Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 05, 2019 | |
Document and Entity Information [Line Items] | ||
Document Type | 10-Q | |
Entity File Number | 001-38098 | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2019 | |
Document Transition Report | false | |
Entity Registrant Name | APPIAN CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 54-1956084 | |
Entity Address, Address Line One | 7950 Jones Branch Drive | |
Entity Address, City or Town | Tysons | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 22102 | |
Local Phone Number | 442-8844 | |
City Area Code | (703) | |
Title of 12(b) Security | Class A Common Stock | |
Trading Symbol | APPN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001441683 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Class A Common Stock | ||
Document and Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 31,509,538 | |
Class B Common Stock | ||
Document and Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 33,374,676 | |
Former Address | ||
Document and Entity Information [Line Items] | ||
Entity Address, Address Line One | 11955 Democracy Drive, Suite 1700 | |
Entity Address, City or Town | Reston | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 20190 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 81,101 | $ 94,930 |
Accounts receivable, net of allowance of $600 as of June 30, 2019 and December 31, 2018 | 70,381 | 79,383 |
Allowance for doubtful accounts | 600 | 600 |
Deferred commissions, current | 17,492 | 14,020 |
Prepaid expenses and other current assets | 7,707 | 21,293 |
Total current assets | 176,681 | 209,626 |
Property and equipment, net | 36,823 | 7,539 |
Deferred commissions, net of current portion | 13,897 | 15,088 |
Deferred tax assets | 445 | 326 |
Other assets | 585 | 601 |
Total assets | 228,431 | 233,180 |
Current liabilities | ||
Accounts payable | 10,173 | 9,249 |
Accrued expenses | 12,075 | 7,464 |
Accrued compensation and related benefits | 10,563 | 13,796 |
Deferred revenue, current | 97,556 | 95,523 |
Capital leases, current | 1,169 | 0 |
Other current liabilities | 1,852 | 2,369 |
Total current liabilities | 133,388 | 128,401 |
Deferred tax liabilities | 20 | 42 |
Deferred revenue, net of current portion | 14,597 | 16,145 |
Deferred rent, net of current portion | 20,150 | 15,400 |
Capital leases, net of current portion | 2,504 | 0 |
Total liabilities | 170,659 | 159,988 |
Stockholders’ equity | ||
Additional paid-in capital | 230,185 | 218,284 |
Accumulated other comprehensive income | 152 | 542 |
Accumulated deficit | (172,571) | (145,640) |
Total stockholders’ equity | 57,772 | 73,192 |
Total liabilities and stockholders’ equity | 228,431 | 233,180 |
Class A Common Stock | ||
Stockholders’ equity | ||
Common stock | $ 3 | $ 3 |
Common stock, par value (in usd per share) | $ 0.0001 | |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 31,462,892 | 29,626,054 |
Common stock, shares outstanding (in shares) | 31,462,892 | 29,626,054 |
Class B Common Stock | ||
Stockholders’ equity | ||
Common stock | $ 3 | $ 3 |
Common stock, par value (in usd per share) | $ 0.0001 | |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 33,374,676 | 34,290,383 |
Common stock, shares outstanding (in shares) | 33,374,676 | 34,290,383 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue: | ||||
Total revenue | $ 66,911 | $ 59,883 | $ 126,490 | $ 111,579 |
Cost of revenue: | ||||
Total cost of revenue | 23,051 | 21,574 | 47,117 | 42,623 |
Gross profit | 43,860 | 38,309 | 79,373 | 68,956 |
Operating expenses: | ||||
Sales and marketing | 31,148 | 27,384 | 61,093 | 50,348 |
Research and development | 12,765 | 10,785 | 26,721 | 20,655 |
General and administrative | 9,261 | 8,425 | 18,277 | 16,485 |
Total operating expenses | 53,174 | 46,594 | 106,091 | 87,488 |
Operating loss | (9,314) | (8,285) | (26,718) | (18,532) |
Other (income) expense: | ||||
Other (income) expense, net | (256) | 2,593 | (316) | 1,675 |
Interest expense | 69 | 54 | 140 | 67 |
Total other (income) expense | (187) | 2,647 | (176) | 1,742 |
Loss before income taxes | (9,127) | (10,932) | (26,542) | (20,274) |
Income tax expense | 267 | 35 | 389 | 246 |
Net loss | $ (9,394) | $ (10,967) | $ (26,931) | $ (20,520) |
Net loss per share attributable to common stockholders: | ||||
Basic and diluted (in dollar per share) | $ (0.15) | $ (0.18) | $ (0.42) | $ (0.34) |
Weighted average common shares outstanding: | ||||
Basic and diluted (in shares) | 64,753,044 | 61,401,466 | 64,531,089 | 61,127,516 |
Subscriptions, Software, And Support | ||||
Revenue: | ||||
Total revenue | $ 39,259 | $ 33,047 | $ 74,168 | $ 59,999 |
Cost of revenue: | ||||
Total cost of revenue | 4,036 | 2,824 | 7,621 | 5,452 |
Professional Services | ||||
Revenue: | ||||
Total revenue | 27,652 | 26,836 | 52,322 | 51,580 |
Cost of revenue: | ||||
Total cost of revenue | $ 19,015 | $ 18,750 | $ 39,496 | $ 37,171 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (9,394) | $ (10,967) | $ (26,931) | $ (20,520) |
Comprehensive loss, net of income taxes: | ||||
Foreign currency translation adjustment | (730) | 1,103 | (390) | 537 |
Total other comprehensive loss, net of income taxes | $ (10,124) | $ (9,864) | $ (27,321) | $ (19,983) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | 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 | ||||
Exercise of stock options | 2,072 | 2,072 | |||
Stock-based compensation expense | 4,446 | 4,446 | |||
Other comprehensive income (loss) | 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) |
Beginning balance (in shares) at Dec. 31, 2018 | 63,916,437 | ||||
Beginning balance at Dec. 31, 2018 | 73,192 | $ 6 | 218,284 | 542 | (145,640) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | $ (26,931) | (26,931) | |||
Issuance of common stock to directors (in shares) | 6,145 | ||||
Vesting of restricted stock units (in shares) | 284,690 | ||||
Exercise of stock options (in shares) | 630,296 | 630,296 | |||
Exercise of stock options | $ 1,987 | 1,987 | |||
Stock-based compensation expense | 9,914 | 9,914 | |||
Other comprehensive income (loss) | (390) | (390) | |||
Ending balance (in shares) at Jun. 30, 2019 | 64,837,568 | ||||
Ending balance at Jun. 30, 2019 | $ 57,772 | $ 6 | $ 230,185 | $ 152 | $ (172,571) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (26,931) | $ (20,520) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 1,933 | 951 |
Loss on disposal of equipment | 145 | 0 |
Bad debt expense | 97 | 0 |
Deferred income taxes | (47) | 77 |
Stock-based compensation | 9,914 | 4,446 |
Changes in assets and liabilities: | ||
Accounts receivable | 8,861 | (9,095) |
Prepaid expenses and other assets | 13,453 | (311) |
Deferred commissions | (2,281) | (3,062) |
Accounts payable and accrued expenses | 5,458 | 3,480 |
Accrued compensation and related benefits | (3,181) | 1,995 |
Other current liabilities | (269) | 951 |
Deferred revenue | 189 | (1,368) |
