DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - shares | 6 Months Ended | |
Jan. 31, 2018 | Feb. 28, 2018 | |
Entity Information [Line Items] | ||
Entity Registrant Name | Nutanix, Inc. | |
Entity Central Index Key | 1,618,732 | |
Current Fiscal Year End Date | --07-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jan. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Common Class A | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding (in shares) | 120,114,416 | |
Common Class B | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding (in shares) | 44,194,199 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jan. 31, 2018 | Jul. 31, 2017 | |
Current assets: | |||
Cash and cash equivalents | $ 610,446 | $ 138,359 | |
Short-term investments | 307,809 | 210,694 | |
Accounts receivable—net | 179,241 | 178,876 | |
Deferred commissions—current | 33,508 | 23,843 | |
Prepaid expenses and other current assets | 31,547 | 28,362 | |
Total current assets | 1,162,551 | 580,134 | [1] |
Property and equipment—net | 69,074 | 58,072 | |
Deferred commissions—non-current | 66,120 | 49,684 | |
Intangible assets, net | 23,539 | 26,001 | |
Goodwill | 16,672 | 16,672 | |
Other assets—non-current | 7,240 | 7,649 | |
Total assets | 1,345,196 | 738,212 | [1] |
Current liabilities: | |||
Accounts payable | 56,270 | 73,725 | |
Accrued compensation and benefits | 75,310 | 57,521 | |
Accrued expenses and other current liabilities | 11,241 | 9,707 | |
Deferred revenue—current | 231,731 | 170,123 | |
Total current liabilities | 374,552 | 311,076 | [1] |
Deferred revenue—non-current | 246,269 | 198,933 | |
Convertible senior notes—net | 415,651 | 0 | |
Early exercised stock options liability | 430 | 851 | |
Other liabilities—non-current | 7,815 | 10,289 | |
Total liabilities | 1,044,717 | 521,149 | [1] |
Commitments and contingencies (Note 7) | [1] | ||
Stockholders’ equity: | |||
Preferred stock, par value of $0.000025 per share— 200,000,000 shares authorized as of July 31, 2017 and January 31, 2018; no shares issued and outstanding as of July 31, 2017 and January 31, 2018 | 0 | 0 | |
Common stock, par value of $0.000025 per share—1,200,000,000 (1,000,000,000 Class A, 200,000,000 Class B) shares authorized as of July 31, 2017 and January 31, 2018; 154,636,520 (93,570,171 Class A and 61,066,349 Class B) and 164,065,915 (119,873,498 Class A and 44,192,417 Class B) shares issued and outstanding as of July 31, 2017 and January 31, 2018 | 4 | 4 | |
Additional paid-in capital | 1,156,282 | 948,134 | |
Accumulated other comprehensive loss | (720) | (106) | |
Accumulated deficit | (855,087) | (730,969) | |
Total stockholders’ equity | 300,479 | 217,063 | [1] |
Total liabilities and stockholders’ equity | $ 1,345,196 | $ 738,212 | [1] |
[1] | See Note 3 for a summary of adjustments related to the adoption of the new revenue recognition standard. |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (parenthetical) - $ / shares | Jan. 31, 2018 | Jul. 31, 2017 |
Preferred stock, par value (in dollars per share) | $ 0.000025 | $ 0.000025 |
Preferred stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.000025 | $ 0.000025 |
Common stock, shares authorized (in shares) | 1,200,000,000 | 1,200,000,000 |
Common stock, shares issued (in shares) | 164,065,915 | 154,636,520 |
Common stock, shares outstanding (in shares) | 164,065,915 | 154,636,520 |
Common Class A | ||
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 119,873,498 | 93,570,171 |
Common stock, shares outstanding (in shares) | 119,873,498 | 93,570,171 |
Common Class B | ||
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 44,192,417 | 61,066,349 |
Common stock, shares outstanding (in shares) | 44,192,417 | 61,066,349 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | ||
Revenue: | |||||
Product | $ 223,170 | $ 158,213 | $ 442,222 | $ 311,749 | |
Support and other services | 63,574 | 41,001 | 120,074 | 76,026 | |
Total revenue | 286,744 | 199,214 | [1] | 562,296 | 387,775 |
Cost of revenue: | |||||
Product | 83,217 | 58,403 | 168,379 | 110,613 | |
Support and other services | 25,311 | 18,443 | 48,771 | 35,995 | |
Total cost of revenue | 108,528 | 76,846 | [1] | 217,150 | 146,608 |
Gross profit | 178,216 | 122,368 | [1] | 345,146 | 241,167 |
Operating expenses: | |||||
Sales and marketing | 151,201 | 111,374 | 296,606 | 239,999 | |
Research and development | 70,924 | 70,914 | 135,436 | 146,195 | |
General and administrative | 15,948 | 15,481 | 32,000 | 44,853 | |
Total operating expenses | 238,073 | 197,769 | [1] | 464,042 | 431,047 |
Loss from operations | (59,857) | (75,401) | [1] | (118,896) | (189,880) |
Other expense—net | (861) | (421) | (1,050) | (26,133) | |
Loss before provision for income taxes | (60,718) | (75,822) | [1] | (119,946) | (216,013) |
Provision for income taxes | 1,913 | 547 | 4,172 | 658 | |
Net loss | $ (62,631) | $ (76,369) | [1] | $ (124,118) | $ (216,671) |
Net loss per share attributable to common stockholders—basic and diluted (in dollars per share) | $ (0.39) | $ (0.54) | [1] | $ (0.78) | $ (2) |
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted (in shares) | 161,737,428 | 141,996,600 | 159,251,964 | 108,185,194 | |
[1] | See Note 3 for a summary of adjustments related to the adoption of the new revenue recognition standard. |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | ||
Statement of Comprehensive Income [Abstract] | |||||
Net loss | $ (62,631) | $ (76,369) | [1] | $ (124,118) | $ (216,671) |
Other comprehensive loss—net of tax: | |||||
Change in unrealized loss on available-for-sale securities—net of tax | (484) | (150) | (614) | (158) | |
Total other comprehensive loss—net of tax | (484) | (150) | [2] | (614) | (158) |
Comprehensive loss | $ (63,115) | $ (76,519) | [2] | $ (124,732) | $ (216,829) |
[1] | See Note 3 for a summary of adjustments related to the adoption of the new revenue recognition standard. | ||||
[2] | See Note 3 for a summary of adjustments related to the adoption of the new revenue recognition standard. |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | ||
Cash flows from operating activities: | |||
Net loss | $ (124,118) | $ (216,671) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation and amortization | 23,015 | 18,172 | |
Stock-based compensation | 77,526 | 143,335 | |
Loss on debt extinguishment | 0 | 3,320 | |
Change in fair value of convertible preferred stock warrant liability | 0 | 21,133 | |
Change in fair value of contingent consideration | (3,955) | 472 | |
Amortization of debt discount and issuance cost | 738 | 0 | |
Other | 141 | 457 | |
Changes in operating assets and liabilities: | |||
Accounts receivable—net | (490) | (39,730) | |
Deferred commission | (26,101) | (8,071) | |
Prepaid expenses and other assets | (2,842) | (2,707) | |
Accounts payable | (16,560) | 11,342 | |
Accrued compensation and benefits | 17,789 | 11,811 | |
Accrued expenses and other liabilities | 2,415 | 1,677 | |
Deferred revenue | 108,944 | 79,372 | |
Net cash provided by operating activities | 56,502 | 23,912 | [1] |
Cash flows from investing activities: | |||
Purchases of property and equipment | (31,993) | (24,616) | |
Purchases of investments | (183,102) | (117,550) | |
Maturities of investments | 84,927 | 41,200 | |
Sale of investments | 0 | 32,640 | |
Payments for business acquisitions, net of cash acquired | 0 | (184) | |
Net cash used in investing activities | (130,168) | (68,510) | [1] |
Cash flows from financing activities: | |||
Proceeds from issuance of convertible senior notes—net | 564,219 | 0 | |
Proceeds from issuance of warrants | 87,975 | 0 | |
Payments for convertible note hedges | (143,175) | 0 | |
Proceeds from sales of shares through employee equity incentive plans—net of repurchases | 36,819 | 2,180 | |
Proceeds from initial public offering—net of underwriting discounts and commissions | 0 | 254,455 | |
Payments of offering costs | (85) | (1,609) | |
Repayment of senior notes | 0 | (75,000) | |
Debt extinguishment costs | 0 | (1,580) | |
Payment of debt in conjunction with a business acquisition | 0 | (7,124) | |
Other | 0 | 73 | |
Net cash provided by financing activities | 545,753 | 171,395 | [1] |
Net increase in cash and cash equivalents | 472,087 | 126,797 | [1] |
Cash and cash equivalents—beginning of period | 138,359 | 99,209 | |
Cash and cash equivalents—end of period | 610,446 | 226,006 | [1] |
Supplemental disclosures of cash flow information: | |||
Cash paid for income taxes | 4,077 | 2,344 | |
Cash paid for interest | 0 | 1,271 | |
Supplemental disclosures of non-cash investing and financing information: | |||
Purchases of property and equipment included in accounts payable and accrued liabilities | 4,673 | 6,983 | |
Convertible senior notes offering costs included in accounts payable and accrued liabilities | 707 | 0 | |
Vesting of early exercised stock options | 435 | 920 | |
Offering costs included in accounts payable | 0 | 51 | |
Conversion of convertible preferred stock to common stock, net of issuance costs | 0 | 310,379 | |
Reclassification of convertible preferred stock warrant liability to additional paid-in capital | 0 | 30,812 | |
Issuance of common stock for business acquisitions | $ 0 | $ 27,063 | |
[1] | See Note 3 for a summary of adjustments related to the adoption of the new revenue recognition standard. |
ORGANIZATION
ORGANIZATION | 6 Months Ended |
Jan. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION Organization and Description of Business —Nutanix, Inc. was incorporated in the state of Delaware in September 2009. Nutanix, Inc. is headquartered in San Jose, California, and together with its wholly-owned subsidiaries (collectively, “we” or “our”) has operations throughout North America, Europe, Asia-Pacific, Middle East, Latin America and Africa. Our enterprise cloud operating system converges traditional silos of server, virtualization, storage and networking into one integrated solution and unifies private and public cloud into a single software fabric. We primarily sell our products and services to end-customers through distributors, resellers and original equipment manufacturers, or OEMs (collectively “Partners”). |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jan. 31, 2018 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Significant Accounting Policies —The accompanying condensed consolidated financial statements, which include the accounts of Nutanix, Inc. and our wholly-owned subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States, or U.S. GAAP, and, except for the impact of the adoption of the new accounting guidance related to revenue recognition, consistent in all material respects with those applied in our Annual Report on Form 10-K for the fiscal year ended July 31, 2017, filed with the Securities and Exchange Commission, or SEC, on September 18, 2017. All intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements are unaudited, but include all adjustments of a normal recurring nature necessary for a fair presentation of our quarterly results. Certain prior period amounts have been adjusted as a result of our early adoption of new accounting guidance related to revenue recognition. Refer to “Summary of Significant Accounting Policies” and “Recent Accounting Pronouncements” below for more information. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes in our Annual Report on Form 10-K for the fiscal year ended July 31, 2017. Effective August 1, 2017, we adopted the requirements of Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers, or ASC 606, as discussed in detail in Note 3. All amounts and disclosures set forth in this Quarterly Report on Form 10-Q have been updated to comply with ASC 606, as indicated by the “as adjusted” footnote. Use of Estimates —The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Such management estimates include, but are not limited to, the best estimate of standalone selling prices for products and related support; determination of fair value of stock-based awards; accounting for income taxes, including the valuation reserve on deferred tax assets and uncertain tax positions; warranty liability; commissions expense; fair value of assets and liabilities acquired in business combinations; fair value of debt and equity components related to our convertible senior notes; and contingencies and litigation. Management evaluates these estimates and assumptions on an ongoing basis using historical experience and other factors and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could materially differ from those estimates and assumptions. Concentration Risk: Concentration of revenue and accounts receivable —We sell our products primarily through Partners and occasionally directly to end-customers. For the three and six months ended January 31, 2017 and 2018 , no end-customer accounted for 10% or more of total revenue. For each significant Partner, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable, net are as follows: Revenue Accounts Receivable as of Three Months Ended Six Months Ended Customers 2017 **As Adjusted 2018 2017 **As Adjusted 2018 July 31, 2017 January 31, 2018 Partner A * * 11 % 12 % * * Partner B 18 % 18 % 19 % 23 % 12 % 18 % Partner C 15 % 16 % 14 % 17 % 14 % * Partner D * 10 % 11 % 10 % 20 % 19 % Partner E 10 % * * * * 10 % Partner F 14 % 14 % 12 % 14 % 18 % * ___________________ * Less than 10% ** Adjusted to include the impact of ASC 606. Refer to Note 3 for more details on the impact of the adoption of this standard. Summary of Significant Accounting Policies —Except for the accounting policies for revenue recognition, deferred revenue, and deferred commissions that were updated as a result of adopting ASC 606 and those related to our 0% Convertible Senior Notes due in 2023, or the Notes, there have been no changes to our significant accounting policies described in the Annual Report on Form 10-K for the fiscal year ended July 31, 2017, filed with the SEC on September 18, 2017, that have had a material impact on our condensed consolidated financial statements and related notes. See Note 3 for the summary of the new accounting policies under ASC 606. Recently Adopted Accounting Pronouncement — In May 2014, the Financial Accounting Standards Board, or FASB, issued ASC 606. The standard is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The FASB has issued several amendments to the standard, including clarifications on disclosure of prior-period performance obligations and remaining performance obligations. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The new standard would have been effective for us beginning August 1, 2018, and adoption as of the original effective date of August 1, 2017 was permitted. We elected to early adopt the standard effective August 1, 2017 using the full retrospective method, which required us to recast our historical financial information to be consistent with the new standard. Refer to Note 3 for the details of impacts to previously reported results. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The guidance is effective for annual periods beginning after December 15, 2017, with early adoption permitted, including adoption in any interim period for which financial statements have not yet been issued. We adopted this ASU effective August 1, 2017 and our adoption did not have a material impact on our condensed consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805) to clarify the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance is effective for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. We adopted this ASU effective August 1, 2017 and as we did not have any business acquisition during the six months ended January 31, 2018, our adoption did not have any impact on our condensed consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. We adopted this ASU effective November 1, 2017 and our adoption did not have any impact on our condensed consolidated financial statements. Recently Issued and Not Yet Adopted Accounting Pronouncements —In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 r equires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash or restricted cash equivalents should be included with cash and cash equivalents when reconciling beginning-of-period and end-of-period amounts shown on the statement of cash flows. ASU 2016-18 is effective for us beginning August 1, 2018, with early adoption permitted. We do not believe that adoption of this ASU will have a material impact on our condensed consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 will require us to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 is effective for us beginning August 1, 2018, with early adoption permitted. We are currently evaluating the effect the adoption of this guidance will have on our condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases, which requires recognition of right-to-use lease assets and lease liabilities for all leases (with the exception of short-term leases) on the balance sheet of lessees. ASU 2016-02 is effective for us beginning August 1, 2019, with early adoption permitted. This new standard requires a modified retrospective transition approach and provides certain optional transition relief. We are currently evaluating the effect the adoption of this guidance will have on our condensed consolidated financial statements. |
