Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 30, 2018 | |
Document and Entity Information [Line Items] | ||
Entity Registrant Name | APPIAN CORP | |
Entity Central Index Key | 1,441,683 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Trading Symbol | APPN | |
Class A Common Stock | ||
Document and Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 22,762,370 | |
Class B Common Stock | ||
Document and Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 38,971,524 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 50,363 | $ 73,758 |
Accounts receivable, net of allowance of $400 | 64,916 | 55,315 |
Deferred commissions, current | 10,890 | 9,117 |
Prepaid expenses and other current assets | 6,374 | 7,032 |
Total current assets | 132,543 | 145,222 |
Property and equipment, net | 3,208 | 2,663 |
Deferred commissions, net of current portion | 13,665 | 12,376 |
Deferred tax assets | 245 | 281 |
Other assets | 599 | 510 |
Total assets | 150,260 | 161,052 |
Current liabilities | ||
Accounts payable | 8,888 | 5,226 |
Accrued expenses | 6,468 | 6,467 |
Accrued compensation and related benefits | 13,644 | 12,075 |
Deferred revenue, current | 72,901 | 70,165 |
Other current liabilities | 1,541 | 1,182 |
Total current liabilities | 103,442 | 95,115 |
Deferred tax liabilities | 11 | 87 |
Deferred revenue, net of current portion | 14,514 | 18,922 |
Other long-term liabilities | 234 | 1,404 |
Total liabilities | 118,201 | 115,528 |
Stockholders’ equity | ||
Additional paid-in capital | 147,786 | 141,268 |
Accumulated other comprehensive income | 976 | 439 |
Accumulated deficit | (116,709) | (96,189) |
Total stockholders’ equity | 32,059 | 45,524 |
Total liabilities and stockholders’ equity | 150,260 | 161,052 |
Class A Common Stock | ||
Stockholders’ equity | ||
Common stock | 2 | 1 |
Class B Common Stock | ||
Stockholders’ equity | ||
Common stock | $ 4 | $ 5 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Allowance for doubtful accounts | $ 400 | $ 400 |
Common stock, par value | $ 0.0001 | |
Class A Common Stock | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 19,422,534 | 13,030,081 |
Common stock, shares outstanding | 19,422,534 | 13,030,081 |
Class B Common Stock | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 42,190,346 | 47,569,796 |
Common stock, shares outstanding | 42,190,346 | 47,569,796 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenue: | ||||
Total revenue | $ 59,883 | $ 43,198 | $ 111,579 | $ 81,527 |
Cost of revenue: | ||||
Total cost of revenue | 21,574 | 16,637 | 42,623 | 29,327 |
Gross profit | 38,309 | 26,561 | 68,956 | 52,200 |
Operating expenses: | ||||
Sales and marketing | 27,384 | 22,775 | 50,348 | 39,778 |
Research and development | 10,785 | 9,971 | 20,655 | 17,271 |
General and administrative | 8,425 | 8,635 | 16,485 | 13,484 |
Total operating expenses | 46,594 | 41,381 | 87,488 | 70,533 |
Operating loss | (8,285) | (14,820) | (18,532) | (18,333) |
Other expense (income): | ||||
Other expense (income), net | 2,593 | (734) | 1,675 | (1,233) |
Interest expense | 54 | 197 | 67 | 453 |
Total other expense (income) | 2,647 | (537) | 1,742 | (780) |
Net loss before income taxes | (10,932) | (14,283) | (20,274) | (17,553) |
Income tax expense | 35 | 176 | 246 | 301 |
Net loss | (10,967) | (14,459) | (20,520) | (17,854) |
Accretion of dividends on convertible preferred stock | 0 | 143 | 0 | 357 |
Net loss attributable to common stockholders | $ (10,967) | $ (14,602) | $ (20,520) | $ (18,211) |
Net loss per share attributable to common stockholders: | ||||
Basic and diluted (in dollar per share) | $ (0.18) | $ (0.34) | $ (0.34) | $ (0.47) |
Weighted average common shares outstanding: | ||||
Basic and diluted (in shares) | 61,401,466 | 42,800,875 | 61,127,516 | 38,561,349 |
Subscriptions, software and support | ||||
Revenue: | ||||
Total revenue | $ 33,047 | $ 22,012 | $ 59,999 | $ 43,456 |
Cost of revenue: | ||||
Total cost of revenue | 2,824 | 2,488 | 5,452 | 4,550 |
Professional services | ||||
Revenue: | ||||
Total revenue | 26,836 | 21,186 | 51,580 | 38,071 |
Cost of revenue: | ||||
Total cost of revenue | $ 18,750 | $ 14,149 | $ 37,171 | $ 24,777 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (10,967) | $ (14,459) | $ (20,520) | $ (17,854) |
Comprehensive loss, net of income taxes: | ||||
Foreign currency translation adjustment | 1,103 | (1,032) | 537 | (1,396) |
Total other comprehensive loss, net of income taxes | $ (9,864) | $ (15,491) | $ (19,983) | $ (19,250) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited) - 6 months ended Jun. 30, 2018 - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit |
Beginning balance (in shares) at Dec. 31, 2017 | 60,599,877 | ||||
Beginning balance at Dec. 31, 2017 | $ 45,524 | $ 6 | $ 141,268 | $ 439 | $ (96,189) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | $ (20,520) | (20,520) | |||
Issuance of common stock to directors (in shares) | 6,605 | ||||
Exercise of stock options (in shares) | 1,006,398 | 1,006,398 | |||
Exercise of stock options | $ 2,072 | 2,072 | |||
Stock-based compensation expense | 4,446 | 4,446 | |||
Other comprehensive income | 537 | 537 | |||
Ending balance (in shares) at Jun. 30, 2018 | 61,612,880 | ||||
Ending balance at Jun. 30, 2018 | $ 32,059 | $ 6 | $ 147,786 | $ 976 | $ (116,709) |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (20,520) | $ (17,854) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 951 | 443 |
Deferred income taxes | 77 | 0 |
Stock-based compensation | 4,446 | 9,345 |
Fair value adjustment for warrant liability | 0 | 341 |
Loss on extinguishment of debt | 0 | 384 |
Changes in assets and liabilities: | ||
Accounts receivable | (9,095) | (1,248) |
Prepaid expenses and other assets | (311) | (2,362) |
Deferred commissions | (3,062) | (933) |
Accounts payable and accrued expenses | 3,480 | 5,296 |
Accrued compensation and related benefits | 1,995 | (687) |
Other current liabilities | 951 | (186) |
Deferred revenue | (1,368) | 1,728 |
Other long-term liabilities | (1,160) | (17) |
Net cash used in operating activities | (23,616) | (5,750) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (1,593) | (205) |
Net cash used in investing activities | (1,593) | (205) |
Cash flows from financing activities: | ||
Proceeds from initial public offering, net of underwriting discounts | 0 | 80,213 |
Payment of deferred initial public offering costs | 0 | (1,081) |
Payment of dividend to Series A preferred stockholders | 0 | (7,565) |
Repayment of long-term debt | 2,072 | 452 |
Proceeds from issuance of long-term debt, net of debt issuance costs | 0 | 19,616 |
Repayment of long-term debt | 0 | (40,000) |
Net cash provided by financing activities | 2,072 | 51,635 |
Effect of foreign exchange rate changes on cash and cash equivalents | (258) | 831 |
Net (decrease) increase in cash and cash equivalents | (23,395) | 46,511 |
Cash and cash equivalents, beginning of period | 73,758 | 31,143 |
Cash and cash equivalents, end of period | 50,363 | 77,654 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 21 | 506 |
Cash paid for income taxes | 175 | 228 |
Supplemental disclosure of non-cash financing activities: | ||
Accretion of dividends on convertible preferred stock | 0 | 357 |
Deferred offering costs included in accounts payable and accrued expenses | 0 | 1,343 |
Conversion of convertible preferred stock to common stock | ||
Supplemental disclosure of non-cash financing activities: | ||
Conversion of convertible preferred stock | 0 | 48,207 |
Conversion of convertible preferred stock warrant to common stock warrant | ||
Supplemental disclosure of non-cash financing activities: | ||
Conversion of convertible preferred stock | $ 0 | $ 1,191 |
Organization and Description of
Organization and Description of Business | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Organization and Description of Business | Organization and Description of Business Appian Corporation (together with its subsidiaries, “Appian,” the “Company,” “we” or “our”) provides a leading low-code software development platform that enables organizations to rapidly develop powerful and unique applications. The applications created on our platform help companies drive digital transformation and competitive differentiation. We were incorporated in the state of Delaware in August 1999. We are headquartered in Reston, Virginia and operate in Canada, Switzerland, the United Kingdom, France, Germany, the Netherlands, Italy, Australia, Spain, Singapore and Sweden. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements and footnotes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification” or “ASC”) for interim financial information. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, changes in stockholders’ equity and cash flows. The results of operations for the current period are not necessarily indicative of the results for the full year or the results for any future periods. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission (the “SEC”) on February 23, 2018. Use of Estimates The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making these estimates, actual results reported in future periods could differ from those estimates. Significant estimates embedded in the condensed consolidated financial statements include revenue recognition, income taxes and the related valuation allowance, stock-based compensation and fair value measurements for our common stock and preferred stock warrant. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of Appian and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Revenue Recognition We generate revenue primarily through sales of subscriptions to our platform, as well as professional services. To a lesser extent, we also generate revenue from the sale of perpetual software license agreements and associated maintenance and support. We recognize revenue when all of the following conditions are met: (1) there is persuasive evidence of an arrangement; (2) the service or product has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of related fees is reasonably assured. If collection is not reasonably assured, we defer revenue recognition until collectability becomes reasonably assured. Our arrangements do not contain general rights of return. Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities. Subscriptions, Software and Support Revenue Subscriptions, software and support revenue is primarily related to (1) software as a service (“SaaS”) subscriptions bundled with maintenance and support and hosting services and (2) term license subscriptions bundled with maintenance and support. To a lesser extent, we also generate revenue from the sale of perpetual software licenses and associated maintenance and support. Historically, we licensed our software primarily under perpetual licenses, but over time we transitioned from perpetual licenses to subscriptions. However, during the three months ended June 30, 2018 we sold a $4.4 million perpetual software license to the U.S. Air Force. As a result, revenue from our perpetual software licenses was 7.5% and 4.0% of our total revenue for the three and six months ended June 30, 2018 , respectively. Revenue from our perpetual software licenses was 0.2% and 0.6% of our total revenue for the three and six months ended June 30, 2017 , respectively. We generally charge subscription fees on a per-user basis. We bill customers and collect payment for subscriptions to our platform in advance on a monthly, quarterly or annual basis. In certain instances, we have had customers pay their entire contract up front. SaaS Subscriptions Our SaaS subscription revenue is derived from customers accessing our cloud offering pursuant to contracts that are generally one to five years in length. We perform all required maintenance and support for our cloud offering and we do not separately charge customers for hosting costs. In these arrangements, our customers do not have the right to take the software on-premises and, as a result, such arrangements are not accounted for within the scope of the software revenue guidance. Revenue from SaaS subscriptions is recognized ratably over the term of the subscription, beginning with the date our service is made available to our customer. Term License Subscriptions Our term license subscription revenue is derived from customers with on-premises installations of our platform pursuant to contracts that are generally one to five years in length. Customers with term license subscriptions have the right to use our software and receive maintenance and support. Since we do not sell maintenance and support separately from the subscription, revenue for the term license subscription and maintenance and support is recognized ratably over the term of the subscription, upon delivery of the platform to the customer when sold on a standalone basis. Perpetual Licenses Our perpetual license revenue is derived from customers with perpetual licenses to our platform and associated maintenance and support contracts. We recognize revenue from perpetual licenses on the date of delivery to our customer. We sell maintenance and support to perpetual license customers separately from the perpetual licenses pursuant to agreements that generally renew annually. Maintenance and support revenue is deferred and recognized ratably over the term of the support period. Professional Services Our professional services revenue is comprised of fees for consulting services, including application development and deployment assistance and training related to our platform. Our professional services are not essential to the functionality of our platform because the platform is ready for the customer’s use immediately upon delivery and is not modified or customized in any manner. Consulting services are billed under both time-and-material and fixed-fee arrangements. For standalone time-and-material contracts, we recognize revenue at contractually agreed upon billing rates applied to hours performed. For standalone fixed-fee contracts, we also recognize revenue as the work is performed using the proportional performance method of accounting. Training revenue is recognized when the associated training services are delivered. Training is also sold in the form of a subscription arrangement where a customer agrees to pay an annual fixed fee for a fixed number of users to have access to all of our training offerings during the year. Revenue from training subscription agreements is recognized ratably over the subscription period. We defer recognition of revenue from work performed on pending contract modifications until the period in which the modifications are accepted and funding is approved by the customer. Costs of work performed on pending contract modifications are expensed as incurred. Multiple Element Arrangements Our multiple element arrangements are from SaaS subscriptions, term license subscriptions and perpetual licenses that are generally sold in combination with maintenance and support service and frequently with professional services. SaaS Subscriptions For multiple element arrangements involving SaaS subscriptions that include professional services in addition to the subscription to our platform, we evaluate each element to determine whether it represents a separate unit of accounting. Because there are third-party vendors who routinely sell and provide the same professional services to our customers, our professional services are deemed to have standalone value apart from the SaaS subscription. Additionally, we offer both SaaS subscriptions and professional services on a standalone basis. Professional services revenue is therefore accounted for separately from subscription fees and recognized as the professional services are performed. We allocate revenue to the elements based on the selling price hierarchy using vendor-specific objective evidence (“VSOE”) of selling price, third-party evidence (“TPE”) of selling price, or if neither exists, best estimated selling price (“BESP”). In cases where we do not have VSOE or TPE of the elements of our arrangements, we use BESP to allocate revenue. We determine BESP for a service by considering multiple factors including, but not limited to, evaluating the weighted average of actual sales prices and other factors such as gross margin objectives, pricing practices and growth strategy. Pricing practices taken into consideration include historic contractually stated prices, volume discounts where applicable and our price lists. While we believe we can make reliable estimates regarding these matters, these estimates are inherently subjective. Once the revenue is allocated to these elements, revenue is recognized as such services are provided. Term License Subscriptions For multiple element arrangements involving term license subscriptions, maintenance and support and professional services, we do not have VSOE of fair value for the maintenance and support. Our term license subscriptions are generally not sold on a standalone basis, and therefore, we have not established VSOE of fair value for the subscriptions. Consequently, for our bundled arrangements that include certain professional services, there are two undelivered elements for which VSOE of fair value has not been established and, therefore, we utilize the combined services approach and defer all revenue until the software has been delivered and the provision of all services has commenced. We then recognize the entire fee from the arrangement ratably over the remaining period of the arrangement, assuming all other software revenue recognition criteria have been met. Perpetual Licenses For multiple element arrangements involving our perpetual software licenses, we allocate revenue to the software license arrangement by determining if VSOE of fair value exists for the undelivered elements, which are usually maintenance and support and professional services. In situations where VSOE of fair value exists for the undelivered elements, we apply the residual method whereby the fees allocated to license revenue are recognized upon delivery, the fees allocated to maintenance and support revenue are recognized over the service period and the fees allocated to professional services and training are recognized as performed. In instances where we lack VSOE of fair value for the undelivered elements, revenue is either deferred until the final element is delivered or recognized ratably over the service period when the only undelivered elements are either professional services or maintenance and support. We have VSOE for maintenance and support elements and professional services elements performed on a time and materials basis. VSOE of fair value is based upon the price charged when the same element is sold separately. In determining VSOE of fair value, we require that a substantial majority of the selling prices fall within a reasonably narrow pricing range. We reassess VSOE annually or more frequently if required. Deferred Revenue Deferred revenue primarily consists of amounts billed or billable in advance of revenue recognition from our subscriptions, software, and support and professional services described above. Deferred revenue is recognized as the revenue recognition criteria are met. Cost of Revenue Cost of Subscriptions, Software and Support Revenue Cost of subscriptions, software and support revenue consists primarily of fees paid to our third-party managed hosting providers and other third-party service providers, personnel costs, including payroll and benefits for our technology operations and customer support teams, and allocated facility costs and overhead. Cost of Professional Services Revenue Cost of professional services revenue includes all direct and indirect costs to deliver our professional services and training, including employee compensation for our global professional services and training personnel, travel costs, third-party contractor costs and allocated facility costs and overhead. Concentration of Credit Risk Our financial instruments that are exposed to concentration of credit risk consist primarily of cash and cash equivalents and trade accounts receivable. Cash deposits may be in excess of insured limits. We believe that the financial institutions that hold our cash deposits are financially sound and, accordingly, minimal credit risk exists with respect to these balances. With regard to our customers, credit evaluation and account monitoring procedures are used to minimize the risk of loss. We believe that no additional credit risk beyond amounts provided for collection loss are inherent in accounts receivable. Revenue generated from government agencies represented 20.1% and 16.5% of our revenue for the three and six months ended June 30, 2018 , respectively, of which the top three federal government agencies generated 13.5% and 9.8% of our revenue for the three and six months ended June 30, 2018 , respectively. Additionally, 28.1% and 29.6% of our revenue during the three and six months ended June 30, 2018 , respectively, was generated from foreign customers. Revenue generated from government agencies represented 15.8% and 16.1% of our revenue for the three and six months ended June 30, 2017 , respectively, of which the top three federal government agencies generated 9.2% and 9.9% of our revenue for the three and six months ended June 30, 2017 , respectively. Additionally, 25.1% and 24.0% of our revenue during the three and six months ended June 30, 2017 , respectively, was generated from foreign customers. One customer accounted for 8.5% of accounts receivable at June 30, 2018 and a different customer accounted for 7.0% of accounts receivable at December 31, 2017 . Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at realizable value, net of an allowance for doubtful accounts. The allowance for doubtful accounts is based on our assessment of the collectability of accounts. We regularly review the composition of the accounts receivable aging, historical bad debts, changes in payment patterns, customer creditworthiness and current economic trends. If the financial condition of our customers were to deteriorate, resulting in their inability to make required payments, additional provisions for doubtful accounts would be required and would increase bad debt expense. To date, our allowance and related bad debt write-offs have been nominal. There was no change in the allowance for doubtful accounts from December 31, 2017 to June 30, 2018 . Deferred Commissions Deferred commissions are the incremental costs that are directly associated with subscription agreements with customers and consist of sales commissions paid to our direct sales force. Commissions are considered direct and incremental and as such are deferred and amortized over the terms of the related customer contracts consistent with the related revenue. Amortization of deferred commissions is included in sales and marketing expense in the accompanying condensed consolidated statements of operations. Commission expense was $3.5 million and $6.2 million for the three and six months ended June 30, 2018 , respectively. Commission expense was $2.7 million and $5.3 million for the three and six months ended June 30, 2017 , respectively. Fair Value of Financial Instruments The carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value as of June 30, 2018 and December 31, 2017 because of the relatively short duration of these instruments. We use a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires us to use observable inputs when available, and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows: • Level 1. Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities; • Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and • Level 3. Unobservable inputs for which there is little or no market data, which require us to develop our own assumptions. Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs There were no changes in our Level 3 instruments measured at fair value on a recurring basis during the three and six months ended June 30, 2018 . The following table presents the changes in our Level 3 instruments measured at fair value on a recurring basis during the three months ended June 30, 2017 (in thousands): Three Months Ended June 30, 2017 Balance as of April 1 $ 850 Change in fair value of warrant liability 341 Reclassification of warrant liability to equity (1,191 ) Balance as of June 30 $ — The following table presents the changes in our Level 3 instruments measured at fair value on a recurring basis during the six months ended June 30, 2017 (in thousands): Six Months Ended June 30, 2017 Balance as of January 1 $ 850 Change in fair value of warrant liability 341 Reclassification of warrant liability to equity (1,191 ) Balance as of June 30 $ — Stock-Based Compensation We account for stock-based compensation expense related to stock-based awards based on the estimated fair value of the award on the grant date. We calculate the fair value of stock options using the Black-Scholes Options Pricing Model. For service-based awards, stock-based compensation expense is recognized on a straight-line basis over the requisite service period. For performance-based awards, stock-based compensation expense is recognized using the accelerated attribution method, based on the probability of satisfying the performance condition. For awards that contain market conditions, compensation expense is measured using a Monte Carlo simulation model and recognized using the accelerated attribution method over the derived service period based on the expected market performance as of the grant date. For restricted stock units, stock-based compensation expense is recognized on a straight-line basis over the requisite service period. We account for forfeitures as they occur, rather than estimating expected forfeitures. Emerging Growth Company Status We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”). The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this extended transition period and, as a result, we will not adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies. Recent Accounting Pronouncements Adopted On December 22, 2017, the Tax Cuts and Jobs Act (the "TCJA") was enacted, substantially changing the U.S. Federal tax system. Notable provisions of the TCJA include the reduction of the corporate tax rate from 35% to 21% beginning in 2018, the imposition of a one-time transition tax on unremitted cumulative non-U.S. earnings of foreign subsidiaries, and the implementation of a territorial tax system. While the changes from the TCJA are generally effective beginning in 2018, U.S. GAAP accounting for income taxes requires the effect of a change in tax laws or rates to be recognized in income from continuing operations for the period that includes the enactment date. Due to the complexities involved in accounting for the enactment of the TCJA, the SEC Staff Accounting Bulletin No. 118 (“SAB 118”) allowed us to record provisional amounts in earnings for the year ended December 31, 2017. Where reasonable estimates can be made, the provisional accounting should be based on such estimates. When no reasonable estimate can be made, the provisional accounting may be based on the tax law in effect before the TCJA. We are required to complete our tax accounting for the TCJA in the period when we have obtained, prepared, and analyzed the information to complete the income tax accounting. We have not completed our accounting for the tax effects of enactment of the TCJA; however, we have made reasonable estimates of the effects of the TCJA on our consolidated financial statements which are included as a component of income tax expense. In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 ("ASU 2018-05"), which allowed SEC registrants to record provisional amounts in earnings for the year ended December 31, 2017 due to the complexities involved in accounting for the enactment of the TCJA. In accordance with SAB No. 118, we recognized the estimated income tax effects of the TCJA in the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 23, 2018. See Note 5 for further information regarding the provisional amounts recorded as of December 31, 2017. In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting ("ASU 2017-09"), which clarifies when a change to the terms or conditions of a share-based payment award must be accounted for as a modification. ASU 2017-09 requires modification accounting if the fair value, vesting condition or the classification of the award is not the same immediately before and after a change to the terms and conditions of the award. ASU 2017-09 became effective on a prospective basis beginning on January 1, 2018. The adoption of ASU 2017-09 did not have an impact on our consolidated financial statements for the three and six months ended June 30, 2018 . Not Yet Adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which provides new guidance for revenue recognition. ASU 2014-09 provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. In March 2016, the FASB issued ASU No. 2016-08, Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) (“ASU 2016-08”), which clarifies implementation guidance on principal versus agent considerations in ASU 2014-09. In April 2016, the FASB issued ASU No. 2016-10, Identifying Performance Obligations and Licensing (“ASU 2016-10”), which clarifies the identification of performance obligations and the licensing implementation guidance in ASU 2014-09. In addition, in May 2016, the FASB issued ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), which clarifies the guidance on assessing collectibility, presentation of sales taxes, noncash consideration and completed contracts and contract modifications at transition. For public entities, the new standard is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2017. For all other entities, the new standard is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods beginning after December 15, 2019. We intend to avail ourselves of the JOBS Act extended transition period that permits us to defer adoption until January 1, 2019. The Topic 606 guidance allows two methods of adoption: retrospectively to each prior reporting period (full retrospective method) or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method). We currently plan to adopt the new standard using the full retrospective method to restate each prior reporting period presented. We do not expect the new standard to have a material impact on the timing of revenue recognition related to our cloud-based subscriptions and standalone professional services. However, we expect the new standard to have a significant impact on the timing of revenue recognition related to our on-premise term license contracts. Under current industry-specific software revenue recognition guidance, we have historically concluded that we did not have VSOE of fair value of the undelivered services related to on-premise term license contracts, and accordingly, have recognized on-premise term license contracts and related services ratably over the contract term. Under this new standard, the requirement to have VSOE for undelivered services is eliminated. Therefore, we may be required to recognize a portion of revenue from the on-premise term license contracts upon delivery of the software. In addition, we expect the new standard to impact our accounting for contract acquisition costs, both with respect to the amounts that will be capitalized as well as the period of amortization. Currently, we defer the direct and incremental commission costs to obtain a contract with a customer and amortize those costs over the term of the related customer contract consistent with the related revenue. Under the new standard, we will continue to defer the direct and incremental commission costs to obtain a contract with a customer but will amortize those costs over the customer's estimated economic life. As a result, we expect the deferred commissions asset to increase and the related amortization expense in each reporting period to decrease under the new standard. We are still in the process of quantifying the effects of the adoption of Topic 606 as well as continuing to evaluate the impact of the adoption of the standard on our consolidated financial statements, including our footnotes. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which requires that lessees recognize assets and liabilities for leases with lease terms greater than 12 months in the statement of financial position. ASU 2016-2 also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The update is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted. We are currently evaluating the impact the adoption of ASU 2016-02 will have on our consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which aims to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. ASU 2016-15 is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. We are currently in the process of evaluating the impact of adoption of this standard on our consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ("ASU 2018-02"), which provides entities the option to reclassify to retained earnings tax effects related to items in accumulated other comprehensive income ("OCI") that the FASB refers to as having been stranded in accumulated OCI as a result of tax reform. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. We do not expect ASU 2018-02 to have a material impact on our consolidated financial statements. |
Accrued Expenses
Accrued Expenses | 6 Months Ended |
Jun. 30, 2018 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses consist of the following as of June 30, 2018 and December 31, 2017 (in thousands): June 30, 2018 December 31, 2017 Accrued contract labor costs $ 2,937 $ 3,424 Accrued hosting costs 506 466 Accrued reimbursable employee expenses 397 286 Accrued audit and tax professional fees 347 248 Accrued marketing and tradeshow expenses 140 128 Other accrued expenses 2,141 1,915 Total $ 6,468 $ 6,467 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Debt 2017 Financing Facility In April 2017, we entered into a new financing facility consisting of a $5.0 million senior revolving credit facility, a $20.0 million senior term loan, and a $10.0 million subordinated term loan. In connection with the execution of this financing facility, the prior line of credit was terminated, and we borrowed the full $20.0 million available under the senior term loan and repaid the outstanding balance under our prior term loan. Additionally, in connection with the execution of our new financing facility, the lender waived the prepayment fee associated with our prior line of credit. In June 2017, we used proceeds from our initial public offering ("IPO") to pay all remaining outstanding principal and interest under the senior term loan and subsequently terminated the senior term loan and subordinated term loan. In connection with the repayment of the senior term loan, we recognized a loss on extinguishment of debt of $0.4 million related to unamortized debt issuance costs, which is included within other (income) expense, net in the accompanying condensed consolidated statements of operations. This financing facility was terminated in November 2017 in connection with our entry into a new $20.0 million revolving line of credit. 2017 Line of Credit In November 2017, we entered into a $20.0 million revolving line of credit with a lender. The facility matures in November 2022. We may elect whether amounts drawn on the revolving line of credit bear interest at a floating rate per annum equal to either the LIBOR or the prime rate plus an additional interest rate margin that is determined by the availability of the borrowings under the revolving line of credit. The additional interest rate margin will range from 2.00% to 2.50% in the case of LIBOR advances and from 1.00% to 1.50% in the case of prime rate advances. The revolving line of credit contains an unused facility fee in an amount between 0.15% and 0.25% of the average unused portion of the revolving line of credit, which is payable quarterly. The agreement contains certain customary affirmative and negative covenants and requires us to maintain (1) an adjusted quick ratio of at least 1.35 to 1.0 and (ii) minimum adjusted EBITDA, in the amounts and for the periods set forth in the agreement. Any amounts borrowed under the credit facility are collateralized by substantially all of our assets. We were in compliance with all covenants as of June 30, 2018 . As of June 30, 2018 , we had no outstanding borrowings under the revolving line of credit. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes is based upon the estimated annual effective tax rates for the year applied to the current period income before tax plus the tax effect of any significant unusual items, discrete events or changes in tax law. Our operating subsidiaries are exposed to statutory effective tax rates ranging from zero to approximately 33% . Fluctuations in the distribution of pre-tax income among our operating subsidiaries can lead to fluctuations of the effective tax rate in the condensed consolidated financial statements. For the three and six months ended June 30, 2018 , the actual effective tax rates were (0.3)% and (1.2)% , respectively. For the three and six months ended June 30, 2017 , the actual effective tax rates were (1.2)% and (1.7)% , respectively. We assess uncertain tax positions in accordance with ASC 740-10, Accounting for Uncertainties in Income Taxes . As of June 30, 2018 , our net unrecognized tax benefits totaled $0.7 million , of which the entire portion would favorably impact our effective tax rate in the period if recognized. We anticipate that the amount of reasonably possible unrecognized tax benefits that could decrease over the next 12 months due to the expiration of certain statutes of limitations and settlement of tax audits is not material to our consolidated financial statements. We file income tax returns in the United States federal jurisdiction and in many states and foreign jurisdictions. The tax years 2014 through 2017 remain open to examination by the major taxing jurisdictions to which we are subject. We are not currently under examination by the Internal Revenue Service for any open tax years. On December 22, 2017, U.S. federal tax reform was enacted with the signing of the TCJA. Notable provisions of the TCJA include the following: • Establishment of a flat corporate income tax rate of 21% on U.S. earnings; • Imposition of a one-time tax on unremitted cumulative non-U.S. earnings of foreign subsidiaries, or the Transition Tax; • The imposition of a new minimum tax on certain non-U.S. earnings, irrespective of the territorial system of taxation, and generally allows for the repatriation of future earnings of foreign subsidiaries without incurring additional U.S. taxes by transitioning to a territorial system of taxation; • Imposition of minimum taxes on certain payments made by a U.S. company to a related foreign company, or the Base Erosion Anti-Abuse Tax; • Elimination of the alternative minimum tax and allowance of a refund for previous alternative minimum tax credits; • Allowance for immediate expensing of the cost of investments in certain depreciable assets acquired and placed in service after September 27, 2017; and • Reduction in tax deductions with respect to certain compensation paid to certain executive officers. While the changes from the TCJA are generally effective beginning in 2018, U.S. GAAP accounting for income taxes requires the effect of a change in tax laws or rates to be recognized in income from continuing operations for the period that includes the enactment date. Due to the complexities involved in accounting for the enactment of the TCJA, SAB 118 allowed us to record provisional amounts in earnings for the year ended December 31, 2017 . Where reasonable estimates can be made, the provisional accounting should be based on such estimates. When no reasonable estimate can be made, the provisional accounting may be based on the tax law in effect before the TCJA. We are required to complete our tax accounting for the TCJA in the period when we have obtained, prepared, and analyzed the information to complete the income tax accounting. During the three and six months ended June 30, 2018 , there were no changes made to the provisional amounts recognized in 2017 . We will continue to analyze the effects of the TCJA on our financial statements. Additional impacts from the enactment of the TCJA will be recorded as they are identified during the measurement period as provided for in SAB 118, which extends up to one year from the enactment date. The final impact of the TCJA may differ from the provisional amounts that have been recognized, possibly materially, due to, among other things, changes in our interpretation of the TCJA, legislative or administrative actions to clarify the intent of the statutory language provided that differ from our current interpretation, any changes in accounting standards for income taxes or related interpretations in response to the TCJA, or any updates or changes to estimates utilized to calculate the impacts, including changes to current year earnings estimates and applicable foreign exchange rates. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation In May 2017, our board of directors adopted, and our stockholders approved, the 2017 Equity Incentive Plan (the “2017 Plan”), which became effective as of the date of the final prospectus for our IPO. The 2017 Plan provides for the grant of incentive stock options to employees, and for the grant of nonstatutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance-based stock awards and other forms of equity compensation to employees, including officers, and to non-employee directors and consultants. We initially reserved 6,421,442 shares of Class A common stock for issuance under the 2017 Plan, which included 421,442 shares that remained available for issuance under our 2007 Stock Option Plan (the “2007 Plan”) at the time that the 2017 Plan became effective. The number of shares reserved under the 2017 Plan increases for any shares subject to outstanding awards originally granted under the 2007 Plan that expire or are forfeited prior to exercise. As a result of the adoption of the 2017 Plan, no further grants may be made under the 2007 Plan. As of June 30, 2018 , there were 6,587,802 shares of Class A common stock reserved for issuance under the 2017 Plan, of which 5,674,155 were available to be issued. The 2007 Plan provided for the grant of stock options to employees, directors, and officers. Stock options under the 2007 Plan are exercisable into shares of Class B common stock and generally expire ten years from the date of grant. Under the 2007 Plan, the exercise price of each award was established by the board of directors, but could not be less than the fair market value of a share of our common stock on the grant date. Stock options generally vest upon the satisfaction of both a service condition and a performance condition. The service condition is satisfied at various rates as determined by us, typically on an annual basis over five years. The performance condition required the occurrence of a qualifying event, defined as a change of control transaction or upon the completion of an IPO. The performance condition was satisfied upon the effectiveness of our IPO in May 2017, on which date we recognized $6.2 million of cumulative stock-based compensation expense using the accelerated attribution method from the service start date. We estimate the fair value of stock options using the Black-Scholes Options Pricing Model, which requires the use of subjective assumptions, including the expected term of the option, the current price of the underlying stock, the expected stock price volatility, expected dividend yield and the risk-free interest rate for the expected term of the option. The expected term represents the period of time the stock options are expected to be outstanding. Due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected term of the stock options, we use the simplified method to estimate the expected term for our stock options. Under the simplified method, the expected term of an option is presumed to be the mid-point between the vesting date and the end of the contractual term. Expected volatility is based on historical volatilities for publicly traded stock of comparable companies over the estimated expected term of the stock options. We assume no dividend yield because dividends are not expected to be paid in the near future, which is consistent with our history of not paying dividends. The following table summarizes the assumptions used to estimate the fair value of stock options granted during the three and six months ended June 30, 2018 and 2017 : Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Risk-free interest rate * 2.0% - 2.1% * 2.0% - 2.2% Expected term (in years) * 6.5 * 6.5 Expected volatility * 38.7% - 38.8% * 38.7% - 40.6% Expected dividend yield * —% * —% * Not applicable because no stock options were granted during the period. Stock Options The following table summarizes the stock option activity for the six months ended June 30, 2018 : Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Outstanding at January 1, 2018 7,010,887 $ 6.36 6.6 $ 176,122 Granted — — Exercised (1,006,398 ) 2.05 27,564 Canceled (50,540 ) 9.68 Outstanding at June 30, 2018 5,953,949 7.06 6.7 173,261 Exercisable at June 30, 2018 2,262,569 3.29 4.5 74,362 The weighted average grant-date fair value of stock options granted during the six months ended June 30, 2017 was $5.01 per share. No stock options were granted during the six months ended June 30, 2018 . The total fair value of stock options that vested during the six months ended June 30, 2018 and 2017 was $1.6 million and $4.9 million , respectively. As of June 30, 2018 , the total compensation cost related to unvested stock options not yet recognized was $8.5 million , which will be recognized over a weighted average period of 2.5 years. On April 25, 2017, our board of directors modified certain outstanding stock options nearing their expiration date to remove the performance condition. Stock options to purchase an aggregate of 216,160 shares of common stock were modified, and we recognized stock-based compensation expense of $2.4 million related to this modification. Restricted Stock Units The following table summarizes the restricted stock unit activity for the six months ended June 30, 2018 : Number of Shares Weighted Average Grant Date Fair Value Non-vested outstanding at January 1, 2018 731,975 $ 22.16 Granted 152,100 29.70 Vested — — Canceled (6,550 ) 25.42 Non-vested outstanding at June 30, 2018 877,525 23.44 As of June 30, 2018 , total unrecognized compensation cost related to unvested restricted stock units was approximately $18.0 million , which will be recognized over a weighted average period of 2.7 years . The following table summarizes the components of our stock-based compensation expense for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Stock-based compensation expense related to stock options $ 1,073 $ 6,821 $ 2,327 $ 6,821 Stock-based compensation expense related to restricted stock units 1,017 — 1,911 — Stock-based compensation expense related to the issuance of common stock to directors 116 130 208 130 Stock-based compensation expense related to stock option modifications — 2,394 — 2,394 Total stock-based compensation expense $ 2,206 $ 9,345 $ 4,446 $ 9,345 Stock-based compensation expense for restricted stock units, stock options and issuances of common stock is included in the following line items in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Cost of revenue Subscriptions, software and support $ 107 $ 404 $ 217 $ 404 Professional services 203 984 423 984 Operating expenses Sales and marketing 538 2,423 1,045 2,423 Research and development 342 2,202 733 2,202 General and administrative 1,016 3,332 2,028 3,332 Total stock-based compensation expense $ 2,206 $ 9,345 $ 4,446 $ 9,345 |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity As of June 30, 2018 , we had authorized 500,000,000 shares of Class A common stock and 100,000,000 shares of Class B common stock, each par value $0.0001 per share, of which 19,422,534 shares of Class A common stock and 42,190,346 shares of Class B common stock were issued and outstanding. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights. The holders of Class A common stock are entitled to one vote per share, and the holders of Class B common stock are entitled to ten votes per share, on all matters that are subject to stockholder vote. The holders of Class B common stock also have approval rights for certain corporate actions. Each share of Class B common stock may be converted into one share of Class A common stock at the option of its holder and will be automatically converted into one share of Class A common stock upon transfer thereof, subject to certain exceptions. In addition, upon the date on which the outstanding shares of Class B common stock represent less than 10% of the aggregate voting power of our capital stock, all outstanding shares of Class B common stock shall convert automatically into Class A common stock. |
