are estimated at contract inception and result in contract assets as revenue recognition may exceed the amount billed early in the contract. Additional fees for monthly usage above the levels included in the standard subscription fee are recognized as revenue in the month when the usage amounts are determined and reported. A small portion of the Company's customers host and manage the Company's solutions on-premises or in third-party data centers under term license and maintenance agreements. Term licenses sold with maintenance entitle the customer to technical support, upgrades and updates to the software on a when-and-if-available basis. The Company recognizes software license revenue once the customer obtains control of the license, which generally occurs at the start of each license term. The Company recognizes the remaining arrangement consideration for maintenance revenue over time on a ratable basis over the term of the software license. If the expected length of time between when the Company transfers the software license to the customer and when the customer pays for it results in a significant financing component, the Company adjusts the promised amount of consideration for the effects of the time value of money, which reflects the price the customer would have paid when the license was transferred. Revenues from term licenses and maintenance agreements and the related financing component were not significant in the periods presented. Transactional Revenues The Company generates the majority of its transactional revenues based on the number of bill-pay transactions that End Users initiate on its digital banking platform. The Company also generates a smaller portion of its transactional revenues from interchange fees generated when End Users utilize debit cards integrated with its Q2 CorePro API or Q2 Biller Direct products. The Company recognizes revenue for bill-pay transaction services and interchange fees in the month incurred based on actual or estimated transactions. Services and Other Revenues Implementation services are required for each new digital banking and lending and leasing platform and Centrix standalone contract, and there is a significant level of integration and configuration for each customer. The Company's revenue for upfront implementation services is billed upfront and recognized over time on a ratable basis over the customer agreement term for its hosted application agreements. Upfront implementation services for on-premises agreements are recognized at commencement date. Under certain circumstances, the Company partners with third-party professional system integrators to support the installation and configuration process for certain products, and therefore, the Company has determined that these services qualify as a separate performance obligation in certain markets and geographies, and the implementation services for these agreements are recognized over time as services are performed. Professional services revenues, which primarily consist of training, advisory services, core conversion services, web design, and other general professional services, are generally billed and recognized when delivered. Certain out-of-pocket expenses billed to customers are recorded as revenues rather than an offset to the related expense. Significant Judgments Performance Obligations and Standalone Selling Price A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of accounting. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. The Company has contracts with customers that often include multiple performance obligations, usually including multiple subscription and implementation services. For these contracts, the Company accounts for individual performance obligations that are distinct separately by allocating the contract's total transaction price to each performance obligation in an amount based on the relative standalone selling price, or SSP, of each distinct good or service in the contract. In determining whether implementation services are distinct from subscription services, the Company considered various factors including the significant level of integration, interdependency, and interrelation between the implementation and subscription service, as well as the inability of the customer's personnel or other service providers to perform significant portions of the services. The Company has concluded that the implementation services included in contracts with multiple performance obligations in the North American banking market are not distinct and, as a result, the Company defers any arrangement fees for implementation services and recognizes such amounts over time on a ratable basis as one performance obligation with the underlying subscription revenue for the initial agreement term of the hosted application agreements. The Company has concluded that outside the North American banking market, the implementation services for its lending and leasing platform included in contracts with multiple performance obligations are distinct and, as a result, the Company recognizes implementation fees on such arrangements over time as services are performed. The majority of the Company's revenue recognized at a particular point in time is for usage revenue and on-premise software licenses. These services are recognized at the point in time in which the customer obtains control of the asset, which is generally upon completion of the service or the point the customer obtained control of the software. Judgment is required to determine the SSP for each distinct performance obligation. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The primary method used to estimate SSP is the adjusted market assessment approach, which considers the Company's overall pricing objectives, market conditions and other factors, including the value of the Company's contracts, its discounting practices, the size and volume of its transactions, customer characteristics, price lists, go-to-market strategy, historical standalone sales and agreement prices, and the number and types of users within its contracts. Variable Consideration The Company recognizes usage revenue related to bill-pay transactions that End Users initiate on its digital banking platform and interchange fees that End Users generate using the Company's solutions. Judgment is required to determine the accounting for these types of revenue. The Company considers various factors including the degree to which usage is interdependent or interrelated to past services, costs to the Company per user over the contract, and contractual price per user changes and their relationship to market terms, forecasted data, and the Company's cost to fulfill the obligation. The Company has concluded that its usage revenue relates specifically to the transfer of the service to the customer and is consistent with the allocation objective of Topic 606 when considering all of the performance obligations and payment terms in the contract. Therefore, the Company recognizes usage revenue on a monthly or quarterly basis in accordance with the agreement, as determined and reported. This allocation reflects the amount the Company expects to receive for the services for the given period. The Company sometimes provides credits or incentives to its customers. Known and estimable credits and incentives represent a form of variable consideration, which are estimated at contract inception and reduce the revenues recognized for a particular contract. These estimates are updated at the end of each reporting period as additional information becomes available. The Company believes that there will not be significant changes to its estimates of variable consideration as of June 30, 2021. Other Considerations The Company evaluates whether it is the principal (i.e., reports revenues on a gross basis) or agent (i.e., reports revenues on a net basis) with respect to the vendor reseller agreements pursuant to which the Company resells certain third-party solutions along with the Company's solutions. Generally, the Company reports revenues from these types of contracts on a gross basis, meaning the amounts billed to customers are recorded as revenues, and expenses incurred are recorded as cost of revenues. Where the Company is the principal, it first obtains control of the inputs to the specific good or service and directs their use to create the combined output. The Company's control is evidenced by its involvement in the integration of the good or service on its platform before it is transferred to its customers and is further supported by the Company being primarily responsible to its customers and having a level of discretion in establishing pricing. Revenues provided from agreements in which the Company is an agent are insignificant. Cost of Revenues Cost of revenues are comprised primarily of salaries and other personnel-related costs, including employee benefits, bonuses and stock-based compensation, for employees providing services to the Company's customers. This includes the costs of the Company's personnel performing implementation, customer support, data center and customer training activities. Cost of revenues also includes the direct costs of bill-pay and other third-party intellectual property included in the Company's solutions, the amortization of deferred solution and services costs, co-location facility costs and depreciation of the Company's data center assets, |
Business Combinations
Business Combinations | 6 Months Ended |
Jun. 30, 2021 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations ClickSWITCH On April 1, 2021, the Company's wholly-owned subsidiary, Q2 Software, Inc. acquired all of the outstanding equity interests of ClickSWITCH Holdings Inc. ("ClickSWITCH"), a privately-owned provider of digital account switching solutions. The acquisition will further enable the Company to offer end-to-end digital customer acquisition, onboarding, and account switching offerings. The purchase price paid was in excess of the fair value of the net assets acquired and, as a result, the Company recorded goodwill. ClickSWITCH was acquired for approximately $65.5 million in cash from existing balances. At closing, the Company deposited into an escrow account $1.0 million of the initial consideration, or CS Purchase Price Escrow Amount, to compensate for any post-closing purchase price adjustments. To the extent not utilized, the CS Purchase Price Escrow Amount shall be paid to the former stockholders of ClickSWITCH following an adjustment period which, absent any unresolved disputes, is expected to be completed within 90 days from closing. At closing, the Company also deposited into an escrow account $0.3 million of the initial consideration, or CS Escrow Amount, to compensate for any breach of a representation or warranty or any violation or default of any obligation by the sellers. To the extent not utilized, 50% of the remaining CS Escrow Amount shall be paid to the former equity holders of ClickSWITCH at the end of a 12-month period, with the remaining 50% to be paid at the end of an 18-month period, in each case unless there are any unresolved claims remaining the time in excess of the amount to be retained in the escrow account. The total purchase price is as follows: Purchase Consideration Cash purchase price $ 62,500 Estimated working capital and other adjustments 3,008 Total purchase price $ 65,508 The Company recorded the purchase of ClickSWITCH using the acquisition method of accounting and accordingly, recognized assets acquired and liabilities assumed at their fair values as of the date of acquisition. The results of ClickSWITCH's operations are included in the Company's condensed consolidated statements of comprehensive loss from the date of acquisition. Acquisition related transaction costs of $1.1 million related to the ClickSWITCH acquisition were expensed as incurred for each of the three and six months ended June 30, 2021, and were recorded within acquisition related expenses in the condensed consolidated statements of comprehensive loss. The table below summarizes the allocation of the purchase price based on the estimated fair value of the assets acquired and liabilities assumed. The fair values of assets acquired and liabilities assumed, including valuations of intangibles assets, accruals, and income taxes, may change as additional information is received during the measurement period. The measurement period will end no later than one year from the acquisition date. Assets acquired: Cash $ 856 Accounts receivable, net 491 Prepaid expenses and other current assets 2,417 Property and equipment, net 39 Intangible assets, net 12,805 Goodwill 50,595 Total assets acquired 67,203 Liabilities assumed: Accounts payable, accrued liabilities, and accrued compensation 643 Deferred tax liability 74 Deferred revenues 978 Total liabilities assumed 1,695 Fair value of assets acquired and liabilities assumed $ 65,508 The goodwill recognized is attributable primarily to synergies expected from the integration of the acquired product offering into the Company's integrated solutions including an increasing customer base, the expanded service capabilities that are expected to become available from planned investments in the acquired products, and the value of the assembled workforce in accordance with generally accepted accounting principles. The estimated fair value of the separately identifiable finite-lived intangible assets acquired and estimated useful lives are as follows (in thousands, except years): Estimated Fair Values Weighted-Average Useful Lives (in Years) Customer relationships $ 1,495 4.0 Non-compete agreements 570 2.9 Acquired technology 10,740 6.0 Total acquisition-related intangible assets $ 12,805 5.6 The fair value of the intangible assets was based on the income approach using various methods such as with and without and multi-period excess earnings. Intangible assets are amortized on a straight-line basis over their estimated useful lives, ranging from two The results of operations of ClickSWITCH have been included in the Company's condensed consolidated financial statements from the date of the acquisition. The acquisition of ClickSWITCH did not have a material impact on the Company's condensed consolidated financial statements, and therefore historical and pro forma disclosures have not been presented. PrecisionLender On October 31, 2019, the Company's wholly-owned subsidiary, Q2 Software, Inc. acquired all of the outstanding equity interests of privately-owned PrecisionLender. The acquisition added to the Company's portfolio of solutions PrecisionLender's data-driven sales enablement, pricing and portfolio management solutions for financial institutions globally. The purchase price paid was in excess of the fair value of the net assets acquired and, as a result, the Company recorded goodwill. PrecisionLender was acquired for approximately $510.0 million in cash from existing balances. At closing, the Company deposited into an escrow account $3.0 million of the initial consideration, or PL Purchase Price Escrow Amount, to compensate for any post-closing working capital adjustments. To the extent not utilized, the PL Purchase Price Escrow Amount was to be paid to the former stockholders of PrecisionLender at the end of the 60-day adjustment period unless there were any unresolved claims remaining at that time. The Company released the $3.0 million in the PL Purchase Price Escrow Amount and paid out an additional $0.2 million related to the finalization of the closing estimates to the former stockholders of PrecisionLender during the three months ended March 31, 2020. At closing, the Company also deposited into an escrow account $1.8 million of the initial consideration, or PL Escrow Amount, to compensate for any breach of a representation or warranty or any violation or default of any obligation by the sellers subsequent to the acquisition during a period of 18 months following the acquisition date. During the three months ended June 30, 2021, the Company released $1.8 million of the PL Escrow Amount to the former stockholders of PrecisionLender, bringing the balance of the escrow to zero at June 30, 2021. The Company accrues for payouts contingent upon continued and future employment of acquired employees and contractors of PrecisionLender, and the unpaid amounts due to the continuing employees are recorded in accrued compensation in the condensed consolidated balance sheets. Compensation expense recognized under these agreements, which is included in cost of revenues in the condensed consolidated statements of comprehensive loss, was $0.1 million and $0.2 million, for the three and six months ended June 30, 2021, respectively, and $0.2 million and $0.5 million for the three and six months ended June 30, 2020, respectively. Compensation expense recognized under these agreements included in acquisition related costs in the condensed consolidated statements of comprehensive loss was $0.5 million and $0.9 million, for the three and six months ended June 30, 2021, respectively, and $0.8 million and $1.5 million for the three and six months ended June 30, 2020, respectively. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The carrying values of the Company's financial instruments, principally cash equivalents, investments, accounts receivable, restricted cash and accounts payable, approximated their fair values due to the short period of time to maturity or repayment. Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The current accounting guidance for fair value measurements defines a three-level valuation hierarchy for disclosures as follows: • Level I—Unadjusted quoted prices in active markets for identical assets or liabilities; • Level II—Inputs other than quoted prices included within Level I that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data; and • Level III—Unobservable inputs that are supported by little or no market activity, which requires the Company to develop its own assumptions. The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following table details the fair value hierarchy of the Company's financial assets measured at fair value on a recurring basis as of June 30, 2021: Fair Value Measurements Using: Fair Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Assets Cash Equivalents: Money market funds $ 182,588 $ 182,588 $ — $ — Certificates of deposit 25,062 — 25,062 — $ 207,650 $ 182,588 $ 25,062 $ — Investments: Fair Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Corporate bonds and commercial paper $ 27,054 $ — $ 27,054 $ — Certificates of deposit 10,019 — 10,019 — U.S. government securities 56,269 — 56,269 — $ 93,342 $ — $ 93,342 $ — The following table details the fair value hierarchy of the Company's financial assets measured at fair value on a recurring basis as of December 31, 2020: Fair Value Measurements Using: Fair Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Assets Cash Equivalents: Money market funds $ 188,469 $ 188,469 $ — $ — Certificates of deposits 25,028 — 25,028 — Corporate bonds and commercial paper 996 — 996 — U.S. government securities 19,999 — 19,999 — $ 234,492 $ 188,469 $ 46,023 $ — Investments: Fair Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Corporate bonds and commercial paper $ 31,239 $ — $ 31,239 $ — Certificates of deposit 10,007 — 10,007 — U.S. government securities 90,106 — 90,106 — $ 131,352 $ — $ 131,352 $ — |
Cash, Cash Equivalents and Inve
Cash, Cash Equivalents and Investments | 6 Months Ended |
Jun. 30, 2021 | |
Cash and Cash Equivalents [Abstract] | |
