Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 15, 2018 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | SolarWinds Corporation | |
Entity Central Index Key | 1,739,942 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Small Business | false | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 309,943,622 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 278,333 | $ 277,716 |
Accounts receivable, net of allowances of $3,027 and $2,065 as of September 30, 2018 and December 31, 2017, respectively | 98,035 | 85,133 |
Income tax receivable | 1,774 | 1,713 |
Prepaid and other current assets | 16,103 | 24,331 |
Total current assets | 394,245 | 388,893 |
Property and equipment, net | 37,870 | 34,209 |
Deferred taxes | 4,738 | 4,425 |
Goodwill | 3,699,311 | 3,695,640 |
Intangible assets, net | 1,020,995 | 1,194,499 |
Other assets, net | 11,178 | 9,398 |
Total assets | 5,168,337 | 5,327,064 |
Current liabilities: | ||
Accounts payable | 5,831 | 9,657 |
Accrued liabilities and other | 50,611 | 39,593 |
Accrued interest payable | 1,116 | 11,632 |
Income taxes payable | 2,536 | 9,049 |
Current portion of deferred revenue | 259,456 | 241,513 |
Current debt obligation | 19,900 | 16,950 |
Total current liabilities | 339,450 | 328,394 |
Long-term liabilities: | ||
Deferred revenue, net of current portion | 24,721 | 20,278 |
Non-current deferred taxes | 152,397 | 167,523 |
Other long-term liabilities | 141,531 | 148,121 |
Long-term debt, net of current portion | 2,216,272 | 2,245,622 |
Total liabilities | 2,874,371 | 2,909,938 |
Commitments and contingencies (Note 12) | ||
Redeemable convertible Class A common stock, $0.001 par value: 5,755,000 Class A shares authorized; 2,661,015 and 2,661,030 Class A shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively | 3,363,491 | 3,146,887 |
Stockholders’ deficit: | ||
Common stock, $0.001 par value: 233,000,000 Class B shares authorized; 102,088,136 and 100,734,056 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively | 102 | 101 |
Accumulated other comprehensive income (loss) | 39,205 | 75,294 |
Accumulated deficit | (1,108,832) | (805,156) |
Total stockholders’ deficit | (1,069,525) | (729,761) |
Total liabilities, redeemable convertible common stock and stockholders’ deficit | $ 5,168,337 | $ 5,327,064 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Allowance for doubtful accounts receivable | $ 3,027 | $ 2,065 |
Temporary Equity | ||
Class A common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Class A common stock, authorized (in shares) | 5,755,000 | 5,755,000 |
Class A common stock, issued (in shares) | 2,661,015 | 2,661,030 |
Class A common stock, outstanding (in shares) | 2,661,015 | 2,661,030 |
Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 233,000,000 | 233,000,000 |
Common stock, issued (in shares) | 102,088,136 | 100,734,056 |
Common stock, outstanding (in shares) | 102,088,136 | 100,734,056 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Revenue: | |||||
Total revenue | $ 213,277 | $ 189,112 | $ 611,908 | $ 529,678 | |
Cost of revenue: | |||||
Amortization of acquired technologies | 43,835 | 43,513 | 132,121 | 127,781 | |
Total cost of revenue | 61,857 | 58,703 | 184,738 | 172,660 | |
Gross profit | 151,420 | 130,409 | 427,170 | 357,018 | |
Operating expenses: | |||||
Sales and marketing | [1] | 56,926 | 50,942 | 166,022 | 152,070 |
Research and development | [1] | 23,274 | 20,521 | 71,800 | 63,414 |
General and administrative | [1] | 19,597 | 15,080 | 59,849 | 50,865 |
Amortization of acquired intangibles | [1] | 16,507 | 17,035 | 50,288 | 49,910 |
Total operating expenses | [1] | 116,304 | 103,578 | 347,959 | 316,259 |
Operating income | 35,116 | 26,831 | 79,211 | 40,759 | |
Other income (expense): | |||||
Interest expense, net | (35,627) | (42,534) | (112,103) | (127,018) | |
Other income (expense), net | [2] | (13) | 14,285 | (74,476) | 29,685 |
Total other income (expense) | (35,640) | (28,249) | (186,579) | (97,333) | |
Loss before income taxes | (524) | (1,418) | (107,368) | (56,574) | |
Income tax benefit | (126) | (3,055) | (20,045) | (12,469) | |
Net income (loss) | (398) | 1,637 | (87,323) | (44,105) | |
Net loss available to common stockholders | $ (75,006) | $ (66,627) | $ (303,944) | $ (242,310) | |
Net loss per share: | |||||
Basic loss per share (in dollars per share) | $ (0.73) | $ (0.66) | $ (2.98) | $ (2.42) | |
Diluted loss per share (in dollars per share) | $ (0.73) | $ (0.66) | $ (2.98) | $ (2.42) | |
Weighted-average shares used to compute net loss per share: | |||||
Shares used in computation of basic loss per share (in shares) | 102,078 | 100,759 | 101,915 | 100,330 | |
Shares used in computation of diluted loss per share (in shares) | 102,078 | 100,759 | 101,915 | 100,330 | |
Recurring Revenue | |||||
Revenue: | |||||
Total revenue | $ 169,530 | $ 148,619 | $ 493,588 | $ 416,863 | |
Cost of revenue: | |||||
Cost of recurring revenue | [1] | 18,022 | 15,190 | 52,617 | 44,879 |
Subscription | |||||
Revenue: | |||||
Total revenue | 67,713 | 55,361 | 196,004 | 155,402 | |
Cost of revenue: | |||||
Amortization of acquired technologies | 7,774 | 7,281 | 23,147 | 21,294 | |
Maintenance | |||||
Revenue: | |||||
Total revenue | 101,817 | 93,258 | 297,584 | 261,461 | |
License | |||||
Revenue: | |||||
Total revenue | 43,747 | 40,493 | 118,320 | 112,815 | |
Cost of revenue: | |||||
Amortization of acquired technologies | $ 36,061 | $ 36,232 | $ 108,974 | $ 106,487 | |
[1] | Includes stock-based compensation expense as follows: Cost of recurring revenue for the Three Months Ended September 30, 2018 and 2017: $2 thousand and $1 thousand Sales and marketing for the Three Months Ended September 30, 2018 and 2017: 115 thousand and 10 thousand Research and development for the Three Months Ended September 30, 2018 and 2017: 21 thousand and 6 thousand General and administrative for the Three Months Ended September 30, 2018 and 2017: 22 thousand and 4 thousand Total for the Three Months Ended September 30, 2018 and 2017: $160 thousand and $21 thousand Cost of recurring revenue for the Nine Months Ended September 30, 2018 and 2017: $7 thousand and $3 thousand Sales and marketing for the Nine Months Ended September 30, 2018 and 2017: 234 thousand and 26 thousand Research and development for the Nine Months Ended September 30, 2018 and 2017: 48 thousand and 14 thousand General and administrative for the Nine Months Ended September 30, 2018 and 2017: 43 thousand and 6 thousand Total for the Nine Months Ended September 30, 2018 and 2017: $332 thousand and $49 thousand | ||||
[2] | Other income (expense), net includes the following: Unrealized net transaction gains (losses) related to remeasurement of intercompany loans for the Three Months Ended September 30, 2018 and 2017: $51 thousand and $14,774 thousand, and for the Nine Months Ended September 30, 2018 and 2017: $(12,660) thousand and $49,955 thousand |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Parentheticals) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Stock-based compensation expense | $ 160 | $ 21 | $ 332 | $ 49 |
Unrealized net transaction gains (losses) related to remeasurement of intercompany loans | 0 | 14,300 | (14,000) | 48,200 |
Cost of recurring revenue | ||||
Stock-based compensation expense | 2 | 1 | 7 | 3 |
Sales and marketing | ||||
Stock-based compensation expense | 115 | 10 | 234 | 26 |
Research and development | ||||
Stock-based compensation expense | 21 | 6 | 48 | 14 |
General and administrative | ||||
Stock-based compensation expense | 22 | 4 | 43 | 6 |
Other income (expense) | ||||
Unrealized net transaction gains (losses) related to remeasurement of intercompany loans | $ 51 | $ 14,774 | $ (12,660) | $ 49,955 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ (398) | $ 1,637 | $ (87,323) | $ (44,105) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | (10,520) | 37,414 | (36,089) | 125,392 |
Other comprehensive income (loss) | (10,520) | 37,414 | (36,089) | 125,392 |
Comprehensive income (loss) | $ (10,918) | $ 39,051 | $ (123,412) | $ 81,287 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Redeemable Convertible Class A Common Stock and Stockholders' Deficit - 9 months ended Sep. 30, 2018 - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Earnings (Deficit) |
Balance at beginning of period (in shares) at Dec. 31, 2017 | 2,661,030 | ||||
Balance at beginning of period at Dec. 31, 2017 | $ 3,146,887 | ||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||
Repurchase of stock | (17) | ||||
Accumulating dividends | $ 216,621 | ||||
Balance at end of period (in shares) at Sep. 30, 2018 | 2,661,015 | ||||
Balance at end of period at Sep. 30, 2018 | $ 3,363,491 | ||||
Balance at beginning of period (in shares) at Dec. 31, 2017 | 100,734,056 | 100,734,000 | |||
Balance at beginning of period at Dec. 31, 2017 | $ (729,761) | $ 101 | $ 0 | $ 75,294 | $ (805,156) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Foreign currency translation adjustment | (36,089) | (36,089) | |||
Net loss | (87,323) | (87,323) | |||
Comprehensive income (loss) | $ (123,412) | ||||
Exercise of stock options (in shares) | 38,600 | 39,000 | |||
Exercise of stock options | $ 13 | 13 | |||
Issuance of stock (in shares) | 1,372,000 | ||||
Issuance of stock | 396 | $ 1 | 395 | ||
Repurchase of stock (in shares) | (57,000) | ||||
Repurchase of stock | (472) | (472) | |||
Accumulating dividends | (216,621) | (268) | (216,353) | ||
Stock-based compensation | $ 332 | 332 | |||
Balance at end of period (in shares) at Sep. 30, 2018 | 102,088,136 | 102,088,000 | |||
Balance at end of period at Sep. 30, 2018 | $ (1,069,525) | $ 102 | $ 0 | $ 39,205 | $ (1,108,832) |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities | ||
Net loss | $ (87,323) | $ (44,105) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 193,903 | 187,086 |
Provision for doubtful accounts | 1,991 | 2,140 |
Stock-based compensation expense | 332 | 49 |
Amortization of debt issuance costs | 9,272 | 14,226 |
Loss on extinguishment of debt | 60,590 | 18,559 |
Deferred taxes | (14,085) | (19,776) |
(Gain) loss on foreign currency exchange rates | 12,747 | (49,648) |
Other non-cash expenses (benefits) | 1,451 | 3,452 |
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business combinations: | ||
Accounts receivable | (13,963) | 4,151 |
Income taxes receivable | (131) | 1,470 |
Prepaid and other current assets | (1,931) | 4,497 |
Accounts payable | (3,958) | (3,130) |
Accrued liabilities and other | 9,745 | (8,783) |
Accrued interest payable | (10,516) | 255 |
Income taxes payable | (16,112) | 768 |
Deferred revenue | 22,291 | 24,249 |
Other long-term liabilities | 1,779 | 439 |
Net cash provided by operating activities | 166,082 | 135,899 |
Cash flows from investing activities | ||
Maturities of investments | 0 | 2,000 |
Purchases of property and equipment | (12,794) | (6,340) |
Purchases of intangible assets | (2,082) | (3,158) |
Acquisitions, net of cash acquired | (60,578) | (23,999) |
Proceeds from sale of cost method investment | 10,715 | 0 |
Net cash used in investing activities | (64,739) | (31,497) |
Cash flows from financing activities | ||
Proceeds from issuance of common stock and incentive restricted stock | 1,723 | 108 |
Repurchase of common stock and incentive restricted stock | (568) | (374) |
Exercise of stock options | 13 | 0 |
Premium paid on debt extinguishment | (22,725) | 0 |
Proceeds from credit agreement | 626,950 | 3,500 |
Repayments of borrowings from credit agreement | (694,925) | (32,714) |
Payment of debt issuance costs | (5,561) | (1,288) |
Payment for offering costs | (2,194) | 0 |
Net cash used in financing activities | (97,287) | (30,768) |
Effect of exchange rate changes on cash and cash equivalents | (3,439) | 8,042 |
Net increase in cash and cash equivalents | 617 | 81,676 |
Cash and cash equivalents | ||
Beginning of period | 277,716 | 101,643 |
End of period | 278,333 | 183,319 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 114,148 | 109,203 |
Cash paid for income taxes | $ 8,045 | $ 3,741 |
Organization and Nature of Oper
