Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 01, 2019 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | SolarWinds Corporation | |
Entity Central Index Key | 0001739942 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
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 | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 310,058,704 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 434,465 | $ 382,620 |
Accounts receivable, net of allowances of $3,466 and $3,196 as of March 31, 2019 and December 31, 2018, respectively | 109,837 | 100,528 |
Income tax receivable | 1,141 | 893 |
Prepaid and other current assets | 20,811 | 16,267 |
Total current assets | 566,254 | 500,308 |
Property and equipment, net | 36,918 | 35,864 |
Deferred taxes | 6,879 | 6,873 |
Goodwill | 3,661,794 | 3,683,961 |
Intangible assets, net | 891,958 | 956,261 |
Other assets, net | 16,669 | 11,382 |
Total assets | 5,180,472 | 5,194,649 |
Current liabilities: | ||
Accounts payable | 10,052 | 9,742 |
Accrued liabilities and other | 40,873 | 52,055 |
Accrued interest payable | 863 | 290 |
Income taxes payable | 17,878 | 15,682 |
Current portion of deferred revenue | 285,212 | 270,433 |
Current debt obligation | 19,900 | 19,900 |
Total current liabilities | 374,778 | 368,102 |
Long-term liabilities: | ||
Deferred revenue, net of current portion | 26,578 | 25,699 |
Non-current deferred taxes | 137,454 | 147,144 |
Other long-term liabilities | 133,902 | 133,532 |
Long-term debt, net of current portion | 1,901,383 | 1,904,072 |
Total liabilities | 2,574,095 | 2,578,549 |
Commitments and contingencies (Note 8) | ||
Stockholders’ equity: | ||
Common stock, $0.001 par value: 1,000,000,000 shares authorized and 306,405,049 and 304,942,415 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively | 306 | 305 |
Preferred stock, $0.001 par value: 50,000,000 shares authorized and no shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively | 0 | 0 |
Additional paid-in capital | 3,019,652 | 3,011,080 |
Accumulated other comprehensive income (loss) | (10,665) | 17,043 |
Accumulated deficit | (402,916) | (412,328) |
Total stockholders’ equity | 2,606,377 | 2,616,100 |
Total liabilities and stockholders’ equity | $ 5,180,472 | $ 5,194,649 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Allowance for doubtful accounts receivable | $ 3,466 | $ 3,196 |
Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, issued (in shares) | 306,405,049 | 304,942,415 |
Common stock, outstanding (in shares) | 306,405,049 | 304,942,415 |
Preferred Stock | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue: | ||
Total revenue | $ 215,792 | $ 196,913 |
Cost of revenue: | ||
Amortization of acquired technologies | 43,817 | 44,319 |
Total cost of revenue | 61,976 | 61,206 |
Gross profit | 153,816 | 135,707 |
Operating expenses: | ||
Sales and marketing | 60,595 | 52,682 |
Research and development | 25,188 | 24,753 |
General and administrative | 21,736 | 19,186 |
Amortization of acquired intangibles | 16,502 | 17,128 |
Total operating expenses | 124,021 | 113,749 |
Operating income | 29,795 | 21,958 |
Other income (expense): | ||
Interest expense, net | (27,382) | (42,089) |
Other income (expense), net | 1,297 | (48,136) |
Total other income (expense) | (26,085) | (90,225) |
Income (loss) before income taxes | 3,710 | (68,267) |
Income tax expense (benefit) | 565 | (8,357) |
Net income (loss) | 3,145 | (59,910) |
Net income (loss) available to common stockholders | $ 3,103 | $ (129,745) |
Net income (loss) available to common stockholders per share: | ||
Basic earnings (loss) per share (in dollars per share) | $ 0.01 | $ (1.28) |
Diluted earnings (loss) per share (in dollars per share) | $ 0.01 | $ (1.28) |
Weighted-average shares used to compute net income (loss) available to commons stockholders per share: | ||
Shares used in computation of basic loss per share (in shares) | 305,653 | 101,644 |
Shares used in computation of diluted loss per share (in shares) | 309,783 | 101,644 |
Recurring Revenue | ||
Revenue: | ||
Total revenue | $ 177,857 | $ 160,053 |
Cost of revenue: | ||
Cost of recurring revenue | 18,159 | 16,887 |
Subscription | ||
Revenue: | ||
Total revenue | 71,565 | 63,053 |
Cost of revenue: | ||
Amortization of acquired technologies | 7,980 | 7,711 |
Maintenance | ||
Revenue: | ||
Total revenue | 106,292 | 97,000 |
License | ||
Revenue: | ||
Total revenue | 37,935 | 36,860 |
Cost of revenue: | ||
Amortization of acquired technologies | $ 35,837 | $ 36,608 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 3,145 | $ (59,910) |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment | (27,708) | 33,353 |
Other comprehensive income (loss) | (27,708) | 33,353 |
Comprehensive income (loss) | $ (24,563) | $ (26,557) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements Stockholders' Equity and Redeemable Convertible Class A Common Stock and Stockholders' Deficit - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit |
Balance at beginning of period (in shares) at Dec. 31, 2017 | 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 | 33,353 | 33,353 | |||
Net income (loss) | (59,910) | (59,910) | |||
Comprehensive income (loss) | (26,557) | ||||
Exercise of stock options (in shares) | 2,000 | ||||
Issuance of stock (in shares) | 1,262,000 | ||||
Issuance of stock | 352 | $ 1 | 351 | ||
Repurchase of stock (in shares) | (12,000) | ||||
Repurchase of stock | (24) | (24) | |||
Accumulating dividends | (69,835) | (368) | (69,467) | ||
Stock-based compensation | 41 | 41 | |||
Balance at end of period (in shares) at Mar. 31, 2018 | 101,986,000 | ||||
Balance at end of period at Mar. 31, 2018 | $ (825,784) | $ 102 | 0 | 108,647 | (934,533) |
Balance at beginning of period (in shares) at Dec. 31, 2017 | 2,661,000 | ||||
Balance at beginning of period at Dec. 31, 2017 | $ 3,146,887 | ||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||
Accumulating dividends | 69,835 | ||||
Stock-based compensation | $ 0 | ||||
Balance at end of period (in shares) at Mar. 31, 2018 | 2,661,000 | ||||
Balance at end of period at Mar. 31, 2018 | $ 3,216,722 | ||||
Balance at beginning of period (in shares) at Dec. 31, 2018 | 304,942,415 | 304,942,000 | |||
Balance at beginning of period at Dec. 31, 2018 | $ 2,616,100 | $ 305 | 3,011,080 | 17,043 | (412,328) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Foreign currency translation adjustment | (27,708) | (27,708) | |||
Net income (loss) | 3,145 | 3,145 | |||
Comprehensive income (loss) | (24,563) | ||||
Exercise of stock options (in shares) | 47,000 | ||||
Exercise of stock options | 36 | 36 | |||
Issuance of stock (in shares) | 1,416,000 | ||||
Issuance of stock | 749 | $ 1 | 748 | ||
Stock-based compensation | $ 7,788 | 7,788 | |||
Balance at end of period (in shares) at Mar. 31, 2019 | 306,405,049 | 306,405,000 | |||
