Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 29, 2020 | |
Entity Addresses [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-36456 | |
Entity Registrant Name | ZENDESK, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 26-4411091 | |
Entity Address, Address Line One | 989 Market Street | |
Entity Address, City or Town | San Francisco | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94103 | |
City Area Code | 415 | |
Local Phone Number | 418-7506 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | ZEN | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Smaller Reporting Company | false | |
Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 116,676,682 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001463172 | |
Current Fiscal Year End Date | --12-31 | |
Former Address | ||
Entity Addresses [Line Items] | ||
Entity Address, Address Line One | 1019 Market Street | |
Entity Address, City or Town | San Francisco | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94103 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 383,318 | $ 196,591 |
Marketable securities | 559,682 | 286,958 |
Accounts receivable, net of allowance for doubtful accounts of $9,322 and $2,846 as of September 30, 2020 and December 31, 2019, respectively | 151,160 | 127,808 |
Deferred costs | 44,722 | 35,619 |
Prepaid expenses and other current assets | 50,047 | 45,847 |
Total current assets | 1,188,929 | 692,823 |
Marketable securities, noncurrent | 407,141 | 361,948 |
Property and equipment, net | 102,098 | 102,090 |
Deferred costs, noncurrent | 42,256 | 35,230 |
Lease right-of-use assets | 89,477 | 89,983 |
Goodwill and intangible assets, net | 199,607 | 206,883 |
Other assets | 24,731 | 25,632 |
Total assets | 2,054,239 | 1,514,589 |
Current liabilities: | ||
Accounts payable | 10,237 | 38,376 |
Accrued liabilities | 33,720 | 36,347 |
Accrued compensation and related benefits | 89,179 | 61,512 |
Deferred revenue | 324,766 | 320,642 |
Lease liabilities | 22,300 | 21,804 |
Convertible senior notes, net | 130,615 | 0 |
Total current liabilities | 610,817 | 478,681 |
Convertible senior notes, net | 925,007 | 483,464 |
Deferred revenue, noncurrent | 2,885 | 3,320 |
Lease liabilities, noncurrent | 80,507 | 83,478 |
Other liabilities | 4,904 | 7,662 |
Total liabilities | 1,624,120 | 1,056,605 |
Commitments and contingencies (Note 9) | ||
Stockholders’ equity: | ||
Preferred stock | 0 | 0 |
Common stock | 1,164 | 1,130 |
Additional paid-in capital | 1,273,242 | 1,155,044 |
Accumulated other comprehensive income | 2,560 | 591 |
Accumulated deficit | (846,847) | (698,781) |
Total stockholders’ equity | 430,119 | 457,984 |
Total liabilities and stockholders’ equity | $ 2,054,239 | $ 1,514,589 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 9,322 | $ 2,846 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Income Statement [Abstract] | |||||
Revenue | $ 261,926 | $ 210,477 | $ 746,066 | $ 586,545 | |
Cost of revenue | [1] | 62,819 | 59,210 | 184,036 | 172,534 |
Gross profit | 199,107 | 151,267 | 562,030 | 414,011 | |
Operating expenses: | |||||
Research and development | [1] | 64,842 | 54,528 | 184,266 | 151,829 |
Sales and marketing | [1] | 123,737 | 99,303 | 369,442 | 285,750 |
General and administrative | [1] | 38,854 | 32,864 | 109,427 | 107,135 |
Total operating expenses | [1] | 227,433 | 186,695 | 663,135 | 544,714 |
Operating loss | (28,326) | (35,428) | (101,105) | (130,703) | |
Other income (expense), net: | |||||
Interest expense | (14,087) | (6,727) | (29,060) | (19,885) | |
Loss on early extinguishment of debt | 0 | 0 | (25,950) | 0 | |
Interest and other income, net | 3,683 | 7,567 | 12,750 | 17,764 | |
Total other income (expense), net | (10,404) | 840 | (42,260) | (2,121) | |
Loss before provision for (benefit from) income taxes | (38,730) | (34,588) | (143,365) | (132,824) | |
Provision for (benefit from) income taxes | 1,973 | (364) | 4,777 | 661 | |
Net loss | $ (40,703) | $ (34,224) | $ (148,142) | $ (133,485) | |
Net loss per share, basic and diluted (usd per share) | $ (0.35) | $ (0.31) | $ (1.29) | $ (1.21) | |
Weighted-average shares used to compute net loss per share, basic and diluted (in shares) | 115,809 | 111,261 | 114,653 | 109,969 | |
[1] | Includes share-based compensation expense as follows: Three Months Ended Nine Months Ended 2020 2019 2020 2019 Cost of revenue $ 4,831 $ 5,397 $ 15,077 $ 15,580 Research and development 13,921 12,169 39,076 35,717 Sales and marketing 19,335 13,839 53,467 39,813 General and administrative 8,176 7,244 24,437 27,948 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based compensation | $ 132,057 | $ 119,058 | ||
Cost of revenue | ||||
Share-based compensation | $ 4,831 | $ 5,397 | 15,077 | 15,580 |
Research and development | ||||
Share-based compensation | 13,921 | 12,169 | 39,076 | 35,717 |
Sales and marketing | ||||
Share-based compensation | 19,335 | 13,839 | 53,467 | 39,813 |
General and administrative | ||||
Share-based compensation | $ 8,176 | $ 7,244 | $ 24,437 | $ 27,948 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (40,703) | $ (34,224) | $ (148,142) | $ (133,485) |
Other comprehensive income (loss), before tax: | ||||
Net unrealized gain (loss) on available-for-sale investments | (1,361) | 161 | 2,817 | 5,794 |
Net unrealized gain (loss) on derivative instruments | 388 | (2,216) | (848) | 360 |
Other comprehensive income (loss), before tax | (973) | (2,055) | 1,969 | 6,154 |
Tax effect | 699 | 236 | 0 | (1,477) |
Other comprehensive income (loss), net of tax | (274) | (1,819) | 1,969 | 4,677 |
Comprehensive loss | $ (40,977) | $ (36,043) | $ (146,173) | $ (128,808) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit |
Beginning balance (in shares) at Dec. 31, 2018 | 108,037 | ||||
Beginning balance at Dec. 31, 2018 | $ 416,921 | $ 1,080 | $ 950,693 | $ (5,724) | $ (529,128) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock upon exercise of stock options (in shares) | 1,060 | ||||
Issuance of common stock upon exercise of stock options | 21,977 | $ 11 | 21,966 | ||
Issuance of common stock for settlement of RSUs and PRSUs (in shares) | 2,446 | ||||
Issuance of common stock for settlement of RSUs and PRSUs | (7,402) | $ 24 | (7,426) | ||
Issuance of common stock in connection with employee stock purchase plan (in shares) | 374 | ||||
Issuance of common stock in connection with employee stock purchase plan | 15,312 | $ 4 | 15,308 | ||
Share-based compensation | 119,189 | 119,189 | |||
Other comprehensive income (loss), net of tax | 4,677 | 4,677 | |||
Net loss | (133,485) | (133,485) | |||
Ending balance (in shares) at Sep. 30, 2019 | 111,917 | ||||
Ending balance at Sep. 30, 2019 | 437,189 | $ 1,119 | 1,099,730 | (1,047) | (662,613) |
Beginning balance (in shares) at Jun. 30, 2019 | 110,698 | ||||
Beginning balance at Jun. 30, 2019 | 426,977 | $ 1,106 | 1,053,488 | 772 | (628,389) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock upon exercise of stock options (in shares) | 433 | ||||
Issuance of common stock upon exercise of stock options | 8,767 | $ 4 | 8,763 | ||
Issuance of common stock for settlement of RSUs and PRSUs (in shares) | 786 | ||||
Issuance of common stock for settlement of RSUs and PRSUs | (2,321) | $ 9 | (2,330) | ||
Share-based compensation | 39,809 | 39,809 | |||
Other comprehensive income (loss), net of tax | (1,819) | (1,819) | |||
Net loss | (34,224) | (34,224) | |||
Ending balance (in shares) at Sep. 30, 2019 | 111,917 | ||||
Ending balance at Sep. 30, 2019 | 437,189 | $ 1,119 | 1,099,730 | (1,047) | (662,613) |
Beginning balance (in shares) at Dec. 31, 2019 | 113,081 | ||||
Beginning balance at Dec. 31, 2019 | $ 457,984 | $ 1,130 | 1,155,044 | 591 | (698,781) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock upon exercise of stock options (in shares) | 912 | 911 | |||
Issuance of common stock upon exercise of stock options | $ 24,591 | $ 9 | 24,582 | ||
Issuance of common stock for settlement of RSUs and PRSUs (in shares) | 2,118 | ||||
Issuance of common stock for settlement of RSUs and PRSUs | (6,129) | $ 21 | (6,150) | ||
Issuance of common stock in connection with employee stock purchase plan (in shares) | 353 | ||||
Issuance of common stock in connection with employee stock purchase plan | 19,952 | $ 4 | 19,948 | ||
Share-based compensation | 135,326 | 135,326 | |||
Equity component of 2025 convertible senior notes | 216,026 | 216,026 | |||
Purchase of capped calls related to 2025 convertible senior notes | (129,950) | (129,950) | |||
Equity component of partial repurchase of 2023 convertible senior notes | (224,639) | (224,639) | |||
Proceeds from capped calls related to 2023 convertible senior notes | 83,040 | 83,040 | |||
Other comprehensive income (loss), net of tax | 1,969 | 1,969 | |||
Net loss | (148,142) | (148,142) | |||
Stockholders' Equity, Other | 90 | 15 | 75 | ||
Ending balance (in shares) at Sep. 30, 2020 | 116,463 | ||||
Ending balance at Sep. 30, 2020 | 430,119 | $ 1,164 | 1,273,242 | 2,560 | (846,848) |
Beginning balance (in shares) at Jun. 30, 2020 | 115,186 | ||||
Beginning balance at Jun. 30, 2020 | 410,310 | $ 1,150 | 1,212,471 | 2,834 | (806,145) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock upon exercise of stock options (in shares) | 577 | ||||
Issuance of common stock upon exercise of stock options | 15,489 | $ 6 | 15,483 | ||
Issuance of common stock for settlement of RSUs and PRSUs (in shares) | 700 | ||||
Issuance of common stock for settlement of RSUs and PRSUs | (1,990) | $ 8 | (1,998) | ||
Share-based compensation | 47,271 | 47,271 | |||
Other comprehensive income (loss), net of tax | (274) | (274) | |||
Net loss | (40,703) | (40,703) | |||
Stockholders' Equity, Other | 15 | 15 | |||
Ending balance (in shares) at Sep. 30, 2020 | 116,463 | ||||
Ending balance at Sep. 30, 2020 | $ 430,119 | $ 1,164 | $ 1,273,242 | $ 2,560 | $ (846,848) |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities | ||
Net loss | $ (148,142) | $ (133,485) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 32,602 | 27,792 |
Share-based compensation | 132,057 | 119,058 |
Amortization of deferred costs | 32,390 | 22,983 |
Amortization of debt discount and issuance costs | 26,230 | 18,831 |
Loss on early extinguishment of debt | 25,950 | 0 |
Repayment of convertible senior notes attributable to debt discount | (38,637) | 0 |
Other | 6,135 | 958 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (33,035) | (19,832) |
Prepaid expenses and other current assets | (3,116) | (10,997) |
Deferred costs | (47,292) | (35,257) |
Lease right-of-use assets | 15,472 | 14,022 |
Other assets and liabilities | (1,022) | (4,141) |
Accounts payable | (26,208) | 22,591 |
Accrued liabilities | 1,569 | 520 |
Accrued compensation and related benefits | 18,252 | 3,349 |
Deferred revenue | 4,369 | 45,683 |
Lease liabilities | (17,503) | (15,025) |
Net cash provided by (used in) operating activities | (19,929) | 57,050 |
Cash flows from investing activities | ||
Purchases of property and equipment | (19,489) | (25,628) |
Internal-use software development costs | (10,901) | (5,007) |
Purchases of marketable securities | (701,367) | (374,706) |
Proceeds from maturities of marketable securities | 281,476 | 146,171 |
Proceeds from sales of marketable securities | 105,506 | 300,632 |
Business combinations, net of cash acquired | 0 | (70,794) |
Purchases of strategic investments | (1,500) | (500) |
Sales of strategic investments | 1,577 | 0 |
Net cash used in investing activities | (344,698) | (29,832) |
Cash flows from financing activities | ||
Proceeds from issuance of convertible senior notes, net of issuance costs paid of $21,010 | 1,128,990 | 0 |
Purchase of capped calls related to 2025 convertible senior notes | (129,950) | 0 |
Payments for 2023 convertible senior notes partial repurchase | (578,973) | 0 |
Proceeds from capped calls related to 2023 convertible senior notes | 83,040 | 0 |
Proceeds from exercises of employee stock options | 24,591 | 21,977 |
Proceeds from employee stock purchase plan | 28,913 | 23,057 |
Taxes paid related to net share settlement of share-based awards | (6,127) | (7,402) |
Net cash provided by financing activities | 550,484 | 37,632 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 237 | 85 |
Net increase in cash, cash equivalents and restricted cash | 186,094 | 64,935 |
Cash, cash equivalents and restricted cash at beginning of period | 199,905 | 128,876 |
Cash, cash equivalents and restricted cash at end of period | 385,999 | 193,811 |
Reconciliation of cash, cash equivalents and restricted cash to condensed consolidated balance sheets | ||
Total cash, cash equivalents and restricted cash | 385,999 | 193,811 |
Supplemental cash flow data | ||
Cash paid for interest | 1,174 | 1,438 |
Cash paid for taxes | 3,093 | 4,013 |
Non-cash investing and financing activities | ||
Balance of property and equipment in accounts payable and accrued expenses | 1,642 | 12,467 |
Property and equipment acquired through tenant improvement allowances | 110 | 414 |
Asset retirement obligations incurred | 0 | 1,196 |
Internal-Use Software Development Costs | ||
Non-cash investing and financing activities | ||
Share-based compensation capitalized in deferred costs and in internal-use software development costs | 2,536 | 1,379 |
Deferred Costs | ||
Non-cash investing and financing activities | ||
Share-based compensation capitalized in deferred costs and in internal-use software development costs | $ 1,229 | $ 1,023 |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Statement of Cash Flows [Abstract] | |
Payments of debt issuance costs associated with convertible notes | $ 21,010 |
Overview and Basis of Presentat