Deferred rent, non-current | 4,584 | (1,160) |
Net cash provided by (used in) operating activities | 11,925 | (23,616) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (27,689) | (1,593) |
Net cash used in investing activities | (27,689) | (1,593) |
Cash flows from financing activities: | ||
Proceeds from exercise of common stock options | 1,987 | 2,072 |
Net cash provided by financing activities | 1,987 | 2,072 |
Effect of foreign exchange rate changes on cash and cash equivalents | (52) | (258) |
Net decrease in cash and cash equivalents | (13,829) | (23,395) |
Cash and cash equivalents, beginning of period | 94,930 | 73,758 |
Cash and cash equivalents, end of period | 81,101 | 50,363 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 170 | 21 |
Cash paid for income taxes | 116 | 175 |
Capital lease obligations to acquire new office furniture and fixtures | $ 3,673 | $ 0 |
Organization and Description of
Organization and Description of Business | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Organization and Description of Business | Organization and Description of BusinessAppian Corporation (together with its subsidiaries, “Appian,” the “Company,” “we” or “our”) provides a low-code software development platform that allows companies to rapidly build powerful business 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. As of June 30, 2019, we were headquartered in Reston, Virginia and subsequently moved to Tysons, Virginia. We 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, 2019 | |
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 (“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, 2018, filed with the Securities and Exchange Commission (the “SEC”) on February 21, 2019. 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 and stock-based compensation. 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. 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. We generally charge subscription fees on a per-user basis or, alternatively, non-user based single application licenses. 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 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 one 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 and term license subscriptions 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. 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. Deposits held with banks may exceed the amount of insurance provided on such deposits. 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 17.3% and 17.6% of our revenue for the three and six months ended June 30, 2019, respectively, of which the top three federal government agencies generated 6.3% and 7.0% of our revenue for the three and six months ended June 30, 2019, respectively. Additionally, 30.8% and 30.3% of our revenue during the three and six months ended June 30, 2019, respectively, was generated from foreign customers. 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. 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, 2018 to June 30, 2019. Non-Trade Receivables We record non-trade receivables to reflect amounts due for activities other than sales of subscriptions to our platform and professional services. Our non-trade receivables relate entirely to a receivable from our tenant improvement allowance. We received the entire tenant improvement allowance as of June 30, 2019, and therefore, there was no receivable balance remaining as of such date. The tenant improvement allowance receivable was $14.4 million as of December 31, 2018 and is classified within prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets. We recognized our initial tenant improvement allowance receivable of $15.8 million related to our new headquarters once we took initial possession of the space in October 2018. We recognized additional tenant improvement allowance receivable of $2.6 million when we took possession of adjacent office space in February 2019. 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 $4.7 million and $9.1 million for the three and six months ended June 30, 2019, respectively. Commission expense was $3.5 million and $6.2 million for the three and six months ended June 30, 2018, respectively. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Significant additions or improvements extending the useful life of an asset are capitalized, while repairs and maintenance costs which do not significantly improve the related assets or extend their useful lives are charged to expense as incurred. Asset Category Useful Life (in years) Computer software 3 Computer hardware 3 Equipment 5 Office furniture and fixtures 10 Leasehold improvements Shorter of useful life of assets or lease term 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, 2019 and December 31, 2018 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 instruments measured at fair value during the three and six months ended June 30, 2019 and June 30, 2018. 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 containing only a service condition using the Black-Scholes Option Pricing Model. The fair value of restricted stock units is based on the closing market price of our common stock on the Nasdaq Global Market on the date of grant. 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 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 (the “JOBS Act”). We will remain an emerging growth company until December 31, 2019. After that date, we will no longer be an "emerging growth company" but will then be a "large accelerated filer," because over $700 million of our outstanding equity securities was held by non-affiliates as of June 30, 2019. 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 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. The adoption of ASU 2016-15 did not have an impact on our condensed consolidated financial statements for the three and six months ended June 30, 2019. 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. The adoption of ASU 2018-02 did not have an impact on our condensed consolidated financial statements for the three and six months ended June 30, 2019. Not Yet Adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”), which provides new guidance for revenue recognition. ASC 606 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. ASC 606 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 ASC 606. 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 ASC 606. 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 have elected to avail ourselves of the JOBS Act extended transition period that permits us to defer adoption until January 1, 2019. In accordance with guidance, the new standard will be adopted in our Annual Report on Form 10-K for the fiscal year ending December 31, 2019 but will not be adopted in our Quarterly Reports on Form 10-Q to be filed during 2019. The ASC 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 are going to adopt the new standard using the modified retrospective method. 