Balance at end of period at Mar. 31, 2019 | $ 2,606,377 | $ 306 | $ 3,019,652 | $ (10,665) | $ (402,916) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities | ||
Net income (loss) | $ 3,145 | $ (59,910) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 64,463 | 65,215 |
Provision for doubtful accounts | 514 | 435 |
Stock-based compensation expense | 7,718 | 41 |
Amortization of debt issuance costs | 2,286 | 4,166 |
Loss on extinguishment of debt | 0 | 60,590 |
Deferred taxes | (11,283) | 1,464 |
Gain on foreign currency exchange rates | (1,308) | (13,543) |
Other non-cash expenses (benefits) | (687) | 572 |
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business combinations: | ||
Accounts receivable | (10,568) | (630) |
Income taxes receivable | (250) | (315) |
Prepaid and other assets | (4,326) | (3,509) |
Accounts payable | 479 | (3,785) |
Accrued liabilities and other | (10,798) | (1,966) |
Accrued interest payable | 573 | (10,582) |
Income taxes payable | 2,546 | (12,149) |
Deferred revenue | 20,054 | 9,492 |
Other long-term liabilities | 805 | (232) |
Net cash provided by operating activities | 63,363 | 35,354 |
Cash flows from investing activities | ||
Purchases of property and equipment | (4,570) | (2,946) |
Purchases of intangible assets | (1,240) | (813) |
Acquisitions, net of cash acquired | 0 | (12,990) |
Proceeds from sale of cost method investment and other | 235 | 10,715 |
Net cash used in investing activities | (5,575) | (6,034) |
Cash flows from financing activities | ||
Proceeds from issuance of common stock and incentive restricted stock | 0 | 1,100 |
Repurchase of common stock and incentive restricted stock | (8) | (45) |
Exercise of stock options | 36 | 1 |
Premium paid on debt extinguishment | 0 | (22,725) |
Proceeds from credit agreement | 0 | 626,950 |
Repayments of borrowings from credit agreement | (4,975) | (684,975) |
Payment of debt issuance costs | 0 | (5,561) |
Net cash used in financing activities | (4,947) | (85,255) |
Effect of exchange rate changes on cash and cash equivalents | (996) | 1,738 |
Net increase (decrease) in cash and cash equivalents | 51,845 | (54,197) |
Cash and cash equivalents | ||
Beginning of period | 382,620 | 277,716 |
End of period | 434,465 | 223,519 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 25,423 | 48,717 |
Cash paid for income taxes | $ 8,635 | $ 2,039 |
Organization and Nature of Oper
Organization and Nature of Operations | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Operations | Organization and Nature of Operations SolarWinds Corporation, a Delaware corporation, and its subsidiaries (“Company”, “we,” “us” and “our”) is a leading provider of information technology, or IT, infrastructure management software. 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
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 in our Annual Report on Form 10-K for the year ended December 31, 2018. With the exception of the change in our revenue recognition and other related policies upon the adoption of new revenue accounting standard described below, there have been no material changes to our significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2018. See Recently Adopted Accounting Pronouncements below regarding the impact of the adoption of the new revenue accounting standard and Revenue Recognition for discussion of our updated revenue recognition policies. 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. Recently Adopted Accounting Pronouncements On January 1, 2019 we adopted the Financial Accounting Standards Board, or FASB, Accounting Standards Codification ( “ ASC ” ) No. 2014-09 “Revenue from Contracts with Customers,” or ASC 606, which replaced all existing revenue guidance under ASC 605 “Revenue Recognition,” including prescriptive industry-specific guidance, or ASC 605. 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. We adopted ASC 606 using the modified-retrospective method. Results for reporting periods beginning after January 1, 2019 are presented in compliance with the new revenue recognition standard ASC 606. Historical financial results for reporting periods prior to 2019 are presented in conformity with amounts previously disclosed under the prior revenue recognition standard, ASC 605. These financial statements include additional information regarding the impacts from the adoption of the new revenue recognition standard on our financial results for the three month period ended March 31, 2019. This includes the presentation of financial results for the three month period ended March 31, 2019 under ASC 605 for comparison to the prior year period. The most significantly impacted areas are the following: • License and Recurring Revenue. The adoption of the new standard resulted in changes to the classification and timing of our revenue recognition. Under the new guidance, the requirement to establish VSOE to recognize license revenue separately from the other elements is eliminated. This change impacted the allocation of the transaction price and timing of our revenue recognition between deliverables, or performance obligations, within an arrangement. In addition, we now recognize time-based license revenue 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. The overall adoption impact to total revenue is immaterial, though we do expect some changes to the timing and classification between license and recurring revenue. Additionally, some historical deferred revenue, primarily from arrangements involving time-based licenses, will never be recognized as revenue and instead has been recorded as a cumulative effect adjustment within accumulated deficit. • Contract Acquisition Costs. We expensed all sales commissions as incurred under the previous guidance. The new guidance requires the deferral and amortization of certain direct and incremental costs incurred to obtain a contract. This guidance requires 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 six years . • Other Items. The impact of the adoption of the new standard on income taxes resulted in an increase of deferred income tax liabilities. The adoption of this standard did not impact our total operating cash flows. The cumulative effect of the changes made to our condensed consolidated balance sheet as of January 1, 2019 for the adoption of ASC 606 to all contracts with customers that were not completed as of December 31, 2018 was recorded as an adjustment to accumulated deficit as of the adoption date as follows: December 31, 2018 January 1, 2019 As reported Adjustments As adjusted (in thousands) Assets: Prepaid and other current assets $ 16,267 $ 1,300 $ 17,567 Other assets, net 11,382 3,857 15,239 Total assets 5,194,649 5,157 5,199,806 Liabilities: Current portion of deferred revenue 270,433 (2,338 ) 268,095 Deferred revenue, net of current portion 25,699 (434 ) 25,265 Non-current deferred taxes 147,144 1,662 148,806 Total liabilities 2,578,549 (1,110 ) 2,577,439 Stockholders' equity (deficit): Accumulated deficit (412,328 ) 6,267 (406,061 ) The impact of adoption of ASC 606 on our condensed consolidated statement of operations and condensed consolidated balance sheet was as follows: Three Months Ended March 31, 2019 As reported ASC 606 ASC 606 impact Without adoption of ASC 606 (in thousands) Revenue: Subscription $ 71,565 $ 124 $ 71,689 Maintenance 106,292 235 106,527 Total recurring revenue 177,857 359 178,216 License 37,935 (192 ) 37,743 Total revenue $ 215,792 $ 167 $ 215,959 Gross profit 153,816 167 153,983 Total operating expenses 124,021 1,400 125,421 Operating income (loss) 29,795 (1,233 ) 28,562 Net income $ 3,145 $ (1,233 ) $ 1,912 March 31, 2019 As reported ASC 606 ASC 606 impact Without adoption of ASC 606 (ASC 605) (in thousands) Assets: Prepaid and other current assets $ 20,811 $ (1,613 ) $ 19,198 Other assets, net 16,669 (4,916 ) 11,753 Total assets 5,180,472 (6,529 ) 5,173,943 Liabilities: Current portion of deferred revenue 285,212 2,221 287,433 Deferred revenue, net of current portion 26,578 410 26,988 Non-current deferred taxes 137,454 (1,662 ) 135,792 Total liabilities 2,574,095 969 2,575,064 Stockholders' equity (deficit): Accumulated deficit (402,916 ) (7,498 ) (410,414 ) 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 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 3. 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. 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, 2018 $ 17,043 $ 17,043 Other comprehensive gain (loss) before reclassification (27,708 ) (27,708 ) Amount reclassified from accumulated other comprehensive income (loss) — — Net current period other comprehensive income (loss) (27,708 ) (27,708 ) Balance at March 31, 2019 $ (10,665 ) $ (10,665 ) Revenue Recognition We generate recurring revenue from fees received for subscriptions and from the sale of maintenance services associated with our perpetual license products and license revenue from the sale of our perpetual license products. We recognize revenue related to contracts from customers when we transfer 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. This is determined by following a five-step process which includes (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price, and (5) recognizing revenue when or as we satisfy a performance obligation, as described below. • Identify the contract with a customer. We generally use a purchase order, an authorized credit card, an electronic or manually signed license agreement, or the receipt of a cash payment as evidence of a contract with a customer provided that collection is considered probable. We sell our products through our direct sales force and through our distributors and resellers. Our distributors and resellers do not carry inventory of our software and we generally require them to specify the end user of the software at the time of the order. If the distributor or reseller does not provide end-user information, then we will generally not fulfill the order. Our distributors and resellers have no rights of return or exchange for software that they purchase from us and payment for these purchases is due to us without regard to whether the distributors or resellers collect payment from their customers. Sales through resellers and distributors are typically evidenced by a reseller or distributor agreement, together with purchase orders or authorized credit cards on a transaction-by-transaction basis. • Identify the performance obligations in the contract. Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are separately identifiable from other promises in the contract, or distinct. If not considered distinct, the promised goods or services are combined with other goods or services and accounted for as a combined performance obligation. Determining the distinct performance obligations in a contract requires judgment. Our performance obligations primarily include perpetual and time-based licenses, maintenance support including unspecified upgrades or enhancements to new versions of their software products and subscriptions to our software-as-a-service, or SaaS, offerings. See additional discussion of our performance obligations below. • Determine the transaction price. We determine the transaction price based on the contractual consideration and the amount of consideration we expect to receive in exchange for transferring the promised goods or services to the customer. We account for sales incentives to customers, resellers or distributors as a reduction of revenue at the time we recognize the revenue from the related product sale. We report revenue net of any sales tax collected. Our return policy generally does not allow our customers to return software products. • Allocate the transaction price. We allocate the transaction price of the contract to each distinct performance obligation based on a relative standalone selling price basis. Determining standalone selling prices for our performance obligations requires judgment and are based on multiple factors including, but not limited to historical selling prices and discounting practices for products and services, internal pricing policies and pricing practices in different regions and through different sales channels. For our subscription products and maintenance services, our standalone selling prices are generally observable using standalone sales or renewals. For our perpetual and time-based license products, we estimate our standalone selling prices utilizing the residual approach by considering our pricing and discounting practices. We review the standalone selling price for our performance obligations periodically and update, if needed, to ensure that the methodology utilized reflects our current pricing practices. • Recognize revenue when or as we satisfy a performance obligation. Revenue is recognized when or as performance obligations are satisfied either over time or at a point in time by transferring a promised good or service. We consider this transfer to have occurred when risk of loss transfers to the customer, reseller or distributor or the customer has access to their subscription which is generally upon electronic transfer of the license key or password that provides immediate availability of the product to the purchaser. See further discussion below regarding the timing of revenue recognition for each of our performance obligations. The following summarizes our performance obligations from which we generate revenue: Performance obligation When performance obligation is typically satisfied Subscription revenue SaaS offerings Over the subscription term, once the service is made available to the customer (over time) Time-based licenses Upon the delivery of the license key or password that provides immediate availability of the product (point in time) Time-based technical support and unspecified software upgrades Ratably over the contract period (over