| Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Stock Split On September 5, 2019, the Company effected a 170-for-1 stock split of its issued and outstanding shares of common stock and made comparable and equitable adjustments to its equity awards in accordance with the terms of the awards. The par value of the common and preferred stock was not adjusted as a result of the stock split. Accordingly, all share and per share amounts for the periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retrospectively, where applicable, to reflect this stock split. In connection with the stock split, the Company’s Board of Directors (the “Board”) and stockholders approved the Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 85,000,000 shares (after giving effect to the stock split) to 500,000,000 shares and to increase the number of authorized shares of preferred stock from 34,000,000 shares (after giving effect to the stock split) to 50,000,000 shares. Segment and Geographic Information The Company operates in a single operating segment. Operating segments are defined as components of an enterprise for which discrete financial information is available and is regularly reviewed by the chief operating decision maker in order to make decisions regarding resource allocation and performance assessment. The Company has determined that its chief operating decision maker is its Chief Executive Officer. The Company's chief operating decision maker reviews the Company's financial information on a consolidated basis for purposes of allocating resources and evaluating financial performance. Since the Company operates in one operating segment, all required financial segment information can be found in the consolidated financial statements. Revenue by geographic region is based on the delivery address of the customer, and is summarized by geographic area as follows: Year Ended December 31, 2021 2020 2019 (in thousands) United States $ 222,425 $ 179,665 $ 188,283 International 77,024 63,924 54,615 Total revenue $ 299,449 $ 243,589 $ 242,898 Other than the United States, no other individual country exceeded 10% of total revenue for the years ended December 31, 2021, 2020 or 2019. The Company's long-lived assets are composed of property and equipment, net and operating lease right-of-use assets, and are summarized by geographic area as follows: December 31, 2021 2020 (in thousands) United States $ 16,123 $ 18,367 Israel 2,925 2,122 International 4,057 4,576 Total long-lived assets $ 23,105 $ 25,065 Outside of the United States and Israel, no other individual country held greater than 10% of total long-lived assets at December 31, 2021 or 2020. Foreign Currency The reporting currency of the Company is the U.S. dollar. For the subsidiary where the U.S. dollar is the functional currency, foreign currency denominated monetary assets and liabilities are remeasured into U.S. dollars at current exchange rates and foreign currency denominated nonmonetary assets and liabilities are remeasured into U.S. dollars at historical exchange rates. . Resulting gains and losses are recorded in in the consolidated statements of operations in the period of occurrence. The Company’s foreign subsidiaries are translated from the applicable functional currency to the U.S. dollar using the average exchange rates during the reporting period, while assets and liabilities are translated at the period-end exchange rates. Resulting gains or losses from translating foreign currency are included in accumulated other comprehensive income (loss). Revenue Recognition The Company recognizes revenue under Accounting Standards Codification Topic 606, Revenue from Contracts with Customers The Company applies judgment in identifying and evaluating terms and conditions in contracts which may impact revenue recognition. 1. Identification of the contract with a customer The Company contracts with its customers through order forms, which in some cases are governed by master sales agreements. The Company determines that it has a contract with a customer when the order form has been approved, each party’s rights regarding the products or services to be transferred can be identified, the payment terms for the products or services can be identified, the Company has determined the customer has the ability and intent to pay and the contract has commercial substance. The Company applies judgment in determining the customer’s ability and intent 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, credit, reputation and financial or other information pertaining to the customer. At contract inception, the Company evaluates whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation. 2. Determination of whether the goods or services in a contract comprise performance obligations Performance obligations promised in a contract are identified based on the products and services that will be transferred to the customer that are both (i) capable of being distinct, whereby the customer can benefit from a product or service either on its own or together with other resources that are readily available from third parties or from the Company, and (ii) are distinct in the context of the contract, whereby the transfer of certain products or services is separately identifiable from other promises in the contract. The Company sells its solutions through subscription-based contracts. The Company’s subscriptions for solutions deployed on-premise within the customer’s technology infrastructure are comprised of a term-based license and an obligation to provide maintenance and support, where the term-based license and the maintenance and support constitute separate performance obligations. The Company’s SaaS subscriptions provide customers the right to access cloud-hosted software and support for the SaaS service, which the Company considers to be a single performance obligation. The Company also renews subscriptions for maintenance and support, which the Company considers to be a single performance obligation. Professional services consist of consulting and training services. These services are distinct performance obligations from subscriptions and do not result in significant customization of the software. 