Overview and Basis of Presentation | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Overview and Basis of Presentation | Overview and Basis of Presentation Company and Background Zendesk was founded in Denmark in 2007 and reincorporated in Delaware in April 2009. We are a software development company that provides software as a service, or SaaS, solutions that are intended to help organizations and their customers build better experiences. Our customer experience solutions are built upon a modern architecture that enables us and our customers to rapidly innovate, adapt our technology in novel ways, and easily integrate with other products and applications. With our origins in customer service, we have evolved our offerings over time to product and platform solutions that work together to help organizations understand the broader customer journey, improve communications across all channels, and engage where and when it’s needed most. References to Zendesk, the “Company,” “our,” or “we” in these notes refer to Zendesk, Inc. and its subsidiaries on a consolidated basis. Basis of Presentation These unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K, for the year ended December 31, 2019, filed with the SEC on February 13, 2020. Other than described below, there have been no changes to our significant accounting policies described in the Annual Report on Form 10-K that have had a material impact on our condensed consolidated financial statements and related notes. The consolidated balance sheet as of December 31, 2019 included herein was derived from the audited financial statements as of that date. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly our financial position, results of operations, comprehensive loss, stockholders’ equity, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2020. Use of Estimates The preparation of our consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods. Significant items subject to such estimates and assumptions include: • the estimate of variable consideration related to revenue recognition; • the estimate of credit losses for accounts receivable and marketable securities; • the fair value and useful lives of acquired intangible assets; • the capitalization and useful life of capitalized costs to obtain customer contracts; • the valuation of strategic investments; • the useful lives of property and equipment; • the capitalization and useful lives of internal-use software; • the lease term and incremental borrowing rate for lease liabilities; • the fair value of our convertible senior notes; • the fair value of asset retirement obligations; • the fair value and expense recognition for certain share-based awards; • the preparation of financial forecasts used in currency hedging; • the recognition and measurement of legal contingencies; and • the recognition of tax benefits and forecasts used to determine our effective tax rate. In December 2019, the novel coronavirus and resulting disease (“COVID-19”) was reported and in March 2020 the World Health Organization declared it a pandemic. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our customers and our sales cycles, and impact on our employees, as discussed in more detail in the Overview section. During fiscal year 2020, this uncertainty has resulted in a higher level of judgment related to our estimates and assumptions concerning variable consideration related to revenue recognition, the estimate of credit losses for accounts receivable, and impairment of strategic investments. For example, the uncertainty around our customers who have faced continued cash flow pressure and decreased demand for their products and services had a variable impact on our revenue from variable consideration and the allowance for credit losses. As of the date of issuance of the financial statements, we are not aware of any specific events or circumstances that would require us to update our estimates, judgments, or to revise the carrying values of our assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to our financial statements. Concentrations of Risk As of September 30, 2020 and December 31, 2019, no customers represented 10% or greater of our total accounts receivable balance. There were no customers that individually exceeded 10% of our revenue during the three and nine months ended September 30, 2020 or 2019. Recently Issued Accounting Pronouncements In August 2020, the Financial Accounting Standards Board, or FASB, issued ASU 2020-06, regarding ASC Topic 470 “Debt ” and ASC Topic 815 “ Derivatives and Hedging ,” which reduces the number of accounting models for convertible instruments and amends the calculation of diluted earnings per share for convertible instruments, among other changes. The guidance is effective for annual reporting periods beginning after December 15, 2021, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements. Recently Adopted Accounting Pronouncements In June 2016, the FASB, issued ASU 2016-13, including subsequent amendments, regarding ASC Topic 326 “ Measurement of Credit Losses on Financial Instruments, ” which modifies the accounting methodology for most financial instruments. The guidance establishes a new “expected loss model” that requires entities to estimate current expected credit losses on financial instruments by using all practical and relevant information, including reasonable and supportable forecasts of future economic conditions. Additionally, any expected credit losses are to be reflected as allowances rather than reductions in the amortized cost of available-for-sale debt securities. We adopted this standard in the first quarter of 2020. The adoption did not have a material effect on our consolidated financial statements. In connection with the adoption, for purposes of identifying and measuring impairment, the policy election was made to exclude accrued interest from both the fair value and amortized cost basis of our available-for-sale debt securities. Such accrued interest is recorded in prepaid expenses and other current assets. In January 2017, the FASB issued ASU 2017-04, regarding ASC Topic 350 “ Simplifying the Test for Goodwill Impairment, ” which simplifies the required methodology to calculate an impairment charge for goodwill. We adopted this standard in the first quarter of 2020. The adoption did not have an effect on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, regarding ASC Topic 820 “ Fair Value Measurement, ” which modifies the disclosure requirements for fair value measurements for certain types of investments. We adopted this standard in the first quarter of 2020. The adoption did not have an effect on our consolidated financial statements. In December 2019, the FASB issued ASU 2019-12 “Simplifying the Accounting for Income Taxes,” which simplifies certain aspects of accounting for income taxes. ASU 2019-12 removes certain exceptions related to the approach for intraperiod tax allocation and clarifies the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The guidance is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. We early adopted ASU 2019-12 in the second quarter of 2020 on a prospective basis. As a result of the adoption, we did not record an income tax benefit from the release of our valuation allowance due to the issuance of our 2025 convertible senior notes. |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations Smooch Technologies Holdings ULC On May 14, 2019, we completed the acquisition of Smooch Technologies Holdings ULC, or Smooch, a developer of messaging technology. We acquired Smooch for purchase consideration of $72 million in cash. In connection with the acquisition in the second quarter of 2019, we incurred transaction costs of $3 million within general and administrative expenses and share-based compensation expense of $5 million, primarily within general and administrative expenses, resulting from the accelerated vesting of certain unvested Smooch stock options because post-combination service requirements were eliminated. As of June 30, 2020, we finalized our purchase accounting for the acquisition. The total purchase consideration was allocated to the assets acquired and liabilities assumed as set forth below (in thousands). The excess of the purchase price over the net assets acquired was recorded as goodwill. Goodwill generated from the acquisition is primarily attributable to assembled workforce and expected growth from the expansion of the scope of and market opportunity for our products. Goodwill will not be amortized but instead will be tested for impairment at least annually and more frequently if certain indicators of impairment are present. As a result of the structure of the transaction, the balance of goodwill is deductible in the U.S. over 15 years for income tax purposes. Net tangible assets $ 1,974 Net deferred tax liability (1,194) Identifiable intangible assets: Developed technology 8,000 Customer relationships 3,900 Backlog 1,000 Goodwill 58,317 Total purchase consideration $ 71,997 The developed technology, customer relationships, and backlog intangible assets were assigned useful lives of 5.5, 8.0, and 2.0 years, respectively. In connection with the acquisition, we granted cash-based retention awards to certain employees of Smooch, which vest over a required service period. The awards will be recorded as expense and were not included in the total purchase consideration. From the date of the acquisition, the results of operations of Smooch have been included in and are immaterial to our consolidated financial statements. Pro forma revenue and results of operations have not been presented because the historical results of Smooch are not material to our consolidated financial statements in any period presented. |
Financial Instruments
Financial Instruments | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments | Financial Instruments Investments The following tables present information about our financial assets measured at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands): Fair Value Measurement at Level 1 Level 2 Total Description U.S. Treasury securities $ — $ 414,594 $ 414,594 Corporate bonds — 368,935 368,935 Money market funds 175,750 — 175,750 Asset-backed securities — 92,099 92,099 Commercial paper — 49,786 49,786 Agency securities — 81,003 81,003 Certificates of deposit — 5,500 5,500 Total $ 175,750 $ 1,011,917 $ 1,187,667 Included in cash and cash equivalents $ 220,844 Included in marketable securities $ 966,823 Fair Value Measurement at Level 1 Level 2 Total Description Corporate bonds $ — $ 418,005 $ 418,005 Asset-backed securities — 124,046 124,046 U.S. Treasury securities — 94,731 94,731 Money market funds 70,455 — 70,455 Commercial paper — 13,548 13,548 Certificates of deposit and time deposits — 1,144 1,144 Agency securities — 920 920 Total $ 70,455 $ 652,394 $ 722,849 Included in cash and cash equivalents $ 73,943 Included in marketable securities $ 648,906 As of September 30, 2020 and December 31, 2019, there were no securities within Level 3 of the fair value hierarchy. There were no transfers between fair value measurement levels during the three and nine months ended September 30, 2020. As of September 30, 2020, gross unrealized gains and losses for marketable securities wer e $7 million and not material, respectively. The aggregate amortized cost basis for cash equivalents and marketable securities was $1,181 million and excludes accrued interest of $3 million. The aggregate fair value of securities with unrealized losses was $147 million. As of December 31, 2019, gross unrealized gains and losses for marketable securities were $4 million and not material, respectively. The aggregate amortized cost basis for cash equivalents and marketable securities was $719 million and excludes accrued interest of $4 million. The aggregate fair value of securities with unrealized losses was $45 million. Unrealized losses for securities that have been in an unrealized loss position for more than 12 months as of September 30, 2020 and December 31, 2019 were not material. We have not recorded an allowance for credit losses, as we believe any such losses would be immaterial based on the high-grade credit rating for each of our marketable securities as of the end of each period. We intend to hold our marketable securities to maturity and it is unlikely that they would be sold before their cost bases are recovered. The following table classifies our marketable securities by contractual maturity (in thousands): September 30, December 31, Due in one year or less $ 559,682 $ 286,958 Due after one year and within five years 407,141 361,948 Total $ 966,823 $ 648,906 As of September 30, 2020 and December 31, 2019, the balance of strategic investments without readily determinable fair values was $11 million. There have been no adjustments to the carrying values of strategic investments resulting from impairments or observable price changes. During the three months ended September 30, 2020, we received proceeds of approximately $2 million on the sale of a strategic investment and realized a gain of approximately $1 million, which was recorded in interest and other income, net. For our other financial instruments, including accounts receivable, accounts payable, and other current liabilities, the carrying amounts approximate their fair values due to the relatively short maturity of these balances. Derivative Instruments and Hedging Our foreign currency exposures typically arise from expenditures associated with foreign operations and sales in foreign currencies of our products. To mitigate the effect of foreign currency fluctuations on our future cash flows and earnings, we enter into foreign currency forward contracts with certain financial institutions and designate those contracts as cash flow hedges. Our foreign currency forward contracts generally have maturities of 15 months or less. We include time value related to our cash flow hedges for effectiveness testing purposes and the entire change in the unrecognized value of our hedge contracts is recorded in accumulated other comprehensive income, or AOCI. As of September 30, 2020, the balance of AOCI include d an immaterial unrecognized net gain related to the changes in the fair value of foreign currency forward contracts designated as cash flow hedges. We expect to reclassify an immaterial net gain into earnings over the next 12 months associated with our cash flow hedges. The following tables present information about our derivative instruments on our consolidated balance sheets (in thousands): September 30, 2020 Asset Derivatives Liability Derivatives Derivative Instrument Balance Sheet Location Fair Value Balance Sheet Location Fair Value Foreign currency forward contracts Other current assets $ 4,042 Accrued liabilities $ 3,882 Total $ 4,042 $ 3,882 December 31, 2019 Asset Derivatives Liability Derivatives Derivative Instrument Balance Sheet Location Fair Value Balance Sheet Location Fair Value Foreign currency forward contracts Other current assets $ 2,385 Accrued liabilities $ 1,975 Total $ 2,385 $ 1,975 Our foreign currency forward contracts had a total notional value of $280 million and $260 million as of September 30, 2020 and December 31, 2019, respectively. We have a master netting arrangement with each of our counterparties, which permit net settlement of multiple, separate derivative contracts with a single payment. GAAP permits companies to present the fair value of derivative instruments on a net basis according to master netting arrangements. We have elected to present our derivative instruments on a gross basis in our consolidated financial statements. We do not enter into any derivative contracts for trading or speculative purposes. As of September 30, 2020 and December 31, 2019, there was no cash collateral posted with counterparties. All derivatives have been designated as hedging instruments. The following table presents information about our foreign currency forward contracts on our condensed consolidated statements of operations for the three and nine months ended September 30, 2020 and 2019 (in thousands): Gain (Loss) Reclassified from AOCI into Earnings Three Months Ended September 30, Nine Months Ended September 30, Classification 2020 2019 2020 2019 Revenue $ 100 $ 652 $ 1,222 $ 1,684 Cost of revenue 163 (274) (701) (1,141) Research and development 174 (280) (671) (1,045) Sales and marketing 366 (519) (1,350) (1,939) General and administrative 108 (226) (374) (723) Total $ 911 $ (647) $ (1,874) $ (3,164) Th e gain r ecognized in AOCI related to foreign currency forward contracts was $1 million for the three months ended September 30, 2020. The loss recognized in AOCI related to foreign currency forward contracts was $3 million for the nine months ended September 30, 2020. The loss recognized in AOCI related to foreign currency forward contracts was $3 million for both the three and nine months ended September 30, 2019, respectively. The cash flow effects related to foreign currency forward contracts are included within operating activities on our consolidated statements of cash flows. Convertible Senior Notes As of September 30, 2020, the fair values of our 0.25% convertible senior notes due 2023 and our 0.625% convertible senior notes due 2025 were $254 million and $1,366 million, respectively. The fair values were determined based on the quoted price of the convertible senior notes in an inactive market on the last traded day of the quarter and have been classified as Level 2 in the fair value hierarchy. Based on the closing price of our common stock of $102.92 on the last trading day of the quarter, the if-converted value of the 2025 convertible senior notes did not exceed the principal amount of $1,150 million, and the if-converted value of the 2023 convertible senior notes exceeded the remaining principal amount by $94 million as of September 30, 2020. |