time) Maintenance revenue Technical support and unspecified software upgrades Ratably over the contract period (over time) License revenue Perpetual licenses Upon the delivery of the license key or password that provides immediate availability of the product (point in time) Recurring Revenue. Recurring revenue consists of subscription and maintenance revenue. • Subscription Revenue . We primarily derive subscription revenue from fees received for subscriptions to our SaaS offerings and our time-based license arrangements. We generally invoice subscription agreements monthly based on usage or monthly in advance over the subscription period. Subscription revenue for our SaaS offerings is generally recognized ratably over the subscription term once the service is made available to the customer or when we have the right to invoice for services performed. Revenue for the license performance obligation of our time-based license arrangements is recognized at a point in time upon delivery of the license key and the revenue for the technical support performance obligation of our time-based license arrangements is recognized ratably over the contract period. The amount of revenue related to the license performance obligations of our time-based license arrangements included in subscription revenue is less than 10% of our total consolidated revenue. Our subscription revenue includes our cloud management and MSP products. • Maintenance Revenue . We derive maintenance revenue from the sale of maintenance services associated with our perpetual license products. We typically include one year of maintenance service as part of the initial purchase price of each perpetual software offering and then sell renewals of this maintenance agreement. Customers with maintenance agreements are entitled to receive technical support and unspecified upgrades or enhancements to new versions of their software products on a when-and-if-available basis for the specified contract period. We believe that our technical support and unspecified upgrades or enhancements performance obligations each have the same pattern of transfer to the customer and are therefore accounted for as a single distinct performance obligation. We recognize maintenance revenue ratably on a daily basis over the contract period. License Revenue . We derive license revenue from the sale of our perpetual licenses. Revenue for the license performance obligation of our perpetual license arrangements is recognized at a point in time upon delivery of the electronic license key. Perpetual license arrangements are invoiced upon delivery. Deferred Revenue Deferred revenue primarily consists of transaction prices allocated to remaining performance obligations from maintenance services associated with our perpetual license products which are delivered over time. We generally bill maintenance agreements annually in advance for services to be performed over a 12-month period. Customers have the option to purchase maintenance renewals for periods other than 12 months. We initially record the amounts allocated to maintenance performance obligations as deferred revenue and recognize these amounts ratably on a daily basis over the term of the maintenance agreement. We record deferred revenue that will be recognized during the succeeding 12-month period as current deferred revenue and the remaining portion is recorded as long-term deferred revenue. Details of our total deferred revenue balance was as follow s: Total Deferred Revenue (in thousands) Balance at December 31, 2018 $ 296,132 Adoption of ASC 606 (2,772 ) Deferred revenue recognized (103,469 ) Additional amounts deferred 121,899 Balance at March 31, 2019 $ 311,790 We expect to recognize revenue related to these remaining performance obligations as follows: Revenue Recognition Expected by Period Total Less than 1 year 1-3 years More than 3 years (in thousands) Expected recognition of deferred revenue $ 311,790 $ 285,212 $ 26,007 $ 571 Contract Acquisition Costs Our contract acquisition costs, which consist of direct and incremental sales commissions and related fringe benefits, are capitalized using the portfolio approach if we expect to benefit from those costs for more than one year. Contract acquisition costs are allocated to each performance obligation within the contract and amortized on a straight-line basis over the expected benefit period of the related performance obligations. Contract acquisition costs allocated to new maintenance arrangements and SaaS offerings are generally amortized over an average expected benefit period of approximately six years which was determined based on the expected life of our technology. Contract acquisition costs allocated to perpetual licenses and maintenance renewal arrangements are expensed or amortized over a period that is consistent with the timing of delivery for the related products and services. We expense contract acquisition costs as incurred when the expected amortization period is one year or less. Deferred contract acquisition costs are classified as current or non-current assets based on the timing the expense will be recognized. The current and non-current portions of our deferred contract acquisition costs are included in prepaid and other current assets and other assets, net respectively, in our condensed consolidated balance sheets. The amortization of our deferred contract acquisition costs is included in sales and marketing expense in our condensed consolidated statement of operations. Details of our total contract acquisition costs balance was as follow s: Total Contract Acquisition Costs (in thousands) Balance at December 31, 2018 $ — Adoption of ASC 606 5,157 Commissions capitalized 1,854 Amortization recognized (482 ) Balance at March 31, 2019 $ 6,529 Classified as: Current $ 1,613 Non-current 4,916 Total contract acquisitions costs $ 6,529 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 March 31, 2019 2018 (in thousands) Amortization of acquired license technologies $ 35,837 $ 36,608 Amortization of acquired subscription technologies 7,980 7,711 Total amortization of acquired technologies $ 43,817 $ 44,319 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 3. Fair Value Measurements The following table summarizes the fair value of our financial assets that were measured on a recurring basis as of March 31, 2019 and December 31, 2018 . There have been no transfers between fair value measurement levels during the three months ended March 31, 2019 . Fair Value Measurements at March 31, 2019 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 $ 277,100 $ — $ — $ 277,100 Fair Value Measurements at December 31, 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 $ 117,100 $ — $ — $ 117,100 As of March 31, 2019 and December 31, 2018 , 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 4. Debt for additional information regarding our debt. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt | 4. Debt The following table summarizes information relating to our debt: March 31, December 31, 2019 2018 Amount Effective Rate Amount Effective Rate (in thousands, except interest rates) Revolving credit facility $ — — % $ — — % First Lien Term Loan (as amended) due Feb 2024 1,965,125 5.25 % 1,970,100 5.27 % Total principal amount 1,965,125 1,970,100 Unamortized discount and debt issuance costs (43,842 ) (46,128 ) Total debt 1,921,283 1,923,972 Less: Current portion of long-term debt (19,900 ) (19,900 ) Total long-term debt $ 1,901,383 $ 1,904,072 Senior Secured First Lien Credit Facilities The First Lien Credit Agreement provides for senior secured first lien credit facilities, consisting as of March 31, 2019 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. Prior to the completion of our initial public offering, or IPO, in October 2018, borrowings under our Revolving Credit Facility bore interest at a floating rate which was, 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% . Upon completion of our IPO, the applicable margins for Eurodollar rate and base rate borrowings were reduced to 2.50% , and 1.50% , respectively. The Eurodollar rate applicable to the Revolving Credit Facility is subject to a “floor” of 0.0% . Prior to the completion of our IPO, borrowings under our First Lien Term Loan bore interest at a floating rate which was, 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% . Upon completion of our IPO, the applicable margins for Eurodollar and base rate borrowings were each reduced to 2.75% and 1.75% , respectively. 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 March 31, 2019 , we were in compliance with all covenants of the First Lien Credit Agreement. |
Redeemable Convertible Class A
Redeemable Convertible Class A Common Stock | 3 Months Ended |
Mar. 31, 2019 | |
Temporary Equity Disclosure [Abstract] | |
Redeemable Convertible Class A Common Stock | 5. Redeemable Convertible Class A Common Stock Prior to the conversion of Class A Common Stock into common stock at our IPO in October 2018, our 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. Immediately prior to the completion of our IPO, we converted each outstanding share of our Class A Common Stock into 140,053,370 shares of common stock, which was 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. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | 6. Earnings (Loss) Per Share A reconciliation of the number of shares in the calculation of basic and diluted earnings (loss) per share follows: Three Months Ended March 31, 2019 2018 (in thousands) Basic earnings (loss) per share Numerator: Net income (loss) $ 3,145 $ (59,910 ) Accretion of dividends on Class A common stock — (69,835 ) Earnings allocated to unvested restricted stock (42 ) — Net income (loss) available to common stockholders $ 3,103 $ (129,745 ) Denominator: Weighted-average common shares outstanding used in computing basic earnings (loss) per share 305,653 101,644 Diluted earnings (loss) per share Numerator: Net income (loss) available to common stockholders $ 3,103 $ (129,745 ) Denominator: Weighted-average shares used in computing basic earnings (loss) per share 305,653 101,644 Add stock-based incentive stock awards 4,130 — Weighted-average shares used in computing diluted earnings (loss) per share 309,783 101,644 The following weighted average outstanding shares of common stock equivalents were excluded from the computation of the diluted earnings (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 March 31, 2019 2018 (in thousands) Stock options to purchase common stock 369 2,035 Performance-based stock options to purchase common stock 130 165 Non-vested restricted stock incentive awards 2,908 2,990 Performance-based non-vested restricted stock incentive awards 1,282 1,812 Restricted stock units 4,675 — Performance stock units 957 — Total anti-dilutive shares 10,321 7,002 Prior to the conversion at the IPO, 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. See Note 5. Redeemable Convertible Class A Common Stock for additional details of the conversion of the Class A Common Stock. 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. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. Income Taxes For the three months ended March 31, 2019 and 2018 , we recorded income tax expense of $0.6 million and income tax benefit of $8.4 million , respectively, resulting in an effective tax rate of 15.2% and 12.2% , respectively. The increase in the effective tax rate for the three months ended March 31, 2019 compared to the same period in 2018 was generally a result of a decrease in the foreign tax benefit partially offset by excess tax benefit from stock-based compensation. Our policy is to include interest and penalties related to unrecognized tax benefits as a component of income tax expense. At March 31, 2019 , we had accrued interest and penalties related to unrecognized tax benefits of approximately $4.3 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 2011 through 2018 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 January 2019 that the Massachusetts Department of Revenue would audit the 2015 through February 2016 tax years. 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. Due to the uncertainty surrounding the status of the current regulations, questions related to the scope of potential benefits or obligations, and the risk of the Tax Court's decision being overturned upon appeal, we have not recorded any benefit or expense as of March 31, 2019. We will continue to monitor ongoing developments and potential impacts to our consolidated financial statements. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. Commitments and Contingencies 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 | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 9. Subsequent Events Acquisition On April 30, 2019, we acquired SAManage Ltd., or Samanage, an IT service desk solution company, for approximately $350.0 million , or approximately $329.0 million , net of cash acquired. Samanage is based in Cary, North Carolina. By acquiring Samanage, we entered the IT Service Management, or ITSM, market and introduced the Samanage SaaS-based IT Service Desk products into our product portfolio. We funded the transaction with cash on hand and $35.0 million of borrowings under our Revolving Credit Facility. The transaction will be accounted for using the acquisition method of accounting. Accordingly, the results of operations of Samanage since the acquisition date will be included in our condensed consolidated financial statements for the second quarter of 2019. We are in the process of gathering information to allocate the purchase price to the assets acquired and liabilities assumed. All of the assets acquired and liabilities assumed in the transaction will be recognized at their acquisition date fair values. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