Cash, Cash Equivalents and Investments | Cash, Cash Equivalents and Investments The Company's cash, cash equivalents and investments as of June 30, 2021 and December 31, 2020 consisted primarily of cash, U.S. government securities, corporate bonds, commercial paper, certificates of deposit and money market funds. The Company classifies investments as available-for-sale at the time of purchase and reevaluates such classification as of each balance sheet date. All investments are recorded at estimated fair value. Unrealized gains and losses on available-for-sale investments are included in accumulated other comprehensive loss, a component of stockholders' equity. If the Company does not expect to recover the entire amortized cost basis of the available-for-sale debt security, it considers the available-for-sale debt security to be impaired. For individual debt securities classified as available-for-sale and deemed impaired, the Company assesses whether such decline has resulted from a credit loss or other factors. Impairment relating to credit losses is recorded through a reserve, limited to the amount that the fair value is less than the amortized cost basis. Impairment deemed to be non-credit related is reported in other income (expense), net in the condensed consolidated statements of comprehensive loss. Realized gains and losses are determined based on the specific identification method and are reported in other income (expense), net in the condensed consolidated statements of comprehensive loss. Interest, amortization of premiums and accretion of discount on all investments classified as available-for-sale are also included as a component of other income (expense), net in the condensed consolidated statements of comprehensive loss. Based on the Company's assessment, no impairments for credit losses were recognized during the three months ended June 30, 2021 or June 30, 2020. As of June 30, 2021 and December 31, 2020, the Company's cash was $110.3 million and $173.2 million, respectively. A summary of the Company's cash equivalents and investments as of June 30, 2021 is as follows: Cash Equivalents: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Money market funds $ 182,588 $ — $ — $ 182,588 Certificates of deposit 25,062 — — 25,062 $ 207,650 $ — $ — $ 207,650 Investments: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate bonds and commercial paper $ 27,054 $ 3 $ (3) $ 27,054 Certificates of deposit 10,019 — — 10,019 U.S. government securities 56,274 1 (6) 56,269 $ 93,347 $ 4 $ (9) $ 93,342 A summary of the Company's cash equivalents and investments as of December 31, 2020 is as follows: Cash Equivalents: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Money market funds $ 188,469 $ — $ — $ 188,469 Certificates of deposit 25,028 — — 25,028 Corporate bonds and commercial paper 997 — (1) 996 U.S. government securities 19,999 — — 19,999 $ 234,493 $ — $ (1) $ 234,492 Investments: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate bonds and commercial paper $ 31,233 $ 15 $ (9) $ 31,239 Certificates of deposit 10,007 — — 10,007 U.S. government securities 90,120 — (14) 90,106 $ 131,360 $ 15 $ (23) $ 131,352 The Company may sell its investments at any time, without significant penalty, for use in current operations or for other purposes, even if they have not yet reached maturity. As a result, the Company classifies its investments, including investments with maturities beyond twelve months, as current assets in the accompanying condensed consolidated balance sheets. The following table summarizes the estimated fair value of the Company's investments, designated as available-for-sale and classified by the contractual maturity date of the investments as of the dates shown: June 30, 2021 December 31, 2020 Due within one year or less $ 88,348 $ 131,352 Due after one year through five years 4,994 — $ 93,342 $ 131,352 The Company has certain available-for-sale investments in a gross unrealized loss position, all of which have been in such position for less than twelve months. The Company regularly reviews its investments for impairment resulting from credit loss using both qualitative and quantitative criteria, as necessary, based on the composition of the portfolio at period end. The Company considers factors such as the length of time and extent to which the market value has been less than the cost, the financial position and near-term prospects of the issuer and its intent to sell, or whether it is more likely than not the Company will be required to sell the investment before recovery of the investment's amortized-cost basis. If the Company determines that impairment exists in one of these investments, the respective investment would be written down to fair value. For debt securities, the portion of the write-down related to credit loss would be recognized in other income, net in the condensed consolidated statements of comprehensive loss if the intent of the Company was to sell the investment before recovery. If the Company did not intend to sell, the portion of the write-down related to credit loss would be recorded to a reserve. Any portion not related to credit loss would be included in accumulated other comprehensive loss in the condensed consolidated statements of comprehensive loss. Because the Company does not intend to sell any investments which have an unrealized loss position at this time, and it is not more likely than not that the Company will be required to sell the investment before recovery of its amortized cost basis, which may be maturity, the reserve for available-for-sale debt securities was zero as of June 30, 2021 and December 31, 2020. The following table shows the fair values and the gross unrealized losses of these available-for-sale investments aggregated by investment category as of June 30, 2021. Adjusted Cost Gross Unrealized Loss Fair Value U.S. government securities $ 6,023 $ (6) $ 6,017 Corporate bonds and commercial paper 18,387 (3) 18,384 $ 24,410 $ (9) $ 24,401 The following table shows the fair values and the gross unrealized losses of these available-for-sale investments aggregated by investment category as of December 31, 2020: Adjusted Cost Gross Unrealized Loss Fair Value U.S. government securities $ 90,120 $ (14) $ 90,106 Corporate bonds and commercial paper 21,445 (9) 21,436 $ 111,565 $ (23) $ 111,542 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The carrying amount of goodwill was $512.9 million and $462.3 million at June 30, 2021 and December 31, 2020, respectively. During the second quarter of 2021, the Company added $50.6 million of goodwill from the ClickSWITCH acquisition. Goodwill represents the excess purchase price over the fair value of assets acquired. The Company has one operating segment and one reporting unit. Goodwill is tested for impairment on an annual basis in the fourth quarter of the fiscal year, and between annual tests if indicators of potential impairment exist, using a fair-value-based approach based on the market capitalization of the reporting unit. The annual impairment test was performed as of October 31, 2020, and no impairment of goodwill was identified, nor has any impairment of goodwill been recorded to date. Intangible assets at June 30, 2021 and December 31, 2020 were as follows: As of June 30, 2021 As of December 31, 2020 Gross Amount Accumulated Amortization Net Carrying Amount Gross Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 65,900 $ (25,072) $ 40,828 $ 64,405 $ (18,568) $ 45,837 Non-compete agreements 13,275 (4,526) 8,749 12,705 (3,205) 9,500 Trademarks 19,870 (4,735) 15,135 19,870 (3,612) 16,258 Acquired technology 152,080 (41,014) 111,066 141,340 (30,256) 111,084 Capitalized software development costs 7,409 (3,390) 4,019 5,103 (2,923) 2,180 $ 258,534 $ (78,737) $ 179,797 $ 243,423 $ (58,564) $ 184,859 The Company recorded intangible assets from the business combination discussed in Note 3 - Business Combinations. Intangible assets are amortized on a straight-line basis over their estimated useful lives, which range from two Gross capitalized software development costs were $7.4 million and $5.1 million as of June 30, 2021 and December 31, 2020, respectively. The Company amortized $0.3 million and $0.2 million of capitalized software development costs for the three months ended June 30, 2021 and 2020, respectively, and $0.5 million and $0.4 million for the six months ended June 30, 2021 and 2020, respectively. Capitalized software development costs are computed on an individual product basis and those products available for market are amortized to cost of revenues over the products' estimated economic lives, which are expected to be three The estimated future amortization expense related to intangible assets as of June 30, 2021 was as follows: Amortization Year Ended December 31, 2021 (July 1 to December 31) $ 20,672 2022 41,015 2023 40,258 2024 35,149 2025 22,909 Thereafter 19,794 Total amortization $ 179,797 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Lease Commitments The Company leases office space under non-cancellable operating leases for its corporate headquarters in Austin, Texas in two adjacent buildings under separate lease agreements. Pursuant to the first of which the Company leases approximately 129 square feet of office space with an initial term that expires on April 30, 2028, with the option to extend the lease for an additional ten-year term, and pursuant to the second of which the Company leases approximately 129 square feet of office space with lease terms of approximately ten years, with the options to extend the leases. The Company also leases office space in Lincoln, Nebraska; Des Moines, Iowa; Atlanta, Georgia; Asheville, North Carolina; Charlotte, North Carolina; Cary, North Carolina; Minneapolis, Minnesota; Bangalore, India; and Sydney, Australia. During the six months ended June 30, 2021, through the Company's regular assessment process, an unoccupied lease charge of $0.8 million was recorded for facilities in Georgia and Texas for the related contractual lease payments and fees, less sublease income. During the year ended December 31, 2020, the Company vacated facilities in San Mateo California; south Austin, Texas; and a portion of the facilities in Charlotte, North Carolina and recorded an unoccupied lease charge of $2.2 million for the related contractual lease payments and fees, less estimated sublease income. The lease liabilities related to the subleases that are expected to be paid during the succeeding twelve-month period of $1.1 million are recorded in accrued liabilities, and the remaining portion of the associated liability of $1.3 million is recorded in other long-term liabilities on the accompanying condensed consolidated balance sheet at June 30, 2021. The Company believes its current facilities will be adequate for its needs for the current term. Rent expense under operating leases was $1.7 million and $1.8 million for the three months ended June 30, 2021 and 2020, respectively, and $3.3 million and $3.4 million for the six months ended June 30, 2021 and 2020, respectively. Future minimum payments required under operating leases that have commenced and have initial or remaining non-cancelable lease terms in excess of one year at June 30, 2021 were as follows: Operating Leases Year Ended December 31, 2021 (July 1 to December 31) $ 5,416 2022 12,264 2023 11,981 2024 10,994 2025 10,051 Thereafter 26,437 Total lease payments $ 77,143 Less: present value discount (3,021) Present value of lease liabilities $ 74,122 Contractual Commitments The Company has non-cancelable contractual commitments related to the 2023 Notes, 2025 Notes and the 2026 Notes as well as the related interest. The interest on the 2023 Notes is payable semi-annually on February 15 and August 15 of each year. The interest on the 2025 Notes is payable semi-annually on May 15 and November 15 of each year. The interest on the 2026 Notes is payable semi-annually on June 1 and December 1 of each year. The Company also has non-cancelable contractual commitments for certain third-party products, co-location fees and other product costs. Several of these purchase commitments for third-party products contain both a contractual minimum obligation and a variable obligation based upon usage or other factors which can change on a monthly basis. The estimated amounts for usage and other factors are not included within the table below. In the quarter ended June 30, 2020, in connection with the termination of a strategic partnership, the Company paid a termination fee of $5.6 million in May 2020 with a remaining payment of $7.6 million to be made in the third quarter of 2021. The Company recorded the $13.2 million charge in partnership termination charges in the condensed consolidated statements of comprehensive loss in the second quarter of 2020 and has recorded the unpaid portion of the termination fee in accrued liabilities on the accompanying condensed consolidated balance sheet at June 30, 2021. On December 31, 2020, the Company entered into a long-term stadium sponsorship agreement, beginning in 2021 and ending in 2028, which grants the Company exclusive naming rights, sponsorship, signage, advertising and other promotional rights and benefits. The advertising expense for these rights is amortized on a straight-line basis and recorded in sales and marketing expense in the consolidated statements of comprehensive loss. The prepaid commitment balance, net of amortization, is included in prepaid expenses and other current assets in the consolidated balance sheets. Future minimum contractual commitments that have initial or remaining non-cancelable terms in excess of one year were as follows: Contractual Commitments Year Ended December 31, 2021 (from July 1 to December 31) $ 20,834 2022 29,069 2023 33,184 2024 7,183 2025 356,309 Thereafter 327,936 Total commitments $ 774,515 Legal Proceedings From time to time, the Company may become involved in legal proceedings arising in the ordinary course of its business. The Company is not presently a party to any legal proceedings that, if determined adversely to the Company, would have a material adverse effect on the Company. Loss Contingencies |
Convertible Senior Notes
Convertible Senior Notes | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Convertible Senior Notes | Convertible Senior Notes 0.75% Convertible Notes due 2023 In February 2018, the Company issued $230.0 million principal amount of convertible senior notes due in February 2023. The interest rate for the 2023 Notes is fixed at 0.75% per annum with interest payable semi-annually on February 15 and August 15 of each year, commencing on August 15, 2018. The 2023 Notes mature on February 15, 2023, unless earlier converted or repurchased in accordance with their terms prior to such date. Each $1,000 of principal of the 2023 Notes will initially be convertible into 17.4292 shares of the Company's common stock, which is equivalent to an initial conversion price of approximately $57.38 per share. The initial conversion price for each of the 2023 Notes is subject to adjustment upon the occurrence of certain specified events. In November 2020, the Company exchanged $181.9 million in aggregate principal amount of the 2023 Notes for $210.7 million in aggregate principal of 2025 Notes and 1.3 million shares of common stock. The Company did not receive any cash proceeds from the exchange. In exchange for issuing 2025 Notes pursuant to the exchange transaction, the Company received and cancelled the exchanged 2023 Notes. As of the exchange date, the carrying value of the 2023 Notes, net of unamortized debt discount and issuance costs, was $42.9 million. The partial exchange of the 2023 Notes resulted in an $8.9 million loss on early debt extinguishment during the year ended December 31, 2020, of which $2.0 million consisted of unamortized debt issuance costs. In May 2021, the Company repurchased $37.1 million in aggregate principal amount of the 2023 Notes for $63.7 million in cash. As of the repurchase date, the carrying value of the notes, net of unamortized debt discount and issuance costs, was $10.0 million. The partial repurchase of the 2023 Notes resulted in a $1.5 million loss on early debt extinguishment during the three months ended June 30, 2021, of which $0.3 million consisted of unamortized debt issuance costs. The Company may repurchase additional 2023 Notes and/or its 2025 Notes and 2026 Notes from time to time through open market purchases, block trades, and/or privately negotiated transactions, in compliance with applicable securities laws and other legal requirements. The timing, volume, and nature of the repurchases will be determined by the Company based on the capital needs of the business, market conditions, applicable legal requirements, and other factors. The 2023 Notes are the Company's senior unsecured obligations and rank senior in right of payment to any of the Company's indebtedness that is expressly subordinated in right of payment to the 2023 Notes, rank equally in right of payment with any of the Company's indebtedness that is not so subordinated, including the 2026 Notes and 2025 Notes, are effectively junior in right of payment to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally junior to all indebtedness and other liabilities (including trade payables) of the Company's current or future subsidiaries. On or after November 15, 2022, holders may convert all or any portion of their 2023 Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date, regardless of the succeeding conditions described herein. Upon conversion, the Company will pay or deliver cash, shares of its common stock or a combination of cash and shares of its common stock, at its election, as described in the indenture governing the 2023 Notes. Holders may convert their 2023 Notes at their option at any time prior to the close of business on the business day immediately preceding November 15, 2022 only under the following circumstances: • during any calendar quarter commencing after the calendar quarter ending on June 30, 2018 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; • during the five • upon the occurrence of specified corporate events. If a fundamental change (as defined in the relevant indenture governing the 2023 Notes) occurs prior to the maturity date, holders of each of the 2023 Notes may require the Company to repurchase all or a portion of their notes for cash at a repurchase price equal to 100% of the principal amount of the 2023 Notes, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. For more than 20 trading days during the 30 consecutive trading days ended December 31, 2020, the last reported sale price of the Company's common stock exceeded 130% of the conversion price of the 2023 Notes. As a result, the 2023 Notes became convertible at the option of the holders on January 1, 2021 and were convertible through March 31, 2021. For more than 20 trading days during the 30 consecutive trading days ended March 31, 2021 and June 30, 2021, the last reported sale price of the Company's common stock exceeded 130% of the conversion price of the 2023 Notes. As a result, the 2023 Notes became convertible at the option of the holders on April 1, 2021 and are convertible through September 30, 2021. As of June 30, 2021, the if-converted value of the 2023 Notes exceeded the principal amount by $8.6 million. The if-converted value was determined based on the closing price of the Company's common stock of $102.58 on June 30, 2021. 