REVENUE, DEFERRED REVENUE AND D
REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS | 6 Months Ended |
Jan. 31, 2018 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS | ue Recognition —Effective August 1, 2017, we adopted ASC 606 using the full retrospective method, which required us to recast our historical financial information to be consistent with the standard. The most significant impact of ASC 606 on our historical financial information relates to the timing of revenue recognition for certain software licenses sold with post contract customer support, or PCS, for which we did not have vendor specific objective evidence, or VSOE, of fair value under the previous revenue recognition guidance. Under ASC 606, the requirement to have VSOE for undelivered elements is eliminated and we now recognize revenue for such software licenses upon transfer of control to our customers. In addition, the adoption of ASC 606 also resulted in differences in the timing of recognition of contract costs, such as sales commissions, as well as the corresponding impacts to provision for income taxes. The adoption of the standard had no significant impact to the provision for income taxes and had no impact to the net cash from or used in operating, investing, or financing activities on our condensed consolidated statements of cash flows. See ASC 606 Adoption Impact to Reported Results below for the impact of adoption of the standard on our condensed consolidated balance sheets and condensed consolidated statements of operations. ASC 606 Adoption Impact to Previously Reported Results We adjusted our condensed consolidated financial statements from amounts previously reported due to the adoption of ASC 606. Select condensed consolidated balance sheet line items, which reflect the adoption of ASC 606, are as follows: Balance Sheet: As of July 31, 2017 As Previously Reported Impact of Adoption As Adjusted (in thousands) Assets Deferred commissions - current $ 27,679 $ (3,836 ) (1) $ 23,843 Deferred commissions - non-current 33,709 15,975 (1) 49,684 Total deferred commissions $ 61,388 $ 12,139 $ 73,527 Liabilities Deferred revenue - current $ 233,498 $ (63,375 ) (2) $ 170,123 Deferred revenue - non-current 292,573 (93,640 ) (2) 198,933 Total deferred revenue $ 526,071 $ (157,015 ) $ 369,056 Accrued expenses and other current liabilities $ 9,414 $ 293 (3) $ 9,707 Stockholders' equity $ 48,202 $ 168,861 $ 217,063 _______________________ (1) Impact of cumulative change in commissions expense (2) Impact of cumulative change in revenue (3) Impact of cumulative change in provision for income taxes Select unaudited condensed consolidated statement of operations line items, which reflects the adoption of ASC 606, are as follows: Three Months Ended January 31, 2017 As Previously Reported Impact of Adoption As Adjusted Revenue (in thousands, except per share data) Product $ 138,508 $ 19,705 $ 158,213 Support and other services 43,687 (2,686 ) 41,001 Total revenue $ 182,195 $ 17,019 $ 199,214 Gross profit $ 105,349 $ 17,019 $ 122,368 Operating expenses Sales and marketing expenses $ 111,244 $ 130 $ 111,374 Loss from operations $ (92,290 ) $ 16,889 $ (75,401 ) Net Loss $ (93,212 ) $ 16,843 $ (76,369 ) Basic and diluted net loss per share $ (0.66 ) $ 0.12 $ (0.54 ) Six Months Ended January 31, 2017 As Previously Reported Impact of Adoption As Adjusted Revenue (in thousands, except per share data) Product $ 268,165 $ 43,584 $ 311,749 Support and other services 80,839 (4,813 ) 76,026 Total revenue $ 349,004 $ 38,771 $ 387,775 Gross profit $ 202,396 $ 38,771 $ 241,167 Operating expenses Sales and marketing expenses $ 240,019 $ (20 ) $ 239,999 Loss from operations $ (228,671 ) $ 38,791 $ (189,880 ) Net Loss $ (255,381 ) $ 38,710 $ (216,671 ) Basic and diluted net loss per share $ (2.36 ) $ 0.36 $ (2.00 ) Unaudited revenue by geographic location based on bill-to location, which reflects the adoption of ASC 606, are as follows: Three Months Ended January 31, 2017 As Previously Reported Impact of Adoption As Adjusted (in thousands) U.S. $ 102,173 $ 2,869 $ 105,042 Europe, the Middle East and Africa 33,272 1,330 34,602 Asia-Pacific 37,382 12,561 49,943 Other Americas 9,368 259 9,627 Total revenue $ 182,195 $ 17,019 $ 199,214 Six Months Ended January 31, 2017 As Previously Reported Impact of Adoption As Adjusted (in thousands) U.S. $ 205,044 $ 6,166 $ 211,210 Europe, the Middle East and Africa 57,520 2,498 60,018 Asia-Pacific 66,290 29,500 95,790 Other Americas 20,150 607 20,757 Total revenue $ 349,004 $ 38,771 $ 387,775 The adoption impacted certain line items in the cash flows from operating activities as follows: Six Months Ended January 31, 2017 As Previously Reported Impact of Adoption As Adjusted Cash flows from operating activities: (in thousands) Net loss $ (255,381 ) $ 38,710 $ (216,671 ) Adjustments to reconcile net loss to net cash provided by operating activities: Deferred commissions $ (8,049 ) $ (22 ) $ (8,071 ) Accrued expenses and other liabilities $ 1,594 $ 83 $ 1,677 Deferred revenue $ 118,143 $ (38,771 ) $ 79,372 The core principle of ASC 606 is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled in exchange for those goods or services. This principle is achieved through applying the following five-step approach: • Identification of the contract, or contracts, with a customer — A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. • Identification of the performance obligations in the contract — Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised goods or services, we apply judgment to determine whether promised goods or services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised goods or services are accounted for as a combined performance obligation. • Determination of the transaction price — The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer. • Allocation of the transaction price to the performance obligations in the contract — If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price, or SSP, basis. We determine standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. • Recognition of revenue when, or as, we satisfy a performance obligation — We satisfy performance obligations either over time or at a point in time as discussed in further detail below. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or service to a customer. Disaggregation of Revenue We generate revenue from the sale of our software solution, which can be delivered on a hardware appliance or on a stand-alone basis, PCS and professional services. A substantial portion of our revenue is generated via channel partners, including distributors and resellers. We also sell our software solution through our OEM partners, such as Dell Technologies and Lenovo Group Ltd. These OEM partners embed our software in their own hardware and we provide limited PCS on these transactions. The following table depicts the disaggregation of revenue according to revenue type and is consistent with how we evaluate our financial performance: Three Months Ended Six Months Ended 2017 2018 2017 2018 (in thousands) Software revenue $ 102,845 $ 145,171 $ 207,590 $ 283,385 Hardware revenue 55,368 77,999 104,159 158,837 Support and other services revenue 41,001 63,574 76,026 120,074 Total revenue $ 199,214 $ 286,744 $ 387,775 $ 562,296 Software revenue — A substantial majority of our product revenue is generated from the sale of our software, which is either delivered on a hardware appliance that is configured to order, or delivered as stand-alone software, which can be installed on our customers' hardware appliance that is typically purchased separately from an OEM partner or other manufacturers of our compatible hardware, including our contract manufacturers. Software revenue includes our base operating system, which can be delivered through different platforms, and licenses to other additional features which are sold by us. Revenue from our software products is generally recognized upon transfer of control to our customers. Hardware revenue — In transactions where we deliver the hardware appliance, we consider ourselves to be the principal in the transaction and we record revenue and costs of goods sold on a gross basis. We consider the amount allocated to hardware revenue to be equivalent to the cost of the hardware procured. Hardware revenue is generally recognized upon transfer of control to our customers. Support and other services revenue — We generate our support and other services revenue primarily from PCS contracts, and, to a lesser extent, from professional services. The majority of our product sales are sold in conjunction with PCS contracts with terms ranging from one to five years. We recognize revenue from PCS contracts ratably over the contractual service period. The service period typically commences upon transfer of control of the corresponding products to our customer. We recognize revenue related to professional services as they are performed. Contracts with multiple performance obligations — Some of our contracts with customers contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative SSP, basis. For deliverables that we routinely sell separately, such as support and maintenance on our core offerings, we determine SSP by evaluating the stand-alone sales over the trailing 12-months. For those that are not sold routinely, we determine SSP based on our overall pricing trends and objectives, taking into consideration market conditions and other factors, including the value of our contracts, the products sold and geographic locations. Contract balances— The timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. A receivable is recognized in the period we deliver goods or provide services or when our right to consideration is unconditional. Payment terms on invoiced amounts are typically 30 days. The balance of accounts receivable, net of allowance for doubtful accounts, as of July 31, 2017 and January 31, 2018 is presented in the accompanying consolidated balance sheets. Costs to obtain and fulfill a contract— We capitalize commissions paid to sales personnel and the related payroll taxes when customer contracts are signed. These costs are recorded as deferred commission expense in the condensed consolidated balance sheets, current and non-current. We determine whether costs should be deferred based on our sales compensation plans, if the commissions are incremental and would not have been incurred absent the execution of the customer contract. Sales commissions for renewals of customer contracts are not commensurate with the commissions paid for the acquisition of the initial contract given the substantive difference in commission rates in proportion to their respective contract values. Commissions paid upon the initial acquisition of a contract are amortized over the estimated period of benefit, which may exceed the term of the initial contract. Accordingly, amortization of deferred costs is recognized on a systematic basis that is consistent with the pattern of revenue recognition allocated to each performance obligation and included in sales and marketing expense in the condensed consolidated statements of operations. We determine the estimated period of benefit by evaluating the expected renewals of our customer contracts, the duration of our relationships with our customers, customer retention data, our technology development lifecycle and other factors. Deferred costs are periodically reviewed for impairment. Deferred revenue— We record deferred revenue when cash payments are received in advance of our performance. The current portion of deferred revenue represents the amounts that are expected to be recognized as revenue within one year of the consolidated balance sheet date. Significant changes in the balance of deferred revenue (contract liability) total deferred commissions (contract asset) for the periods presented are as follows: Deferred Revenue Deferred Commissions (in thousands) Balance as of July 31, 2017 * $ 369,056 73,527 Additions 96,288 33,807 Revenue/commissions recognized (56,500 ) (25,350 ) Balance as of October 31, 2017 408,844 81,984 Additions 132,730 45,782 Revenue/commissions recognized (63,574 ) (28,138 ) Balance as of January 31, 2018 $ 478,000 $ 99,628 * See details above for the summary of adjustments to deferred commission and deferred revenue as a result of the adoption of ASC 606. Of the $99.6 million total deferred commissions balance as of January 31, 2018 , we expect to recognize approximately 34% as commission expense over the next 12 months and the remainder thereafter. During the three and six months ended January 31, 2017 , we recognized approximately $36.7 million and approximately $55.6 million pertaining to amounts deferred as of October 31, 2016 and July 31, 2016, respectively. During the three and six months ended January 31, 2018 , we recognized approximately $55.0 million and approximately $96.5 million pertaining to amounts deferred as of October 31, 2017 and July 31, 2017, respectively. The majority of our contracted but not invoiced performance obligations are subject to cancellation terms. Revenue allocated to remaining performance obligations represent contracted revenue that has not yet been recognized (“contracted not recognized”), which includes deferred revenue and non-cancelable amounts that will be invoiced and recognized as revenue in future periods, and excludes performance obligations that are subject to cancellation terms. Contracted not recognized revenue was $519.9 million as of January 31, 2018 , of which we expect to recognize approximately 51% of the revenue over the next 12 months and the remainder thereafter. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jan. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The fair value of our financial assets and liabilities measured on a recurring basis is as follows: As of July 31, 2017 Level I Level II Level III Total (in thousands) Financial Assets: Cash equivalents: Money market funds $ 34,784 $ — $ — $ 34,784 Commercial paper — 23,041 — 23,041 Short-term investments: Corporate bonds — 160,634 — 160,634 Commercial paper — 36,084 — 36,084 U.S. government securities — 13,976 — 13,976 Total measured at fair value 34,784 233,735 — 268,519 Cash 80,534 Total cash, cash equivalents and short-term investments $ 349,053 Financial Liabilities: Contingent consideration $ — $ — $ 4,295 $ 4,295 As of January 31, 2018 Level I Level II Level III Total (in thousands) Financial Assets: Cash equivalents: Money market funds $ 380,039 $ — $ — $ 380,039 Commercial paper 63,529 63,529 U.S. government securities — 25,281 — 25,281 Corporate bonds — 2,847 — 2,847 Short-term investments: Corporate bonds — 209,425 — 209,425 Commercial paper — 74,092 — 74,092 U.S. government securities — 24,292 — 24,292 Total measured at fair value $ 380,039 $ 399,466 $ — 779,505 Cash 138,750 Total cash, cash equivalents and short-term investments $ 918,255 Financial Liabilities: Contingent consideration $ — $ — $ 340 $ 340 Financial Instruments Not Recorded at Fair Value on a Recurring Basis. We report our financial instruments at fair value with the exception of the Notes. Financial instruments that are not reported at fair value are measured at fair value on a quarterly basis for disclosure purposes. The carrying amounts and estimated fair values of financial instruments not recorded at fair value are as follows: As of July 31, 2017 As of January 31, 2018 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value (in thousands) Convertible senior notes, net — — $ 415,651 $ 563,011 The carrying amount of the Notes as of January 31, 2018 was net of unamortized debt discount of $150.9 million and unamortized debt issuance costs of $8.4 million . The total estimated fair value of the Notes was determined based on the closing trading price of the Notes as of the last day of trading for the period. We consider the fair value of the Notes to be a Level 2 measurement due to the limited trading activity of the Notes. A summary of the changes in the fair value of our contingent consideration, categorized as Level 3 in the fair value hierarchy, is as follows: Six Months Ended 2017 2018 (in thousands) Contingent consideration—beginning balance $ — $ 4,295 Assumed in a business acquisition 2,371 — Change in fair value* 472 (3,955 ) Contingent consideration—ending balance $ 2,843 $ 340 ____________ * Recorded in the condensed consolidated statements of operations within general and administrative expenses We remeasure the fair value of our Level 3 contingent consideration liability using the Monte Carlo simulation on projected future payments. The fair value is determined by calculating the net present value of the expected payments using significant inputs that are not observable in the market, including the probability of achieving the milestone, estimated bookings and discount rates. The fair value of the contingent consideration will increase or decrease according to the movement of the inputs. |
