Marketo (MKTO) 10-Q 6 May 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	Apr. 29, 2016
Document and Entity Information
Entity Registrant Name	Marketo, Inc.
Entity Central Index Key	1,490,660
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		44,523,276
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 94,703	$ 107,218
Accounts receivable, net	48,505	50,678
Prepaid expenses and other current assets	15,029	9,073
Total current assets	158,237	166,969
Property and equipment, net	24,273	21,323
Goodwill	29,201	29,201
Intangible assets, net	5,204	5,455
Other assets	3,052	2,130
Total assets	219,967	225,078
Current liabilities:
Accounts payable	5,058	4,265
Accrued expenses and other current liabilities	24,445	25,706
Deferred revenue	91,520	91,735
Current portion of credit facility	1,873	2,174
Total current liabilities	122,896	123,880
Credit facility, net of current portion	83	478
Deferred revenue, long-term	193	230
Other liabilities	3,818	2,722
Total liabilities	$ 126,990	$ 127,310
Commitments and contingencies (Note 8)
Redeemable non-controlling interests (Note 2 and Note 6)	$ 4,425	$ 4,643
Stockholders' equity:
Common stock	4	4
Additional paid-in capital	358,175	344,727
Accumulated other comprehensive loss	(46)	(274)
Accumulated deficit	(269,581)	(251,332)
Total stockholders' equity	88,552	93,125
Total liabilities, redeemable non-controlling interests and stockholders' equity	$ 219,967	$ 225,078

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Revenue:
Subscription and support	$ 55,348	$ 40,100
Professional services and other	6,868	5,900
Total revenue	62,216	46,000
Cost of revenue:
Subscription and support	12,310	9,074
Professional services and other	9,068	7,337
Total cost of revenue	21,378	16,411
Gross profit:
Subscription and support	43,038	31,026
Professional services and other	(2,200)	(1,437)
Total gross profit	40,838	29,589
Operating expenses:
Research and development	11,001	9,695
Sales and marketing	37,113	30,032
General and administrative	10,872	8,782
Total operating expenses	58,986	48,509
Loss from operations	(18,148)	(18,920)
Other (expense) income, net	(137)	520
Loss before provision for income taxes	(18,285)	(18,400)
Provision for income taxes	402	212
Net loss	(18,687)	(18,612)
Net loss and adjustment attributable to redeemable non-controlling interests (Note 2)	264	454
Net loss attributable to Marketo	$ (18,423)	$ (18,158)
Net loss per share of common stock, basic and diluted (in dollars per share)	$ (0.42)	$ (0.44)
Shares used in computing net loss per share of common stock, basic and diluted (in shares)	43,992	41,613

Condensed Consolidated Stateme4

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Condensed Consolidated Statements of Comprehensive Loss
Net loss	$ (18,687)	$ (18,612)
Other comprehensive loss:
Foreign currency translation adjustments	274	89
Total comprehensive loss	(18,413)	(18,523)
Net loss attributable to redeemable non-controlling interests (excluding adjustment to redeemable non-controlling interests)	438	454
Other comprehensive loss attributable to redeemable non-controlling interests	(46)	(3)
Comprehensive loss attributable to Marketo	$ (18,021)	$ (18,072)

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cash flows from operating activities:
Net loss attributable to Marketo	$ (18,423)	$ (18,158)
Net loss and adjustment attributable to redeemable non-controlling interests	(264)	(454)
Net loss	(18,687)	(18,612)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	3,980	2,879
Stock-based compensation expense	10,000	9,281
Deferred income taxes	84	187
Provision for allowance for doubtful accounts	104	248
Changes in operating assets and liabilities:
Accounts receivable	2,296	(3,027)
Prepaid expenses and other current assets	(5,541)	(4,170)
Other assets	(117)	(644)
Accounts payable	(159)	1,028
Accrued expenses and other current liabilities	(1,549)	(515)
Deferred revenue	(771)	4,694
Other liabilities	380	116
Net cash provided used in operating activities	(9,980)	(8,535)
Cash flows from investing activities:
Increase in Restricted Cash	(735)	(215)
Purchase of property and equipment	(4,587)	(4,092)
Capitalized software development	(601)	(521)
Net cash used in investing activities	(5,923)	(4,828)
Cash flows from financing activities:
Proceeds from issuance of common stock upon exercise of stock options	781	965
Proceeds from the issuance of common stock issued under the employee stock purchase plan	2,716	2,885
Investment from redeemable non-controlling interests		1,678
Withholding taxes remitted for the net share settlement of an equity awards	(3)	(3)
Repayment of debt	(697)	(670)
Net cash provided by financing activities	2,797	4,855
Effect of foreign exchange rate changes on cash and cash equivalents	591	(368)
Net decrease in cash and cash equivalents	(12,515)	(8,876)
Cash and cash equivalents - beginning of period	107,218	112,644
Cash and cash equivalents - end of period	94,703	103,768
Supplemental disclosures of cash flow information:
Cash paid for interest	25	52
Cash paid for income taxes	90	29
Supplemental disclosure of noncash investing and financing activities:
Vesting of early exercise options	16	42
Unpaid and accrued fixed assets	1,218	262
Property and equipment acquired through tenant improvement allowance	$ 594	$ 65

The Company and Summary of Sign

The Company and Summary of Significant Accounting Policies and Estimates	3 Months Ended
	Mar. 31, 2016
The Company and Summary of Significant Accounting Policies and Estimates
The Company and Summary of Significant Accounting Policies and Estimates	1. The Company and Summary of Significant Accounting Policies and Estimates Business Marketo, Inc. (Marketo or the Company) was incorporated in the state of California on January 20, 2006. The Company was reincorporated in the state of Delaware on December 17, 2009. The Company operates from its headquarters in San Mateo, California and has operating subsidiaries in Ireland, Australia, Israel, Japan and the United Kingdom. Marketo is the provider of a leading cloud-based Engagement Marketing Platform that is purpose-built to enable organizations ranging from small and medium businesses (SMBs) to the world’s largest enterprises to engage in modern relationship marketing. The Company’s platform enables the effective execution, management and analytical measurement of online, social, mobile and offline marketing activities and customer interactions in today’s data-centric, multi-channel business environment. The Company has built a rich set of applications across ten categories that run on the Engagement Marketing Platform, as follows: Marketing Automation, Email Marketing, Mobile Engagement, Social Marketing, Digital Ads, Web Personalization, Marketing Analytics, Predictive Content, Marketing Calendar and Sales Insight. The Company generally offers its services on an annual subscription basis with quarterly or annual payment terms. Basis of Presentation The unaudited condensed consolidated financial statements and accompanying notes of the Company reflect all adjustments (all of which are normal and recurring in nature) that, in the opinion of management, are necessary for a fair presentation of the interim periods presented. The unaudited condensed consolidated financial statements include the accounts of Marketo and its wholly owned and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the entire year ending December 31, 2016. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) have been condensed or omitted under the rules and regulations of the Securities and Exchange Commission (SEC). These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and related notes presented in the Company’s Annual Report on Form 10-K filed with the SEC on March 4, 2016. There have been no material changes in the Company’s significant accounting policies from those that were disclosed in the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015. Certain immaterial amounts in the prior period condensed consolidated statement of cash flows have been reclassified and disclosed to conform to the current period presentation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Such management estimates and assumptions include the estimated selling price for the various elements in our customer contracts, the allowance for doubtful accounts, stock-based compensation expense, useful lives of intangible assets, redemption value of redeemable non-controlling interests and the valuation of deferred tax assets and acquired intangible assets. Actual results could differ materially from those estimates, and such differences could be material to the financial statements and affect the results of operations reported in future periods. Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-09, Improvements to Employee Share-Based Payment Accounting, which is intended to improve the accounting for share-based payment transactions as part of the FASB’s simplification initiative. The ASU changes seven aspects of the accounting for share-based payment award transactions, including: (1) accounting for income taxes; (2) classification of excess tax benefits on the statement of cash flows; (3) forfeitures; (4) minimum statutory tax withholding requirements; (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes; (6) practical expedient — expected term (nonpublic only); and (7) intrinsic value (nonpublic only). The ASU is effective for fiscal years beginning after December 15, 2016 and interim periods within those years, and early adoption is permitted. The Company has elected not to early adopt. The Company is evaluating the impact of the updated guidance on the Company’s consolidated financial statements and related disclosures and has no t selected a transition method. In February 2016, the FASB issued ASU 2016-02, Leases, which, among other things, requires lessees to recognize most leases on-balance sheet. This will increase lessees’ reported assets and liabilities — in some cases very significantly. Lessor accounting remains substantially similar to current U.S. GAAP. ASU 2016-02 supersedes Topic 840, Leases. This ASU is effective for interim and annual periods beginning after December 15, 2018. ASU 2016-02 mandates a modified retrospective transition method for all entities. The Company is evaluating the impact of the updated guidance on the Company’s consolidated financial statements and related disclosures and has not determined if it will early adopt. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09 also specifies the accounting for some costs to obtain or fulfill a contract with a customer. In July 2015, the FASB approved a one year deferral of the effective date for the new revenue reporting standard for entities reporting under U.S. GAAP. In accordance with the deferral, this guidance will be effective for the Company, beginning January 1, 2018, and can be applied either retrospectively to each period presented or as a cumulative effect adjustment as of the date of adoption. Early adoption is permitted beginning January 1, 2017. The Company has elected not to early adopt. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its consolidated financial statements.