Basic and Diluted Loss per Comm
Basic and Diluted Loss per Common Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Loss per Common Share | Basic and Diluted Loss per Common Share The following securities have been excluded from the calculation of weighted average common shares outstanding because the effect is anti-dilutive or performance or market conditions had not been met at the end of the period: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Stock options 5,953,949 7,581,688 5,953,949 7,581,688 Restricted stock units 877,525 — 877,525 — |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases We lease office space and equipment in our headquarters location in Reston, Virginia, as well as in the United Kingdom, France, Germany, Canada, Italy, Australia and the Netherlands, under non-cancellable operating lease agreements which have various expiration dates through 2026 for our office space and various expiration dates through 2019 for our equipment. In April 2018, we entered into a new lease agreement for a new headquarters in Tysons, Virginia. The lease term is expected to commence on October 1, 2018, for a period of 150 months . Total payments committed under the lease amount to $86.4 million . In connection with the lease agreement, we also entered into a letter of credit of $9.4 million . In connection with entering into the lease agreement, we amended our sublease with College Entrance Examination Board, which will terminate the sublease agreement. Pursuant to the termination amendment, the sublease will terminate in two stages, with the termination of a majority of the premises taking place on May 31, 2019, rather than July 31, 2021 as originally contemplated by the sublease. We record rent expense using the total minimum rent commitment, amortized using the straight-line method over the term of the lease. The difference between monthly rental payments and recorded rent expense is charged to deferred rent. As of June 30, 2018 and December 31, 2017 , deferred rent totaled $0.9 million and $2.0 million , respectively, and is included within other current liabilities and other long-term liabilities on the accompanying consolidated balance sheets. Total rent and lease expense was $1.8 million and $3.8 million for the three and six months ended June 30, 2018 , respectively. Total rent and lease expense was $1.7 million and $3.4 million for the three and six months ended June 30, 2017 , respectively. Other Commitments We also have entered into a non-cancellable agreement for the use of technology that is integral in the development of our software and pay annual royalty fees of $0.3 million . Letters of Credit As of June 30, 2018 and December 31, 2017 , we had outstanding letters of credit totaling $10.4 million and $1.1 million , respectively, in connection with securing our leased office space. All letters of credit are secured by our borrowing arrangement as described in Note 4. Legal From time to time, we are subject to legal, regulatory and other proceedings and claims that arise in the ordinary course of business. There are no issues or resolution of any matters that are expected to have a material adverse impact on our consolidated financial statements. |
Segment and Geographic Informat
Segment and Geographic Information | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | Segment and Geographic Information The following table summarizes revenue by geography for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Domestic $ 43,035 $ 32,335 $ 78,560 $ 61,982 International 16,848 10,863 33,019 19,545 Total $ 59,883 $ 43,198 $ 111,579 $ 81,527 With respect to geographic information, revenue is attributed to respective geographies based on the contracting address of the customer. There were no individual foreign countries from which more than 10% of our total revenue was attributable for the three and six months ended June 30, 2018 and 2017 . Substantially all of our long-lived assets were held in the United States as of June 30, 2018 and December 31, 2017 . |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events In preparing our condensed consolidated financial statements, we evaluated subsequent events through August 2, 2018, which is the date that the condensed consolidated financial statements were available to be issued. On July 30, 2018, our board of directors approved the grant of 156,046 restricted stock units under the 2017 Plan at a fair value of $30.94 per share to members of management and other employees. The value of these awards at the grant date was $4.8 million and will be amortized over the vesting periods. 87,146 restricted stock units vest over five years through August 5, 2023 and the remaining 68,900 restricted stock units vest over one year through August 5, 2019. |
Significant Accounting Polici19
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements and footnotes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification” or “ASC”) for interim financial information. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, changes in stockholders’ equity and cash flows. The results of operations for the current period are not necessarily indicative of the results for the full year or the results for any future periods. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission (the “SEC”) on February 23, 2018. |
Use of Estimates | Use of Estimates The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making these estimates, actual results reported in future periods could differ from those estimates. Significant estimates embedded in the condensed consolidated financial statements include revenue recognition, income taxes and the related valuation allowance, stock-based compensation and fair value measurements for our common stock and preferred stock warrant. |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of Appian and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
Revenue Recognition | Revenue Recognition We generate revenue primarily through sales of subscriptions to our platform, as well as professional services. To a lesser extent, we also generate revenue from the sale of perpetual software license agreements and associated maintenance and support. We recognize revenue when all of the following conditions are met: (1) there is persuasive evidence of an arrangement; (2) the service or product has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of related fees is reasonably assured. If collection is not reasonably assured, we defer revenue recognition until collectability becomes reasonably assured. Our arrangements do not contain general rights of return. Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities. Subscriptions, Software and Support Revenue Subscriptions, software and support revenue is primarily related to (1) software as a service (“SaaS”) subscriptions bundled with maintenance and support and hosting services and (2) term license subscriptions bundled with maintenance and support. To a lesser extent, we also generate revenue from the sale of perpetual software licenses and associated maintenance and support. Historically, we licensed our software primarily under perpetual licenses, but over time we transitioned from perpetual licenses to subscriptions. However, during the three months ended June 30, 2018 we sold a $4.4 million perpetual software license to the U.S. Air Force. As a result, revenue from our perpetual software licenses was 7.5% and 4.0% of our total revenue for the three and six months ended June 30, 2018 , respectively. Revenue from our perpetual software licenses was 0.2% and 0.6% of our total revenue for the three and six months ended June 30, 2017 , respectively. We generally charge subscription fees on a per-user basis. We bill customers and collect payment for subscriptions to our platform in advance on a monthly, quarterly or annual basis. In certain instances, we have had customers pay their entire contract up front. SaaS Subscriptions Our SaaS subscription revenue is derived from customers accessing our cloud offering pursuant to contracts that are generally one to five years in length. We perform all required maintenance and support for our cloud offering and we do not separately charge customers for hosting costs. In these arrangements, our customers do not have the right to take the software on-premises and, as a result, such arrangements are not accounted for within the scope of the software revenue guidance. Revenue from SaaS subscriptions is recognized ratably over the term of the subscription, beginning with the date our service is made available to our customer. Term License Subscriptions Our term license subscription revenue is derived from customers with on-premises installations of our platform pursuant to contracts that are generally one to five years in length. Customers with term license subscriptions have the right to use our software and receive maintenance and support. Since we do not sell maintenance and support separately from the subscription, revenue for the term license subscription and maintenance and support is recognized ratably over the term of the subscription, upon delivery of the platform to the customer when sold on a standalone basis. Perpetual Licenses Our perpetual license revenue is derived from customers with perpetual licenses to our platform and associated maintenance and support contracts. We recognize revenue from perpetual licenses on the date of delivery to our customer. We sell maintenance and support to perpetual license customers separately from the perpetual licenses pursuant to agreements that generally renew annually. Maintenance and support revenue is deferred and recognized ratably over the term of the support period. Professional Services Our professional services revenue is comprised of fees for consulting services, including application development and deployment assistance and training related to our platform. Our professional services are not essential to the functionality of our platform because the platform is ready for the customer’s use immediately upon delivery and is not modified or customized in any manner. Consulting services are billed under both time-and-material and fixed-fee arrangements. For standalone time-and-material contracts, we recognize revenue at contractually agreed upon billing rates applied to hours performed. For standalone fixed-fee contracts, we also recognize revenue as the work is performed using the proportional performance method of accounting. Training revenue is recognized when the associated training services are delivered. Training is also sold in the form of a subscription arrangement where a customer agrees to pay an annual fixed fee for a fixed number of users to have access to all of our training offerings during the year. Revenue