Organization and Nature of Operations | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Operations | 1. Organization and Nature of Operations SolarWinds Corporation and its subsidiaries (“Company” or “Successor”) is a leading provider of information technology, or IT, infrastructure management software. References to “we,” “us” and “our” refer to the Company. Our products give organizations worldwide, regardless of type, size or IT infrastructure complexity, the power to monitor and manage the performance of their IT environments, whether on-premise, in the cloud, or in hybrid infrastructure models. Our approach, which we refer to as the SolarWinds Model, combines powerful, scalable, affordable, easy to use products with high-velocity, low-touch sales. We’ve built our business to enable the technology professionals who use our products to manage “all things IT.” Our range of customers has expanded over time from network and systems engineers to a broad set of technology professionals, such as database administrators, storage administrators, web operators and DevOps professionals, as well as managed service providers, or MSPs. Our SolarWinds Model enables us to sell our products for use in organizations ranging in size from very small businesses to large enterprises. Initial Public Offering In October 2018, we completed our initial public offering, or IPO, in which we sold and issued 25,000,000 shares of our common stock at an issue price of $15.00 per share. Upon the closing of our IPO, all shares of Class A Common Stock that were outstanding immediately prior to the closing of the offering converted into shares of common stock in accordance with the terms of our certificate of incorporation. In addition, we converted the accrued and unpaid dividends on the Class A Common Stock into shares of common stock equal to the result of the accrued and unpaid dividends on each share of Class A Common Stock, divided by the conversion price of $19.00 per share. See Note 13. Subsequent Events for additional details. The condensed consolidated financial statements as of September 30, 2018, including share and per share amounts, do not give effect to the sale of shares in connection with the IPO or conversion of Class A Common Stock as the IPO was completed subsequent to September 30, 2018. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies We prepared our interim condensed consolidated financial statements in conformity with United States of America generally accepted accounting principles, or GAAP, and the reporting regulations of the Securities and Exchange Commission, or the SEC. They do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying condensed consolidated financial statements include the accounts of SolarWinds Corporation and the accounts of its wholly owned subsidiaries. We have eliminated all intercompany balances and transactions. The interim financial information is unaudited, but reflects all normal adjustments that are, in our opinion, necessary to provide a fair statement of results for the interim periods presented. This interim information should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2017, contained in our final prospectus dated October 18, 2018 and filed with the SEC on October 22, 2018 pursuant to Rule 424(b) of the Securities Act of 1933, as amended. Use of Estimates The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts and the disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. The actual results that we experience may differ materially from our estimates. The accounting estimates that require our most significant, difficult and subjective judgments include: • the valuation of goodwill, intangibles, long-lived assets and contingent consideration; • revenue recognition; • stock-based compensation; • income taxes; and • loss contingencies. Foreign Currency Translation The functional currency of our foreign subsidiaries is determined in accordance with authoritative guidance issued by the Financial Accounting Standards Board, or FASB. We translate assets and liabilities for these subsidiaries at exchange rates in effect at the balance sheet date. We translate income and expense accounts for these subsidiaries at the average monthly exchange rates for the periods. We record resulting translation adjustments as a component of accumulated other comprehensive income (loss) within stockholders’ equity (deficit). We record gains and losses from currency transactions denominated in currencies other than the functional currency as other income (expense) in our consolidated statements of operations. There were no equity transactions denominated in foreign currencies for the three and nine months ended September 30, 2018 and 2017 . Local currency transactions of international subsidiaries that have the U.S. dollar as the functional currency are remeasured into U.S. dollars using current rates of exchange for monetary assets and liabilities and historical rates of exchange for non-monetary assets and liabilities. We recorded an immaterial net transaction loss related to the remeasurement of monetary assets and liabilities for the three months ended September 30, 2018 and a net transaction gain of $14.3 million for the three months ended September 30, 2017 within our consolidated statements of operations. We recorded a net transaction loss related to the remeasurement of monetary assets and liabilities of $14.0 million and a net transaction gain of $48.2 million within our consolidated statements of operations for the nine months ended September 30, 2018 and 2017 , respectively. As of July 1, 2018, we changed our assertion regarding the planned settlement of a certain intercompany loan. We have evaluated our investment strategy in light of our global treasury plans and the new Tax Act (as defined below) and have determined there is no need to settle the principal related to the loan. The intercompany loan has been designated as long-term based on the assertion that settlement is not planned or anticipated in the foreseeable future. Therefore, beginning on July 1, 2018, the foreign currency transaction gains and losses resulting from the remeasurement of this long-term intercompany loan denominated in a currency other than the subsidiary's functional currency are recognized as a component of accumulated other comprehensive income (loss). In the three months ended September 30, 2018 , a foreign currency translation adjustment of $3.3 million was recognized as a component of accumulated other comprehensive income related to this long-term intercompany loan. Recent Accounting Pronouncements Not Yet Adopted Under the Jumpstart our Business Startups Act, or the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to non-public companies. We intend to take advantage of the longer phase-in periods for the adoption of new or revised financial accounting standards permitted under the JOBS Act until we are no longer an emerging growth company. In May 2014, FASB issued “Revenue from Contracts with Customers,” which replaced all existing revenue guidance, including prescriptive industry-specific guidance. This standard’s core principle is that an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Entities will need to apply more judgment and make more estimates than under the previous guidance. In July 2015, FASB deferred the effective date for all entities by one year, making the guidance for non-public companies effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted to the original effective date of December 15, 2016. The standard permits the use of either a full-retrospective or a modified-retrospective transition method. We will adopt the new standard effective first quarter 2019. Management anticipates using the modified-retrospective method for adoption. In preparation for this planned adoption, we have been evaluating the impact of the new standard to our financial statements and accompanying disclosures in the notes to our consolidated financial statements. Our assessment of the impact includes an evaluation of the five-step process set forth in the new standard along with the enhancement of disclosures that will be required. We are in the process of executing our plan for implementing the standard, which includes identifying customer contracts within the scope of the new standard, identifying performance obligations within those customer contracts, and evaluating the impact of incremental variable consideration paid to obtain those customer contracts. We have also undertaken a comprehensive review of all contracts that fall under the scope of the new standard. We are continuing our review of in-scope contracts and reviewing all potential impacts of the standard, including the tax related impact. Based on analysis performed to date, we expect that adoption of the new standard will result in changes to the classification and timing of our revenue recognition. The most significantly impacted areas are the following: • License and Recurring Revenue. Under the new guidance, the requirement to establish VSOE to recognize license revenue separately from the other elements is eliminated. This change is expected to impact the allocation of the transaction price and timing of our revenue recognition between deliverables, or performance obligations, within an arrangement. In addition, we will recognize time-based license revenues upon the transfer of the license and the associated maintenance revenue over the contract period under the new standard instead of recognizing both the license and maintenance revenue ratably over the contract period. We expect the overall adoption impact to total revenue to be immaterial, though we do expect some changes to the timing and classification between license and recurring revenues. Additionally, some deferred revenue, primarily from arrangements involving time-based licenses, will never be recognized as revenue and instead will be a cumulative effect adjustment within accumulated deficit. We expect an immaterial reduction to the deferred revenue balance as a cumulative effect adjustment upon adoption. • Contract Acquisition Costs. We expense all sales commissions as incurred under current guidance. The new guidance requires the deferral and amortization of certain incremental costs incurred to obtain a contract. This guidance will require us to capitalize and amortize certain sales commission costs over the remaining contractual term or over an expected period of benefit, which we have determined to be approximately three to six years . As part of the transition to the new guidance, we will recognize a contract asset as a cumulative effect adjustment upon adoption. We do not expect the changes described above to have a material impact on our quarterly or annual consolidated financial statements, however the exact impact of the new standard will be dependent on facts and circumstances that could vary from quarter to quarter. In February 2016, FASB issued an accounting standard to provide updated guidance requiring the recognition of all lease assets and liabilities on the balance sheet. The accounting standard required the use of a modified retrospective transition method. In July 2018, FASB issued additional guidance that provides entities with an optional transition method in which an entity can apply the new standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance retained earnings in the period of adoption. The updated accounting guidance is effective for non-public companies for fiscal years beginning after December 15, 2019 and interim periods beginning the following year. Early adoption is permitted and the standard provides for certain practical expedients. We expect to adopt the updated guidance in fiscal year 2020. Our evaluation of the new standard will extend into future periods and we will update our disclosures, including the expected impacts of the new standard, as we progress towards the required adoption date. In January 2017, FASB issued an accounting standard to simplify the accounting for goodwill impairment. The new guidance removes step two of the two-step quantitative goodwill impairment test, which requires a hypothetical purchase price allocation. The updated guidance is effective for non-public companies for fiscal years beginning after December 15, 2021 and may be adopted early for any interim or annual goodwill impairment tests performed after January 1, 2017. We expect to adopt the updated guidance in fiscal year 2022. We do not believe that this standard will have a material impact on our consolidated financial statements. Fair Value Measurements We apply the authoritative guidance on fair value measurements for financial assets and liabilities that are measured at fair value on a recurring basis and non-financial assets and liabilities, such as goodwill, intangible assets and property, plant and equipment that are measured at fair value on a non-recurring basis. The guidance establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows: Level 1: Unadjusted quoted prices for identical assets or liabilities in active markets accessible by us. Level 2: Inputs that are observable in the marketplace other than those inputs classified as Level 1. Level 3: Inputs that are unobservable in the marketplace and significant to the valuation. See Note 5. Fair Value Measurements for a summary of our financial instruments accounted for at fair value on a recurring basis. The carrying amounts reported in our consolidated balance sheets for cash, accounts receivable, accounts payable and other accrued expenses approximate fair value due to relatively short periods to maturity. Deferred Offering Costs Deferred offering costs, primarily consisting of legal, accounting, printer, and other direct fees and costs, related to our proposed initial public offering are capitalized. The deferred offering costs were offset against proceeds from our initial public offering upon the closing of the offering in October 2018. As of September 30, 2018 , we have capitalized $2.2 million of offering costs in the consolidated balance sheet. As of December 31, 2017 , we had no t yet capitalized any offering costs in the consolidated balance sheet. Accumulated Other Comprehensive Income (Loss) Changes in accumulated other comprehensive income (loss) by component are summarized below: Foreign Currency Translation Adjustments Accumulated Other Comprehensive Income (Loss) (in thousands) Balance at December 31, 2017 $ 75,294 $ 75,294 Other comprehensive gain (loss) before reclassification (36,089 ) (36,089 ) Amount reclassified from accumulated other comprehensive