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 will 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 defer the incremental costs to obtain a contract with a customer. Therefore, the new standard will result in additional costs being capitalized, including fringe benefits. Under the new standard, initial incremental costs to obtain a contract will be amortized over the customer's estimated economic life of five years, which was calculated based on both qualitative and quantitative factors, such as product life cycles, contractual terms and customer attrition. Incremental contract costs paid relating to contract renewals will be deferred and amortized on a straight-line basis over the related renewal period. 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 ASC 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 was further clarified by ASU No. 2018-10, Codification Improvements to Topic 842, Leases , and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements , both issued in July 2018. ASU 2016-02 requires companies to recognize on the balance sheet the assets and liabilities for the rights and obligations created by lease assets. The new standard also requires additional disclosure of qualitative and quantitative information about the amounts recorded in the financial statements related to lease agreements. Because we will lose "emerging growth company" status effective December 31, 2019, the new standard will be adopted in our Annual Report on Form 10-K for the year ending December 31, 2019. ASU 2016-02 requires a transition adoption election of either (1) a modified retrospective approach with periods prior to the adoption date being restated or (2) a prospective adoption approach with a cumulative-effect adjustment recognized to the opening balance of retained earnings on the adoption date with prior periods not restated. We are currently evaluating the impact the adoption of ASU 2016-02 will have on our condensed consolidated financial statements. We plan to adopt this standard using the prospective adoption approach and electing the practical expedients allowed under the standard. Although we are still evaluating the impact of the adoption of the standard on our condensed consolidated financial statements, we expect there will be a material increase to assets and liabilities related to the recognition of new right-of-use assets and lease liabilities on our balance sheet for leases currently classified as operating leases. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) ("ASU 2016-13"), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We are currently evaluating the impact that the standard will have on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"), which eliminates, modifies and adds disclosure requirements for fair value measurements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted. We do not expect ASU 2018-13 to have a material impact on our consolidated financial statements. |
Property and Equipment, net
Property and Equipment, net | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | Property and Equipment, net Property and equipment, net consisted of the following as of June 30, 2019 and December 31, 2018 (in thousands): June 30, 2019 December 31, 2018 Leasehold improvements $ 32,601 $ 9,958 Computer hardware 3,956 2,535 Office furniture and fixtures 3,910 649 Computer software 1,727 1,727 Equipment 134 138 42,328 15,007 Less: accumulated depreciation (5,505) (7,468) Property and equipment, net $ 36,823 $ 7,539 Depreciation and amortization totaled $1.1 million and $1.9 million for the three and six months ended June 30, 2019, respectively. Depreciation and amortization totaled $0.7 million and $1.0 million for the three and six months ended June 30, 2018, respectively. During the three and six months ended June 30, 2019, we retired $3.2 million of leasehold improvements and $0.8 million of office furniture and fixtures and equipment in association with the relocation of our corporate headquarters. During the three and six months ended June 30, 2019, we recorded a loss on disposal of $0.1 million. During the three and six months ended June 30, 2018, we disposed of $0.1 million of fully depreciated computer hardware. |
Accrued Expenses
Accrued Expenses | 6 Months Ended |
Jun. 30, 2019 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses consisted of the following as of June 30, 2019 and December 31, 2018 (in thousands): June 30, 2019 December 31, 2018 Accrued contract labor costs $ 2,746 $ 3,128 Accrued leasehold improvement costs 2,406 — Accrued hosting costs 1,914 579 Accrued reimbursable employee expenses 1,147 459 Accrued marketing and tradeshow expenses 812 229 Accrued computer hardware costs 670 — Accrued audit and tax expenses 601 375 Accrued third party license fees 341 729 Other accrued expenses 1,438 1,965 Total $ 12,075 $ 7,464 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | DebtLine of CreditIn 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, 2019. As of June 30, 2019, we had no outstanding borrowings under the revolving line of credit. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
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 32%. 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, 2019, the actual effective tax rates were (3.0)% and (1.5)%, respectively. For the three and six months ended June 30, 2018, the actual effective tax rates were (0.3)% and (1.2)%, respectively. We assess uncertain tax positions in accordance with ASC 740-10, Accounting for Uncertainties in Income Taxes . As of June 30, 2019, our net unrecognized tax benefits totaled $1.0 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. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [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 initial public offering. 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, 2019, there were 7,084,603 shares of Class A common stock reserved for issuance under the 2017 Plan, of which 4,913,160 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 initial public offering. The performance condition was satisfied upon the effectiveness of our initial public offering in May 2017. We estimate the fair value of stock options containing only a service condition using the Black-Scholes Option 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. In May 2019, our board of directors granted a stock option to purchase 700,000 shares of our Class A common stock to our Chief Executive Officer (the "2019 CEO Grant") under the 2017 Plan with an exercise price of $33.98 per share. The 2019 CEO Grant is eligible to vest based on the achievement of a stock price appreciation target of our Class A common stock. Specifically, the 2019 CEO Grant will vest when shares of our Class A common stock closes at or above $84.63 per share for a period equal to or greater than 90 calendar days or upon the occurrence of a change in control in which the value of our Class A common stock is equal to or greater than $84.63 per share within five years of the grant date. The fair value of the 2019 CEO Grant was determined using a Monte Carlo simulation. The fair value of the award at the grant date was $9.5 million and will be amortized over the derived service period of 2.6 years. 