from training subscription agreements is recognized ratably over the subscription period. We defer recognition of revenue from work performed on pending contract modifications until the period in which the modifications are accepted and funding is approved by the customer. Costs of work performed on pending contract modifications are expensed as incurred. Multiple Element Arrangements Our multiple element arrangements are from SaaS subscriptions, term license subscriptions and perpetual licenses that are generally sold in combination with maintenance and support service and frequently with professional services. SaaS Subscriptions For multiple element arrangements involving SaaS subscriptions that include professional services in addition to the subscription to our platform, we evaluate each element to determine whether it represents a separate unit of accounting. Because there are third-party vendors who routinely sell and provide the same professional services to our customers, our professional services are deemed to have standalone value apart from the SaaS subscription. Additionally, we offer both SaaS subscriptions and professional services on a standalone basis. Professional services revenue is therefore accounted for separately from subscription fees and recognized as the professional services are performed. We allocate revenue to the elements based on the selling price hierarchy using vendor-specific objective evidence (“VSOE”) of selling price, third-party evidence (“TPE”) of selling price, or if neither exists, best estimated selling price (“BESP”). In cases where we do not have VSOE or TPE of the elements of our arrangements, we use BESP to allocate revenue. We determine BESP for a service by considering multiple factors including, but not limited to, evaluating the weighted average of actual sales prices and other factors such as gross margin objectives, pricing practices and growth strategy. Pricing practices taken into consideration include historic contractually stated prices, volume discounts where applicable and our price lists. While we believe we can make reliable estimates regarding these matters, these estimates are inherently subjective. Once the revenue is allocated to these elements, revenue is recognized as such services are provided. Term License Subscriptions For multiple element arrangements involving term license subscriptions, maintenance and support and professional services, we do not have VSOE of fair value for the maintenance and support. Our term license subscriptions are generally not sold on a standalone basis, and therefore, we have not established VSOE of fair value for the subscriptions. Consequently, for our bundled arrangements that include certain professional services, there are two undelivered elements for which VSOE of fair value has not been established and, therefore, we utilize the combined services approach and defer all revenue until the software has been delivered and the provision of all services has commenced. We then recognize the entire fee from the arrangement ratably over the remaining period of the arrangement, assuming all other software revenue recognition criteria have been met. Perpetual Licenses For multiple element arrangements involving our perpetual software licenses, we allocate revenue to the software license arrangement by determining if VSOE of fair value exists for the undelivered elements, which are usually maintenance and support and professional services. In situations where VSOE of fair value exists for the undelivered elements, we apply the residual method whereby the fees allocated to license revenue are recognized upon delivery, the fees allocated to maintenance and support revenue are recognized over the service period and the fees allocated to professional services and training are recognized as performed. In instances where we lack VSOE of fair value for the undelivered elements, revenue is either deferred until the final element is delivered or recognized ratably over the service period when the only undelivered elements are either professional services or maintenance and support. We have VSOE for maintenance and support elements and professional services elements performed on a time and materials basis. VSOE of fair value is based upon the price charged when the same element is sold separately. In determining VSOE of fair value, we require that a substantial majority of the selling prices fall within a reasonably narrow pricing range. We reassess VSOE annually or more frequently if required. |
Deferred Revenue | Deferred Revenue Deferred revenue primarily consists of amounts billed or billable in advance of revenue recognition from our subscriptions, software, and support and professional services described above. Deferred revenue is recognized as the revenue recognition criteria are met. |
Cost of Revenue | Cost of Revenue Cost of Subscriptions, Software and Support Revenue Cost of subscriptions, software and support revenue consists primarily of fees paid to our third-party managed hosting providers and other third-party service providers, personnel costs, including payroll and benefits for our technology operations and customer support teams, and allocated facility costs and overhead. Cost of Professional Services Revenue Cost of professional services revenue includes all direct and indirect costs to deliver our professional services and training, including employee compensation for our global professional services and training personnel, travel costs, third-party contractor costs and allocated facility costs and overhead. |
Concentration of Credit Risk | Concentration of Credit Risk Our financial instruments that are exposed to concentration of credit risk consist primarily of cash and cash equivalents and trade accounts receivable. Cash deposits may be in excess of insured limits. We believe that the financial institutions that hold our cash deposits are financially sound and, accordingly, minimal credit risk exists with respect to these balances. With regard to our customers, credit evaluation and account monitoring procedures are used to minimize the risk of loss. We believe that no additional credit risk beyond amounts provided for collection loss are inherent in accounts receivable. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at realizable value, net of an allowance for doubtful accounts. The allowance for doubtful accounts is based on our assessment of the collectability of accounts. We regularly review the composition of the accounts receivable aging, historical bad debts, changes in payment patterns, customer creditworthiness and current economic trends. If the financial condition of our customers were to deteriorate, resulting in their inability to make required payments, additional provisions for doubtful accounts would be required and would increase bad debt expense. To date, our allowance and related bad debt write-offs have been nominal. |
Deferred Commissions | Deferred Commissions Deferred commissions are the incremental costs that are directly associated with subscription agreements with customers and consist of sales commissions paid to our direct sales force. Commissions are considered direct and incremental and as such are deferred and amortized over the terms of the related customer contracts consistent with the related revenue. Amortization of deferred commissions is included in sales and marketing expense in the accompanying condensed consolidated statements of operations. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value as of June 30, 2018 and December 31, 2017 because of the relatively short duration of these instruments. We use a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires us to use observable inputs when available, and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows: • Level 1. Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities; • Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and • Level 3. Unobservable inputs for which there is little or no market data, which require us to develop our own assumptions. |
Stock-Based Compensation | Stock-Based Compensation We account for stock-based compensation expense related to stock-based awards based on the estimated fair value of the award on the grant date. We calculate the fair value of stock options using the Black-Scholes Options Pricing Model. For service-based awards, stock-based compensation expense is recognized on a straight-line basis over the requisite service period. For performance-based awards, stock-based compensation expense is recognized using the accelerated attribution method, based on the probability of satisfying the performance condition. For awards that contain market conditions, compensation expense is measured using a Monte Carlo simulation model and recognized using the accelerated attribution method over the derived service period based on the expected market performance as of the grant date. For restricted stock units, stock-based compensation expense is recognized on a straight-line basis over the requisite service period. We account for forfeitures as they occur, rather than estimating expected forfeitures. |
Emerging Growth Company Status | Emerging Growth Company Status We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”). The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this extended transition period and, as a result, we will not adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Adopted On December 22, 2017, the Tax Cuts and Jobs Act (the "TCJA") was enacted, substantially changing the U.S. Federal tax system. Notable provisions of the TCJA include the reduction of the corporate tax rate from 35% to 21% beginning in 2018, the imposition of a one-time transition tax on unremitted cumulative non-U.S. earnings of foreign subsidiaries, and the implementation of a territorial tax system. While the changes from the TCJA are generally effective beginning in 2018, U.S. GAAP accounting for income taxes requires the effect of a change in tax laws or rates to be recognized in income from continuing operations for the period that includes the enactment date. Due to the complexities involved in accounting for the enactment of the TCJA, the SEC Staff Accounting Bulletin No. 118 (“SAB 118”) allowed us to record provisional amounts in earnings for the year ended December 31, 2017. Where reasonable estimates can be made, the provisional accounting should be based on such estimates. When no reasonable estimate can be made, the provisional accounting may be based on the tax law in effect before the TCJA. We are required to complete our tax accounting for the TCJA in the period when we have obtained, prepared, and analyzed the information to complete the income tax accounting. We have not completed our accounting for the tax effects of enactment of the TCJA; however, we have made reasonable estimates of the effects of the TCJA on our consolidated financial statements which are included as a component of income tax expense. In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 ("ASU 2018-05"), which allowed SEC registrants to record provisional amounts in earnings for the year ended December 31, 2017 due to the complexities involved in accounting for the enactment of the TCJA. In accordance with SAB No. 118, we recognized the estimated income tax effects of the TCJA in the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 23, 2018. See Note 5 for further information regarding the provisional amounts recorded as of December 31, 2017. In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting ("ASU 2017-09"), which clarifies when a change to the terms or conditions of a share-based payment award must be accounted for as a modification. ASU 2017-09 requires modification accounting if the fair value, vesting condition or the classification of the award is not the same immediately before and after a change to the terms and conditions of the award. ASU 2017-09 became effective on a prospective basis beginning on January 1, 