Costs to Obtain Customer Contra
Costs to Obtain Customer Contracts | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Costs to Obtain Customer Contracts | Costs to Obtain Customer ContractsThe balances of deferred costs to obtain customer contracts were $87 million and $71 million as of September 30, 2020 and December 31, 2019, respectively. Amortization expense for these deferred costs was $12 million and $8 million for the three months ended September 30, 2020 and 2019, respectively and $32 million and $23 million for the nine months ended September 30, 2020 and 2019, respectively. There were no impairment losses related to these deferred costs for the periods presented.Deferred Revenue and Performance Obligations The changes in the balances of deferred revenue are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Balance, beginning of period $ 316,113 $ 287,349 $ 323,962 $ 247,962 Billings 273,464 216,075 749,755 631,530 Subscription and services revenue (249,052) (201,498) (707,715) (559,911) Other revenue* (12,874) (8,979) (38,351) (26,634) Balance, end of period $ 327,651 $ 292,947 $ 327,651 $ 292,947 *Other revenue primarily includes implementation and training services, Talk usage, and amounts from contract assets. For the three months ended September 30, 2020 and 2019, the majority of revenue recognized was from the deferred revenue balances at the beginning of each period. For the nine months ended September 30, 2020 and 2019, less than half of revenue recognized was from the deferred revenue balances at the beginning of each period. The aggregate balance of remaining performance obligations as of September 30, 2020 was $800 million. We expect to recognize $560 million of the balance as revenue in the next 12 months and the remainder thereafter. The aggregate balance of remaining performance obligations represents contracted revenue that has not yet been recognized, including contracted revenue from renewals, and does not include contract amounts which are cancelable by the customer and amounts associated with optional renewal periods. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment, net consists of the following (in thousands): September 30, December 31, Leasehold improvements $ 91,323 $ 83,968 Capitalized internal-use software 49,056 38,437 Computer equipment and licensed software and patents 30,837 27,309 Furniture and fixtures 16,777 16,332 Construction in progress 10,442 8,647 Total 198,435 174,693 Less: accumulated depreciation and amortization (96,337) (72,603) Property and equipment, net $ 102,098 $ 102,090 Depreciation expense was $7 million and $5 million for the three months ended September 30, 2020 and 2019, respectively, and $20 million and $15 million for the nine months ended September 30, 2020 and 2019, respectively. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | Leases We lease office space under noncancelable operating leases with various expiration dates. Additionally, we are the sublessor for certain office space. All of our office leases are classified as operating leases with lease expense recognized on a straight-line basis over the lease term. Lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The lease right-of-use assets also include any lease payments made and exclude lease incentives such as tenant improvement allowances. Options to extend the lease term are included in the lease term when it is reasonably certain that we will exercise the extension option. Our operating leases typically include non-lease components such as common-area maintenance costs. We have elected to include non-lease components with lease payments for the purpose of calculating lease right-of-use assets and liabilities, to the extent that they are fixed. Non-lease components that are not fixed are expensed as incurred as variable lease payments. Leases with a term of one year or less are not recognized on our consolidated balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. The following tables present information about leases on our consolidated balance sheet (in thousands): September 30, 2020 December 31, 2019 Assets Lease right-of-use assets $ 89,477 $ 89,983 Liabilities Lease liabilities 22,300 21,804 Lease liabilities, noncurrent 80,507 83,478 As of September 30, 2020, the weighted average remaining lease term was 5.9 years and the weighted average discount rate was 4.8%. The following table presents information about leases on our consolidated statement of operations (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Operating lease expense $ 6,573 $ 6,382 $ 19,590 $ 17,221 Short-term lease expense 128 168 451 2,037 Variable lease expense 1,412 1,607 4,614 4,835 Sublease income (422) (560) (1,281) (1,353) The following table presents supplemental cash flow information about our leases (in thousands): Nine Months Ended September 30, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities $ 24,029 $ 15,197 Operating lease assets obtained in exchange for new lease liabilities 14,960 27,559 As of September 30, 2020, remaining maturities of lease liabilities are as follows: Remainder of 2020 $ 4,897 2021 28,183 2022 25,877 2023 17,088 2024 7,667 Thereafter 33,892 Total lease payments 117,604 Less imputed interest 14,797 Total $ 102,807 The table above excludes future payments of $9 million related to signed leases that have not yet commenced. |
Goodwill and Acquired Intangibl
Goodwill and Acquired Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Acquired Intangible Assets | Goodwill and Acquired Intangible Assets The changes in the carrying amount of goodwill for the nine months ended September 30, 2020 are as follows (in thousands): Balance as of December 31, 2019 $ 169,647 Goodwill adjustments 15 Balance as of September 30, 2020 $ 169,662 Acquired intangible assets subject to amortization consist of the following (in thousands): As of September 30, 2020 Cost Accumulated Net Weighted Average Remaining Useful Life (In years) Developed technology $ 30,200 $ (9,833) $ 20,367 4.3 Customer relationships 14,710 (5,424) 9,286 4.2 Backlog 3,200 (2,908) 292 0.6 $ 48,110 $ (18,165) $ 29,945 As of December 31, 2019 Cost Accumulated Net Weighted Average Remaining Useful Life (In years) Developed technology $ 39,000 $ (14,492) $ 24,508 4.9 Customer relationships 15,210 (3,882) 11,328 4.8 Backlog 3,200 (1,800) 1,400 1.0 $ 57,410 $ (20,174) $ 37,236 During the second quarter of 2020, we removed developed technology and customer relationship intangible assets from our consolidated balance sheet, which had become fully amortized. Amortization expense of acquired intangible assets was $2 million and $3 million for the three months ended September 30, 2020 and 2019, respectively, and $7 million and $8 million for the nine months ended September 30, 2020 and 2019, respectively. Estimated future amortization expense as of September 30, 2020 is as follows (in thousands): Remainder of 2020 $ 2,011 2021 7,603 2022 7,437 2023 6,658 2024 4,616 Thereafter 1,620 $ 29,945 |
Convertible Senior Notes
Convertible Senior Notes | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Convertible Senior Notes | Convertible Senior Notes 2025 Convertible Senior Notes In June 2020, we issued $1,150 million aggregate principal amount of 0.625% convertible senior notes due June 15, 2025 in a private offerin g , the “2025 Notes.” The 2025 Notes are senior unsecured obligations and bear interest at a fixed rate of 0.625% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, commencing on D ecember 15, 2020. The total net pr oceeds from the offering, after deducting initial purchase discounts and estimated debt issuance costs, were approxim ately $1,129 million. Each $1,000 principal amount of the 2025 Notes will initially be convertible into 9.1944 shares of our common stock, which is equivalent to an initial conversion price of approximately $108.76 per share, subject to adjustment upon the occurrence of specified events. The 2025 Notes will be convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding March 15, 2025, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five On or after March 15, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2025 Notes, in minimum denominations of $1,000 or an integral multiple in excess thereof, at the option of the holders regardless of the foregoing circumstances. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. If certain specified fundamental changes occur (as set forth in the indenture) prior to the maturity date, holders of the 2025 Notes may require us to repurchase for cash all or any portion of their notes at a repurchase price equal to 100% of the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if specific corporate events occur prior to the applicable maturity date or if we deliver a notice of redemption, we will increase the conversion rate for a holder who elects to convert their notes in connection with such a corporate event or converts its notes called (or deemed called) for redemption in connection with such notice of redemption in certain circumstances. It is our current intent and policy to settle conversions through combination settlement with a specified dollar amount of $1,000 per $1,000 principal amount of 2025 Notes. During the three months ended September 30, 2020, the conditions allowing holders of the 2025 Notes to convert were not met. We may not redeem the 2025 Notes prior to June 20, 2023. We may redeem for cash all or any portion of the 2025 Notes, at our option, on or after June 20, 2023 and on or prior to the 41st scheduled trading day immediately preceding the maturity date, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2025 Notes. In accounting for the transaction, the 2025 Notes were separated into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was $220 million and was determined by deducting the fair value of the liability component from the par value of the 2025 Notes. The equity component was recorded in additional paid-in capital and is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount is amortized to interest expense over the contractual term of the 2025 Notes at an effective interest rate of 5.00%. In accounting for the debt issuance costs of $21 million related to the 2025 Notes, we allocated the total amount incurred to the liability and equity components of the 2025 Notes based on their relative values. Issuance costs attributable to the liability component were $17 million and will be amortized to interest expense using the effective interest method over the contractual term of the 2025 Notes. Issuance costs attributable to the equity component were netted with the equity component in additional paid-in capital. The net carrying amount of the liability component of the 2025 Notes is as follows (in thousands): September 30, December 31, Principal $ 1,150,000 $ — Unamortized Debt Discount (208,764) — Unamortized issuance costs (16,241) — Net carrying amount $ 924,995 $ — The net carrying amount of the equity component of the 2025 Notes is as follows (in thousands): September 30, December 31, Debt Discount for Conversion Option $ 220,061 $ — Issuance costs (4,035) — Net carrying amount $ 216,026 $ — Interest expense related to the 2025 Notes is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Contractual interest expense $ 1,797 $ — $ 2,076 $ — Amortization of Debt Discount 9,785 — 11,297 — Amortization of issuance costs 660 — 761 — Total interest expense $ 12,242 $ — $ 14,134 $ — The difference between the book and tax treatment of the debt discount and debt issuance costs of the 2025 Notes resulted in a difference between the carrying amount and tax basis of the 2025 Notes. This taxable temporary difference resulted in the recognition of a $51 million net deferred tax liability which was recorded as an adjustment to additional paid-in capital. The creation of the deferred tax liability represents a source of future taxable income which supports realization of deferred tax assets. As we continue to maintain a full valuation allowance against its deferred tax assets, this additional source of income resulted in the release of a portion of its valuation allowance. Consistent with the adoption of ASU 2019-12, the release of the valuation allowance of $51 million was recorded as an adjustment to additional paid-in capital. 2025 Capped Calls In connection with the pricing of the 2025 Notes, we entered into privately negotiated capped call transactions with certain counterparties, the “2025 Capped Calls.” The 2025 Capped Calls each have an initial strike price of approximately $108.76 per share, subject to certain adjustments, which correspond to the initial conversion price of the 2025 Notes. The 2025 Capped Calls have initial cap prices of $164.17 per share, subject to certain adjustments. The 2025 Capped Calls cover, subject to anti-dilution adjustments, approximately 11 million shares of our common stock. Conditions that cause adjustments to the initial strike price of the 2025 Capped Calls are similar to the conditions that result in corresponding adjustments for the 2025 Notes. The 2025 Capped Calls are generally intended to reduce or offset the potential dilution to our common stock upon any conversion of the 2025 Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. For accounting purposes, the 2025 Capped Calls are separate transactions, and not part of the terms of the 2025 Notes. As these transactions meet certain accounting criteria, the 2025 Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $130 million incurred in connection with the 2025 Capped Calls was recorded as a reduction to additional paid-in capital. 