Joint Venture

Joint Venture	3 Months Ended
	Mar. 31, 2016
Joint Venture
Joint Venture	2. Joint Venture In February 2014, the Company entered into an agreement with SunBridge Corporation and Dentsu Digital Inc. (the successor entity to Dentsu eMarketing One K.K.) (collectively, the Investors) to engage in the investment, organization, management and operation of a Japanese subsidiary (Marketo KK) of the Company that is focused on the sale of the Company’s products and services in Japan. The Investors initially contributed approximately $2.0 million (200,000,000 Japanese Yen) in cash in exchange for 35.4% of the outstanding common stock of Marketo KK. Furthermore, under the agreement, the Company and the Investors agreed to subscribe to additional shares by contributing additional funding of approximately $2.0 million (237,480,955 Japanese Yen) and approximately $1.7 million (200,000,000 Japanese Yen), respectively, which occurred in March 2015. As of March 31, 2016, the Company and the Investors owned approximately 60.1% and 39.9% of the outstanding common stock in Marketo KK, respectively. See Note 6 for the activity in the redeemable non-controlling interests balance. Twenty percent of the common stock held by the Investors may be callable by the Company or puttable by the Investors beginning on the seventh anniversary of the initial capital contribution by the Investors. This percentage increases to forty percent and one hundred percent on the eighth and tenth anniversary, respectively. Should the call or put option be exercised, the redemption value would be determined based on a prescribed formula derived from the relative revenues of Marketo KK and the Company and may be settled, at the Company’s discretion, with Company stock (with no limit on the shares that may be issued) or cash. Additionally, the common stock held by the Investors may be callable or puttable following a change of control of the Company. The redeemable non-controlling interests in Marketo KK are classified outside of permanent equity in the Company’s unaudited condensed consolidated balance sheet as of March 31, 2016, primarily due to the put right available to the redeemable non-controlling interest holders in the future which may be settled in cash or common stock of the Company. The balance of the redeemable non-controlling interests is reported at the greater of the initial carrying amount adjusted for the redeemable non-controlling interest’s share of earnings, or its estimated redemption value. Accordingly, at March 31, 2016 the Company adjusted the redeemable non-controlling interests to its expected redemption value, resulting in a $0.2 million reduction to additional paid-in-capital. The following table reconciles net loss and adjustment attributable to redeemable non-controlling interests for periods indicated below (in thousands): Three Months Ended March 31, 2016 2015 Net loss attributable to redeemable non-controlling interests (before adjustment to redeemable non-controlling interests) $ $ Adjustment to redeemable non-controlling interests ) — Net loss and adjustment attributable to redeemable non-controlling interests $ $

Fair Value of Financial Instrum

Fair Value of Financial Instruments	3 Months Ended
	Mar. 31, 2016
Fair Value of Financial Instruments
Fair Value of Financial Instruments	3. Fair Value of Financial Instruments The Company measures certain financial assets at fair value on a recurring basis based on a fair value hierarchy that requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows: · Level 1 — Quoted prices in active markets for identical assets or liabilities. · Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3 — Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. As of March 31, 2016 and December 31, 2015, financial assets measured at fair value on a recurring basis were comprised of money market funds and certificates of deposit included within cash and cash equivalents. The fair value of these financial assets was determined using the following inputs for the periods presented: March 31, 2016 December 31, 2015 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 (in thousands) Money market funds $ $ — $ — $ $ — $ — Certificates of deposit — — — — Total $ $ $ — $ $ $ —

Balance Sheet Components

Balance Sheet Components	3 Months Ended
	Mar. 31, 2016
Balance Sheet Components
Balance Sheet Components	4. Balance Sheet Components Cash and Cash Equivalents Cash and cash equivalents consist of the following: March 31, December 31, 2016 2015 (in thousands) Cash $ $ Cash equivalents: Money market funds Certificates of deposit Total cash equivalents Cash and cash equivalents $ $ Accounts Receivable, Net Accounts receivable, net consists of the following: March 31, December 31, 2016 2015 (in thousands) Accounts receivable $ $ Allowance for doubtful accounts ) ) Accounts receivable, net $ $ Property and Equipment, Net Property and equipment, net consists of the following: March 31, December 31, 2016 2015 (in thousands) Computer equipment $ $ Software Office furniture Leasehold improvements Construction in progress Total property and equipment Less accumulated depreciation ) ) Property and equipment, net $ $ Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities are as follows: March 31, December 31, 2016 2015 (in thousands) Accrued bonuses, commissions and wages $ $ Accrued ESPP Accrued vacation Accrued marketing expenses Accrued other Accrued expenses and other current liabilities $ $

Goodwill and Intangible Assets

Goodwill and Intangible Assets	3 Months Ended
	Mar. 31, 2016
Goodwill and Intangible Assets
Goodwill and Intangible Assets	5. Goodwill and Intangible Assets Goodwill and intangible assets consist of the following as of March 31, 2016 and December 31, 2015: March 31, 2016 Weighted Average Remaining Useful Life December 31, 2015 Weighted Average Remaining Useful Life (in thousands) (in years) (in thousands) (in years) Developed technology $ $ Domain names Customer relationships Non-compete agreements Capitalized software development costs Less accumulated amortization ) ) Intangible assets, net Goodwill Goodwill and intangible assets, net $ $ Amortization expense for the periods indicated below is as follows (in thousands): Three Months Ended March 31, 2016 2015 Amortization expense $ $ Based on the carrying amount of intangible assets as of March 31, 2016, the estimated future amortization is as follows (in thousands): Nine Months Ending December 31, Years Ending December 31, 2016 2017 2018 2019 2020 Total Developed Technology $ $ $ — $ — $ — $ Domain Names — Customer Relationships — — — — Non-Compete Agreements — — — Capitalized Software Development Costs — — Total $ $ $ $ $ — $

Stockholders' Equity and Redeem

Stockholders' Equity and Redeemable Noncontrolling Interests	3 Months Ended
	Mar. 31, 2016
Stockholders' Equity and Redeemable Non-controlling Interests
Stockholders' Equity and Redeemable Non-controlling Interests	6. Stockholders’ Equity and Redeemable Non-controlling Interests The following table summarizes the activity in stockholders’ equity and redeemable non-controlling interests for the period indicated below (in thousands): Total Stockholders’ Equity Redeemable Non-controlling Interests Balance as of December 31, 2015 $ $ Issuance of common stock upon exercise and early exercise of stock options — Issuance of common stock under employee stock purchase plan — Adjustment to redemption value ) Vesting of early exercised options — Stock-based compensation expense — Net loss ) ) Foreign currency translation adjustments Balance as of March 31, 2016 $ $ For the three months ended March 31, 2016, the Company incurred $10.0 million of stock-based compensation expense and capitalized stock-based compensation expense of $0.1 million associated with the development of the Company’s internal-use software projects.