income (loss) — — Net current period other comprehensive income (loss) (36,089 ) (36,089 ) Balance at September 30, 2018 $ 39,205 $ 39,205 Cost of Revenue Amortization of acquired technologies. Amortization of acquired technologies included in cost of revenue relate to our licensed products and subscription products as follows: Three Months Ended September 30, Nine Months Ended 2018 2017 2018 2017 (in thousands) Amortization of acquired license technologies $ 36,061 $ 36,232 $ 108,974 $ 106,487 Amortization of acquired subscription technologies 7,774 7,281 23,147 21,294 Total amortization of acquired technologies $ 43,835 $ 43,513 $ 132,121 $ 127,781 |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | 3. Acquisitions In the nine months ended September 30, 2018, we completed acquisitions for a combined purchase price of approximately $62.9 million in cash, including $2.4 million of cash acquired. The acquisitions were funded with available cash on hand. We incurred $0.9 million in acquisition related costs, which are included in general and administrative expense for the nine months ended September 30, 2018. Goodwill for these acquisitions is no t deductible for tax purposes. The initial determination of the fair value of the assets acquired and liabilities assumed is based on a preliminary valuation and the estimates and assumptions for these items are subject to change as we obtain additional information during the measurement period. Subsequent changes to the purchase price or other fair value adjustments determined during the measurement period will be recorded as an adjustment to goodwill. The amounts of revenue and net loss related to these acquisitions included in our condensed consolidated financial statements from the effective date of the respective acquisitions are insignificant for the nine months ended September 30, 2018. Pro forma information for these acquisitions have not been provided because the impact of the historical financials on our revenue, net loss and loss per share is not material. The following table summarizes the consideration paid and the amounts recognized for the assets acquired and liabilities assumed for our acquisitions completed in the nine months ended September 30, 2018: Total Fair Value (in thousands) Current assets, including cash acquired $ 4,577 Deferred tax asset 1,462 Fixed assets 1,272 Identifiable intangible assets 18,412 Goodwill 41,789 Current liabilities (1,628 ) Deferred revenue (2,944 ) Total consideration $ 62,940 The following table summarizes the fair value of the acquired identifiable intangible assets and weighted-average useful life: Fair Value Weighted-average useful life (in thousands) (in years) Developed product technologies $ 13,317 5 Customer relationships 4,805 4 Tradenames 290 3 Total identifiable intangible assets $ 18,412 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 4. Goodwill and Intangible Assets Goodwill The following table reflects the changes in goodwill for the nine months ended September 30, 2018 : (in thousands) Balance at December 31, 2017 $ 3,695,640 Acquisitions 41,789 Foreign currency translation and other adjustments (38,118 ) Balance at September 30, 2018 $ 3,699,311 The goodwill from acquisitions resulted primarily from our expectations that we will now be able to offer our customers additional products in new markets. Additionally, we expect the acquisitions will attract new customers for our entire line of products. Intangible Assets Intangible assets consisted of the following at September 30, 2018 and December 31, 2017: September 30, 2018 December 31, 2017 Gross Carrying Amount Accumulated Net Gross Carrying Amount Accumulated Amortization Net (in thousands) Developed product technologies $ 1,010,952 $ (452,420 ) $ 558,532 $ 1,006,454 $ (324,196 ) $ 682,258 Customer relationships 544,823 (166,597 ) 378,226 546,207 (118,930 ) 427,277 Intellectual property 764 (109 ) 655 547 (59 ) 488 Trademarks 84,800 (1,218 ) 83,582 85,257 (1,075 ) 84,182 Customer backlog — — — 6,200 (5,906 ) 294 Total intangible assets $ 1,641,339 $ (620,344 ) $ 1,020,995 $ 1,644,665 $ (450,166 ) $ 1,194,499 Intangible asset amortization expense was as follows: Three Months Ended September 30, Nine Months Ended 2018 2017 2018 2017 (in thousands) Intangible asset amortization expense $ 60,360 $ 60,559 $ 182,459 $ 177,721 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 5. Fair Value Measurements The following table summarizes the fair value of our financial assets that were measured on a recurring basis as of September 30, 2018 and December 31, 2017 . There have been no transfers between fair value measurement levels during the nine months ended September 30, 2018 . Fair Value Measurements at September 30, 2018 Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total (in thousands) Money market funds $ 67,100 $ — $ — $ 67,100 Fair Value Measurements at December 31, 2017 Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total (in thousands) Money market funds $ 67,100 $ — $ — $ 67,100 As of September 30, 2018 and December 31, 2017 , the carrying value of our long-term debt approximates its estimated fair value as the interest rate on the debt agreements is adjusted for changes in the market rates. See Note 6. Debt for additional information regarding our debt. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | 6. Debt Debt Agreements The following table summarizes information relating to our debt: September 30, December 31, 2018 2017 Amount Effective Rate Amount Effective Rate (in thousands, except interest rates) Revolving credit facility $ — — % $ — — % First Lien Term Loan (as amended) due Feb 2024 1,975,075 5.24 % 1,678,050 5.07 % Second Lien Floating Rate Notes (as amended) due Feb 2024 — — % 680,000 10.14 % Second Lien Term Loan due Feb 2025 315,000 9.49 % — — % Total principal amount 2,290,075 2,358,050 Unamortized discount and debt issuance costs (53,903 ) (95,478 ) Total debt 2,236,172 2,262,572 Less: Current portion of long-term debt (19,900 ) (16,950 ) Total long-term debt $ 2,216,272 $ 2,245,622 Senior Secured Debt Senior Secured First Lien Credit Facilities On February 5, 2016, we were acquired by the Sponsors in a take private transaction, or the Take Private. In connection with the Take Private, we entered into a first lien credit agreement with Credit Suisse AG, Cayman Islands Branch, or Credit Suisse, as administrative agent and collateral agent, and a syndicate of institutional lenders and financial institutions, or Initial First Lien Credit Agreement. In March 2018, we entered into Amendment No. 4 to the Initial First Lien Credit Agreement, or Amendment No. 4, which replaced the outstanding borrowings with a new $1.99 billion U.S. dollar term loan, or First Lien Term Loan. The Initial First Lien Credit Agreement, as amended, is referred to here as the First Lien Credit Agreement. The proceeds of the First Lien Term Loan were used to repay all outstanding borrowings including accrued interest under the existing First Lien Term Loan and a portion of the Second Lien Notes, including accrued interest and related transaction costs. In connection with Amendment No. 4, a loss on debt extinguishment of $21.4 million was recorded to other income (expense) in the consolidated statement of operations for the nine months ended September 30, 2018 . The First Lien Credit Agreement provides for senior secured first lien credit facilities, consisting as of September 30, 2018 of: • a $1.99 billion First Lien Term Loan with a final maturity date of February 5, 2024; and • a $125.0 million revolving credit facility (with a letter of credit sub-facility in the amount of $35.0 million ), or the Revolving Credit Facility, consisting of (i) a $100.0 million multicurrency tranche and (ii) a $25.0 million tranche available only in U.S. dollars, of which $7.5 million has a final maturity date of February 5, 2021 and $17.5 million has a final maturity date of February 5, 2022. Borrowings under our Revolving Credit Facility bear interest at a floating rate which can be, at our option, either (1) a Eurodollar rate for a specified interest period plus an applicable margin of 3.00% or (2) a base rate plus an applicable margin of 2.00% . The applicable margins for Eurodollar rate and base rate borrowings are subject to reductions to 2.75% and 2.50% , and to 1.75% and 1.50% , respectively, based on our first lien net leverage ratio or based upon the completion of an initial public offering. The Eurodollar rate applicable to the Revolving Credit Facility is subject to a “floor” of 0.0% . Borrowings under our First Lien Term Loan bear interest at a floating rate which can be, at our option, either (1) a Eurodollar rate for a specified interest period plus an applicable margin of 3.00% or (2) a base rate plus an applicable margin of 2.00% . The applicable margins for Eurodollar and base rate borrowings are each subject to a reduction to 2.75% and 1.75% , respectively, based on our first lien net leverage ratio or based upon the completion of an initial public offering. The Eurodollar rate applicable to the First Lien Term Loan is subject to a “floor” of 0.0% . The Eurodollar rate is equal to an adjusted London Interbank Offered Rate, or LIBOR, for a one -, two -, three - or six -month interest period with a LIBOR floor of 0% . The base rate for any day is a fluctuating rate per annum equal to the highest of (a) the rate of interest in effect for such day as publicly announced by Credit Suisse as its “prime rate” and (b) the federal funds effective rate in effect on such day plus 0.50% and (c) the one-month adjusted LIBOR plus 1.0% per annum. The First Lien Term Loan requires equal quarterly repayments equal to 0.25% of the original principal amount. In addition to paying interest on loans outstanding under the Revolving Credit Facility and the First Lien Term Loan, we are required to pay a commitment fee of 0.50% per annum of unused commitments under the Revolving Credit Facility. The commitment fee is subject to a reduction to 0.375% per annum based on our first lien net leverage ratio. The First Lien Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, our ability to: incur additional indebtedness; incur liens; engage in mergers, consolidations, liquidations or dissolutions; pay dividends and distributions on, or redeem, repurchase or retire our capital stock; and make certain investments, acquisitions, loans, or advances. In addition, the terms of the First Lien Credit Agreement include a financial covenant which requires that, at the end of each fiscal quarter, if the aggregate amount of borrowings under the Revolving Credit Facility exceeds 35% of the aggregate commitments under the Revolving Credit Facility, our first lien net leverage ratio cannot exceed 7.40 to 1.00 . The First Lien Credit Agreement also contains certain customary representations and warranties, affirmative covenants and events of default. As of September 30, 2018 , we were in compliance with all covenants of the First Lien Credit Agreement. The following table summarizes the future minimum principal payments under the First Lien Term Loan outstanding as of September 30, 2018 : As of September 30, 2018 (in thousands) 2018 $ 4,975 2019 19,900 2020 19,900 2021 19,900 2022 19,900 Thereafter 1,890,500 Total minimum principal payments $ 1,975,075 Senior Secured Second Lien Credit Facility In March 2018, we terminated the agreements governing our senior secured second lien floating rate notes, or the Second Lien Notes, and repaid or exchanged the then-outstanding principal on our Second Lien Notes of $680.0 million and replaced the Second Lien Notes with a new second lien credit agreement, or the Second Lien Credit Agreement, with Wilmington Trust, National Association or Wilmington Trust, as administrative agent and collateral agent, and certain other financial institutions. The Second Lien Credit Agreement provides for a $315.0 million U.S. dollar term loan, or the Second Lien Term Loan, with a final maturity of February 5, 2025 and does not require periodic principal payments. In connection with the redemption and exchange of our Second Lien Notes, a loss on debt extinguishment of $39.2 million , which includes a $22.7 million redemption premium, was recorded to other income (expense) in the consolidated statement of operations for the nine months ended September 30, 2018 . The borrowings under the Second Lien Term Loan bear interest at a floating rate which can be, at our option, either (1) a Eurodollar rate for a specified interest period plus an applicable margin of 7.25% or (2) a base rate plus an applicable margin of 6.25% . The Eurodollar rate is equal to the adjusted LIBOR Rate for a one-, two-, three or six-month interest period. The base rate for any day is a fluctuating rate per annum equal to the rate last quoted by the Wall Street Journal as the “Prime Rate” in the United States, or if the Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board as “bank prime loan” rate or, if such rate is no longer quoted therein (as determined by Wilmington Trust) or any similar release by the Federal Reserve Board (as determined by Wilmington Trust). The Second Lien Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, our ability to: incur additional indebtedness; incur liens; engage in mergers, consolidations, liquidations or dissolutions; pay dividends and distributions on, or redeem, repurchase or retire our capital stock; or make investments, acquisitions, loans, or advances. The Second Lien Credit Agreement also contains certain customary representations and warranties, affirmative covenants and events of default. As of September 30, 2018 , we were in compliance with all covenants of the Second Lien Credit Agreement. In October 2018, we completed our IPO and used a portion of the net proceeds from the offering to repay the $315.0 million in borrowings outstanding under our Second Lien Term Loan. See Note 13. Subsequent Events for additional information. |