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, 2019 and 2018: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Risk-free interest rate 2.1% * 2.1% * Expected term (in years) 2.6 * 2.6 * Expected volatility 55.0% * 55.0% * 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, 2019: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) January 1, 2019 5,021,068 $ 7.30 6.4 $ 97,440 Granted 700,000 33.98 Exercised (630,296) 3.15 18,852 Canceled (44,140) 10.45 Outstanding at June 30, 2019 5,046,632 11.49 6.2 124,021 Exercisable at June 30, 2019 3,207,972 7.12 6.0 92,872 The weighted average grant-date fair value of stock options granted during the six months ended June 30, 2019 was $13.57 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, 2019 and 2018 was $1.5 million and $1.6 million, respectively. As of June 30, 2019, the total compensation cost related to unvested stock options not yet recognized was $10.9 million, which will be recognized over a weighted average period of 2.4 years. Restricted Stock Units The following table summarizes the restricted stock unit activity for the six months ended June 30, 2019: Number of Shares Weighted Average Grant Date Fair Value Non-vested outstanding at January 1, 2019 1,175,049 $ 26.04 Granted 126,065 35.02 Vested (284,690) 30.03 Canceled (20,375) 28.70 Non-vested outstanding at June 30, 2019 996,049 25.99 As of June 30, 2019, total unrecognized compensation cost related to unvested restricted stock units was approximately $20.6 million, which will be recognized over a weighted average period of 2.3 years. In November 2018, our board of directors approved the grant of 255,930 restricted stock units under the 2017 Plan at a fair value of $30.06 per share to our co-founders. The value of these awards at the grant date was $7.7 million and was amortized over the vesting periods. The restricted stock units vested during the three months ended March 31, 2019. The following table summarizes the components of our stock-based compensation expense for the three and six months ended June 30, 2019 and 2018 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Stock-based compensation expense related to restricted stock units $ 1,902 $ 1,017 $ 8,671 $ 1,911 Stock-based compensation expense related to stock options 695 1,073 1,059 2,327 Stock-based compensation expense related to the issuance of common stock to directors 92 116 184 208 Total stock-based compensation expense $ 2,689 $ 2,206 $ 9,914 $ 4,446 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, 2019 and 2018 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Cost of revenue Subscriptions, software and support $ 161 $ 107 $ 315 $ 217 Professional services 244 203 2,218 423 Operating expenses Sales and marketing 814 538 3,195 1,045 Research and development 435 342 2,550 733 General and administrative 1,035 1,016 1,636 2,028 Total stock-based compensation expense $ 2,689 $ 2,206 $ 9,914 $ 4,446 |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity As of June 30, 2019, we had authorized 500,000,000 shares of Class A common stock and 100,000,000 shares of Class B common stock, each with a par value of $0.0001 per share, of which 31,462,892 shares of Class A common stock and 33,374,676 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, 2019 | |
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, 2019 2018 2019 2018 Stock options 5,046,632 5,953,949 5,046,632 5,953,949 Restricted stock units 996,049 877,525 996,049 877,525 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases We lease office space and equipment under non-cancellable operating lease agreements which have various expiration dates through 2031 for our office space and various expiration dates through 2020 for our equipment. In April 2018, we entered into a new lease agreement for a new headquarters in Tysons, Virginia. We took initial possession of the first phase of the new headquarters in October 2018 and began to recognize rent expense. We expect to start making recurring rental payments under the lease in the third quarter of 2020. Total payments committed under the lease amount to $87.2 million. In connection with the lease agreement, we also entered into a letter of credit of $9.4 million to fund the security deposit required by the lease. The lease for the new headquarters contains a tenant improvement allowance of up to $18.4 million from the landlord. The tenant improvement allowance is accounted for as a lease incentive obligation and is amortized as a reduction to rent expense over the lease term. We recorded a lease incentive obligation when we took initial possession of the first phase of the new headquarters. We took initial possession of the second phase in February 2019 and recorded an additional lease incentive obligation. As of June 30, 2019, $1.4 million was included in other current liabilities and $16.0 million was included in deferred rent, net of current portion on the accompanying consolidated balance sheets. As of December 31, 2018, $1.2 million was included in other current liabilities and $14.4 million was included in deferred rent, net of current portion on the accompanying consolidated balance sheets. Capital Leases We lease certain office furniture and fixtures under non-cancellable capital lease agreements which have expiration dates in 2022. As of June 30, 2019, office furniture and fixtures acquired under capital lease agreements totaled $3.7 million. There were no assets acquired under capital lease agreements as of December 31, 2018. A summary of our future minimum payments under non-cancellable operating and capital lease agreements by year as of June 30, 2019 is as follows (in thousands): Operating Leases Capital Leases Remainder of 2019 $ 2,111 $ 663 2020 3,375 1,325 2021 6,790 1,325 2022 6,938 663 2023 6,987 — Thereafter 65,148 — Total minimum lease payments 91,349 3,976 Less: amounts representing interest — (302) Present value of lease obligations $ 91,349 $ 3,674 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, 2019 and December 31, 2018, deferred rent totaled $21.5 million and $17.4 million, respectively, and is included within other current liabilities and deferred rent, net of current portion on the accompanying condensed consolidated balance sheets. In addition to rental payments, certain leases require additional payments for real estate taxes, common area maintenance and insurance, which are expensed when incurred and not included in future minimum payments. Total rent and lease expense was $2.4 million and $5.5 million for the three and six months ended June 30, 2019, respectively. Total rent and lease expense was $1.8 million and $3.8 million for the three and six months ended June 30, 2018, 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 each of June 30, 2019 and December 31, 2018, we had outstanding letters of credit totaling $10.5 million in connection with securing our leased office space. All letters of credit are secured by our borrowing arrangement as described in Note 5. Legal |