2023 Convertible Senior Notes In March 2018, we issued $575 million aggregate principal amount of 0.25% convertible senior notes due March 15, 2023 in a private offering, the “2023 Notes.” The 2023 Notes are unsecured obligations and bear interest at a fixed rate of 0.25% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, commencing on September 15, 2018. The total net proceeds from the offering, after deducting initial purchase discounts and estimated debt issuance costs, were approximately $561 million. In connection with the offering of the 2025 Notes, we used $618 million of the net proceeds from the offering of the 2025 Notes to repurchase $426 million aggregate principal amount of the 2023 Notes in cash through individual privately negotiated transactions (the “2023 Notes Partial Repurchase”). Of the $618 million consideration, $393 million and $225 million were allocated to the debt and equity components on our consolidated balance sheets, respectively, utilizing an effective interest rate to determine the fair value of the liability component. The fair value of the liability component is estimated by calculating the present value of expected cash flows using an interest rate that reflects our incremental borrowing rate, with an estimated adjustment for our credit standing on nonconvertible debt with similar maturity. As of the repurchase date, the carrying value of the 2023 Notes subject to the 2023 Notes Partial Repurchase, net of unamortized debt discount and issuance costs, was $367 million. The 2023 Notes Partial Repurchase resulted in a $26 million loss on early debt extinguishment. Additionally, $39 million of the total consideration was related to repayment of the debt discount and reflected as a cash outflow from operating activities. As of September 30, 2020, $149 million of principal remains outstanding on the 2023 Notes. Each $1,000 principal amount of the 2023 Notes will initially be convertible into 15.8554 shares of our common stock, the “Conversion Option,” which is equivalent to an initial conversion price of approximately $63.07 per share, subject to adjustment upon the occurrence of specified events. The 2023 Notes will be convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding December 15, 2022, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2018 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five In addition, if specific corporate events occur prior to the applicable maturity date, we will increase the conversion rate for a holder who elects to convert their notes in connection with such a corporate event in certain circumstances. It is our current intent and policy to settle conversions through combination settlement with a specified dollar amount of $1,000 per $1,000 principal amount of 2023 Notes. During the three months ended September 30, 2020, the conditions allowing holders of the 2023 Notes to convert were met. The 2023 Notes are therefore convertible during the three months ending December 31, 2020, and are classified as a current liability as of September 30, 2020. To date, we have received one request for conversion for an immaterial amount of 2023 Notes. In accounting for the issuance of the 2023 Notes, the 2023 Notes were separated into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated conversion feature. The carrying amount of the equity component was determined by deducting the fair value of the liability component from the par value of the 2023 Notes. The equity component was recorded in additional paid-in capital and is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount is amortized to interest expense over the contractual term of the 2023 Notes at an effective interest rate of 5.26%. In accounting for the debt issuance costs related to the 2023 Not es, we allocated the total amount incurred to the liability and equity components of the 2023 Notes based on their relative values. Issuance costs attributable to the liability component are amortized to interest expense using the effective interest method over the contractual term of the 2023 Notes. Issuance costs attributable to the equity component were netted with the equity component in additional paid-in capital. The net carrying amount of the liability component of the 2023 Notes is as follows (in thousands): September 30, December 31, Principal $ 149,194 $ 575,000 Unamortized Debt Discount (17,028) (84,037) Unamortized issuance costs (1,551) (7,499) Net carrying amount $ 130,615 $ 483,464 The net carrying amount of the equity component of the 2023 Notes is as follows (in thousands): September 30, December 31, Debt Discount for Conversion Option $ 32,427 $ 124,976 Issuance costs (765) (2,948) Net carrying amount $ 31,662 $ 122,028 Interest expense related to the 2023 Notes is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Contractual interest expense $ 93 $ 359 $ 770 $ 1,078 Amortization of Debt Discount 1,614 5,902 13,097 17,479 Amortization of issuance costs 135 464 1,075 1,352 Total interest expense $ 1,842 $ 6,725 $ 14,942 $ 19,909 2023 Capped Calls In connection with the pricing of the 2023 Notes, we entered into privately negotiated capped call transactions with certain counterparties, the “2023 Capped Calls.” The 2023 Capped Calls each have an initial strike price of approximately $63.07 per share, subject to certain adjustments, which correspond to the initial conversion price of the 2023 Notes. The 2023 Capped Calls have initial cap prices of $95.20 per share, subject to certain adjustments. The 2023 Capped Calls covered, subject to anti-dilution adjustments, approximately 9.1 million shares of our common stock. Conditions that cause adjustments to the initial strike price of the 2023 Capped Calls mirror conditions that result in corresponding adjustments for the 2023 Notes. The 2023 Capped Calls are generally intended to reduce or offset the potential dilution to our common stock upon any conversion of the 2023 Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. For accounting purposes, the 2023 Capped Calls are separate transactions, and not part of the terms of the 2023 Notes. As these transactions meet certain accounting criteria, the 2023 Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $64 million incurred in connection with the 2023 Capped Calls was recorded as a reduction to additional paid-in capital. In June 2020, and in connection with the 2023 Notes Partial Repurchase, we terminated 2023 Capped Calls corresponding to approximately 6.7 million shares for cash proceeds of $83 million. The proceeds were recorded as an increase to additional paid-in capital in the condensed consolidated balance sheets. As of September 30, 2020, there remains outstanding 2023 Capped Calls giving the Company the option to purchase approximately 2.4 million shares (subject to adjustment). The net impact to our stockholders ’ equity, included in additional paid-in capital, of the above components of the 2023 Notes is as follows (in thousands): At Issuance Conversion Option $ 124,976 Purchase of Capped Calls (63,940) Issuance Costs (2,948) Net deferred tax liability (13,784) Total $ 44,304 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Commitments Except as discussed below, there were no material changes in our commitments under contractual obligations, as disclosed in our audited consolidated financial statements for the year ended December 31, 2019. In June 2020, we issued $1,150 million aggregate principal amount of 0.625% convertible senior notes due June 15, 2025 and used $618 million of the net proceeds from this offering to repurchase $426 million aggregate principal amount of our existing convertible senior notes. Refer to Note 8 for additional information. Litigation and Loss Contingencies We accrue estimates for resolution of legal and other contingencies when losses are probable and estimable. These estimates are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel, and other information and events pertaining to a particular matter. On October 24, 2019 and November 7, 2019, purported stockholders of the Company filed two putative class action complaints in the United States District Court for the Northern District of California, entitled Charles Reidinger v. Zendesk, Inc., et al., 3:19-cv-06968-CRB and Ho v. Zendesk, Inc., et al., No. 3:19-cv-07361-WHA, respectively, against the Company and certain of the Company’s executive officers. The complaints are nearly identical and allege violations of Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934, as amended, purportedly on behalf of all persons who purchased Zendesk, Inc. common stock between February 6, 2019 and October 1, 2019, inclusive. The claims are based upon allegations that the defendants misrepresented and/or omitted material information in certain of our prior public filings. To this point, no discovery has occurred in these cases. The court has appointed a lead plaintiff and consolidated the various lawsuits into a single action (Case No. 3:19-cv-06968-CRB), and lead plaintiff filed its amended complaint on April 14, 2020 asserting the same alleged violations of securities laws as the initial complaints. On June 29, 2020, Zendesk and the executive officer defendants moved to dismiss the amended complaint. Lead Plaintiff opposed that motion and it is set for hearing on November 12, 2020. On June 2, 2020, a purported stockholder of the Company filed a derivative complaint in the United States District Court for the Northern District of California, entitled Anderson v. Svane, et al., 3:20-cv-03671, against certain of the Company’s executive officers and directors. The derivative complaint alleges breaches of fiduciary duty against all defendants, and an insider trading claim and violations of Section 10(b) of the Securities Exchange Act of 1934 against the officer defendants, purportedly on behalf of the Company itself. The claims are based on nearly identical allegations as the class action complaints, namely that the defendants misrepresented and/or omitted material information in certain of our prior public filings. On June 29, 2020, the court stayed the derivative action until either the class action is dismissed with prejudice or class action defendants answer the complaint. On July 27, 2020, the court ordered the derivative action related to the class action. The class action and derivative action are still in the preliminary stages, and it is not possible for the Company to quantify the extent of potential liability to the individual defendants, if any. Management believes that the lawsuits lack merit and intends to vigorously defend the actions. We cannot predict the outcome of or estimate the possible loss or range of loss from the above described matter. From time to time, we may be subject to other legal proceedings, claims, investigations, and government inquiries in the ordinary course of business. We have received, and may in the future continue to receive, claims from third parties asserting, among other things, infringement of their intellectual property rights, labor and employment rights, defamation, privacy, and contractual rights. In general, the resolution of a legal matter could prevent the Company from offering its service to others, could be material to the Company’s financial condition or cash flows, or both, or could otherwise adversely affect the Company’s operating results. The outcomes of legal proceedings and other contingencies are inherently unpredictable and subject to significant uncertainties. As a result, the Company is not able to reasonably estimate the amount or range of possible losses in excess of any amounts accrued, including losses that could arise as a result of application of non-monetary remedies, with respect to the contingencies it faces. In management’s opinion, resolution of all current matters is not expected to have a material adverse impact on business, consolidated balance sheets, results of operations, comprehensive loss, or cash flows. Indemnifications In the ordinary course of business, we enter into contractual arrangements under which we agree to provide indemnification of varying scope and terms to customers, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties, and other liabilities relating to or arising from our products or our acts or omissions. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. Further, our obligations under these agreements may be limited in terms of time and/or amount, and in some instances, we may have recourse against third parties for certain payments. In addition, we have indemnification agreements with our directors and executive officers that require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations may vary. To date, we have not incurred any material costs, and we have not accrued any liabilities in our consolidated financial statements, as a result of these obligations. |
Common Stock and Stockholders'
Common Stock and Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Common Stock and Stockholders' Equity | Common Stock and Stockholders’ Equity Common Stock As of September 30, 2020 and December 31, 2019, there were 400 million shares of common stock authorized for issuance with a par value of $0.01 per share and 116.4 million and 113.1 million shares were issued and outstanding, respectively. Preferred Stock As of each of September 30, 2020 and December 31, 2019, there were 10 million shares of preferred stock authorized for issuance with a par value of $0.01 per share and no shares of preferred stock were issued or outstanding. Employee Equity Plans Employee Stock Purchase Plan Under our Employee Stock Purchase Plan, or ESPP, eligible employees are granted options to purchase shares of our common stock through payroll deductions. The ESPP provides for 18-month offering periods, which include three six Stock Option and Grant Plans Our board of directors adopted the 2009 Stock Option and Grant Plan, or the 2009 Plan, in July 2009. The 2009 Plan was terminated in connection with our initial public offering in May 2014, and accordingly, no shares are available for issuance under this plan. The 2009 Plan continues to govern outstanding awards granted thereunder. Our 2014 Stock Option and Incentive Plan, or the 2014 Plan, serves as the successor to our 2009 Plan. Pursuant to the terms of the 2014 Plan, the number of shares reserved for issuance under the 2014 Plan increased by 5.7 million shares on January 1, 2020. As of September 30, 2020, we had 15.0 million shares of common stock available for future grants under the 2014 Plan. On May 6, 2016, the compensation committee of our board of directors granted equity awards representing 1.2 million shares of common stock. These awards were granted outside of the 2014 Plan pursuant to an exemption provided for “employment inducement awards” within the meaning of Section 303A.08 of the New York Stock Exchange Listed Company Manual and accordingly did not require approval from our stockholders. A summary of our share-based award activity for the nine months ended September 30, 2020 is as follows (in thousands, except per share information): Options Outstanding RSUs Outstanding Shares Number of Weighted Weighted Aggregate Outstanding Weighted Aggregate Intrinsic Value (In years) Outstanding — January 1, 2020 11,613 4,860 $ 24.08 5.85 $ 255,536 5,361 $ 55.00 $ 410,804 Increase in authorized shares 5,654 — — — — — — — Stock options granted (572) 572 87.65 — — — — — RSUs granted (2,435) — — — — 2,435 83.65 Stock options exercised (912) 26.97 — — — — — RSUs vested — — — — — (2,057) 53.67 — Stock options forfeited or canceled 144 (144) 54.27 — — — — — RSUs forfeited or canceled 555 — — — — (555) 61.19 — RSUs forfeited or canceled and unavailable for grant — — — — — (13) 23.44 — PRSUs forfeited 35 — — — — — — — Outstanding — September 30, 2020 14,994 4,376 $ 30.79 5.45 $ 315,837 5,171 $ 68.44 $ 532,210 The restricted stock units, or RSUs, forfeited or canceled and unavailable for grant relate to our employment inducement awards. The aggregate intrinsic value for options outstanding represents the difference between the closing market price of our common stock on the last trading day of the reporting period and the exercise price of outstanding, in-the-money options. The total intrinsic value of stock options exercised during the nine months ended September 30, 2020 and 2019 was $54 million and $63 million, respectively. The intrinsic value for options exercised represents the difference between the exercise price and the market value on the date of exercise. The weighted-average grant date fair value of stock options granted during the nine months ended September 30, 2020 and 2019 was $31.41 and $28.65, respectively. The total fair value of RSUs vested during the nine months ended September 30, 2020 and 2019 was $168 million and $191 million, respectively. The fair value of RSUs vested represents market value on the vesting date. The weighted-average grant date fair value of RSUs granted during the nine months ended September 30, 2020 and 2019 was $83.65, and $74.39, respectively. As of September 30, 2020, we had a total of $373 million in future expense related to our stock options and RSUs to be recognized over a weighted average period of 2.7 years. Performance Restricted Stock Units During the three months ended September 30, 2018 , the compensation committee of our board of directors granted performance-based restricted stock units, or PRSUs, representing 0.2 million shares of common stock, the substantial majority of which were granted in connection with the acquisition of FutureSimple Inc. The PRSUs vest in four semi-annual tranches through March 2021. The PRSUs include a service condition and a performance condition related to the attainment of semi-annual performance targets approved and communicated in advance of each performance period. F or the three and nine months ended September 30, 2020, we recorded $3 million and $5 million of share-based compensation expense related to the PRSUs, respectively. For the three and nine months ended September 30, 2019, we recorded $2 million and $6 million of share-based compensation expense related to PRSUs, respectively, including a one-time charge related to accelerated retention compensation. For the three and nine months ended September 30, 2020, 36 thousand and 62 thousand PRSUs were vested, respectively. For the three and nine months ended September 30, 2019, 48 thousand PRSUs were vested. Th e total future expense related to the PRSUs will be based on the fair value of the underlying shares on the grant date for each performance tranche. |