Redeemable Convertible Class A
Redeemable Convertible Class A Common Stock | 9 Months Ended |
Sep. 30, 2018 | |
Temporary Equity Disclosure [Abstract] | |
Redeemable Convertible Class A Common Stock | 7. Redeemable Convertible Class A Common Stock Class A Common Stock accrued dividends at a rate of 9% per annum and had a liquidation preference equal to $1,000 per share plus any accrued and unpaid dividends. Prior to the conversion of the Class A Common Stock into common stock, in a future liquidation event, such as a sale, the holders of the Class A Common Stock would have been entitled to payment up to the amount of the liquidation preference and holders of the Class B Common Stock would have been entitled to the residual value of the Company. Cumulative undeclared and unpaid dividends on Class A Common Stock totaled $702.5 million and $485.9 million at September 30, 2018 and December 31, 2017 , respectively. Redeemable convertible Class A Common Stock was recorded at liquidation value plus accrued, unpaid dividends in our consolidated balance sheets. Immediately prior to the completion of our IPO in October 2018, we converted each outstanding share of our Class A Common Stock into a number of shares of common stock equal to the result of the liquidation value of such share of Class A Common Stock, divided by $19.00 per share. The liquidation value for each share of Class A Common Stock was equal to $1,000 . At the time of the conversion of the Class A Common Stock, we converted $717.4 million of accrued and unpaid dividends on the Class A Common Stock into 37,758,109 shares of common stock equal to the result of the accrued and unpaid dividends on each share of Class A Common Stock, divided by $19.00 per share. See Note 13. Subsequent Events for additional information regarding the conversion of our Class A Common Stock. |
Stockholders' Deficit and Stock
Stockholders' Deficit and Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Equity And Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stockholders’ Deficit and Stock-Based Compensation | 8. Stockholders’ Deficit and Stock-Based Compensation Common Stock As of September 30, 2018, the Company had authorized capital stock of 238,755,000 shares consisting of 5,755,000 shares of Class A Common Stock, par value $0.001 per share, or Class A Common Stock, and 233,000,000 shares of Class B Common Stock, par value of $0.001 per share, or Class B Common Stock. See Note 13. Subsequent Events for additional information regarding the conversion of our Class A Common Stock and Class B Common Stock into common stock immediately prior to the completion of our IPO. 2016 Equity Plan Equity awards to the Company’s employees, consultants, directors, managers and advisors are issued by the Company. The board of directors adopted, and the stockholders approved, the SolarWinds Corporation Equity Plan, or 2016 Plan, in June 2016. Under the 2016 Plan, the Company is able to sell or grant shares of Class A Common Stock and Class B Common Stock and common stock-based awards, including nonqualified stock options, to the Company’s employees, consultants, directors, managers and advisors. The Company has issued common stock-based incentive awards, consisting of nonqualified stock options exercisable for shares of Class B Common Stock and restricted shares of Class B Common Stock, under the 2016 Plan to employees and certain members of the Company’s board of directors. As of September 30, 2018 , common stock-based incentive awards of 8,241,934 were outstanding under the 2016 Plan consisting of 3,199,400 stock options and 5,042,534 shares of restricted Class B Common Stock and 502,833 shares of Class B Common Stock were reserved for future equity incentive awards under the 2016 Plan. For the nine months ended September 30, 2018 , the Company repurchased 250,333 shares of vested and unvested restricted Class B Common Stock upon employee terminations. Stock Option Awards Option grant activity under the 2016 Plan was as follows: Number of Shares Outstanding Weighted- Average Exercise Price Aggregate Intrinsic Value (in thousands) Weighted- Average Remaining Contractual Term (in years) Outstanding balances at December 31, 2017 2,156,550 $ 0.45 Options granted 1,327,475 3.40 Options exercised (38,600 ) 0.35 Options forfeited (231,075 ) 0.94 Options expired (30,050 ) 0.30 Outstanding balances at September 30, 2018 3,184,300 $ 1.65 Options exercisable at September 30, 2018 618,250 $ 0.41 $ 5,980 8.17 Options vested and expected to vest at September 30, 2018 3,184,300 $ 1.65 $ 26,856 8.84 Additional information regarding options follows (in thousands except for per share amounts): Nine Months Ended September 30, 2018 Weighted-average grant date fair value per share of options granted during the period $ 1.98 Aggregate intrinsic value of options exercised during the period 302 Aggregate fair value of options vested during the period 102 Stock-based compensation expense related to stock option awards recorded for the three and nine months ended September 30, 2018 and 2017 was immaterial. The unrecognized stock-based compensation expense related to unvested stock options and subject to recognition in future periods was approximately $2.5 million and $0.3 million as of September 30, 2018 and December 31, 2017 , respectively. We expect to recognize this expense over weighted average periods of approximately 3.5 years and 3.8 years at September 30, 2018 and December 31, 2017 , respectively. Restricted Stock The following table summarizes information about employee restricted stock activity subject to vesting under the 2016 Plan: Number of Shares Outstanding Unvested balances at December 31, 2017 5,789,401 Restricted stock granted and issued 820,500 Restricted stock vested (1,371,334 ) Restricted stock repurchased - unvested shares (196,033 ) Unvested balances at September 30, 2018 5,042,534 Restricted stock is purchased at fair market value by the employee and Class B Common Stock is issued at the date of grant. The weighted-average grant date fair market value of restricted Class B Common Stock purchased was $2.10 per share for the nine months ended September 30, 2018 . Restricted stock is subject to certain restrictions, such as vesting and a repurchase right. The Class B Common Stock acquired by the employee is restricted stock because vesting is conditioned upon (i) continued employment through the applicable vesting date and (ii) for employees at the level of group vice president and above, the achievement of certain financial performance targets determined by the board of directors. The restricted stock is subject to repurchase in the event the stockholder ceases to be employed or engaged (as applicable) by the Company for any reason or in the event of a change of control or due to certain regulatory burdens. As the restricted stock is purchased at fair market value at the time of grant, there is no stock-based compensation expense recognized related to these awards. The related liability for unvested shares is included in other long-term liabilities on the consolidated balance sheet and was $2.9 million and $1.7 million as of September 30, 2018 and December 31, 2017 . See Note 13. Subsequent Events for additional information regarding the adoption of our 2018 Equity Incentive Plan. |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | 9. Net Loss Per Share A reconciliation of the number of shares in the calculation of basic and diluted loss per share follows: Three Months Ended September 30, Nine Months Ended 2018 2017 2018 2017 (in thousands) Basic net loss per share Numerator: Net income (loss) $ (398 ) $ 1,637 $ (87,323 ) $ (44,105 ) Accretion of dividends on Class A common stock (74,608 ) (68,264 ) (216,621 ) (198,205 ) Net loss available to common stockholders $ (75,006 ) $ (66,627 ) $ (303,944 ) $ (242,310 ) Denominator: Weighted-average Class B common shares outstanding used in computing basic net loss per share 102,078 100,759 101,915 100,330 Diluted net loss per share Numerator: Net loss available to common stockholders $ (75,006 ) $ (66,627 ) $ (303,944 ) $ (242,310 ) Denominator: Weighted-average shares used in computing basic net loss per share 102,078 100,759 101,915 100,330 Add options and restricted stock units to purchase common stock — — — — Weighted-average shares used in computing diluted net loss per share 102,078 100,759 101,915 100,330 The following weighted average outstanding shares of common stock equivalents were excluded from the computation of the diluted net loss per share attributable to common stockholders for the periods presented because their effect would have been anti-dilutive or for which the performance condition had not been met at the end of the period: Three Months Ended September 30, Nine Months Ended 2018 2017 2018 2017 (in thousands) Stock options to purchase common stock 2,782 1,816 2,525 1,509 Performance-based stock options to purchase common stock 316 116 267 96 Non-vested restricted stock incentive awards 3,512 3,410 3,435 3,605 Performance-based non-vested restricted stock incentive awards 1,537 2,260 1,566 2,601 Total anti-dilutive shares 8,147 7,602 7,793 7,811 Class A Common Stock was not included in the basic or diluted earnings (loss) per share calculations as it was contingently convertible upon a future event. The calculation of diluted earnings per share requires us to make certain assumptions related to the use of proceeds that would be received upon the assumed exercise of stock options. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 10. Related Party Transactions Management Fee Agreement with Silver Lake Management, Thoma Bravo and TB Partners On February 5, 2016, we entered into a Management Fee Agreement with Silver Lake Management Company IV, L.L.C. (Silver Lake Management), Thoma Bravo, LLC (Thoma Bravo) and Thoma Bravo Partners XI, L.P. (TB Partners and, collectively with Silver Lake Management and Thoma Bravo, the Managers), pursuant to which the Managers provided business and organizational strategy and financial and advisory services. Under the Management Fee Agreement, we paid to the Managers quarterly payments of $2.5 million in the aggregate, plus fees for certain corporate transactions in the Managers’ discretion. Each payment of fees under the Management Fee Agreement was allocated among the Managers as follows: 50% to Silver Lake Management, 40.73% to Thoma Bravo and 9.27% to TB Partners. We also reimbursed each of the Managers for all out-of-pocket costs incurred in connection with activities under the Management Fee Agreement, and we indemnified the Managers and their respective related parties from and against all losses, claims, damages and liabilities related to the performance of the Managers obligations under the Management Fee Agreement. The Management Fee Agreement terminated upon the consummation of the IPO in October 2018 and no future payments are required. The following table details the management fees for the respective periods: Three Months Ended September 30, Nine Months Ended 2018 2017 2018 2017 (in thousands) Silver Lake Management $ 1,250 $ 1,250 $ 3,750 $ 3,750 Thoma Bravo 1,018 1,018 3,054 3,054 TB Partners 232 232 696 696 $ 2,500 $ 2,500 $ 7,500 $ 7,500 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 11. Income Taxes For the three months ended September 30, 2018 and 2017 , we recorded income tax benefit of $0.1 million and $3.1 million , respectively, resulting in an effective tax rate of 24.0% and 215.4% , respectively. For the nine months ended September 30, 2018 and 2017 , we recorded income tax benefit of $20.0 million and $12.5 million , respectively, resulting in an effective tax rate of 18.7% and 22.0% , respectively. The decrease in the effective tax rate for the three and nine months ended September 30, 2018 compared to the same periods in 2017 were generally a result of the lower U.S. corporate tax rate attributable to the Tax Cuts and Jobs Act, or the Tax Act, as well as discrete items related to expired statutes in various jurisdictions. The Tax Act reduces the U.S. federal corporate tax rate from 35% to 21% , requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that have not been taxed previously in the U.S., and creates new taxes on certain foreign sourced earnings. We are required to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, re-measuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118) , which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in our consolidated financial statements for the year ended December 31, 2017 . As the Company collects and prepares the necessary data, interprets the Tax Act and reviews any additional guidance issued by the