3. Measurement of the transaction price The Company determines the transaction price based on the consideration that the Company expects to receive in exchange for transferring the promised goods or services to the customer. This transaction price is exclusive of amounts collected on behalf of third parties, such as sales tax and value-added tax. The Company does not offer refunds, rebates or credits to customers in the normal course of business, so the impact of variable consideration has not been material. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that its contracts generally do not include a significant financing component. The primary purpose of the Company’s invoicing terms is to provide customers with a simple and predictable way to purchase the Company’s subscriptions, not to provide customers with financing. 4. Allocation of the transaction price to separate performance obligations If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. For contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation based on each obligation’s relative standalone selling price (“SSP”). The SSP is determined based on the prices at which the Company separately sells the product, assuming the majority of these fall within a pricing range. In instances where SSP is not directly observable, such as when the Company does not sell the software license separately, the Company determines the SSP using information that may include market conditions, cost estimates and other observable inputs that can require significant judgment. There is typically a range of standalone selling prices for individual products and services based on a stratification of those products and services by quantity and other circumstances. If one of the performance obligations is outside of the SSP range, the Company determines SSP to be the nearest endpoint of the range. 5. Recognition of revenue when or as the Company satisfies each performance obligation Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised product or service to the customer. The Company’s software subscriptions include both upfront revenue recognition when the Company transfers control of the term-based license to the customer, as well as revenue recognized ratably over the contract period for maintenance and support based on the stand-ready nature of these subscription elements. Revenue for the Company’s SaaS products is recognized ratably over the contract period as the Company satisfies the performance obligation. Professional services revenue provided on a time and materials basis is recognized as these services are performed. Revenue from training services and sponsorship fees is recognized on the date the services are complete. The Company generates sales directly through its sales team as well as through its channel partners. Where channel partners are involved, the Company has determined that it is the principal in these arrangements. Sales to channel partners are generally made at a discount, and revenues are recorded at the discounted price once the revenue recognition criteria above have been met. In certain instances, the Company pays referral fees to its partners, which the Company has determined to be commensurate with internal sales commissions and thus records these payments as sales commissions. Channel partners generally receive an order from an end customer prior to placing an order with the Company, and payment from channel partners is not contingent on the partner’s collection from end customers. Deferred Commissions Sales commissions earned by the Company’s internal and external sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for new contracts and additional sales to existing customers are deferred and recorded in deferred commissions, current and noncurrent in the Company’s consolidated balance sheets. Deferred commissions are amortized over the period of benefit, which the Company has determined to be generally four years. The Company determined the period of benefit by taking into consideration its customer contracts, its technology and other factors. Deferred commissions are amortized consistent with the pattern of revenue recognition for each performance obligation for contracts for which the commissions were earned. The Company includes amortization of deferred commissions in sales and marketing expense in the consolidated statements of operations. The Company periodically reviews the carrying amount of deferred commissions to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred costs. The Company did not recognize an impairment of deferred commissions during the years ended December 31, 2021, 2020 and 2019. Cash and Cash Equivalents Cash consists of deposits with financial institutions whereas cash equivalents primarily consist of money market funds. The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Accounts Receivable and Allowance for Expected Credit Losses Accounts receivable represent amounts owed to the Company by its customers that are recorded at the invoiced amount. Effective January 1, 2020, the Company reports accounts receivable and contract assets net of an allowance for expected