21 notes of the 2023 Notes, with a principal amount of $1,000 each, have been converted since original issuance of the 2023 Notes through the date of this filing. In accordance with accounting guidance for cash conversion features, the Company valued the liability component at the estimated fair value, as of the date of issuance, of a similar debt without the conversion feature. The effective interest rate for the liability component was 5.875%. The liability component of the 2023 Notes is recorded in long-term debt, and the interest payable is recorded in accrued liabilities on the condensed consolidated balance sheets as of June 30, 2021. The Company recorded the difference between the initial proceeds of the convertible debt and the fair value of the conversion feature, and the difference was allocated to additional paid-in capital on the condensed consolidated balance sheet as the carrying amount of the equity component. In accounting for the transaction costs for the February 2018 convertible note offering, the Company allocated the costs incurred to the liability and equity components in proportion to the allocation of the proceeds from issuance to the liability and equity components. Issuance costs attributable to the liability component, totaling $5.3 million for the 2023 Notes are being amortized to expense over the expected life the 2023 Notes using the effective interest method. Issuance costs attributable to the equity component related to the conversion feature, totaling $1.5 million for the 2023 Notes were netted with the equity component. The outstanding 2023 Notes consist of the following: As of June 30, 2021 As of December 31, 2020 Liability component: Principal $ 10,909 $ 48,035 Unamortized debt discount (891) (4,915) Unamortized debt issuance costs (89) (501) Net carrying amount 9,929 42,619 Equity component: Net carrying amount $ 2,321 $ 10,217 The following table sets forth total interest expense recognized related to the 2023 Notes: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Contractual interest expense $ 62 $ 431 $ 152 $ 862 Amortization of debt issuance costs 91 293 152 543 Amortization of debt discount 415 2,482 961 4,916 Total $ 568 $ 3,206 $ 1,265 $ 6,321 As of June 30, 2021, the remaining period over which the debt discount and debt issuance costs will be amortized was 1.6 years. Bond Hedges and Warrants Transactions Concurrent with the February 2018 convertible note offering, the Company entered into separate convertible note bond hedges, or Bond Hedges, and Warrants transactions. The Bond Hedges are generally expected to reduce potential dilution to the Company's common stock upon conversion of the 2023 Notes. The Bond Hedges are call options that give the Company the option to purchase, subject to anti-dilution adjustments substantially identical to those in the 2023 Notes, approximately 0.9 million shares of its common stock for $57.38 per share, exercisable upon conversion of the 2023 Notes and expires in February 2023. The total cost of the Bond Hedges transactions was $41.7 million. In November 2020, and in connection with the partial exchange of the 2023 Notes, the Company terminated Bond Hedges corresponding to approximately 0.7 million shares for cash proceeds of $171.7 million. In May 2021, and in connection with the partial repurchase of the 2023 Notes, the Company terminated Bond Hedges corresponding to approximately 0.1 million shares for cash proceeds of $26.3 million. The proceeds were recorded as an increase to additional paid-in capital in the consolidated balance sheets. As of June 30, 2021, Bond Hedges giving the Company the option to repurchase approximately 0.1 million shares remained outstanding. Under the February 2018 Warrants transaction, the Company issued warrants to acquire, subject to anti-dilution adjustments, up to approximately 4.0 million shares over 80 scheduled trading days beginning on May 15, 2023 at an exercise price of $78.75 per share. If the Warrants are not exercised on their exercise dates, they will expire. Pursuant to the Warrants, if the average market value per share of the Company's common stock for the reporting period, as measured under the Warrants, exceeds the exercise price of the Warrants of $78.75, the Warrants will have a dilutive effect on the Company's earnings per share, assuming the Company is profitable. The Company received $22.4 million in cash proceeds from the sale of the Warrants. In November 2020, and in connection with the partial exchange of the 2023 Notes, the Company terminated Warrants corresponding to approximately 3.2 million shares for total cash payments of $137.5 million. In May 2021, and in connection with the partial repurchase of the 2023 Notes, the Company terminated Warrants corresponding to approximately 0.6 million shares for total cash payments of $19.7 million. The termination payments were recorded as a decrease to additional paid-in capital in the consolidated balance sheets. As of June 30, 2021, Warrants to acquire up to approximately 0.2 million shares remained outstanding. The Bond Hedges and the Warrants are separate transactions, in each case, entered into by the Company with counterparties, and are not part of the terms of the 2023 Notes and will not affect any holders' rights under the 2023 Notes. The holders of the 2023 Notes will not have any rights with respect to the Bond Hedges or Warrants transactions. The Bond Hedges and Warrants do not meet the criteria for derivative accounting as they are indexed to the Company's stock. The amounts paid for the Bond Hedges and the proceeds received from the sale of the Warrants have been included as a net reduction to additional paid-in capital. 0.75% Convertible Note due 2026 In June 2019, the Company issued $316.3 million principal amount of convertible senior notes due in June 2026. The interest rate for the 2026 Notes is fixed at 0.75% per annum with interest payable semi-annually on June 1 and December 1 of each year, commencing on December 1, 2019. The 2026 Notes mature on June 1, 2026, unless earlier converted or repurchased in accordance with their terms prior to such date. Each $1,000 of principal of the 2026 Notes will initially be convertible into 11.2851 shares of the Company's common stock, which is equivalent to an initial conversion price of approximately $88.61 per share. The initial conversion price for each of the 2026 Notes is subject to adjustment upon the occurrence of certain specified events. The 2026 Notes are the Company's senior unsecured obligations and rank senior in right of payment to any of the Company's indebtedness that is expressly subordinated in right of payment to the 2026 Notes, rank equally in right of payment with any of the Company's indebtedness that is not so subordinated, including the 2023 Notes and 2025 Notes, are effectively junior to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally junior to all indebtedness and other liabilities (including trade payables) of the Company's current and future subsidiaries. On or after June 5, 2023, the Company may redeem for cash all or any portion of the 2026 Notes, at the Company's option if the last reported sale price of the Company's common stock has been at least 130% of the conversion price in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period. If the Company calls any or all of the 2026 Notes for redemption, holders may convert all or any portion of their 2026 Notes at any time prior to the close of business on the scheduled trading day prior to the redemption date, even if the 2026 Notes are not otherwise convertible at such time. After that time, the right to convert such 2026 Notes will expire, unless the Company defaults on the payment of the redemption price, in which case a holder of 2026 Notes may convert all or any portion of its 2026 Notes until the redemption price has been paid or duly provided for. On or after March 1, 2026, holders may convert all or any portion of their 2026 Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the succeeding conditions described herein. Upon conversion, the Company will pay or deliver cash, shares of its common stock or a combination of cash and shares of its common stock, at its election, as described in the indenture governing the 2026 Notes. Holders may convert their 2026 Notes at their option at any time prior to the close of business on the business day immediately preceding March 1, 2026 only under the following circumstances: • during any calendar quarter commencing after the calendar quarter ending on September 30, 2019 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; • during the five • upon the occurrence of specified corporate events. If a fundamental change (as defined in the relevant indenture governing the 2026 Notes) occurs prior to the maturity date, holders of each of the 2026 Notes may require the Company to repurchase all or a portion of their notes for cash at a repurchase price equal to 100% of the principal amount of the 2026 Notes, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. As of June 30, 2021, the 2026 Notes were not convertible. However, as of June 30, 2021, the if-converted value of the 2026 Notes exceeded the principal amount by $49.8 million. The if-converted value was determined based on the closing price of the Company's common stock of $102.58 on June 30, 2021. In accordance with accounting guidance for cash conversion features, the Company valued the liability component at the estimated fair value, as of the date of issuance, of a similar debt without the conversion feature. The effective interest rate for the liability component was 5.38%. The liability component of the 2026 Notes is recorded in long-term debt, and the interest payable is recorded in accrued liabilities on the condensed consolidated balance sheets as of June 30, 2021. The Company recorded the difference between the initial proceeds of the convertible debt and the fair value of the conversion feature, and the difference was allocated to additional paid-in capital on the condensed consolidated balance sheets as the carrying amount of the equity component. In accounting for the transaction costs for the June 2019 convertible note offering, the Company allocated the costs incurred to the liability and equity components in proportion to the allocation of the proceeds from issuance to the liability and equity components. Issuance costs attributable to the liability component, totaling $6.4 million for the 2026 Notes are being amortized to expense over the expected life the 2026 Notes using the effective interest method. Issuance costs attributable to the equity component related to the conversion feature, totaling $2.9 million for the 2026 Notes were netted with the equity component. The outstanding 2026 Notes consist of the following: As of June 30, 2021 As of December 31, 2020 Liability component: Principal $ 316,250 $ 316,250 Unamortized debt discount (62,557) (67,977) Unamortized debt issuance costs (4,700) (5,114) Net carrying amount 248,993 243,159 Equity component: Net carrying amount $ 81,550 $ 81,550 The following table sets forth total interest expense recognized related to the 2026 Notes: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Contractual interest expense $ 593 $ 593 1,186 $ 1,179 Amortization of debt issuance costs 211 202 417 402 Amortization of debt discount 2,764 2,664 5,387 5,261 Total $ 3,568 $ 3,459 $ 6,990 $ 6,842 As of June 30, 2021, the remaining period over which the debt discount and debt issuance costs will be amortized was 4.9 years. Capped Call Transactions In connection with the June 2019 convertible note offering, the Company entered into capped call transactions with one or more counterparties, or the 2019 Capped Calls. The 2019 Capped Calls each have an initial strike price of $88.6124 per share, subject to certain adjustments, which correspond to the initial conversion price of the 2026 Notes. The 2019 Capped Calls have initial cap prices of $139.00 per share. The 2019 Capped Calls are expected to offset the potential dilution to the common stock upon any conversion of the 2026 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the 2026 Notes in the event the market price per share of common stock is greater than the strike price of the 2019 Capped Call, with such offset subject to a cap. If, however, the market price per share of the common stock exceeds the cap price of the 2019 Capped Calls, there would be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that the then-market price per share of the common stock exceeds the cap price. As the 2019 Capped Calls are considered indexed to the Company's stock and are considered equity classified, they are recorded in stockholders' equity on the condensed consolidated balance sheet and are not accounted for as derivatives. The cost of $40.8 million incurred in connection with the 2019 Capped Calls was recorded as a reduction to additional paid-in capital. 0.125% Convertible Notes due 2025 In November 2020, the Company issued $350.0 million principal amount of convertible senior notes due in November 2025. This was achieved by exchanging $181.9 million principal amount of the 2023 Notes for $210.7 million principal amount of the 2025 Notes and issuing an additional $139.3 million of new notes. The interest rate for the 2025 Notes is fixed at 0.125% per annum with interest payable semi-annually on May 15 and November 15 of each year, commencing on May 15, 2021. The 2025 Notes mature on November 15, 2025, unless earlier converted or repurchased in accordance with their terms prior to such date. Each $1,000 of principal of the 2025 Notes will initially be convertible into 7.1355 shares of the Company's common stock, which is equivalent to an initial conversion price of approximately $140.14 per share. The initial conversion price for each of the 2025 Notes is subject to adjustment upon the occurrence of certain specified events. The 2025 Notes are the Company's senior unsecured obligations and rank senior in right of payment to any of the Company's indebtedness that is expressly subordinated in right of payment to the 2025 Notes, rank equally in right of payment with any of the Company's indebtedness that is not so subordinated, including the 2023 Notes and 2026 Notes, are effectively junior to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally junior to all indebtedness and other liabilities (including trade payables) of the Company's current and future subsidiaries. On or after November 20, 2023, the Company may redeem for cash all or any portion of the 2025 Notes, at the Company's option if the last reported sale price of the Company's common stock has been at least 130% of the conversion price in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period. If the Company calls any or all of the 2025 Notes for redemption, holders may convert all or any portion of their 2025 Notes at any time prior to the close of business on the scheduled trading day prior to the redemption date, even if the 2025 Notes are not otherwise convertible at such time. After that time, the right to convert such 2025 Notes will expire, unless the Company defaults on the payment of the redemption price, in which case a holder of 2025 Notes may convert all or any portion of its 2025 Notes until the redemption price has been paid or duly provided for. On or after August 15, 2025, holders may convert all or any portion of their 2025 Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the succeeding conditions described herein. Upon conversion, the Company will pay or deliver cash, shares of its common stock or a combination of cash and shares of its common stock, at its election, as described in the indenture governing the 2025 Notes. Holders may convert their 2025 Notes at their option at any time prior to the close of business on the business day immediately preceding August 15, 2025 only under the following circumstances: • during any calendar quarter commencing after the calendar quarter ending on March 30, 2021 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; • during the five • upon the occurrence of specified corporate events. If a fundamental change (as defined in the relevant indenture governing the 2025 Notes) occurs prior to the maturity date, holders of each of the 2025 Notes may require the Company to repurchase all or a portion of their notes for cash at a repurchase price equal to 100% of the principal amount of the 2025 Notes, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. As of June 30, 2021, the 2025 Notes were not yet convertible. In accordance with accounting guidance for cash conversion features, the Company valued the liability component at the estimated fair value, as of the date of issuance, of a similar debt without the conversion feature. The effective interest rate for the liability component was 5.0%. The liability component of the 2025 Notes is recorded in long-term debt, and the interest payable is recorded in accrued liabilities on the condensed consolidated balance sheets as of June 30, 2021. The Company recorded the difference between the initial proceeds of the convertible debt and the fair value of the conversion feature, and the difference was allocated to additional paid-in capital on the condensed consolidated balance sheets as the carrying amount of the equity component. In accounting for the transaction costs for the November 2020 convertible note offering, the Company allocated the costs incurred to the liability and equity components in proportion to the allocation of the proceeds from issuance to the liability and equity components. Issuance costs attributable to the liability component, totaling $5.4 million for the 2025 Notes are being amortized to expense over the expected life the 2025 Notes using the effective interest method. Issuance costs attributable to the equity component related to the conversion feature, totaling $1.5 million for the 2025 Notes were netted with the equity component. The outstanding 2025 Notes consist of the following: As of June 30, 2021 As of December 31, 2020 Liability component: Principal $ 350,000 $ 350,000 Unamortized debt discount (66,310) (73,075) Unamortized debt issuance costs (4,717) (5,235) Net carrying amount 278,973 271,690 Equity component: Net carrying amount $ 73,109 $ 73,097 The following table sets forth total interest expense recognized related to the 2025 Notes: Three Months Ended Six Months Ended June 30, 2021 June 30, 2021 Contractual interest expense $ 109 $ 218 Amortization of debt issuance costs 238 476 Amortization of debt discount 3,374 6,706 Total $ 3,721 $ 7,400 As of June 30, 2021, the remaining period over which the debt discount and debt issuance costs will be amortized was 4.4 years. Capped Call Transactions In connection with the November 2020 convertible note offering, the Company entered into capped call transactions with one or more counterparties, or the 2020 Capped Calls. The 2020 Capped Calls each have an initial strike price of $140.1443 per share, subject to certain adjustments, which correspond to the initial conversion price of the 2025 Notes. The 2020 Capped Calls have initial cap prices of $211.54 per share. The 2020 Capped Calls are expected to offset the potential dilution to the common stock upon any conversion of the 2025 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the 2025 Notes in the event the market price per share of common stock is greater than the strike price of the 2020 Capped Call, with such offset subject to a cap. If, however, the market price per share of the common stock exceeds the cap price of the 2020 Capped Calls, there would be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that the then-market price per share of the common stock exceeds the cap price. As the 2020 Capped Calls are considered indexed to the Company's stock and are considered equity classified, they are recorded in stockholders' equity on the consolidated balance sheet and are not accounted for as derivatives. The cost of $39.8 million incurred in connection with the 2020 Capped Calls was recorded as a reduction to additional paid-in capital. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity On May 15, 2020, the Company completed a registered public offering of 4,735,294 shares of the Company's common stock at a price of $76.50 per share, before underwriting discounts and commissions. The Company sold 4,235,294 of such shares and existing stockholders sold an aggregate of 500,000 of such shares. The May 2020 common stock offering generated net proceeds to the Company of approximately $311.3 million, after deducting $12.7 million in underwriting discounts and commissions and offering costs, which have been recorded against the proceeds received from the offering. The Company did not receive any proceeds from the sale of shares by the selling stockholders in the May 2020 common stock offering. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based CompensationIn March 2014, the Company's board of directors approved the 2014 Equity Incentive Plan, or 2014 Plan, under which stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units and other cash-based or stock-based awards may be granted to employees, consultants and directors. Shares of common stock that are issued and available for issuance under the 2014 Plan consist of authorized, but unissued or reacquired shares of common stock or any combination thereof. As of December 31, 2020, a total of 13,322 shares had been reserved for issuance under the 2014 Plan. The 2014 Plan contains a provision that automatically increases the shares available for issuance under the plan on January 1 of each year subsequent to the 2014 Plan's adoption through 2024, by an amount equal to the smaller of (a) 4.5% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or (b) an amount determined by the Company's board of directors. On January 1, 2021, 2,500 shares were added to the 2014 Plan in accordance with the annual automatic increase provision of the 2014 Plan. In addition, the 2014 Plan reserve is automatically increased to include any shares issuable upon expiration or termination of options granted under the Company's 2007 Stock Plan, or 2007 Plan, for options that expire or terminate without having been exercised. For the six months ended June 30, 2021, no shares have been transferred to the 2014 Plan from the 2007 Plan, and as of June 30, 2021 a total of 15,823 shares were allocated for issuance under the 2014 Plan. As of June 30, 2021, options to purchase a total of 2,706 shares of common stock have been granted under the 2014 Plan, 6,557 shares have been reserved under the 2014 Plan for the vesting of restricted stock units and market stock units, 1,276 shares have been returned to the 2014 Plan as a result of termination of options that expired or terminated without having been exercised and restricted stock awards that terminated prior to the awards vesting, and 7,836 shares of common stock remain available for future issuance under the 2014 Plan. In July 2007, the Company adopted the 2007 Plan under which options or stock purchase rights may be granted to employees, consultants and directors. Upon the completion of the Company's initial public offering, or IPO, in March 2014, the board of directors terminated the 2007 Plan in connection with the IPO and all shares that were available for future issuance under the 2007 Plan at such time were transferred to the 2014 Plan. The 2007 Plan will continue to govern the terms and conditions of all outstanding equity awards granted under the 2007 Plan. As of June 30, 2021, no shares remain available for future issuance under the 2007 Plan. Stock Options Stock option activity during the six months ended June 30, 2021 was as follows: Number of Options Weighted Average Exercise Price Balance as of January 1, 2021 670 $ 27.43 Granted — — Exercised (209) 21.79 Forfeited — — Balance as of June 30, 2021 461 $ 29.99 Restricted Stock Units Restricted stock unit activity during the six months ended June 30, 2021 was as follows: Number of Shares Weighted Average Grant Date Fair Value Nonvested as of January 1, 2021 1,757 $ 70.74 Granted 566 120.26 Vested (309) 55.46 Forfeited (132) 75.49 Nonvested as of June 30, 2021 1,882 $ 87.82 Market Stock Units Market stock unit activity during the six months ended June 30, 2021 was as follows: Number of Shares Weighted Average Grant Date Fair Value Nonvested as of January 1, 2021 370 $ 35.67 Granted 101 80.11 Change in awards based on performance (1) 206 39.67 Vested (386) 33.62 Forfeited (21) 44.67 Nonvested as of June 30, 2021 270 $ 57.58 _______________________________________________________________________________ (1) Represents the change in the number of MSUs earned based on performance achievement for the performance period. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes In accordance with applicable accounting guidance, the income tax expense for the six months ended June 30, 2021 is based on the estimated annual effective tax rate for fiscal year 2021. The Company's provision for income taxes is based on estimated effective tax rates derived from an estimate of annual consolidated earnings before taxes, adjusted for nondeductible expenses, other permanent items, valuation allowances, and any applicable income tax credits. The Company's provision for income taxes reflected an effective tax rate of approximately (0.6)% and (0.2)% for the three months ended June 30, 2021 and 2020, respectively, and (0.6)% and (0.7)% for the six months ended June 30, 2021 and 2020, respectively. For the three and six months ended June 30, 2021 and 2020, the Company's effective tax rate was lower than the U.S. federal statutory rate primarily due to its valuation allowance offsetting the benefits of losses in the United States. To date, the Company has provided a valuation allowance against most of its deferred tax assets as it believes the objective and verifiable evidence of its historical pretax net losses outweighs any positive evidence of its forecasted future results. The Company will continue to monitor the positive and negative evidence, and it will adjust the valuation allowance as sufficient objective positive evidence becomes available. The Company has unrecognized tax benefits as of June 30, 2021 of $0.3 million related to prior year uncertain tax positions, and an insignificant amount of accrued interest, representing no material change from December 31, 2020. Operating losses generated in years prior to 2017 remain open to adjustment until the statute of limitations closes for the tax year in which the net operating losses are utilized. The Company's tax years 2017 through 2020 generally remain open to examination by the major taxing jurisdictions to which the Company is subject. The Company is not currently under examination by any other taxing jurisdiction. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | These interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, and Securities and Exchange Commission, or SEC, requirements for interim financial statements. The interim unaudited condensed consolidated financial statements include the accounts of Q2 Holdings, Inc. and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
Principles of Consolidation | In the Company's opinion, the accompanying interim unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, consisting of normal, recurring adjustments, necessary for a fair presentation. Certain information and disclosures normally included in the notes to the annual consolidated financial statements prepared in accordance with GAAP have been omitted from these interim unaudited condensed consolidated financial statements pursuant to the rules and regulations of the SEC. Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes for the fiscal year ended December 31, 2020, which are included in the Company's Annual Report on Form 10-K, filed with the SEC on February 19, 2021. The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other period. |
Use of Estimates | The preparation of the accompanying interim unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the interim unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses. Significant items subject to such estimates include: revenue recognition including determining the nature and timing of satisfaction of performance obligations, variable consideration, standalone selling price, and other revenue items requiring significant judgment; estimate of credit losses; stock-based compensation; the carrying value of goodwill; the fair value of acquired intangibles; the capitalization of software development costs; the useful lives of property and equipment and long-lived intangible assets; fair value of contingent consideration; fair value of the conversion features of convertible notes; and, income taxes. In accordance with GAAP, management bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Management regularly evaluates its estimates and assumptions using historical experience and other factors; however, actual results could differ significantly from those estimates. |
Cash and Cash Equivalents | The Company considers all highly liquid investments acquired with an original maturity of ninety days or less at the date of purchase to be cash equivalents. Cash equivalents are stated at cost or fair value based on the underlying security. |
Restricted Cash | Restricted cash consists of deposits held as collateral for the Company's secured letters of credit or bank guarantees issued in place of security deposits for the Company's corporate headquarters and various other leases. |
Investments | Investments typically include U.S. government securities, corporate bonds, commercial paper, certificates of deposit and money market funds. All investments are considered available for sale and are carried at fair value. |
Concentration of Credit Risk | Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, restricted cash, investments, accounts receivable and contract assets. The Company's cash and cash equivalents, restricted cash and investments are placed with high credit quality financial institutions and issuers, and at times may exceed federally-insured limits. The Company has not experienced any loss relating to cash and cash equivalents or restricted cash in these accounts. The Company provides credit, in the normal course of business, to a majority of its customers. The Company performs periodic credit evaluations of its customers' financial condition and generally does not require collateral. |
Contract Balances | The timing of revenue recognition, billings and cash collections can result in billed accounts receivable, unbilled receivables or contract assets, and deferred revenues, or contract liabilities. Billings scheduled to occur after the performance obligation has been satisfied and revenue recognition has occurred result in contract assets. Contract assets that are expected to be billed during the succeeding twelve-month period are recorded in contract assets, current portion, and the remaining portion is recorded in contract assets, net of current portion on the accompanying condensed consolidated balance sheets at the end of each reporting period. A contract liability results when the Company receives prepayments or deposits from customers in advance for implementation, maintenance and other services, as well as initial subscription fees. Customer prepayments are generally applied against invoices issued to customers when services are performed and billed. The Company recognizes contract liabilities as revenues when the services are performed, and the corresponding revenue recognition criteria are met. Contract liabilities that are expected to be recognized as revenues during the succeeding twelve-month period are recorded in deferred revenues, current portion, and the remaining portion is recorded in deferred revenues, net of current portion, on the accompanying condensed consolidated balance sheets at the end of each reporting period.The Company is exposed to credit losses primarily through sales of products and services. The Company assesses the collectability of outstanding contract assets on an ongoing basis and maintains a reserve which is included in the allowance for credit losses for contract assets deemed uncollectable. Under ASU 2016-13, the Company analyzes the contract asset portfolio for significant risks by considering historical collection experience and forecasting future collectability to determine the amount of revenues that will ultimately be collected from its customers. Customer type has been identified as the primary specific risk affecting the Company's contract assets, and the estimate for losses is analyzed quarterly and adjusted as necessary. Future collectability is contingent upon current and anticipated macroeconomic conditions that could impact the Company's customers such as unemployment, inflation and regulatory matters. Additionally, specific allowance amounts may be established to record the appropriate provision for customers that have a higher probability of default. The Company has provisioned $0.02 million and $0.2 million for expected losses for the six months ended June 30, 2021 and 2020, respectively, and zero has been written off and charged against the allowance at each of June 30, 2021 and December 31, 2020. The allowance for credit losses related to contract assets was $0.3 million as of June 30, 2021 and December 31, 2020. |
Accounts Receivable | Accounts receivable are stated at net realizable value, including both billed and unbilled receivables to customers. Unbilled receivable balances arise primarily when the Company provides services in advance of billing for those services. Generally, billing for revenues related to the number of End Users and the number of transactions processed by the Company's End Users that are included in the Company's minimum subscription fee occurs in the month the revenue is recognized, resulting in accounts receivable. Billing for revenues relating to the number of End Users and the number of transactions processed by the Company's End Users that are in excess of the Company's minimum subscription fees are, generally, billed in the month following the month the revenues were earned, resulting in an unbilled receivable. Unbilled receivables of $5.0 million an d $2.1 million were included in the accounts receivable balance at June 30, 2021 and December 31, 2020, respectively. |
Deferred Revenues | Deferred revenues primarily consist of amounts that have been billed to or received from customers in advance of revenue recognition and prepayments received from customers in advance for implementation, maintenance and other services, as well as initial subscription fees. The Company recognizes deferred revenues as revenues when the services are performed and the corresponding revenue recognition criteria are met. Customer prepayments are generally applied against invoices issued to customers when services are performed and billed. |
Deferred Implementation Costs | The Company capitalizes certain personnel and other costs such as employee salaries, benefits and the associated payroll taxes that are direct and incremental to the implementation of its solutions. The Company analyzes implementation costs that may be capitalized to assess their recoverability, and only capitalizes costs that it anticipates being recoverable through the terms of the associated contract. The Company begins amortizing the deferred implementation costs for an implementation once the revenue recognition criteria have been met, and the Company amortizes those deferred implementation costs ratably over the expected period of customer benefit. The Company has determined this period to be the estimated life of the technology, which is estimated to be five |
Deferred Solution and Other Costs | The Company capitalizes sales commissions and other third-party costs such as third-party licenses and maintenance related to its customer agreements. The Company capitalizes sales commissions because the commission charges are considered incremental and recoverable costs of obtaining a contract with a customer. The Company capitalizes commissions and bonuses for those involved in the sale, including direct employees and indirect supervisors, as these are incremental to the sale. Historically, the Company typically paid commissions in two increments. The initial payment was made after the contract had been executed and the initial deposit had been received from the customer, and the final payment was made upon commencement date. The Company required that an individual remain employed to collect a commission when it was due. The service period between the first and second payment was considered a substantive service period and as a result, the Company expensed the final payment when made. Beginning in 2020, commissions were paid in a single payment once the contract had been executed and the initial deposit had been received from the customer. The Company begins amortizing deferred solution and other costs for a particular customer agreement once the revenue recognition criteria are met and amortizes those deferred costs over the expected period of customer benefit. The Company has determined this period to be the estimated life of the technology, which is estimated to be five The Company analyzes solution and other costs that may be capitalized to assess their recoverability and only capitalizes costs that it anticipates being recoverable. The portion of capitalized costs expected to be amortized during the succeeding twelve-month period is recorded in current assets as deferred solution and other costs, current portion, and the remainder is recorded in long-term assets as deferred solution and other costs, net of current portion. The Company capitalized $3.2 million and $2.9 million in deferred commissions costs during the three months ended June 30, 2021 and 2020, respectively, and recognized $3.1 million and $2.3 million of amortization during the three months ended June 30, 2021 and 2020, respectively. The Company capitalized $6.3 million and $8.5 million during the six months ended June 30, 2021 and 2020, respectively, and recognized $6.4 million and $4.1 million of amortization during the six months ended June 30, 2021 and 2020, respectively. Amortization expense is included in sales and marketing expenses in the accompanying condensed consolidated statements of comprehensive loss. |
Property and Equipment | Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is calculated on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the related assets. Maintenance and repairs that do not extend the life of or improve an asset are expensed in the period incurred. |
Purchase Price Allocation, Intangible Assets, and Goodwill | The purchase price allocation for business combinations and asset acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values. The Company determines whether substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the single asset or group of assets, as applicable, is not a business. If it is not met, the Company determines whether the single asset or group of assets, as applicable, meets the definition of a business. In connection with the Company's business combinations, the Company recorded certain intangible assets, including acquired technology, customer relationships, trademarks and non-compete agreements. Amounts allocated to the acquired intangible assets are being amortized on a straight-line basis over the estimated useful lives. The Company periodically reviews the estimated useful lives and fair values of its identifiable intangible assets, taking into consideration any events or circumstances which might result in a diminished fair value or revised useful life. The excess purchase price over the fair value of assets acquired is recorded as goodwill. The Company tests goodwill for impairment annually in October, or whenever events or changes in circumstances indicate an impairment may have occurred. Because the Company operates as a single reporting unit, the impairment test is performed at the consolidated entity level by comparing the estimated fair value of the Company to the carrying value of the Company. The Company estimates the fair value of the reporting unit using a "step one" analysis using a fair-value-based approach based on the market capitalization or a discounted cash flow analysis of projected future results to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Determining the fair value of goodwill is subjective in nature and often involves the use of estimates and assumptions including, without limitation, use of estimates of future prices and volumes for the Company's products, capital needs, economic trends and other factors which are inherently difficult to forecast. If actual results, or the plans and estimates used in future impairment analyses are lower than the original estimates used to assess the recoverability of these assets, the Company could incur impairment charges in a future period. |