BALANCE SHEET COMPONENTS
BALANCE SHEET COMPONENTS | 6 Months Ended |
Jan. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BALANCE SHEET COMPONENTS | BALANCE SHEET COMPONENTS Short-Term Investments —The amortized cost of our short-term investments approximate their fair value. As of July 31, 2017 and January 31, 2018 , unrealized gains or losses from our short-term investments were immaterial. Unrealized losses related to our short-term investments are due to interest rate fluctuations as opposed to credit quality. In addition, unless we will need cash to support our current operations, we do not intend to sell and it is not likely that we would be required to sell these investments before recovery of their amortized cost basis, which may be at maturity. As a result, there were no other-than-temporary impairments for these investments at July 31, 2017 and January 31, 2018. The following table summarizes the estimated fair value of our investments in marketable debt securities, by the contractual maturity date: As of January 31, 2018 (in thousands) Due within 1 year $ 222,640 Due after 1 year through 3 years 85,169 Total $ 307,809 Property and Equipment—Net —Property and equipment, net consists of the following: Estimated (In months) As of July 31, 2017 January 31, 2018 (in thousands) Computer, production, engineering and other equipment 36 $ 85,280 $ 104,891 Demonstration units 12 46,387 51,580 Leasehold improvements * 10,562 15,309 Furniture and fixtures 60 4,744 5,866 Total property and equipment—gross 146,973 177,646 Less accumulated depreciation and amortization (88,901 ) (108,572 ) Total property and equipment—net $ 58,072 $ 69,074 ____________ * Leasehold improvements are amortized over the shorter of the estimated useful lives of the improvements or the remaining lease term. Depreciation and amortization expense related to our property and equipment was $9.0 million and $10.3 million for the three months ended January 31, 2017 and 2018 , respectively, and was $17.2 million and 20.6 million for the six months ended January 31, 2017 and 2018 , respectively. Intangible Assets—Net —Intangible assets, net consists of the following: As of July 31, 2017 January 31, 2018 (in thousands) Indefinite-lived intangible asset: In-process R&D* $ 16,100 $ — Finite-lived intangible assets: Developed technology* 7,300 23,400 Customer relationships 4,830 4,830 Total finite-lived intangible assets, gross 12,130 28,230 Total intangible assets, gross 28,230 28,230 Less: Accumulated amortization of developed technology (1,314 ) (3,375 ) Accumulated amortization of customer relationships (915 ) (1,316 ) Total accumulated amortization (2,229 ) (4,691 ) Intangible assets, net $ 26,001 $ 23,539 * We started amortizing the in-process R&D during the first quarter of fiscal 2018 because the related technology was completed and released in the first quarter of fiscal 2018. We are amortizing the developed technology using the straight-line method over a useful life of 5 years. Based on the foregoing, the balance of in-process R&D is now presented as part of developed technology under finite-lived intangible assets as of January 31, 2018. The amortization expense of finite-lived intangible assets is being recognized in the condensed consolidated statement of operations within product cost of revenue for developed technology and sales and marketing expenses for customer relationships. Estimated future amortization expense of finite-lived intangible assets is as follows: Year Ending July 31: (In thousands) 2018 (remaining six months) $ 2,710 2019 5,421 2020 5,421 2021 5,421 2022 4,224 Thereafter 342 Total $ 23,539 Accrued Compensation and Benefits —Accrued compensation and benefits consists of the following: As of July 31, 2017 January 31, 2018 (in thousands) Accrued commissions $ 20,388 $ 24,115 Accrued vacation 6,286 7,438 Contributions to ESPP withheld 14,371 18,036 Accrued bonus 7,342 8,566 Payroll taxes payable 3,434 8,970 Other 5,700 8,185 Total accrued compensation and benefits $ 57,521 $ 75,310 Accrued Expenses and Other Current Liabilities —Accrued expenses and other current liabilities consists of the following: As of July 31, 2017 January 31, 2018 (in thousands) Accrued professional services $ 4,167 $ 4,273 Income taxes payable* 3,873 4,163 Other 1,667 2,805 Total accrued expenses and other current liabilities $ 9,707 $ 11,241 * Balance as of July 31, 2017 was adjusted to reflect the impact of the adoption of ASC 606 on income taxes. See Note 3 for a summary of adjustments. |
CONVERTIBLE SENIOR NOTES
CONVERTIBLE SENIOR NOTES | 6 Months Ended |
Jan. 31, 2018 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE SENIOR NOTES | CONVERTIBLE SENIOR NOTES In January 2018, we issued $575.0 million in aggregate principal amount of 0% Convertible Senior Notes due in 2023, or the Notes, in a private placement to qualified institutional buyers pursuant to Rule144A under the Securities Act of 1933, as amended. This included $75.0 million in aggregate principal amount of the Notes that we issued resulting from initial purchasers fully exercising their option to purchase additional notes. There are no required principal payments prior to maturity of the Notes. The estimated total net proceeds from the Notes are as follows: Amount (in thousands) Principal amount $ 575,000 Less initial purchasers' discount (10,781 ) Less cost of the bond hedges (143,175 ) Add proceeds from the sale of warrants 87,975 Less other issuance costs (707 ) Net proceeds $ 508,312 The $0.7 million other issuance costs remained unpaid as of January 31, 2018. The Notes do not bear any interest and will mature on January 15, 2023, unless earlier converted or repurchased in accordance with their terms. The Notes are unsecured and do not contain any financial covenants or any restrictions on the payment of dividends, or the issuance or repurchase of securities by us. Each $1,000 of principal of the Notes will initially be convertible into 20.4705 shares of our Class A common stock, which is equivalent to an initial conversion price of approximately $48.85 per share, subject to adjustment upon the occurrence of specified events. Holders of these Notes may convert their Notes at their option at any time prior to the close of business day immediately preceding October 15, 2022, only under the following circumstances: 1) during any fiscal quarter commencing after the fiscal quarter ending on April 30, 2018 (and only during such fiscal quarter), if the last reported sale price of our Class A 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 fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; 2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A common stock and the conversion rate for the notes on each such trading day; or 3) upon the occurrence of certain specified corporate events. On or after October 15, 2022, holders may convert all or any portion of their Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions. Upon conversion of the Notes, we will pay or deliver, as the case may be, cash, shares of our Class A common stock or a combination of cash and shares of our Class A common stock, at our election. We intend to settle the principal of the Notes in cash. The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued or unpaid interest. A holder who converts their Notes in connection with certain corporate events that constitute a “make-whole fundamental change” per the indenture governing the Notes are, under certain circumstances, entitled to an increase in the conversion rate. In addition, if we undergo a fundamental change prior to the maturity date, holders may require us to repurchase for cash all or a portion of its Notes at a repurchase price equal to 100% of the principal amount of the repurchased Notes, plus accrued and unpaid interest. We may not redeem the Notes prior to the maturity date, and no sinking fund is provided for the Notes. In accounting for the issuance of the Notes, we separated the Notes into liability and equity components. The carrying amount of the liability component of approximately $423.4 million was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component of approximately $151.6 million , representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the Notes. The difference between the principal amount of the Notes and the liability component (the “debt discount”) is amortized to interest expense using the effective interest method over the term of the Notes. The equity component of the Notes is included in additional paid-in capital in the consolidated balance sheet and is not remeasured as long as it continues to meet the conditions for equity classification. We incurred transaction costs related to the issuance of the Notes of approximately $11.5 million , consisting of initial purchasers' discount of $10.8 million and other issuance costs of approximately $0.7 million . In accounting for the transaction costs, we allocated the total amount incurred to the liability and equity components using the same proportions as the proceeds from the Notes. Transaction costs attributable to the liability component were approximately $8.5 million , were recorded as debt issuance cost (presented as contra debt in the consolidated balance sheet) and are being amortized to interest expense over the term of the Notes. The transaction costs attributable to the equity component were approximately $3.0 million and were netted with the equity component in stockholders’ equity. The Notes consisted of the following: As of January 31, 2018 (in thousands) Principal amounts: Principal $ 575,000 Unamortized debt discount (1) (150,929 ) Unamortized debt issuance costs (1) (8,420 ) Net carrying amount $ 415,651 Carrying amount of the equity component (2) $ 148,598 (1) Included in the condensed consolidated balance sheet within "Convertible senior notes — net" and amortized over the remaining life of the Notes using the effective interest rate method. The effective interest rate is 6.62% . (2) Included in the condensed consolidated balance sheet within additional paid-in capital, net of $3.0 million in equity issuance costs. As of January 31, 2018, the remaining life of the Notes is approximately 59 months. Based on the closing price of our Class A common stock of $32.10 on January 31, 2018, the if-converted value of the Notes was less than the principal amount. The following table sets forth the total interest expense recognized related to the Notes: Three and Six Months Ended (in thousands) Interest expense related to amortization of debt discount $ 699 Interest expense related to amortization of the debt issuance costs 39 Total interest expense $ 738 Note Hedges and Warrants Concurrently with the offering of the Notes in January 2018, we entered into convertible note hedge transactions with certain bank counterparties whereby we have the option to purchase initially (subject to adjustment for certain specified events) a total of approximately 11.8 million shares of our Class A common stock at a conversion price of approximately $48.85 per share. The total cost of the convertible note hedge transactions was approximately $143.2 million . In addition, we sold warrants to certain bank counterparties whereby the holders of the warrants have the option to purchase initially (subject to adjustment for certain specified events) a total of approximately 11.8 million shares of our Class A common stock at a price of $73.46 per share. We received approximately $88.0 million in cash proceeds from the sale of these warrants. Taken together, the purchase of the convertible note hedges and the sale of warrants are intended to offset any actual dilution from the conversion of the Notes and to effectively increase the overall conversion price from $48.85 to $73.46 per share. As these transactions meet certain accounting criteria, the convertible note hedges and warrants are recorded in stockholders’ equity and are not accounted for as derivatives. The net cost incurred in connection with the convertible note hedge and warrant transactions of approximately $55.2 million was recorded as a reduction to additional paid-in capital in the consolidated balance sheet as of January 31, 2018. The fair value of the note hedges and warrants are not remeasured each reporting period. The amounts paid for the note hedges are tax deductible expenses, while the proceeds received from the warrants are not taxable. Impact to Earnings per Share The Notes will have no impact to diluted earnings per share until the average price of our Class A common stock exceeds the conversion price of $48.85 per share because we intend to settle the principal amount of the Notes in cash upon conversion. Under the treasury stock method, in periods we report net income, we are required to include the effect of additional shares that may be issued under the Notes when the price of our Class A common stock exceeds the conversion price. Under this method, the cumulative dilutive effect of the Notes would be approximately 3.9 million shares if the average price of our Class A common stock is $73.46 . However, upon conversion, there will be no economic dilution from the Notes, as exercise of the note hedges eliminate any dilution from the Notes that would have otherwise occurred when the price of our Class A common stock exceeds the conversion price. The note hedges are required to be excluded from the calculation of diluted earnings per share, as they would be anti-dilutive under the treasury stock method. The warrants will have a dilutive effect when the average share price exceeds the warrant’s strike price of $73.46 per share. As the price of our Class A common stock continues to increase above the warrant strike price, additional dilution would occur at a declining rate so that a $10 increase from the warrant strike price would yield cumulative dilution of approximately 4.9 million diluted shares for EPS purposes. However, upon conversion, the note hedges would neutralize the dilution from the Notes so that there would only be dilution from the warrants, which would result in actual dilution of approximately 1.4 million shares at a common stock price of $83.46 . |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jan. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Except for the items below, there have been no material changes to our commitments compared to the commitments described in Note 7, Commitments and Contingencies, in Notes to Consolidated Financial Statements in Item 8 of Part II of the Form 10-K for the fiscal year ended July 31, 2017. Purchase Commitments —In the normal course of business, we make commitments with our third-party hardware contract manufacturers to manufacture our inventories and non-standard components based on our forecasts. These commitments consist of obligations for on-hand inventories and non-cancelable purchase orders for non-standard components. We record a charge for firm, non-cancelable and unconditional purchase commitments with our third-party hardware contract manufacturers for non-standard components when and if quantities exceed our future demand forecasts through a charge to cost of product sales. As of January 31, 2018 , we had approximately $19.3 million of non-cancelable purchase commitments pertaining to our normal operations, and approximately $53.0 million of other purchase obligations with our contract manufacturers. |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 6 Months Ended |