Segment and Geographic Informat
Segment and Geographic Information | 6 Months Ended |
Jun. 30, 2019 | |
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, 2019 and 2018 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Domestic $ 46,295 $ 43,035 $ 88,178 $ 78,560 International 20,616 16,848 38,312 33,019 Total $ 66,911 $ 59,883 $ 126,490 $ 111,579 With respect to geographic information, revenue is attributed to respective geographies based on the contracting address of the customer. Revenues from external customers attributed to the United Kingdom were 10.5% and 10.2% of our total revenue for the three and six months ended June 30, 2019, respectively. 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. Substantially all of our long-lived assets were held in the United States as of June 30, 2019 and December 31, 2018. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
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 (“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, 2018, filed with the Securities and Exchange Commission (the “SEC”) on February 21, 2019. |
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 and stock-based compensation. |
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, Deferred Revenue, and Cost of Revenue | Revenue Recognition We generate revenue primarily through sales of subscriptions to our platform, as well as professional services. 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. We generally charge subscription fees on a per-user basis or, alternatively, non-user based single application licenses. 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 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 one 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 and term license subscriptions 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. 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 | 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. Deposits held with banks may exceed the amount of insurance provided on such deposits. 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. |
Accounts Receivable and Allowance for Doubtful Accounts and Non-Trade Receivables | 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, 2018 to June 30, 2019. Non-Trade Receivables We record non-trade receivables to reflect amounts due for activities other than sales of subscriptions to our platform and professional services. Our non-trade receivables relate entirely to a receivable from our tenant improvement allowance. We received the entire tenant improvement allowance as of June 30, 2019, and therefore, there was no receivable balance remaining as of such date. The tenant improvement allowance receivable was $14.4 million as of December 31, 2018 and is classified within prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets. We recognized our initial tenant improvement allowance receivable of $15.8 million related to our new headquarters once we took initial possession of the space in October 2018. We recognized additional tenant improvement allowance receivable of $2.6 million when we took possession of adjacent office space in February 2019. |
Deferred Commissions | Deferred CommissionsDeferred 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. |
Property and Equipment | Property and EquipmentProperty and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Significant additions or improvements extending the useful life of an asset are capitalized, while repairs and maintenance costs which do not significantly improve the related assets or extend their useful lives are charged to expense as incurred. |
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, 2019 and December 31, 2018 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 CompensationWe 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 containing only a service condition using the Black-Scholes Option Pricing Model. The fair value of restricted stock units is based on the closing market price of our common stock on the Nasdaq Global Market on the date of grant. 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 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 StatusWe are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). We will remain an emerging growth company until December 31, 2019. After that date, we will no longer be an "emerging growth company" but will then be a "large accelerated filer," because over $700 million of our outstanding equity securities was held by non-affiliates as of June 30, 2019. 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 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. The adoption of ASU 2016-15 did not have an impact on our condensed consolidated financial statements for the three and six months ended June 30, 2019. 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. The adoption of ASU 2018-02 did not have an impact on our condensed consolidated financial statements for the three and six months ended June 30, 2019. Not Yet Adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”), which provides new guidance for revenue recognition. ASC 606 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. ASC 606 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 ASC 606. 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 ASC 606. 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 have elected to avail ourselves of the JOBS Act extended transition period that permits us to defer adoption until January 1, 2019. In accordance with guidance, the new standard will be adopted in our Annual Report on Form 10-K for the fiscal year ending December 31, 2019 but will not be adopted in our Quarterly Reports on Form 10-Q to be filed during 2019. The ASC 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 are going to adopt the new standard using the modified retrospective method. 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 will 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 defer the incremental costs to obtain a contract with a customer. Therefore, the new standard will result in additional costs being capitalized, including fringe benefits. Under the new standard, initial incremental costs to obtain a contract will be amortized over the customer's estimated economic life of five years, which was calculated based on both qualitative and quantitative factors, such as product life cycles, contractual terms and customer attrition. Incremental contract costs paid relating to contract renewals will be deferred and amortized on a straight-line basis over the related renewal period. 