U.S. Treasury Department, state taxation authorities and other standard-setting bodies, the Company may make adjustments to the provisional amounts noted above which may materially impact its provision for income taxes from continuing operations in the period in which the adjustments are made. The accounting for the tax effects of the Tax Act will be completed in 2018. Our policy is to include interest and penalties related to unrecognized tax benefits as a component of income tax expense. At September 30, 2018 , we had accrued interest and penalties related to unrecognized tax benefits of approximately $3.8 million . We file U.S., state and foreign income tax returns in jurisdictions with varying statutes of limitations. The 2011 through 2017 tax years generally remain open and subject to examination by federal tax authorities. The 2010 through 2017 tax years generally remain open and subject to examination by the state tax authorities and foreign tax authorities. We are currently under examination by the IRS for the tax years 2011 through the period ending February 2016. We are under audit by the Indian Tax Authority for the 2014 and 2017 tax years. We are currently under audit by the California Franchise Tax Board for the 2012 through 2014 tax years. We were notified in December 2017 that the Swiss Tax Authorities would audit the 2014 through 2016 tax years. This audit concluded in April 2018 with no adjustments. We are not currently under audit in any other taxing jurisdictions. On July 24, 2018, U.S. Court of Appeals for the Ninth Circuit reversed the decision of the U.S. Tax Court in Altera Corp. v. Commissioner related to the treatment of stock-based compensation in an intercompany cost sharing arrangement. On August 7, 2018, the Ninth Circuit withdrew the opinion to allow time for a reconstituted panel to confer on this appeal. Until the reconstituted panel issues a decision, the Tax Court's decision in Altera controls. As of September 30, 2018, we have not recorded any tax benefit of excluding stock-based compensation from our cost sharing agreement. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 12. Commitments and Contingencies Take Private Deferred Stock Payments As a result of the Take Private, RSUs granted to certain of our employees under the existing stock plans not subject to accelerated vesting were cancelled and converted into the right to receive the per share price of $60.10 less applicable withholding taxes shortly after those RSUs would have vested based on the underlying original RSU vesting schedule and subject to continued employment of the holders of those RSUs. As of September 30, 2018 , we had a liability for Take Private deferred stock payments recorded of $1.8 million included in accrued liabilities and other, related to the future payment for service provided. For the nine months ended September 30, 2018 , we recognized $2.4 million of compensation expense and made cash payments of approximately $3.5 million to employees related to the deferred compensation. We expect to pay approximately $4.2 million through the year 2020. The expected future payment may differ from actual payment amounts due to future employee terminations. Legal Proceedings From time to time, we have been and may be involved in various legal proceedings arising in our ordinary course of business. In the opinion of management, resolution of any pending claims (either individually or in the aggregate) is not expected to have a material adverse impact on our consolidated financial statements, cash flows or financial position and it is not possible to provide an estimated amount of any such loss. However, the outcome of disputes is inherently uncertain. Therefore, although management considers the likelihood of such an outcome to be remote, an unfavorable resolution of one or more matters could materially affect our future results of operations or cash flows, or both, in a particular period. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 13. Subsequent Events Initial Public Offering In October 2018, we completed our IPO, in which we sold and issued 25,000,000 shares of our common stock at an issue price of $15.00 per share. We raised a total of $375.0 million in gross proceeds from the offering, or approximately $353.0 million in net proceeds after deducting underwriting discounts and commissions of $17.8 million and estimated offering-related expenses of approximately $4.2 million . A portion of the net proceeds from the offering were used to repay the $315.0 million in borrowings outstanding under our Second Lien Term Loan. In connection with the voluntary prepayment of the Second Lien Term Loan, we paid a $14.2 million prepayment fee. Upon the closing of our IPO, all 2,661,015 shares of Class A Common Stock that were outstanding immediately prior to the closing of such offering converted into 140,053,370 shares of common stock in accordance with the terms of our certificate of incorporation. In addition, we converted $717.4 million of accrued and unpaid dividends on the Class A Common Stock into 37,758,109 shares of common stock equal to the result of the accrued and unpaid dividends on each share of Class A Common Stock, divided by $19.00 per share. All outstanding shares of Class B Common Stock converted into common stock on a one -for-one basis. Following consummation of our IPO, we amended our certificate of incorporation to, among other things, set the authorized capital stock of the company at 1,000,000,000 shares of common stock, par value of $0.001 per share, and 50,000,000 shares of preferred stock, par value of $0.001 per share. Each share of common stock entitles the holder thereof to one vote on each matter submitted to a vote at any meeting of stockholders. 2018 Equity Incentive Plan In October 2018, the board of directors adopted, and the stockholders approved, the SolarWinds Corporation 2018 Equity Incentive Plan, or 2018 Plan. We reserved 30,000,000 shares of our common stock for issuance under the 2018 Plan. On October 27, 2018, we granted 7,342,878 equity awards to our employees and directors consisting of 6,371,956 restricted stock units, or RSUs, and 970,922 performance stock units, or PSUs. RSUs generally vest over a four -year service period. PSUs generally vest over a three -year period based on the achievement of specified performance targets for the fiscal year ended December 31, 2019 and subject to continued service through the applicable vesting dates. Based on the extent to which the performance targets are achieved, vested shares may range from 0% to 150% of the target award amount. We will not grant any additional awards under our 2016 Plan; however, the 2016 Plan will continue to govern the terms and conditions of all outstanding equity awards granted under the 2016 Plan. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Accounting | We prepared our interim condensed consolidated financial statements in conformity with United States of America generally accepted accounting principles, or GAAP, and the reporting regulations of the Securities and Exchange Commission, or the SEC. They do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying condensed consolidated financial statements include the accounts of SolarWinds Corporation and the accounts of its wholly owned subsidiaries. We have eliminated all intercompany balances and transactions. The interim financial information is unaudited, but reflects all normal adjustments that are, in our opinion, necessary to provide a fair statement of results for the interim periods presented. This interim information should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2017, contained in our final prospectus dated October 18, 2018 and filed with the SEC on October 22, 2018 pursuant to Rule 424(b) of the Securities Act of 1933, as amended. |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts and the disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. The actual results that we experience may differ materially from our estimates. The accounting estimates that require our most significant, difficult and subjective judgments include: • the valuation of goodwill, intangibles, long-lived assets and contingent consideration; • revenue recognition; • stock-based compensation; • income taxes; and • loss contingencies. |
Foreign Currency Translation | As of July 1, 2018, we changed our assertion regarding the planned settlement of a certain intercompany loan. We have evaluated our investment strategy in light of our global treasury plans and the new Tax Act (as defined below) and have determined there is no need to settle the principal related to the loan. The intercompany loan has been designated as long-term based on the assertion that settlement is not planned or anticipated in the foreseeable future. Therefore, beginning on July 1, 2018, the foreign currency transaction gains and losses resulting from the remeasurement of this long-term intercompany loan denominated in a currency other than the subsidiary's functional currency are recognized as a component of accumulated other comprehensive income (loss). The functional currency of our foreign subsidiaries is determined in accordance with authoritative guidance issued by the Financial Accounting Standards Board, or FASB. We translate assets and liabilities for these subsidiaries at exchange rates in effect at the balance sheet date. We translate income and expense accounts for these subsidiaries at the average monthly exchange rates for the periods. We record resulting translation adjustments as a component of accumulated other comprehensive income (loss) within stockholders’ equity (deficit). We record gains and losses from currency transactions denominated in currencies other than the functional currency as other income (expense) in our consolidated statements of operations. There were no equity transactions denominated in foreign currencies for the three and nine months ended September 30, 2018 and 2017 . Local currency transactions of international subsidiaries that have the U.S. dollar as the functional currency are remeasured into U.S. dollars using current rates of exchange for monetary assets and liabilities and historical rates of exchange for non-monetary assets and liabilities. |
Recent Accounting Pronouncements Not Yet Adopted | Under the Jumpstart our Business Startups Act, or the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to non-public companies. We intend to take advantage of the longer phase-in periods for the adoption of new or revised financial accounting standards permitted under the JOBS Act until we are no longer an emerging growth company. In May 2014, FASB issued “Revenue from Contracts with Customers,” which replaced all existing revenue guidance, including prescriptive industry-specific guidance. This standard’s core principle is that an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Entities will need to apply more judgment and make more estimates than under the previous guidance. In July 2015, FASB deferred the effective date for all entities by one year, making the guidance for non-public companies effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted to the original effective date of December 15, 2016. The standard permits the use of either a full-retrospective or a modified-retrospective transition method. We will adopt the new standard effective first quarter 2019. Management anticipates using the modified-retrospective method for adoption. In preparation for this planned adoption, we have been evaluating the impact of the new standard to our financial statements and accompanying disclosures in the notes to our consolidated financial statements. Our assessment of the impact includes an evaluation of the five-step process set forth in the new standard along with the enhancement of disclosures that will be required. We are in the process of executing our plan for implementing the standard, which includes identifying customer contracts within the scope of the new standard, identifying performance obligations within those customer contracts, and evaluating the impact of incremental variable consideration paid to obtain those customer contracts. We have also undertaken a comprehensive review of all contracts that fall under the scope of the new standard. We are continuing our review of in-scope contracts and reviewing all potential impacts of the standard, including the tax related impact. Based on analysis performed to date, we expect that adoption of the new standard will result in changes to the classification and timing of our revenue recognition. The most significantly impacted areas are the following: • License and Recurring Revenue. Under the new guidance, the requirement to establish VSOE to recognize license revenue separately from the other elements is eliminated. This change is expected to impact the allocation of the transaction price and timing of our revenue recognition between deliverables, or performance obligations, within an arrangement. In addition, we will recognize time-based license revenues upon the transfer of the license and the associated maintenance revenue over the contract period under the new standard instead of recognizing both the license and maintenance revenue ratably over the contract period. We expect the overall adoption impact to total