2018. The adoption of ASU 2017-09 did not have an impact on our consolidated financial statements for the three and six months ended June 30, 2018 . Not Yet Adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which provides new guidance for revenue recognition. ASU 2014-09 provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. In March 2016, the FASB issued ASU No. 2016-08, Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) (“ASU 2016-08”), which clarifies implementation guidance on principal versus agent considerations in ASU 2014-09. In April 2016, the FASB issued ASU No. 2016-10, Identifying Performance Obligations and Licensing (“ASU 2016-10”), which clarifies the identification of performance obligations and the licensing implementation guidance in ASU 2014-09. In addition, in May 2016, the FASB issued ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), which clarifies the guidance on assessing collectibility, presentation of sales taxes, noncash consideration and completed contracts and contract modifications at transition. For public entities, the new standard is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2017. For all other entities, the new standard is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods beginning after December 15, 2019. We intend to avail ourselves of the JOBS Act extended transition period that permits us to defer adoption until January 1, 2019. The Topic 606 guidance allows two methods of adoption: retrospectively to each prior reporting period (full retrospective method) or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method). We currently plan to adopt the new standard using the full retrospective method to restate each prior reporting period presented. We do not expect the new standard to have a material impact on the timing of revenue recognition related to our cloud-based subscriptions and standalone professional services. However, we expect the new standard to have a significant impact on the timing of revenue recognition related to our on-premise term license contracts. Under current industry-specific software revenue recognition guidance, we have historically concluded that we did not have VSOE of fair value of the undelivered services related to on-premise term license contracts, and accordingly, have recognized on-premise term license contracts and related services ratably over the contract term. Under this new standard, the requirement to have VSOE for undelivered services is eliminated. Therefore, we may be required to recognize a portion of revenue from the on-premise term license contracts upon delivery of the software. In addition, we expect the new standard to impact our accounting for contract acquisition costs, both with respect to the amounts that will be capitalized as well as the period of amortization. Currently, we defer the direct and incremental commission costs to obtain a contract with a customer and amortize those costs over the term of the related customer contract consistent with the related revenue. Under the new standard, we will continue to defer the direct and incremental commission costs to obtain a contract with a customer but will amortize those costs over the customer's estimated economic life. As a result, we expect the deferred commissions asset to increase and the related amortization expense in each reporting period to decrease under the new standard. We are still in the process of quantifying the effects of the adoption of Topic 606 as well as continuing to evaluate the impact of the adoption of the standard on our consolidated financial statements, including our footnotes. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which requires that lessees recognize assets and liabilities for leases with lease terms greater than 12 months in the statement of financial position. ASU 2016-2 also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The update is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted. We are currently evaluating the impact the adoption of ASU 2016-02 will have on our consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which aims to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. ASU 2016-15 is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. We are currently in the process of evaluating the impact of adoption of this standard on our consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ("ASU 2018-02"), which provides entities the option to reclassify to retained earnings tax effects related to items in accumulated other comprehensive income ("OCI") that the FASB refers to as having been stranded in accumulated OCI as a result of tax reform. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. We do not expect ASU 2018-02 to have a material impact on our consolidated financial statements. |
Significant Accounting Polici20
Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table presents the changes in our Level 3 instruments measured at fair value on a recurring basis during the three months ended June 30, 2017 (in thousands): Three Months Ended June 30, 2017 Balance as of April 1 $ 850 Change in fair value of warrant liability 341 Reclassification of warrant liability to equity (1,191 ) Balance as of June 30 $ — The following table presents the changes in our Level 3 instruments measured at fair value on a recurring basis during the six months ended June 30, 2017 (in thousands): Six Months Ended June 30, 2017 Balance as of January 1 $ 850 Change in fair value of warrant liability 341 Reclassification of warrant liability to equity (1,191 ) Balance as of June 30 $ — |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consist of the following as of June 30, 2018 and December 31, 2017 (in thousands): June 30, 2018 December 31, 2017 Accrued contract labor costs $ 2,937 $ 3,424 Accrued hosting costs 506 466 Accrued reimbursable employee expenses 397 286 Accrued audit and tax professional fees 347 248 Accrued marketing and tradeshow expenses 140 128 Other accrued expenses 2,141 1,915 Total $ 6,468 $ 6,467 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Assumptions Used to Estimate the Fair Value of Stock Options Granted | The following table summarizes the assumptions used to estimate the fair value of stock options granted during the three and six months ended June 30, 2018 and 2017 : Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Risk-free interest rate * 2.0% - 2.1% * 2.0% - 2.2% Expected term (in years) * 6.5 * 6.5 Expected volatility * 38.7% - 38.8% * 38.7% - 40.6% Expected dividend yield * —% * —% * Not applicable because no stock options were granted during the period. |
Summary of the Stock Option Activity | The following table summarizes the stock option activity for the six months ended June 30, 2018 : Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Outstanding at January 1, 2018 7,010,887 $ 6.36 6.6 $ 176,122 Granted — — Exercised (1,006,398 ) 2.05 27,564 Canceled (50,540 ) 9.68 Outstanding at June 30, 2018 5,953,949 7.06 6.7 173,261 Exercisable at June 30, 2018 2,262,569 3.29 4.5 74,362 |
Schedule of Restricted Stock Unit Activity | The following table summarizes the restricted stock unit activity for the six months ended June 30, 2018 : Number of Shares Weighted Average Grant Date Fair Value Non-vested outstanding at January 1, 2018 731,975 $ 22.16 Granted 152,100 29.70 Vested — — Canceled (6,550 ) 25.42 Non-vested outstanding at June 30, 2018 877,525 23.44 |
Schedule of Components of Stock-based Compensation Expense | The following table summarizes the components of our stock-based compensation expense for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Stock-based compensation expense related to stock options $ 1,073 $ 6,821 $ 2,327 $ 6,821 Stock-based compensation expense related to restricted stock units 1,017 — 1,911 — Stock-based compensation expense related to the issuance of common stock to directors 116 130 208 130 Stock-based compensation expense related to stock option modifications — 2,394 — 2,394 Total stock-based compensation expense $ 2,206 $ 9,345 $ 4,446 $ 9,345 |
Schedule of Stock-based Compensation Expense Included in Condensed Consolidated Statements of Operations | Stock-based compensation expense for restricted stock units, stock options and issuances of common stock is included in the following line items in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Cost of revenue Subscriptions, software and support $ 107 $ 404 $ 217 $ 404 Professional services 203 984 423 984 Operating expenses Sales and marketing 538 2,423 1,045 2,423 Research and development 342 2,202 733 2,202 General and administrative 1,016 3,332 2,028 3,332 Total stock-based compensation expense $ 2,206 $ 9,345 $ 4,446 $ 9,345 |
Basic and Diluted Loss per Co23
Basic and Diluted Loss per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Summary of Securities Excluded From Calculation of Weighted Average Common Shares | The following securities have been excluded from the calculation of weighted average common shares outstanding because the effect is anti-dilutive or performance or market conditions had not been met at the end of the period: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Stock options 5,953,949 7,581,688 5,953,949 7,581,688 Restricted stock units 877,525 — 877,525 — |
Segment and Geographic Inform24
Segment and Geographic Information (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Summary of Revenue By Geography | The following table summarizes revenue by geography for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Domestic $ 43,035 $ 32,335 $ 78,560 $ 61,982 International 16,848 10,863 33,019 19,545 Total $ 59,883 $ 43,198 $ 111,579 $ 81,527 |
Significant Accounting Polici25
Significant Accounting Policies - Additional Information (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)agency | Jun. 30, 2017USD ($) | Dec. 31, 2017 | |
Summary Of Significant Accounting Policies [Line Items] | |||||
Sale of perpetual software deal | $ 4,400,000 | ||||
Percentage of license revenue (less than) | 7.50% | 0.20% | 4.00% | 0.60% | |
Change in allowance for doubtful accounts | $ 0 | ||||
Commission expense | $ 3,500,000 | $ 2,700,000 | $ 6,200,000 | $ 5,300,000 | |
Customer Concentration Risk | Sales Revenue, Net | Foreign Customers | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Concentration risk percentage | 28.10% | 25.10% | 29.60% | 24.00% | |
Customer Concentration Risk | Sales Revenue, Net | Government Agencies | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Concentration risk percentage | 20.10% | 15.80% | 16.50% | 16.10% | |
Customer Concentration Risk | Sales Revenue, Net | Federal Government Agencies | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Concentration risk percentage | 13.50% | 9.20% | 9.80% | 9.90% | |
Number of federal government agencies | agency | 3 | ||||
Customer Concentration Risk | Accounts Receivable | Federal Government Agencies | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Concentration risk percentage | 8.50% | 7.00% | |||
Minimum | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
SaaS Subscriptions contracts term | 1 year | ||||
Term license subscription contracts term | 1 year | ||||
Maximum | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
SaaS Subscriptions contracts term | 5 years | ||||
Term license subscription contracts term | 5 years |
Significant Accounting Polici26
Significant Accounting Policies Significant Accounting Policies - Summary of Changes in Level 3 Instruments Measured at Fair Value On Recurring Basis (Details) - Fair Value, Measurements, Recurring - Fair Value, Inputs, Level 3 - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 850 | $ 850 |
Change in fair value of warrant liability | 341 | 341 |
Reclassification of warrant liability to equity | (1,191) | (1,191) |
Ending balance | $ 0 | $ 0 |
Accrued Expenses - Schedule of
Accrued Expenses - Schedule of Accrued Expenses (Detail) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Accrued contract labor costs | $ 2,937 | $ 3,424 |