Revenues and Cost of Revenues | Revenues are recognized when control of the promised goods or services is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services over the term of the agreement, generally when the Company's solutions are implemented and made available to the customers. The promised consideration may include fixed amounts, variable amounts or both. Revenues are recognized net of sales credits and allowances. Revenue-generating activities are directly related to the sale, implementation and support of the Company's solutions within a single operating segment. The Company derives the majority of its revenues from subscription fees for the use of its solutions hosted in either the Company's data centers or cloud-based hosting services, transactional revenue from bill-pay solutions and interchange fees, and revenues for customer support and implementation services related to the Company's solutions. The following table disaggregates the Company's revenue by major source: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Subscription $ 89,150 $ 70,174 $ 174,221 $ 136,406 Transactional 17,710 13,908 33,993 26,728 Services and Other 16,713 13,499 31,879 26,827 Total Revenues $ 123,573 $ 97,581 $ 240,093 $ 189,961 Subscription Revenues The Company's software solutions are available for use as hosted application arrangements under subscription fee agreements without licensing perpetual rights to the software. Subscription fees from these applications, including contractual periodic price increases, are recognized over time on a ratable basis over the customer agreement term beginning on the date the Company's solution is made available to the customer. Amounts that have been invoiced are recorded in accounts receivable and deferred revenues or revenues, depending on whether the revenue recognition criteria have been met. Periodic price increases are estimated at contract inception and result in contract assets as revenue recognition may exceed the amount billed early in the contract. Additional fees for monthly usage above the levels included in the standard subscription fee are recognized as revenue in the month when the usage amounts are determined and reported. A small portion of the Company's customers host and manage the Company's solutions on-premises or in third-party data centers under term license and maintenance agreements. Term licenses sold with maintenance entitle the customer to technical support, upgrades and updates to the software on a when-and-if-available basis. The Company recognizes software license revenue once the customer obtains control of the license, which generally occurs at the start of each license term. The Company recognizes the remaining arrangement consideration for maintenance revenue over time on a ratable basis over the term of the software license. If the expected length of time between when the Company transfers the software license to the customer and when the customer pays for it results in a significant financing component, the Company adjusts the promised amount of consideration for the effects of the time value of money, which reflects the price the customer would have paid when the license was transferred. Revenues from term licenses and maintenance agreements and the related financing component were not significant in the periods presented. Transactional Revenues The Company generates the majority of its transactional revenues based on the number of bill-pay transactions that End Users initiate on its digital banking platform. The Company also generates a smaller portion of its transactional revenues from interchange fees generated when End Users utilize debit cards integrated with its Q2 CorePro API or Q2 Biller Direct products. The Company recognizes revenue for bill-pay transaction services and interchange fees in the month incurred based on actual or estimated transactions. Services and Other Revenues Implementation services are required for each new digital banking and lending and leasing platform and Centrix standalone contract, and there is a significant level of integration and configuration for each customer. The Company's revenue for upfront implementation services is billed upfront and recognized over time on a ratable basis over the customer agreement term for its hosted application agreements. Upfront implementation services for on-premises agreements are recognized at commencement date. Under certain circumstances, the Company partners with third-party professional system integrators to support the installation and configuration process for certain products, and therefore, the Company has determined that these services qualify as a separate performance obligation in certain markets and geographies, and the implementation services for these agreements are recognized over time as services are performed. Professional services revenues, which primarily consist of training, advisory services, core conversion services, web design, and other general professional services, are generally billed and recognized when delivered. Certain out-of-pocket expenses billed to customers are recorded as revenues rather than an offset to the related expense. Significant Judgments Performance Obligations and Standalone Selling Price A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of accounting. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. The Company has contracts with customers that often include multiple performance obligations, usually including multiple subscription and implementation services. For these contracts, the Company accounts for individual performance obligations that are distinct separately by allocating the contract's total transaction price to each performance obligation in an amount based on the relative standalone selling price, or SSP, of each distinct good or service in the contract. In determining whether implementation services are distinct from subscription services, the Company considered various factors including the significant level of integration, interdependency, and interrelation between the implementation and subscription service, as well as the inability of the customer's personnel or other service providers to perform significant portions of the services. The Company has concluded that the implementation services included in contracts with multiple performance obligations in the North American banking market are not distinct and, as a result, the Company defers any arrangement fees for implementation services and recognizes such amounts over time on a ratable basis as one performance obligation with the underlying subscription revenue for the initial agreement term of the hosted application agreements. The Company has concluded that outside the North American banking market, the implementation services for its lending and leasing platform included in contracts with multiple performance obligations are distinct and, as a result, the Company recognizes implementation fees on such arrangements over time as services are performed. The majority of the Company's revenue recognized at a particular point in time is for usage revenue and on-premise software licenses. These services are recognized at the point in time in which the customer obtains control of the asset, which is generally upon completion of the service or the point the customer obtained control of the software. Judgment is required to determine the SSP for each distinct performance obligation. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The primary method used to estimate SSP is the adjusted market assessment approach, which considers the Company's overall pricing objectives, market conditions and other factors, including the value of the Company's contracts, its discounting practices, the size and volume of its transactions, customer characteristics, price lists, go-to-market strategy, historical standalone sales and agreement prices, and the number and types of users within its contracts. Variable Consideration The Company recognizes usage revenue related to bill-pay transactions that End Users initiate on its digital banking platform and interchange fees that End Users generate using the Company's solutions. Judgment is required to determine the accounting for these types of revenue. The Company considers various factors including the degree to which usage is interdependent or interrelated to past services, costs to the Company per user over the contract, and contractual price per user changes and their relationship to market terms, forecasted data, and the Company's cost to fulfill the obligation. The Company has concluded that its usage revenue relates specifically to the transfer of the service to the customer and is consistent with the allocation objective of Topic 606 when considering all of the performance obligations and payment terms in the contract. Therefore, the Company recognizes usage revenue on a monthly or quarterly basis in accordance with the agreement, as determined and reported. This allocation reflects the amount the Company expects to receive for the services for the given period. The Company sometimes provides credits or incentives to its customers. Known and estimable credits and incentives represent a form of variable consideration, which are estimated at contract inception and reduce the revenues recognized for a particular contract. These estimates are updated at the end of each reporting period as additional information becomes available. The Company believes that there will not be significant changes to its estimates of variable consideration as of June 30, 2021. Other Considerations The Company evaluates whether it is the principal (i.e., reports revenues on a gross basis) or agent (i.e., reports revenues on a net basis) with respect to the vendor reseller agreements pursuant to which the Company resells certain third-party solutions along with the Company's solutions. Generally, the Company reports revenues from these types of contracts on a gross basis, meaning the amounts billed to customers are recorded as revenues, and expenses incurred are recorded as cost of revenues. Where the Company is the principal, it first obtains control of the inputs to the specific good or service and directs their use to create the combined output. The Company's control is evidenced by its involvement in the integration of the good or service on its platform before it is transferred to its customers and is further supported by the Company being primarily responsible to its customers and having a level of discretion in establishing pricing. Revenues provided from agreements in which the Company is an agent are insignificant. |
Software Development Costs | The Company capitalizes certain software development costs under accounting frameworks that differ based on the nature of the software. Software development costs include salaries and other personnel-related costs, including employee benefits, stock-based compensation and bonuses attributed to programmers, software engineers and quality control teams working on the Company's software solutions, and third-party development costs. Capitalized software development costs are computed on an individual product basis and products available for market are amortized to cost of revenues over the products' estimated economic lives. The costs related to software development are included in intangible assets, net on the consolidated balance sheets. The Company capitalizes certain development costs associated with software that is to be sold, leased or otherwise marketed that are incurred between reaching technological feasibility of a solution and the point at which the solution is ready for general release. Under this accounting framework, the Company capitalized zero software development costs for each of the three and six months ended June 30, 2021 and 2020. The Company recognized $0.2 million of amortization of capitalized software development costs for both of the three months ended June 30, 2021 and 2020, and $0.4 million of amortization of capitalized software development costs for both of the six months ended June 30, 2021 and 2020. |
Research and Development Costs | Research and development costs include salaries and other personnel-related costs, including employee benefits, bonuses and stock-based compensation, third-party contractor expenses, third-party consultants, software development tools, an allocation of facilities and depreciation expenses and other related expenses incurred in developing new solutions and upgrading and enhancing existing solutions. Certain research and development costs that are related to the Company's software development, which include salaries and other personnel-related costs, including employee benefits and bonuses attributed to programmers, software engineers and quality control teams working on the Company's software solutions, are capitalized and are included in intangible assets, net on the condensed consolidated balance sheets. |
Advertising | All advertising costs of the Company are generally expensed the first time the advertising takes place. |
Sales Tax | The Company presents sales taxes and other taxes collected from customers and remitted to governmental authorities on a net basis and, as such, excludes them from revenues. |
Comprehensive Loss | Comprehensive loss includes net loss as well as other changes in stockholders' equity that result from transactions and economic events other than those with stockholders. Other comprehensive loss consists of net loss, unrealized gains and losses on available-for-sale investments, and foreign currency translation adjustments. |
Stock-Based Compensation | Stock options, restricted stock units, and market stock units awarded to employees, directors, executives and consultants are measured at fair value at each grant date. The Company does not use a forfeiture rate to recognize compensation expense. Generally, options vest 25% on the one-year anniversary of the grant date with the balance vesting monthly over the following 36 months, and restricted stock unit awards vest in four annual installments of 25% each. Market stock units are performance-based awards that vest based on the Company's stockholder return relative to the total stockholder return of the Russell 2000 Index, or Index. Market stock units granted prior to fiscal 2021 vest over a three-year period on the anniversary of the date of grant, generally with up to one-third of the target shares of the Company's common stock subject to each market stock unit award eligible to be earned after the first and second years and up to 200% of the full target number of shares subject to each market stock unit award eligible to be earned after the completion of the three-year performance period (less any shares earned for years one and two) based on the average price of the Company's common stock relative to the Index during the performance period. Beginning in March 2021, newly granted market stock units vest over a two-year and three-year period, each running from the date of grant, with up to one-third of the target shares of the Company's common stock subject to each market stock unit award eligible to be earned after completion of the two-year performance period and up to 200% of the full target number of shares subject to each market stock unit award eligible to be earned after the completion of the three-year performance period (less any shares earned for the two-year performance period) based on the average price of the Company's common stock relative to the Index during the performance period. From time to time, we may make grants of restricted stock units or market stock units with vesting formulas that vary from those described above. The Company values stock options using the Black-Scholes option-pricing model, which requires the input of subjective assumptions, including the risk-free interest rate, expected life, expected stock price volatility and dividend yield. The risk-free interest rate assumption is based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the expected term of the Company's employee stock options. The expected life represents the time the stock options are expected to be outstanding and is based on the simplified method. Under the simplified method, the expected life of an option is presumed to be the mid-point between the vesting date and end of the contractual term. The Company used the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. Expected volatility is based on historical volatilities for publicly traded stock of comparable companies over the estimated expected life of the stock options. The Company assumes no dividend yield because it does not expect to pay dividends in the near future, which is consistent with the Company's history of not paying dividends. The Company recognizes compensation expense ratably over the requisite service period of the stock option award. The Company values restricted stock units at the closing market price on the date of grant and recognizes compensation expense ratably over the requisite service period of the restricted stock unit award. |
Convertible Senior Notes | In February 2018, the Company issued $230.0 million principal amount of convertible senior notes due in February 2023, or the 2023 Notes. In June 2019, the Company issued $316.3 million principal amount of convertible senior notes due in June 2026, or the 2026 Notes. In November 2020, the Company issued $350.0 million principal amount of convertible senior notes due in November 2025, or the 2025 Notes. This was achieved by exchanging $181.9 million principal amount of the 2023 Notes for $210.7 million principal amount of the 2025 Notes and issuing an additional $139.3 million of new notes. In May 2021, the Company repurchased $37.1 million principal amount of the 2023 Notes. As of June 30, 2021, the aggregate principal amount outstanding related to the 2023 Notes was $10.9 million. When accounting for the issuance of convertible notes, the Company separates each of the convertible notes into liability and equity components. The carrying amount of the liability component is calculated by measuring the fair value, as of the date of issuance, of a similar debt without the conversion feature. The carrying amount of the equity component representing the conversion feature is determined by deducting the fair value of the liability components from the total initial proceeds. The difference between the par amount of the convertible notes and the carrying amount of the liability component represents debt discounts that are amortized to interest expense over the respective terms of the convertible notes using the effective interest rate method. The equity components are not remeasured as long as they continue to meet the conditions for equity classification. In accounting for the issuance costs related to its convertible notes, the Company allocates the total amount of issuance costs incurred to liability and equity components based on their relative values. Issuance costs attributable to the liability components are amortized to interest expense over the respective terms of the convertible notes using the effective interest rate method. The issuance costs attributable to the equity components were netted against the respective equity components in additional paid-in capital. |
Leases | The Company determines if a contract contains a lease for accounting purposes at the inception of the arrangement. The Company has elected to apply the practical expedient which allows the Company to account for lease and non-lease components of a contract as a single leasing arrangement. In addition, the Company has elected the practical expedients related to lease classification and the short-term lease exemption, whereby leases with initial terms of one year or less are not capitalized and instead expensed generally on a straight-line basis over the lease term. The Company is primarily a lessee with a lease portfolio comprised mainly of real estate and equipment leases. As of June 30, 2021, the Company had no finance leases. Operating lease assets are included on the Company's condensed consolidated balance sheets in non-current assets as a right-of-use, or ROU, asset, and represent the Company's right to use an underlying asset for the lease term. Operating lease liabilities are included on the Company's condensed consolidated balance sheets in lease liabilities, current portion, for the portion that is due within 12 months and in lease liabilities, net of current portion, for the portion that is due beyond 12 months of the financial statement date and represent the Company's obligation to make lease payments. |