revenue to be immaterial, though we do expect some changes to the timing and classification between license and recurring revenues. Additionally, some deferred revenue, primarily from arrangements involving time-based licenses, will never be recognized as revenue and instead will be a cumulative effect adjustment within accumulated deficit. We expect an immaterial reduction to the deferred revenue balance as a cumulative effect adjustment upon adoption. • Contract Acquisition Costs. We expense all sales commissions as incurred under current guidance. The new guidance requires the deferral and amortization of certain incremental costs incurred to obtain a contract. This guidance will require us to capitalize and amortize certain sales commission costs over the remaining contractual term or over an expected period of benefit, which we have determined to be approximately three to six years . As part of the transition to the new guidance, we will recognize a contract asset as a cumulative effect adjustment upon adoption. We do not expect the changes described above to have a material impact on our quarterly or annual consolidated financial statements, however the exact impact of the new standard will be dependent on facts and circumstances that could vary from quarter to quarter. In February 2016, FASB issued an accounting standard to provide updated guidance requiring the recognition of all lease assets and liabilities on the balance sheet. The accounting standard required the use of a modified retrospective transition method. In July 2018, FASB issued additional guidance that provides entities with an optional transition method in which an entity can apply the new standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance retained earnings in the period of adoption. The updated accounting guidance is effective for non-public companies for fiscal years beginning after December 15, 2019 and interim periods beginning the following year. Early adoption is permitted and the standard provides for certain practical expedients. We expect to adopt the updated guidance in fiscal year 2020. Our evaluation of the new standard will extend into future periods and we will update our disclosures, including the expected impacts of the new standard, as we progress towards the required adoption date. In January 2017, FASB issued an accounting standard to simplify the accounting for goodwill impairment. The new guidance removes step two of the two-step quantitative goodwill impairment test, which requires a hypothetical purchase price allocation. The updated guidance is effective for non-public companies for fiscal years beginning after December 15, 2021 and may be adopted early for any interim or annual goodwill impairment tests performed after January 1, 2017. We expect to adopt the updated guidance in fiscal year 2022. We do not believe that this standard will have a material impact on our consolidated financial statements. |
Fair Value Measurements | We apply the authoritative guidance on fair value measurements for financial assets and liabilities that are measured at fair value on a recurring basis and non-financial assets and liabilities, such as goodwill, intangible assets and property, plant and equipment that are measured at fair value on a non-recurring basis. The guidance establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows: Level 1: Unadjusted quoted prices for identical assets or liabilities in active markets accessible by us. Level 2: Inputs that are observable in the marketplace other than those inputs classified as Level 1. Level 3: Inputs that are unobservable in the marketplace and significant to the valuation. See Note 5. Fair Value Measurements for a summary of our financial instruments accounted for at fair value on a recurring basis. The carrying amounts reported in our consolidated balance sheets for cash, accounts receivable, accounts payable and other accrued expenses approximate fair value due to relatively short periods to maturity. |
Deferred Offering Costs | Deferred offering costs, primarily consisting of legal, accounting, printer, and other direct fees and costs, related to our proposed initial public offering are capitalized. The deferred offering costs were offset against proceeds from our initial public offering upon the closing of the offering in October 2018. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Changes in accumulated other comprehensive income (loss) by component | Changes in accumulated other comprehensive income (loss) by component are summarized below: Foreign Currency Translation Adjustments Accumulated Other Comprehensive Income (Loss) (in thousands) Balance at December 31, 2017 $ 75,294 $ 75,294 Other comprehensive gain (loss) before reclassification (36,089 ) (36,089 ) Amount reclassified from accumulated other comprehensive income (loss) — — Net current period other comprehensive income (loss) (36,089 ) (36,089 ) Balance at September 30, 2018 $ 39,205 $ 39,205 |
Amortization of acquired technologies | Amortization of acquired technologies. Amortization of acquired technologies included in cost of revenue relate to our licensed products and subscription products as follows: Three Months Ended September 30, Nine Months Ended 2018 2017 2018 2017 (in thousands) Amortization of acquired license technologies $ 36,061 $ 36,232 $ 108,974 $ 106,487 Amortization of acquired subscription technologies 7,774 7,281 23,147 21,294 Total amortization of acquired technologies $ 43,835 $ 43,513 $ 132,121 $ 127,781 Intangible asset amortization expense was as follows: Three Months Ended September 30, Nine Months Ended 2018 2017 2018 2017 (in thousands) Intangible asset amortization expense $ 60,360 $ 60,559 $ 182,459 $ 177,721 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Summary of consideration paid and amounts recognized for assets acquired and liabilities assumed | The following table summarizes the consideration paid and the amounts recognized for the assets acquired and liabilities assumed for our acquisitions completed in the nine months ended September 30, 2018: Total Fair Value (in thousands) Current assets, including cash acquired $ 4,577 Deferred tax asset 1,462 Fixed assets 1,272 Identifiable intangible assets 18,412 Goodwill 41,789 Current liabilities (1,628 ) Deferred revenue (2,944 ) Total consideration $ 62,940 |
Summary of fair value of acquired identifiable intangible assets and weighted-average useful life | The following table summarizes the fair value of the acquired identifiable intangible assets and weighted-average useful life: Fair Value Weighted-average useful life (in thousands) (in years) Developed product technologies $ 13,317 5 Customer relationships 4,805 4 Tradenames 290 3 Total identifiable intangible assets $ 18,412 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in goodwill | The following table reflects the changes in goodwill for the nine months ended September 30, 2018 : (in thousands) Balance at December 31, 2017 $ 3,695,640 Acquisitions 41,789 Foreign currency translation and other adjustments (38,118 ) Balance at September 30, 2018 $ 3,699,311 |
Intangible assets | Intangible assets consisted of the following at September 30, 2018 and December 31, 2017: September 30, 2018 December 31, 2017 Gross Carrying Amount Accumulated Net Gross Carrying Amount Accumulated Amortization Net (in thousands) Developed product technologies $ 1,010,952 $ (452,420 ) $ 558,532 $ 1,006,454 $ (324,196 ) $ 682,258 Customer relationships 544,823 (166,597 ) 378,226 546,207 (118,930 ) 427,277 Intellectual property 764 (109 ) 655 547 (59 ) 488 Trademarks 84,800 (1,218 ) 83,582 85,257 (1,075 ) 84,182 Customer backlog — — — 6,200 (5,906 ) 294 Total intangible assets $ 1,641,339 $ (620,344 ) $ 1,020,995 $ 1,644,665 $ (450,166 ) $ 1,194,499 |
Intangible asset amortization expense | Amortization of acquired technologies. Amortization of acquired technologies included in cost of revenue relate to our licensed products and subscription products as follows: Three Months Ended September 30, Nine Months Ended 2018 2017 2018 2017 (in thousands) Amortization of acquired license technologies $ 36,061 $ 36,232 $ 108,974 $ 106,487 Amortization of acquired subscription technologies 7,774 7,281 23,147 21,294 Total amortization of acquired technologies $ 43,835 $ 43,513 $ 132,121 $ 127,781 Intangible asset amortization expense was as follows: Three Months Ended September 30, Nine Months Ended 2018 2017 2018 2017 (in thousands) Intangible asset amortization expense $ 60,360 $ 60,559 $ 182,459 $ 177,721 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair value of financial assets measured on a recurring basis | The following table summarizes the fair value of our financial assets that were measured on a recurring basis as of September 30, 2018 and December 31, 2017 . There have been no transfers between fair value measurement levels during the nine months ended September 30, 2018 . Fair Value Measurements at September 30, 2018 Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total (in thousands) Money market funds $ 67,100 $ — $ — $ 67,100 Fair Value Measurements at December 31, 2017 Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total (in thousands) Money market funds $ 67,100 $ — $ — $ 67,100 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Summary of debt | The following table summarizes information relating to our debt: September 30, December 31, 2018 2017 Amount Effective Rate Amount Effective Rate (in thousands, except interest rates) Revolving credit facility $ — — % $ — — % First Lien Term Loan (as amended) due Feb 2024 1,975,075 5.24 % 1,678,050 5.07 % Second Lien Floating Rate Notes (as amended) due Feb 2024 — — % 680,000 10.14 % Second Lien Term Loan due Feb 2025 315,000 9.49 % — — % Total principal amount 2,290,075 2,358,050 Unamortized discount and debt issuance costs (53,903 ) (95,478 ) Total debt 2,236,172 2,262,572 Less: Current portion of long-term debt (19,900 ) (16,950 ) Total long-term debt $ 2,216,272 $ 2,245,622 |
Summary of future minimum principal payments of debt | The following table summarizes the future minimum principal payments under the First Lien Term Loan outstanding as of September 30, 2018 : As of September 30, 2018 (in thousands) 2018 $ 4,975 2019 19,900 2020 19,900 2021 19,900 2022 19,900 Thereafter 1,890,500 Total minimum principal payments $ 1,975,075 |
Stockholders' Deficit and Sto_2
Stockholders' Deficit and Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity And Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Option grant activity | Option grant activity under the 2016 Plan was as follows: Number of Shares Outstanding Weighted- Average Exercise Price Aggregate Intrinsic Value (in thousands) Weighted- Average Remaining Contractual Term (in years) Outstanding balances at December 31, 2017 2,156,550 $ 0.45 Options granted 1,327,475 3.40 Options exercised (38,600 ) 0.35 Options forfeited (231,075 ) 0.94 Options expired (30,050 ) 0.30 Outstanding balances at September 30, 2018 3,184,300 $ 1.65 Options exercisable at September 30, 2018 618,250 $ 0.41 $ 5,980 8.17 Options vested and expected to vest at September 30, 2018 3,184,300 $ 1.65 $ 26,856 8.84 |
Schedule of intrinsic value | Additional information regarding options follows (in thousands except for per share amounts): Nine Months Ended September 30, 2018 Weighted-average grant date fair value per share of options granted during the period $ 1.98 Aggregate intrinsic value of options exercised during the period 302 Aggregate fair value of options vested during the period 102 |
Schedule of grant date fair value | Additional information regarding options follows (in thousands except for per share amounts): Nine Months Ended September 30, 2018 Weighted-average grant date fair value per share of options granted during the period $ 1.98 Aggregate intrinsic value of options exercised during the period 302 Aggregate fair value of options vested during the period 102 |
Summary of restricted stock activity | The following table summarizes information about employee restricted stock activity subject to vesting under the 2016 Plan: Number of Shares Outstanding Unvested balances at December 31, 2017 5,789,401 Restricted stock granted and issued 820,500 Restricted stock vested (1,371,334 ) Restricted stock repurchased - unvested shares (196,033 ) Unvested balances at September 30, 2018 5,042,534 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Reconciliation of shares in basic and diluted loss per share calculation | A reconciliation of the number of shares in the calculation of basic and diluted loss per share follows: Three Months Ended September 30, Nine Months Ended 2018 2017 2018 2017 (in thousands) Basic net loss per share Numerator: Net income (loss) $ (398 ) $ 1,637 $ (87,323 ) $ (44,105 ) Accretion of dividends on Class A common stock (74,608 ) (68,264 ) (216,621 ) (198,205 ) Net loss available to common stockholders $ (75,006 ) $ (66,627 ) $ (303,944 ) $ (242,310 ) Denominator: Weighted-average Class B common shares outstanding used in computing basic net loss per share 102,078 100,759 101,915 100,330 Diluted net loss per share Numerator: Net loss available to common stockholders $ (75,006 ) $ (66,627 ) $ (303,944 ) $ (242,310 ) Denominator: Weighted-average shares used in computing basic net loss per share 102,078 100,759 101,915 100,330 Add options and restricted stock units to purchase common stock — — — — Weighted-average shares used in computing diluted net loss per share 102,078 100,759 101,915 100,330 |