Jan. 31, 2018 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | STOCKHOLDERS’ EQUITY Preferred Stock Upon the closing of our initial public offering, or IPO, in October 2016, we filed an Amended and Restated Certificate of Incorporation, which authorized the issuance of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by our Board of Directors, or the Board. As of January 31, 2018 , there were 200,000,000 shares of preferred stock authorized with a par value of $0.000025 and no shares of preferred stock issued or outstanding. Common Stock We have two classes of authorized common stock, Class A common stock and Class B common stock. As of January 31, 2018 , we had 1,000,000,000 shares of Class A common stock authorized with a par value of $0.000025 per share and 200,000,000 shares of Class B common stock authorized with a par value of $0.000025 per share. As of January 31, 2018 , 119,873,498 shares of Class A common stock were issued and outstanding and 44,192,417 shares of Class B common stock were issued and outstanding. Holders of Class A common stock are entitled to one vote for each share of Class A common stock held on all matters submitted to a vote of stockholders and holders of Class B common stock are entitled to ten votes for each share of Class B common stock held on all matters submitted to a vote of stockholders. Except with respect to voting, the rights of the holders of Class A and Class B common stock are identical. Shares of Class B common stock are voluntarily convertible into shares of Class A common stock at the option of the holder and generally automatically convert into shares of our Class A common stock upon a transfer. Shares issued in connection with exercises of stock options, vesting of restricted stock units, or shares purchased under the employee stock purchase plan are generally automatically converted into shares of our Class A common stock. Shares issued in connection with an exercise of the common stock warrants are converted into shares of our Class B common stock. |
EQUITY AWARD PLANS
EQUITY AWARD PLANS | 6 Months Ended |
Jan. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
EQUITY AWARD PLANS | EQUITY AWARD PLANS Stock Plans —In June 2010, we adopted the 2010 Stock Plan, or the 2010 Plan, and in December 2011, we adopted the 2011 Stock Plan, or 2011 Plan. In December 2015, the Board adopted the 2016 Equity Incentive Plan, or the 2016 Plan, and together with the 2010 Plan and 2011 Plan, the Stock Plans, which was amended in September 2016. Our stockholders approved the 2016 Plan in March 2016 and it became effective in connection with our IPO in October 2016. As a result, upon the IPO, we ceased granting additional stock awards under the 2010 Plan and 2011 Plan and the 2010 Plan and 2011 Plan terminated. Any outstanding stock awards under the 2010 Plan and 2011 Plan will remain outstanding, subject to the terms of the applicable plan and award agreements, until such shares are issued under those stock awards, by exercise of stock options or settlement of RSUs, or until those stock awards become vested or expired by their terms. Under the 2016 Plan, we may grant incentive stock options, or ISOs, non-statutory stock options, or NSOs, restricted stock, or RS, restricted stock units, or RSUs, and stock appreciation rights, or SARs, to employees, directors and consultants. We have initially reserved 22,400,000 shares of our Class A common stock for issuance under the 2016 Plan. The number of shares of Class A common stock available for issuance under the 2016 Plan also includes an annual increase on the first day of each fiscal year beginning in fiscal year 2018, equal to the lesser of: 18,000,000 shares, 5% of the outstanding shares of classes of common stock as of the last day of our immediately preceding fiscal year, or such other amount as may be determined by the Board. Accordingly, on August 1, 2017, the number of shares of Class A common stock available for issuance under our 2016 Plan increased by 7,731,826 shares pursuant to these provisions. As of January 31, 2018 , we had reserved a total of 52,457,925 shares for the issuance of equity awards under the Stock Plans, of which 15,095,482 shares were still available for grant. Restricted Stock Units Performance RSUs . We granted RSUs that contain both service and performance conditions to our executives and employees, which we refer to as Performance RSUs. Vesting of the Performance RSUs is subject to continuous service with us and satisfaction of certain of our liquidity events, including the expiration of a lock-up period established in connection with the IPO, or both certain liquidity events and specified performance targets. While we recognize cumulative stock-based compensation expense for the portion of the awards for which the service condition has been satisfied when it is probable that the performance conditions will be met, vesting and settlement of the Performance RSUs are subject to the performance conditions actually being met. During the three months ended October 31, 2016, we began to recognize Performance RSUs with liquidity event performance conditions as the satisfaction of the performance conditions for vesting became probable. The summary of RSU activity under the Stock Plans is as follows: Number of Grant Date Fair Value per Share Outstanding—July 31, 2017 17,376,090 $ 18.85 Granted 9,214,498 $ 32.68 Vested (2,749,519 ) $ 18.01 Canceled/forfeited (1,230,623 ) $ 22.86 Outstanding—January 31, 2018 22,610,446 $ 24.37 Stock Options —We did not grant any stock options during the six months ended January 31, 2018 . A total of 5,422,273 stock options were exercised during the six months ended January 31, 2018 for an average exercise price of $3.58 . As of January 31, 2018 , 14,717,817 stock options with a weighted-average exercise price $4.91 per share, weighted-average remaining contractual life of 6.14 years, and aggregate intrinsic value of $400.2 million remained outstanding. Employee Stock Purchase Plan —In December 2015, the Board adopted the 2016 Employee Stock Purchase Plan, or the 2016 ESPP, which was subsequently amended in January 2016 and September 2016 and was approved by our stockholders in March 2016. The 2016 ESPP became effective in connection with our IPO. A total of 3,800,000 shares of Class A common stock were initially reserved for issuance under the 2016 ESPP. The number of shares of Class A common stock available for sale under the 2016 ESPP also includes an annual increase on the first day of each fiscal year beginning in fiscal 2018, equal to the lesser of: 3,800,000 shares, 1% of the outstanding shares of classes of common stock as of the last day of our immediately preceding fiscal year, or such other amount as may be determined by the Board. Accordingly, on August 1, 2017, the number of shares of Class A common stock available for issuance under 2016 ESPP increased by 1,546,365 shares pursuant to these provisions. The 2016 ESPP allows eligible employees to purchase shares of our Class A common stock at a discount through payroll deductions of up to 15% of eligible compensation, subject to caps of $25,000 in any calendar year and 1,000 shares on any purchase date. The 2016 ESPP provides for 12 -month offering periods generally beginning March and September of each year, and each offering period consists of two six-month purchase periods. On each purchase date, participating employees will purchase Class A common stock at a price per share equal to 85% of the lesser of the fair market value of our Class A common stock on (i) the first trading day of the applicable offering period and (2) the last trading day of each purchase period in the applicable offering period. If the stock price of our Class A common stock on any purchase date in an offering period is lower than the stock price on the enrollment date of that offering period, the offering period will immediately reset after the purchase of shares on such purchase date and automatically roll into a new offering period. For the six months ended January 31, 2018 , 1,261,104 shares of common stock were purchased for an aggregate amount of $17.4 million . As of January 31, 2018 , 2,839,207 shares were available for future issuance under the 2016 ESPP. We use the Black-Scholes option-pricing model to determine the fair value of shares purchased under the 2016 ESPP with the following weighted-average assumptions on the date of grant: Six Months Ended January 31, 2017 2018 Expected term (in years) 0.75 0.75 Risk-free interest rate 0.6 % 1.25 % Volatility 50.6 % 50.2 % Dividend yield — % — % Stock-Based Compensation —Total stock-based compensation expense recognized for stock awards in the consolidated statements of operations is as follows (in thousands): Three Months Ended Six Months Ended 2017 2018 2017 2018 (in thousands) (in thousands) Cost of revenue: Product $ 848 $ 684 $ 1,814 $ 1,254 Support and other services 2,389 2,133 5,739 4,205 Sales and marketing 15,528 15,942 49,419 29,708 Research and development 28,759 17,023 62,785 32,565 General and administrative 5,083 6,229 23,578 9,794 Total stock-based compensation expense $ 52,607 $ 42,011 $ 143,335 $ 77,526 Stock-based compensation expense for the six months ended January 31, 2017 included cumulative stock-compensation expense related to stock awards with performance conditions, which vesting was deemed probable in the first quarter of fiscal 2017 upon the successful completion of our IPO. Prior to fiscal 2017, no expense was recognized related to these stock awards with performance conditions as vesting was not deemed probable. The cumulative stock-based compensation expense recorded in the first quarter of fiscal 2017 was for the portion of the awards for which the relevant service condition had been satisfied and we have continued to recognize the remaining expense over the remaining service period. Stock-based compensation expense related to stock awards without performance conditions is recognized on a straight-line basis over the requisite service period. As of January 31, 2018 , unrecognized stock-based compensation expense related to the outstanding stock awards was approximately $483.8 million and is expected to be recognized over a weighted-average period of approximately 2.7 years. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jan. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The income tax provisions of $0.5 million and $0.7 million for the three and six months ended January 31, 2017, respectively, primarily consisted of foreign taxes on our international operations and U.S. state income taxes, offset by the partial release of $1.5 million of the U.S. valuation allowance in connection with a business acquisition completed during the six months ended January 31, 2017 and tax benefit related to the early adoption of ASU 2016-09. The net deferred tax liability recorded in connection with a business acquisition completed during the six months ended January 31, 2017 provided an additional source of taxable income to support the realizability of the pre-existing deferred tax assets and as a result, we released a portion of the U.S. valuation allowance. The income tax provisions of $1.9 million and $4.2 million for the three and six months ended January 31, 2018, respectively, primarily consisted of foreign taxes on our international operations. We continue to maintain a valuation allowance for its U.S. Federal and state deferred tax assets. On December 22, 2017, the Tax Cuts and Jobs Act, or TCJA, was signed into federal law, which among other changes reduces the federal corporate tax rate to 21%. We do not expect the TCJA to have a material impact on our financial statements due to our valuation allowance in the U.S. Based on our analysis, U.S. deferred tax assets have been revalued from 34% to 21% with a corresponding offset to the valuation allowance. This resulted in a significant reduction to our net U.S. deferred tax assets and valuation allowance and an immaterial impact to income tax provision due to the valuation allowance on net US deferred tax assets. Pursuant to SEC Staff Accounting Bulletin 118, which provides guidance on accounting for the tax effects of the TJCA, we will continue to evaluate the impact of various domestic and international provisions of the TCJA as well as the impact of additional guidance that may be provided, to assess the full effects on our financial results, including disclosures for our fiscal year ending July 31, 2018. We have not yet made a policy election with respect to our treatment of potential global intangible low-taxed income, or GILTI. Companies can either account for taxes on GILTI as incurred or recognize deferred taxes when basis differences exist that are expected to affect the amount of the GILTI inclusion upon reversal. We are still in the process of analyzing the provisions of the Act associated with GILTI and the expected impact of GILTI on us in the future. In connection with the transition from a global to a territorial U.S. tax system, companies are required to pay a one-time transition tax on deemed repatriated earnings of Non-US subsidiaries. The tax is to be computed using our total foreign post-1986 earnings and profits that were previously deferred from U.S. income taxes. We did not have any deemed repatriation tax liability due to consolidated foreign deficit. The provisional amount may change during the one-year measurement period when we finalize the calculation of post-1986 foreign earnings and profits and the amount of foreign earnings held in cash or other specified assets. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 6 Months Ended |