Income Taxes | Deferred income taxes are provided for the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases and operating loss carryforwards and credits using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. The Company assesses the likelihood that deferred tax assets will be realized and recognizes a valuation allowance if it is more likely than not that some portion of the deferred tax assets will not be realized. This assessment requires judgment as to the likelihood and amounts of future taxable income by tax jurisdiction. To date, the Company has provided a valuation allowance against most of its deferred tax assets as it believes the objective and verifiable evidence of its historical pretax net losses outweighs any positive evidence of its forecasted future results. The Company will continue to monitor the positive and negative evidence, and it will adjust the valuation allowance as sufficient objective positive evidence becomes available. The Company evaluates its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized. The Company believes it has accrued adequate reserves related to its uncertain tax positions; however, ultimate determination of our liability is subject to audit by taxing authorities in the ordinary course of business. Potential interest and penalties associated with any uncertain tax positions are recorded as a component of income tax expense. |
Basic and Diluted Net Loss per Common Share | Because the Company has the intention and ability to settle the principal amount of each of its 2023 Notes, 2025 Notes and 2026 Notes in cash, the treasury stock method is expected to be used for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. For the 2023 Notes, the conversion premium has a dilutive impact on net income per share of common stock when the average market price of common stock for a given period exceeds the conversion price of $57.38 per share. For the 2025 Notes, the conversion premium has a dilutive impact on net income per share of common stock when the average market price of common stock for a given period exceeds the conversion price of $140.14 per share. For the 2026 Notes, the conversion premium has a dilutive impact on net income per share of common stock when the average market price of common stock for a given period exceeds the conversion price of $88.61 per share. The warrants issued by the Company in connection with its February 2018 convertible note offering, or Warrants, have a dilutive effect when the average market price of common stock for a given period exceeds the Warrant's strike price of $78.75 per share. During the six months ended June 30, 2021 the average market price per share of the Company's common stock exceeded the conversion price of the 2023 and 2026 Notes and strike price of the Warrants; however, since the Company is in a net loss position, there was no dilutive effect on net loss per share of the Company's common stock during any period presented. During the six months ended June 30, 2020 the average market price per share of the Company's common stock exceeded the conversion price of the 2023 Notes; however, since the Company is in a net loss position, there was no dilutive effect on net loss per share of the Company's common stock during any period presented. |
Recent Accounting Pronouncements | In August 2020, the FASB issued ASU No. 2020-06, "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40)" which simplifies the accounting for convertible debt instruments by eliminating the requirement to separate embedded conversion features from the host contract when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. In addition, the guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the potential effects of this guidance on its consolidated financial statements and plans to adopt for the fiscal year beginning January 1, 2022. In May 2021, the FASB issued ASU No. 2021-04, "Earnings Per Share (Topic 260), Debt - Modifications and Extinguishments (Subtopic 470-50), Compensation - Stock Compensation (Topic 718), and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40)" which clarifies and reduces diversity in the accounting for modifications or exchanges of freestanding equity classified written call options that remain equity classified after modification or exchange. The ASU provides a principles-based framework to determine whether an issuer should recognize the modification or exchange as an adjustment to equity or an expense. The standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company is currently evaluating the potential effects of this guidance on its consolidated financial statements and plans to adopt for the fiscal year beginning January 1, 2022. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Useful Lives of Property and Equipment | The estimated useful lives of property and equipment are as follows: Computer hardware and equipment 3 - 5 years Purchased software and licenses 3 - 5 years Furniture and fixtures 7 years Leasehold improvements Lesser of estimated useful life or lease term |
Schedule of Disaggregation of Revenue by Major Source | The following table disaggregates the Company's revenue by major source: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Subscription $ 89,150 $ 70,174 $ 174,221 $ 136,406 Transactional 17,710 13,908 33,993 26,728 Services and Other 16,713 13,499 31,879 26,827 Total Revenues $ 123,573 $ 97,581 $ 240,093 $ 189,961 |
Schedule of Net Loss Per Share, Basic and Diluted | The following table sets forth the computations of net loss per share for the periods listed: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Numerator: Net loss $ (30,127) $ (38,971) $ (55,782) $ (73,079) Denominator: Weighted-average common shares outstanding, basic and diluted 56,360 51,241 56,081 49,911 Net loss per common share, basic and diluted $ (0.53) $ (0.76) $ (0.99) $ (1.46) |
Schedule of Antidilutive Securities Excluded from Computation of Loss Per Share | The following table sets forth the anti-dilutive common share equivalents for the periods listed: As of June 30, 2021 2020 Stock options, restricted stock units, and market stock units 2,613 3,263 Shares related to the 2023 Notes 93 1,030 Shares subject to warrants related to the issuance of the 2023 Notes 56 — Shares related to the 2026 Notes 746 — 3,508 4,293 |
Business Combinations (Tables)
Business Combinations (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Business Combinations [Abstract] | |
Schedule of Purchase Price | The total purchase price is as follows: Purchase Consideration Cash purchase price $ 62,500 Estimated working capital and other adjustments 3,008 Total purchase price $ 65,508 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The measurement period will end no later than one year from the acquisition date. Assets acquired: Cash $ 856 Accounts receivable, net 491 Prepaid expenses and other current assets 2,417 Property and equipment, net 39 Intangible assets, net 12,805 Goodwill 50,595 Total assets acquired 67,203 Liabilities assumed: Accounts payable, accrued liabilities, and accrued compensation 643 Deferred tax liability 74 Deferred revenues 978 Total liabilities assumed 1,695 Fair value of assets acquired and liabilities assumed $ 65,508 |
Schedule of Acquired Finite-Lived Intangible Assets by Major Class | The estimated fair value of the separately identifiable finite-lived intangible assets acquired and estimated useful lives are as follows (in thousands, except years): Estimated Fair Values Weighted-Average Useful Lives (in Years) Customer relationships $ 1,495 4.0 Non-compete agreements 570 2.9 Acquired technology 10,740 6.0 Total acquisition-related intangible assets $ 12,805 5.6 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Assets Measured on Recurring Basis | The following table details the fair value hierarchy of the Company's financial assets measured at fair value on a recurring basis as of June 30, 2021: Fair Value Measurements Using: Fair Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Assets Cash Equivalents: Money market funds $ 182,588 $ 182,588 $ — $ — Certificates of deposit 25,062 — 25,062 — $ 207,650 $ 182,588 $ 25,062 $ — Investments: Fair Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Corporate bonds and commercial paper $ 27,054 $ — $ 27,054 $ — Certificates of deposit 10,019 — 10,019 — U.S. government securities 56,269 — 56,269 — $ 93,342 $ — $ 93,342 $ — The following table details the fair value hierarchy of the Company's financial assets measured at fair value on a recurring basis as of December 31, 2020: Fair Value Measurements Using: Fair Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Assets Cash Equivalents: Money market funds $ 188,469 $ 188,469 $ — $ — Certificates of deposits 25,028 — 25,028 — Corporate bonds and commercial paper 996 — 996 — U.S. government securities 19,999 — 19,999 — $ 234,492 $ 188,469 $ 46,023 $ — Investments: Fair Value Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Corporate bonds and commercial paper $ 31,239 $ — $ 31,239 $ — Certificates of deposit 10,007 — 10,007 — U.S. government securities 90,106 — 90,106 — $ 131,352 $ — $ 131,352 $ — |
Cash, Cash Equivalents and In_2
Cash, Cash Equivalents and Investments (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Cash and Cash Equivalents [Abstract] | |
Summary of Cash, Cash Equivalents and Investments | A summary of the Company's cash equivalents and investments as of June 30, 2021 is as follows: Cash Equivalents: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Money market funds $ 182,588 $ — $ — $ 182,588 Certificates of deposit 25,062 — — 25,062 $ 207,650 $ — $ — $ 207,650 Investments: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate bonds and commercial paper $ 27,054 $ 3 $ (3) $ 27,054 Certificates of deposit 10,019 — — 10,019 U.S. government securities 56,274 1 (6) 56,269 $ 93,347 $ 4 $ (9) $ 93,342 A summary of the Company's cash equivalents and investments as of December 31, 2020 is as follows: Cash Equivalents: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Money market funds $ 188,469 $ — $ — $ 188,469 Certificates of deposit 25,028 — — 25,028 Corporate bonds and commercial paper 997 — (1) 996 U.S. government securities 19,999 — — 19,999 $ 234,493 $ — $ (1) $ 234,492 Investments: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate bonds and commercial paper $ 31,233 $ 15 $ (9) $ 31,239 Certificates of deposit 10,007 — — 10,007 U.S. government securities 90,120 — (14) 90,106 $ 131,360 $ 15 $ (23) $ 131,352 |
Schedule of Investments Classified by Contractual Maturity Date | The following table summarizes the estimated fair value of the Company's investments, designated as available-for-sale and classified by the contractual maturity date of the investments as of the dates shown: June 30, 2021 December 31, 2020 Due within one year or less $ 88,348 $ 131,352 Due after one year through five years 4,994 — $ 93,342 $ 131,352 |
Schedule of Fair Values and Gross Unrealized Losses for Available-For-Sale Securities | The following table shows the fair values and the gross unrealized losses of these available-for-sale investments aggregated by investment category as of June 30, 2021. Adjusted Cost Gross Unrealized Loss Fair Value U.S. government securities $ 6,023 $ (6) $ 6,017 Corporate bonds and commercial paper 18,387 (3) 18,384 $ 24,410 $ (9) $ 24,401 The following table shows the fair values and the gross unrealized losses of these available-for-sale investments aggregated by investment category as of December 31, 2020: Adjusted Cost Gross Unrealized Loss Fair Value U.S. government securities $ 90,120 $ (14) $ 90,106 Corporate bonds and commercial paper 21,445 (9) 21,436 $ 111,565 $ (23) $ 111,542 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets at June 30, 2021 and December 31, 2020 were as follows: As of June 30, 2021 As of December 31, 2020 Gross Amount Accumulated Amortization Net Carrying Amount Gross Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 65,900 $ (25,072) $ 40,828 $ 64,405 $ (18,568) $ 45,837 Non-compete agreements 13,275 (4,526) 8,749 12,705 (3,205) 9,500 Trademarks 19,870 (4,735) 15,135 19,870 (3,612) 16,258 Acquired technology 152,080 (41,014) 111,066 141,340 (30,256) 111,084 Capitalized software development costs 7,409 (3,390) 4,019 5,103 (2,923) 2,180 $ 258,534 $ (78,737) $ 179,797 $ 243,423 $ (58,564) $ 184,859 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated future amortization expense related to intangible assets as of June 30, 2021 was as follows: Amortization Year Ended December 31, 2021 (July 1 to December 31) $ 20,672 2022 41,015 2023 40,258 2024 35,149 2025 22,909 Thereafter 19,794 Total amortization $ 179,797 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Minimum Payments Required Under Operating Leases | Future minimum payments required under operating leases that have commenced and have initial or remaining non-cancelable lease terms in excess of one year at June 30, 2021 were as follows: Operating Leases Year Ended December 31, 2021 (July 1 to December 31) $ 5,416 2022 12,264 2023 11,981 2024 10,994 2025 10,051 Thereafter 26,437 Total lease payments $ 77,143 Less: present value discount (3,021) Present value of lease liabilities $ 74,122 |
Schedule of Future Minimum Contractual Commitments | Future minimum contractual commitments that have initial or remaining non-cancelable terms in excess of one year were as follows: Contractual Commitments Year Ended December 31, 2021 (from July 1 to December 31) $ 20,834 2022 29,069 2023 33,184 2024 7,183 2025 356,309 Thereafter 327,936 Total commitments $ 774,515 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Summary of Convertible Notes | The outstanding 2023 Notes consist of the following: As of June 30, 2021 As of December 31, 2020 Liability component: Principal $ 10,909 $ 48,035 Unamortized debt discount (891) (4,915) Unamortized debt issuance costs (89) (501) Net carrying amount 9,929 42,619 Equity component: Net carrying amount $ 2,321 $ 10,217 The outstanding 2026 Notes consist of the following: As of June 30, 2021 As of December 31, 2020 Liability component: Principal $ 316,250 $ 316,250 Unamortized debt discount (62,557) (67,977) Unamortized debt issuance costs (4,700) (5,114) Net carrying amount 248,993 243,159 Equity component: Net carrying amount $ 81,550 $ 81,550 The outstanding 2025 Notes consist of the following: As of June 30, 2021 As of December 31, 2020 Liability component: Principal $ 350,000 $ 350,000 Unamortized debt discount (66,310) (73,075) Unamortized debt issuance costs (4,717) (5,235) Net carrying amount 278,973 271,690 Equity component: Net carrying amount $ 73,109 $ 73,097 |
Summary of Interest Expense | The following table sets forth total interest expense recognized related to the 2023 Notes: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Contractual interest expense $ 62 $ 431 $ 152 $ 862 Amortization of debt issuance costs 91 293 152 543 Amortization of debt discount 415 2,482 961 4,916 Total $ 568 $ 3,206 $ 1,265 $ 6,321 The following table sets forth total interest expense recognized related to the 2026 Notes: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Contractual interest expense $ 593 $ 593 1,186 $ 1,179 Amortization of debt issuance costs 211 202 417 402 Amortization of debt discount 2,764 2,664 5,387 5,261 Total $ 3,568 $ 3,459 $ 6,990 $ 6,842 The following table sets forth total interest expense recognized related to the 2025 Notes: Three Months Ended Six Months Ended June 30, 2021 June 30, 2021 Contractual interest expense $ 109 $ 218 Amortization of debt issuance costs 238 476 Amortization of debt discount 3,374 6,706 Total $ 3,721 $ 7,400 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock Option Activity | Stock option activity during the six months ended June 30, 2021 was as follows: Number of Options Weighted Average Exercise Price Balance as of January 1, 2021 670 $ 27.43 Granted — — Exercised (209) 21.79 Forfeited — — Balance as of June 30, 2021 461 $ 29.99 |
Schedule of Nonvested Restricted Stock Units Activity | Restricted stock unit activity during the six months ended June 30, 2021 was as follows: Number of Shares Weighted Average Grant Date Fair Value Nonvested as of January 1, 2021 1,757 $ 70.74 Granted 566 120.26 Vested (309) 55.46 Forfeited (132) 75.49 Nonvested as of June 30, 2021 1,882 $ 87.82 |
Schedule of Nonvested Market Stock Units Activity | Market stock unit activity during the six months ended June 30, 2021 was as follows: Number of Shares Weighted Average Grant Date Fair Value Nonvested as of January 1, 2021 370 $ 35.67 Granted 101 80.11 Change in awards based on performance (1) 206 39.67 Vested (386) 33.62 Forfeited (21) 44.67 Nonvested as of June 30, 2021 270 $ 57.58 _______________________________________________________________________________ (1) Represents the change in the number of MSUs earned based on performance achievement for the performance period. |
Organization and Description _2
Organization and Description of Business (Details) | Jun. 30, 2021 |
Q2 Software, Inc. | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Wholly owned subsidiary, ownership percentage | 100.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Contract Balances and Accounts Receivable (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | |||
Provision for expected credit losses, contract balances | $ 20,000 | $ 200,000 | |
Writeoffs, contract balances | 0 | $ 0 | |
Allowance for credit loss, contract balances | 300,000 | 300,000 | |
Unbilled receivables | 5,000,000 | 2,100,000 | |
Provision for expected credit losses, accounts receivable | 100,000 | $ 900,000 | |
Writeoffs, accounts receivable | 100,000 | 600,000 | |
Allowance reserve | 600,000 | 600,000 | |
Allowance for credit losses, sales credits | $ 600,000 | $ 500,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Deferred Revenue (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Capitalized Contract Cost [Line Items] | |
Cash received in advance and not recognized as revenue | $ 240.3 |
Increase from netting of contract assets and liabilities on contract by contract basis | 2.6 |
Increase in revenue recognized from current year invoices | (187.7) |
Revenue recognized that was included in the deferred revenue balance in prior year | (52.4) |
Revenue from remaining performance obligations | $ 1,300 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-01 | |
Capitalized Contract Cost [Line Items] | |
Remaining performance obligation, percentage | 48.00% |
Performance obligations expected to be satisfied, expected timing | 24 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | |
Capitalized Contract Cost [Line Items] | |
Remaining performance obligation, percentage | 38.00% |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | Minimum | |
Capitalized Contract Cost [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 25 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | Maximum | |
Capitalized Contract Cost [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 48 months |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Deferred Implementation Costs, Deferred Solution and Other Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Deferred Implementation Costs | ||||
Capitalized Contract Cost [Line Items] | ||||
Capitalization of implementation costs | $ 3.4 | $ 5 | $ 6.8 | $ 9 |
Amortization of capitalized implementation costs | $ 2.4 | 2.4 | $ 5.2 | 4.5 |
Deferred Implementation Costs | Minimum | ||||
Capitalized Contract Cost [Line Items] | ||||
Expected period of customer benefit | 5 years | 5 years | ||
Deferred Implementation Costs | Maximum | ||||
Capitalized Contract Cost [Line Items] | ||||
Expected period of customer benefit | 7 years | 7 years | ||
Deferred Commissions | ||||
Capitalized Contract Cost [Line Items] | ||||
Capitalization of implementation costs | $ 3.2 | 2.9 | $ 6.3 | 8.5 |