credit losses in accordance with Accounting Standards Codification Topic 326, Financial Instruments – Credit Losses Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts over a financial asset’s contractual term. The Company’s historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made from qualitative and quantitative factors if economic conditions at the reporting date reflect stronger or weaker economic performance than the historical data implies based on management’s expectations of economic conditions on certain indicators of the Company, industry and economy. Management reviews factors such as past collection experience, age of the accounts receivable balance, and macroeconomic conditions. As of December 31, 2021 and 2020, the Company evaluated these economic conditions and made adjustments to historical loss information for certain economic risk factors. In developing its expected credit loss model, the Company evaluated financial assets with similar risk characteristics on a collective (pool) basis for their respective estimated and expected credit loss allowance. A financial asset will be measured individually only if it does not share similar risk characteristics with other financial assets. Due to the short-term nature of trade receivables, the estimated amount of accounts receivable that may not be collected is based on the aging of the accounts receivable balances and the financial condition of customers. Our monitoring activities include timely account reconciliation, dispute resolution, payment confirmation, consideration of each customer’s financial condition and macroeconomic conditions. We apply a similar methodology towards our current and non-current contract asset balances. However, due to the inherent additional risk associated with a long-term receivable, an additional provision is applied toward contract asset balances that will diminish over time as the contract nears its expiration date. Prior to the adoption of ASC 326, the Company’s allowance for doubtful accounts was based on management judgments and estimates of the probable loss related to uncollectible accounts receivable considering a number of factors including collection trends, prevailing and anticipated economic conditions, and specific customer credit risk. The Company’s allowance for doubtful accounts activity was historically not significant. Probable losses were recorded in general and administrative expense in the accompanying consolidated statements of operations and account balances were charged off against the allowance after all means of collection had been exhausted and the potential for recovery was considered remote. Concentrations of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and cash equivalents on deposit at several financial institutions as well as accounts receivable. The Company deposits cash with high-credit-quality financial institutions, which, at times, may exceed federally insured amounts. The Company invests its cash equivalents in highly-rated money market funds. Additionally, the Company performs ongoing credit evaluations of its customers’ financial condition and will limit the amount of credit as deemed necessary, but currently does not require collateral from customers. As of December 31, 2021, Reseller A represented approximately 15% of accounts receivable. As of December 31, 2021, no single customer represented greater than 10% of accounts receivable. As of December 31, 2020, no single customer or reseller represented greater than 10% of accounts receivable. For the years ended December 31, 2021, 2020 and 2019, no single customer or reseller represented greater than 10% of revenue. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a three-level valuation hierarchy for the disclosure of fair value measurements. The determination of the applicable level within the hierarchy of a particular asset or liability depends on the inputs used in its valuation as of the measurement date, and notably the extent to which the inputs are market-based (observable) or internally determined (unobservable). The three levels are defined as follows: ● Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2: Observable inputs, other than Level 1 inputs, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3: Unobservable inputs reflecting the Company’s own assumptions used to measure assets and liabilities at fair value and which require significant management judgment or estimation. Property and Equipment Property and equipment are stated at historical cost less accumulated depreciation. Maintenance, repairs and minor renewals are expensed as incurred. Depreciation is computed using the straight-line method based on the following estimated useful lives: Asset Type Useful Life Computer equipment 3 years Purchased computer software 1 - 3 years Furniture and fixtures 3 - 5 years Leasehold improvements Lesser of the lease term or 10 years Other 3 - 5 years Capitalized Software Costs Costs for the development of new software products sold to customers and substantial enhancements to existing software products sold to customers are expensed as incurred until technological feasibility has been established, at which time any additional costs are capitalized during the development stage and until the software is generally released. The Company believes its current process for developing software will be essentially completed concurrently with the establishment of technological feasibility; hence, no costs have been capitalized to date. For development costs related to software to be used internally, the Company follows guidance of Accounting Standards Codification Topic 350-40, Internal Use