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 ASC 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 was further clarified by ASU No. 2018-10, Codification Improvements to Topic 842, Leases , and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements , both issued in July 2018. ASU 2016-02 requires companies to recognize on the balance sheet the assets and liabilities for the rights and obligations created by lease assets. The new standard also requires additional disclosure of qualitative and quantitative information about the amounts recorded in the financial statements related to lease agreements. Because we will lose "emerging growth company" status effective December 31, 2019, the new standard will be adopted in our Annual Report on Form 10-K for the year ending December 31, 2019. ASU 2016-02 requires a transition adoption election of either (1) a modified retrospective approach with periods prior to the adoption date being restated or (2) a prospective adoption approach with a cumulative-effect adjustment recognized to the opening balance of retained earnings on the adoption date with prior periods not restated. We are currently evaluating the impact the adoption of ASU 2016-02 will have on our condensed consolidated financial statements. We plan to adopt this standard using the prospective adoption approach and electing the practical expedients allowed under the standard. Although we are still evaluating the impact of the adoption of the standard on our condensed consolidated financial statements, we expect there will be a material increase to assets and liabilities related to the recognition of new right-of-use assets and lease liabilities on our balance sheet for leases currently classified as operating leases. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) ("ASU 2016-13"), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We are currently evaluating the impact that the standard will have on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"), which eliminates, modifies and adds disclosure requirements for fair value measurements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted. We do not expect ASU 2018-13 to have a material impact on our consolidated financial statements. |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property and equipment, net consisted of the following as of June 30, 2019 and December 31, 2018 (in thousands): June 30, 2019 December 31, 2018 Leasehold improvements $ 32,601 $ 9,958 Computer hardware 3,956 2,535 Office furniture and fixtures 3,910 649 Computer software 1,727 1,727 Equipment 134 138 42,328 15,007 Less: accumulated depreciation (5,505) (7,468) Property and equipment, net $ 36,823 $ 7,539 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consisted of the following as of June 30, 2019 and December 31, 2018 (in thousands): June 30, 2019 December 31, 2018 Accrued contract labor costs $ 2,746 $ 3,128 Accrued leasehold improvement costs 2,406 — Accrued hosting costs 1,914 579 Accrued reimbursable employee expenses 1,147 459 Accrued marketing and tradeshow expenses 812 229 Accrued computer hardware costs 670 — Accrued audit and tax expenses 601 375 Accrued third party license fees 341 729 Other accrued expenses 1,438 1,965 Total $ 12,075 $ 7,464 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [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, 2019 and 2018: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Risk-free interest rate 2.1% * 2.1% * Expected term (in years) 2.6 * 2.6 * Expected volatility 55.0% * 55.0% * 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, 2019: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) January 1, 2019 5,021,068 $ 7.30 6.4 $ 97,440 Granted 700,000 33.98 Exercised (630,296) 3.15 18,852 Canceled (44,140) 10.45 Outstanding at June 30, 2019 5,046,632 11.49 6.2 124,021 Exercisable at June 30, 2019 3,207,972 7.12 6.0 92,872 |
Schedule of Restricted Stock Unit Activity | The following table summarizes the restricted stock unit activity for the six months ended June 30, 2019: Number of Shares Weighted Average Grant Date Fair Value Non-vested outstanding at January 1, 2019 1,175,049 $ 26.04 Granted 126,065 35.02 Vested (284,690) 30.03 Canceled (20,375) 28.70 Non-vested outstanding at June 30, 2019 996,049 25.99 |
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, 2019 and 2018 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Stock-based compensation expense related to restricted stock units $ 1,902 $ 1,017 $ 8,671 $ 1,911 Stock-based compensation expense related to stock options 695 1,073 1,059 2,327 Stock-based compensation expense related to the issuance of common stock to directors 92 116 184 208 Total stock-based compensation expense $ 2,689 $ 2,206 $ 9,914 $ 4,446 |
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, 2019 and 2018 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Cost of revenue Subscriptions, software and support $ 161 $ 107 $ 315 $ 217 Professional services 244 203 2,218 423 Operating expenses Sales and marketing 814 538 3,195 1,045 Research and development 435 342 2,550 733 General and administrative 1,035 1,016 1,636 2,028 Total stock-based compensation expense $ 2,689 $ 2,206 $ 9,914 $ 4,446 |
Basic and Diluted Loss per Co_2
Basic and Diluted Loss per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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, 2019 2018 2019 2018 Stock options 5,046,632 5,953,949 5,046,632 5,953,949 Restricted stock units 996,049 877,525 996,049 877,525 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | A summary of our future minimum payments under non-cancellable operating and capital lease agreements by year as of June 30, 2019 is as follows (in thousands): Operating Leases Capital Leases Remainder of 2019 $ 2,111 $ 663 2020 3,375 1,325 2021 6,790 1,325 2022 6,938 663 2023 6,987 — Thereafter 65,148 — Total minimum lease payments 91,349 3,976 Less: amounts representing interest — (302) Present value of lease obligations $ 91,349 $ 3,674 |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Summary of Revenue By Geography | The following table summarizes revenue by geography for the three and six months ended June 30, 2019 and 2018 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Domestic $ 46,295 $ 43,035 $ 88,178 $ 78,560 International 20,616 16,848 38,312 33,019 Total $ 66,911 $ 59,883 $ 126,490 $ 111,579 |
Significant Accounting Polici_3
Significant Accounting Policies - Additional Information (Detail) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($)agency | Dec. 31, 2018USD ($) | Feb. 28, 2019USD ($) | Oct. 31, 2018USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | |||||||
Change in allowance for doubtful accounts | $ 0 | $ 0 | |||||