Amortization of capitalized implementation costs | $ 3.1 | $ 2.3 | $ 6.4 | $ 4.1 |
Deferred Commissions | Minimum | ||||
Capitalized Contract Cost [Line Items] | ||||
Expected period of customer benefit | 5 years | 5 years | ||
Deferred Commissions | Maximum | ||||
Capitalized Contract Cost [Line Items] | ||||
Expected period of customer benefit | 7 years | 7 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Useful Lives of Property and Equipment (Details) | 6 Months Ended |
Jun. 30, 2021 | |
Computer hardware and equipment | Minimum | |
Intangible Assets, Net [Line Items] | |
Estimated useful life | 3 years |
Computer hardware and equipment | Maximum | |
Intangible Assets, Net [Line Items] | |
Estimated useful life | 5 years |
Purchased software and licenses | Minimum | |
Intangible Assets, Net [Line Items] | |
Estimated useful life | 3 years |
Purchased software and licenses | Maximum | |
Intangible Assets, Net [Line Items] | |
Estimated useful life | 5 years |
Furniture and fixtures | |
Intangible Assets, Net [Line Items] | |
Estimated useful life | 7 years |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Disaggregation of Revenues by Major Source (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Total Revenues | $ 123,573 | $ 97,581 | $ 240,093 | $ 189,961 |
Subscription | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenues | 89,150 | 70,174 | 174,221 | 136,406 |
Transactional | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenues | 17,710 | 13,908 | 33,993 | 26,728 |
Services and Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenues | $ 16,713 | $ 13,499 | $ 31,879 | $ 26,827 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Software Development Cost (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Capitalized software development costs | ||||
Intangible Assets, Net [Line Items] | ||||
Capitalized costs | $ 1,500,000 | $ 100,000 | $ 2,300,000 | $ 400,000 |
Amortization of capitalized software development costs | 100,000 | 0 | ||
Capitalized software development costs | ||||
Intangible Assets, Net [Line Items] | ||||
Capitalized costs | 0 | 0 | 0 | 0 |
Amortization of capitalized software development costs | $ 200,000 | $ 200,000 | $ 400,000 | $ 400,000 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Advertising (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Accounting Policies [Abstract] | ||||
Advertising costs | $ 0.5 | $ 0.2 | $ 0.6 | $ 0.4 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Stock-Based Compensation (Details) - annualInstallment | 1 Months Ended | 6 Months Ended |
Mar. 31, 2021 | Jun. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Dividend yield | 0.00% | |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 36 months | |
Stock options | Year One | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting rights (percentage) | 25.00% | |
Award vesting period | 1 year | |
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of annual installments | 4 | |
Restricted Stock Units (RSUs) | Year One | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting rights (percentage) | 25.00% | |
Restricted Stock Units (RSUs) | Year Two | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting rights (percentage) | 25.00% | |
Restricted Stock Units (RSUs) | Year Three | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting rights (percentage) | 25.00% | |
Restricted Stock Units (RSUs) | Year Four | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting rights (percentage) | 25.00% | |
Market Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 3 years | |
Market Stock Units | Year One | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting rights (percentage) | 33.00% | |
Market Stock Units | Year Two | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting rights (percentage) | 33.00% | |
Market Stock Units | Year Three | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting rights (percentage) | 200.00% | |
Market Stock Units | Two-year vest, 2021 market stocks | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting rights (percentage) | 200.00% | |
Award vesting period | 2 years | |
Market Stock Units | Three-year vest, 2021 market stocks | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 3 years |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Convertible Notes (Details) - Convertible Debt - USD ($) | 1 Months Ended | ||||
Nov. 30, 2020 | Jun. 30, 2021 | May 31, 2021 | Jun. 30, 2019 | Feb. 28, 2018 | |
Convertible Senior Notes Due February 2023 | |||||
Debt Instrument [Line Items] | |||||
Principal amount | $ 10,900,000 | $ 230,000,000 | |||
Extinguishment of debt | $ 181,900,000 | ||||
Repurchased principal amount | $ 37,100,000 | ||||
Convertible Senior Notes Due June 2026 | |||||
Debt Instrument [Line Items] | |||||
Principal amount | $ 316,300,000 | ||||
Convertible Notes Due 2025 | |||||
Debt Instrument [Line Items] | |||||
Principal amount | 350,000,000 | ||||
Principal amount received in 2025 notes | 210,700,000 | ||||
Principal amount, additional | $ 139,300,000 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Summary of Basic and Diluted Net Loss per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Numerator: | ||||
Net loss | $ (30,127) | $ (38,971) | $ (55,782) | $ (73,079) |
Denominator: | ||||
Weighted-average common shares outstanding, basic (in shares) | 56,360 | 51,241 | 56,081 | 49,911 |
Weighted-average common shares outstanding, diluted (in shares) | 56,360 | 51,241 | 56,081 | 49,911 |
Net loss per common share, basic (usd per share) | $ (0.53) | $ (0.76) | $ (0.99) | $ (1.46) |
Net loss per common share, diluted (usd per share) | (0.53) | $ (0.76) | $ (0.99) | $ (1.46) |
Antidilutive securities excluded from computation of earnings per share (in shares) | 3,508 | 4,293 | ||
Convertible Senior Notes Due June 2026 | Convertible Debt | ||||
Denominator: | ||||
Conversion price (usd per share) | 88.61 | $ 88.61 | ||
Convertible Notes Due 2025 | Convertible Debt | ||||
Denominator: | ||||
Conversion price (usd per share) | $ 140.14 | $ 140.14 | ||
Stock options, restricted stock units, and market stock units | ||||
Denominator: | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 2,613 | 3,263 | ||
Shares related to the 2023 Notes | ||||
Denominator: | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 93 | 1,030 | ||
Convertible Senior Notes Due February 2023 | ||||
Denominator: | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 56 | 0 | ||
Shares related to the 2026 Notes | ||||
Denominator: | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 746 | 0 |
Business Combinations - Narrati
Business Combinations - Narrative (Details) - USD ($) | Apr. 01, 2021 | Oct. 31, 2019 | Jun. 30, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 |
Business Acquisition [Line Items] | |||||||
Period held in escrow | 18 months | ||||||
Acquisition related costs | $ 1,188,000 | $ 1,127,000 | $ 2,038,000 | $ (840,000) | |||
ClickSWITCH | |||||||
Business Acquisition [Line Items] | |||||||
Cash purchase price | $ 65,500,000 | ||||||
Amount placed in escrow | $ 1,000,000 | ||||||
Escrow adjustment period | 90 days | ||||||
Additional escrow | $ (300,000) | ||||||
Period held in escrow | 12 months | ||||||
Estimated useful life | 5 years 7 months 6 days | ||||||
ClickSWITCH | Acquisition related costs | |||||||
Business Acquisition [Line Items] | |||||||
Acquisition related costs | 1,100,000 | 1,100,000 | |||||
PrecisionLender | |||||||
Business Acquisition [Line Items] | |||||||
Cash purchase price | $ 510,000,000 | ||||||
Amount placed in escrow | $ 3,000,000 | ||||||
Escrow adjustment period | 60 days | ||||||
Period held in escrow | 18 months | ||||||
Amount released | 1,800,000 | $ 3,000,000 | |||||
Additional payment to former stockholders upon finalization of closing estimates | $ 200,000 | ||||||
Amount deposited into escrow, portion of initial consideration to compensate for any breaches of warranty or violations | $ 1,800,000 | ||||||
PrecisionLender | Cost of revenues | |||||||
Business Acquisition [Line Items] | |||||||
Compensation expenses included in acquisition related costs | 100,000 | 200,000 | 200,000 | 500,000 | |||
PrecisionLender | Acquisition related costs | |||||||
Business Acquisition [Line Items] | |||||||
Compensation expenses included in acquisition related costs | 500,000 | $ 800,000 | 900,000 | $ 1,500,000 | |||
PL Escrow | |||||||
Business Acquisition [Line Items] | |||||||
Amount placed in escrow | $ 0 | $ 0 | |||||
Minimum | |||||||
Business Acquisition [Line Items] | |||||||
Estimated useful life | 2 years | ||||||
Minimum | ClickSWITCH | |||||||
Business Acquisition [Line Items] | |||||||
Estimated useful life | 2 years | ||||||
Maximum | |||||||
Business Acquisition [Line Items] | |||||||
Estimated useful life | 10 years | ||||||
Maximum | ClickSWITCH | |||||||
Business Acquisition [Line Items] | |||||||
Estimated useful life | 6 years |
Business Combinations - Schedul
Business Combinations - Schedule of Purchase Price (Details) - USD ($) $ in Thousands | Apr. 01, 2021 | Jun. 30, 2021 | Jun. 30, 2020 |
Cash purchase price | $ 64,652 | $ 0 | |
ClickSWITCH | |||
Cash purchase price | $ 62,500 | ||
Estimated working capital and other adjustments | 3,008 | ||
Total purchase price | $ 65,508 |
Business Combinations - Sched_2
Business Combinations - Schedule of Fair Value of Assets Acquired and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Apr. 01, 2021 | Dec. 31, 2020 |
Assets acquired: | |||
Goodwill | $ 512,869 | $ 462,274 | |
ClickSWITCH | |||
Assets acquired: | |||
Cash | $ 856 | ||
Accounts receivable, net | 491 | ||
Prepaid expenses and other current assets | 2,417 | ||
Property and equipment, net | 39 | ||
Intangible assets, net | 12,805 | ||
Goodwill | $ 50,600 | 50,595 | |
Total assets acquired | 67,203 | ||
Liabilities assumed: | |||
Accounts payable, accrued liabilities, and accrued compensation | 643 | ||
Deferred tax liability | 74 | ||
Deferred revenues | 978 | ||
Total liabilities assumed | 1,695 | ||
Fair value of assets acquired and liabilities assumed | $ 65,508 |
Business Combinations - Intangi
Business Combinations - Intangible Assets Acquired (Details) - USD ($) $ in Thousands | Apr. 01, 2021 | Jun. 30, 2021 |
Minimum | ||
Business Acquisition [Line Items] | ||
Estimated useful life | 2 years | |
Maximum | ||
Business Acquisition [Line Items] | ||
Estimated useful life | 10 years | |
ClickSWITCH | ||
Business Acquisition [Line Items] | ||
Estimated Fair Values | $ 12,805 | |
Estimated useful life | 5 years 7 months 6 days | |
ClickSWITCH | Minimum | ||
Business Acquisition [Line Items] | ||
Estimated useful life | 2 years | |
ClickSWITCH | Maximum | ||
Business Acquisition [Line Items] | ||
Estimated useful life | 6 years | |
ClickSWITCH | Customer relationships | ||
Business Acquisition [Line Items] | ||
Estimated Fair Values | $ 1,495 | |
Estimated useful life | 4 years | |
ClickSWITCH | Non-compete agreements | ||
Business Acquisition [Line Items] | ||
Estimated Fair Values | $ 570 | |
Estimated useful life | 2 years 10 months 24 days | |
ClickSWITCH | Acquired technology | ||
Business Acquisition [Line Items] | ||
Estimated Fair Values | $ 10,740 | |
Estimated useful life | 6 years |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 207,650 | $ 234,492 |
Investments | 93,342 | 131,352 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level I) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 182,588 | 188,469 |
Investments | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level II) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 25,062 | 46,023 |
Investments | 93,342 | 131,352 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level III) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Investments | 0 | 0 |
Corporate bonds and commercial paper | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 27,054 | 31,239 |
Corporate bonds and commercial paper | Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level I) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Corporate bonds and commercial paper | Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level II) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 27,054 | 31,239 |
Corporate bonds and commercial paper | Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level III) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Certificates of deposit | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 10,019 | 10,007 |
Certificates of deposit | Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level I) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Certificates of deposit | Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level II) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 10,019 | 10,007 |
Certificates of deposit | Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level III) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
U.S. government securities | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 56,269 | 90,106 |
U.S. government securities | Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level I) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
U.S. government securities | Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level II) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 56,269 | 90,106 |
U.S. government securities | Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level III) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 182,588 | 188,469 |
Money market funds | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 182,588 | 188,469 |
Money market funds | Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level I) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 182,588 | 188,469 |
Money market funds | Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level II) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Money market funds | Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level III) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 25,062 | 25,028 |
Certificates of deposit | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 25,062 | 25,028 |
Certificates of deposit | Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level I) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Certificates of deposit | Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level II) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 25,062 | 25,028 |
Certificates of deposit | Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level III) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 0 | 0 |
Corporate bonds and commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 996 | |
Corporate bonds and commercial paper | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 996 | |
Corporate bonds and commercial paper | Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level I) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | |
Corporate bonds and commercial paper | Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level II) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 996 | |
Corporate bonds and commercial paper | Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level III) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | |
U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 19,999 | |
U.S. government securities | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 19,999 | |
U.S. government securities | Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level I) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | |
U.S. government securities | Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level II) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 19,999 | |
U.S. government securities | Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level III) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 0 |
Cash, Cash Equivalents and In_3
Cash, Cash Equivalents and Investments - Narrative (Details) - USD ($) | 3 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Cash and Cash Equivalents [Line Items] | |||
Impairments for credit losses | $ 0 | $ 0 | |
Cash and cash equivalents | 317,949,000 | $ 407,703,000 | |
Available for sale debt securities allowance for credit loss | 0 | 0 | |
Cash | |||
Cash and Cash Equivalents [Line Items] | |||
Cash and cash equivalents | $ 110,300,000 | $ 173,200,000 |
Cash, Cash Equivalents and In_4
Cash, Cash Equivalents and Investments - Summary of Cash Equivalents and Investments (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Debt Securities, Available-for-sale [Line Items] | ||
Gross Unrealized Gains | $ 4 | $ 15 |
Gross Unrealized Losses | (9) | (23) |
Investments, amortized cost | 93,347 | 131,360 |
Investments, fair value | 93,342 | 131,352 |
Corporate bonds and commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Gross Unrealized Gains | 3 | 15 |
Gross Unrealized Losses | (3) | (9) |
Investments, amortized cost | 27,054 | 31,233 |
Investments, fair value | 27,054 | 31,239 |
Certificates of deposit | ||
Debt Securities, Available-for-sale [Line Items] | ||
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Investments, amortized cost | 10,019 | 10,007 |
Investments, fair value | 10,019 | 10,007 |
U.S. government securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Gross Unrealized Gains | 1 | 0 |
Gross Unrealized Losses | (6) | (14) |
Investments, amortized cost | 56,274 | 90,120 |
Investments, fair value | 56,269 | 90,106 |
Money market funds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cash equivalents, amortized cost | 182,588 | 188,469 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Cash equivalents, fair value | 182,588 | 188,469 |
Certificates of deposit | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cash equivalents, amortized cost | 25,062 | 25,028 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Cash equivalents, fair value | 25,062 | 25,028 |
Corporate bonds and commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cash equivalents, amortized cost | 997 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | (1) | |
Cash equivalents, fair value | 996 | |
U.S. government securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cash equivalents, amortized cost | 19,999 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | 0 | |
Cash equivalents, fair value | 19,999 | |
Cash | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cash equivalents, amortized cost | 207,650 | 234,493 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | (1) |
Cash equivalents, fair value | $ 207,650 | $ 234,492 |
Cash, Cash Equivalents and In_5
Cash, Cash Equivalents and Investments - Schedule of Contractual Maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Cash and Cash Equivalents [Abstract] | ||
Due within one year or less | $ 88,348 | $ 131,352 |
Due after one year through five years | 4,994 | 0 |
Total | $ 93,342 | $ 131,352 |
Cash, Cash Equivalents and In_6
Cash, Cash Equivalents and Investments - Fair Values and Gross Unrealized Loss of Available-For-Sale Investments (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Debt Securities, Available-for-sale [Line Items] | ||
Adjusted Cost | $ 24,410 | $ 111,565 |
Gross Unrealized Loss | (9) | (23) |
Fair Value | 24,401 | 111,542 |
U.S. government securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Adjusted Cost | 6,023 | 90,120 |
Gross Unrealized Loss | (6) | (14) |
Fair Value | 6,017 | 90,106 |
Corporate bonds and commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Adjusted Cost | 18,387 | 21,445 |
Gross Unrealized Loss | (3) | (9) |
Fair Value | $ 18,384 | $ 21,436 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Narrative (Details) | Apr. 01, 2021USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)operatingSegmentreportingUnit | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($) |
Finite-Lived Intangible Assets [Line Items] | ||||||
Goodwill | $ 512,869,000 | $ 512,869,000 | $ 462,274,000 | |||
Number of operating segments | operatingSegment | 1 | |||||
Number of reporting units | reportingUnit | 1 | |||||
Impairment of goodwill | $ 0 | 0 | ||||
Amortization of acquired intangibles | 4,563,000 | $ 4,491,000 | 8,982,000 | $ 8,982,000 | ||