Credit Facility

Credit Facility	3 Months Ended
	Mar. 31, 2016
Credit Facility
Credit Facility	7. Credit Facility In May 2012, the Company entered into a loan and security agreement with a bank related to an equipment facility providing the Company with an equipment line of up to $4.0 million. In June 2013, the Company entered into a first amendment to the loan and security agreement, which provided an additional line of credit for advances of up to $4.5 million. The interest rate associated with both lines of credit is the greater of 4% or three-quarters of a percentage point above the prime rate, as determined on the applicable funding date. For each equipment advance, the Company paid interest only for approximately nine months. Subsequently, the Company is obligated to make thirty-six equal monthly payments of principal and interest. The loan is secured by a security interest on substantially all of the Company’s assets, including the equipment purchased with the advances, and excludes the Company’s intellectual property. The loan and security agreement contains customary events of default and provides that during the existence of an event of default, interest on the obligations could be increased by 5%. In May 2014, the Company entered into a second amendment to the loan and security agreement to amend various covenants. Under the second amendment the Company is required to maintain compliance with certain financial covenants, which include maintaining a minimum cash balance with the bank and various reporting covenants. As of March 31, 2016, the Company was in compliance with these covenants. As of March 31, 2016 and December 31, 2015, the outstanding loan balance was $2.0 million and $2.7 million, respectively. There were no material changes in the Company’s commitments under the outstanding loan balance, which was disclosed in the Company’s audited consolidated financial statements for the year ended December 31, 2015.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2016
Commitments and Contingencies.
Commitments and Contingencies	8. Commitments and Contingencies Except as set forth below, there were no material changes in the Company’s commitments under contractual obligations, as disclosed in the Company’s audited consolidated financial statements for the year ended December 31, 2015. In March 2016, the Company entered into a definitive lease agreement whereby the Company extended its current lease facilities in San Mateo through 2022 and expanded its office space by 33,779 square feet. The Company’s incremental future minimum lease payments under this extension are approximately $36.7 million, payable over seventy months. In conjunction with the amendment to the San Mateo lease agreement, the Company entered into a letter of credit of approximately $0.7 million with a bank as security for the amended lease agreement. As of March 31, 2016, future minimum operating lease payments are as follows (in thousands): Minimum Lease Payment 2016 $ 2017 2018 2019 2020 Thereafter Total $

Stockholders' Equity and Stock

Stockholders' Equity and Stock Based Compensation	3 Months Ended
	Mar. 31, 2016
Stockholders' Equity and Stock Based Compensation
Stockholders' Equity and Stock Based Compensation	9. Stockholders’ Equity and Stock-Based Compensation Common Stock Authorized and Outstanding As of March 31, 2016, the Company was authorized to issue 1,000,000,000 common shares with a par value of $0.0001 per share and 20,000,000 convertible preferred shares with a par value of $0.0001 per share. As of March 31, 2016, the Company had approximately 44.4 million shares of common stock issued and outstanding. Summary of Stock Option Activity A summary of the Company’s stock option activity under all stock option plans and related information for three months ended March 31, 2016 is as follows: Number of Stock Options Outstanding Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life Aggregate Intrinsic Value (in thousands) (Years) (in thousands) Balance as of December 31, 2015 $ $ Granted — — Exercised ) Repurchased — — Cancelled/forfeited ) Balance as of March 31, 2016 $ $ Exercisable as of March 31, 2016 $ $ Vested and expected to vest as of March 31, 2016 $ $ The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the Company’s closing price of $19.57 as of March 31, 2016 for options that were in-the-money as of that date. Option awards generally vest over a four-year period, with 25% vesting one year from date of grant and monthly thereafter. Stock options granted under the Company’s 2006 Plan provided option holders with an early exercise provision, where in the event of termination any exercised and unvested shares are subject to repurchase by the Company at the original purchase price. This right of repurchase lapses as the option vests. Options exercisable as of March 31, 2016 include options that are exercisable prior to vesting. The weighted average grant date fair value of options granted and the total intrinsic value of options exercised are as follows (in thousands, except weighted average grant date fair value): Three Months Ended March 31, 2016 2015 Weighted average grant date fair value of options granted N/A N/A Total intrinsic value of options exercised (in thousands) $ $ The total estimated grant date fair value of options vested during the three months ended March 31, 2016 was approximately $2.1 million. Determining Fair Value of Stock Options The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model. During each of the three months ending March 31, 2016 and 2015, the Company granted no stock options to employees. Restricted Stock Units A summary of the Company’s Restricted Stock Units (RSUs) activity and related information for the three months ended March 31, 2016 is as follows: Number of RSUs Weighted Average Grant Date Fair Value (in thousands) Balance as of December 31, 2015 $ RSUs Granted RSUs Vested ) RSUs Cancelled/Forfeited ) Balance as of March 31, 2016 $ RSUs are generally subject to a time-based vesting condition that ranges from 3 to 4 years. The weighted average grant date fair value of RSUs granted and the total intrinsic value of RSUs that vested during the periods presented were as follows (in thousands, except weighted average grant date fair value): Three Months Ended March 31, 2016 2015 Weighted average grant date fair value of RSUs granted $ $ Total intrinsic value of vested RSUs (in thousands) $ $ Market Stock Units During the first quarter of 2015 and 2016 the Company granted market stock units (MSUs) to its executive officers under the Company’s 2013 Equity Incentive Plan. Each MSU award granted contains three separate tranches. The actual number of MSUs eligible to vest in each tranche is based on the performance of the Company’s stock price relative to the performance of the NASDAQ Composite Index over the vesting period of each tranche, which ranges from one to three years. MSU participants have the ability to receive up to 100% of the target number of shares in tranche 1 and 2 and up to 150% of the target number of shares in tranche 3. A summary of the Company’s MSU activity and related information for the three months ended March 31, 2016 is as follows: Number of Shares Underlying MSUs Weighted Average Grant Date Fair Value (in thousands) Balance as of December 31, 2015 $ MSUs Granted MSUs Vested ) MSUs Cancelled/Forfeited ) Balance as of March 31, 2016 $ The fair value of each MSU award is determined by multiplying the fair value per share by the underlying number of shares. The fair value per share was determined on the grant date using the Monte Carlo valuation methodology. The fair value per share for each MSU award granted during the three months ended March 31, 2016 by tranche were as follows: Grant Date MSUs Granted Tranche 1 Tranche 2 Tranche 3 MSU FV February 17, 2016 $ $ $ $ February 18, 2016 March 7, 2016 The Company amortizes the fair value of each MSU award using the graded-vesting method, adjusted for estimated forfeitures. Stock-based compensation expense associated with participants who fulfill their requisite service period is not reversed even if the performance conditions are not met. However, stock-based compensation expense is reversed for participants who forfeit their MSU awards prior to fulfilling their requisite service period. The fair value of the MSUs granted during the three months ended March 31, 2016 and 2015 were estimated using the following weighted-average assumptions: Three Months Ended March 31, 2016 2015 Expected term (in years) 3 3 Risk-free interest rate 0.86% - 1.05% 0.99% Expected volatility 45% 39% Expected dividend rate 0% 0% The weighted average grant date fair value of MSUs granted and the total intrinsic value of MSUs that vested during the periods presented were as follows (in thousands, except weighted average grant date fair value): Three Months Ended March 31, 2016 2015 Weighted average grant date fair value of MSUs granted $ $ Total intrinsic value of vested MSUs (in thousands) $ $ — Employee Stock Purchase Plan The assumptions used to value employee stock purchase rights under the Black-Scholes model during the three months ended March 31, 2016 and 2015 were as follows: Three Months Ended March 31, 2016 2015 Expected term (in months) 6 6 Risk-free interest rate 0.42% 0.07% Expected volatility 41% 39% Expected dividend rate 0% 0% During the first three months ended March 31, 2016, the Company issued approximately 0.2 million shares of common stock under the Company’s Employee Stock Purchase Plan (ESPP) with an average purchase price of $12.65 per share. Stock Compensation Expense The stock-based compensation expense included in operating results was allocated as follows (in thousands): Three Months Ended March 31, 2016 2015 Cost of subscription and support revenue $ $ Cost of professional services and other revenue Research and development Sales and marketing General and administrative Total stock-based compensation expense $ $ For the three months ended March 31, 2016, the Company incurred expenses of $1.7 million for options, $7.1 million for RSUs, $0.8 million for MSUs and $0.5 million for ESPP shares. Additionally, the Company capitalized stock-based compensation expense of $0.1 million associated with the Company’s internal-use software projects. As of March 31, 2016, total unrecognized compensation cost related to unvested awards not yet recognized under all equity compensation plans, adjusted for estimated forfeitures, was as follows: March 31, 2016 Unrecognized Expense Average Expected Recognition Period (in thousands) (in years) Stock options $ Restricted stock units and market stock units Employee stock purchase plan Total unrecognized stock-based compensation expense $

Net Loss per Share

Net Loss per Share	3 Months Ended
	Mar. 31, 2016
Net Loss per Share
Net Loss per Share	10. Net Loss per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, less the weighted-average unvested common stock subject to repurchase or forfeiture as they are not deemed to be issued for accounting purposes. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including stock options, RSUs, MSUs and ESPP shares, to the extent they are dilutive. The following table sets forth the computation of the Company’s basic and diluted net loss per share of common stock under the two-class method attributable to common stockholders: Three Months Ended March 31, 2016 2015 (in thousands, except per share amounts) Numerator: Net loss attributable to Marketo $ ) $ ) Denominator: Weighted-average common shares outstanding Less: Weighted-average unvested common shares subject to repurchase or forfeiture and shares held in escrow ) ) Weighted-average shares used in computing net loss per share of common stock, basic and diluted Net loss per share of common stock, basic and diluted $ ) $ ) The Company applied the two-class method to calculate its basic and diluted net loss per share of common stock, as its common stock subject to repurchase and common stock held in escrow are participating securities. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common shareholders. However, the two-class method does not impact the net loss per share of common stock as the Company was in a loss position for each of the periods presented and preferred shareholders, holders of common stock subject to repurchase and common stock held in escrow do not have to participate in losses. Additionally, since the Company was in a loss position for each of the periods presented, diluted net loss per share is the same as basic net loss per share for each period, as the inclusion of all potential common shares outstanding would have been anti-dilutive. Potentially dilutive securities that were excluded from the diluted per share calculation because they would have been anti-dilutive were as follows: As of March 31, 2016 2015 (in thousands) Stock options to purchase common stock Employee stock purchase plan Common stock held in escrow — Common stock subject to repurchase Restricted stock units and market stock units

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2016
Income Taxes
Income Taxes	11. Income Taxes For the three months ended March 31, 2016 and 2015, the Company recorded an expense for income taxes of approximately $0.4 million and $0.2 million, respectively, consisting primarily of foreign and state income taxes. For the three months ended March 31, 2016 and 2015, the provision for income taxes differed from the statutory amount primarily due to unbenefited federal, state, and certain foreign losses with minor offsets for certain state and foreign taxes currently payable. The Company realized no benefit for current year losses due to maintaining a full valuation allowance against the U.S. and certain foreign net deferred tax assets. The realization of tax benefits of deferred tax assets is dependent upon future levels of taxable income, of an appropriate character, in the periods the items are expected to be deductible or taxable. Based on the available objective evidence, the Company does not believe it is more likely than not that the U.S. federal and state and certain foreign net deferred tax assets will be realizable. Accordingly, the Company has provided a full valuation allowance against the domestic net deferred tax assets and certain foreign jurisdictions with net deferred tax assets as of March 31, 2016 and December 31, 2015. The Company intends to maintain the remaining valuation allowance until sufficient positive evidence exists to support a reversal of, or decrease in, the valuation allowance. During the three months ended March 31, 2016, there have been no material changes to the total amount of unrecognized tax benefits.

Segment Information and Informa

Segment Information and Information about Geographic Areas	3 Months Ended
	Mar. 31, 2016
Segment Information and Information about Geographic Areas
Segment Information and Information about Geographic Areas	12. Segment Information and Information about Geographic Areas The accounting principles guiding disclosures about segments of an enterprise and related information establishes standards for the reporting by business enterprises of information about operating segments, products and services, geographic areas, and major customers. The method of determining which information is reported is based on the way that management organizes the operating segments within the Company for making operational decisions and assessments of financial performance. The Company’s chief operating decision maker (CODM) is considered to be the Company’s Chief Executive Officer (CEO). The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. As such, the Company is determined to be operating in one business segment. All of the Company’s principal operations and decision-making functions are located in the United States. Revenue Revenue by geography is based on the shipping address of the customer. The following table presents the Company’s revenue by geographic region for the periods presented: Three Months Ended March 31, 2016 2015 (in thousands) United States $ $ EMEA Other Total $ $ No single customer accounted for more than 10% of the Company’s total revenue during the three months ended March 31, 2016 and 2015, respectively. No single customer accounted for more than 10% of accounts receivable as of March 31, 2016 and December 31, 2015. Long-lived Assets The following table sets forth the Company’s long-lived assets by geographic areas as of the periods presented: March 31, December 31, 2016 2015 (in thousands) United States $ $ EMEA Other Total $ $

The Company and Summary of Si18

The Company and Summary of Significant Accounting Policies and Estimates (Policies)	3 Months Ended
	Mar. 31, 2016
The Company and Summary of Significant Accounting Policies and Estimates
Basis of Presentation	Basis of Presentation The unaudited condensed consolidated financial statements and accompanying notes of the Company reflect all adjustments (all of which are normal and recurring in nature) that, in the opinion of management, are necessary for a fair presentation of the interim periods presented. The unaudited condensed consolidated financial statements include the accounts of Marketo and its wholly owned and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the entire year ending December 31, 2016. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) have been condensed or omitted under the rules and regulations of the Securities and Exchange Commission (SEC). These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and related notes presented in the Company’s Annual Report on Form 10-K filed with the SEC on March 4, 2016. There have been no material changes in the Company’s significant accounting policies from those that were disclosed in the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015. Certain immaterial amounts in the prior period condensed consolidated statement of cash flows have been reclassified and disclosed to conform to the current period presentation.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Such management estimates and assumptions include the estimated selling price for the various elements in our customer contracts, the allowance for doubtful accounts, stock-based compensation expense, useful lives of intangible assets, redemption value of redeemable non-controlling interests and the valuation of deferred tax assets and acquired intangible assets. Actual results could differ materially from those estimates, and such differences could be material to the financial statements and affect the results of operations reported in future periods.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-09, Improvements to Employee Share-Based Payment Accounting, which is intended to improve the accounting for share-based payment transactions as part of the FASB’s simplification initiative. The ASU changes seven aspects of the accounting for share-based payment award transactions, including: (1) accounting for income taxes; (2) classification of excess tax benefits on the statement of cash flows; (3) forfeitures; (4) minimum statutory tax withholding requirements; (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes; (6) practical expedient — expected term (nonpublic only); and (7) intrinsic value (nonpublic only). The ASU is effective for fiscal years beginning after December 15, 2016 and interim periods within those years, and early adoption is permitted. The Company has elected not to early adopt. The Company is evaluating the impact of the updated guidance on the Company’s consolidated financial statements and related disclosures and has not sel ected a transition method. In February 2016, the FASB issued ASU 2016-02, Leases, which, among other things, requires lessees to recognize most leases on-balance sheet. This will increase lessees’ reported assets and liabilities — in some cases very significantly. Lessor accounting remains substantially similar to current U.S. GAAP. ASU 2016-02 supersedes Topic 840, Leases. This ASU is effective for interim and annual periods beginning after December 15, 2018. ASU 2016-02 mandates a modified retrospective transition method for all entities. The Company is evaluating the impact of the updated guidance on the Company’s consolidated financial statements and related disclosures and has not determined if it will early adopt. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09 also specifies the accounting for some costs to obtain or fulfill a contract with a customer. In July 2015, the FASB approved a one year deferral of the effective date for the new revenue reporting standard for entities reporting under U.S. GAAP. In accordance with the deferral, this guidance will be effective for the Company, beginning January 1, 2018, and can be applied either retrospectively to each period presented or as a cumulative effect adjustment as of the date of adoption. Early adoption is permitted beginning January 1, 2017. The Company has elected not to early adopt. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its consolidated financial statements.

Joint Venture (Tables)

Joint Venture (Tables)	3 Months Ended
	Mar. 31, 2016
Joint Venture
Schedule reconciling net loss and adjustment attributable to redeemable non-controlling interests	The following table reconciles net loss and adjustment attributable to redeemable non-controlling interests for periods indicated below (in thousands): ` Three Months Ended March 31, 2016 2015 Net loss attributable to redeemable non-controlling interests (before adjustment to redeemable non-controlling interests) $ $ Adjustment to redeemable non-controlling interests ) — Net loss and adjustment attributable to redeemable non-controlling interests $ $

Fair Value of Financial Instr20

Fair Value of Financial Instruments (Tables)	3 Months Ended
	Mar. 31, 2016
Fair Value of Financial Instruments
Schedule of financial assets measured stated at fair value on a recurring basis	March 31, 2016 December 31, 2015 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 (in thousands) Money market funds $ $ — $ — $ $ — $ — Certificates of deposit — — — — Total $ $ $ — $ $ $ —

Balance Sheet Components (Table

Balance Sheet Components (Tables)	3 Months Ended
	Mar. 31, 2016
Balance Sheet Components
Schedule of cash and cash equivalents	March 31, December 31, 2016 2015 (in thousands) Cash $ $ Cash equivalents: Money market funds Certificates of deposit Total cash equivalents Cash and cash equivalents $ $
Schedule of accounts receivable, net	March 31, December 31, 2016 2015 (in thousands) Accounts receivable $ $ Allowance for doubtful accounts ) ) Accounts receivable, net $ $
Schedule of property and equipment, net	March 31, December 31, 2016 2015 (in thousands) Computer equipment $ $ Software Office furniture Leasehold improvements Construction in progress Total property and equipment Less accumulated depreciation ) ) Property and equipment, net $ $
Schedule of accrued expenses and other current liabilities	March 31, December 31, 2016 2015 (in thousands) Accrued bonuses, commissions and wages $ $ Accrued ESPP Accrued vacation Accrued marketing expenses Accrued other Accrued expenses and other current liabilities $ $

Goodwill and Intangible Assets

Goodwill and Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2016
Goodwill and Intangible Assets
Schedule of goodwill and intangible assets	March 31, 2016 Weighted Average Remaining Useful Life December 31, 2015 Weighted Average Remaining Useful Life (in thousands) (in years) (in thousands) (in years) Developed technology $ $ Domain names Customer relationships Non-compete agreements Capitalized software development costs Less accumulated amortization ) ) Intangible assets, net Goodwill Goodwill and intangible assets, net $ $
Schedule of amortization expense	Amortization expense for the periods indicated below is as follows (in thousands): Three Months Ended March 31, 2016 2015 Amortization expense $ $
Schedule of estimated future amortization based on the carrying amount of intangible assets	Based on the carrying amount of intangible assets as of March 31, 2016, the estimated future amortization is as follows (in thousands): Nine Months Ending December 31, Years Ending December 31, 2016 2017 2018 2019 2020 Total Developed Technology $ $ $ — $ — $ — $ Domain Names — Customer Relationships — — — — Non-Compete Agreements — — — Capitalized Software Development Costs — — Total $ $ $ $ $ — $

Stockholders Equity and Redeema

Stockholders Equity and Redeemable Noncontrolling Interests (Tables)	3 Months Ended
	Mar. 31, 2016
Stockholders' Equity and Redeemable Non-controlling Interests
Summary of activity in stockholders' equity and redeemable non-controlling interests	The following table summarizes the activity in stockholders’ equity and redeemable non-controlling interests for the period indicated below (in thousands): Total Stockholders’ Equity Redeemable Non-controlling Interests Balance as of December 31, 2015 $ $ Issuance of common stock upon exercise and early exercise of stock options — Issuance of common stock under employee stock purchase plan — Adjustment to redemption value ) Vesting of early exercised options — Stock-based compensation expense — Net loss ) ) Foreign currency translation adjustments Balance as of March 31, 2016 $ $

Commitments and Contingencies (

Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2016
Commitments and Contingencies.
Schedule of future minimum operating lease payments	As of March 31, 2016, future minimum operating lease payments are as follows (in thousands): Minimum Lease Payment 2016 $ 2017 2018 2019 2020 Thereafter Total $

Stockholders' Equity and Stoc25

Stockholders' Equity and Stock Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2016
Stockholders' Equity and Stock Based Compensation
Summary of stock option activity	Number of Stock Options Outstanding Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life Aggregate Intrinsic Value (in thousands) (Years) (in thousands) Balance as of December 31, 2015 $ $ Granted — — Exercised ) Repurchased — — Cancelled/forfeited ) Balance as of March 31, 2016 $ $ Exercisable as of March 31, 2016 $ $ Vested and expected to vest as of March 31, 2016 $ $
Schedule of weighted average grant date fair value of options granted and the total intrinsic value of options exercised	The weighted average grant date fair value of options granted and the total intrinsic value of options exercised are as follows (in thousands, except weighted average grant date fair value): Three Months Ended March 31, 2016 2015 Weighted average grant date fair value of options granted N/A N/A Total intrinsic value of options exercised (in thousands) $ $
Summary of Restricted Stock Units (RSUs) activity	Number of RSUs Weighted Average Grant Date Fair Value (in thousands) Balance as of December 31, 2015 $ RSUs Granted RSUs Vested ) RSUs Cancelled/Forfeited ) Balance as of March 31, 2016 $
Schedule of weighted average grant date fair value of RSU and the total intrinsic value of RSU vested	The weighted average grant date fair value of RSUs granted and the total intrinsic value of RSUs that vested during the periods presented were as follows (in thousands, except weighted average grant date fair value): Three Months Ended March 31, 2016 2015 Weighted average grant date fair value of RSUs granted $ $ Total intrinsic value of vested RSUs (in thousands) $ $
Schedule of market performance based compensation restricted stock units (MSU) award activity	Number of Shares Underlying MSUs Weighted Average Grant Date Fair Value (in thousands) Balance as of December 31, 2015 $ MSUs Granted MSUs Vested ) MSUs Cancelled/Forfeited ) Balance as of March 31, 2016 $
Schedule of MSU fair value per share by grant date	The fair value per share for each MSU award granted during the three months ended March 31, 2016 by tranche were as follows: Grant Date MSUs Granted Tranche 1 Tranche 2 Tranche 3 MSU FV February 17, 2016 $ $ $ $ February 18, 2016 March 7, 2016
Schedule of weighted average assumptions used to estimate fair value of market performance based compensation restricted stock units (MSU) awards	Three Months Ended March 31, 2016 2015 Expected term (in years) 3 3 Risk-free interest rate 0.86% - 1.05% 0.99% Expected volatility 45% 39% Expected dividend rate 0% 0%
Schedule of weighted average grant date fair value of MSUs granted and the total intrinsic value of MSUs that vested	The weighted average grant date fair value of MSUs granted and the total intrinsic value of MSUs that vested during the periods presented were as follows (in thousands, except weighted average grant date fair value): Three Months Ended March 31, 2016 2015 Weighted average grant date fair value of MSUs granted $ $ Total intrinsic value of vested MSUs (in thousands) $ $ —
Schedule of assumptions used to value employee stock purchase rights under the Black-Scholes model	Three Months Ended March 31, 2016 2015 Expected term (in months) 6 6 Risk-free interest rate 0.42% 0.07% Expected volatility 41% 39% Expected dividend rate 0% 0%
Schedule of stock-based compensation expense included in operating results	The stock-based compensation expense included in operating results was allocated as follows (in thousands): Three Months Ended March 31, 2016 2015 Cost of subscription and support revenue $ $ Cost of professional services and other revenue Research and development Sales and marketing General and administrative Total stock-based compensation expense $ $
Schedule of total unrecognized compensation cost related to unvested awards not yet recognized under all equity compensation plans, adjusted for estimate forfeitures	March 31, 2016 Unrecognized Expense Average Expected Recognition Period (in thousands) (in years) Stock options $ Restricted stock units and market stock units Employee stock purchase plan Total unrecognized stock-based compensation expense $

Net Loss per Share (Tables)

Net Loss per Share (Tables)	3 Months Ended
	Mar. 31, 2016
Net Loss per Share
Schedule of computation of basic and diluted net loss per share of common stock	Three Months Ended March 31, 2016 2015 (in thousands, except per share amounts) Numerator: Net loss attributable to Marketo $ ) $ ) Denominator: Weighted-average common shares outstanding Less: Weighted-average unvested common shares subject to repurchase or forfeiture and shares held in escrow ) ) Weighted-average shares used in computing net loss per share of common stock, basic and diluted Net loss per share of common stock, basic and diluted $ ) $ )
Schedule of potentially dilutive securities excluded from the diluted per share calculation	As of March 31, 2016 2015 (in thousands) Stock options to purchase common stock Employee stock purchase plan Common stock held in escrow — Common stock subject to repurchase Restricted stock units and market stock units

Segment Information and Infor27

Segment Information and Information about Geographic Areas (Tables)	3 Months Ended
	Mar. 31, 2016
Segment Information and Information about Geographic Areas
Schedule of revenue by geographic region	Three Months Ended March 31, 2016 2015 (in thousands) United States $ $ EMEA Other Total $ $
Schedule of long-lived assets by geographic areas	March 31, December 31, 2016 2015 (in thousands) United States $ $ EMEA Other Total $ $

Joint Venture (Details)

Joint Venture (Details)	1 Months Ended				3 Months Ended
	Mar. 31, 2015JPY (¥)	Mar. 31, 2015USD ($)	Feb. 28, 2014JPY (¥)	Feb. 28, 2014USD ($)	Mar. 31, 2016USD ($)	Mar. 31, 2015USD ($)
Joint Venture
Amount contributed by investors to acquire equity interests						$ 1,678,000
Redeemable non-controlling interests
Net loss attributable to redeemable non-controlling interests (excluding adjustment to redeemable non-controlling interests)					$ 438,000	454,000
Adjustment to redeemable non-controlling interest					(174,000)
Net loss and adjustment attributable to redeemable non-controlling interests (Note 2)					264,000	$ 454,000
Marketo KK
Redeemable non-controlling interests
Adjustment to redeemable non-controlling interest					$ 200,000
Marketo KK | Vesting milestones
Joint Venture
Equity interests held by company (as a percent)					60.10%
Contributions to subscribe to additional shares	¥ 237,480,955	$ 2,000,000
Investors
Joint Venture
Amount contributed by investors to acquire equity interests			¥ 200,000,000	$ 2,000,000
Percentage of equity interest held by investors			35.40%	35.40%
Percentage of the common stock callable or puttable beginning on the seventh anniversary					20.00%
Percentage of the common stock callable or puttable beginning on the eighth anniversary					40.00%
Percentage of the common stock callable or puttable beginning on the tenth anniversary					100.00%
Investors | Vesting milestones
Joint Venture
Contributions to subscribe to additional shares	¥ 200,000,000	$ 1,700,000
Percentage of equity interest held by investors					39.90%

Fair Value of Financial Instr29

Fair Value of Financial Instruments (Details) - Recurring basis - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Level 1
Fair Value of Financial Instruments
Total fair value of financial assets	$ 84,186	$ 93,108
Level 1 | Money market funds
Fair Value of Financial Instruments
Total fair value of financial assets	84,186	93,108
Level 2
Fair Value of Financial Instruments
Total fair value of financial assets	25	25
Level 2 | Certificates of deposit
Fair Value of Financial Instruments
Total fair value of financial assets	$ 25	$ 25

Balance Sheet Components (Detai

Balance Sheet Components (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Cash and cash equivalents
Cash	$ 10,492	$ 14,085
Cash equivalents:
Money market funds	84,186	93,108
Certificates of deposit	25	25
Total cash equivalents	84,211	93,133
Cash and cash equivalents	94,703	107,218	$ 103,768	$ 112,644
Accounts Receivable
Accounts receivable	49,030	51,235
Allowance for doubtful accounts	(525)	(557)
Accounts receivable, net	48,505	50,678
Property and equipment, net
Total property and equipment	50,567	44,537
Less accumulated depreciation	(26,294)	(23,214)
Property and equipment, net	24,273	21,323
Computer equipment
Property and equipment, net
Total property and equipment	32,105	28,159
Software
Property and equipment, net
Total property and equipment	3,525	3,498
Office furniture
Property and equipment, net
Total property and equipment	3,331	2,952
Leasehold improvements
Property and equipment, net
Total property and equipment	8,267	7,120
Construction in progress
Property and equipment, net
Total property and equipment	$ 3,339	$ 2,808

Balance Sheet Components (Det31

Balance Sheet Components (Details 2) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Accrued expenses and other current liabilities
Accrued bonuses, commissions and wages	$ 8,847	$ 12,343
Accrued ESPP	984	2,387
Accrued vacation	4,400	3,739
Accrued marketing expenses	5,787	1,289
Accrued other	4,427	5,948
Accrued expenses and other current liabilities	$ 24,445	$ 25,706