Tenant improvement allowance receivable | $ 14,400,000 | $ 15,800,000 | |||||
Additional tenant improvement receivable | $ 2,600,000 | ||||||
Commission expense | $ 4,700,000 | $ 3,500,000 | $ 9,100,000 | $ 6,200,000 | |||
Customer Concentration Risk | Sales Revenue, Net | Foreign Customers | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Concentration risk percentage | 30.80% | 28.10% | 30.30% | 29.60% | |||
Customer Concentration Risk | Sales Revenue, Net | Government Agencies | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Concentration risk percentage | 17.30% | 20.10% | 17.60% | 16.50% | |||
Customer Concentration Risk | Sales Revenue, Net | Federal Government Agencies | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Concentration risk percentage | 6.30% | 13.50% | 7.00% | 9.80% | |||
Number of federal government agencies | agency | 3 | ||||||
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 | 3 years | ||||||
Term license subscription contracts term | 3 years | ||||||
Computer software | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Useful Life (in years) | 3 years | ||||||
Computer hardware | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Useful Life (in years) | 3 years | ||||||
Equipment | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Useful Life (in years) | 5 years | ||||||
Office furniture and fixtures | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Useful Life (in years) | 10 years |
Property, Plant, and Equipmen_2
Property, Plant, and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 42,328 | $ 42,328 | $ 15,007 | ||
Less: accumulated depreciation | (5,505) | (5,505) | (7,468) | ||
Property and equipment, net | 36,823 | 36,823 | 7,539 | ||
Depreciation and amortization expense | 1,100 | $ 700 | 1,900 | $ 1,000 | |
Loss on disposal of equipment | 100 | 145 | 0 | ||
Capital leases | 3,700 | 3,700 | |||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 32,601 | 32,601 | 9,958 | ||
Disposal of property plant and equipment | 3,200 | 3,200 | |||
Computer hardware | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 3,956 | 3,956 | 2,535 | ||
Disposal of property plant and equipment | $ 100 | $ 100 | |||
Office furniture and fixtures | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 3,910 | 3,910 | 649 | ||
Disposal of property plant and equipment | 800 | 800 | |||
Computer software | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 1,727 | 1,727 | 1,727 | ||
Equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 134 | $ 134 | $ 138 |
Accrued Expenses - Schedule of
Accrued Expenses - Schedule of Accrued Expenses (Detail) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Accrued contract labor costs | $ 2,746 | $ 3,128 |
Accrued leasehold improvement costs | 2,406 | 0 |
Accrued hosting costs | 1,914 | 579 |
Accrued reimbursable employee expenses | 1,147 | 459 |
Accrued marketing and tradeshow expenses | 812 | 229 |
Accrued computer hardware costs | 670 | 0 |
Accrued audit and tax expenses | 601 | 375 |
Accrued third party license fees | 341 | 729 |
Other accrued expenses | 1,438 | 1,965 |
Total | $ 12,075 | $ 7,464 |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) | 1 Months Ended | |
Nov. 30, 2017 | Jun. 30, 2019 | |
Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Credit facility | $ 20,000,000 | |
Term Loan | ||
Line of Credit Facility [Line Items] | ||
Line of credit, outstanding borrowings | $ 0 | |
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, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Taxes [Line Items] | ||||
Effective tax rate | (3.00%) | (0.30%) | (1.50%) | (1.20%) |
Net unrecognized tax benefits which would impact effective tax rate if recognized | $ 1 | $ 1 | ||
Earliest Tax Year | ||||
Income Taxes [Line Items] | ||||
Open tax year | 2015 | |||
Latest Tax Year | ||||
Income Taxes [Line Items] | ||||
Open tax year | 2018 | |||
Minimum | Subsidiaries | ||||
Income Taxes [Line Items] | ||||
Effective tax rate | 0.00% | |||
Maximum | Subsidiaries | ||||
Income Taxes [Line Items] | ||||
Effective tax rate | 32.00% |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
May 31, 2019 | Nov. 30, 2018 | Mar. 31, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | May 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Service period for option exercise | 5 years | |||||
Weighted average grant-date fair value (in usd per share) | $ 13.57 | |||||
Vested in period, value | $ 1.5 | $ 1.6 | ||||
Compensation cost related to nonvested stock options not yet recognized | $ 10.9 | |||||
Unrecognized compensation cost related to nonvested stock option recognized over weighted average period, in years | 2 years 4 months 24 days | |||||
Stock option cancellation agreement, vested options to purchase (in shares) | 700,000 | |||||
Granted (in shares) | 700,000 | |||||
Exercise price of stock options granted (in usd per share) | $ 33.98 | |||||
Service period (in years) | 6 years 4 months 24 days | 6 years 2 months 12 days | ||||
Restricted Stock Units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Total unrecognized compensation cost related to unvested restricted stock units | $ 20.6 | |||||
Weighted average remaining vesting period | 2 years 3 months 18 days | |||||
Grant of RSUs (in shares) | 126,065 | |||||
Fair value of shares granted (in usd per share) | $ 35.02 | |||||
2017 Equity Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares available to be issued (in shares) | 4,913,160 | |||||
2017 Equity Incentive Plan | Restricted Stock Units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Value of award at grant date | $ 7.7 | |||||
Grant of RSUs (in shares) | 255,930 | |||||
Fair value of shares granted (in usd per share) | $ 30.06 | |||||
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 (in shares) | 7,084,603 | 6,421,442 | ||||
2007 Stock Option Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares available to be issued (in shares) | 421,442 | |||||
Number of shares available for grants (in shares) | 0 | |||||
Period for which options can be granted | 10 years | |||||
Chief Executive Officer | 2017 Equity Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock option cancellation agreement, vested options to purchase (in shares) | 700,000 | |||||
Granted (in shares) | 700,000 | |||||
Exercise price of stock options granted (in usd per share) | $ 33.98 | |||||
Share price (in usd per share) | $ 84.63 | |||||
Value of award at grant date | $ 9.5 | |||||
Service period (in years) | 2 years 7 months 6 days |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions Used to Estimate Fair Value of Stock Options (Detail) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Risk-free interest rate | 210.00% | 210.00% |
Expected term (in years) | 2 years 7 months 6 days | 2 years 7 months 6 days |
Expected volatility | 55.00% | 55.00% |
Expected dividend yield | 0.00% | 0.00% |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of the Stock Option Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended |
Mar. 31, 2019 | Jun. 30, 2019 | |
Number of Shares | ||
January 1, 2019 (in shares) | 5,021,068 | 5,021,068 |
Granted (in shares) | 700,000 | |
Exercised (in shares) | (630,296) | |
Canceled (in shares) | (44,140) | |
Outstanding at June 30, 2019 (in shares) | 5,046,632 | |
Exercisable at June 30, 2019 (in shares) | 3,207,972 | |
Weighted Average Exercise Price | ||
January 1, 2019 (in usd per share) | $ 7.30 | $ 7.30 |
Granted (in usd per share) | 33.98 | |
Exercised (in usd per share) | 3.15 | |
Canceled (in usd per share) | 10.45 | |
Outstanding at June 30, 2019 (in usd per share) | 11.49 | |
Exercisable at June 30, 2019 (in usd per share) | $ 7.12 | |
Weighted Average Remaining Contractual Term (Years) | ||
January 1, 2019 | 6 years 4 months 24 days | 6 years 2 months 12 days |
Outstanding at June 30, 2019 | 6 years 4 months 24 days | 6 years 2 months 12 days |
Exercisable at June 30, 2019 | 6 years | |
Aggregate Intrinsic Value (in thousands) | ||
January 1, 2019 | $ 97,440 | $ 97,440 |
Exercised | 18,852 | |
Outstanding at June 30, 2019 | 124,021 | |
Exercisable at June 30, 2019 | $ 92,872 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Restricted Stock Unit Activity (Detail) - Restricted Stock Units | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Number of Shares | |
Non-vested outstanding at January 1, 2019 (in shares) | shares | 1,175,049 |
Granted (in shares) | shares | 126,065 |
Vested (in shares) | shares | (284,690) |
Canceled (in shares) | shares | (20,375) |
Non-vested outstanding at June 30, 2019 (in shares) | shares | 996,049 |
Weighted Average Grant Date Fair Value | |
Non-vested outstanding at January 1, 2019 (in usd per share) | $ / shares | $ 26.04 |
Fair value of shares granted (in usd per share) | $ / shares | 35.02 |
Vested (in usd per share) | $ / shares | 30.03 |
Canceled (in usd per share) | $ / shares | 28.70 |
Non-vested outstanding at June 30, 2019 (in usd per share) | $ / shares | $ 25.99 |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Stock-based Compensation Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | $ 2,689 | $ 2,206 | $ 9,914 | $ 4,446 |
Restricted Stock Units (RSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | 1,902 | 1,017 | 1,059 | 2,327 |
Employee Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | 695 | 1,073 | 8,671 | 1,911 |
Issuance Of Common Stock To Directors | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | $ 92 | $ 116 | $ 184 | $ 208 |
Stock-Based Compensation - Sc_3
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, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | $ 2,689 | $ 2,206 | $ 9,914 | $ 4,446 |
Subscriptions, Software, And Support | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | 161 | 107 | 315 | 217 |
Professional Services | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | 244 | 203 | 2,218 | 423 |
Selling and Marketing Expense | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | 814 | 538 | 3,195 | 1,045 |
Research and Development Expense | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | 435 | 342 | 2,550 | 733 |
General and Administrative Expense | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | $ 1,035 | $ 1,016 | $ 1,636 | $ 2,028 |
Stockholders' Equity (Detail)
Stockholders' Equity (Detail) | 6 Months Ended | |
Jun. 30, 2019vote_per_share$ / sharesshares | Dec. 31, 2018shares | |
Class A Common Stock | ||
Class of Stock [Line Items] | ||
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, par value (in usd per share) | $ / shares | $ 0.0001 | |
Common stock, shares issued (in shares) | 31,462,892 | 29,626,054 |
Common stock, shares outstanding (in shares) | 31,462,892 | 29,626,054 |
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% | |
Class B Common Stock | ||
Class of Stock [Line Items] | ||
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, par value (in usd per share) | $ / shares | $ 0.0001 | |
Common stock, shares issued (in shares) | 33,374,676 | 34,290,383 |
Common stock, shares outstanding (in shares) | 33,374,676 | 34,290,383 |
Number of votes entitled to stockholders per share | vote_per_share | 10 |
Basic and Diluted Loss per Co_3
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, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Employee Stock Option | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Convertible preferred stock (in shares) | 5,046,632 | 5,953,949 | 5,046,632 | 5,953,949 |
Restricted Stock Units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Convertible preferred stock (in shares) | 996,049 | 877,525 | 996,049 | 877,525 |
Commitments and Contingencies -
Commitments and Contingencies -Narrative (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Apr. 30, 2018 | |
Debt Instrument [Line Items] | ||||||
Total payments committed under operating lease | $ 91,349 | $ 91,349 | $ 87,200 | |||
Tenant improvement allowance, maximum | 18,400 | 18,400 | ||||
Deferred rent credit | 1,400 | 1,400 | $ 1,200 | |||
Deferred rent credit, net of current portion | 16,000 | 16,000 | 14,400 | |||
Office furniture and fixtures acquired under capital lease agreements | 3,700 | 3,700 | ||||
Deferred rent, noncurrent | 21,500 | 21,500 | 17,400 | |||
Total rent and lease expense | 2,400 | $ 1,800 | 5,500 | $ 3,800 | ||
Payment of royalty fees | 300 | |||||
Outstanding letters of credit | $ 10,500 | $ 10,500 | $ 10,500 | |||
Letter of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Letter of credit entered into in connection with lease | $ 9,400 |
Commitments and Contingencies_2
Commitments and Contingencies - Future Minimum Lease Commitments (Detail) - USD ($) $ in Thousands | Jun. 30, 2019 | Apr. 30, 2018 |
Operating Leases | ||
Remainder of 2019 | $ 2,111 | |
2020 | 3,375 | |
2021 | 6,790 | |
2022 | 6,938 | |
2023 | 6,987 | |
Thereafter | 65,148 | |
Total minimum lease payments | 91,349 | $ 87,200 |
Capital Leases | ||
Remainder of 2019 | 663 | |
2020 | 1,325 | |
2021 | 1,325 | |
2022 | 663 | |
2023 | 0 | |
Thereafter | 0 | |
Total minimum lease payments | 3,976 | |
Less: amounts representing interest | (302) | |
Present value of capital lease obligations | $ 3,674 |
Segment and Geographic Inform_3
Segment and Geographic Information - Summary of Revenues By Geography (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | $ 66,911 | $ 59,883 | $ 126,490 | $ 111,579 |
Domestic | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | 46,295 | 43,035 | 88,178 | 78,560 |
International | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | $ 20,616 | $ 16,848 | $ 38,312 | $ 33,019 |
Segment and Geographic Inform_4
Segment and Geographic Information - Additional Information (Detail) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Sales Revenue, Net | Geographic Concentration Risk | ||
Segment Reporting Information [Line Items] | ||
Concentration risk, percentage | 10.50% | 10.20% |