Deferred Revenue and Performanc
Deferred Revenue and Performance Obligations | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Deferred Revenue and Performance Obligations | Costs to Obtain Customer ContractsThe balances of deferred costs to obtain customer contracts were $87 million and $71 million as of September 30, 2020 and December 31, 2019, respectively. Amortization expense for these deferred costs was $12 million and $8 million for the three months ended September 30, 2020 and 2019, respectively and $32 million and $23 million for the nine months ended September 30, 2020 and 2019, respectively. There were no impairment losses related to these deferred costs for the periods presented.Deferred Revenue and Performance Obligations The changes in the balances of deferred revenue are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Balance, beginning of period $ 316,113 $ 287,349 $ 323,962 $ 247,962 Billings 273,464 216,075 749,755 631,530 Subscription and services revenue (249,052) (201,498) (707,715) (559,911) Other revenue* (12,874) (8,979) (38,351) (26,634) Balance, end of period $ 327,651 $ 292,947 $ 327,651 $ 292,947 *Other revenue primarily includes implementation and training services, Talk usage, and amounts from contract assets. For the three months ended September 30, 2020 and 2019, the majority of revenue recognized was from the deferred revenue balances at the beginning of each period. For the nine months ended September 30, 2020 and 2019, less than half of revenue recognized was from the deferred revenue balances at the beginning of each period. The aggregate balance of remaining performance obligations as of September 30, 2020 was $800 million. We expect to recognize $560 million of the balance as revenue in the next 12 months and the remainder thereafter. The aggregate balance of remaining performance obligations represents contracted revenue that has not yet been recognized, including contracted revenue from renewals, and does not include contract amounts which are cancelable by the customer and amounts associated with optional renewal periods. |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per ShareBasic 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 net loss per share is computed by giving effect to all potential shares of common stock, including those related to outstanding share-based awards and our convertible senior notes, to the extent dilutive. Basic and diluted net loss per share were the same for each period presented as the inclusion of all potential common stock outstanding would have been anti-dilutive. The following table presents the calculation of basic and diluted net loss per share for the periods presented (in thousands, except per share data): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Net loss $ (40,703) $ (34,224) $ (148,142) $ (133,485) Weighted-average shares used to compute basic and diluted net loss per share 115,809 111,261 114,653 109,969 Net loss per share, basic and diluted $ (0.35) $ (0.31) $ (1.29) $ (1.21) The anti-dilutive securities excluded from the shares used to calculate diluted net loss per share are as follows (in thousands): As of September 30, 2020 2019 Shares subject to outstanding common stock options and employee stock purchase plan 4,607 5,323 Restricted stock units 5,171 5,908 Shares related to convertible senior notes 770 2,138 10,548 13,369 The shares related to convertible senior notes in the table above are calculated based on the average market price of our common stock for the three months ended September 30, 2020 and 2019, respectively. We expect to settle the principal amount of both the 2023 Notes and 2025 Notes in cash and therefore use the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread has a dilutive impact on diluted net income per share when the average market price of our common stock for a given reporting period exceeds the initial conversion prices of $63.07 and $108.76 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesWe reported income tax expense of $2 million for the three months ended September 30, 2020 and an immaterial benefit from income taxes in the three months ended September 30, 2019. For the nine months ended September 30, 2020 and 2019, we reported income tax expense of $5 million and $1 million, respectively. The effective tax rate for each period differs from the statutory rate primarily as a result of not recognizing a deferred tax asset for U.S. losses due to having a full valuation allowance against U.S. deferred tax assets. |
Geographic Information
Geographic Information | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Geographic Information | Geographic Information Our chief operating decision maker reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating our financial performance. Accordingly, we have determined that we operate in a single reporting segment. Revenue The following table presents our revenue by geographic area, as determined based on the billing address of our customers (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 United States $ 136,491 $ 110,964 $ 391,025 $ 306,880 EMEA 73,798 59,196 210,487 166,728 APAC 28,954 22,981 81,105 63,715 Other 22,683 17,336 63,449 49,222 Total $ 261,926 $ 210,477 $ 746,066 $ 586,545 Long-Lived Assets The following table presents our long-lived assets by geographic area (in thousands): As of As of United States $ 90,113 $ 91,532 EMEA: Republic of Ireland 38,724 42,500 Other EMEA 3,531 3,725 Total EMEA 42,255 46,225 APAC: Singapore 21,114 25,988 Other APAC 7,218 5,362 Total APAC 28,332 31,350 Other 414 417 Total $ 161,114 $ 169,524 The table above includes property and equipment and lease right-of-use assets and excludes capitalized internal-use software and intangible assets. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event In October 2020, our board of directors determined that the Company will no longer continue to occupy the leased premises located at 1019 Market Street and 988 Market Street, San Francisco, California 94103. As a result, we expect to record an impairment charge of approximately $13 to $17 million, primarily related to lease right-of-use assets and leasehold improvements. We intend to pay all rental payments due and payable by us pursuant to the lease, which total approximately $12 million, plus additional operating costs. The actual amount and timing of the impairments and the cash outflows are dependent on the outcome of negotiations with landlords and potential subtenants, and the timing of completion of lease decommissioning activities, which we expect to complete on or before March 31, 2021. |
Overview and Basis of Present_2
Overview and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | These unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K, for the year ended December 31, 2019, filed with the SEC on February 13, 2020. Other than described below, there have been no changes to our significant accounting policies described in the Annual Report on Form 10-K that have had a material impact on our condensed consolidated financial statements and related notes. The consolidated balance sheet as of December 31, 2019 included herein was derived from the audited financial statements as of that date. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly our financial position, results of operations, comprehensive loss, stockholders’ equity, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2020. |
Use of Estimates | The preparation of our consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods. Significant items subject to such estimates and assumptions include: • the estimate of variable consideration related to revenue recognition; • the estimate of credit losses for accounts receivable and marketable securities; • the fair value and useful lives of acquired intangible assets; • the capitalization and useful life of capitalized costs to obtain customer contracts; • the valuation of strategic investments; • the useful lives of property and equipment; • the capitalization and useful lives of internal-use software; • the lease term and incremental borrowing rate for lease liabilities; • the fair value of our convertible senior notes; • the fair value of asset retirement obligations; • the fair value and expense recognition for certain share-based awards; • the preparation of financial forecasts used in currency hedging; • the recognition and measurement of legal contingencies; and • the recognition of tax benefits and forecasts used to determine our effective tax rate. In December 2019, the novel coronavirus and resulting disease (“COVID-19”) was reported and in March 2020 the World Health Organization declared it a pandemic. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our customers and our sales cycles, and impact on our employees, as discussed in more detail in the Overview section. During fiscal year 2020, this uncertainty has resulted in a higher level of judgment related to our estimates and assumptions concerning variable consideration related to revenue recognition, the estimate of credit losses for accounts receivable, and impairment of strategic investments. For example, the uncertainty around our customers who have faced continued cash flow pressure and decreased demand for their products and services had a variable impact on our revenue from variable consideration and the allowance for credit losses. As of the date of issuance of the financial statements, we are not aware of any specific events or circumstances that would require us to update our estimates, judgments, or to revise the carrying values of our assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to our financial statements. |
Concentrations of Risk | As of September 30, 2020 and December 31, 2019, no customers represented 10% or greater of our total accounts receivable balance. There were no customers that individually exceeded 10% of our revenue during the three and nine months ended September 30, 2020 or 2019. |
Recently Issued and Adopted Accounting Pronouncements | Recently Issued Accounting Pronouncements In August 2020, the Financial Accounting Standards Board, or FASB, issued ASU 2020-06, regarding ASC Topic 470 “Debt ” and ASC Topic 815 “ Derivatives and Hedging ,” which reduces the number of accounting models for convertible instruments and amends the calculation of diluted earnings per share for convertible instruments, among other changes. The guidance is effective for annual reporting periods beginning after December 15, 2021, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements. Recently Adopted Accounting Pronouncements In June 2016, the FASB, issued ASU 2016-13, including subsequent amendments, regarding ASC Topic 326 “ Measurement of Credit Losses on Financial Instruments, ” which modifies the accounting methodology for most financial instruments. The guidance establishes a new “expected loss model” that requires entities to estimate current expected credit losses on financial instruments by using all practical and relevant information, including reasonable and supportable forecasts of future economic conditions. Additionally, any expected credit losses are to be reflected as allowances rather than reductions in the amortized cost of available-for-sale debt securities. We adopted this standard in the first quarter of 2020. The adoption did not have a material effect on our consolidated financial statements. In connection with the adoption, for purposes of identifying and measuring impairment, the policy election was made to exclude accrued interest from both the fair value and amortized cost basis of our available-for-sale debt securities. Such accrued interest is recorded in prepaid expenses and other current assets. In January 2017, the FASB issued ASU 2017-04, regarding ASC Topic 350 “ Simplifying the Test for Goodwill Impairment, ” which simplifies the required methodology to calculate an impairment charge for goodwill. We adopted this standard in the first quarter of 2020. The adoption did not have an effect on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, regarding ASC Topic 820 “ Fair Value Measurement, ” which modifies the disclosure requirements for fair value measurements for certain types of investments. We adopted this standard in the first quarter of 2020. The adoption did not have an effect on our consolidated financial statements. In December 2019, the FASB issued ASU 2019-12 “Simplifying the Accounting for Income Taxes,” which simplifies certain aspects of accounting for income taxes. ASU 2019-12 removes certain exceptions related to the approach for intraperiod tax allocation and clarifies the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The guidance is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. We early adopted ASU 2019-12 in the second quarter of 2020 on a prospective basis. As a result of the adoption, we did not record an income tax benefit from the release of our valuation allowance due to the issuance of our 2025 convertible senior notes. |