Gross intangible assets | 258,534,000 | 258,534,000 | 243,423,000 | |||
ClickSWITCH | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Goodwill | $ 50,595,000 | 50,600,000 | 50,600,000 | |||
Estimated useful life | 5 years 7 months 6 days | |||||
Capitalized software development costs | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Gross intangible assets | 7,409,000 | 7,409,000 | $ 5,103,000 | |||
Amortization of capitalized software development costs | 300,000 | 200,000 | 500,000 | 400,000 | ||
Cost of revenues | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Amortization of acquired intangibles | 5,600,000 | 5,500,000 | 10,800,000 | 10,900,000 | ||
Operating expenses | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Amortization of acquired intangibles | $ 4,600,000 | $ 4,500,000 | $ 9,000,000 | $ 9,000,000 | ||
Minimum | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated useful life | 2 years | |||||
Minimum | ClickSWITCH | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated useful life | 2 years | |||||
Minimum | Capitalized software development costs | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated useful life | 3 years | |||||
Maximum | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated useful life | 10 years | |||||
Maximum | ClickSWITCH | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated useful life | 6 years | |||||
Maximum | Capitalized software development costs | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated useful life | 5 years |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | $ 258,534 | $ 243,423 |
Accumulated Amortization | (78,737) | (58,564) |
Net Carrying Amount | 179,797 | 184,859 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 65,900 | 64,405 |
Accumulated Amortization | (25,072) | (18,568) |
Net Carrying Amount | 40,828 | 45,837 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 13,275 | 12,705 |
Accumulated Amortization | (4,526) | (3,205) |
Net Carrying Amount | 8,749 | 9,500 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 19,870 | 19,870 |
Accumulated Amortization | (4,735) | (3,612) |
Net Carrying Amount | 15,135 | 16,258 |
Acquired technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 152,080 | 141,340 |
Accumulated Amortization | (41,014) | (30,256) |
Net Carrying Amount | 111,066 | 111,084 |
Capitalized software development costs | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 7,409 | 5,103 |
Accumulated Amortization | (3,390) | (2,923) |
Net Carrying Amount | $ 4,019 | $ 2,180 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedule of Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2021 (July 1 to December 31) | $ 20,672 | |
2022 | 41,015 | |
2023 | 40,258 | |
2024 | 35,149 | |
2025 | 22,909 | |
Thereafter | 19,794 | |
Total amortization | $ 179,797 | $ 184,859 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) ft² in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
May 30, 2020USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)ft²building | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($) | Sep. 30, 2021USD ($) | |
Other Commitments [Line Items] | |||||||
Number of buildings occupied | building | 2 | ||||||
Unoccupied lease charges | $ 812 | $ 668 | $ 812 | $ 668 | |||
Lease liability, current | 7,842 | 7,842 | $ 6,844 | ||||
Lease liability, non-current | 66,280 | 66,280 | 36,739 | ||||
Rent expense | 1,700 | 1,800 | 3,300 | 3,400 | |||
Partnership termination charges | $ 5,600 | $ 0 | $ 13,244 | $ 0 | $ 13,244 | ||
Subsequent Event | |||||||
Other Commitments [Line Items] | |||||||
Expected termination fees associated with contractual commitments | $ 7,600 | ||||||
Lease One | |||||||
Other Commitments [Line Items] | |||||||
Leased square feet | ft² | 129 | ||||||
Lease renewal term | 10 years | 10 years | |||||
Lease Two | |||||||
Other Commitments [Line Items] | |||||||
Leased square feet | ft² | 129 | ||||||
Lease term | 10 years | 10 years | |||||
Facilities | |||||||
Other Commitments [Line Items] | |||||||
Unoccupied lease charges | $ 800 | $ 2,200 | |||||
Lease liability, current | $ 1,100 | 1,100 | |||||
Lease liability, non-current | $ 1,300 | $ 1,300 |
Commitments and Contingencies_2
Commitments and Contingencies - Schedule of Minimum Payments Required Under Operating Leases (Details) $ in Thousands | Jun. 30, 2021USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2021 (July 1 to December 31) | $ 5,416 |
2022 | 12,264 |
2023 | 11,981 |
2024 | 10,994 |
2025 | 10,051 |
Thereafter | 26,437 |
Total lease payments | 77,143 |
Less: present value discount | (3,021) |
Present value of lease liabilities | $ 74,122 |
Commitments and Contingencies_3
Commitments and Contingencies - Contractual Commitments (Details) $ in Thousands | Jun. 30, 2021USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2021 (from July 1 to December 31) | $ 20,834 |
2022 | 29,069 |
2023 | 33,184 |
2024 | 7,183 |
2025 | 356,309 |
Thereafter | 327,936 |
Total commitments | $ 774,515 |
Convertible Senior Notes - Narr
Convertible Senior Notes - Narrative (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
May 31, 2021USD ($)shares | Nov. 30, 2020USD ($)$ / sharesshares | Jun. 30, 2019USD ($)day | Feb. 28, 2018USD ($)shares | Jun. 30, 2021USD ($)$ / sharesshares | Mar. 31, 2021day | Jun. 30, 2020USD ($)day | Mar. 31, 2019day | Jun. 30, 2021USD ($)day$ / sharesshares | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($)day | |
Debt Instrument [Line Items] | |||||||||||
Loss on extinguishment of debt | $ 1,513,000 | $ 0 | $ 1,513,000 | $ 0 | |||||||
Payments for repurchases of convertible notes | 63,692,000 | 0 | |||||||||
Payments for warrants related to convertible notes | $ 19,655,000 | $ 0 | |||||||||
Bond Hedge | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Total cost of bond hedge | $ 41,700,000 | ||||||||||
Warrant Transaction | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Number of bond hedges and warrants issued, subject to anti-dilution adjustments (in shares) | shares | 4,000,000 | ||||||||||
Warrant strike price (usd per share) | $ / shares | $ 78.75 | $ 78.75 | |||||||||
Proceeds from bond hedge | $ 22,400,000 | ||||||||||
Convertible Senior Notes Due February 2023 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Carrying value | $ 10,000,000 | ||||||||||
Loss on extinguishment of debt | $ (1,500,000) | ||||||||||
Unamortized debt issuance costs | 300,000 | ||||||||||
Remaining amortization period for debt discount and debt issuance costs | 1 year 7 months 6 days | ||||||||||
Convertible Senior Notes Due February 2023 | Convertible Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate | 0.75% | ||||||||||
Principal amount | $ 230,000,000 | 10,900,000 | $ 10,900,000 | ||||||||
Principal amount exchanged | $ 181,900,000 | ||||||||||
Initial conversion rate of common stock | 0.0174292 | ||||||||||
Carrying value | 42,900,000 | 9,929,000 | 9,929,000 | $ 42,619,000 | |||||||
Loss on extinguishment of debt | 8,900,000 | ||||||||||
Unamortized debt issuance costs | $ 2,000,000 | $ 89,000 | $ 89,000 | $ 501,000 | |||||||
Repurchased principal amount | 37,100,000 | ||||||||||
Payments for repurchases of convertible notes | $ 63,700,000 | ||||||||||
Limitation on sale of common stock, sale price threshold, number of trading days | day | 20 | 20 | 20 | ||||||||
Limitation on sale of common stock, sale price threshold, trading period | day | 30 | 30 | 30 | 30 | |||||||
Threshold percentage of stock price trigger | 130.00% | 130.00% | 130.00% | 130.00% | |||||||
Number of consecutive business days | 5 days | ||||||||||
Percentage of closing sale price in excess of convertible notes | 98.00% | ||||||||||
Redemption price percentage | 100.00% | ||||||||||
If-converted value of convertible note that exceed principal amount | $ 8,600,000 | ||||||||||
Closing price of common stock (in dollars per share) | $ / shares | $ 102.58 | $ 102.58 | |||||||||
Effective interest rate of liability component | 5.875% | ||||||||||
Issuance costs attributable to the liability component | $ 5,300,000 | ||||||||||
Net issuance costs related to the equity component | $ 1,500,000 | ||||||||||
Number of bond hedges and warrants issued, subject to anti-dilution adjustments (in shares) | shares | 100,000 | 100,000 | |||||||||
Convertible Senior Notes Due February 2023 | Convertible Debt | Bond Hedge | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Conversion price (usd per share) | $ / shares | $ 57.38 | $ 57.38 | |||||||||
Number of securities called by warrants (in shares) | shares | 700,000 | ||||||||||
Number of bond hedges and warrants issued, subject to anti-dilution adjustments (in shares) | shares | 100,000 | 900,000 | |||||||||
Proceeds from bond hedge | $ 26,300,000 | $ 171,700,000 | |||||||||
Convertible Senior Notes Due February 2023 | Convertible Debt | Warrant Transaction | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Number of bond hedges and warrants issued, subject to anti-dilution adjustments (in shares) | shares | 600,000 | 200,000 | 200,000 | ||||||||
Proceeds from bond hedge | $ 19,700,000 | 3,200,000 | |||||||||
Payments for warrants related to convertible notes | $ 137,500,000 | ||||||||||
Convertible Senior Notes Due June 2026 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Remaining amortization period for debt discount and debt issuance costs | 4 years 10 months 24 days | ||||||||||
Convertible Senior Notes Due June 2026 | Convertible Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate | 0.75% | ||||||||||
Principal amount | $ 316,300,000 | ||||||||||
Conversion price (usd per share) | $ / shares | $ 88.61 | $ 88.61 | |||||||||
Initial conversion rate of common stock | 0.0112851 | ||||||||||
Carrying value | $ 248,993,000 | $ 248,993,000 | $ 243,159,000 | ||||||||
Unamortized debt issuance costs | $ 4,700,000 | 4,700,000 | 5,114,000 | ||||||||
Limitation on sale of common stock, sale price threshold, number of trading days | day | 20 | 20 | |||||||||
Limitation on sale of common stock, sale price threshold, trading period | day | 30 | 30 | |||||||||
Threshold percentage of stock price trigger | 130.00% | 130.00% | |||||||||
Number of consecutive business days | 5 days | ||||||||||
Percentage of closing sale price in excess of convertible notes | 98.00% | ||||||||||
Redemption price percentage | 100.00% | ||||||||||
If-converted value of convertible note that exceed principal amount | $ 49,800,000 | ||||||||||
Closing price of common stock (in dollars per share) | $ / shares | $ 102.58 | $ 102.58 | |||||||||
Effective interest rate of liability component | 5.38% | ||||||||||
Issuance costs attributable to the liability component | $ 6,400,000 | ||||||||||
Net issuance costs related to the equity component | 2,900,000 | ||||||||||
Initial strike price (in usd per share) | $ / shares | 88.6124 | 88.6124 | |||||||||
Initial cap price (in usd per share) | $ / shares | 139 | $ 139 | |||||||||
Cost incurred in connection with capped calls | $ 40,800,000 | ||||||||||
Convertible Notes Due 2025 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Remaining amortization period for debt discount and debt issuance costs | 4 years 4 months 24 days | ||||||||||
Convertible Notes Due 2025 | Convertible Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate | 0.125% | ||||||||||
Principal amount | $ 350,000,000 | ||||||||||
Conversion price (usd per share) | $ / shares | $ 140.14 | $ 140.14 | |||||||||
Initial conversion rate of common stock | 0.0071355 | ||||||||||
Principal amount received in 2025 notes | $ 210,700,000 | ||||||||||
Shares issued from exchange on convertible senior notes (in shares) | shares | 1,300,000 | ||||||||||
Carrying value | $ 278,973,000 | $ 278,973,000 | 271,690,000 | ||||||||
Unamortized debt issuance costs | $ 4,717,000 | $ 4,717,000 | $ 5,235,000 | ||||||||
Limitation on sale of common stock, sale price threshold, number of trading days | day | 20 | ||||||||||
Limitation on sale of common stock, sale price threshold, trading period | day | 30 | ||||||||||
Threshold percentage of stock price trigger | 130.00% | ||||||||||
Number of consecutive business days | 5 days | ||||||||||
Percentage of closing sale price in excess of convertible notes | 98.00% | ||||||||||
Redemption price percentage | 100.00% | ||||||||||
Effective interest rate of liability component | 5.00% | 5.00% | |||||||||
Issuance costs attributable to the liability component | $ 5,400,000 | ||||||||||
Net issuance costs related to the equity component | $ 1,500,000 | ||||||||||
Initial strike price (in usd per share) | $ / shares | $ 140.1443 | ||||||||||
Initial cap price (in usd per share) | $ / shares | $ 211.54 | ||||||||||
Cost incurred in connection with capped calls | $ 39,800,000 | ||||||||||
Principal amount, additional | $ 139,300,000 |
Convertible Senior Notes - Sche
Convertible Senior Notes - Schedule of Convertible Notes (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | May 31, 2021 | Dec. 31, 2020 | Nov. 30, 2020 |
Convertible Senior Notes Due February 2023 | ||||
Liability component: | ||||
Unamortized debt issuance costs | $ (300) | |||
Net carrying amount | $ 10,000 | |||
Convertible Debt | Convertible Senior Notes Due February 2023 | ||||
Liability component: | ||||
Principal | $ 10,909 | $ 48,035 | ||
Unamortized debt discount | (891) | (4,915) | ||
Unamortized debt issuance costs | (89) | (501) | $ (2,000) | |
Net carrying amount | 9,929 | 42,619 | $ 42,900 | |
Convertible Debt | Convertible Senior Notes Due February 2023 | Net carrying amount | ||||
Equity component: | ||||
Net carrying amount | 2,321 | 10,217 | ||
Convertible Debt | Convertible Senior Notes Due June 2026 | ||||
Liability component: | ||||
Principal | 316,250 | 316,250 | ||
Unamortized debt discount | (62,557) | (67,977) | ||
Unamortized debt issuance costs | (4,700) | (5,114) | ||
Net carrying amount | 248,993 | 243,159 | ||
Convertible Debt | Convertible Senior Notes Due June 2026 | Net carrying amount | ||||
Equity component: | ||||
Net carrying amount | 81,550 | 81,550 | ||
Convertible Debt | Convertible Notes Due 2025 | ||||
Liability component: | ||||
Principal | 350,000 | 350,000 | ||
Unamortized debt discount | (66,310) | (73,075) | ||
Unamortized debt issuance costs | (4,717) | (5,235) | ||
Net carrying amount | 278,973 | 271,690 | ||
Equity component: | ||||
Net carrying amount | $ 73,109 | $ 73,097 |
Convertible Senior Notes - Sc_2
Convertible Senior Notes - Schedule of Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Debt Instrument [Line Items] | ||||
Amortization of debt issuance costs | $ 1,045 | $ 945 | ||
Amortization of debt discount | 13,054 | 10,177 | ||
Convertible Senior Notes Due February 2023 | Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Contractual interest expense | $ 62 | $ 431 | 152 | 862 |
Amortization of debt issuance costs | 91 | 293 | 152 | 543 |
Amortization of debt discount | 415 | 2,482 | 961 | 4,916 |
Total | 568 | 3,206 | 1,265 | 6,321 |
Convertible Senior Notes Due June 2026 | Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Contractual interest expense | 593 | 593 | 1,186 | 1,179 |
Amortization of debt issuance costs | 211 | 202 | 417 | 402 |
Amortization of debt discount | 2,764 | 2,664 | 5,387 | 5,261 |
Total | 3,568 | $ 3,459 | 6,990 | $ 6,842 |
Convertible Notes Due 2025 | Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Contractual interest expense | 109 | 218 | ||
Amortization of debt issuance costs | 238 | 476 | ||
Amortization of debt discount | 3,374 | 6,706 | ||
Total | $ 3,721 | $ 7,400 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | May 15, 2020 | Jun. 30, 2021 | Jun. 30, 2020 |
Class of Stock [Line Items] | |||
Proceeds from issuance of common stock, net of issuance costs | $ 311,300 | $ 0 | $ 311,636 |
Underwriting discounts, commissions and offering costs | $ 12,700 | ||
Public Stock Offering | |||
Class of Stock [Line Items] | |||
Issuance of common stock from registered public offering (in shares) | 4,735,294 | ||
Issuance of common stock from registered public offering (in usd per share) | $ 76.50 | ||
Public Stock Offering - Shares From Parent | |||
Class of Stock [Line Items] | |||
Issuance of common stock from registered public offering (in shares) | 4,235,294 | ||
Public Stock Offering - Shares From Existing Shareholders | |||
Class of Stock [Line Items] | |||
Issuance of common stock from registered public offering (in shares) | 500,000 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - shares | Jan. 01, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock, granted (in shares) | 0 | ||
2014 Stock Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares reserved for future issuance under the plan (in shares) | 13,322 | ||
Additional shares authorized under the plan, percentage increase | 4.50% | ||
Automatic annual increase (in shares) | 2,500,000 | ||
Shares transferred from the previous plan that expired or terminated (in shares) | 0 | ||
Shares allocated for issuance (in shares) | 15,823,000 | ||
Common stock, granted (in shares) | 2,706,000 | ||
Shares available for future issuance under the plan (in shares) | 7,836,000 | ||
2014 Stock Plan | Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares reserved for future issuance under the plan (in shares) | 6,557,000 | ||
Shares transferred from the previous plan that expired or terminated (in shares) | 1,276,000 | ||
2007 Stock Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares available for future issuance under the plan (in shares) | 0 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) shares in Thousands | 6 Months Ended |
Jun. 30, 2021$ / sharesshares | |
Number of Options | |
Balance as of beginning of period (in shares) | shares | 670 |
Stock options, granted (in shares) | shares | 0 |
Stock options, exercised (in shares) | shares | (209) |
Stock options, forfeited (in shares) | shares | 0 |
Balance as of end of period (in shares) | shares | 461 |
Weighted Average Exercise Price | |
Balance at beginning of period (in dollars per share) | $ / shares | $ 27.43 |
Granted (in dollars per share) | $ / shares | 0 |
Exercised (in dollars per share) | $ / shares | 21.79 |
Forfeited (in dollars per share) | $ / shares | 0 |
Balance at end of period (in dollars per share) | $ / shares | $ 29.99 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) shares in Thousands | 6 Months Ended |
Jun. 30, 2021$ / sharesshares | |
Number of Shares | |
Nonvested as of beginning of period (in shares) | shares | 1,757 |
Granted (in shares) | shares | 566 |
Vested (in shares) | shares | (309) |
Forfeited (in shares) | shares | (132) |
Nonvested as of end of period (in shares) | shares | 1,882 |
Weighted Average Grant Date Fair Value | |
Nonvested at beginning of period (in dollars per share) | $ / shares | $ 70.74 |
Granted (in dollars per share) | $ / shares | 120.26 |
Vested (in dollars per share) | $ / shares | 55.46 |
Forfeited (in dollars per share) | $ / shares | 75.49 |
Nonvested at end of period (in dollars per share) | $ / shares | $ 87.82 |
Stock-Based Compensation - Mark
Stock-Based Compensation - Market Stock Unit Activity (Details) - Market Stock Units shares in Thousands | 6 Months Ended |
Jun. 30, 2021$ / sharesshares | |
Number of Shares | |
Nonvested as of beginning of period (in shares) | shares | 370 |
Granted (in shares) | shares | 101 |
Change in awards based on performance (in shares) | shares | 206 |
Vested (in shares) | shares | (386) |
Forfeited (in shares) | shares | (21) |
Nonvested as of end of period (in shares) | shares | 270 |
Weighted Average Grant Date Fair Value | |
Nonvested at beginning of period (in dollars per share) | $ / shares | $ 35.67 |
Granted (in dollars per share) | $ / shares | 80.11 |
Change in awards based on performance (in dollars per share) | $ / shares | 39.67 |
Vested (in dollars per share) | $ / shares | 33.62 |
Forfeited (in dollars per share) | $ / shares | 44.67 |
Nonvested at end of period (in dollars per share) | $ / shares | $ 57.58 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | (0.60%) | (0.20%) | (0.60%) | (0.70%) |
Unrecognized tax benefits | $ 0.3 | $ 0.3 |