Weighted average shares excluded from loss per share computation | The following weighted average outstanding shares of common stock equivalents were excluded from the computation of the diluted net loss per share attributable to common stockholders for the periods presented because their effect would have been anti-dilutive or for which the performance condition had not been met at the end of the period: Three Months Ended September 30, Nine Months Ended 2018 2017 2018 2017 (in thousands) Stock options to purchase common stock 2,782 1,816 2,525 1,509 Performance-based stock options to purchase common stock 316 116 267 96 Non-vested restricted stock incentive awards 3,512 3,410 3,435 3,605 Performance-based non-vested restricted stock incentive awards 1,537 2,260 1,566 2,601 Total anti-dilutive shares 8,147 7,602 7,793 7,811 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Management fees | The following table details the management fees for the respective periods: Three Months Ended September 30, Nine Months Ended 2018 2017 2018 2017 (in thousands) Silver Lake Management $ 1,250 $ 1,250 $ 3,750 $ 3,750 Thoma Bravo 1,018 1,018 3,054 3,054 TB Partners 232 232 696 696 $ 2,500 $ 2,500 $ 7,500 $ 7,500 |
Organization and Nature of Op_2
Organization and Nature of Operations (Details) - Subsequent Event | 1 Months Ended |
Oct. 31, 2018$ / sharesshares | |
Subsidiary, Sale of Stock [Line Items] | |
Conversion price (in dollars per share) | $ 19 |
Common Stock | IPO | |
Subsidiary, Sale of Stock [Line Items] | |
Number of shares issued (in shares) | shares | 25,000,000 |
Stock issue price (in dollars per share) | $ 15 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Foreign Currency Translation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Accounting Policies [Abstract] | ||||
Unrealized net transaction gains (losses) related to remeasurement | $ 0 | $ 14,300 | $ (14,000) | $ 48,200 |
Debt Instrument [Line Items] | ||||
Foreign currency translation adjustment | (10,520) | $ 37,414 | $ (36,089) | $ 125,392 |
Intercompany Loan | ||||
Debt Instrument [Line Items] | ||||
Foreign currency translation adjustment | $ 3,300 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Recent Accounting Pronouncements Not Yet Adopted (Details) | Sep. 30, 2018 |
Minimum | |
Capitalized Contract Cost [Line Items] | |
Amortization period | 3 years |
Maximum | |
Capitalized Contract Cost [Line Items] | |
Amortization period | 6 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Deferred Offering Costs (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Deferred offering costs | $ 2,200,000 | $ 0 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Changes in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Balance at beginning of period | $ (729,761) | |||
Other comprehensive gain (loss) before reclassification | (36,089) | |||
Amount reclassified from accumulated other comprehensive income (loss) | 0 | |||
Other comprehensive income (loss) | $ (10,520) | $ 37,414 | (36,089) | $ 125,392 |
Balance at end of period | (1,069,525) | (1,069,525) | ||
Foreign Currency Translation Adjustments | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Balance at beginning of period | 75,294 | |||
Other comprehensive gain (loss) before reclassification | (36,089) | |||
Amount reclassified from accumulated other comprehensive income (loss) | 0 | |||
Other comprehensive income (loss) | (36,089) | |||
Balance at end of period | 39,205 | 39,205 | ||
Accumulated Other Comprehensive Income (Loss) | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Balance at beginning of period | 75,294 | |||
Balance at end of period | $ 39,205 | $ 39,205 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Cost of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Product Information [Line Items] | ||||
Total amortization of acquired technologies | $ 43,835 | $ 43,513 | $ 132,121 | $ 127,781 |
License | ||||
Product Information [Line Items] | ||||
Total amortization of acquired technologies | 36,061 | 36,232 | 108,974 | 106,487 |
Subscription | ||||
Product Information [Line Items] | ||||
Total amortization of acquired technologies | $ 7,774 | $ 7,281 | $ 23,147 | $ 21,294 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) - 2018 Acquisitions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Business Acquisition [Line Items] | |
Combined purchase price | $ 62,900,000 |
Cash acquired from acquisitions | 2,400,000 |
Acquisition related costs | 900,000 |
Goodwill expected to be deductible for tax purposes | $ 0 |
Acquisitions - Summary of Consi
Acquisitions - Summary of Consideration Paid and Amounts Recognized (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | ||
Goodwill | $ 3,699,311 | $ 3,695,640 |
2018 Acquisitions | ||
Business Acquisition [Line Items] | ||
Current assets, including cash acquired | 4,577 | |
Deferred tax asset | 1,462 | |
Fixed assets | 1,272 | |
Identifiable intangible assets | 18,412 | |
Goodwill | 41,789 | |
Current liabilities | (1,628) | |
Deferred revenue | (2,944) | |
Total consideration | $ 62,940 |
Acquisitions - Summary of Fair
Acquisitions - Summary of Fair Value of Acquired Identifiable Intangible Assets and Weighted-Average Useful Life (Details) - 2018 Acquisitions $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 18,412 |
Developed product technologies | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 13,317 |
Weighted-average useful life | 5 years |
Customer relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 4,805 |
Weighted-average useful life | 4 years |
Tradenames | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 290 |
Weighted-average useful life | 3 years |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Changes in Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Goodwill [Roll Forward] | |
Balance at beginning of period | $ 3,695,640 |
Acquisitions | 41,789 |
Foreign currency translation and other adjustments | (38,118) |
Balance at end of period | $ 3,699,311 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 1,641,339 | $ 1,644,665 |
Accumulated Amortization | (620,344) | (450,166) |
Net | 1,020,995 | 1,194,499 |
Developed product technologies | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,010,952 | 1,006,454 |
Accumulated Amortization | (452,420) | (324,196) |
Net | 558,532 | 682,258 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 544,823 | 546,207 |
Accumulated Amortization | (166,597) | (118,930) |
Net | 378,226 | 427,277 |
Intellectual property | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 764 | 547 |
Accumulated Amortization | (109) | (59) |
Net | 655 | 488 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 84,800 | 85,257 |
Accumulated Amortization | (1,218) | (1,075) |
Net | 83,582 | 84,182 |
Customer backlog | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 0 | 6,200 |
Accumulated Amortization | 0 | (5,906) |
Net | $ 0 | $ 294 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Intangible Assets Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Intangible asset amortization expense | $ 60,360 | $ 60,559 | $ 182,459 | $ 177,721 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - Money market funds - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value | $ 67,100 | $ 67,100 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value | 67,100 | 67,100 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value | 0 | 0 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value | $ 0 | $ 0 |
Debt - Summary of Debt (Details
Debt - Summary of Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Amount | ||
Total principal amount | $ 2,290,075 | $ 2,358,050 |
Unamortized discount and debt issuance costs | (53,903) | (95,478) |
Total debt | 2,236,172 | 2,262,572 |
Less: Current portion of long-term debt | (19,900) | (16,950) |
Total long-term debt | 2,216,272 | 2,245,622 |
Line of Credit | Revolving Credit Facility | ||
Amount | ||
Total principal amount | $ 0 | $ 0 |
Effective Rate | 0.00% | 0.00% |
Secured Debt | First Lien Term Loan (as amended) due Feb 2024 | ||
Amount | ||
Total principal amount | $ 1,975,075 | $ 1,678,050 |
Effective Rate | 5.24% | 5.07% |
Secured Debt | Second Lien Floating Rate Notes (as amended) due Feb 2024 | ||
Amount | ||
Total principal amount | $ 0 | $ 680,000 |
Effective Rate | 0.00% | 10.14% |
Secured Debt | Second Lien Term Loan due Feb 2025 | ||
Amount | ||
Total principal amount | $ 315,000 | $ 0 |
Effective Rate | 9.49% | 0.00% |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |||
Oct. 31, 2018 | Mar. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | |||||
Loss on extinguishment of debt | $ 60,590,000 | $ 18,559,000 | |||
Long-term debt | 2,236,172,000 | $ 2,262,572,000 | |||
Debt redemption premium | $ 22,725,000 | $ 0 | |||
Credit Suisse | Eurodollar | |||||
Debt Instrument [Line Items] | |||||
LIBOR floor | 0.00% | ||||
Credit Suisse | Federal Funds Effective Rate | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 0.50% | ||||
Credit Suisse | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 1.00% | ||||
Credit Suisse | Secured Debt | First Lien Term Loan | |||||
Debt Instrument [Line Items] | |||||
Face amount of debt | $ 1,990,000,000 | $ 1,990,000,000 | |||
Loss on extinguishment of debt | 21,400,000 | ||||
Quarterly periodic payment, as a percentage of original principal | 0.25% | ||||
Covenant, leverage ratio, maximum | 7.40 | ||||
Long-term debt | $ 1,975,075,000 | ||||
Credit Suisse | Secured Debt | First Lien Term Loan | Eurodollar | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 3.00% | ||||
Covenant, floor interest rate | 0.00% | ||||
Credit Suisse | Secured Debt | First Lien Term Loan | Base Rate | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.00% | ||||
Credit Suisse | Secured Debt | First Lien Term Loan | Net Leverage Ratio Or IPO | Eurodollar | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.75% | ||||
Credit Suisse | Secured Debt | First Lien Term Loan | Net Leverage Ratio Or IPO | Base Rate | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 1.75% | ||||
Credit Suisse | Line of Credit | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 125,000,000 | ||||
Commitment fee percentage | 0.50% | ||||
Covenant, commitment fee percentage, net leverage ratio, reduction per annum | 0.375% | ||||
Covenant, borrowing percentage of commitments, maximum | 35.00% | ||||
Credit Suisse | Line of Credit | Revolving Credit Facility | Eurodollar | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 3.00% | ||||
Covenant, floor interest rate | 0.00% | ||||
Credit Suisse | Line of Credit | Revolving Credit Facility | Base Rate | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.00% | ||||
Credit Suisse | Line of Credit | Revolving Credit Facility | Net Leverage Ratio Or IPO | Eurodollar | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.75% | ||||
Credit Suisse | Line of Credit | Revolving Credit Facility | Net Leverage Ratio Or IPO | Eurodollar | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.50% | ||||
Credit Suisse | Line of Credit | Revolving Credit Facility | Net Leverage Ratio Or IPO | Base Rate | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 1.75% | ||||
Credit Suisse | Line of Credit | Revolving Credit Facility | Net Leverage Ratio Or IPO | Base Rate | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 1.50% | ||||
Credit Suisse | Line of Credit | Revolving Credit Facility | Multi-Currency Tranche | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 100,000,000 | ||||
Credit Suisse | Line of Credit | Revolving Credit Facility | Single Currency Tranche | US Dollars | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | 25,000,000 | ||||
Credit Suisse | Line of Credit | Revolving Credit Facility | Single Currency Tranche, February 5, 2021 Maturity Date | US Dollars | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | 7,500,000 | ||||
Credit Suisse | Line of Credit | Revolving Credit Facility | Single Currency Tranche, February 5, 2022 Maturity Date | US Dollars | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | 17,500,000 | ||||
Credit Suisse | Line of Credit | Letter of Credit | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 35,000,000 | ||||
Wilmington Trust | Secured Debt | Second Lien Notes | |||||
Debt Instrument [Line Items] | |||||
Loss on extinguishment of debt | 39,200,000 | ||||
Debt redemption premium | 22,700,000 | ||||
Wilmington Trust | Secured Debt | Second Lien Floating Rate Notes | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | 680,000,000 | ||||
Wilmington Trust | Secured Debt | Second Lien Term Loan due Feb 2025 | |||||
Debt Instrument [Line Items] | |||||
Face amount of debt | $ 315,000,000 | ||||
Wilmington Trust | Secured Debt | Second Lien Term Loan due Feb 2025 | Subsequent Event | |||||
Debt Instrument [Line Items] | |||||
Debt redemption premium | $ 14,200,000 | ||||
Repayments of debt | $ 315,000,000 | ||||
Wilmington Trust | Secured Debt | Second Lien Term Loan due Feb 2025 | Eurodollar | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 7.25% | ||||