Leases | Lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The lease right-of-use assets also include any lease payments made and exclude lease incentives such as tenant improvement allowances. Options to extend the lease term are included in the lease term when it is reasonably certain that we will exercise the extension option. Our operating leases typically include non-lease components such as common-area maintenance costs. We have elected to include non-lease components with lease payments for the purpose of calculating lease right-of-use assets and liabilities, to the extent that they are fixed. Non-lease components that are not fixed are expensed as incurred as variable lease payments. Leases with a term of one year or less are not recognized on our consolidated balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Summary of Assets Acquired and Liabilities Assumed | Net tangible assets $ 1,974 Net deferred tax liability (1,194) Identifiable intangible assets: Developed technology 8,000 Customer relationships 3,900 Backlog 1,000 Goodwill 58,317 Total purchase consideration $ 71,997 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets Measured at Fair Value on Recurring Basis | The following tables present information about our financial assets measured at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands): Fair Value Measurement at Level 1 Level 2 Total Description U.S. Treasury securities $ — $ 414,594 $ 414,594 Corporate bonds — 368,935 368,935 Money market funds 175,750 — 175,750 Asset-backed securities — 92,099 92,099 Commercial paper — 49,786 49,786 Agency securities — 81,003 81,003 Certificates of deposit — 5,500 5,500 Total $ 175,750 $ 1,011,917 $ 1,187,667 Included in cash and cash equivalents $ 220,844 Included in marketable securities $ 966,823 Fair Value Measurement at Level 1 Level 2 Total Description Corporate bonds $ — $ 418,005 $ 418,005 Asset-backed securities — 124,046 124,046 U.S. Treasury securities — 94,731 94,731 Money market funds 70,455 — 70,455 Commercial paper — 13,548 13,548 Certificates of deposit and time deposits — 1,144 1,144 Agency securities — 920 920 Total $ 70,455 $ 652,394 $ 722,849 Included in cash and cash equivalents $ 73,943 Included in marketable securities $ 648,906 |
Schedule of Marketable Securities Classified by Contractual Maturity | The following table classifies our marketable securities by contractual maturity (in thousands): September 30, December 31, Due in one year or less $ 559,682 $ 286,958 Due after one year and within five years 407,141 361,948 Total $ 966,823 $ 648,906 |
Schedule of Derivative Instruments on Consolidated Balance Sheets | The following tables present information about our derivative instruments on our consolidated balance sheets (in thousands): September 30, 2020 Asset Derivatives Liability Derivatives Derivative Instrument Balance Sheet Location Fair Value Balance Sheet Location Fair Value Foreign currency forward contracts Other current assets $ 4,042 Accrued liabilities $ 3,882 Total $ 4,042 $ 3,882 December 31, 2019 Asset Derivatives Liability Derivatives Derivative Instrument Balance Sheet Location Fair Value Balance Sheet Location Fair Value Foreign currency forward contracts Other current assets $ 2,385 Accrued liabilities $ 1,975 Total $ 2,385 $ 1,975 |
Schedule of Derivative Instruments on Statement of Operations | The following table presents information about our foreign currency forward contracts on our condensed consolidated statements of operations for the three and nine months ended September 30, 2020 and 2019 (in thousands): Gain (Loss) Reclassified from AOCI into Earnings Three Months Ended September 30, Nine Months Ended September 30, Classification 2020 2019 2020 2019 Revenue $ 100 $ 652 $ 1,222 $ 1,684 Cost of revenue 163 (274) (701) (1,141) Research and development 174 (280) (671) (1,045) Sales and marketing 366 (519) (1,350) (1,939) General and administrative 108 (226) (374) (723) Total $ 911 $ (647) $ (1,874) $ (3,164) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment, net consists of the following (in thousands): September 30, December 31, Leasehold improvements $ 91,323 $ 83,968 Capitalized internal-use software 49,056 38,437 Computer equipment and licensed software and patents 30,837 27,309 Furniture and fixtures 16,777 16,332 Construction in progress 10,442 8,647 Total 198,435 174,693 Less: accumulated depreciation and amortization (96,337) (72,603) Property and equipment, net $ 102,098 $ 102,090 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of Lease Impact on Balance Sheet | The following tables present information about leases on our consolidated balance sheet (in thousands): September 30, 2020 December 31, 2019 Assets Lease right-of-use assets $ 89,477 $ 89,983 Liabilities Lease liabilities 22,300 21,804 Lease liabilities, noncurrent 80,507 83,478 |
Schedule of Lease Cost and Supplemental Cash Flow Information | The following table presents information about leases on our consolidated statement of operations (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Operating lease expense $ 6,573 $ 6,382 $ 19,590 $ 17,221 Short-term lease expense 128 168 451 2,037 Variable lease expense 1,412 1,607 4,614 4,835 Sublease income (422) (560) (1,281) (1,353) The following table presents supplemental cash flow information about our leases (in thousands): Nine Months Ended September 30, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities $ 24,029 $ 15,197 Operating lease assets obtained in exchange for new lease liabilities 14,960 27,559 |
Schedule of Maturities of Leases | As of September 30, 2020, remaining maturities of lease liabilities are as follows: Remainder of 2020 $ 4,897 2021 28,183 2022 25,877 2023 17,088 2024 7,667 Thereafter 33,892 Total lease payments 117,604 Less imputed interest 14,797 Total $ 102,807 |
Goodwill and Acquired Intangi_2
Goodwill and Acquired Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the nine months ended September 30, 2020 are as follows (in thousands): Balance as of December 31, 2019 $ 169,647 Goodwill adjustments 15 Balance as of September 30, 2020 $ 169,662 |
Summary of Intangible Assets Acquired | Acquired intangible assets subject to amortization consist of the following (in thousands): As of September 30, 2020 Cost Accumulated Net Weighted Average Remaining Useful Life (In years) Developed technology $ 30,200 $ (9,833) $ 20,367 4.3 Customer relationships 14,710 (5,424) 9,286 4.2 Backlog 3,200 (2,908) 292 0.6 $ 48,110 $ (18,165) $ 29,945 As of December 31, 2019 Cost Accumulated Net Weighted Average Remaining Useful Life (In years) Developed technology $ 39,000 $ (14,492) $ 24,508 4.9 Customer relationships 15,210 (3,882) 11,328 4.8 Backlog 3,200 (1,800) 1,400 1.0 $ 57,410 $ (20,174) $ 37,236 |
Summary of Estimated Future Amortization Expense | Estimated future amortization expense as of September 30, 2020 is as follows (in thousands): Remainder of 2020 $ 2,011 2021 7,603 2022 7,437 2023 6,658 2024 4,616 Thereafter 1,620 $ 29,945 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Net Carrying Amount of Liability and Equity Component of Convertible Notes | The net carrying amount of the liability component of the 2025 Notes is as follows (in thousands): September 30, December 31, Principal $ 1,150,000 $ — Unamortized Debt Discount (208,764) — Unamortized issuance costs (16,241) — Net carrying amount $ 924,995 $ — The net carrying amount of the equity component of the 2025 Notes is as follows (in thousands): September 30, December 31, Debt Discount for Conversion Option $ 220,061 $ — Issuance costs (4,035) — Net carrying amount $ 216,026 $ — The net carrying amount of the liability component of the 2023 Notes is as follows (in thousands): September 30, December 31, Principal $ 149,194 $ 575,000 Unamortized Debt Discount (17,028) (84,037) Unamortized issuance costs (1,551) (7,499) Net carrying amount $ 130,615 $ 483,464 The net carrying amount of the equity component of the 2023 Notes is as follows (in thousands): September 30, December 31, Debt Discount for Conversion Option $ 32,427 $ 124,976 Issuance costs (765) (2,948) Net carrying amount $ 31,662 $ 122,028 The net impact to our stockholders ’ equity, included in additional paid-in capital, of the above components of the 2023 Notes is as follows (in thousands): At Issuance Conversion Option $ 124,976 Purchase of Capped Calls (63,940) Issuance Costs (2,948) Net deferred tax liability (13,784) Total $ 44,304 |
Schedule of Interest Expense | Interest expense related to the 2025 Notes is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Contractual interest expense $ 1,797 $ — $ 2,076 $ — Amortization of Debt Discount 9,785 — 11,297 — Amortization of issuance costs 660 — 761 — Total interest expense $ 12,242 $ — $ 14,134 $ — Interest expense related to the 2023 Notes is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Contractual interest expense $ 93 $ 359 $ 770 $ 1,078 Amortization of Debt Discount 1,614 5,902 13,097 17,479 Amortization of issuance costs 135 464 1,075 1,352 Total interest expense $ 1,842 $ 6,725 $ 14,942 $ 19,909 |
Common Stock and Stockholders_2
Common Stock and Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Summary of Stock Option and RSU Award Activity | A summary of our share-based award activity for the nine months ended September 30, 2020 is as follows (in thousands, except per share information): Options Outstanding RSUs Outstanding Shares Number of Weighted Weighted Aggregate Outstanding Weighted Aggregate Intrinsic Value (In years) Outstanding — January 1, 2020 11,613 4,860 $ 24.08 5.85 $ 255,536 5,361 $ 55.00 $ 410,804 Increase in authorized shares 5,654 — — — — — — — Stock options granted (572) 572 87.65 — — — — — RSUs granted (2,435) — — — — 2,435 83.65 Stock options exercised (912) 26.97 — — — — — RSUs vested — — — — — (2,057) 53.67 — Stock options forfeited or canceled 144 (144) 54.27 — — — — — RSUs forfeited or canceled 555 — — — — (555) 61.19 — RSUs forfeited or canceled and unavailable for grant — — — — — (13) 23.44 — PRSUs forfeited 35 — — — — — — — Outstanding — September 30, 2020 14,994 4,376 $ 30.79 5.45 $ 315,837 5,171 $ 68.44 $ 532,210 |
Deferred Revenue and Performa_2
Deferred Revenue and Performance Obligations (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Changes in Balance of Deferred Revenue | The changes in the balances of deferred revenue are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Balance, beginning of period $ 316,113 $ 287,349 $ 323,962 $ 247,962 Billings 273,464 216,075 749,755 631,530 Subscription and services revenue (249,052) (201,498) (707,715) (559,911) Other revenue* (12,874) (8,979) (38,351) (26,634) Balance, end of period $ 327,651 $ 292,947 $ 327,651 $ 292,947 *Other revenue primarily includes implementation and training services, Talk usage, and amounts from contract assets. |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Net Loss per Share | The following table presents the calculation of basic and diluted net loss per share for the periods presented (in thousands, except per share data): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Net loss $ (40,703) $ (34,224) $ (148,142) $ (133,485) Weighted-average shares used to compute basic and diluted net loss per share 115,809 111,261 114,653 109,969 Net loss per share, basic and diluted $ (0.35) $ (0.31) $ (1.29) $ (1.21) |
Schedule of Anti-Dilutive Securities Excluded from the Diluted per Share Calculation | The anti-dilutive securities excluded from the shares used to calculate diluted net loss per share are as follows (in thousands): As of September 30, 2020 2019 Shares subject to outstanding common stock options and employee stock purchase plan 4,607 5,323 Restricted stock units 5,171 5,908 Shares related to convertible senior notes 770 2,138 10,548 13,369 |
Geographic Information (Tables)
Geographic Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Geographic Areas | The following table presents our revenue by geographic area, as determined based on the billing address of our customers (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 United States $ 136,491 $ 110,964 $ 391,025 $ 306,880 EMEA 73,798 59,196 210,487 166,728 APAC 28,954 22,981 81,105 63,715 Other 22,683 17,336 63,449 49,222 Total $ 261,926 $ 210,477 $ 746,066 $ 586,545 |
Schedule of Long-Lived Assets by Geographic Areas | The following table presents our long-lived assets by geographic area (in thousands): As of As of United States $ 90,113 $ 91,532 EMEA: Republic of Ireland 38,724 42,500 Other EMEA 3,531 3,725 Total EMEA 42,255 46,225 APAC: Singapore 21,114 25,988 Other APAC 7,218 5,362 Total APAC 28,332 31,350 Other 414 417 Total $ 161,114 $ 169,524 |
Business Combinations - Narrati
Business Combinations - Narrative (Details) - Smooch Technologies Holding ULC - USD ($) $ in Millions | May 14, 2019 | Jun. 30, 2019 |
Business Acquisition [Line Items] | ||
Cash consideration | $ 72 | |
Transaction costs associated with transaction | $ 3 | |
Share based compensation expense as a result of acquisition | $ 5 | |
Amortization period for goodwill acquired and eligible for income tax deductions | 15 years | |
Developed technology | ||
Business Acquisition [Line Items] | ||
Acquired intangible assets weighted average useful life | 5 years 6 months | |
Customer relationships | ||
Business Acquisition [Line Items] | ||
Acquired intangible assets weighted average useful life | 8 years | |
Backlog | ||
Business Acquisition [Line Items] | ||
Acquired intangible assets weighted average useful life | 2 years |
Business Combinations - Summary
Business Combinations - Summary of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | May 14, 2019 |
Business Acquisition [Line Items] | |||
Goodwill | $ 169,662 | $ 169,647 | |
Smooch Technologies Holding ULC | |||
Business Acquisition [Line Items] | |||
Net tangible assets | $ 1,974 | ||
Net deferred tax liability | (1,194) | ||
Goodwill | 58,317 | ||
Total purchase price | 71,997 | ||
Developed technology | Smooch Technologies Holding ULC | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets: | 8,000 | ||
Customer relationships | Smooch Technologies Holding ULC | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets: | 3,900 | ||
Backlog | Smooch Technologies Holding ULC | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets: | $ 1,000 |
Financial Instruments - Financi
Financial Instruments - Financial Assets Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Included in marketable securities | $ 966,823 | $ 648,906 |
Fair Value Measurements, Recurring | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 1,187,667 | 722,849 |
Included in cash and cash equivalents | 220,844 | 73,943 |
Included in marketable securities | 966,823 | 648,906 |
Fair Value Measurements, Recurring | U.S. Treasury securities | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 414,594 | 94,731 |
Fair Value Measurements, Recurring | Corporate bonds | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 368,935 | 418,005 |
Fair Value Measurements, Recurring | Money market funds | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 175,750 | 70,455 |
Fair Value Measurements, Recurring | Asset-backed securities | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 92,099 | 124,046 |
Fair Value Measurements, Recurring | Commercial paper | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 49,786 | 13,548 |
Fair Value Measurements, Recurring | Agency securities | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 81,003 | 920 |
Fair Value Measurements, Recurring | Certificates of deposit and time deposits | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 5,500 | 1,144 |
Fair Value Measurements, Recurring | Level 1 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 175,750 | 70,455 |
Fair Value Measurements, Recurring | Level 1 | U.S. Treasury securities | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 0 | 0 |
Fair Value Measurements, Recurring | Level 1 | Corporate bonds | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 0 | 0 |
Fair Value Measurements, Recurring | Level 1 | Money market funds | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 175,750 | 70,455 |
Fair Value Measurements, Recurring | Level 1 | Asset-backed securities | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 0 | 0 |
Fair Value Measurements, Recurring | Level 1 | Commercial paper | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 0 | 0 |
Fair Value Measurements, Recurring | Level 1 | Agency securities | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 0 | 0 |
Fair Value Measurements, Recurring | Level 1 | Certificates of deposit and time deposits | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 0 | 0 |
Fair Value Measurements, Recurring | Level 2 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 1,011,917 | 652,394 |
Fair Value Measurements, Recurring | Level 2 | U.S. Treasury securities | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 414,594 | 94,731 |
Fair Value Measurements, Recurring | Level 2 | Corporate bonds | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 368,935 | 418,005 |
Fair Value Measurements, Recurring | Level 2 | Money market funds | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 0 | 0 |
Fair Value Measurements, Recurring | Level 2 | Asset-backed securities | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 92,099 | 124,046 |
Fair Value Measurements, Recurring | Level 2 | Commercial paper | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 49,786 | 13,548 |
Fair Value Measurements, Recurring | Level 2 | Agency securities | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | 81,003 | 920 |
Fair Value Measurements, Recurring | Level 2 | Certificates of deposit and time deposits | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total fair value of financial assets | $ 5,500 | $ 1,144 |
Financial Instruments - Narrati
Financial Instruments - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Jun. 30, 2020 | Mar. 31, 2018 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Gross unrealized gains | $ 7,000,000 | $ 4,000,000 | |||||
Gross unrealized losses | 0 | 0 | |||||
Amortized cost of cash equivalents and marketable securities | $ 1,181,000,000 | 1,181,000,000 | 719,000,000 | ||||
Accrued interest | 3,000,000 | 3,000,000 | 4,000,000 | ||||
Aggregate fair value of securities with unrealized losses | 147,000,000 | 147,000,000 | 45,000,000 | ||||
Unrealized losses recognized by securities in continuous loss position for twelve months or longer | 0 | 0 | 0 | ||||
Allowance for credit losses | 0 | 0 | 0 | ||||
Balance of strategic investment | 11,000,000 | 11,000,000 | 11,000,000 | ||||
Adjustments to carrying value of strategic investments | 0 | ||||||
Proceeds from sale of strategic investment | 2,000,000 | 1,577,000 | $ 0 | ||||
Realized gain from sale of strategic investment | 1,000,000 | ||||||
Cash collateral posted | $ 0 | $ 0 | 0 | ||||
Closing price of common stock (usd per share) | $ 102.92 | $ 102.92 | |||||
Level 3 | |||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Fair value of financial assets | $ 0 | $ 0 | 0 | ||||
Convertible Debt | Convertible Senior Notes Due 2023 | |||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Interest rate | 0.25% | 0.25% | |||||
Aggregate principal amount | 94,000,000 | 94,000,000 | $ 575,000,000 | ||||
Convertible Debt | Convertible Senior Notes Due 2025 | |||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Interest rate | 0.625% | ||||||
Aggregate principal amount | 1,150,000,000 | 1,150,000,000 | |||||
Convertible Debt | Level 2 | Convertible Senior Notes Due 2023 | |||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Fair value | 1,366,000,000 | 1,366,000,000 | |||||
Convertible Debt | Level 2 | Convertible Senior Notes Due 2025 | |||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Fair value | 254,000,000 | 254,000,000 | |||||
Foreign Currency Forward Contracts | |||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Notional value | 280,000,000 | 280,000,000 | $ 260,000,000 | ||||
Gain (loss) recognized in AOCI | $ 1,000,000 | $ (3,000,000) | $ (3,000,000) | $ (3,000,000) | |||
Foreign Currency Forward Contracts | Maximum | |||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Derivative, maturity | 15 months |
Financial Instruments - Marketa
Financial Instruments - Marketable Securities by Contractual Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value Disclosures [Abstract] | ||
Due in one year or less | $ 559,682 | $ 286,958 |
Due after one year and within five years | 407,141 | 361,948 |
Total | $ 966,823 | $ 648,906 |
Financial Instruments - Schedul
Financial Instruments - Schedule of Derivative Instruments on Consolidated Balance Sheets (Details) - Designated as Hedging Instrument - Level 2 - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Derivatives Fair Value [Line Items] | ||
Asset Derivatives | $ 4,042 | $ 2,385 |
Liability Derivatives | 3,882 | 1,975 |
Foreign Currency Forward Contracts | Other current assets | ||
Derivatives Fair Value [Line Items] | ||
Asset Derivatives | 4,042 | 2,385 |
Foreign Currency Forward Contracts | Accrued liabilities | ||
Derivatives Fair Value [Line Items] | ||
Liability Derivatives | $ 3,882 | $ 1,975 |
Financial Instruments - Sched_2
Financial Instruments - Schedule of Derivative Instruments on Statement of Operations (Details) - Foreign Currency Forward Contracts - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Derivative Instruments Gain Loss [Line Items] | ||||
Gain (Loss) Reclassified from AOCI into Earnings | $ 911 | $ (647) | $ (1,874) | $ (3,164) |
Revenue | ||||
Derivative Instruments Gain Loss [Line Items] | ||||
Gain (Loss) Reclassified from AOCI into Earnings | 100 | 652 | 1,222 | 1,684 |
Cost of revenue | ||||
Derivative Instruments Gain Loss [Line Items] | ||||
Gain (Loss) Reclassified from AOCI into Earnings | 163 | (274) | (701) | (1,141) |
Research and development | ||||
Derivative Instruments Gain Loss [Line Items] | ||||
Gain (Loss) Reclassified from AOCI into Earnings | 174 | (280) | (671) | (1,045) |
Sales and marketing | ||||
Derivative Instruments Gain Loss [Line Items] | ||||
Gain (Loss) Reclassified from AOCI into Earnings | 366 | (519) | (1,350) | (1,939) |
General and administrative | ||||
Derivative Instruments Gain Loss [Line Items] | ||||
Gain (Loss) Reclassified from AOCI into Earnings | $ 108 | $ (226) | $ (374) | $ (723) |
Costs to Obtain Customer Cont_2
Costs to Obtain Customer Contracts (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |||||
Deferred costs to obtain customer contracts | $ 87,000,000 | $ 87,000,000 | $ 71,000,000 | ||
Amortization of deferred costs | 12,000,000 | $ 8,000,000 | 32,390,000 | $ 22,983,000 | |
Impairment related to deferred costs | $ 0 | $ 0 | $ 0 | $ 0 |
Property and Equipment - Compon
Property and Equipment - Components of Property and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Total | $ 198,435 | $ 174,693 |
Less: accumulated depreciation and amortization | (96,337) | (72,603) |
Property and equipment, net | 102,098 | 102,090 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total | 91,323 | 83,968 |
Capitalized internal-use software | ||
Property, Plant and Equipment [Line Items] | ||
Total | 49,056 | 38,437 |
Computer equipment and licensed software and patents | ||
Property, Plant and Equipment [Line Items] | ||
Total | 30,837 | 27,309 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total | 16,777 | 16,332 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 10,442 | $ 8,647 |
Property and Equipment - Narrat
Property and Equipment - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |||||
Depreciation expense | $ 7 | $ 5 | $ 20 | $ 15 | |
Amortization expense of capitalized internal-use software | 2 | $ 2 | 5 | $ 5 | |
Carrying value of capitalized internal-use software | 30 | 30 | $ 23 | ||
Capitalized internal-use software included in construction in progress | $ 10 | $ 10 | $ 8 |
Leases - Schedule of Lease Impa
Leases - Schedule of Lease Impact on Balance Sheet (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Lease right-of-use assets | $ 89,477 | $ 89,983 |
Liabilities | ||
Lease liabilities | 22,300 | 21,804 |
Lease liabilities, noncurrent | $ 80,507 | $ 83,478 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Millions | Sep. 30, 2020USD ($) |
Leases [Abstract] | |
Weighted average remaining lease term | 5 years 10 months 24 days |
Weighted average discount rate | 4.80% |
Operating lease payments for leases that have not yet commenced | $ 9 |
Leases - Schedule of Lease Cost
Leases - Schedule of Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||||
Operating lease expense | $ 6,573 | $ 6,382 | $ 19,590 | $ 17,221 |
Short-term lease expense | 128 | 168 | 451 | 2,037 |
Variable lease expense | 1,412 | 1,607 | 4,614 | 4,835 |
Sublease income | $ (422) | $ (560) | $ (1,281) | $ (1,353) |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||
Cash paid for amounts included in the measurement of lease liabilities | $ 24,029 | $ 15,197 |
Operating lease assets obtained in exchange for new lease liabilities | $ 14,960 | $ 27,559 |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Leases (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
Remainder of 2020 | $ 4,897 |
2021 | 28,183 |
2022 | 25,877 |
2023 | 17,088 |
2024 | 7,667 |
Thereafter | 33,892 |
Total lease payments | 117,604 |
Less imputed interest | 14,797 |
Total | $ 102,807 |
Goodwill and Acquired Intangi_3
Goodwill and Acquired Intangible Assets - Schedule of Carrying Amount of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Goodwill [Roll Forward] | |
Balance as of December 31, 2019 | $ 169,647 |
Goodwill adjustments | 15 |
Balance as of September 30, 2020 | $ 169,662 |
Goodwill and Acquired Intangi_4
Goodwill and Acquired Intangible Assets - Acquired Intangible Assets Subject to Amortization (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Finite Lived Intangible Assets [Line Items] | ||
Cost | $ 48,110 | $ 57,410 |
Accumulated Amortization | (18,165) | (20,174) |
Net | 29,945 | 37,236 |
Developed technology | ||
Finite Lived Intangible Assets [Line Items] | ||
Cost | 30,200 | 39,000 |
Accumulated Amortization | (9,833) | (14,492) |
Net | $ 20,367 | $ 24,508 |
Weighted Average Remaining Useful Life | 4 years 3 months 18 days | 4 years 10 months 24 days |
Customer relationships | ||
Finite Lived Intangible Assets [Line Items] | ||
Cost | $ 14,710 | $ 15,210 |
Accumulated Amortization | (5,424) | (3,882) |
Net | $ 9,286 | $ 11,328 |
Weighted Average Remaining Useful Life | 4 years 2 months 12 days | 4 years 9 months 18 days |
Backlog | ||
Finite Lived Intangible Assets [Line Items] | ||
Cost | $ 3,200 | $ 3,200 |
Accumulated Amortization | (2,908) | (1,800) |
Net | $ 292 | $ 1,400 |
Weighted Average Remaining Useful Life | 7 months 6 days | 1 year |
Goodwill and Acquired Intangi_5
Goodwill and Acquired Intangible Assets - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 2 | $ 3 | $ 7 | $ 8 |
Goodwill and Acquired Intangi_6
Goodwill and Acquired Intangible Assets - Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2020 | $ 2,011 | |
2021 | 7,603 | |
2022 | 7,437 | |
2023 | 6,658 | |
2024 | 4,616 | |
Thereafter | 1,620 | |
Net | $ 29,945 | $ 37,236 |
Convertible Senior Notes - Narr
Convertible Senior Notes - Narrative (Details) $ / shares in Units, shares in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Jun. 30, 2020USD ($)day$ / sharesshares | Mar. 31, 2018USD ($)day$ / sharesshares | Sep. 30, 2020USD ($)shares | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)shares | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) | |
Debt Instrument [Line Items] | |||||||||
Net proceeds used from offering to repurchase principal | $ 1,128,990,000 | $ 0 | |||||||
Loss on early extinguishment of debt | $ 0 | $ 0 | 25,950,000 | 0 | |||||
Cost incurred related to capped calls | 216,026,000 | ||||||||
Release of valuation allowance | $ 410,310,000 | 430,119,000 | 437,189,000 | 430,119,000 | 437,189,000 | $ 457,984,000 | $ 426,977,000 | $ 416,921,000 | |
Income tax benefit | (1,973,000) | $ 364,000 | (4,777,000) | $ (661,000) | |||||
Cumulative Effect, Period of Adoption, Adjustment | |||||||||
Debt Instrument [Line Items] | |||||||||
Release of valuation allowance | 51,000,000 | ||||||||
Convertible Debt | |||||||||
Debt Instrument [Line Items] | |||||||||
Conversion Option | 124,976,000 | ||||||||
Cost incurred related to capped calls | 44,304,000 | ||||||||
Net deferred tax liability related to cap call | $ 13,784,000 | ||||||||
Convertible Debt | Convertible Senior Notes Due 2023 | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount | $ 575,000,000 | 94,000,000 | $ 94,000,000 | ||||||
Interest rate | 0.25% | 0.25% | |||||||
Proceeds from issuance of convertible senior notes, net of issuance costs | $ 561,000,000 | ||||||||
Initial conversion rate of common stock | 0.0158554 | ||||||||
Conversion price (usd per share) | $ / shares | $ 63.07 | ||||||||
Limitation on sale of common stock, sale price threshold, number of trading days | day | 20 | ||||||||
Limitation on sale of common stock, sale price threshold, trading period | day | 30 | ||||||||
Threshold percentage of stock price trigger | 130.00% | ||||||||
Number of consecutive business days | 5 days | ||||||||
Percentage of closing sale price in excess of convertible notes | 98.00% | ||||||||
Redemption price percentage | 100.00% | ||||||||
Net carrying amount of liability component | $ 367,000,000 | 130,615,000 | $ 130,615,000 | 483,464,000 | |||||
Loss on early extinguishment of debt | $ 26,000,000 | ||||||||
Principal outstanding | 149,194,000 | 149,194,000 | 575,000,000 | ||||||
Conversion Option | $ 32,427,000 | $ 32,427,000 | 124,976,000 | ||||||
Effective interest rate | 5.26% | 5.26% | |||||||
Issuance costs attributable to the liability component | $ 1,551,000 | $ 1,551,000 | 7,499,000 | ||||||
Capped calls, initial cap price (in usd per share) | $ / shares | $ 95.20 | ||||||||
Number of shares terminated (in shares) | shares | 6.7 | ||||||||
Proceeds from shares terminated | $ 83,000,000 | ||||||||
Number of shares covered by cap call (in shares) | shares | 9.1 | 2.4 | 2.4 | ||||||
Cost incurred related to capped calls | $ 64,000,000 | ||||||||
Convertible Debt | Convertible Senior Notes Due 2025 | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount | $ 1,150,000,000 | $ 1,150,000,000 | |||||||
Interest rate | 0.625% | ||||||||
Proceeds from issuance of convertible senior notes, net of issuance costs | $ 1,129,000,000 | ||||||||
Initial conversion rate of common stock | 0.0091944 | ||||||||
Conversion price (usd per share) | $ / shares | $ 108.76 | ||||||||
Limitation on sale of common stock, sale price threshold, number of trading days | day | 20 | ||||||||
Limitation on sale of common stock, sale price threshold, trading period | day | 30 | ||||||||
Threshold percentage of stock price trigger | 130.00% | ||||||||
Number of consecutive business days | 5 days | ||||||||
Percentage of closing sale price in excess of convertible notes | 98.00% | ||||||||
Redemption price percentage | 100.00% | ||||||||
Net proceeds used from offering to repurchase principal | $ 618,000,000 | ||||||||
Proceeds from convertible debt allocated to debt component | 393,000,000 | ||||||||
Proceeds from convertible debt allocated to equity component | 225,000,000 | ||||||||
Payments to repurchase convertible debt | 426,000,000 | ||||||||
Net carrying amount of liability component | 924,995,000 | 924,995,000 | 0 | ||||||
Repayment of debt discount | 39,000,000 | ||||||||
Principal outstanding | 1,150,000,000 | 1,150,000,000 | 0 | ||||||
Conversion Option | 220,000,000 | $ 220,061,000 | $ 220,061,000 | 0 | |||||
Effective interest rate | 5.00% | 5.00% | |||||||
Debt issuance costs, gross | 21,000,000 | ||||||||
Issuance costs attributable to the liability component | $ 17,000,000 | $ 16,241,000 | $ 16,241,000 | $ 0 | |||||
Capped calls, initial cap price (in usd per share) | $ / shares | $ 164.17 | ||||||||
Number of shares covered by cap call (in shares) | shares | 11 | ||||||||
Cost incurred related to capped calls | $ 130,000,000 | ||||||||
Net deferred tax liability related to cap call | $ 51,000,000 | $ 51,000,000 |
Convertible Senior Notes - Sche
Convertible Senior Notes - Schedule of Net Carrying Amount of Liability and Equity Component of Convertible Notes (Details) - Convertible Debt - USD ($) $ in Thousands | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Mar. 31, 2018 |
Net Carrying Amount of Equity Component of Convertible Notes [Abstract] | ||||
Debt Discount for Conversion Option | $ 124,976 | |||
Issuance costs | (2,948) | |||
Convertible Senior Notes Due 2023 | ||||
Net Carrying Amount of Liability Component of Convertible Notes [Abstract] | ||||
Principal | $ 149,194 | $ 575,000 | ||
Unamortized Debt Discount | (17,028) | (84,037) | ||
Unamortized issuance costs | (1,551) | (7,499) | ||
Net carrying amount | 130,615 | 483,464 | $ 367,000 | |
Net Carrying Amount of Equity Component of Convertible Notes [Abstract] | ||||
Debt Discount for Conversion Option | 32,427 | 124,976 | ||
Issuance costs | (765) | (2,948) | ||
Net carrying amount | 31,662 | 122,028 | ||
Convertible Senior Notes Due 2025 | ||||
Net Carrying Amount of Liability Component of Convertible Notes [Abstract] | ||||
Principal | 1,150,000 | 0 | ||
Unamortized Debt Discount | (208,764) | 0 | ||
Unamortized issuance costs | (16,241) | (17,000) | 0 | |
Net carrying amount | 924,995 | 0 | ||
Net Carrying Amount of Equity Component of Convertible Notes [Abstract] | ||||
Debt Discount for Conversion Option | 220,061 | $ 220,000 | 0 | |
Issuance costs | (4,035) | 0 | ||
Net carrying amount | $ 216,026 | $ 0 |
Convertible Senior Notes - Sc_2
Convertible Senior Notes - Schedule of Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Debt Instrument [Line Items] | ||||
Total interest expense | $ 14,087 | $ 6,727 | $ 29,060 | $ 19,885 |
Convertible Debt | Convertible Senior Notes Due 2023 | ||||
Debt Instrument [Line Items] | ||||
Contractual interest expense | 93 | 359 | 770 | 1,078 |
Amortization of Debt Discount | 1,614 | 5,902 | 13,097 | 17,479 |
Amortization of issuance costs | 135 | 464 | 1,075 | 1,352 |
Total interest expense | 1,842 | 6,725 | 14,942 | 19,909 |
Convertible Debt | Convertible Senior Notes Due 2025 | ||||
Debt Instrument [Line Items] | ||||
Contractual interest expense | 1,797 | 0 | 2,076 | 0 |
Amortization of Debt Discount | 9,785 | 0 | 11,297 | 0 |
Amortization of issuance costs | 660 | 0 | 761 | 0 |
Total interest expense | $ 12,242 | $ 0 | $ 14,134 | $ 0 |
Convertible Senior Notes - Summ
Convertible Senior Notes - Summary of Impact to Stockholder's Equity (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Mar. 31, 2018 | Sep. 30, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | ||||
Net impact to stockholder's equity | $ 216,026 | |||
Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Conversion Option | $ 124,976 | |||
Purchase of Capped Calls | (63,940) | |||
Issuance Costs | (2,948) | |||
Net deferred tax liability | (13,784) | |||
Net impact to stockholder's equity | $ 44,304 | |||
Convertible Debt | Convertible Senior Notes Due 2023 | ||||
Debt Instrument [Line Items] | ||||
Conversion Option | 32,427 | $ 124,976 | ||
Issuance Costs | $ (765) | $ (2,948) | ||
Net impact to stockholder's equity | $ 64,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | |
Jun. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | |
Debt Instrument [Line Items] | |||
Net proceeds used from offering to repurchase principal | $ 1,128,990 | $ 0 | |
Convertible Senior Notes Due 2025 | Convertible Debt | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount | $ 1,150,000 | ||
Interest rate | 0.625% | ||
Net proceeds used from offering to repurchase principal | $ 618,000 | ||
Payments to repurchase convertible debt | $ 426,000 |
Common Stock and Stockholders_3
Common Stock and Stockholders' Equity - Narrative (Details) $ / shares in Units, $ in Millions | Jan. 01, 2020shares | May 06, 2016shares | Sep. 30, 2020USD ($)semi-annualTranche$ / sharesshares | Sep. 30, 2019USD ($)shares | Sep. 30, 2018shares | Sep. 30, 2020USD ($)offeringPeriod$ / sharesshares | Sep. 30, 2019USD ($)$ / sharesshares | Dec. 31, 2019$ / sharesshares |
Class Of Stock [Line Items] | ||||||||
Common stock, shares authorized (in shares) | 400,000,000 | 400,000,000 | 400,000,000 | |||||
Common stock, par value (usd per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | |||||
Common stock, shares issued (in shares) | 116,400,000 | 116,400,000 | 113,100,000 | |||||
Common stock, shares outstanding (in shares) | 116,400,000 | 116,400,000 | 113,100,000 | |||||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | 10,000,000 | |||||
Preferred stock, par value (usd per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | |||||
Preferred stock, shares issued (in shares) | 0 | 0 | 0 | |||||
Preferred stock, shares outstanding (in shares) | 0 | 0 | 0 | |||||
Increase in authorized shares (in shares) | 5,654,000 | |||||||
Shares of common stock available for issuance (in shares) | 14,994,000 | 14,994,000 | 11,613,000 | |||||
Stock options granted (in shares) | 1,200,000 | 572,000 | ||||||
Intrinsic value of options exercised (usd per share) | $ | $ 54 | $ 63 | ||||||
Weighted-average grant date fair value of stock options (usd per share) | $ / shares | $ 31.41 | $ 28.65 | ||||||
Future period share-based compensation expense | $ | $ 373 | $ 373 | ||||||
Future period share-based compensation expense, period to recognized | 2 years 8 months 12 days | |||||||
Employee Stock Option | ||||||||
Class Of Stock [Line Items] | ||||||||
Offering period | 18 months | |||||||
Number of offering periods | offeringPeriod | 3 | |||||||
Length of purchase period | 6 months | |||||||
Restricted Stock Units | ||||||||
Class Of Stock [Line Items] | ||||||||
Intrinsic value of shares vested | $ | $ 168 | $ 191 | ||||||
Weighted average grant date fair value (usd per share) | $ / shares | $ 83.65 | $ 74.39 | ||||||
Shares granted (in shares) | 2,435,000 | |||||||
Number of shares vested (in shares) | 2,057,000 | |||||||
Performance Restricted Stock Units | ||||||||
Class Of Stock [Line Items] | ||||||||
Number of vesting periods | semi-annualTranche | 4 | |||||||
2009 Stock Option and Grant Plan | ||||||||
Class Of Stock [Line Items] | ||||||||
Shares of common stock available for issuance (in shares) | 0 | 0 | ||||||
2014 Plan | Employee Stock Option | ||||||||
Class Of Stock [Line Items] | ||||||||
Increase in authorized shares (in shares) | 5,700,000 | |||||||
Shares of common stock available for issuance (in shares) | 15,000,000 | 15,000,000 | ||||||
PSU Retention Plan | Performance Restricted Stock Units | ||||||||
Class Of Stock [Line Items] | ||||||||
Shares granted (in shares) | 200,000 | |||||||
Share-based compensation expense | $ | $ 3 | $ 2 | $ 5 | $ 6 | ||||
Number of shares vested (in shares) | 36,000 | 48,000 | 62,000 | 48,000 | ||||
Employee Stock Purchase Plan | ||||||||
Class Of Stock [Line Items] | ||||||||
Percentage of purchase price of shares lower of the fair market value of common stock employees are able to purchase shares | 85.00% | |||||||
Number of shares repurchased under ESPP (in shares) | 0 | 400,000 | ||||||
Increase in authorized shares (in shares) | 1,100,000 | |||||||
Shares of common stock available for issuance (in shares) | 5,100,000 | 5,100,000 |
Common Stock and Stockholders_4
Common Stock and Stockholders' Equity - Summary of Stock Option and RSU Award Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | May 06, 2016 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Shares Available for Grant | ||||
Outstanding at beginning of period (in shares) | 11,613 | |||
Increase in authorized shares (in shares) | 5,654 | |||
Stock options granted (in shares) | (572) | |||
Granted (in shares) | (2,435) | |||
Stock options forfeited or canceled (in shares) | 144 | |||
Forfeited or canceled (in shares) | 555 | |||
Outstanding at end of period (in shares) | 14,994 | 11,613 | ||
Number of Shares | ||||
Balance at the beginning of the period (in shares) | 4,860 | |||
Stock options granted (in shares) | 1,200 | 572 | ||
Stock options exercised (in shares) | (912) | |||
Stock options forfeited or canceled (in shares) | (144) | |||
Balance at the end of the period (in shares) | 4,376 | 4,860 | ||
Weighted Average Exercise Price | ||||
Balance at the beginning of the period (usd per share) | $ 24.08 | |||
Stock options granted (usd per share) | 87.65 | |||
Stock options exercised (usd per share) | 26.97 | |||
Stock options forfeited or canceled (usd per share) | 54.27 | |||
Balance at the end of the period (usd per share) | $ 30.79 | $ 24.08 | ||
Weighted Average Remaining Contractual Term | ||||
Weighted average remaining contractual term | 5 years 5 months 12 days | 5 years 10 months 6 days | ||
Aggregate Intrinsic Value | ||||
Aggregate intrinsic value, options | $ 315,837 | $ 255,536 | ||
Aggregate intrinsic value, restricted stock units | $ 532,210 | $ 410,804 | ||
Restricted Stock Units | ||||
Outstanding RSUs | ||||
Balance at the beginning of the period (in shares) | 5,361 | |||
RSUs granted (in shares) | 2,435 | |||
RSUs vested (in shares) | (2,057) | |||
RSUs forfeited or canceled (in shares) | (555) | |||
RSUs forfeited and unavailable for grant (in shares) | (13) | |||
Balance at the end of the period (in shares) | 5,171 | 5,361 | ||
Weighted Average Grant Date Fair Value | ||||
Balance at the beginning of the period (usd per share) | $ 55 | |||
Weighted average grant date fair value, RSUs granted (usd per share) | 83.65 | $ 74.39 | ||
Weighted average grant date fair value, RSUs vested (usd per share) | 53.67 | |||
Weighted average grant date fair value, RSUs forfeited or canceled (usd per share) | 61.19 | |||
Weighted average grant date fair value, forfeited and unavailable for grant (usd per share) | 23.44 | |||
Balance at the end of the period (usd per share) | $ 68.44 | $ 55 | ||
Performance Restricted Stock Units | ||||
Shares Available for Grant | ||||
Forfeited or canceled (in shares) | 35 |
Deferred Revenue and Performa_3
Deferred Revenue and Performance Obligations - Schedule of Changes in Balance of Deferred Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Change in Contract with Customer, Liability [Abstract] | ||||
Balance, beginning of period | $ 316,113 | $ 287,349 | $ 323,962 | $ 247,962 |
Billings | 273,464 | 216,075 | 749,755 | 631,530 |
Subscription and services revenue | (249,052) | (201,498) | (707,715) | (559,911) |
Other revenue | (12,874) | (8,979) | (38,351) | (26,634) |
Balance, end of period | $ 327,651 | $ 292,947 | $ 327,651 | $ 292,947 |
Deferred Revenue and Performa_4
Deferred Revenue and Performance Obligations - Performance Obligations (Details) $ in Millions | Sep. 30, 2020USD ($) |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 800 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 560 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 1 year |
Net Loss Per Share - Computatio
Net Loss Per Share - Computation of Basic and Diluted Net Loss per Share of Common Stock (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings Per Share [Abstract] | ||||
Net loss | $ (40,703) | $ (34,224) | $ (148,142) | $ (133,485) |
Weighted-average shares used to compute basic and diluted net loss per share (in shares) | 115,809 | 111,261 | 114,653 | 109,969 |
Net loss per share, basic and diluted (usd per share) | $ (0.35) | $ (0.31) | $ (1.29) | $ (1.21) |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of Anti-Dilutive Securities Excluded from the Diluted per Share Calculation (Details) - shares shares in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share amount (in shares) | 10,548 | 13,369 |
Shares subject to outstanding common stock options and employee stock purchase plan | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share amount (in shares) | 4,607 | 5,323 |
Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share amount (in shares) | 5,171 | 5,908 |
Shares related to convertible senior notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share amount (in shares) | 770 | 2,138 |
Net Loss Per Share - Narrative
Net Loss Per Share - Narrative (Details) - $ / shares shares in Millions | 9 Months Ended | ||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2018 | |
Convertible Senior Notes Due 2023 | |||
Debt Instrument [Line Items] | |||
Potential dilution based on initial conversion price (in shares) | 2.4 | ||
Convertible Senior Notes Due 2025 | |||
Debt Instrument [Line Items] | |||
Potential dilution based on initial conversion price (in shares) | 10.6 | ||
Convertible Debt | Convertible Senior Notes Due 2023 | |||
Debt Instrument [Line Items] | |||
Conversion price (usd per share) | $ 63.07 | ||
Convertible Debt | Convertible Senior Notes Due 2025 | |||
Debt Instrument [Line Items] | |||
Conversion price (usd per share) | $ 108.76 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 1,973 | $ (364) | $ 4,777 | $ 661 |
Geographic Information - Narrat
Geographic Information - Narrative (Details) | 9 Months Ended |
Sep. 30, 2020segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |
Geographic Information - Schedu
Geographic Information - Schedule of Revenue by Geographic Areas (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Revenue | $ 261,926 | $ 210,477 | $ 746,066 | $ 586,545 |
United States | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Revenue | 136,491 | 110,964 | 391,025 | 306,880 |
EMEA | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Revenue | 73,798 | 59,196 | 210,487 | 166,728 |
APAC | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Revenue | 28,954 | 22,981 | 81,105 | 63,715 |
Other | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Revenue | $ 22,683 | $ 17,336 | $ 63,449 | $ 49,222 |
Geographic Information - Sche_2
Geographic Information - Schedule of Long-Lived Assets by Geographic Areas (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Long-lived assets | $ 161,114 | $ 169,524 |
United States | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Long-lived assets | 90,113 | 91,532 |
Republic of Ireland | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Long-lived assets | 38,724 | 42,500 |
Other EMEA | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Long-lived assets | 3,531 | 3,725 |
EMEA | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Long-lived assets | 42,255 | 46,225 |
Singapore | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Long-lived assets | 21,114 | 25,988 |
Other APAC | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Long-lived assets | 7,218 | 5,362 |
APAC | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Long-lived assets | 28,332 | 31,350 |
Other | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Long-lived assets | $ 414 | $ 417 |
Subsequent Events (Details)
Subsequent Events (Details) - Forecast $ in Millions | 6 Months Ended |
Mar. 31, 2021USD ($) | |
Subsequent Event [Line Items] | |
Operating lease expense from acceleration of rental payments | $ 12 |
Minimum | |
Subsequent Event [Line Items] | |
Impairment of operating lease, right-of-use assets | 13 |
Maximum | |
Subsequent Event [Line Items] | |
Impairment of operating lease, right-of-use assets | $ 17 |
Uncategorized Items - zen-20200
Label | Element | Value |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | $ 722,000 |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | 724,000 |
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | 1,957,000 |
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | $ 2,197,000 |