Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 03, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Enphase Energy, Inc. | |
Entity Central Index Key | 1,463,101 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 85,532,519 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 28,878 | $ 17,764 |
Accounts receivable, net of allowances of $2,824 and $2,921 at September 30, 2017 and December 31, 2016, respectively | 68,869 | 61,019 |
Inventory | 25,316 | 31,960 |
Prepaid expenses and other assets | 13,254 | 7,121 |
Total current assets | 136,317 | 117,864 |
Property and equipment, net | 28,191 | 31,440 |
Goodwill | 3,664 | 3,664 |
Intangibles, net | 591 | 945 |
Other assets | 8,318 | 9,663 |
Total assets | 177,081 | 163,576 |
Current liabilities: | ||
Accounts payable | 34,620 | 31,696 |
Accrued liabilities | 24,152 | 22,937 |
Deferred revenues, current | 9,014 | 6,411 |
Warranty obligations, current (includes $2,765 and $3,296 measured at fair value at September 30, 2017 and December 31, 2016, respectively) | 7,151 | 8,596 |
Revolving credit facility | 0 | 10,100 |
Current portion of term loan | 10,552 | 3,032 |
Total current liabilities | 85,489 | 82,772 |
Long-term liabilities: | ||
Deferred revenues, noncurrent | 36,327 | 33,893 |
Warranty obligations, noncurrent (includes $8,954 and $7,036 measured at fair value at September 30, 2017 and December 31, 2016, respectively) | 23,201 | 22,818 |
Other liabilities | 2,808 | 2,025 |
Term loan, less current portion | 37,058 | 20,768 |
Total liabilities | 184,883 | 162,276 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock, $0.00001 par value, 10,000 shares authorized; none issued and outstanding | 0 | 0 |
Common stock, $0.00001 par value, 125,000 and 100,000 shares authorized and 85,217 and 62,269 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 1 | 1 |
Additional paid-in capital | 285,449 | 252,126 |
Accumulated deficit | (292,787) | (250,535) |
Accumulated other comprehensive loss | (465) | (292) |
Total stockholders’ (deficit) equity | (7,802) | 1,300 |
Total liabilities and stockholders’ (deficit) equity | $ 177,081 | $ 163,576 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Allowances, accounts receivable | $ 2,824 | $ 2,921 |
Warranty obligations, current at fair value | 2,765 | 3,296 |
Warranty obligations, non-current at fair value | $ 8,954 | $ 7,036 |
Preferred stock, par value (in usd per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 85,217,000 | 62,269,000 |
Common stock, shares outstanding (in shares) | 85,217,000 | 62,269,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Net revenues | $ 77,038 | $ 88,684 | $ 206,492 | $ 231,990 |
Cost of revenues | 60,577 | 72,805 | 169,438 | 190,215 |
Gross profit | 16,461 | 15,879 | 37,054 | 41,775 |
Operating expenses: | ||||
Research and development | 7,397 | 13,169 | 24,949 | 39,326 |
Sales and marketing | 5,453 | 11,016 | 18,186 | 31,218 |
General and administrative | 5,441 | 6,708 | 16,238 | 21,121 |
Restructuring charges | 4,071 | 2,717 | 14,927 | 2,717 |
Total operating expenses | 22,362 | 33,610 | 74,300 | 94,382 |
Loss from operations | (5,901) | (17,731) | (37,246) | (52,607) |
Other income (expense), net: | ||||
Interest expense | (1,760) | (1,234) | (5,979) | (1,598) |
Other income | 623 | 353 | 1,771 | 655 |
Total other expense, net | (1,137) | (881) | (4,208) | (943) |
Loss before income taxes | (7,038) | (18,612) | (41,454) | (53,550) |
Income tax (provision) benefit | 184 | (144) | (798) | (724) |
Net loss | $ (6,854) | $ (18,756) | $ (42,252) | $ (54,274) |
Net loss per share: | ||||
Net loss per share, basic and diluted (in usd per share) | $ (0.08) | $ (0.40) | $ (0.52) | $ (1.16) |
Shares used in per share calculation: | ||||
Shares used in per share calculation, basic and diluted (in shares) | 84,862 | 47,278 | 81,993 | 46,704 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (6,854) | $ (18,756) | $ (42,252) | $ (54,274) |
Other comprehensive loss: | ||||
Foreign currency translation adjustments | (296) | 54 | (173) | (44) |
Comprehensive loss | $ (7,150) | $ (18,702) | $ (42,425) | $ (54,318) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Cash flows from operating activities: | |||||
Net loss | $ (6,854) | $ (18,756) | $ (42,252) | $ (54,274) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||
Depreciation and amortization | 6,763 | 8,039 | |||
Provision for doubtful accounts | 911 | 3,194 | |||
Asset impairment and restructuring | 1,638 | 1,440 | |||
Amortization of debt issuance costs | 1,337 | 101 | |||
Stock-based compensation | 5,277 | 8,239 | |||
Changes in operating assets and liabilities: | |||||
Accounts receivable | (8,761) | (16,577) | |||
Inventory | 6,644 | 1,699 | |||
Prepaid expenses and other assets | (5,110) | (3,857) | |||
Accounts payable, accrued and other liabilities | 3,051 | 14,867 | |||
Warranty obligations | (1,062) | (198) | |||
Deferred revenues | 5,036 | 8,739 | |||
Net cash used in operating activities | (26,528) | (28,588) | |||
Cash flows from investing activities: | |||||
Purchases of property and equipment | (3,609) | (9,607) | |||
Purchases of intangible assets | 0 | (678) | |||
Net cash used in investing activities | (3,609) | (10,285) | |||
Cash flows from financing activities: | |||||
Proceeds from issuance of common stock, net of issuance costs | 26,425 | 14,593 | |||
Proceeds from term loan, net | 24,240 | 24,175 | |||
Proceeds from borrowings under revolving credit facility | 0 | 10,000 | |||
Payments under revolving credit facility | (10,100) | (14,550) | |||
Payments of deferred financing costs | 0 | (401) | |||
Contingent consideration payment related to prior acquisition | 0 | (29) | |||
Proceeds from issuance of common stock under employee stock plans | 174 | 852 | |||
Net cash provided by financing activities | 40,739 | 34,640 | |||
Effect of exchange rate changes on cash | 512 | (107) | |||
Net increase (decrease) in cash and cash equivalents | 11,114 | (4,340) | |||
Cash and cash equivalents—Beginning of period | 17,764 | 28,452 | $ 28,452 | ||
Cash and cash equivalents—End of period | 28,878 | 24,112 | 28,878 | 24,112 | $ 17,764 |
Supplemental disclosures of non-cash investing and financing activities: | |||||
Purchases of fixed and intangible assets included in accounts payable | 871 | 517 | |||
Warrants issued in connection with debt | $ 1,447 | $ 0 | $ 1,447 | $ 0 |
DESCRIPTION OF BUSINESS AND BAS
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of Business Enphase Energy, Inc. and subsidiaries (the “Company”) delivers simple, innovative and reliable energy management solutions that advance the worldwide potential of renewable energy. Our semiconductor-based microinverter system converts direct current (DC) electricity to alternating current (AC) electricity at the individual solar module level, and brings a system-based, high technology approach to solar energy generation leveraging our design expertise across power electronics, semiconductors, networking, and cloud-based software technologies. Since inception, the Company has shipped approximately 16 million microinverters, representing over 3 gigawatts of solar photovoltaic (PV) generating capacity, and approximately 700,000 Enphase residential and commercial systems have been deployed in over 100 countries. Basis of Presentation and Consolidation The accompanying condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the U.S, or GAAP. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company disclosed in its Form 10-K for the year ended December 31, 2016 that certain conditions led it to conclude that substantial doubt existed as to the Company’s ability to continue as a going concern. The Company believes that the same or similar conditions continue to exist and that substantial doubt as to its ability to continue as a going concern within one year from the date of this filing also continues to exist. The accompanying consolidated financial statements for the three and nine months ended September 30, 2017 are presented on a going concern basis and do not include any adjustments that might result from the outcome of this uncertainty. The Company has taken actions and intends to take further actions to improve its liquidity, including raising funds in the capital markets. In 2016, the Company completed a public offering of its common stock. The Company sold approximately 15 million shares and realized net proceeds of approximately $16.2 million . In December of 2016, the Company entered into an At The Market Issuance Sales Agreement (ATM) under which it may sell shares of common stock up to a gross aggregate offering price of $17.0 million . The Company realized the full gross proceeds of $17.0 million from common stock sold under the ATM during the three months ended March 31, 2017. In January 2017, the Company completed a private placement of securities that resulted in gross proceeds of $10.0 million . In July 2016, the Company entered into a loan and security agreement (the “Term Loan Agreement”) with lenders that are affiliates of Tennenbaum Capital Partners, LLC (collectively “TCP”). Under the agreement, the lenders committed to advance a term loan in an aggregate principal amount of up to $25.0 million with a maturity date of July 1, 2020. The Company drew down the $25.0 million term loan commitment at closing. In February 2017, the Company amended its loan and security agreement with TCP to provide an additional $25.0 million in principal. The Company simultaneously terminated its revolving credit facility with Wells Fargo Bank, N.A., and the combined principal and interest balance of $10.3 million was fully repaid. The amended loan has the same July 1, 2020 maturity date as the original TCP loan, both of which are interest only until February 2018. See Note 7, “Debt” for further information. The Company launched its next generation microinverter, the Enphase Home Energy Solution with IQ, in March 2017. This product is a major milestone in the Company’s product cost reduction initiative, and the Company expects to introduce the next generation of the Enphase Home Energy Solution with IQ in the first quarter of 2018, which the Company believes will achieve further cost savings. Actions the Company has taken to reduce its operating expenses include a reduction in its global workforce in the third quarter of 2016 and a second reduction in January 2017. The Company has eliminated certain projects that did not have a near-term return on investment, consolidated office space at its headquarters, divested its services business and engaged a management consulting firm to help it lower expenses and improve operational efficiencies. The Company expects the cumulative impact of these actions to decrease its ongoing annualized operating expenses by approximately $40.0 million as compared to pre-restructuring annualized operating expenses. For the nine months ended September 30, 2017, the Company achieved a combined $32.3 million in savings for research and development, sales and marketing and general and administrative expenses over the same period in 2016, which was partially offset by increased restructuring charges of $12.2 million . Unaudited Interim Financial Information These accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring items, considered necessary to present fairly the Company's financial condition, results of operations, comprehensive income (loss) and cash flows for the interim periods indicated. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the operating results for the full year. Certain information and footnote disclosures typically included in annual consolidated financial statements have been condensed or omitted. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . There have been no material changes in the Company’s significant accounting policies during the nine months ended September 30, 2017 , as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . Reference is made to the disclosures therein for a summary of all of the Company’s significant accounting policies. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Significant estimates and assumptions reflected in the financial statements include revenue recognition, inventory valuation and accrued warranty obligations. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ materially from management’s estimates using different assumptions or under different conditions. Recently Adopted Accounting Pronouncements In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” which requires most entities to measure most inventories at the lower of cost or net realizable value ("NRV"). This simplifies the evaluation from the current method of lower of cost or market, where market is based on one of three measures (i.e. replacement cost, net realizable value, or net realizable value less a normal profit margin). ASU 2015-11 does not apply to inventories measured under the last-in, first-out method or the retail inventory method, and defines NRV as the “estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.” This standard, which was adopted in the first quarter of 2017, did not have a material impact on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which will simplify the income tax consequences, accounting for forfeitures and classification on the Statements of Consolidated Cash Flows. This standard, which was adopted in the first quarter of 2017, did not have a material impact on the consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This ASU simplifies the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. Under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The FASB also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. A public business entity that is an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 was early adopted by the Company for the year beginning January 1, 2017. The Company has a single reporting unit, and adoption of the standard did not have a material impact on the Company's condensed consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Effective In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers: Topic 606 and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016 and December 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, respectively (ASU 2014-09, ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, respectively, and collectively Topic 606). Topic 606 supersedes nearly all existing revenue recognition guidance under GAAP. The updated standard’s core principle is that revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The standard generally requires an entity to identify performance obligations in its contracts, estimate the amount of variable consideration to be received in the transaction price, allocate the transaction price to each separate performance obligation, and recognize revenue as obligations are satisfied. In addition, the updated standard requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. Topic 606 is effective for the Company as of our first quarter of fiscal 2018 using either of two methods: (1) retrospective application of Topic 606 to each prior reporting period presented with the option to elect certain practical expedients as defined within Topic 606 or (2) retrospective application of Topic 606 with the cumulative effect of initially applying Topic 606 recognized at the date of initial application and providing certain additional disclosures as defined per Topic 606. The Company plans to adopt Topic 606 in the first quarter of fiscal 2018 pursuant to the aforementioned adoption method (2). Under ASC 605 Envoy hardware and Enlighten service are considered two units of accounting with a portion of the consideration related to the hardware recognized upfront and the remaining deferred over the estimated service period. Under ASC 606 the full consideration for these products may represent a single performance obligation and need to be deferred over the estimated service period. This treatment would result in an increase in deferred revenue upon adoption of ASC 606. Under ASC 605 the Company recorded certain contra revenue promotions at the later of the date the sale was made and revenue recognized or the date at which the promotional offer was extended. Under ASC 606 all such contra revenue programs will be treated as variable consideration and recognized at the time the related revenue is recorded resulting in a potential increase in and change in timing of contra revenue upon adoption. The Company is finalizing its review of contracts to quantify the impact of adoption on its consolidated financial statements. The Company is also in the process of assessing the appropriate changes to its business processes and upgrading its systems and controls to support recognition and disclosure under ASC 606. In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities,” which amends certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Changes to the current guidance include the accounting for equity investments, the presentation and disclosure requirements for financial instruments, and the assessment of valuation allowance on deferred tax assets related to available-for-sale securities. In addition, ASU 2016-01 establishes an incremental recognition and disclosure requirement related to the presentation of fair value changes of financial liabilities for which the fair value option has been elected. Under this guidance, an entity would be required to separately present in other comprehensive income the portion of the total fair value change attributable to instrument-specific credit risk as opposed to reflecting the entire amount in earnings. ASU 2016-01 is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company does not expect the adoption of this standard to have a material impact on the consolidated financial statements. |
INVENTORY
INVENTORY | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY Inventory as of September 30, 2017 and December 31, 2016 consists of the following (in thousands): September 30, December 31, Raw materials $ 1,975 $ 5,095 Finished goods 23,341 26,865 Total inventory $ 25,316 $ 31,960 |
WARRANTY OBLIGATIONS
WARRANTY OBLIGATIONS | 9 Months Ended |
Sep. 30, 2017 | |
Product Warranties Disclosures [Abstract] | |
WARRANTY OBLIGATIONS | WARRANTY OBLIGATIONS The Company’s warranty activities during the three and nine months ended September 30, 2017 and 2016 were as follows (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Warranty obligations, beginning of period $ 31,613 $ 30,066 $ 31,414 $ 30,547 Accruals for warranties issued during period 1,009 1,194 2,913 2,931 Changes in estimates (1,046 ) 783 (826 ) 1,548 Settlements (1,494 ) (2,561 ) (5,092 ) (6,517 ) Increase due to accretion expense 549 461 1,542 1,279 Other (279 ) 406 401 561 Warranty obligations, end of period $ 30,352 $ 30,349 $ 30,352 $ 30,349 Less current portion $ (7,151 ) $ (6,761 ) Noncurrent $ 23,201 $ 23,588 As of September 30, 2017 , the $30.4 million of warranty obligations included $11.7 million measured at fair value. See Note 4, “Fair Value Measurements” for additional information. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value: • Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of such assets or liabilities do not entail a significant degree of judgment. • Level 2—Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. • Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The following table presents the Company’s liabilities that were measured at fair value on a recurring basis and its categorization within the fair value hierarchy at September 30, 2017 and December 31, 2016 (in thousands): Fair Value September 30, December 31, Liabilities: Warranty obligations Level 3 $ 11,719 $ 10,332 Fair Value Option for Warranty Obligations Related to Microinverters Sold Since January 1, 2014 The Company’s warranty obligations related to substantially all microinverters sold since January 1, 2014 provide the Company the right, but not the requirement, to assign its warranty obligations to a third-party. Under Accounting Standards Codification (“ASC”) 825—Financial Instruments, (“fair value option”), an entity may choose to elect the fair value option for such warranties at the time it first recognizes the eligible item. The Company made an irrevocable election to account for all eligible warranty obligations associated with microinverters sold since January 1, 2014 at fair value. This election was made to reflect the underlying economics of the time value of money for an obligation that will be settled over an extended period of up to 25 years. The Company estimates the fair value of warranty obligations by calculating the warranty obligations in the same manner as for sales prior to January 1, 2014 and applying an expected present value technique to that result. The expected present value technique, an income approach, converts future amounts into a single current discounted amount. In addition to the key estimates of failure rates, claim rates and replacement costs, the Company used certain Level 3 inputs which are unobservable and significant to the overall fair value measurement. Such additional assumptions included a discount rate based on the Company’s credit-adjusted risk-free rate and compensation comprised of a profit element and risk premium required of a market participant to assume the obligation. The following table provides information regarding changes in nonfinancial liabilities related to the Company’s warranty obligations measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the periods indicated (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Balance at beginning of period $ 12,564 $ 8,053 $ 10,332 $ 6,182 Accruals for warranties issued during period 867 1,185 2,760 2,898 Changes in estimates (1,452 ) (200 ) (2,051 ) (678 ) Settlements (530 ) (390 ) (1,265 ) (726 ) Increase due to accretion expense 549 461 1,542 1,279 Other (279 ) 406 401 560 Balance at end of period $ 11,719 $ 9,515 $ 11,719 $ 9,515 Quantitative and Qualitative Information about Level 3 Fair Value Measurements As of September 30, 2017 , the significant unobservable inputs used in the fair value measurement of the Company’s liabilities designated as Level 3 are as follows: Item Measured at Fair Value Valuation Technique Description of Significant Unobservable Input Percent Used (Weighted-Average) Warranty obligations for microinverters sold since January 1, 2014 Discounted cash flows Profit element and risk premium 17% Credit-adjusted risk-free rate 18% As of December 31, 2016 , the significant unobservable inputs used in the fair value measurement of the Company’s liabilities designated as Level 3 are as follows: Item Measured at Fair Value Valuation Technique Description of Significant Unobservable Input Percent Used (Weighted-Average) Warranty obligations for microinverters sold since January 1, 2014 Discounted cash flows Profit element and risk premium 17% Credit-adjusted risk-free rate 19% Sensitivity of Level 3 Inputs Warranty Obligations Each of the significant unobservable inputs is independent of the other. The profit element and risk premium are estimated based on requirements of a third-party participant willing to assume the Company’s warranty obligations. The credit-adjusted risk free rate (“discount rate”) is determined by reference to the Company’s own credit standing at the fair value measurement date. Increasing or decreasing the profit element and risk premium input by 100 basis points would not have a material impact on the fair value measurement of the liability. Increasing the discount rate by 100 basis points would result in a $0.5 million reduction of the liability. Decreasing the discount rate by 100 basis points would result in a $0.6 million increase to the liability. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS The following table presents the details of the Company’s goodwill and purchased intangible assets as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Goodwill $ 3,664 $ — $ 3,664 $ 3,664 $ — $ 3,664 Other indefinite-lived intangibles $ 286 $ — $ 286 $ 286 $ — $ 286 Intangible assets with finite lives: Patents and licensed technology $ 1,665 $ (1,360 ) $ 305 $ 1,665 $ (1,006 ) $ 659 In July 2014, the Company purchased certain patents related to system interconnection and photovoltaic AC module construction. The patents are being amortized over their legal life of 3 years . In October 2015, the Company licensed certain technology related to ASIC development for a 3 year term, which is also its estimated useful life. For the nine months ended September 30, 2017 , amortization expense related to intangible assets was $0.4 million . As of September 30, 2017 , estimated future amortization expense related to finite-lived intangible assets was as follows: Year (In thousands) 2017 $ 76 2018 229 Total $ 305 |
RESTRUCTURING
RESTRUCTURING | 9 Months Ended |
Sep. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING | RESTRUCTURING In the third quarter of 2016, the Company began implementing restructuring actions to lower its operating expenses and cost of revenues. The restructuring actions have included reductions in the Company’s global workforce, the elimination of certain non-core projects, consolidation of office space at the Company’s corporate headquarters and the engagement of management consultants to assist the Company in making organizational and structural changes to improve operational efficiencies and reduce expenses. The following table presents the details of the Company’s restructuring charges for the periods indicated (in thousands): Three Months Ended September 30, Nine Months Ended 2017 2016 2017 2016 Employee severance and benefit arrangements $ 1,111 $ 1,308 $ 2,826 $ 1,308 Asset impairments — 1,409 522 1,409 Consultants engaged in restructuring activities 3,100 — 10,100 — Lease loss reserves and contract termination costs (140 ) — 1,479 — Total restructuring and asset impairment charges $ 4,071 $ 2,717 $ 14,927 $ 2,717 The following table provides information regarding changes in the Company’s accrued restructuring balance for the periods indicated (in thousands): Employee Severance and Benefits Asset Impairments Lease Loss Reserves and Contractual Obligations Total Balance at beginning of period as of December 31, 2016 $ 198 $ — $ 484 $ 682 Charges 2,826 522 11,579 14,927 Cash settlement (2,783 ) — (10,857 ) (13,640 ) Non-cash settlement — (522 ) — (522 ) Balance at end of period as of September 30, 2017 $ 241 $ — $ 1,206 $ 1,447 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Revolving Credit Facility The Company had a $50.0 million revolving credit facility with Wells Fargo Bank, N.A. (“Wells Fargo”) that was entered into in November 2012, as first amended on February 14, 2014. On December 18, 2015, the Company entered into an amended and restated revolving credit agreement with Wells Fargo (the “Revolver”) which extended the maturity date to November 7, 2019 and added an uncommitted accordion feature that could increase the size of the facility by $25.0 million , subject to the satisfaction of certain conditions. The Revolver was fully repaid and terminated in February 2017. Term Loan In July 2016, the Company entered into a Term Loan Agreement (the “Original Term Loan”) with lenders that are affiliates of Tennenbaum Capital Partners, LLC. (the “Lenders”). Under the agreement, the Lenders committed to advance a term loan in an aggregate principal amount of up to $25.0 million with a maturity date of July 1, 2020. The Company borrowed the entire $25.0 million of term loan commitments on the loan closing date. Monthly payments due through June 30, 2017 were interest only, followed by consecutive equal monthly payments of principal plus accrued interest that were to begin on July 1, 2017 and continue through the maturity date. The term loan provides for an interest rate per annum equal to the higher of (i) 10.25% or (ii) LIBOR plus 9.5625% , subject to a 1.0% reduction if the Company achieves minimum levels of Revenue and EBITDA (each as defined in the Term Loan Agreement) for the twelve-consecutive month period ending June 30, 2017 as set forth in the Term Loan Agreement. In addition, the Company paid a commitment fee of 3.3% of the loan amount upon closing and a closing fee of 10.0% of the loan amount is payable in four equal installments at each anniversary of the closing date. The Company may elect to prepay the loan by incurring a prepayment fee between 1% and 3% of the principal amount of the term loan depending on the timing and circumstances of prepayment. In February 2017, the Company entered into an Amended and Restated Loan and Security Agreement (the “Loan Agreement”) that amended and restated the Original Term Loan. The Loan Agreement provides for a $25.0 million secured term loan to the Company (the “New Term Loan”), which is in addition to the $25.0 million secured term loan borrowed by the Company under the Original Term Loan (together with the “New Term Loan” the “Term Loans”). The New Term Loan has the same July 1, 2020 maturity date that was applicable to the Original Term Loan. The New Term Loan was fully drawn at closing, with approximately $10.3 million of the proceeds used to repay existing combined principal and interest due under the Company’s Revolver with Wells Fargo. Upon the repayment of loans under the Wells Fargo Revolver, the Wells Fargo Revolving Credit Agreement was terminated. The Company expects to use the remainder of the proceeds from the New Term Loan for general corporate purposes. Monthly payments under the Term Loans through February 28, 2018 are interest only, followed by consecutive equal monthly payments of principal plus accrued interest beginning on March 1, 2018 and continuing through the maturity date; provided, however, that the Company may extend the interest only period on a month to month basis up to February 28, 2019 if no Event of Default (as defined in the Loan Agreement) has occurred and is continuing and the Company has Consolidated Operating Income (as defined in the Loan Agreement) for the calendar year 2017 and each month thereafter on a trailing twelve consecutive month basis of at least $15.0 million (collectively, the “Accommodation Conditions”). The Term Loans provide for an interest rate per annum equal to the greater of (i) 10.3125% and (ii) LIBOR plus 9.25% , subject to a 1.0% reduction if and for so long as the Accommodation Conditions have been met. In addition, the Company paid a commitment fee of 3.0% of the New Term Loan amount upon closing and a closing fee of 4.0% of the New Term Loan amount, which is payable with the closing fee under the Original Term Loan in four equal installments at each anniversary of the closing date of the Original Loan Agreement. The Company may elect to prepay the Term Loans by incurring a prepayment fee between 1% and 3% of the principal amount of the Term Loans depending on the timing and circumstances of prepayment. The Term Loans are secured by a first-priority security interest on substantially all assets of the Company; provided, however that the security interest in the Company’s intellectual property may be released if the Company satisfies certain requirements. The Company’s obligations under the Term Loans are not guaranteed by any of the Company’s existing subsidiaries, nor have any existing subsidiaries of the Company pledged any of their assets to secure the Term Loans. The Loan Agreement requires that (i) at all times from the closing date to and including March 31, 2018, the Company, and any future guarantors, have Unrestricted Cash (as defined in the Loan Agreement) of at least $10.0 million ; (ii) at all times from the closing date to and including March 31, 2018, that the aggregate amount of Consolidated Unrestricted Cash, plus the value of Consolidated Receivables, plus the value of Consolidated Inventory (each as defined in the Loan Agreement) divided by the outstanding principal amount of Term Loans, shall equal or exceed 1.5 ; and (iii) at all times from April 1, 2018 and thereafter, that the aggregate amount of Consolidated Unrestricted Cash, plus the value of Consolidated Receivables, plus the value of Consolidated Inventory divided by the outstanding principal amount of Term Loans, shall equal or exceed 1.75 . In addition, the Loan Agreement is subject to customary affirmative and negative covenants including restrictions on creation of liens, dispositions of assets, mergers, changing the nature of its business and dividends and other distributions, in each case subject to certain exceptions. The Term Loan Agreement also contains certain customary events of default including, but not limited to, failure to pay interest, principal and fees or other amounts when due, material breach of any representation or warranty, covenant defaults, cross defaults to other material indebtedness, events of bankruptcy and the occurrence of a material adverse change (as defined in the agreement) to the Company’s business. The Term Loan Agreement offers TCP typical rights and remedies in any event of default, including the ability to declare all amounts outstanding immediately due and payable. The Company was in compliance with all financial covenants as of September 30, 2017 . In connection with the New Term Loan, the Company issued to the Lenders warrants to purchase an aggregate 1,220,000 shares of the Company’s Common Stock at an exercise price of $1.05 per share. The warrants have a term of seven years and contain a “cashless exercise” feature that allows the holder to exercise the warrant without a cash payment upon the terms set forth therein. The Company estimated the fair value of the warrants by using the Black-Scholes approach and the following assumptions: stock price of $1.56 ; strike price of $1.05 ; volatility of 85.9% , risk-free rate of 2.23% ; dividend yield of 0% ; and a 7 year term. The resulting fair value was used to allocate the proceeds from the Term Loan between liability and equity components. The Company classified the warrants as equity and allocated the proceeds from the Term Loan and warrants using the relative fair value method. Using this method, the Company allocated $1.4 million to the warrants, which was recorded as equity. This amount represents debt discount that will be amortized to interest expense over the term of the loan. Long-term debt was comprised of the following at September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, Term loan $ 50,000 $ 25,000 Less unamortized discount and issuance costs (2,390 ) (1,200 ) Carrying amount of debt 47,610 23,800 Less current portion (10,552 ) (3,032 ) Long-term debt $ 37,058 $ 20,768 As of September 30, 2017 , the amount of scheduled principal payments due on the term loan is as follows (in thousands): Year Amounts 2017 $ — 2018 15,229 2019 20,084 2020 14,687 Total $ 50,000 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES The Company may be subject to legal proceedings arising in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently does not believe that the final outcome of any such matters will have a material adverse effect on the Company’s business, financial position, results of operations or cash flows. |
SALE OF COMMON STOCK
SALE OF COMMON STOCK | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
SALE OF COMMON STOCK | SALE OF COMMON STOCK In January 2017, the Company completed a private placement of securities that resulted in the issuance of approximately 10.8 million shares of common stock and gross proceeds of $10.0 million . In December of 2016, the Company entered into an At Market Issuance Sales Agreement (ATM) under which it could sell shares of its common stock up to a gross aggregate offering price of $17.0 million . During the three months ended March 31, 2017 the Company sold approximately 11.1 million shares of common stock under the ATM and received net proceeds of approximately $16.6 million . |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company has adopted certain equity incentive and stock purchase plans as described in the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . Equity Awards Activity Stock Options The following is a summary of stock option activity for the nine months ended September 30, 2017 (in thousands, except per share data): Number of Shares Outstanding Weighted- Average Exercise Price per Share Outstanding at December 31, 2016 8,730 $ 4.56 Granted 4,191 1.14 Exercised (17 ) 0.39 Canceled (4,193 ) 7.02 Outstanding at September 30, 2017 8,711 $ 1.74 The intrinsic value of options exercised in the nine months ended September 30, 2017 was nominal. As of September 30, 2017 , the intrinsic value of options outstanding was $3.1 million based on the closing price of the Company’s stock as of September 30, 2017 . Restricted Stock Units The following is a summary of restricted stock unit activity for the nine months ended September 30, 2017 (in thousands, except per share data): RSUs Weighted Average Outstanding at December 31, 2016 606 $ 9.33 Granted 4,318 1.13 Vested (824 ) 3.87 Canceled (1,299 ) 2.03 Outstanding at September 30, 2017 2,801 $ 1.68 On April 3, 2017, the Company commenced a Tender Offer (Offer) to exchange out of the money stock options for restricted stock units. The Offer expired on Monday, May 1, 2017. Pursuant to the Offer, the Company accepted elections to exchange options to purchase 2,362,470 shares of common stock and issued replacement awards of restricted stock units for 733,559 shares of common stock. As the transaction approximated a value-for-value exchange, it did not have a material impact on the Company’s stock based compensation expense. The total intrinsic value of restricted stock units that were vested in the nine months ended September 30, 2017 was $0.8 million . As of September 30, 2017 , the intrinsic value of restricted stock units outstanding was $4.3 million based on the closing price of the Company’s stock as of September 30, 2017 . Stock-Based Compensation Expense Compensation expense for all stock-based awards expected to vest is measured at fair value on the date of grant and recognized ratably over the requisite service period. The following table summarizes the components of total stock-based compensation expense included in the condensed consolidated statements of operations for the periods presented (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Cost of revenues $ 347 $ 295 $ 796 $ 907 Research and development 607 941 1,994 3,047 Sales and marketing 226 560 889 1,760 General and administrative 547 736 1,598 2,525 Total $ 1,727 $ 2,532 $ 5,277 $ 8,239 The following table summarizes the various types of stock-based compensation expense for the periods presented (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Stock options and restricted stock units $ 1,473 $ 1,983 $ 4,363 $ 6,703 Employee stock purchase plan 254 549 914 1,536 Total $ 1,727 $ 2,532 $ 5,277 $ 8,239 The following table presents the weighted-average grant date fair value of options granted for the periods presented and the assumptions used to estimate those values using a Black-Scholes option pricing model: Three Months Ended Nine Months Ended 2017 2016 2017 2016 Weighted average grant date fair value $ 0.69 $ 1.25 $ 0.70 $ 1.31 Expected term (in years) 4.2 4.5 4.4 4.5 Expected volatility 83.8 % 84.7 % 84.4 % 79.8 % Annual risk-free rate of return 1.6 % 1.1 % 1.8 % 1.1 % Dividend yield 0.0 % 0.0 % 0.0 % 0.0 % As of September 30, 2017 , there was approximately $8.8 million of total unrecognized compensation expense related to unvested equity awards expected to be recognized over a weighted-average period of 2.8 years. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company used the discrete tax approach in calculating the tax expense for the three and nine months ended September 30, 2017 and 2016 due to the fact that a relatively small change in the Company’s projected pre-tax net income (loss) could result in a volatile effective tax rate. Under the discrete method, the Company determines its tax (expense) benefit based upon actual results as if the interim period was an annual period. The tax provision recorded was primarily related to income taxes attributable to its foreign operations. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NET LOSS PER SHARE Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed in a similar manner, but it also includes the effect of potential common shares outstanding during the period, when dilutive. Potential common shares include outstanding in-the-money stock options, restricted stock units, shares to be purchased under the Company’s employee stock purchase plan and warrants to purchase common stock. The dilutive effect of potentially dilutive common shares is reflected in diluted earnings per share by application of the treasury stock method. To the extent these potential common shares are antidilutive, they are excluded from the calculation of diluted net loss per share. The following table presents the computation of basic and diluted net loss per share for the periods presented (in thousands, except per share data): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Numerator: Net loss $ (6,854 ) $ (18,756 ) $ (42,252 ) $ (54,274 ) Denominator: Weighted average common shares outstanding 84,862 47,278 81,993 46,704 Net loss per share, basic and diluted $ (0.08 ) $ (0.40 ) $ (0.52 ) $ (1.16 ) As the Company incurred a net loss for all periods presented, potential dilutive securities from employee stock options, restricted stock units and warrants have been excluded from the diluted net loss per share computations because the effect of including such shares would have been anti-dilutive. The following table sets forth the potentially dilutive securities excluded from the computation of the diluted net loss per share (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Employee stock options 7,844 9,383 8,121 8,944 Restricted stock units 3,306 840 1,959 994 Warrants to purchase common stock 1,220 45 1,033 85 Total 12,370 10,268 11,113 10,023 |
DESCRIPTION OF BUSINESS AND B19
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The accompanying condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the U.S, or GAAP. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Unaudited Interim Financial Information | Unaudited Interim Financial Information These accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring items, considered necessary to present fairly the Company's financial condition, results of operations, comprehensive income (loss) and cash flows for the interim periods indicated. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the operating results for the full year. Certain information and footnote disclosures typically included in annual consolidated financial statements have been condensed or omitted. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Significant estimates and assumptions reflected in the financial statements include revenue recognition, inventory valuation and accrued warranty obligations. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ materially from management’s estimates using different assumptions or under different conditions. |
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Effective | Recently Adopted Accounting Pronouncements In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” which requires most entities to measure most inventories at the lower of cost or net realizable value ("NRV"). This simplifies the evaluation from the current method of lower of cost or market, where market is based on one of three measures (i.e. replacement cost, net realizable value, or net realizable value less a normal profit margin). ASU 2015-11 does not apply to inventories measured under the last-in, first-out method or the retail inventory method, and defines NRV as the “estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.” This standard, which was adopted in the first quarter of 2017, did not have a material impact on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which will simplify the income tax consequences, accounting for forfeitures and classification on the Statements of Consolidated Cash Flows. This standard, which was adopted in the first quarter of 2017, did not have a material impact on the consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This ASU simplifies the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. Under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The FASB also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. A public business entity that is an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 was early adopted by the Company for the year beginning January 1, 2017. The Company has a single reporting unit, and adoption of the standard did not have a material impact on the Company's condensed consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Effective In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers: Topic 606 and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016 and December 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, respectively (ASU 2014-09, ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, respectively, and collectively Topic 606). Topic 606 supersedes nearly all existing revenue recognition guidance under GAAP. The updated standard’s core principle is that revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The standard generally requires an entity to identify performance obligations in its contracts, estimate the amount of variable consideration to be received in the transaction price, allocate the transaction price to each separate performance obligation, and recognize revenue as obligations are satisfied. In addition, the updated standard requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. Topic 606 is effective for the Company as of our first quarter of fiscal 2018 using either of two methods: (1) retrospective application of Topic 606 to each prior reporting period presented with the option to elect certain practical expedients as defined within Topic 606 or (2) retrospective application of Topic 606 with the cumulative effect of initially applying Topic 606 recognized at the date of initial application and providing certain additional disclosures as defined per Topic 606. The Company plans to adopt Topic 606 in the first quarter of fiscal 2018 pursuant to the aforementioned adoption method (2). Under ASC 605 Envoy hardware and Enlighten service are considered two units of accounting with a portion of the consideration related to the hardware recognized upfront and the remaining deferred over the estimated service period. Under ASC 606 the full consideration for these products may represent a single performance obligation and need to be deferred over the estimated service period. This treatment would result in an increase in deferred revenue upon adoption of ASC 606. Under ASC 605 the Company recorded certain contra revenue promotions at the later of the date the sale was made and revenue recognized or the date at which the promotional offer was extended. Under ASC 606 all such contra revenue programs will be treated as variable consideration and recognized at the time the related revenue is recorded resulting in a potential increase in and change in timing of contra revenue upon adoption. The Company is finalizing its review of contracts to quantify the impact of adoption on its consolidated financial statements. The Company is also in the process of assessing the appropriate changes to its business processes and upgrading its systems and controls to support recognition and disclosure under ASC 606. In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities,” which amends certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Changes to the current guidance include the accounting for equity investments, the presentation and disclosure requirements for financial instruments, and the assessment of valuation allowance on deferred tax assets related to available-for-sale securities. In addition, ASU 2016-01 establishes an incremental recognition and disclosure requirement related to the presentation of fair value changes of financial liabilities for which the fair value option has been elected. Under this guidance, an entity would be required to separately present in other comprehensive income the portion of the total fair value change attributable to instrument-specific credit risk as opposed to reflecting the entire amount in earnings. ASU 2016-01 is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company does not expect the adoption of this standard to have a material impact on the consolidated financial statements. |
Income Taxes | The Company used the discrete tax approach in calculating the tax expense for the three and nine months ended September 30, 2017 and 2016 due to the fact that a relatively small change in the Company’s projected pre-tax net income (loss) could result in a volatile effective tax rate. Under the discrete method, the Company determines its tax (expense) benefit based upon actual results as if the interim period was an annual period. |
INVENTORY (Tables)
INVENTORY (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Summary of Inventory | Inventory as of September 30, 2017 and December 31, 2016 consists of the following (in thousands): September 30, December 31, Raw materials $ 1,975 $ 5,095 Finished goods 23,341 26,865 Total inventory $ 25,316 $ 31,960 |
WARRANTY OBLIGATIONS (Tables)
WARRANTY OBLIGATIONS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Product Warranties Disclosures [Abstract] | |
Summary of Warranty Activities | The Company’s warranty activities during the three and nine months ended September 30, 2017 and 2016 were as follows (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Warranty obligations, beginning of period $ 31,613 $ 30,066 $ 31,414 $ 30,547 Accruals for warranties issued during period 1,009 1,194 2,913 2,931 Changes in estimates (1,046 ) 783 (826 ) 1,548 Settlements (1,494 ) (2,561 ) (5,092 ) (6,517 ) Increase due to accretion expense 549 461 1,542 1,279 Other (279 ) 406 401 561 Warranty obligations, end of period $ 30,352 $ 30,349 $ 30,352 $ 30,349 Less current portion $ (7,151 ) $ (6,761 ) Noncurrent $ 23,201 $ 23,588 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table presents the Company’s liabilities that were measured at fair value on a recurring basis and its categorization within the fair value hierarchy at September 30, 2017 and December 31, 2016 (in thousands): Fair Value September 30, December 31, Liabilities: Warranty obligations Level 3 $ 11,719 $ 10,332 |
Schedule of Changes in Nonfinancial Liabilities Related to Warrant Obligations Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs | The following table provides information regarding changes in nonfinancial liabilities related to the Company’s warranty obligations measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the periods indicated (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Balance at beginning of period $ 12,564 $ 8,053 $ 10,332 $ 6,182 Accruals for warranties issued during period 867 1,185 2,760 2,898 Changes in estimates (1,452 ) (200 ) (2,051 ) (678 ) Settlements (530 ) (390 ) (1,265 ) (726 ) Increase due to accretion expense 549 461 1,542 1,279 Other (279 ) 406 401 560 Balance at end of period $ 11,719 $ 9,515 $ 11,719 $ 9,515 |
Summary of Significant Unobservable Inputs used in the Fair Value Measurement of Liabilities Designated as Level 3 | As of September 30, 2017 , the significant unobservable inputs used in the fair value measurement of the Company’s liabilities designated as Level 3 are as follows: Item Measured at Fair Value Valuation Technique Description of Significant Unobservable Input Percent Used (Weighted-Average) Warranty obligations for microinverters sold since January 1, 2014 Discounted cash flows Profit element and risk premium 17% Credit-adjusted risk-free rate 18% As of December 31, 2016 , the significant unobservable inputs used in the fair value measurement of the Company’s liabilities designated as Level 3 are as follows: Item Measured at Fair Value Valuation Technique Description of Significant Unobservable Input Percent Used (Weighted-Average) Warranty obligations for microinverters sold since January 1, 2014 Discounted cash flows Profit element and risk premium 17% Credit-adjusted risk-free rate 19% |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill and Intangible Assets | The following table presents the details of the Company’s goodwill and purchased intangible assets as of September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 December 31, 2016 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Goodwill $ 3,664 $ — $ 3,664 $ 3,664 $ — $ 3,664 Other indefinite-lived intangibles $ 286 $ — $ 286 $ 286 $ — $ 286 Intangible assets with finite lives: Patents and licensed technology $ 1,665 $ (1,360 ) $ 305 $ 1,665 $ (1,006 ) $ 659 |
Schedule of Estimated Future Amortization Expense Related to Finite-Lived Intangible Assets | As of September 30, 2017 , estimated future amortization expense related to finite-lived intangible assets was as follows: Year (In thousands) 2017 $ 76 2018 229 Total $ 305 |
RESTRUCTURING (Tables)
RESTRUCTURING (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs | The following table presents the details of the Company’s restructuring charges for the periods indicated (in thousands): Three Months Ended September 30, Nine Months Ended 2017 2016 2017 2016 Employee severance and benefit arrangements $ 1,111 $ 1,308 $ 2,826 $ 1,308 Asset impairments — 1,409 522 1,409 Consultants engaged in restructuring activities 3,100 — 10,100 — Lease loss reserves and contract termination costs (140 ) — 1,479 — Total restructuring and asset impairment charges $ 4,071 $ 2,717 $ 14,927 $ 2,717 |
Schedule of Restructuring Reserve by Type of Cost | The following table provides information regarding changes in the Company’s accrued restructuring balance for the periods indicated (in thousands): Employee Severance and Benefits Asset Impairments Lease Loss Reserves and Contractual Obligations Total Balance at beginning of period as of December 31, 2016 $ 198 $ — $ 484 $ 682 Charges 2,826 522 11,579 14,927 Cash settlement (2,783 ) — (10,857 ) (13,640 ) Non-cash settlement — (522 ) — (522 ) Balance at end of period as of September 30, 2017 $ 241 $ — $ 1,206 $ 1,447 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Long-term debt was comprised of the following at September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, Term loan $ 50,000 $ 25,000 Less unamortized discount and issuance costs (2,390 ) (1,200 ) Carrying amount of debt 47,610 23,800 Less current portion (10,552 ) (3,032 ) Long-term debt $ 37,058 $ 20,768 |
Schedule of Maturities of Long-term Debt | As of September 30, 2017 , the amount of scheduled principal payments due on the term loan is as follows (in thousands): Year Amounts 2017 $ — 2018 15,229 2019 20,084 2020 14,687 Total $ 50,000 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Stock Option Activity | The following is a summary of stock option activity for the nine months ended September 30, 2017 (in thousands, except per share data): Number of Shares Outstanding Weighted- Average Exercise Price per Share Outstanding at December 31, 2016 8,730 $ 4.56 Granted 4,191 1.14 Exercised (17 ) 0.39 Canceled (4,193 ) 7.02 Outstanding at September 30, 2017 8,711 $ 1.74 |
Summary of Restricted Stock Unit Activity | The following is a summary of restricted stock unit activity for the nine months ended September 30, 2017 (in thousands, except per share data): RSUs Weighted Average Outstanding at December 31, 2016 606 $ 9.33 Granted 4,318 1.13 Vested (824 ) 3.87 Canceled (1,299 ) 2.03 Outstanding at September 30, 2017 2,801 $ 1.68 |
Summary of the Components of Total Stock-Based Compensation Expense | The following table summarizes the components of total stock-based compensation expense included in the condensed consolidated statements of operations for the periods presented (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Cost of revenues $ 347 $ 295 $ 796 $ 907 Research and development 607 941 1,994 3,047 Sales and marketing 226 560 889 1,760 General and administrative 547 736 1,598 2,525 Total $ 1,727 $ 2,532 $ 5,277 $ 8,239 |
Summary of Stock-Based Compensation Associated with Each Type of Award | The following table summarizes the various types of stock-based compensation expense for the periods presented (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Stock options and restricted stock units $ 1,473 $ 1,983 $ 4,363 $ 6,703 Employee stock purchase plan 254 549 914 1,536 Total $ 1,727 $ 2,532 $ 5,277 $ 8,239 |
Summary of the Weighted-Average Grant Date Fair Value of Options Granted | The following table presents the weighted-average grant date fair value of options granted for the periods presented and the assumptions used to estimate those values using a Black-Scholes option pricing model: Three Months Ended Nine Months Ended 2017 2016 2017 2016 Weighted average grant date fair value $ 0.69 $ 1.25 $ 0.70 $ 1.31 Expected term (in years) 4.2 4.5 4.4 4.5 Expected volatility 83.8 % 84.7 % 84.4 % 79.8 % Annual risk-free rate of return 1.6 % 1.1 % 1.8 % 1.1 % Dividend yield 0.0 % 0.0 % 0.0 % 0.0 % |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Net Loss Per Share | The following table presents the computation of basic and diluted net loss per share for the periods presented (in thousands, except per share data): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Numerator: Net loss $ (6,854 ) $ (18,756 ) $ (42,252 ) $ (54,274 ) Denominator: Weighted average common shares outstanding 84,862 47,278 81,993 46,704 Net loss per share, basic and diluted $ (0.08 ) $ (0.40 ) $ (0.52 ) $ (1.16 ) |
Schedule of Potentially Dilutive Securities Excluded from the Computation of Diluted Net Loss Per Share | The following table sets forth the potentially dilutive securities excluded from the computation of the diluted net loss per share (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Employee stock options 7,844 9,383 8,121 8,944 Restricted stock units 3,306 840 1,959 994 Warrants to purchase common stock 1,220 45 1,033 85 Total 12,370 10,268 11,113 10,023 |
DESCRIPTION OF BUSINESS AND B28
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details) system in Thousands, shares in Millions, microinverter in Millions, watt in Billions | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Jan. 31, 2017USD ($)shares | Dec. 31, 2016USD ($) | Jul. 31, 2016USD ($) | Mar. 31, 2017USD ($)shares | Sep. 30, 2017USD ($)countrysystemwattmicroinverter | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($)shares | Feb. 28, 2017USD ($) | |
Product Information [Line Items] | ||||||||
Proceeds from issuance of common stock | $ 26,425,000 | $ 14,593,000 | ||||||
Proceeds from term loan | 24,240,000 | 24,175,000 | ||||||
Payments under revolving credit facility | 10,100,000 | $ 14,550,000 | ||||||
Combined savings | 32,300,000 | |||||||
Restructuring charges | $ 12,200,000 | |||||||
Microinverter | ||||||||
Product Information [Line Items] | ||||||||
Number of product shipped | microinverter | 16 | |||||||
Number of watts | watt | 3 | |||||||
Residential And Commercial Systems | ||||||||
Product Information [Line Items] | ||||||||
Number of product deployed | system | 700 | |||||||
Number of countries in which product is deployed | country | 100 | |||||||
Reduction in Annualized Operating Expense | ||||||||
Product Information [Line Items] | ||||||||
Expected decrease in annualized expenses | $ 40,000,000 | |||||||
Over-Allotment Option | ||||||||
Product Information [Line Items] | ||||||||
Proceeds from issuance of common stock | $ 16,200,000 | |||||||
Market Issuance Sales Agreement (ATM) | ||||||||
Product Information [Line Items] | ||||||||
Common stock issued during period (in shares) | shares | 11.1 | |||||||
Proceeds from issuance of common stock | $ 16,600,000 | |||||||
Gross aggregate offering price | $ 17,000,000 | |||||||
Gross proceeds from issuance of common stock | $ 17,000,000 | |||||||
Private Placement | ||||||||
Product Information [Line Items] | ||||||||
Common stock issued during period (in shares) | shares | 10.8 | |||||||
Proceeds from issuance of common stock | $ 10,000,000 | |||||||
Gross proceeds from issuance of common stock | $ 10,000,000 | |||||||
Term Loan Agreement, July 2016 | Secured Debt | Tennenbaum Capital Partners, LLC | ||||||||
Product Information [Line Items] | ||||||||
Debt instrument face amount | $ 25,000,000 | |||||||
Proceeds from term loan | 25,000,000 | |||||||
Revolving Credit Facility | Line of Credit | Wells Fargo Bank | ||||||||
Product Information [Line Items] | ||||||||
Payments under revolving credit facility | 10,300,000 | |||||||
Secured Debt | Tennenbaum Capital Partners, LLC | ||||||||
Product Information [Line Items] | ||||||||
Debt instrument face amount | 25,000,000 | |||||||
Proceeds from term loan | $ 25,000,000 | |||||||
Secured Debt | Amended Term Loan Agreement, February 2017 | Tennenbaum Capital Partners, LLC | ||||||||
Product Information [Line Items] | ||||||||
Debt instrument face amount | $ 25,000,000 | |||||||
Common Stock | Over-Allotment Option | ||||||||
Product Information [Line Items] | ||||||||
Common stock issued during period (in shares) | shares | 15 |
INVENTORY - Summary of Inventor
INVENTORY - Summary of Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Schedule of inventory | ||
Raw materials | $ 1,975 | $ 5,095 |
Finished goods | 23,341 | 26,865 |
Total inventory | $ 25,316 | $ 31,960 |
WARRANTY OBLIGATIONS - Summary
WARRANTY OBLIGATIONS - Summary of Warranty Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Changes in the Company's product warranty liability | |||||
Warranty obligations, beginning of period | $ 31,613 | $ 30,066 | $ 31,414 | $ 30,547 | |
Accruals for warranties issued during period | 1,009 | 1,194 | 2,913 | 2,931 | |
Changes in estimates | (1,046) | 783 | (826) | 1,548 | |
Settlements | (1,494) | (2,561) | (5,092) | (6,517) | |
Increase due to accretion expense | 549 | 461 | 1,542 | 1,279 | |
Other | (279) | 406 | 401 | 561 | |
Warranty obligations, end of period | 30,352 | 30,349 | 30,352 | 30,349 | |
Less current portion | (7,151) | (6,761) | (7,151) | (6,761) | $ (8,596) |
Noncurrent | $ 23,201 | $ 23,588 | $ 23,201 | $ 23,588 | $ 22,818 |
WARRANTY OBLIGATIONS - Narrativ
WARRANTY OBLIGATIONS - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2015 |
Product Warranty Liability [Line Items] | ||||||
Warranty obligations | $ 30,352 | $ 31,613 | $ 31,414 | $ 30,349 | $ 30,066 | $ 30,547 |
Recurring | Warranty obligations for microinverters sold since January 1, 2014 | Level 3 | ||||||
Product Warranty Liability [Line Items] | ||||||
Fair value liabilities | $ 11,719 | $ 12,564 | $ 10,332 | $ 9,515 | $ 8,053 | $ 6,182 |
FAIR VALUE MEASUREMENTS - Sched
FAIR VALUE MEASUREMENTS - Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2015 |
Recurring | Level 3 | Warranty obligations | ||||||
Liabilities: | ||||||
Fair value liabilities | $ 11,719 | $ 12,564 | $ 10,332 | $ 9,515 | $ 8,053 | $ 6,182 |
FAIR VALUE MEASUREMENTS - Sch33
FAIR VALUE MEASUREMENTS - Schedule of Changes in Nonfinancial Liabilities Related to Warrant Obligations Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Details) - Level 3 - Recurring - Warranty obligations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance at beginning of period | $ 12,564 | $ 8,053 | $ 10,332 | $ 6,182 |
Accruals for warranties issued during period | 867 | 1,185 | 2,760 | 2,898 |
Changes in estimates | (1,452) | (200) | (2,051) | (678) |
Settlements | (530) | (390) | (1,265) | (726) |
Increase due to accretion expense | 549 | 461 | 1,542 | 1,279 |
Other | (279) | 406 | 401 | 560 |
Balance at end of period | $ 11,719 | $ 9,515 | $ 11,719 | $ 9,515 |
FAIR VALUE MEASUREMENTS - Summa
FAIR VALUE MEASUREMENTS - Summary of Significant Unobservable Inputs used in the Fair Value Measurement of Liabilities Designated as Level 3 (Details) - Discounted cash flows - Recurring - Level 3 - Warranty obligations for microinverters sold since January 1, 2014 | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Profit element and risk premium | 17.00% | 17.00% |
Credit-adjusted risk-free rate | 18.00% | 19.00% |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) - Discounted cash flows - Recurring - Level 3 - Contingent consideration $ in Millions | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Derivative [Line Items] | |
Decrease to fair value measurement as a result of 100 basis point increase | $ 0.5 |
Increase to fair value measurement as a result of 100 basis point decrease | $ 0.6 |
GOODWILL AND INTANGIBLE ASSET36
GOODWILL AND INTANGIBLE ASSETS - Schedule of Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill, gross | $ 3,664 | $ 3,664 |
Goodwill | 3,664 | 3,664 |
Other indefinite-lived intangibles | 286 | 286 |
Intangible assets with finite lives: | ||
Total | 305 | |
Patents and licensed technology | ||
Intangible assets with finite lives: | ||
Intangibles assets with finite lives, gross | 1,665 | 1,665 |
Intangibles assets with finite lives, accumulated amortization | (1,360) | (1,006) |
Total | $ 305 | $ 659 |
GOODWILL AND INTANGIBLE ASSET37
GOODWILL AND INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 9 Months Ended | |
Oct. 31, 2015 | Jul. 31, 2014 | Sep. 30, 2017 | |
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense related to intangible assets | $ 0.4 | ||
Patents and licensed technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life | 3 years | ||
ASIC development | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life | 3 years |
GOODWILL AND INTANGIBLE ASSET38
GOODWILL AND INTANGIBLE ASSETS - Schedule of Estimated Future Amortization Expense Related to Finite-Lived Intangible Assets (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,017 | $ 76 |
2,018 | 229 |
Total | $ 305 |
RESTRUCTURING (Details)
RESTRUCTURING (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring and asset impairment charges | $ 12,200 | |||
Restructuring Plan 2016 | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring and asset impairment charges | $ 4,071 | $ 2,717 | 14,927 | $ 2,717 |
Restructuring Plan 2016 | Employee severance and benefit arrangements | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring and asset impairment charges | 1,111 | 1,308 | 2,826 | 1,308 |
Restructuring Plan 2016 | Asset impairments | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring and asset impairment charges | 0 | 1,409 | 522 | 1,409 |
Restructuring Plan 2016 | Consultants engaged in restructuring activities | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring and asset impairment charges | 3,100 | 0 | 10,100 | 0 |
Restructuring Plan 2016 | Lease loss reserves and contract termination costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring and asset impairment charges | $ (140) | $ 0 | $ 1,479 | $ 0 |
RESTRUCTURING - Rollforward (De
RESTRUCTURING - Rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Restructuring Reserve [Roll Forward] | ||||
Restructuring charges | $ 12,200 | |||
Restructuring Plan 2016 | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, Beginning balance | 682 | |||
Restructuring charges | $ 4,071 | $ 2,717 | 14,927 | $ 2,717 |
Cash settlement | (13,640) | |||
Non-cash settlement | (522) | |||
Restructuring reserve, Ending balance | 1,447 | 1,447 | ||
Employee Severance and Benefits | Restructuring Plan 2016 | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, Beginning balance | 198 | |||
Restructuring charges | 1,111 | 1,308 | 2,826 | 1,308 |
Cash settlement | (2,783) | |||
Non-cash settlement | 0 | |||
Restructuring reserve, Ending balance | 241 | 241 | ||
Asset Impairments | Restructuring Plan 2016 | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, Beginning balance | 0 | |||
Restructuring charges | 0 | $ 1,409 | 522 | $ 1,409 |
Cash settlement | 0 | |||
Non-cash settlement | (522) | |||
Restructuring reserve, Ending balance | 0 | 0 | ||
Lease Loss Reserves and Contractual Obligations | Restructuring Plan 2016 | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, Beginning balance | 484 | |||
Restructuring charges | 11,579 | |||
Cash settlement | (10,857) | |||
Non-cash settlement | 0 | |||
Restructuring reserve, Ending balance | $ 1,206 | $ 1,206 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) | 1 Months Ended | 9 Months Ended | |||
Feb. 28, 2017USD ($)$ / sharesshares | Jul. 31, 2016USD ($) | Sep. 30, 2017USD ($)$ / shares | Sep. 30, 2016USD ($) | Dec. 18, 2015USD ($) | |
Short-term Debt [Line Items] | |||||
Proceeds from term loan | $ 24,240,000 | $ 24,175,000 | |||
Payments under revolving credit facility | 10,100,000 | 14,550,000 | |||
Fair value of warrants issued | 1,447,000 | $ 0 | |||
Tennenbaum Capital Partners, LLC | Secured Debt | |||||
Short-term Debt [Line Items] | |||||
Debt instrument face amount | $ 25,000,000 | ||||
Proceeds from term loan | $ 25,000,000 | ||||
Interest rate during period | 10.25% | ||||
Commitment fee percentage | 3.30% | ||||
Closing fee (as a percent) | 10.00% | ||||
Tennenbaum Capital Partners, LLC | Secured Debt | Amended Term Loan Agreement, February 2017 | |||||
Short-term Debt [Line Items] | |||||
Debt instrument face amount | $ 25,000,000 | ||||
Tennenbaum Capital Partners, LLC | Secured Debt | Minimum | |||||
Short-term Debt [Line Items] | |||||
Prepayment fee (as a percent) | 1.00% | ||||
Tennenbaum Capital Partners, LLC | Secured Debt | Maximum | |||||
Short-term Debt [Line Items] | |||||
Prepayment fee (as a percent) | 3.00% | ||||
Tennenbaum Capital Partners, LLC | Secured Debt | LIBOR | |||||
Short-term Debt [Line Items] | |||||
Interest rate during period | 9.5625% | ||||
Reduction of interest rate during period (as a percent) | 1.00% | ||||
Line of Credit | Wells Fargo Bank | Revolving Credit Facility | |||||
Short-term Debt [Line Items] | |||||
Credit line facility | $ 50,000,000 | ||||
Credit line facility, accordion feature | $ 25,000,000 | ||||