Wilmington Trust | Secured Debt | Second Lien Term Loan due Feb 2025 | Base Rate | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 6.25% |
Debt - Summary of Future Minimu
Debt - Summary of Future Minimum Principal Payments (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Long-term Debt, Fiscal Year Maturity [Abstract] | ||
Total debt | $ 2,236,172 | $ 2,262,572 |
Credit Suisse | First Lien Term Loan | Secured Debt | ||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||
2,018 | 4,975 | |
2,019 | 19,900 | |
2,020 | 19,900 | |
2,021 | 19,900 | |
2,022 | 19,900 | |
Thereafter | 1,890,500 | |
Total debt | $ 1,975,075 |
Redeemable Convertible Class _2
Redeemable Convertible Class A Common Stock (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 9 Months Ended | |
Oct. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
Temporary Equity Disclosure [Abstract] | |||
Dividend rate | 9.00% | ||
Liquidation preference (in dollars per share) | $ 1,000 | ||
Subsidiary, Sale of Stock [Line Items] | |||
Cumulative undeclared and unpaid dividends | $ 702.5 | $ 485.9 | |
Subsequent Event | |||
Subsidiary, Sale of Stock [Line Items] | |||
Cumulative undeclared and unpaid dividends | $ 717.4 | ||
Conversion price (in dollars per share) | $ 19 | ||
Subsequent Event | Common Stock | |||
Subsidiary, Sale of Stock [Line Items] | |||
Conversion of accrued and unpaid dividends (in shares) | 37,758,109 |
Stockholders' Deficit and Sto_3
Stockholders' Deficit and Stock-Based Compensation - Common Stock (Details) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Equity And Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Capital stock authorized (in shares) | 238,755,000 | |
Class A common stock, authorized (in shares) | 5,755,000 | 5,755,000 |
Class A common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Class B common stock, authorized (in shares) | 233,000,000 | 233,000,000 |
Class B common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Stockholders' Deficit and Sto_4
Stockholders' Deficit and Stock-Based Compensation - 2016 Equity Plan (Details) - shares | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock options outstanding (in shares) | 3,184,300 | 2,156,550 |
Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Awards outstanding (in shares) | 5,042,534 | 5,789,401 |
Common Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Repurchase of stock (in shares) | 57,000 | |
2016 Equity Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock-based incentive awards outstanding (in shares) | 8,241,934 | |
Stock options outstanding (in shares) | 3,199,400 | |
Class B common stock reserved for future issuance (in shares) | 502,833 | |
2016 Equity Plan | Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Awards outstanding (in shares) | 5,042,534 | |
2016 Equity Plan | Common Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Repurchase of stock (in shares) | 250,333 |
Stockholders' Deficit and Sto_5
Stockholders' Deficit and Stock-Based Compensation - Stock Option Awards, Option Grant Activity (Details) $ / shares in Units, $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($)$ / sharesshares | |
Number of Shares Outstanding | |
Outstanding balances at beginning of period (in shares) | shares | 2,156,550 |
Options granted (in shares) | shares | 1,327,475 |
Options exercised (in shares) | shares | (38,600) |
Options forfeited (in shares) | shares | (231,075) |
Options expired (in shares) | shares | (30,050) |
Outstanding balances at end of period (in shares) | shares | 3,184,300 |
Options exercisable at end of period (in shares) | shares | 618,250 |
Options vested and expected to vest at end of period (in shares) | shares | 3,184,300 |
Weighted- Average Exercise Price | |
Outstanding balances at beginning of period (in dollars per share) | $ / shares | $ 0.45 |
Options granted (in dollars per share) | $ / shares | 3.40 |
Options exercised (in dollars per share) | $ / shares | 0.35 |
Options forfeited (in dollars per share) | $ / shares | 0.94 |
Options expired (in dollars per share) | $ / shares | 0.30 |
Outstanding balances at the end of period (in dollars per share) | $ / shares | 1.65 |
Options exercisable at end of period (in dollars per share) | $ / shares | 0.41 |
Options vested and expected to vest at end of period (in dollars per share) | $ / shares | $ 1.65 |
Aggregate Intrinsic Value (in thousands) | |
Options exercisable at September 30, 2018 | $ | $ 5,980 |
Options vested and expected to vest at September 30, 2018 | $ | $ 26,856 |
Weighted- Average Remaining Contractual Term (in years) | |
Options exercisable at September 30, 2018 | 8 years 2 months 2 days |
Options vested and expected to vest at September 30, 2018 | 8 years 10 months 3 days |
Stockholders' Deficit and Sto_6
Stockholders' Deficit and Stock-Based Compensation - Stock Option Awards, Additional Information Regarding Options (Details) $ / shares in Units, $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($)$ / shares | |
Equity And Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Weighted-average grant date fair value per share of options granted during the period (in dollars per share) | $ / shares | $ 1.98 |
Aggregate intrinsic value of options exercised during the period | $ 302 |
Aggregate fair value of options vested during the period | $ 102 |
Stockholders' Deficit and Sto_7
Stockholders' Deficit and Stock-Based Compensation - Stock Option Awards, Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense | $ 160 | $ 21 | $ 332 | $ 49 | |
Stock-based compensation expense subject to future recognition | $ 2,500 | 2,500 | $ 300 | ||
Stock Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense | $ 0 | $ 0 | |||
Weighted-average recognition period | 3 years 5 months 20 days | 3 years 10 months 3 days |
Stockholders' Deficit and Sto_8
Stockholders' Deficit and Stock-Based Compensation - Restricted Stock (Details) - Restricted Stock | 9 Months Ended |
Sep. 30, 2018shares | |
Number of Shares Outstanding | |
Unvested balances at beginning of period (in shares) | 5,789,401 |
Restricted stock granted and issued (in shares) | 820,500 |
Restricted stock vested (in shares) | (1,371,334) |
Restricted stock repurchased - unvested shares (in shares) | (196,033) |
Unvested balances at end of period (in shares) | 5,042,534 |
Stockholders' Deficit and Sto_9
Stockholders' Deficit and Stock-Based Compensation - Restricted Stock, Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense | $ 160,000 | $ 21,000 | $ 332,000 | $ 49,000 | |
Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Weighted average grant date fair value (in dollars per share) | $ 2.10 | ||||
Stock-based compensation expense | $ 0 | ||||
Share-based compensation, liability | $ 2,900,000 | $ 2,900,000 | $ 1,700,000 |
Net Loss Per Share - Reconcilia
Net Loss Per Share - Reconciliation of Shares in the Calculation of Basic and Diluted Loss Per Share (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Numerator: | ||||
Net income (loss) | $ (398) | $ 1,637 | $ (87,323) | $ (44,105) |
Accretion of dividends on Class A common stock | (74,608) | (68,264) | (216,621) | (198,205) |
Net loss available to common stockholders | $ (75,006) | $ (66,627) | $ (303,944) | $ (242,310) |
Weighted-average Class B common shares outstanding used in computing basic net loss per share (in shares) | 102,078 | 100,759 | 101,915 | 100,330 |
Net loss available to common stockholders | $ (75,006) | $ (66,627) | $ (303,944) | $ (242,310) |
Denominator: | ||||
Weighted-average shares used in computing basic net loss per share (in shares) | 102,078 | 100,759 | 101,915 | 100,330 |
Add options and restricted stock units to purchase common stock (in shares) | 0 | 0 | 0 | 0 |
Weighted-average shares used in computing diluted net loss per share (in shares) | 102,078 | 100,759 | 101,915 | 100,330 |
Net Loss Per Share - Weighted A
Net Loss Per Share - Weighted Average Outstanding Shares of Common Stock Equivalents Excluded (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total anti-dilutive shares (in shares) | 8,147 | 7,602 | 7,793 | 7,811 |
Stock options to purchase common stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total anti-dilutive shares (in shares) | 2,782 | 1,816 | 2,525 | 1,509 |
Performance-based stock options to purchase common stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total anti-dilutive shares (in shares) | 316 | 116 | 267 | 96 |
Non-vested restricted stock incentive awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total anti-dilutive shares (in shares) | 3,512 | 3,410 | 3,435 | 3,605 |
Performance-based non-vested restricted stock incentive awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total anti-dilutive shares (in shares) | 1,537 | 2,260 | 1,566 | 2,601 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - The Managers - Management Fee Agreement $ in Millions | Feb. 05, 2016USD ($) |
Related Party Transaction [Line Items] | |
Quarterly transaction amount | $ 2.5 |
Silver Lake Management | |
Related Party Transaction [Line Items] | |
Percent of transaction amount | 50.00% |
Thoma Bravo | |
Related Party Transaction [Line Items] | |
Percent of transaction amount | 40.73% |
TB Partners | |
Related Party Transaction [Line Items] | |
Percent of transaction amount | 9.27% |
Related Party Transactions - Ma
Related Party Transactions - Management Fees (Details) - Management Fee Agreement - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Related Party Transaction [Line Items] | ||||
Management fees | $ 2,500 | $ 2,500 | $ 7,500 | $ 7,500 |
Silver Lake Management | ||||
Related Party Transaction [Line Items] | ||||
Management fees | 1,250 | 1,250 | 3,750 | 3,750 |
Thoma Bravo | ||||
Related Party Transaction [Line Items] | ||||
Management fees | 1,018 | 1,018 | 3,054 | 3,054 |
TB Partners | ||||
Related Party Transaction [Line Items] | ||||
Management fees | $ 232 | $ 232 | $ 696 | $ 696 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Income tax benefit | $ 126 | $ 3,055 | $ 20,045 | $ 12,469 |
Effective income tax rate | 24.00% | 215.40% | 18.70% | 22.00% |
Unrecognized tax benefits, income tax penalties and interest accrued | $ 3,800 | $ 3,800 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ / shares in Units, $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($)$ / shares | |
Commitments and Contingencies Disclosure [Abstract] | |
Deferred compensation (in dollars per share) | $ / shares | $ 60.10 |
Liability for stock payments | $ 1.8 |
Compensation expense | 2.4 |
Cash payments for deferred compensation | 3.5 |
Deferred compensation, expected future payments | $ 4.2 |
Subsequent Events - Initial Pub
Subsequent Events - Initial Public Offering (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | ||
Oct. 31, 2018USD ($)vote$ / sharesshares | Sep. 30, 2018USD ($)$ / sharesshares | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($)$ / sharesshares | |
Subsequent Event [Line Items] | ||||
Debt extinguishment costs | $ 22,725 | $ 0 | ||
Class A common stock, outstanding (in shares) | shares | 2,661,015 | 2,661,030 | ||
Cumulative undeclared and unpaid dividends | $ 702,500 | $ 485,900 | ||
Common stock, authorized (in shares) | shares | 233,000,000 | 233,000,000 | ||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Cumulative undeclared and unpaid dividends | $ 717,400 | |||
Conversion price (in dollars per share) | $ / shares | $ 19 | |||
Conversion ratio | 1 | |||
Common stock, authorized (in shares) | shares | 1,000,000,000 | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | |||
Preferred stock, authorized (in shares) | shares | 50,000,000 | |||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | |||
Number of votes per common share | vote | 1 | |||
Subsequent Event | Common Stock | ||||
Subsequent Event [Line Items] | ||||
Conversion of stock (in shares) | shares | 140,053,370 | |||
Conversion of accrued and unpaid dividends (in shares) | shares | 37,758,109 | |||
Subsequent Event | Second Lien Term Loan due Feb 2025 | Wilmington Trust | Secured Debt | ||||
Subsequent Event [Line Items] | ||||
Repayments of debt | $ 315,000 | |||
Debt extinguishment costs | 14,200 | |||
Subsequent Event | IPO | ||||
Subsequent Event [Line Items] | ||||
Proceeds from issuance, initial public offering | 375,000 | |||
Proceeds from offering, net | 353,000 | |||
Underwriting discounts and commissions | 17,800 | |||
Offering-related expenses | $ 4,200 | |||
Subsequent Event | IPO | Common Stock | ||||
Subsequent Event [Line Items] | ||||
Number of shares issued (in shares) | shares | 25,000,000 | |||
Stock issue price (in dollars per share) | $ / shares | $ 15 |
Subsequent Events - 2018 Equity
Subsequent Events - 2018 Equity Incentive Plan (Details) - Subsequent Event - 2018 Equity Incentive Plan | 1 Months Ended |
Oct. 31, 2018shares | |
Subsequent Event [Line Items] | |
Stock reserved for future issuance (in shares) | 30,000,000 |
Restricted stock granted and issued (in shares) | 7,342,878 |
Minimum | |
Subsequent Event [Line Items] | |
Vesting percentage | 0.00% |
Maximum | |
Subsequent Event [Line Items] | |
Vesting percentage | 150.00% |
Restricted Stock Units (RSUs) | |
Subsequent Event [Line Items] | |
Restricted stock granted and issued (in shares) | 6,371,956 |
Vesting period | 4 years |
Performance Stock Units | |
Subsequent Event [Line Items] | |
Restricted stock granted and issued (in shares) | 970,922 |
Vesting period | 3 years |