Goodwill and Intangible Asset32

Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Goodwill and Intangible Assets
Intangible assets, gross	$ 13,865		$ 13,160
Less accumulated amortization	(8,661)		(7,705)
Intangible assets, net	5,204		5,455
Goodwill	29,201		29,201
Goodwill and intangible assets, net	34,405		34,656
Amortization expense	956	$ 736
Estimated future amortization
Nine Months Ending December 31, 2016	2,645
2,017	2,324
2,018	206
2,019	29
Intangible assets, net	5,204		5,455
Developed technology
Goodwill and Intangible Assets
Intangible assets, gross	6,050		$ 6,050
Intangible assets, net	$ 2,538
Weighted Average Remaining Useful Life	1 year 8 months 12 days		1 year 10 months 24 days
Estimated future amortization
Nine Months Ending December 31, 2016	$ 1,131
2,017	1,407
Intangible assets, net	2,538
Domain names
Goodwill and Intangible Assets
Intangible assets, gross	950		$ 950
Intangible assets, net	$ 363
Weighted Average Remaining Useful Life	2 years 7 months 6 days		2 years 9 months 18 days
Estimated future amortization
Nine Months Ending December 31, 2016	$ 134
2,017	100
2,018	100
2,019	29
Intangible assets, net	363
Customer relationships
Goodwill and Intangible Assets
Intangible assets, gross	1,600		$ 1,600
Intangible assets, net	$ 178
Weighted Average Remaining Useful Life	8 months 12 days		9 months 18 days
Estimated future amortization
Nine Months Ending December 31, 2016	$ 178
Intangible assets, net	178
Non-compete agreements
Goodwill and Intangible Assets
Intangible assets, gross	580		$ 580
Intangible assets, net	$ 257
Weighted Average Remaining Useful Life	1 year 8 months 12 days		2 years
Estimated future amortization
Nine Months Ending December 31, 2016	$ 113
2,017	144
Intangible assets, net	257
Capitalized software development costs
Goodwill and Intangible Assets
Intangible assets, gross	4,685		$ 3,980
Intangible assets, net	$ 1,868
Weighted Average Remaining Useful Life	1 year 3 months 18 days		1 year 2 months 12 days
Estimated future amortization
Nine Months Ending December 31, 2016	$ 1,089
2,017	673
2,018	106
Intangible assets, net	$ 1,868

Stockholders' Equity and Rede33

Stockholders' Equity and Redeemable Noncontrolling Interests (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Increase (Decrease) in Shareholders' Equity
Balance	$ 93,125
Issuance of common stock upon exercise and early exercise of stock options	781
Issuance of common stock under employee stock purchase plan	2,716
Adjustment to redemption value	(174)
Vesting of early exercised options	16	$ 42
Stock-based compensation expense	10,109
Net loss before adjustment to redemption value	(18,249)
Foreign currency translation adjustments attributable to parent	228
Balance	88,552
Redeemable Non-controlling Interests
Balance	4,643
Adjustment to redemption value, non-controlling interests	174
Net income loss attributable to redeemable non-controlling interest before adjustment	(438)	(454)
Balance	4,425
Stock-based compensation expense	10,000	$ 9,281
Capitalized stock-based compensation associated with internal-use software projects	$ 100

Credit Facility (Details)

Credit Facility (Details) $ in Millions	1 Months Ended
	May. 31, 2012USD ($)item	Mar. 31, 2016USD ($)	Dec. 31, 2015USD ($)	Jun. 30, 2013USD ($)
Equipment facility
Credit facility
Outstanding loan		$ 2	$ 2.7
Original Line of Credit
Credit facility
Maximum borrowing capacity	$ 4
Minimum interest rate (as a percent)	4.00%
Percentage points above prime rate considered for determining interest rate	0.75%
Interest only payment period	9 months
Number of equal monthly principal and interest payments | item	36
Percentage of increase in interest rate basis of existence of an event as per loan and security agreement	5.00%
New line of credit
Credit facility
Maximum borrowing capacity				$ 4.5

Commitments and Contingencies35

Commitments and Contingencies (Details) $ in Thousands	1 Months Ended
	Mar. 31, 2016USD ($)ft²
Leases and contractual obligations
Future minimum lease payments	$ 55,019
Future minimum lease payments
2016 (remaining 9 months)	5,461
2,017	8,642
2,018	9,120
2,019	8,861
2,020	8,400
Thereafter	14,535
Total	$ 55,019
San Mateo Lease Agreement, Incremental Portion
Leases and contractual obligations
Area of office space (in square feet) | ft²	33,779
Future minimum lease payments	$ 36,700
Term of operating lease	70 months
Standby letter of credit for amended lease agreement	$ 700
Future minimum lease payments
Total	$ 36,700

Stockholders' Equity and Stoc36

Stockholders' Equity and Stock Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Stockholders' Equity and Stock Based Compensation
Common stock, shares authorized	1,000,000,000
Common stock, par value (in dollars per share)	$ 0.0001
Preferred stock, shares authorized	20,000,000
Preferred stock, par value (in dollars per share)	$ 0.0001
Common stock, shares issued	44,400,000
Common stock, shares outstanding	44,400,000
Aggregate Intrinsic Value
Closing stock price (in dollars per share)	$ 19.57
Stock options to purchase common stock
Number of Stock Options Outstanding
Balance at the beginning of the period (in shares)	3,777,000
Exercised (in shares)	(159,000)
Cancelled/Forfeited (in shares)	(135,000)
Balance at the end of the period (in shares)	3,483,000		3,777,000
Exercisable at the end of the period (in shares)	3,058,000
Vested and expected to vest at the end of the period (in shares)	3,406,000
Weighted-Average Exercise Price
Balance at the beginning of the period (in dollars per share)	$ 13.55
Exercised (in dollars per share)	4.92
Cancelled/Forfeited (in dollars per share)	26.64
Balance at end of the period (in dollars per share)	13.43		$ 13.55
Exercisable at the end of the period (in dollars per share)	10.23
Vested and expected to vest at the end of the period (in dollars per share)	$ 13.15
Weighted-Average Remaining Contractual Life
Outstanding at the beginning of the period			6 years 7 months 10 days
Outstanding at the end of the period	6 years 2 months 23 days
Exercisable at the end of the period	6 years 4 days
Vested and expected to vest at the end of the period	6 years 2 months 12 days
Aggregate Intrinsic Value
Outstanding at the beginning of the period	$ 65,915
Outstanding at the end of the period	37,107		$ 65,915
Exercisable at the end of the period	37,106
Vested and expected to vest at the end of the period	$ 36,764
Closing stock price (in dollars per share)	$ 19.57
Additional information
Total intrinsic value of options exercised	$ 2,180	$ 7,583
Total estimated grant date fair value of options vested	$ 2,100
Stock options to purchase common stock | 2006 Stock Plan
Additional information
Vesting period	4 years
Percentage of awards which will vest after one year	25.00%

Stockholders' Equity and Stoc37

Stockholders' Equity and Stock Based Compensation (Details 1) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Additional information
Closing stock price (in dollars per share)	$ 19.57
Employee Stock Purchase Plan Member
Valuation assumptions
Expected term	6 months	6 months
Risk-free interest rate (as a percent)	0.42%	0.07%
Expected volatility (as a percent)	41.00%	39.00%
Expected dividend rate (as a percent)	0.00%	0.00%
Additional information
Average purchase price of shares issued (in dollars per share)	$ 12.65
Issuance of common stock under employee stock purchase plan	200
Stock options to purchase common stock
Additional information
Closing stock price (in dollars per share)	$ 19.57
RSUs
Number of RSUs
Balance at the beginning of the period (in shares)	3,037
RSUs Granted (in shares)	1,109
RSUs Vested (in shares)	(411)
RSUs Cancelled/Forfeited (in shares)	(207)
Balance at the end of the period (in shares)	3,528
Average Grant Date Fair Value
Balance at the beginning of the period (in dollars per share)	$ 32.84
RSUs Granted (in dollars per share)	15.59	$ 34.50
RSUs Vested (in dollars per share)	37.21
RSUs Cancelled/Forfeited (in dollars per share)	30.13
Balance at the end of the period (in dollars per share)	27.07
Aggregate Intrinsic Value
Granted (in dollars per share)	15.59	34.50
Additional information
RSUs Granted (in dollars per share)	$ 15.59	$ 34.50
Total intrinsic value of vested Units	$ 6,124	$ 6,029
RSUs | Minimum
Aggregate Intrinsic Value
Vesting period	3 years
RSUs | Maximum
Aggregate Intrinsic Value
Vesting period	4 years