Payments under revolving credit facility | $ 10,300,000 | ||||
Secured Debt | Tennenbaum Capital Partners, LLC | Amended Term Loan Agreement, February 2017 | |||||
Short-term Debt [Line Items] | |||||
Interest rate during period | 10.3125% | ||||
Commitment fee percentage | 3.00% | ||||
Closing fee (as a percent) | 4.00% | ||||
Unrestricted cash | $ 10,000,000 | ||||
Number of securities called by warrants (in shares) | shares | 1,220,000 | ||||
Warrant to purchase common stock, price per share (usd per share) | $ / shares | $ 1.05 | ||||
Class of warrant term year | 7 years | ||||
Secured Debt | Tennenbaum Capital Partners, LLC | Term Loan Agreement, July 2016 | |||||
Short-term Debt [Line Items] | |||||
Debt instrument face amount | 25,000,000 | ||||
Proceeds from term loan | $ 25,000,000 | ||||
Secured Debt | Tennenbaum Capital Partners, LLC | Minimum | Amended Term Loan Agreement, February 2017 | |||||
Short-term Debt [Line Items] | |||||
Prepayment fee (as a percent) | 1.00% | ||||
Periodic payments | $ 15,000,000 | ||||
Secured Debt | Tennenbaum Capital Partners, LLC | Maximum | Amended Term Loan Agreement, February 2017 | |||||
Short-term Debt [Line Items] | |||||
Prepayment fee (as a percent) | 3.00% | ||||
Secured Debt | Tennenbaum Capital Partners, LLC | LIBOR | Amended Term Loan Agreement, February 2017 | |||||
Short-term Debt [Line Items] | |||||
Basis spread on variable rate | 9.25% | ||||
Reduction of interest rate during period (as a percent) | 1.00% | ||||
Closing Date to March 31, 2018 | Secured Debt | Amended Term Loan Agreement, February 2017 | |||||
Short-term Debt [Line Items] | |||||
Liquidity ratio required | 1.5 | ||||
April 1, 2018 and Thereafter | Secured Debt | Amended Term Loan Agreement, February 2017 | |||||
Short-term Debt [Line Items] | |||||
Liquidity ratio required | 1.75 | ||||
Cashless Exercise Warrants | |||||
Short-term Debt [Line Items] | |||||
Warrant to purchase common stock, price per share (usd per share) | $ / shares | $ 1.05 | ||||
Stock price (usd per share) | $ / shares | $ 1.56 | ||||
Volatility rate, warrants | 85.90% | ||||
Risk free interest rate, warrants | 2.23% | ||||
Dividend rate, warrants | 0.00% | ||||
Expected term, warrants | 7 years |
DEBT - Long term debt (Details)
DEBT - Long term debt (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
Term loan | $ 50,000 | $ 25,000 |
Less unamortized discount and issuance costs | (2,390) | (1,200) |
Carrying amount of debt | 47,610 | 23,800 |
Less current portion | (10,552) | (3,032) |
Long-term debt | $ 37,058 | $ 20,768 |
DEBT - Maturities (Details)
DEBT - Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
2,017 | $ 0 | |
2,018 | 15,229 | |
2,019 | 20,084 | |
2,020 | 14,687 | |
Total | $ 50,000 | $ 25,000 |
SALE OF COMMON STOCK (Details)
SALE OF COMMON STOCK (Details) - USD ($) $ in Thousands, shares in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jan. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | |
Subsidiary, Sale of Stock [Line Items] | |||||
Proceeds from issuance of common stock | $ 26,425 | $ 14,593 | |||
Private Placement | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock issued during period (in shares) | 10.8 | ||||
Gross proceeds from issuance of common stock | $ 10,000 | ||||
Proceeds from issuance of common stock | $ 10,000 | ||||
Market Issuance Sales Agreement (ATM) | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock issued during period (in shares) | 11.1 | ||||
Gross proceeds from issuance of common stock | $ 17,000 | ||||
Gross aggregate offering price | $ 17,000 | ||||
Proceeds from issuance of common stock | $ 16,600 |
STOCK-BASED COMPENSATION - Summ
STOCK-BASED COMPENSATION - Summary of Stock Option Activity (Details) shares in Thousands | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Number of Shares Outstanding | |
Outstanding, beginning balance (in shares) | shares | 8,730 |
Granted (in shares) | shares | 4,191 |
Exercised (in shares) | shares | (17) |
Canceled (in shares) | shares | (4,193) |
Outstanding, ending balance (in shares) | shares | 8,711 |
Weighted- Average Exercise Price per Share | |
Outstanding, beginning balance (in usd per share) | $ / shares | $ 4.56 |
Granted (in usd per share) | $ / shares | 1.14 |
Exercised (in usd per share) | $ / shares | 0.39 |
Canceled (in usd per share) | $ / shares | 7.02 |
Outstanding, ending balance (in usd per share) | $ / shares | $ 1.74 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Millions | Apr. 03, 2017 | Sep. 30, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Intrinsic value of options outstanding | $ 3.1 | |
Common stock to be purchased in exchange for options (in shares) | 4,193,000 | |
Total unrecognized compensation cost | $ 8.8 | |
Weighted-average recognition period for unrecognized compensation cost | 2 years 9 months 18 days | |
Restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Replacement awards of restricted stock units (in shares) | 4,318,000 | |
Fair value of stock vested during period | $ 0.8 | |
Intrinsic value of restricted stock units outstanding | $ 4.3 | |
Tender Offer, exchange out of the money stock options for restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock to be purchased in exchange for options (in shares) | 2,362,470 | |
Replacement awards of restricted stock units (in shares) | 733,559 |
STOCK-BASED COMPENSATION - Su47
STOCK-BASED COMPENSATION - Summary of Restricted Stock Unit Activity (Details) - Restricted stock units shares in Thousands | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
RSUs | |
Outstanding, beginning balance (in shares) | shares | 606 |
Granted (in shares) | shares | 4,318 |
Vested (in shares) | shares | (824) |
Canceled (in shares) | shares | (1,299) |
Outstanding, ending balance (in shares) | shares | 2,801 |
Weighted Average Fair Value per Share at Grant Date | |
Outstanding, beginning balance (in usd per share) | $ / shares | $ 9.33 |
Granted (in usd per share) | $ / shares | 1.13 |
Vested (in usd per share) | $ / shares | 3.87 |
Canceled (in usd per share) | $ / shares | 2.03 |
Outstanding, ending balance (in usd per share) | $ / shares | $ 1.68 |
STOCK-BASED COMPENSATION - Su48
STOCK-BASED COMPENSATION - Summary of the Components of Total Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Allocation of Stock-based Compensation Expense Included in the Consolidated Statement of Operations [Abstract] | ||||
Total stock-based compensation expense | $ 1,727 | $ 2,532 | $ 5,277 | $ 8,239 |
Cost of revenues | ||||
Allocation of Stock-based Compensation Expense Included in the Consolidated Statement of Operations [Abstract] | ||||
Total stock-based compensation expense | 347 | 295 | 796 | 907 |
Research and development | ||||
Allocation of Stock-based Compensation Expense Included in the Consolidated Statement of Operations [Abstract] | ||||
Total stock-based compensation expense | 607 | 941 | 1,994 | 3,047 |
Sales and marketing | ||||
Allocation of Stock-based Compensation Expense Included in the Consolidated Statement of Operations [Abstract] | ||||
Total stock-based compensation expense | 226 | 560 | 889 | 1,760 |
General and administrative | ||||
Allocation of Stock-based Compensation Expense Included in the Consolidated Statement of Operations [Abstract] | ||||
Total stock-based compensation expense | $ 547 | $ 736 | $ 1,598 | $ 2,525 |
STOCK-BASED COMPENSATION - Su49
STOCK-BASED COMPENSATION - Summary of Stock-Based Compensation Associated with Each Type of Award (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 1,727 | $ 2,532 | $ 5,277 | $ 8,239 |
Stock options and restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 1,473 | 1,983 | 4,363 | 6,703 |
Employee stock purchase plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 254 | $ 549 | $ 914 | $ 1,536 |
STOCK-BASED COMPENSATION - Su50
STOCK-BASED COMPENSATION - Summary of the Weighted-Average Grant Date Fair Value of Options Granted (Details) - Stock options - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
The fair value of each option granted during the periods | ||||
Weighted average grant date fair value (in usd per share) | $ 0.69 | $ 1.25 | $ 0.70 | $ 1.31 |
Expected term (in years) | 4 years 2 months 12 days | 4 years 6 months | 4 years 4 months 24 days | 4 years 6 months |
Expected volatility | 83.80% | 84.70% | 84.40% | 79.80% |
Annual risk-free rate of return | 1.60% | 1.10% | 1.80% | 1.10% |
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
NET LOSS PER SHARE - Schedule o
NET LOSS PER SHARE - Schedule of Computation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Numerator: | ||||
Net loss | $ (6,854) | $ (18,756) | $ (42,252) | $ (54,274) |
Denominator: | ||||
Shares used in per share calculation, basic and diluted (in shares) | 84,862 | 47,278 | 81,993 | 46,704 |
Net loss per share, basic and diluted (in usd per share) | $ (0.08) | $ (0.40) | $ (0.52) | $ (1.16) |
NET LOSS PER SHARE - Schedule52
NET LOSS PER SHARE - Schedule of Potentially Dilutive Securities Excluded from the Computation of Diluted Net Loss Per Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
The potential common shares outstanding that were excluded from the computation of diluted net loss per share attributable to common stockholders | ||||
Total (in shares) | 12,370 | 10,268 | 11,113 | 10,023 |
Employee stock options | ||||
The potential common shares outstanding that were excluded from the computation of diluted net loss per share attributable to common stockholders | ||||
Total (in shares) | 7,844 | 9,383 | 8,121 | 8,944 |
Restricted stock units | ||||
The potential common shares outstanding that were excluded from the computation of diluted net loss per share attributable to common stockholders | ||||
Total (in shares) | 3,306 | 840 | 1,959 | 994 |
Warrants to purchase common stock | ||||
The potential common shares outstanding that were excluded from the computation of diluted net loss per share attributable to common stockholders | ||||
Total (in shares) | 1,220 | 45 | 1,033 | 85 |