Jan. 31, 2018 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NET LOSS PER SHARE We compute basic net income (loss) per share using the weighted average number of common shares outstanding during the period. We compute diluted net income (loss) per share using the weighted average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares include shares issuable upon the exercise of stock options, the exercise of common stock warrants, the vesting of RSUs, and each purchase under our 2016 ESPP, under the treasury stock method. In loss periods, basic net loss per share and diluted net loss per share are the same since the effect of potential common shares is anti-dilutive and therefore excluded. The rights, including the liquidation and dividend rights, of the holders of our Class A and Class B common stock are identical, except with respect to voting. As the liquidation and dividend rights are identical, our undistributed earnings or losses are allocated on a proportionate basis among the holders of both Class A and Class B common stock. As a result, the net income (loss) per share attributed to common stockholders will, therefore, be the same for both Class A and Class B common stock on an individual or combined basis. Net Loss Per Share Attributable to Class A and Class B Common Stockholders —The computation of basic and diluted net loss per share is as follows (in thousands, except share and per share data): Three Months Ended Six Months Ended 2017 *As Adjusted 2018 2017 *As Adjusted 2018 Numerator: Net loss $ (76,369 ) $ (62,631 ) $ (216,671 ) $ (124,118 ) Denominator: Weighted-average shares—basic and diluted 141,996,600 161,737,428 108,185,194 159,251,964 Net loss per share attributable to common stockholders—basic and diluted $ (0.54 ) $ (0.39 ) $ (2.00 ) $ (0.78 ) * See Note 3 for a summary of adjustments related to the adoption of the new revenue recognition standard. The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive are as follows: Three and Six Months Ended 2017 2018 Outstanding stock options and RSUs 44,813,334 37,328,263 Employee stock purchase plan 2,304,960 2,031,761 Common stock subject to repurchase 551,750 107,631 Common stock warrants 51,270 34,180 Total 47,721,314 39,501,835 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jan. 31, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION Our chief operating decision maker is a group which is comprised of our Chief Executive Officer and Chief Financial Officer. This group reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. Accordingly, we have a single reportable segment. The following table sets forth revenue by geographic location based on bill-to location: Three Months Ended Six Months Ended 2017 *As Adjusted 2018 2017 *As Adjusted 2018 (in thousands) (in thousands) U.S. $ 105,042 $ 165,775 $ 211,210 $ 353,140 Europe, the Middle East and Africa 34,602 51,729 60,018 89,173 Asia-Pacific 49,943 59,293 95,790 104,152 Other Americas 9,627 9,947 20,757 15,831 Total revenue $ 199,214 $ 286,744 $ 387,775 $ 562,296 * See Note 3 for a summary of adjustments related to the adoption of the new revenue recognition standard. Pursuant to our arrangement with one of our OEMs, prior to the fourth quarter of fiscal 2017, billings to such OEM were entirely attributed to Asia-Pacific. Beginning in the fourth quarter of fiscal 2017, billings to such OEM were attributed to various geographic locations. As of July 31, 2017 and January 31, 2018 , $63.3 million and $71.9 million , respectively, of our net long-lived assets were located in the U.S. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jan. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | RELATED PARTY TRANSACTIONS We enter into various transactions with our related parties in the normal course of business. During the three months ended January 31, 2017 and 2018 , our purchases of goods or services from related parties totaled $0.5 million and $4.6 million , respectively. During the six months ended January 31, 2017 and 2018 , our purchases of goods and services from related parties totaled $0.7 million and $5.0 million , respectively. We did not have any payables outstanding to related parties as of July 31, 2017 and outstanding payables to related parties as of January 31, 2018 were immaterial. Revenue from related parties for the three months ended January 31, 2017 and 2018 were immaterial. Revenue from related parties for the six months ended January 31, 2017 and 2018 were $0.1 million and $0.3 million , respectively. We did not have any receivables outstanding from related parties as of July 31, 2017 and January 31, 2018 . One member of our Board is affiliated with Lightspeed Venture Partners. As of January 31, 2018 , entities affiliated with Lightspeed Venture partners owned approximately 7.1% of all our outstanding Class A common stock and Class B common stock combined. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jan. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS Minjar Inc. In February 2018, we executed a definitive agreement pursuant to which we agreed to acquire Minjar Inc., or MI, a privately held Delaware corporation with its principal offices in Bangalore, India. The closing of the acquisition is subject to customary closing conditions. MI is a cloud technology solutions company. The acquisition of MI will complement and enhance our products, allowing us to offer customers new capabilities to better manage their multi-cloud deployments. Pursuant to the terms of the definitive agreement, all outstanding shares of MI capital stock, and all in-the-money options and warrants to purchase MI capital stock will be purchased or canceled in exchange for an aggregate purchase price of approximately $23.8 million in cash, subject to certain adjustments. Certain portions of the consideration for the acquisition will be placed in escrow to secure the indemnification obligations of certain MI security holders. In addition, a portion of the aggregate consideration payable to certain key MI employees will be subject to employee holdback or deferred payment arrangements, which will be accounted for as compensation because the key employees will need to continue to provide service to receive payments. The definitive agreement contains customary representations, warranties and covenants by us and MI. Netsil Inc. In March 2018, we executed a definitive agreement pursuant to which we agreed to acquire Netsil Inc., or NI, a privately held Delaware corporation headquartered in San Francisco, California. The closing of the acquisition is subject to customary closing conditions. NI provides application discovery and operations management . The acquisition of NI represents an opportunity for us to accelerate our ability to deliver native multi-cloud operations with the addition of application discovery and operations management . Under the terms of the definitive agreement, between 85% and 100% of the consideration will be payable in shares of our Class A common stock, depending on the accredited investor status of NI’s equity holders. As a result, upon consummation of the acquisition, we expect to issue at least 1,210,662 and up to approximately 1,424,308 shares of Class A common stock, subject to certain customary adjustments, in exchange for all of the capital stock, warrants and other vested rights to acquire or receive capital stock of NI, including vested stock options of NI. Certain portions of the consideration for the acquisition (both cash and shares of our Class A common stock) will be held in escrow to secure the indemnification obligations of certain NI security holders. In addition, a portion of the aggregate consideration payable to certain key NI employees will be subject to employee holdback arrangements, which will be accounted for as compensation because the key employees will need to continue to provide service to receive payments. The definitive agreement contains customary representations, warranties and covenants by us and NI. In June 2016, and prior to our consideration of NI as an acquisition target, Mr. Dheeraj Pandey, our CEO, made a personal investment in NI, which he still holds. As a shareholder of NI, Mr. Pandey will receive approximately 0.59% of the aggregate acquisition consideration, or approximately 8,400 shares of our Class A common stock, as a result of the acquisition, subject to certain customary adjustments. Following the acquisition, Mr. Pandey intends to donate all of the gains on his investment in NI to charity. |
BASIS OF PRESENTATION AND SUM21
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jan. 31, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Significant Accounting Policies | Principles of Consolidation and Significant Accounting Policies —The accompanying condensed consolidated financial statements, which include the accounts of Nutanix, Inc. and our wholly-owned subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States, or U.S. GAAP, and, except for the impact of the adoption of the new accounting guidance related to revenue recognition, consistent in all material respects with those applied in our Annual Report on Form 10-K for the fiscal year ended July 31, 2017, filed with the Securities and Exchange Commission, or SEC, on September 18, 2017. All intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements are unaudited, but include all adjustments of a normal recurring nature necessary for a fair presentation of our quarterly results. Certain prior period amounts have been adjusted as a result of our early adoption of new accounting guidance related to revenue recognition. Refer to “Summary of Significant Accounting Policies” and “Recent Accounting Pronouncements” below for more information. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes in our Annual Report on Form 10-K for the fiscal year ended July 31, 2017. Effective August 1, 2017, we adopted the requirements of Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers, or ASC 606, as discussed in detail in Note 3. All amounts and disclosures set forth in this Quarterly Report on Form 10-Q have been updated to comply with ASC 606, as indicated by the “as adjusted” footnote. |
Use of Estimates | Use of Estimates —The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Such management estimates include, but are not limited to, the best estimate of standalone selling prices for products and related support; determination of fair value of stock-based awards; accounting for income taxes, including the valuation reserve on deferred tax assets and uncertain tax positions; warranty liability; commissions expense; fair value of assets and liabilities acquired in business combinations; fair value of debt and equity components related to our convertible senior notes; and contingencies and litigation. Management evaluates these estimates and assumptions on an ongoing basis using historical experience and other factors and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could materially differ from those estimates and assumptions. |
Concentration Risk | Concentration Risk: Concentration of revenue and accounts receivable —We sell our products primarily through Partners and occasionally directly to end-customers. For the three and six months ended January 31, 2017 and 2018 , no end-customer accounted for 10% or more of total revenue. |
Recently Issued and Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncement — In May 2014, the Financial Accounting Standards Board, or FASB, issued ASC 606. The standard is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The FASB has issued several amendments to the standard, including clarifications on disclosure of prior-period performance obligations and remaining performance obligations. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The new standard would have been effective for us beginning August 1, 2018, and adoption as of the original effective date of August 1, 2017 was permitted. We elected to early adopt the standard effective August 1, 2017 using the full retrospective method, which required us to recast our historical financial information to be consistent with the new standard. Refer to Note 3 for the details of impacts to previously reported results. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The guidance is effective for annual periods beginning after December 15, 2017, with early adoption permitted, including adoption in any interim period for which financial statements have not yet been issued. We adopted this ASU effective August 1, 2017 and our adoption did not have a material impact on our condensed consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805) to clarify the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance is effective for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. We adopted this ASU effective August 1, 2017 and as we did not have any business acquisition during the six months ended January 31, 2018, our adoption did not have any impact on our condensed consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. We adopted this ASU effective November 1, 2017 and our adoption did not have any impact on our condensed consolidated financial statements. Recently Issued and Not Yet Adopted Accounting Pronouncements —In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 r equires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash or restricted cash equivalents should be included with cash and cash equivalents when reconciling beginning-of-period and end-of-period amounts shown on the statement of cash flows. ASU 2016-18 is effective for us beginning August 1, 2018, with early adoption permitted. We do not believe that adoption of this ASU will have a material impact on our condensed consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 will require us to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 is effective for us beginning August 1, 2018, with early adoption permitted. We are currently evaluating the effect the adoption of this guidance will have on our condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases, which requires recognition of right-to-use lease assets and lease liabilities for all leases (with the exception of short-term leases) on the balance sheet of lessees. ASU 2016-02 is effective for us beginning August 1, 2019, with early adoption permitted. This new standard requires a modified retrospective transition approach and provides certain optional transition relief. We are currently evaluating the effect the adoption of this guidance will have on our condensed consolidated financial statements. |
Revenue Recognition | Revenue Recognition —Effective August 1, 2017, we adopted ASC 606 using the full retrospective method, which required us to recast our historical financial information to be consistent with the standard. The most significant impact of ASC 606 on our historical financial information relates to the timing of revenue recognition for certain software licenses sold with post contract customer support, or PCS, for which we did not have vendor specific objective evidence, or VSOE, of fair value under the previous revenue recognition guidance. Under ASC 606, the requirement to have VSOE for undelivered elements is eliminated and we now recognize revenue for such software licenses upon transfer of control to our customers. In addition, the adoption of ASC 606 also resulted in differences in the timing of recognition of contract costs, such as sales commissions, as well as the corresponding impacts to provision for income taxes. The adoption of the standard had no significant impact to the provision for income taxes and had no impact to the net cash from or used in operating, investing, or financing activities on our condensed consolidated statements of cash flows. See ASC 606 Adoption Impact to Reported Results below for the impact of adoption of the standard on our condensed consolidated balance sheets and condensed consolidated statements of operations. |
BASIS OF PRESENTATION AND SUM22
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedules of Concentration of Revenue and Accounts Receivable | For each significant Partner, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable, net are as follows: Revenue Accounts Receivable as of Three Months Ended Six Months Ended Customers 2017 **As Adjusted 2018 2017 **As Adjusted 2018 July 31, 2017 January 31, 2018 Partner A * * 11 % 12 % * * Partner B 18 % 18 % 19 % 23 % 12 % 18 % Partner C 15 % 16 % 14 % 17 % 14 % * Partner D * 10 % 11 % 10 % 20 % 19 % Partner E 10 % * * * * 10 % Partner F 14 % 14 % 12 % 14 % 18 % * ___________________ * Less than 10% ** Adjusted to include the impact of ASC 606. Refer to Note 3 for more details on the impact of the adoption of this standard. |
REVENUE, DEFERRED REVENUE AND23
REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | Select condensed consolidated balance sheet line items, which reflect the adoption of ASC 606, are as follows: Balance Sheet: As of July 31, 2017 As Previously Reported Impact of Adoption As Adjusted (in thousands) Assets Deferred commissions - current $ 27,679 $ (3,836 ) (1) $ 23,843 Deferred commissions - non-current 33,709 15,975 (1) 49,684 Total deferred commissions $ 61,388 $ 12,139 $ 73,527 Liabilities Deferred revenue - current $ 233,498 $ (63,375 ) (2) $ 170,123 Deferred revenue - non-current 292,573 (93,640 ) (2) 198,933 Total deferred revenue $ 526,071 $ (157,015 ) $ 369,056 Accrued expenses and other current liabilities $ 9,414 $ 293 (3) $ 9,707 Stockholders' equity $ 48,202 $ 168,861 $ 217,063 _______________________ (1) Impact of cumulative change in commissions expense (2) Impact of cumulative change in revenue (3) Impact of cumulative change in provision for income taxes Select unaudited condensed consolidated statement of operations line items, which reflects the adoption of ASC 606, are as follows: Three Months Ended January 31, 2017 As Previously Reported Impact of Adoption As Adjusted Revenue (in thousands, except per share data) Product $ 138,508 $ 19,705 $ 158,213 Support and other services 43,687 (2,686 ) 41,001 Total revenue $ 182,195 $ 17,019 $ 199,214 Gross profit $ 105,349 $ 17,019 $ 122,368 Operating expenses Sales and marketing expenses $ 111,244 $ 130 $ 111,374 Loss from operations $ (92,290 ) $ 16,889 $ (75,401 ) Net Loss $ (93,212 ) $ 16,843 $ (76,369 ) Basic and diluted net loss per share $ (0.66 ) $ 0.12 $ (0.54 ) Six Months Ended January 31, 2017 As Previously Reported Impact of Adoption As Adjusted Revenue (in thousands, except per share data) Product $ 268,165 $ 43,584 $ 311,749 Support and other services 80,839 (4,813 ) 76,026 Total revenue $ 349,004 $ 38,771 $ 387,775 Gross profit $ 202,396 $ 38,771 $ 241,167 Operating expenses Sales and marketing expenses $ 240,019 $ (20 ) $ 239,999 Loss from operations $ (228,671 ) $ 38,791 $ (189,880 ) Net Loss $ (255,381 ) $ 38,710 $ (216,671 ) Basic and diluted net loss per share $ (2.36 ) $ 0.36 $ (2.00 ) Unaudited revenue by geographic location based on bill-to location, which reflects the adoption of ASC 606, are as follows: Three Months Ended January 31, 2017 As Previously Reported Impact of Adoption As Adjusted (in thousands) U.S. $ 102,173 $ 2,869 $ 105,042 Europe, the Middle East and Africa 33,272 1,330 34,602 Asia-Pacific 37,382 12,561 49,943 Other Americas 9,368 259 9,627 Total revenue $ 182,195 $ 17,019 $ 199,214 Six Months Ended January 31, 2017 As Previously Reported Impact of Adoption As Adjusted (in thousands) U.S. $ 205,044 $ 6,166 $ 211,210 Europe, the Middle East and Africa 57,520 2,498 60,018 Asia-Pacific 66,290 29,500 95,790 Other Americas 20,150 607 20,757 Total revenue $ 349,004 $ 38,771 $ 387,775 The adoption impacted certain line items in the cash flows from operating activities as follows: Six Months Ended January 31, 2017 As Previously Reported Impact of Adoption As Adjusted Cash flows from operating activities: (in thousands) Net loss $ (255,381 ) $ 38,710 $ (216,671 ) Adjustments to reconcile net loss to net cash provided by operating activities: Deferred commissions $ (8,049 ) $ (22 ) $ (8,071 ) Accrued expenses and other liabilities $ 1,594 $ 83 $ 1,677 Deferred revenue $ 118,143 $ (38,771 ) $ 79,372 |
Revenue by Arrangement, Disclosure | The following table depicts the disaggregation of revenue according to revenue type and is consistent with how we evaluate our financial performance: Three Months Ended Six Months Ended 2017 2018 2017 2018 (in thousands) Software revenue $ 102,845 $ 145,171 $ 207,590 $ 283,385 Hardware revenue 55,368 77,999 104,159 158,837 Support and other services revenue 41,001 63,574 76,026 120,074 Total revenue $ 199,214 $ 286,744 $ 387,775 $ 562,296 |
Deferred Revenue, by Arrangement, Disclosure | Significant changes in the balance of deferred revenue (contract liability) total deferred commissions (contract asset) for the periods presented are as follows: Deferred Revenue Deferred Commissions (in thousands) Balance as of July 31, 2017 * $ 369,056 73,527 Additions 96,288 33,807 Revenue/commissions recognized (56,500 ) (25,350 ) Balance as of October 31, 2017 408,844 81,984 Additions 132,730 45,782 Revenue/commissions recognized (63,574 ) (28,138 ) Balance as of January 31, 2018 $ 478,000 $ 99,628 * See details above for the summary of adjustments to deferred commission and deferred revenue as a result of the adoption of ASC 606. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Assets and Liabilities Measured on Recurring Basis | The carrying amounts and estimated fair values of financial instruments not recorded at fair value are as follows: As of July 31, 2017 As of January 31, 2018 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value (in thousands) Convertible senior notes, net — — $ 415,651 $ 563,011 The fair value of our financial assets and liabilities measured on a recurring basis is as follows: As of July 31, 2017 Level I Level II Level III Total (in thousands) Financial Assets: Cash equivalents: Money market funds $ 34,784 $ — $ — $ 34,784 Commercial paper — 23,041 — 23,041 Short-term investments: Corporate bonds — 160,634 — 160,634 Commercial paper — 36,084 — 36,084 U.S. government securities — 13,976 — 13,976 Total measured at fair value 34,784 233,735 — 268,519 Cash 80,534 Total cash, cash equivalents and short-term investments $ 349,053 Financial Liabilities: Contingent consideration $ — $ — $ 4,295 $ 4,295 As of January 31, 2018 Level I Level II Level III Total (in thousands) Financial Assets: Cash equivalents: Money market funds $ 380,039 $ — $ — $ 380,039 Commercial paper 63,529 63,529 U.S. government securities — 25,281 — 25,281 Corporate bonds — 2,847 — 2,847 Short-term investments: Corporate bonds — 209,425 — 209,425 Commercial paper — 74,092 — 74,092 U.S. government securities — 24,292 — 24,292 Total measured at fair value $ 380,039 $ 399,466 $ — 779,505 Cash 138,750 Total cash, cash equivalents and short-term investments $ 918,255 Financial Liabilities: Contingent consideration $ — $ — $ 340 $ 340 |
Summary of Changes in Fair Value of Convertible Preferred Stock Warrant Liability | A summary of the changes in the fair value of our contingent consideration, categorized as Level 3 in the fair value hierarchy, is as follows: Six Months Ended 2017 2018 (in thousands) Contingent consideration—beginning balance $ — $ 4,295 Assumed in a business acquisition 2,371 — Change in fair value* 472 (3,955 ) Contingent consideration—ending balance $ 2,843 $ 340 ____________ * Recorded in the condensed consolidated statements of operations within general and administrative expenses |
BALANCE SHEET COMPONENTS (Table
BALANCE SHEET COMPONENTS (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Investments in Marketable Debt Securities, by Contractual Maturity Date | The following table summarizes the estimated fair value of our investments in marketable debt securities, by the contractual maturity date: As of January 31, 2018 (in thousands) Due within 1 year $ 222,640 Due after 1 year through 3 years 85,169 Total $ 307,809 |
Schedule of Property, Plant and Equipment | Property and Equipment—Net —Property and equipment, net consists of the following: Estimated (In months) As of July 31, 2017 January 31, 2018 (in thousands) Computer, production, engineering and other equipment 36 $ 85,280 $ 104,891 Demonstration units 12 46,387 51,580 Leasehold improvements * 10,562 15,309 Furniture and fixtures 60 4,744 5,866 Total property and equipment—gross 146,973 177,646 Less accumulated depreciation and amortization (88,901 ) (108,572 ) Total property and equipment—net $ 58,072 $ 69,074 ____________ * Leasehold improvements are amortized over the shorter of the estimated useful lives of the improvements or the remaining lease term. |
Schedule of Finite-Lived Intangible Assets | Intangible Assets—Net —Intangible assets, net consists of the following: As of July 31, 2017 January 31, 2018 (in thousands) Indefinite-lived intangible asset: In-process R&D* $ 16,100 $ — Finite-lived intangible assets: Developed technology* 7,300 23,400 Customer relationships 4,830 4,830 Total finite-lived intangible assets, gross 12,130 28,230 Total intangible assets, gross 28,230 28,230 Less: Accumulated amortization of developed technology (1,314 ) (3,375 ) Accumulated amortization of customer relationships (915 ) (1,316 ) Total accumulated amortization (2,229 ) (4,691 ) Intangible assets, net $ 26,001 $ 23,539 |
Schedule of Indefinite-Lived Intangible Assets | Intangible Assets—Net —Intangible assets, net consists of the following: As of July 31, 2017 January 31, 2018 (in thousands) Indefinite-lived intangible asset: In-process R&D* $ 16,100 $ — Finite-lived intangible assets: Developed technology* 7,300 23,400 Customer relationships 4,830 4,830 Total finite-lived intangible assets, gross 12,130 28,230 Total intangible assets, gross 28,230 28,230 Less: Accumulated amortization of developed technology (1,314 ) (3,375 ) Accumulated amortization of customer relationships (915 ) (1,316 ) Total accumulated amortization (2,229 ) (4,691 ) Intangible assets, net $ 26,001 $ 23,539 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated future amortization expense of finite-lived intangible assets is as follows: Year Ending July 31: (In thousands) 2018 (remaining six months) $ 2,710 2019 5,421 2020 5,421 2021 5,421 2022 4,224 Thereafter 342 Total $ 23,539 |
Schedule of Accrued Liabilities | Accrued Compensation and Benefits —Accrued compensation and benefits consists of the following: As of July 31, 2017 January 31, 2018 (in thousands) Accrued commissions $ 20,388 $ 24,115 Accrued vacation 6,286 7,438 Contributions to ESPP withheld 14,371 18,036 Accrued bonus 7,342 8,566 Payroll taxes payable 3,434 8,970 Other 5,700 8,185 Total accrued compensation and benefits $ 57,521 $ 75,310 Accrued Expenses and Other Current Liabilities —Accrued expenses and other current liabilities consists of the following |
CONVERTIBLE SENIOR NOTES (Table
CONVERTIBLE SENIOR NOTES (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Debt Disclosure [Abstract] | |
Net Proceeds from Notes | The estimated total net proceeds from the Notes are as follows: Amount (in thousands) Principal amount $ 575,000 Less initial purchasers' discount (10,781 ) Less cost of the bond hedges (143,175 ) Add proceeds from the sale of warrants 87,975 Less other issuance costs (707 ) Net proceeds $ 508,312 |
Components of Notes | The Notes consisted of the following: As of January 31, 2018 (in thousands) Principal amounts: Principal $ 575,000 Unamortized debt discount (1) (150,929 ) Unamortized debt issuance costs (1) (8,420 ) Net carrying amount $ 415,651 Carrying amount of the equity component (2) $ 148,598 (1) Included in the condensed consolidated balance sheet within "Convertible senior notes — net" and amortized over the remaining life of the Notes using the effective interest rate method. The effective interest rate is 6.62% . (2) Included in the condensed consolidated balance sheet within additional paid-in capital, net of $3.0 million in equity issuance costs. |
Interest Expense Recognized | The following table sets forth the total interest expense recognized related to the Notes: Three and Six Months Ended (in thousands) Interest expense related to amortization of debt discount $ 699 Interest expense related to amortization of the debt issuance costs 39 Total interest expense $ 738 |
EQUITY AWARD PLANS (Tables)
EQUITY AWARD PLANS (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of RSUs Activity | The summary of RSU activity under the Stock Plans is as follows: Number of Grant Date Fair Value per Share Outstanding—July 31, 2017 17,376,090 $ 18.85 Granted 9,214,498 $ 32.68 Vested (2,749,519 ) $ 18.01 Canceled/forfeited (1,230,623 ) $ 22.86 Outstanding—January 31, 2018 22,610,446 $ 24.37 |
Schedule of ESPP Valuation Assumptions | We use the Black-Scholes option-pricing model to determine the fair value of shares purchased under the 2016 ESPP with the following weighted-average assumptions on the date of grant: Six Months Ended January 31, 2017 2018 Expected term (in years) 0.75 0.75 Risk-free interest rate 0.6 % 1.25 % Volatility 50.6 % 50.2 % Dividend yield — % — % |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | Total stock-based compensation expense recognized for stock awards in the consolidated statements of operations is as follows (in thousands): Three Months Ended Six Months Ended 2017 2018 2017 2018 (in thousands) (in thousands) Cost of revenue: Product $ 848 $ 684 $ 1,814 $ 1,254 Support and other services 2,389 2,133 5,739 4,205 Sales and marketing 15,528 15,942 49,419 29,708 Research and development 28,759 17,023 62,785 32,565 General and administrative 5,083 6,229 23,578 9,794 Total stock-based compensation expense $ 52,607 $ 42,011 $ 143,335 $ 77,526 |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Loss Per Share | The computation of basic and diluted net loss per share is as follows (in thousands, except share and per share data): Three Months Ended Six Months Ended 2017 *As Adjusted 2018 2017 *As Adjusted 2018 Numerator: Net loss $ (76,369 ) $ (62,631 ) $ (216,671 ) $ (124,118 ) Denominator: Weighted-average shares—basic and diluted 141,996,600 161,737,428 108,185,194 159,251,964 Net loss per share attributable to common stockholders—basic and diluted $ (0.54 ) $ (0.39 ) $ (2.00 ) $ (0.78 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive are as follows: Three and Six Months Ended 2017 2018 Outstanding stock options and RSUs 44,813,334 37,328,263 Employee stock purchase plan 2,304,960 2,031,761 Common stock subject to repurchase 551,750 107,631 Common stock warrants 51,270 34,180 Total 47,721,314 39,501,835 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jan. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Geographic Area | The following table sets forth revenue by geographic location based on bill-to location: Three Months Ended Six Months Ended 2017 *As Adjusted 2018 2017 *As Adjusted 2018 (in thousands) (in thousands) U.S. $ 105,042 $ 165,775 $ 211,210 $ 353,140 Europe, the Middle East and Africa 34,602 51,729 60,018 89,173 Asia-Pacific 49,943 59,293 95,790 104,152 Other Americas 9,627 9,947 20,757 15,831 Total revenue $ 199,214 $ 286,744 $ 387,775 $ 562,296 |
BASIS OF PRESENTATION AND SUM30
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Partner Concentration Risk | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | Jul. 31, 2017 | |
Revenue | Partner A | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 12.00% | 11.00% | |||
Revenue | Partner B | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 18.00% | 18.00% | 23.00% | 19.00% | |
Revenue | Partner C | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 16.00% | 15.00% | 17.00% | 14.00% | |
Revenue | Partner D | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 10.00% | 10.00% | 11.00% | ||
Revenue | Partner E | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 10.00% | ||||
Revenue | Partner F | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 14.00% | 14.00% | 14.00% | 12.00% | |
Accounts Receivable | Partner B | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 18.00% | 12.00% | |||
Accounts Receivable | Partner C | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 14.00% | ||||
Accounts Receivable | Partner D | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 19.00% | 20.00% | |||
Accounts Receivable | Partner E | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 10.00% | ||||
Accounts Receivable | Partner F | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 18.00% |
REVENUE, DEFERRED REVENUE AND31
REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS - ASC 606 Impact on Balance Sheet (Details) - USD ($) $ in Thousands | Jan. 31, 2018 | Oct. 31, 2017 | Jul. 31, 2017 | |
Assets | ||||
Deferred commissions—current | $ 33,508 | $ 23,843 | ||
Deferred commissions—non-current | 66,120 | 49,684 | ||
Total deferred commissions | 99,628 | $ 81,984 | 73,527 | |
Liabilities | ||||
Deferred revenue—current | 231,731 | 170,123 | ||
Deferred revenue—non-current | 246,269 | 198,933 | ||
Total deferred revenue | 478,000 | $ 408,844 | 369,056 | |
Accrued expenses and other current liabilities | 11,241 | 9,707 | ||
Stockholders' equity | $ 300,479 | 217,063 | [1] | |
Accounting Standards Update 2014-09 | ||||
Assets | ||||
Deferred commissions—current | 23,843 | |||
Deferred commissions—non-current | 49,684 | |||
Total deferred commissions | 73,527 | |||
Liabilities | ||||
Deferred revenue—current | 170,123 | |||
Deferred revenue—non-current | 198,933 | |||
Total deferred revenue | 369,056 | |||