Software The Company capitalizes the cost of software purchased from third-party vendors and has classified such costs as property and equipment in the consolidated balance sheets. These costs are amortized over their useful lives, which are primarily estimated to be three years. Goodwill Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations using the acquisition method of accounting, which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values. The Company evaluates goodwill for impairment annually in the fourth quarter of each year and as events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company’s test for goodwill impairment starts with a qualitative assessment to determine whether it is necessary to perform a quantitative goodwill impairment test. If qualitative factors indicate that the fair value of the reporting unit is more likely than not less than its carrying amount, then a quantitative goodwill impairment test is performed. Under the quantitative impairment test, if the carrying amount of the reporting unit exceeds its fair value, then an impairment loss is recognized in an amount equal to that excess, not to exceed the total amount of goodwill. For purposes of the annual impairment test, the Company has determined it has one reporting unit. There was no impairment of goodwill recorded during the years ended December 31, 2021, 2020 or 2019. Intangible Assets Intangible assets with finite lives arising from business combinations are initially recorded at fair value and amortized over their useful lives using the straight-line method. The estimated useful life for each acquired intangible asset class is as follows: Asset Type Useful Life Weighted Average Useful Life Developed technology 4 - 9 years 7.7 years Customer relationships 3 - 13 years 12.7 years Trade names 10 years 10 years Product backlog 3 years 3 years The Company records acquired in-process research and development as indefinite-lived intangible assets. Purchased intangible assets with indefinite lives are not amortized but assessed for potential impairment annually and when events or circumstances indicate that their carrying amounts might be impaired. research and development assets are reclassified to developed technology and amortized over their estimated useful lives. Impairment of Long-Lived Assets The Company reviews long-lived assets, including property and equipment and finite-lived intangible assets, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Such events and changes may include significant changes in performance relative to expected operating results, significant changes in asset use, significant negative industry or economic trends and changes in the Company’s business strategy. An impairment loss is recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. There were no events or changes in circumstances that indicated the Company’s long-lived assets were impaired Deferred Debt Issuance Costs Total deferred debt issuance costs incurred by the Company were $8.1 million and $1.2 million related to the 2021 Credit Facilities and the 2019 Credit Facilities, respectively (discussed in Note 9). The carrying value of deferred debt issuance costs associated with the 2021 Term Loan Facility (discussed in Note 9) and the 2019 Credit Facilities was $7.7 million and $1.0 million at December 31, 2021 and 2020 respectively, which was included as a reduction to long-term debt in the accompanying consolidated balance sheets. These issuance costs incurred to obtain debt financing are deferred and amortized to interest expense using the effective interest method over the contractual term of the debt. The carrying value of deferred debt issuance costs associated with the 2021 Revolving Facility (discussed in Note 9) was $0.8 million at December 31, 2021, which was included in other assets in the accompanying consolidated balance sheets. These issuance costs associated with the 2021 Revolving Facility are capitalized and amortized to interest expense on a straight-line basis over the contractual term of the debt. Operating Leases The Company leases office spaces and a data center under noncancelable lease terms, which are accounted for in accordance with Accounting Standards Codification Topic 842, Leases Some real estate leases contain lease and non-lease components. Non-lease components generally represent use-based charges for common area maintenance, taxes and utilities. The Company has elected not to separate lease and non-lease components. In addition to variable lease payments for use-based charges, some leasing arrangements contain variable lease payments that increase based on a consumer price index. Some contracts also contain lease incentives such as tenant improvement allowances and rent holidays, which are treated as a reduction of lease payments for the measurement of the lease liability. Research and Development Research and development costs include direct and allocated expenses. Other than software development costs that qualify for capitalization as discussed above, research and development costs are expensed as incurred. Advertising Costs The Company expenses advertising costs as incurred. Advertising expense is included within sales and marketing expense in the consolidated statements of operations. For the years ended December 31, 2021, 2020 and 2019, advertising expenses were $9.8 million, $5.3 million and $1.9 million, respectively. Stock-Based Compensation Stock-based compensation expense, including grants of employee stock options and restricted stock-based awards, is measured at the date of grant based on the fair value of the award. The Company accounts for forfeitures as they