Accrued hosting costs | 506 | 466 |
Accrued reimbursable employee expenses | 397 | 286 |
Accrued audit and tax professional fees | 347 | 248 |
Accrued marketing and tradeshow expenses | 140 | 128 |
Other accrued expenses | 2,141 | 1,915 |
Total | $ 6,468 | $ 6,467 |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) | 1 Months Ended | 6 Months Ended | ||
Nov. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Apr. 30, 2017 | |
Line of Credit Facility [Line Items] | ||||
Loss on extinguishment of debt | $ 0 | $ (384,000) | ||
Revolving Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Credit facility | $ 20,000,000 | 20,000,000 | $ 5,000,000 | |
Term Loan | ||||
Line of Credit Facility [Line Items] | ||||
Credit facility | 20,000,000 | |||
Line of credit, outstanding borrowings | 0 | |||
Term Loan | Other (Income) Expense | ||||
Line of Credit Facility [Line Items] | ||||
Loss on extinguishment of debt | $ (400,000) | |||
Subordinated Term Loan | ||||
Line of Credit Facility [Line Items] | ||||
Credit facility | $ 10,000,000 | |||
Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Unused credit facility fee | 0.15% | |||
Quick ratio | 135.00% | |||
Minimum | London Interbank Offered Rate (LIBOR) | ||||
Line of Credit Facility [Line Items] | ||||
Interest rate margin | 2.00% | |||
Minimum | Prime Rate | ||||
Line of Credit Facility [Line Items] | ||||
Interest rate margin | 1.00% | |||
Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Unused credit facility fee | 0.25% | |||
Maximum | London Interbank Offered Rate (LIBOR) | ||||
Line of Credit Facility [Line Items] | ||||
Interest rate margin | 2.50% | |||
Maximum | Prime Rate | ||||
Line of Credit Facility [Line Items] | ||||
Interest rate margin | 1.50% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Taxes [Line Items] | ||||
Effective tax rate | (0.30%) | (1.20%) | 1.20% | (1.70%) |
Net unrecognized tax benefits which would impact effective tax rate if recognized | $ 0.7 | $ 0.7 | ||
Earliest Tax Year | ||||
Income Taxes [Line Items] | ||||
Open tax year | 2,014 | |||
Latest Tax Year | ||||
Income Taxes [Line Items] | ||||
Open tax year | 2,017 | |||
Minimum | Subsidiaries | ||||
Income Taxes [Line Items] | ||||
Effective tax rate | 0.00% | |||
Maximum | Subsidiaries | ||||
Income Taxes [Line Items] | ||||
Effective tax rate | (33.00%) |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - USD ($) | Apr. 25, 2017 | May 31, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares available for grants | 0 | 0 | ||||
Service period for option exercise | 5 years | |||||
Stock-based compensation expense | $ 2,206,000 | $ 9,345,000 | $ 4,446,000 | $ 9,345,000 | ||
Granted (in usd per share) | $ 5.01 | |||||
Vested | 1,600,000 | $ 4,900,000 | ||||
Compensation cost related to nonvested stock options not yet recognized | 8,500,000 | $ 8,500,000 | ||||
Unrecognized compensation cost related to nonvested stock option recognized over weighted average period, in years | 2 years 6 months | |||||
Stock options to purchase common stock (in shares) | 216,160 | |||||
Restricted Stock Units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Total unrecognized compensation cost related to unvested restricted stock units | 18,000,000 | $ 18,000,000 | ||||
Weighted average remaining vesting period | 2 years 8 months 8 days | |||||
Cumulative Stock-based Compensation Expense Related to Stock Options Recorded upon Effectiveness of Our IPO | Performance Shares | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock-based compensation expense | $ 6,200,000 | |||||
Stock Option Modifications | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock-based compensation expense | $ 2,400,000 | $ 0 | $ 2,394,000 | $ 0 | $ 2,394,000 | |
2017 Equity Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares available to be issued | 5,674,155 | 5,674,155 | ||||
2017 Equity Incentive Plan | Class A Common Stock | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares available to be issued | 6,421,442 | 6,587,802 | 6,587,802 | |||
2007 Stock Option Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares available to be issued | 421,442 | |||||
Number of shares available for grants | 0 | |||||
Period for which options can be granted | 10 years |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Estimate the Fair Value of Stock Options Granted (Detail) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
Share-based Goods and Nonemployee Services Transaction [Line Items] | ||
Expected term (in years) | 6 years 6 months | 6 years 6 months |
Expected dividend yield | 0.00% | 0.00% |
Minimum | ||
Share-based Goods and Nonemployee Services Transaction [Line Items] | ||
Risk-free interest rate | 2.00% | 2.00% |
Expected volatility | 38.70% | 38.70% |
Maximum | ||
Share-based Goods and Nonemployee Services Transaction [Line Items] | ||
Risk-free interest rate | 2.10% | 2.20% |
Expected volatility | 38.80% | 40.60% |
Stock-Based Compensation - Su32
Stock-Based Compensation - Summary of the Stock Option Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Number of Shares | ||
January 1, 2018 | 7,010,887 | |
Granted | 0 | |
Exercised | (1,006,398) | |
Canceled | (50,540) | |
June 30, 2018 | 5,953,949 | 7,010,887 |
June 30, 2018 | 2,262,569 | |
Weighted Average Exercise Price | ||
January 1, 2018 | $ 6.36 | |
Granted | 0 | |
Exercised | 2.05 | |
Canceled | 9.68 | |
June 30, 2018 | 7.06 | $ 6.36 |
June 30, 2018 | $ 3.29 | |
Weighted Average Remaining Contractual Term (Years) | ||
January 1, 2018 | 6 years 8 months 12 days | 6 years 7 months |
June 30, 2018 | 6 years 8 months 12 days | 6 years 7 months |
June 30, 2018 | 4 years 6 months | |
Aggregate Intrinsic Value (in thousands) | ||
January 1, 2018 | $ 176,122 | |
Exercised | 27,564 | |
June 30, 2018 | 173,261 | $ 176,122 |
June 30, 2018 | $ 74,362 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Restricted Stock Unit Activity (Details) - Restricted Stock Units | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Number of Shares | |
Non-vested outstanding at January 1, 2018 | shares | 731,975 |
Granted | shares | 152,100 |
Vested | shares | 0 |
Canceled | shares | (6,550) |
Non-vested outstanding at June 30, 2018 | shares | 877,525 |
Weighted Average Grant Date Fair Value | |
Non-vested outstanding at January 1, 2018 | $ / shares | $ 22.16 |
Granted | $ / shares | 29.70 |
Vested | $ / shares | 0 |
Canceled | $ / shares | 25.42 |
Non-vested outstanding at June 30, 2018 | $ / shares | $ 23.44 |
Stock-Based Compensation - Sc34
Stock-Based Compensation - Schedule of Stock-based Compensation Expense (Detail) - USD ($) $ in Thousands | Apr. 25, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Total stock-based compensation expense | $ 2,206 | $ 9,345 | $ 4,446 | $ 9,345 | |
Stock-Based Compensation Expense Related to Stock Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Total stock-based compensation expense | 1,073 | 6,821 | 2,327 | 6,821 | |
Stock-based Compensation Expense Related to Restricted Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Total stock-based compensation expense | 1,017 | 0 | 1,911 | 0 | |
Stock-based Compensation Expense Related to the Issuance of Common Stock to Directors | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Total stock-based compensation expense | 116 | 130 | 208 | 130 | |
Stock Option Modifications | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Total stock-based compensation expense | $ 2,400 | $ 0 | $ 2,394 | $ 0 | $ 2,394 |
Stock-Based Compensation - Sc35
Stock-Based Compensation - Schedule of Stock-based Compensation Expense Included in Condensed Consolidated Statements of Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | $ 2,206 | $ 9,345 | $ 4,446 | $ 9,345 |
Subscriptions, software and support | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | 107 | 404 | 217 | 404 |
Professional services | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | 203 | 984 | 423 | 984 |
Sales and marketing | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | 538 | 2,423 | 1,045 | 2,423 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | 342 | 2,202 | 733 | 2,202 |
General and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | $ 1,016 | $ 3,332 | $ 2,028 | $ 3,332 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | 6 Months Ended | |
Jun. 30, 2018vote_per_share$ / sharesshares | Dec. 31, 2017$ / sharesshares | |
Class of Stock [Line Items] | ||
Common stock, par value | $ / shares | $ 0.0001 | |
Class B Common Stock | ||
Class of Stock [Line Items] | ||
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 |
Common stock, shares issued | 42,190,346 | 47,569,796 |
Common stock, shares outstanding | 42,190,346 | 47,569,796 |
Number of votes entitled to stockholders per share | vote_per_share | 10 | |
Class A Common Stock | ||
Class of Stock [Line Items] | ||
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 |
Common stock, shares issued | 19,422,534 | 13,030,081 |
Common stock, shares outstanding | 19,422,534 | 13,030,081 |
Number of votes entitled to stockholders per share | vote_per_share | 1 | |
Conversion of stock (in shares) | 1 | |
Maximum percentage of aggregate voting power of capital stock which triggers conversion of stock | 10.00% |
Basic and Diluted Loss per Co37
Basic and Diluted Loss per Common Share - Summary of Securities Excluded From Calculation of Weighted Average Common Shares Outstanding (Detail) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Employee Stock Option | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Convertible preferred stock (in shares) | 5,953,949 | 7,581,688 | 5,953,949 | 7,581,688 |
Restricted Stock Units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Convertible preferred stock (in shares) | 877,525 | 0 | 877,525 | 0 |
Commitments and Contingencies -
Commitments and Contingencies -Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Apr. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | ||||||
Lease term (in months) | 150 months | |||||
Total payments committed under operating lease | $ 86.4 | |||||
Deferred rent, noncurrent | $ 0.9 | $ 0.9 | $ 2 | |||
Total rent and lease expense | 1.8 | $ 1.7 | 3.8 | $ 3.4 | ||
Payment of royalty fees | 0.3 | |||||
Outstanding letters of credit | $ 10.4 | $ 10.4 | $ 1.1 | |||
Letter of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Letter of credit entered into in connection with lease | $ 9.4 |
Segment and Geographic Inform39
Segment and Geographic Information - Summary of Revenues By Geography (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | $ 59,883 | $ 43,198 | $ 111,579 | $ 81,527 |
Domestic | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | 43,035 | 32,335 | 78,560 | 61,982 |
International | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | $ 16,848 | $ 10,863 | $ 33,019 | $ 19,545 |
Segment and Geographic Inform40
Segment and Geographic Information - Additional Information (Detail) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Sales Revenue, Net | Geographic Concentration Risk | ||||
Segment Reporting Information [Line Items] | ||||
Concentration risk, percentage | 10.00% | 10.00% | 10.00% | 10.00% |
Subsequent Events (Details)
Subsequent Events (Details) - Restricted Stock Units - USD ($) $ / shares in Units, $ in Millions | Jul. 30, 2018 | Jun. 30, 2018 |
Subsequent Event [Line Items] | ||
Fair value of RSUs, granted (in usd per share) | $ 29.70 | |
2017 Equity Incentive Plan | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Grant of restricted stock units (in shares) | 156,046 | |
Fair value of RSUs, granted (in usd per share) | $ 30.94 | |
Value of RSUs at grant date | $ 4.8 | |
2017 Equity Incentive Plan | Vesting through August 5, 2023 | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Grant of restricted stock units (in shares) | 87,146 | |
Vesting period | 5 years | |
2017 Equity Incentive Plan | Vesting through August 5, 2019 | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Grant of restricted stock units (in shares) | 68,900 | |
Vesting period | 1 year |