Stockholders' Equity and Stoc38

Stockholders' Equity and Stock Based Compensation (Details2) $ / shares in Units, shares in Thousands, $ in Thousands	Mar. 07, 2016$ / sharesshares	Feb. 18, 2016$ / sharesshares	Feb. 17, 2016$ / sharesshares	Mar. 31, 2016USD ($)$ / sharesshares	Mar. 31, 2015item$ / shares
Aggregate Intrinsic Value
Closing stock price (in dollars per share)				$ 19.57
Additional information
Closing stock price (in dollars per share)				$ 19.57
MSU's | Executive Officers
Valuation assumptions
Expected term				3 years	3 years
Risk-free interest rate (as a percent)					0.99%
Expected volatility (as a percent)				45.00%	39.00%
Expected dividend rate (as a percent)				0.00%	0.00%
Number of shares underlying MSU's
Balance at the beginning of the period (in shares) | shares				193
Granted to employees (in shares) | shares	18,835	65,000	136,350	220
Vested (in shares) | shares				(36)
Cancelled/Forfeited (in shares) | shares				(28)
Balance at the end of the period (in shares) | shares				349
Average Grant Date Fair Value
Balance at the beginning of the period (in dollars per share)				$ 37.53
Granted (in dollars per share)				9.67	$ 37.53
Vested (in dollars per share)				27.30
Cancelled/Forfeited (in dollars per share)				27.30
Balance at the end of the period (in dollars per share)				21.82
Additional information
Number of separate tranches | item					3
Grant date fair value per share	$ 13.28	$ 8.68	$ 9.64
Granted (in dollars per share)				$ 9.67	$ 37.53
Total intrinsic value of vested Units | $				$ 540
MSU's | Executive Officers | Tranche one
Additional information
Percent of shares in tranche that can be received					100.00%
Grant date fair value per share	2.19	1.15	1.36
MSU's | Executive Officers | Tranche two
Additional information
Percent of shares in tranche that can be received					100.00%
Grant date fair value per share	2.80	1.76	1.98
MSU's | Executive Officers | Tranche three
Additional information
Percent of shares in tranche that can be received					150.00%
Grant date fair value per share	$ 8.29	$ 5.77	$ 6.30
MSU's | Executive Officers | Minimum
Valuation assumptions
Risk-free interest rate (as a percent)				0.86%
Additional information
Vesting period for each tranche (in years)					1 year
MSU's | Executive Officers | Maximum
Valuation assumptions
Risk-free interest rate (as a percent)				1.05%
Additional information
Vesting period for each tranche (in years)					3 years

Stockholders' Equity and Stoc39

Stockholders' Equity and Stock Based Compensation (Details 3) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Stock Compensation Expense
Total stock-based compensation expense	$ 10,000	$ 9,281
Capitalized stock-based compensation expense	100
Total unrecognized compensation cost related to unvested awards not yet recognized
Unrecognized Expense	$ 79,192
Expected Recognition Period	2 years 9 months 4 days
Employee Stock Purchase Plan Member
Stock Compensation Expense
Total stock-based compensation expense	$ 500
Total unrecognized compensation cost related to unvested awards not yet recognized
Unrecognized Expense	$ 619
Expected Recognition Period	6 months
Stock options to purchase common stock
Stock Compensation Expense
Total stock-based compensation expense	$ 1,700
Total unrecognized compensation cost related to unvested awards not yet recognized
Unrecognized Expense	$ 7,988
Expected Recognition Period	1 year 2 months 16 days
RSUs
Stock Compensation Expense
Total stock-based compensation expense	$ 7,100
Total unrecognized compensation cost related to unvested awards not yet recognized
Unrecognized Expense	$ 70,585
Expected Recognition Period	2 years 11 months 12 days
MSU's
Stock Compensation Expense
Total stock-based compensation expense	$ 800
Cost of subscription and support revenue
Stock Compensation Expense
Total stock-based compensation expense	762	619
Cost of professional services and other revenue
Stock Compensation Expense
Total stock-based compensation expense	1,212	937
Research and development
Stock Compensation Expense
Total stock-based compensation expense	1,805	2,316
Sales and marketing
Stock Compensation Expense
Total stock-based compensation expense	3,074	2,802
General and administrative
Stock Compensation Expense
Total stock-based compensation expense	3,147	$ 2,607
Internal use software projects
Stock Compensation Expense
Capitalized stock-based compensation expense	$ 100

Net Loss per Share (Details)

Net Loss per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Numerator:
Net loss attributable to Marketo	$ (18,423)	$ (18,158)
Denominator:
Weighted-average common shares outstanding	44,021	41,815
Less: Weighted-average unvested common shares subject to repurchase or forfeiture and shares held in escrow	(29)	(202)
Weighted-average shares used in computing net loss per share of common stock, basic and diluted	43,992	41,613
Net loss per share of common stock, basic and diluted (in dollars per share)	$ (0.42)	$ (0.44)
Potentially dilutive securities that were excluded from the diluted per share
Potentially dilutive securities excluded from the diluted per share calculation	7,576	8,646
Stock options to purchase common stock
Potentially dilutive securities that were excluded from the diluted per share
Potentially dilutive securities excluded from the diluted per share calculation	3,483	4,969
Employee Stock Purchase Plan
Potentially dilutive securities that were excluded from the diluted per share
Potentially dilutive securities excluded from the diluted per share calculation	207	120
Common stock held in escrow
Potentially dilutive securities that were excluded from the diluted per share
Potentially dilutive securities excluded from the diluted per share calculation		159
Common stock subject to repurchase
Potentially dilutive securities that were excluded from the diluted per share
Potentially dilutive securities excluded from the diluted per share calculation	9	39
RSUs
Potentially dilutive securities that were excluded from the diluted per share
Potentially dilutive securities excluded from the diluted per share calculation	3,877	3,359

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Provision for income taxes
Provision for income taxes	$ 402	$ 212
Income tax benefit for current year losses due to maintaining a full valuation allowance	0	$ 0
Components of deferred tax assets and liabilities
Change in total unrecognized tax benefits	$ 0

Segment Information and Infor42

Segment Information and Information about Geographic Areas (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016USD ($)customeritem	Mar. 31, 2015USD ($)customer	Dec. 31, 2015USD ($)
Revenue, customers and long-lived assets by geographic area
Number of business segments | item	1
Revenue	$ 62,216	$ 46,000
Long-lived assets	$ 24,273		$ 21,323
Number of Customers accounting for more than ten percent of total revenue member
Revenue, customers and long-lived assets by geographic area
Number of Customers | customer	0	0
Number of Customers accounting for more than ten percent of accounts receivable member
Revenue, customers and long-lived assets by geographic area
Number of Customers | customer	0	0
United States
Revenue, customers and long-lived assets by geographic area
Revenue	$ 51,859	$ 39,265
Long-lived assets	22,513		19,508
EMEA
Revenue, customers and long-lived assets by geographic area
Revenue	4,586	3,152
Long-lived assets	409		327
Other
Revenue, customers and long-lived assets by geographic area
Revenue	5,771	$ 3,583
Long-lived assets	$ 1,351		$ 1,488