Accrued expenses and other current liabilities | 9,707 | |||
Stockholders' equity | 217,063 | |||
Accounting Standards Update 2014-09 | Scenario, Previously Reported | ||||
Assets | ||||
Deferred commissions—current | 27,679 | |||
Deferred commissions—non-current | 33,709 | |||
Total deferred commissions | 61,388 | |||
Liabilities | ||||
Deferred revenue—current | 233,498 | |||
Deferred revenue—non-current | 292,573 | |||
Total deferred revenue | 526,071 | |||
Accrued expenses and other current liabilities | 9,414 | |||
Stockholders' equity | 48,202 | |||
Accounting Standards Update 2014-09 | Restatement Adjustment | ||||
Assets | ||||
Deferred commissions—current | (3,836) | |||
Deferred commissions—non-current | 15,975 | |||
Total deferred commissions | 12,139 | |||
Liabilities | ||||
Deferred revenue—current | (63,375) | |||
Deferred revenue—non-current | (93,640) | |||
Total deferred revenue | (157,015) | |||
Accrued expenses and other current liabilities | 293 | |||
Stockholders' equity | $ 168,861 | |||
[1] | See Note 3 for a summary of adjustments related to the adoption of the new revenue recognition standard. |
REVENUE, DEFERRED REVENUE AND32
REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS - ASC 606 Impact on Income Statement (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | ||
Revenues [Abstract] | |||||
Product | $ 223,170 | $ 158,213 | $ 442,222 | $ 311,749 | |
Support and other services | 63,574 | 41,001 | 120,074 | 76,026 | |
Total revenue | 286,744 | 199,214 | [1] | 562,296 | 387,775 |
Gross profit | 178,216 | 122,368 | [1] | 345,146 | 241,167 |
Operating expenses: | |||||
Sales and marketing | 151,201 | 111,374 | 296,606 | 239,999 | |
Loss from operations | (59,857) | (75,401) | [1] | (118,896) | (189,880) |
Net loss | $ (62,631) | $ (76,369) | [1] | $ (124,118) | $ (216,671) |
Basic and diluted net loss per share (in dollars per share) | $ (0.39) | $ (0.54) | [1] | $ (0.78) | $ (2) |
Accounting Standards Update 2014-09 | |||||
Revenues [Abstract] | |||||
Product | $ 158,213 | $ 311,749 | |||
Support and other services | 41,001 | 76,026 | |||
Total revenue | 199,214 | 387,775 | |||
Gross profit | 122,368 | 241,167 | |||
Operating expenses: | |||||
Sales and marketing | 111,374 | 239,999 | |||
Loss from operations | (75,401) | (189,880) | |||
Net loss | $ (76,369) | $ (216,671) | |||
Basic and diluted net loss per share (in dollars per share) | $ (0.54) | $ (2) | |||
Accounting Standards Update 2014-09 | Scenario, Previously Reported | |||||
Revenues [Abstract] | |||||
Product | $ 138,508 | $ 268,165 | |||
Support and other services | 43,687 | 80,839 | |||
Total revenue | 182,195 | 349,004 | |||
Gross profit | 105,349 | 202,396 | |||
Operating expenses: | |||||
Sales and marketing | 111,244 | 240,019 | |||
Loss from operations | (92,290) | (228,671) | |||
Net loss | $ (93,212) | $ (255,381) | |||
Basic and diluted net loss per share (in dollars per share) | $ (0.66) | $ (2.36) | |||
Accounting Standards Update 2014-09 | Restatement Adjustment | |||||
Revenues [Abstract] | |||||
Product | $ 19,705 | $ 43,584 | |||
Support and other services | (2,686) | (4,813) | |||
Total revenue | 17,019 | 38,771 | |||
Gross profit | 17,019 | 38,771 | |||
Operating expenses: | |||||
Sales and marketing | 130 | (20) | |||
Loss from operations | 16,889 | 38,791 | |||
Net loss | $ 16,843 | $ 38,710 | |||
Basic and diluted net loss per share (in dollars per share) | $ 0.12 | $ 0.36 | |||
[1] | See Note 3 for a summary of adjustments related to the adoption of the new revenue recognition standard. |
REVENUE, DEFERRED REVENUE AND33
REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS - ASC 606 Impact on Revenue by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | $ 286,744 | $ 199,214 | [1] | $ 562,296 | $ 387,775 |
U.S. | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | 165,775 | 105,042 | 353,140 | 211,210 | |
Europe, the Middle East and Africa | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | 51,729 | 34,602 | 89,173 | 60,018 | |
Asia-Pacific | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | 59,293 | 49,943 | 104,152 | 95,790 | |
Other Americas | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | $ 9,947 | 9,627 | $ 15,831 | 20,757 | |
Accounting Standards Update 2014-09 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | 199,214 | 387,775 | |||
Accounting Standards Update 2014-09 | U.S. | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | 105,042 | 211,210 | |||
Accounting Standards Update 2014-09 | Europe, the Middle East and Africa | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | 34,602 | 60,018 | |||
Accounting Standards Update 2014-09 | Asia-Pacific | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | 49,943 | 95,790 | |||
Accounting Standards Update 2014-09 | Other Americas | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | 9,627 | 20,757 | |||
Accounting Standards Update 2014-09 | Scenario, Previously Reported | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | 182,195 | 349,004 | |||
Accounting Standards Update 2014-09 | Scenario, Previously Reported | U.S. | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | 102,173 | 205,044 | |||
Accounting Standards Update 2014-09 | Scenario, Previously Reported | Europe, the Middle East and Africa | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | 33,272 | 57,520 | |||
Accounting Standards Update 2014-09 | Scenario, Previously Reported | Asia-Pacific | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | 37,382 | 66,290 | |||
Accounting Standards Update 2014-09 | Scenario, Previously Reported | Other Americas | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | 9,368 | 20,150 | |||
Accounting Standards Update 2014-09 | Restatement Adjustment | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | 17,019 | 38,771 | |||
Accounting Standards Update 2014-09 | Restatement Adjustment | U.S. | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | 2,869 | 6,166 | |||
Accounting Standards Update 2014-09 | Restatement Adjustment | Europe, the Middle East and Africa | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | 1,330 | 2,498 | |||
Accounting Standards Update 2014-09 | Restatement Adjustment | Asia-Pacific | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | 12,561 | 29,500 | |||
Accounting Standards Update 2014-09 | Restatement Adjustment | Other Americas | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total revenue | $ 259 | $ 607 | |||
[1] | See Note 3 for a summary of adjustments related to the adoption of the new revenue recognition standard. |
REVENUE, DEFERRED REVENUE AND34
REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS - ASC 606 Impact on Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Net loss | $ (62,631) | $ (76,369) | [1] | $ (124,118) | $ (216,671) |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||
Deferred commission | (26,101) | (8,071) | |||
Accrued expenses and other liabilities | 2,415 | 1,677 | |||
Deferred revenue | $ 108,944 | 79,372 | |||
Accounting Standards Update 2014-09 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Net loss | (76,369) | (216,671) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||
Deferred commission | 8,071 | ||||
Accrued expenses and other liabilities | 1,677 | ||||
Deferred revenue | 79,372 | ||||
Accounting Standards Update 2014-09 | Scenario, Previously Reported | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Net loss | (93,212) | (255,381) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||
Deferred commission | 8,049 | ||||
Accrued expenses and other liabilities | 1,594 | ||||
Deferred revenue | 118,143 | ||||
Accounting Standards Update 2014-09 | Restatement Adjustment | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Net loss | $ 16,843 | 38,710 | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||
Deferred commission | 22 | ||||
Accrued expenses and other liabilities | 83 | ||||
Deferred revenue | $ (38,771) | ||||
[1] | See Note 3 for a summary of adjustments related to the adoption of the new revenue recognition standard. |
REVENUE, DEFERRED REVENUE AND35
REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS - Schedule of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | ||
Condensed Income Statements, Captions [Line Items] | |||||
Sales revenue, goods | $ 223,170 | $ 158,213 | $ 442,222 | $ 311,749 | |
Support and other services | 63,574 | 41,001 | 120,074 | 76,026 | |
Total revenue | 286,744 | 199,214 | [1] | 562,296 | 387,775 |
Software | |||||
Condensed Income Statements, Captions [Line Items] | |||||
Sales revenue, goods | 145,171 | 102,845 | 283,385 | 207,590 | |
Hardware | |||||
Condensed Income Statements, Captions [Line Items] | |||||
Sales revenue, goods | $ 77,999 | 55,368 | $ 158,837 | 104,159 | |
Accounting Standards Update 2014-09 | |||||
Condensed Income Statements, Captions [Line Items] | |||||
Sales revenue, goods | 158,213 | 311,749 | |||
Support and other services | 41,001 | 76,026 | |||
Total revenue | $ 199,214 | $ 387,775 | |||
[1] | See Note 3 for a summary of adjustments related to the adoption of the new revenue recognition standard. |
REVENUE, DEFERRED REVENUE AND36
REVENUE, DEFERRED REVENUE AND DEFERRED COMMISSIONS - Deferred Revenue/Commissions (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2018 | Oct. 31, 2017 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Movement in Deferred Revenue [Roll Forward] | |||||
Deferred revenue, beginning balance | $ 408,844 | $ 369,056 | $ 369,056 | ||
Additions | 96,288 | 132,730 | |||
Revenue recognized | (56,500) | (63,574) | |||
Deferred revenue, ending balance | 478,000 | 408,844 | 478,000 | ||
Movement in Deferred Commissions [Roll Forward] | |||||
Deferred commissions, beginning balance | 81,984 | 73,527 | 73,527 | ||
Additions | 33,807 | 45,782 | |||
Commissions Recognized | (25,350) | (28,138) | |||
Deferred commissions, ending balance | $ 99,628 | $ 81,984 | $ 99,628 | ||
Percent expected to be recognized in next year | 34.00% | 34.00% | |||
Revenue recognized, amount deferred in prior period | $ 55,000 | $ 36,700 | $ 96,500 | $ 55,600 | |
Contracted revenue not recognized | $ 519,900 | $ 519,900 | |||
Percent expected to be recognized in next year | 51.00% | 51.00% |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Jan. 31, 2018 | Jul. 31, 2017 |
Financial Assets: | ||
Short-term investments: | $ 307,809 | $ 210,694 |
Recurring | ||
Financial Assets: | ||
Total measured at fair value | 779,505 | 268,519 |
Cash | 138,750 | 80,534 |
Total cash, cash equivalents and short-term investments | 918,255 | 349,053 |
Recurring | Commitments | ||
Financial Liabilities: | ||
Convertible preferred stock warrant liability | 340 | 4,295 |
Recurring | Corporate bonds | ||
Financial Assets: | ||
Short-term investments: | 209,425 | 160,634 |
Recurring | Commercial paper | ||
Financial Assets: | ||
Short-term investments: | 74,092 | 36,084 |
Recurring | U.S. government securities | ||
Financial Assets: | ||
Short-term investments: | 24,292 | 13,976 |
Recurring | Money market funds | ||
Financial Assets: | ||
Cash equivalents: | 380,039 | 34,784 |
Recurring | Commercial paper | ||
Financial Assets: | ||
Cash equivalents: | 63,529 | 23,041 |
Recurring | U.S. government securities | ||
Financial Assets: | ||
Cash equivalents: | 25,281 | |
Recurring | Corporate bonds | ||
Financial Assets: | ||
Cash equivalents: | 2,847 | |
Recurring | Level I | ||
Financial Assets: | ||
Total measured at fair value | 380,039 | 34,784 |
Recurring | Level I | Commitments | ||
Financial Liabilities: | ||
Convertible preferred stock warrant liability | 0 | 0 |
Recurring | Level I | Corporate bonds | ||
Financial Assets: | ||
Short-term investments: | 0 | 0 |
Recurring | Level I | Commercial paper | ||
Financial Assets: | ||
Short-term investments: | 0 | 0 |
Recurring | Level I | U.S. government securities | ||
Financial Assets: | ||
Short-term investments: | 0 | 0 |
Recurring | Level I | Money market funds | ||
Financial Assets: | ||
Cash equivalents: | 380,039 | 34,784 |
Recurring | Level I | Commercial paper | ||
Financial Assets: | ||
Cash equivalents: | 0 | |
Recurring | Level I | U.S. government securities | ||
Financial Assets: | ||
Cash equivalents: | 0 | |
Recurring | Level I | Corporate bonds | ||
Financial Assets: | ||
Cash equivalents: | 0 | |
Recurring | Level II | ||
Financial Assets: | ||
Total measured at fair value | 399,466 | 233,735 |
Recurring | Level II | Commitments | ||
Financial Liabilities: | ||
Convertible preferred stock warrant liability | 0 | 0 |
Recurring | Level II | Corporate bonds | ||
Financial Assets: | ||
Short-term investments: | 209,425 | 160,634 |
Recurring | Level II | Commercial paper | ||
Financial Assets: | ||
Short-term investments: | 74,092 | 36,084 |
Recurring | Level II | U.S. government securities | ||
Financial Assets: | ||
Short-term investments: | 24,292 | 13,976 |
Recurring | Level II | Money market funds | ||
Financial Assets: | ||
Cash equivalents: | 0 | 0 |
Recurring | Level II | Commercial paper | ||
Financial Assets: | ||
Cash equivalents: | 63,529 | 23,041 |
Recurring | Level II | U.S. government securities | ||
Financial Assets: | ||
Cash equivalents: | 25,281 | |
Recurring | Level II | Corporate bonds | ||
Financial Assets: | ||
Cash equivalents: | 2,847 | |
Recurring | Level III | ||
Financial Assets: | ||
Total measured at fair value | 0 | 0 |
Recurring | Level III | Commitments | ||
Financial Liabilities: | ||
Convertible preferred stock warrant liability | 340 | 4,295 |
Recurring | Level III | Corporate bonds | ||
Financial Assets: | ||
Short-term investments: | 0 | 0 |
Recurring | Level III | Commercial paper | ||
Financial Assets: | ||
Short-term investments: | 0 | 0 |
Recurring | Level III | U.S. government securities | ||
Financial Assets: | ||
Short-term investments: | 0 | |
Recurring | Level III | Money market funds | ||
Financial Assets: | ||
Cash equivalents: | 0 | 0 |
Recurring | Level III | Commercial paper | ||
Financial Assets: | ||
Cash equivalents: | $ 0 | |
Recurring | Level III | U.S. government securities | ||
Financial Assets: | ||
Cash equivalents: | 0 | |
Recurring | Level III | Corporate bonds | ||
Financial Assets: | ||
Cash equivalents: | $ 0 |
FAIR VALUE MEASUREMENTS - Non-r
FAIR VALUE MEASUREMENTS - Non-recurring Basis (Details) - Fair Value, Measurements, Nonrecurring - USD ($) | Jan. 31, 2018 | Jul. 31, 2017 |
Reported Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Convertible senior notes, net | $ 415,651,000 | $ 0 |
Estimate of Fair Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Convertible senior notes, net | $ 563,011,000 | $ 0 |
FAIR VALUE MEASUREMENTS - Level
FAIR VALUE MEASUREMENTS - Level 3 Roll Forward (Details) - Commitments - USD ($) $ in Thousands | 6 Months Ended | |
Jan. 31, 2018 | Jan. 31, 2017 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Contingent consideration—beginning balance | $ 4,295 | $ 0 |
Assumed in a business acquisition | 0 | 2,371 |
Change in fair value | 3,955 | (472) |
Contingent consideration—ending balance | $ 340 | $ 2,843 |
BALANCE SHEET COMPONENTS - Shor
BALANCE SHEET COMPONENTS - Short-Term Investments (Details) - USD ($) $ in Thousands | Jan. 31, 2018 | Jul. 31, 2017 |
Available-for-sale Securities, Debt Maturities, Fair Value, Rolling Maturity [Abstract] | ||
Due within 1 year | $ 222,640 | |
Due after 1 year through 3 years | 85,169 | |
Total | $ 307,809 | $ 210,694 |
BALANCE SHEET COMPONENTS - Prop
BALANCE SHEET COMPONENTS - Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | Jul. 31, 2017 | |
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment—gross | $ 177,646 | $ 177,646 | $ 146,973 | ||
Less accumulated depreciation and amortization | (108,572) | (108,572) | (88,901) | ||
Total property and equipment—net | 69,074 | 69,074 | 58,072 | ||
Depreciation and amortization | 23,015 | $ 18,172 | |||
Property, Plant and Equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Depreciation and amortization | 10,300 | $ 9,000 | $ 20,600 | $ 17,200 | |
Computer, production, engineering and other equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated Useful Life (In months) | 36 months | ||||
Total property and equipment—gross | 104,891 | $ 104,891 | 85,280 | ||
Demonstration units | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated Useful Life (In months) | 12 months | ||||
Total property and equipment—gross | 51,580 | $ 51,580 | 46,387 | ||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment—gross | 15,309 | $ 15,309 | 10,562 | ||
Furniture and fixtures | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated Useful Life (In months) | 60 months | ||||
Total property and equipment—gross | $ 5,866 | $ 5,866 | $ 4,744 |
BALANCE SHEET COMPONENTS - Inta
BALANCE SHEET COMPONENTS - Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jan. 31, 2018 | Jul. 31, 2017 | |
Finite-lived intangible assets: | ||
Finite-lived intangible assets, gross | $ 28,230 | $ 12,130 |
Total intangible assets, gross | 28,230 | 28,230 |
Less: | ||
Accumulated amortization | (4,691) | (2,229) |
Intangible assets, net | 23,539 | 26,001 |
In-process R&D | ||
Indefinite-lived intangible asset: | ||
In-process R&D | 0 | 16,100 |
Developed technology | ||
Finite-lived intangible assets: | ||
Finite-lived intangible assets, gross | 23,400 | 7,300 |
Less: | ||
Accumulated amortization | $ (3,375) | (1,314) |
Developed technology | Minimum | ||
Less: | ||
Estimated life (in years) | 5 years | |
Customer relationships | ||
Finite-lived intangible assets: | ||
Finite-lived intangible assets, gross | $ 4,830 | 4,830 |
Less: | ||
Accumulated amortization | $ (1,316) | $ (915) |
BALANCE SHEET COMPONENTS - Futu
BALANCE SHEET COMPONENTS - Future Amortization Expense (Details) $ in Thousands | Jan. 31, 2018USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2018 (remaining six months) | $ 2,710 |
2,019 | 5,421 |
2,020 | 5,421 |
2,021 | 5,421 |
2,022 | 4,224 |
Thereafter | 342 |
Total | $ 23,539 |
BALANCE SHEET COMPONENTS - Accr
BALANCE SHEET COMPONENTS - Accrued Compensation Benefits (Details) - USD ($) $ in Thousands | Jan. 31, 2018 | Jul. 31, 2017 |
Employee-related Liabilities, Current [Abstract] | ||
Accrued commissions | $ 24,115 | $ 20,388 |
Accrued vacation | 7,438 | 6,286 |
Contributions to ESPP withheld | 18,036 | 14,371 |
Accrued bonus | 8,566 | 7,342 |
Payroll taxes payable | 8,970 | 3,434 |
Other | 8,185 | 5,700 |
Total accrued compensation and benefits | $ 75,310 | $ 57,521 |
BALANCE SHEET COMPONENTS - Ac45
BALANCE SHEET COMPONENTS - Accrued Liabilities (Details) - USD ($) $ in Thousands | Jan. 31, 2018 | Jul. 31, 2017 |
Other Liabilities Disclosure [Abstract] | ||
Accrued professional services | $ 4,273 | $ 4,167 |
Income taxes payable | 4,163 | 3,873 |
Other | 2,805 | 1,667 |
Total accrued expenses and other current liabilities | $ 11,241 | $ 9,707 |
CONVERTIBLE SENIOR NOTES - Proc
CONVERTIBLE SENIOR NOTES - Proceeds from Notes (Details) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended | |
Jan. 31, 2018 | Jan. 31, 2018 | Jan. 31, 2017 | |
Debt Instrument [Line Items] | |||
Payments for convertible note hedges | $ (143,175) | $ 0 | |
Proceeds from issuance of warrants | 87,975 | $ 0 | |
Convertible Debt | |||
Debt Instrument [Line Items] | |||
Principal amount | $ 575,000 | 575,000 | |
Less initial purchasers' discount | (10,781) | (10,781) | |
Payments for convertible note hedges | (143,175) | ||
Proceeds from issuance of warrants | 87,975 | ||
Debt Issuance Cost, Gross, Noncurrent | 707 | 707 | |
Less other issuance costs | $ (39) | ||
Net proceeds | $ 508,312 |
CONVERTIBLE SENIOR NOTES - Addi
CONVERTIBLE SENIOR NOTES - Additional Information (Details) $ / shares in Units, shares in Millions | 1 Months Ended | 6 Months Ended | |
Jan. 31, 2018USD ($)day$ / sharesshares | Jan. 31, 2018USD ($)$ / sharesshares | Jan. 31, 2017USD ($) | |
Debt Instrument [Line Items] | |||
Number of securities called by warrants or rights (in shares) | shares | 11.8 | 11.8 | |
Payments for convertible note hedges | $ 143,175,000 | $ 0 | |
Exercise price of warrants (in dollars per share) | $ / shares | $ 73.46 | $ 73.46 | |
Proceeds from issuance of warrants | $ 87,975,000 | $ 0 | |
Transaction cost | $ (55,200,000) | ||
Dilutive effect of convertible securities (in shares) | shares | 3.9 | ||
Share price threshold for dilutive effect of convertible debt (in dollars per share) | $ / shares | 73.46 | $ 73.46 | |
Dilutive effect of $10 increase in share price (in shares) | shares | 4.9 | ||
Dilutive effect of warrants (in shares) | shares | 1.4 | ||
Share price threshold for dilutive effect of warrants (in dollars per share) | $ / shares | 83.46 | $ 83.46 | |
Common Class A | |||
Debt Instrument [Line Items] | |||
Share price (in dollars per share) | $ / shares | $ 32.10 | $ 32.10 | |
Convertible Debt | |||
Debt Instrument [Line Items] | |||
Debt Issuance Cost, Gross, Noncurrent | $ 707,000 | $ 707,000 | |
Face amount | $ 575,000,000 | $ 575,000,000 | |
Interest rate, stated percentage | 0.00% | 0.00% | |
Convertible debt | $ 75,000,000 | $ 75,000,000 | |
Conversion ratio | 20.4705 | ||
Conversion price (in dollars per share) | $ / shares | $ 48.85 | $ 48.85 | |
Threshold trading days | day | 20 | ||
Threshold consecutive trading days | day | 30 | ||
Threshold percentage of stock price trigger | 130.00% | ||
Redemption price, percentage | 100.00% | ||
Carrying amount of liability component | $ 423,400,000 | $ 423,400,000 | |
Carrying amount of equity component | 151,600,000 | 151,600,000 | |
Unamortized discount and debt issuance costs, net | 11,500,000 | 11,500,000 | |
Unamortized discount, net | 10,781,000 | 10,781,000 | |
Transaction costs attributable to liability component | 8,500,000 | 8,500,000 | |
Transaction costs attributable to equity component | $ 3,000,000 | $ 3,000,000 | |
Debt instrument, term | 59 months | ||
Payments for convertible note hedges | $ 143,175,000 | ||
Proceeds from issuance of warrants | $ 87,975,000 | ||
Convertible Debt | Common Class A | |||
Debt Instrument [Line Items] | |||
Threshold percentage of stock price trigger | 98.00% |
CONVERTIBLE SENIOR NOTES - Comp
CONVERTIBLE SENIOR NOTES - Components of Notes (Details) - USD ($) $ in Thousands | Jan. 31, 2018 | Jul. 31, 2017 |
Debt Instrument [Line Items] | ||
Convertible senior notes—net | $ 415,651 | $ 0 |
Convertible Debt | ||
Debt Instrument [Line Items] | ||
Principal amount | 575,000 | |
Unamortized discount | (150,929) | |
Unamortized debt issuance cost | (8,420) | |
Carrying amount of the equity component | $ 148,598 | |
Effective interest rate | 6.62% | |
Payments of offering costs | $ (3,000) |
CONVERTIBLE SENIOR NOTES - Inte
CONVERTIBLE SENIOR NOTES - Interest Expense (Details) - Convertible Debt $ in Thousands | 6 Months Ended |
Jan. 31, 2018USD ($) | |
Debt Instrument [Line Items] | |
Interest expense related to amortization of debt discount | $ 699 |
Interest expense related to amortization of the debt issuance costs | 39 |
Total interest expense | $ 738 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | Jan. 31, 2018USD ($) |
Non-contract Vendors | |
Loss Contingencies [Line Items] | |
Purchase obligation | $ 19.3 |
Contract Manufacturer | |
Loss Contingencies [Line Items] | |
Purchase obligation | $ 53 |
STOCKHOLDERS_ EQUITY (Details)
STOCKHOLDERS’ EQUITY (Details) | Jan. 31, 2018vote$ / sharesshares | Jul. 31, 2017$ / sharesshares | Sep. 30, 2016class |
Class of Stock [Line Items] | |||
Preferred stock, shares authorized (in shares) | 200,000,000 | 200,000,000 | |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.000025 | $ 0.000025 | |
Preferred stock, shares issued (in shares) | 0 | 0 | |
Preferred stock, shares outstanding (in shares) | 0 | 0 | |
Common stock, number of classes of stock | class | 2 | ||
Common stock, shares authorized (in shares) | 1,200,000,000 | 1,200,000,000 | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.000025 | $ 0.000025 | |
Common stock, shares issued (in shares) | 164,065,915 | 154,636,520 | |
Common stock, shares outstanding (in shares) | 164,065,915 | 154,636,520 | |
Common Class A | |||
Class of Stock [Line Items] | |||
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 | |
Common stock, shares issued (in shares) | 119,873,498 | 93,570,171 | |
Common stock, shares outstanding (in shares) | 119,873,498 | 93,570,171 | |
Common stock number of votes per share | vote | 1 | ||
Common Class B | |||
Class of Stock [Line Items] | |||
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 | |
Common stock, shares issued (in shares) | 44,192,417 | 61,066,349 | |
Common stock, shares outstanding (in shares) | 44,192,417 | 61,066,349 | |
Common stock number of votes per share | vote | 10 |
EQUITY AWARD PLANS - Additional
EQUITY AWARD PLANS - Additional Information (Details) | Aug. 01, 2017shares | Sep. 30, 2016USD ($)purchase_periodshares | Jan. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2015shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercises in period (in shares) | 5,422,273 | |||
Weighted average exercise price (in dollars per share) | $ / shares | $ 3.58 | |||
Options outstanding (in shares) | 14,717,817 | |||
Outstanding options, weighted average exercise price (in dollars per share) | $ / shares | $ 4.91 | |||
Contractual term | 6 years 1 month 21 days | |||
Options outstanding, intrinsic value | $ | $ 400,200,000 | |||
Compensation not yet recognized | $ | $ 483,800,000 | |||
Period for recognition (in years) | 2 years 8 months 12 days | |||
Employee Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares available for grant (in shares) | 2,839,207 | |||
Percent of eligible compensation (up to) | 15.00% | |||
Monetary cap | $ | $ 25,000 | |||
Share cap (in shares) | 1,000 | |||
Offering period duration (in months) | 12 months | |||
Number of six-month purchase periods | purchase_period | 2 | |||
Purchase price of common stock, percent | 85.00% | |||
Stock repurchased during period (in shares) | 1,261,104 | |||
Stock repurchased during period, value | $ | $ 17,400,000 | |||
Common Class A | Employee Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares reserved for future issuance (in shares) | 3,800,000 | |||
Annual increase (in shares) | 3,800,000 | |||
Annual increase, percent of outstanding shares | 1.00% | |||
Number of additional shares authorized | 1,546,365 | |||
2016 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares reserved for future issuance (in shares) | 52,457,925 | |||
Number of shares available for grant (in shares) | 15,095,482 | |||
2016 Plan | Common Class A | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares reserved for future issuance (in shares) | 22,400,000 | |||
Annual increase (in shares) | 18,000,000 | |||
Annual increase, percent of outstanding shares | 5.00% | |||
Number of additional shares authorized | 7,731,826 |
EQUITY AWARD PLANS - RSU (Detai
EQUITY AWARD PLANS - RSU (Details) - RSUs - $ / shares | 6 Months Ended | |
Jan. 31, 2018 | Jul. 31, 2017 | |
Number of Shares | ||
Outstanding, beginning balance (in shares) | 17,376,090 | |
Granted (in shares) | 9,214,498 | |
Released (in shares) | (2,749,519) | |
Canceled/forfeited (in shares) | (1,230,623) | |
Outstanding, ending balance (in shares) | 22,610,446 | |
Grant Date Fair Value per Share | ||
Outstanding (in dollars per share) | $ 24.37 | $ 18.85 |
Granted (in dollars per share) | 32.68 | |
Released (in dollars per share) | 18.01 | |
Canceled/forfeited (in dollars per share) | $ 22.86 |
EQUITY AWARD PLANS - ESPP (Deta
EQUITY AWARD PLANS - ESPP (Details) - Employee Stock Purchase Plan | 6 Months Ended | |
Jan. 31, 2018 | Jan. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (in years) | 9 months | 9 months |
Risk-free interest rate | 1.25% | 0.60% |
Volatility | 50.21% | 50.60% |
Dividend yield | 0.00% | 0.00% |
EQUITY AWARD PLANS - Stock Base
EQUITY AWARD PLANS - Stock Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | $ 42,011 | $ 52,607 | $ 77,526 | $ 143,335 |
Cost of revenue, product | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | 684 | 848 | 1,254 | 1,814 |
Cost of revenue, support and other services | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | 2,133 | 2,389 | 4,205 | 5,739 |
Sales and marketing | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | 15,942 | 15,528 | 29,708 | 49,419 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | 17,023 | 28,759 | 32,565 | 62,785 |
General and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation expense | $ 6,229 | $ 5,083 | $ 9,794 | $ 23,578 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Provision for income taxes | $ 1,913 | $ 547 | $ 4,172 | $ 658 |
Valuation allowance release | $ 1,500 |
NET LOSS PER SHARE - Computatio
NET LOSS PER SHARE - Computation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | ||
Earnings Per Share [Abstract] | |||||
Net loss | $ (62,631) | $ (76,369) | [1] | $ (124,118) | $ (216,671) |
Weighted-average shares used in computing net loss per share attributable to common stockholders—basic and diluted (in shares) | 161,737,428 | 141,996,600 | 159,251,964 | 108,185,194 | |
Net loss per share attributable to common stockholders—basic and diluted (in dollars per share) | $ (0.39) | $ (0.54) | [1] | $ (0.78) | $ (2) |
[1] | See Note 3 for a summary of adjustments related to the adoption of the new revenue recognition standard. |
NET LOSS PER SHARE - Antidiluti
NET LOSS PER SHARE - Antidilutive Securities (Details) - shares | 6 Months Ended | |
Jan. 31, 2018 | Jan. 31, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 39,501,835 | 47,721,314 |
Outstanding stock options and RSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 37,328,263 | 44,813,334 |
Employee stock purchase plan | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 2,031,761 | 2,304,960 |
Common stock subject to repurchase | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 107,631 | 551,750 |
Common stock warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 34,180 | 51,270 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jan. 31, 2018USD ($) | Jan. 31, 2017USD ($) | Jan. 31, 2018USD ($)segment | Jan. 31, 2017USD ($) | Jul. 31, 2017USD ($) | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Number of reportable segments | segment | 1 | |||||
Total revenue | $ 286,744 | $ 199,214 | [1] | $ 562,296 | $ 387,775 | |
U.S. | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Total revenue | 165,775 | 105,042 | 353,140 | 211,210 | ||
Long-lived assets | 71,900 | 71,900 | $ 63,300 | |||
Europe, the Middle East and Africa | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Total revenue | 51,729 | 34,602 | 89,173 | 60,018 | ||
Asia-Pacific | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Total revenue | 59,293 | 49,943 | 104,152 | 95,790 | ||
Other Americas | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Total revenue | $ 9,947 | $ 9,627 | $ 15,831 | $ 20,757 | ||
[1] | See Note 3 for a summary of adjustments related to the adoption of the new revenue recognition standard. |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2018 | Jan. 31, 2017 | Jan. 31, 2018 | Jan. 31, 2017 | Jul. 31, 2017 | |
Related Party Transaction [Line Items] | |||||
Purchases from related party | $ 4,600,000 | $ 500,000 | $ 5,000,000 | $ 700,000 | |
Revenue from related parties | 300,000 | $ 100,000 | |||
Payables to related parties | 0 | 0 | $ 0 | ||
Receivables from related parties | $ 0 | $ 0 | $ 0 | ||
Nutanix, Inc. | Lightspeed Venture Partners | Lightspeed Venture Partners | |||||
Related Party Transaction [Line Items] | |||||
Ownership percentage by noncontrolling owners | 7.10% | 7.10% |
SUBSEQUEN EVENTS (Details)
SUBSEQUEN EVENTS (Details) - Subsequent Event - USD ($) $ in Millions | Mar. 12, 2018 | Feb. 28, 2018 |
Minjar Inc. | ||
Subsequent Event [Line Items] | ||
Payments to acquire businesses, gross | $ 23.8 | |
Netsil Inc. | Minimum | ||
Subsequent Event [Line Items] | ||
Percent of consideration payable in equity | 85.00% | |
Equity interest issued or issuable (in shares) | 1,210,662 | |
Netsil Inc. | Maximum | ||
Subsequent Event [Line Items] | ||
Percent of consideration payable in equity | 100.00% | |
Equity interest issued or issuable (in shares) | 1,424,308 | |
Netsil Inc. | Chief Executive Officer | ||
Subsequent Event [Line Items] | ||
Equity interest issued or issuable (in shares) | 8,400 | |
Percent of consideration payable to related party | 0.59% |