occur. The Company estimates the fair value of time-based stock options on the grant date using a Black-Scholes valuation model. Share-based compensation expense for restricted stock units (“RSUs”) is measured based on the fair value of the Company’s common stock on the date of grant. The Company recognizes share-based compensation expense for these awards on a straight-line basis over the award’s requisite service period. The vesting of performance stock units (“PSUs”) and performance-based stock options is contingent upon the achievement of certain performance and/or market-based metrics. Share-based compensation expense for PSUs with only performance-based vesting conditions is measured based on the fair value of the Company’s stock price on the date of grant. Share-based compensation expense for market-based options and market-based PSUs that have performance and market vesting conditions are measured on the grant date using a Monte Carlo simulation. The Company recognizes share-based compensation expense for these awards on a graded vesting basis over the term of the award. The fair value of each time-based option grant is estimated on the date of the grant using the Black-Scholes option pricing model. For awards subject to performance and market conditions, the Company uses a Monte Carlo simulation model, which utilizes multiple inputs to estimate the probability that market conditions will be achieved. Both models require highly subjective assumptions as inputs, including the following: ● Risk-free rate : The risk-free interest rate is based on the implied yield currently available on U.S. Treasury securities with a remaining term commensurate with the estimated expected term. ● Expected term : For time-based awards, the estimated expected term of options granted is generally calculated as the vesting period plus the midpoint of the remaining contractual term, as the Company does not have sufficient historical information to develop reasonable expectations surrounding future exercise patterns and post-vesting employment termination behavior. For awards subject to market and performance conditions, the expected term represents the period of time that the options or awards granted are expected to be outstanding. ● Dividend yield : The Company uses a dividend yield of zero, as it does not currently issue dividends and has no plans to issue dividends in the foreseeable future. ● Volatility : Since the Company does not have substantive trading history of its common stock, expected volatility is estimated based on the historical volatility of peer companies over the period commensurate with the estimated expected term. ● Fair value : Prior to the IPO, there was no public market for the Company’s common stock, so the fair value of the shares of common stock was established by the Board using various inputs, including an independent valuation. Following the IPO, the Company’s shares are traded in the public market, and accordingly the Company uses the applicable closing price of its common stock to determine fair value. No time-based options were granted during the years ended December 31, 2021, 2020 and 2019. No awards subject to performance and market conditions were granted during the years ended December 31, 2020 and 2019. The following assumptions were used for awards subject to performance and market conditions that were granted during the year ended December 31, 2021: Year Ended December 31, 2021 Risk-free rate 0.12 % Expected term 1.7 years Dividend yield — Volatility 65.0 % Grant date fair value of awards granted during the period $19.94 Income Taxes Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are computed annually for temporary differences between the financial statement basis and the income tax basis of assets and liabilities that will result in taxable or deductible amounts in the future. The Company’s temporary differences result primarily from net operating losses, stock compensation, deferred revenue, intangible assets and accrued expenses. Deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to the years in which the differences are expected to affect taxable income. A valuation allowance is established when necessary to reduce deferred income tax assets to the amounts expected to be realized. The Company evaluates the tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are more likely than not of being sustained by the applicable tax authority. Tax positions not deemed to meet the more likely than not threshold would not be recorded as a tax benefit or expense in the current year. Interest and penalties related to income tax liabilities are included in the benefit (provision) for income taxes. Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period, plus the dilutive effects of RSUs, PSUs and stock options. Dilutive shares of common stock are determined by applying the treasury stock method. Recent Accounting Pronouncements In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (" ASU No. 2021-08"). ASU No. 2021-08 will require companies to apply the definition of a performance obligation under ASC Topic 606 to recognize and measure contract assets and contract liabilities (i.e., deferred revenue) relating to contracts with customers that are acquired in a business combination. Under current GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU No. 2021-08 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. The impact is dependent on the size and frequency of future acquisitions and does not affect contract assets or contract liabilities related to acquisitions completed in a year prior to the adoption date. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes |