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 in our Annual Report on Form 10-K for the year ended December 31, 2018. |
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. |
Recently Adopted Accounting Pronouncements and 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 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. On January 1, 2019 we adopted the Financial Accounting Standards Board, or FASB, Accounting Standards Codification ( “ ASC ” ) No. 2014-09 “Revenue from Contracts with Customers,” or ASC 606, which replaced all existing revenue guidance under ASC 605 “Revenue Recognition,” including prescriptive industry-specific guidance, or ASC 605. 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. We adopted ASC 606 using the modified-retrospective method. Results for reporting periods beginning after January 1, 2019 are presented in compliance with the new revenue recognition standard ASC 606. Historical financial results for reporting periods prior to 2019 are presented in conformity with amounts previously disclosed under the prior revenue recognition standard, ASC 605. These financial statements include additional information regarding the impacts from the adoption of the new revenue recognition standard on our financial results for the three month period ended March 31, 2019. This includes the presentation of financial results for the three month period ended March 31, 2019 under ASC 605 for comparison to the prior year period. The most significantly impacted areas are the following: • License and Recurring Revenue. The adoption of the new standard resulted in changes to the classification and timing of our revenue recognition. Under the new guidance, the requirement to establish VSOE to recognize license revenue separately from the other elements is eliminated. This change impacted the allocation of the transaction price and timing of our revenue recognition between deliverables, or performance obligations, within an arrangement. In addition, we now recognize time-based license revenue 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. The overall adoption impact to total revenue is immaterial, though we do expect some changes to the timing and classification between license and recurring revenue. Additionally, some historical deferred revenue, primarily from arrangements involving time-based licenses, will never be recognized as revenue and instead has been recorded as a cumulative effect adjustment within accumulated deficit. • Contract Acquisition Costs. We expensed all sales commissions as incurred under the previous guidance. The new guidance requires the deferral and amortization of certain direct and incremental costs incurred to obtain a contract. This guidance requires 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 six years . • Other Items. The impact of the adoption of the new standard on income taxes resulted in an increase of deferred income tax liabilities. The adoption of this standard did not impact our total operating cash flows. The cumulative effect of the changes made to our condensed consolidated balance sheet as of January 1, 2019 for the adoption of ASC 606 to all contracts with customers that were not completed as of December 31, 2018 was recorded as an adjustment to accumulated deficit as of the adoption date as follows: December 31, 2018 January 1, 2019 As reported Adjustments As adjusted (in thousands) Assets: Prepaid and other current assets $ 16,267 $ 1,300 $ 17,567 Other assets, net 11,382 3,857 15,239 Total assets 5,194,649 5,157 5,199,806 Liabilities: Current portion of deferred revenue 270,433 (2,338 ) 268,095 Deferred revenue, net of current portion 25,699 (434 ) 25,265 Non-current deferred taxes 147,144 1,662 148,806 Total liabilities 2,578,549 (1,110 ) 2,577,439 Stockholders' equity (deficit): Accumulated deficit (412,328 ) 6,267 (406,061 ) The impact of adoption of ASC 606 on our condensed consolidated statement of operations and condensed consolidated balance sheet was as follows: Three Months Ended March 31, 2019 As reported ASC 606 ASC 606 impact Without adoption of ASC 606 (in thousands) Revenue: Subscription $ 71,565 $ 124 $ 71,689 Maintenance 106,292 235 106,527 Total recurring revenue 177,857 359 178,216 License 37,935 (192 ) 37,743 Total revenue $ 215,792 $ 167 $ 215,959 Gross profit 153,816 167 153,983 Total operating expenses 124,021 1,400 125,421 Operating income (loss) 29,795 (1,233 ) 28,562 Net income $ 3,145 $ (1,233 ) $ 1,912 March 31, 2019 As reported ASC 606 ASC 606 impact Without adoption of ASC 606 (ASC 605) (in thousands) Assets: Prepaid and other current assets $ 20,811 $ (1,613 ) $ 19,198 Other assets, net 16,669 (4,916 ) 11,753 Total assets 5,180,472 (6,529 ) 5,173,943 Liabilities: Current portion of deferred revenue 285,212 2,221 287,433 Deferred revenue, net of current portion 26,578 410 26,988 Non-current deferred taxes 137,454 (1,662 ) 135,792 Total liabilities 2,574,095 969 2,575,064 Stockholders' equity (deficit): Accumulated deficit (402,916 ) (7,498 ) (410,414 ) |
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 3. 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. |
Revenue Recognition | Deferred revenue primarily consists of transaction prices allocated to remaining performance obligations from maintenance services associated with our perpetual license products which are delivered over time. We generally bill maintenance agreements annually in advance for services to be performed over a 12-month period. Customers have the option to purchase maintenance renewals for periods other than 12 months. We initially record the amounts allocated to maintenance performance obligations as deferred revenue and recognize these amounts ratably on a daily basis over the term of the maintenance agreement. We record deferred revenue that will be recognized during the succeeding 12-month period as current deferred revenue and the remaining portion is recorded as long-term deferred revenue. Contract Acquisition Costs Our contract acquisition costs, which consist of direct and incremental sales commissions and related fringe benefits, are capitalized using the portfolio approach if we expect to benefit from those costs for more than one year. Contract acquisition costs are allocated to each performance obligation within the contract and amortized on a straight-line basis over the expected benefit period of the related performance obligations. Contract acquisition costs allocated to new maintenance arrangements and SaaS offerings are generally amortized over an average expected benefit period of approximately six years which was determined based on the expected life of our technology. Contract acquisition costs allocated to perpetual licenses and maintenance renewal arrangements are expensed or amortized over a period that is consistent with the timing of delivery for the related products and services. We expense contract acquisition costs as incurred when the expected amortization period is one year or less. Deferred contract acquisition costs are classified as current or non-current assets based on the timing the expense will be recognized. The current and non-current portions of our deferred contract acquisition costs are included in prepaid and other current assets and other assets, net respectively, in our condensed consolidated balance sheets. The amortization of our deferred contract acquisition costs is included in sales and marketing expense in our condensed consolidated statement of operations. We generate recurring revenue from fees received for subscriptions and from the sale of maintenance services associated with our perpetual license products and license revenue from the sale of our perpetual license products. We recognize revenue related to contracts from customers when we transfer 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. This is determined by following a five-step process which includes (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price, and (5) recognizing revenue when or as we satisfy a performance obligation, as described below. • Identify the contract with a customer. We generally use a purchase order, an authorized credit card, an electronic or manually signed license agreement, or the receipt of a cash payment as evidence of a contract with a customer provided that collection is considered probable. We sell our products through our direct sales force and through our distributors and resellers. Our distributors and resellers do not carry inventory of our software and we generally require them to specify the end user of the software at the time of the order. If the distributor or reseller does not provide end-user information, then we will generally not fulfill the order. Our distributors and resellers have no rights of return or exchange for software that they purchase from us and payment for these purchases is due to us without regard to whether the distributors or resellers collect payment from their customers. Sales through resellers and distributors are typically evidenced by a reseller or distributor agreement, together with purchase orders or authorized credit cards on a transaction-by-transaction basis. • Identify the performance obligations in the contract. Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are separately identifiable from other promises in the contract, or distinct. If not considered distinct, the promised goods or services are combined with other goods or services and accounted for as a combined performance obligation. Determining the distinct performance obligations in a contract requires judgment. Our performance obligations primarily include perpetual and time-based licenses, maintenance support including unspecified upgrades or enhancements to new versions of their software products and subscriptions to our software-as-a-service, or SaaS, offerings. See additional discussion of our performance obligations below. • Determine the transaction price. We determine the transaction price based on the contractual consideration and the amount of consideration we expect to receive in exchange for transferring the promised goods or services to the customer. We account for sales incentives to customers, resellers or distributors as a reduction of revenue at the time we recognize the revenue from the related product sale. We report revenue net of any sales tax collected. Our return policy generally does not allow our customers to return software products. • Allocate the transaction price. We allocate the transaction price of the contract to each distinct performance obligation based on a relative standalone selling price basis. Determining standalone selling prices for our performance obligations requires judgment and are based on multiple factors including, but not limited to historical selling prices and discounting practices for products and services, internal pricing policies and pricing practices in different regions and through different sales channels. For our subscription products and maintenance services, our standalone selling prices are generally observable using standalone sales or renewals. For our perpetual and time-based license products, we estimate our standalone selling prices utilizing the residual approach by considering our pricing and discounting practices. We review the standalone selling price for our performance obligations periodically and update, if needed, to ensure that the methodology utilized reflects our current pricing practices. • Recognize revenue when or as we satisfy a performance obligation. Revenue is recognized when or as performance obligations are satisfied either over time or at a point in time by transferring a promised good or service. We consider this transfer to have occurred when risk of loss transfers to the customer, reseller or distributor or the customer has access to their subscription which is generally upon electronic transfer of the license key or password that provides immediate availability of the product to the purchaser. See further discussion below regarding the timing of revenue recognition for each of our performance obligations. The following summarizes our performance obligations from which we generate revenue: Performance obligation When performance obligation is typically satisfied Subscription revenue SaaS offerings Over the subscription term, once the service is made available to the customer (over time) Time-based licenses Upon the delivery of the license key or password that provides immediate availability of the product (point in time) Time-based technical support and unspecified software upgrades Ratably over the contract period (over time) Maintenance revenue Technical support and unspecified software upgrades Ratably over the contract period (over time) License revenue Perpetual licenses Upon the delivery of the license key or password that provides immediate availability of the product (point in time) Recurring Revenue. Recurring revenue consists of subscription and maintenance revenue. • Subscription Revenue . We primarily derive subscription revenue from fees received for subscriptions to our SaaS offerings and our time-based license arrangements. We generally invoice subscription agreements monthly based on usage or monthly in advance over the subscription period. Subscription revenue for our SaaS offerings is generally recognized ratably over the subscription term once the service is made available to the customer or when we have the right to invoice for services performed. Revenue for the license performance obligation of our time-based license arrangements is recognized at a point in time upon delivery of the license key and the revenue for the technical support performance obligation of our time-based license arrangements is recognized ratably over the contract period. The amount of revenue related to the license performance obligations of our time-based license arrangements included in subscription revenue is less than 10% of our total consolidated revenue. Our subscription revenue includes our cloud management and MSP products. • Maintenance Revenue . We derive maintenance revenue from the sale of maintenance services associated with our perpetual license products. We typically include one year of maintenance service as part of the initial purchase price of each perpetual software offering and then sell renewals of this maintenance agreement. Customers with maintenance agreements are entitled to receive technical support and unspecified upgrades or enhancements to new versions of their software products on a when-and-if-available basis for the specified contract period. We believe that our technical support and unspecified upgrades or enhancements performance obligations each have the same pattern of transfer to the customer and are therefore accounted for as a single distinct performance obligation. We recognize maintenance revenue ratably on a daily basis over the contract period. License Revenue . We derive license revenue from the sale of our perpetual licenses. Revenue for the license performance obligation of our perpetual license arrangements is recognized at a point in time upon delivery of the electronic license key. Perpetual license arrangements are invoiced upon delivery. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Performance obligation from which revenue is generated | The following summarizes our performance obligations from which we generate revenue: Performance obligation When performance obligation is typically satisfied Subscription revenue SaaS offerings Over the subscription term, once the service is made available to the customer (over time) Time-based licenses Upon the delivery of the license key or password that provides immediate availability of the product (point in time) Time-based technical support and unspecified software upgrades Ratably over the contract period (over time) Maintenance revenue Technical support and unspecified software upgrades Ratably over the contract period (over time) License revenue Perpetual licenses Upon the delivery of the license key or password that provides immediate availability of the product (point in time) |
Adjustment to accumulated deficit | The impact of adoption of ASC 606 on our condensed consolidated statement of operations and condensed consolidated balance sheet was as follows: Three Months Ended March 31, 2019 As reported ASC 606 ASC 606 impact Without adoption of ASC 606 (in thousands) Revenue: Subscription $ 71,565 $ 124 $ 71,689 Maintenance 106,292 235 106,527 Total recurring revenue 177,857 359 178,216 License 37,935 (192 ) 37,743 Total revenue $ 215,792 $ 167 $ 215,959 Gross profit 153,816 167 153,983 Total operating expenses 124,021 1,400 125,421 Operating income (loss) 29,795 (1,233 ) 28,562 Net income $ 3,145 $ (1,233 ) $ 1,912 March 31, 2019 As reported ASC 606 ASC 606 impact Without adoption of ASC 606 (ASC 605) (in thousands) Assets: Prepaid and other current assets $ 20,811 $ (1,613 ) $ 19,198 Other assets, net 16,669 (4,916 ) 11,753 Total assets 5,180,472 (6,529 ) 5,173,943 Liabilities: Current portion of deferred revenue 285,212 2,221 287,433 Deferred revenue, net of current portion 26,578 410 26,988 Non-current deferred taxes 137,454 (1,662 ) 135,792 Total liabilities 2,574,095 969 2,575,064 Stockholders' equity (deficit): Accumulated deficit (402,916 ) (7,498 ) (410,414 ) The cumulative effect of the changes made to our condensed consolidated balance sheet as of January 1, 2019 for the adoption of ASC 606 to all contracts with customers that were not completed as of December 31, 2018 was recorded as an adjustment to accumulated deficit as of the adoption date as follows: December 31, 2018 January 1, 2019 As reported Adjustments As adjusted (in thousands) Assets: Prepaid and other current assets $ 16,267 $ 1,300 $ 17,567 Other assets, net 11,382 3,857 15,239 Total assets 5,194,649 5,157 5,199,806 Liabilities: Current portion of deferred revenue 270,433 (2,338 ) 268,095 Deferred revenue, net of current portion 25,699 (434 ) 25,265 Non-current deferred taxes 147,144 1,662 148,806 Total liabilities 2,578,549 (1,110 ) 2,577,439 Stockholders' equity (deficit): Accumulated deficit (412,328 ) 6,267 (406,061 ) |
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, 2018 $ 17,043 $ 17,043 Other comprehensive gain (loss) before reclassification (27,708 ) (27,708 ) Amount reclassified from accumulated other comprehensive income (loss) — — Net current period other comprehensive income (loss) (27,708 ) (27,708 ) Balance at March 31, 2019 $ (10,665 ) $ (10,665 ) |
Details of total deferred revenue balance | Details of our total deferred revenue balance was as follow s: Total Deferred Revenue (in thousands) Balance at December 31, 2018 $ 296,132 Adoption of ASC 606 (2,772 ) Deferred revenue recognized (103,469 ) Additional amounts deferred 121,899 Balance at March 31, 2019 $ 311,790 |
Remaining performance obligations for revenue recognition | We expect to recognize revenue related to these remaining performance obligations as follows: Revenue Recognition Expected by Period Total Less than 1 year 1-3 years More than 3 years (in thousands) Expected recognition of deferred revenue $ 311,790 $ 285,212 $ 26,007 $ 571 |
Details of contract acquisition cost | Details of our total contract acquisition costs balance was as follow s: Total Contract Acquisition Costs (in thousands) Balance at December 31, 2018 $ — Adoption of ASC 606 5,157 Commissions capitalized 1,854 Amortization recognized (482 ) Balance at March 31, 2019 $ 6,529 Classified as: Current $ 1,613 Non-current 4,916 Total contract acquisitions costs $ 6,529 |
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 March 31, 2019 2018 (in thousands) Amortization of acquired license technologies $ 35,837 $ 36,608 Amortization of acquired subscription technologies 7,980 7,711 Total amortization of acquired technologies $ 43,817 $ 44,319 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 and December 31, 2018 . There have been no transfers between fair value measurement levels during the three months ended March 31, 2019 . Fair Value Measurements at March 31, 2019 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 $ 277,100 $ — $ — $ 277,100 Fair Value Measurements at December 31, 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 $ 117,100 $ — $ — $ 117,100 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Summary of debt | The following table summarizes information relating to our debt: March 31, December 31, 2019 2018 Amount Effective Rate Amount Effective Rate (in thousands, except interest rates) Revolving credit facility $ — — % $ — — % First Lien Term Loan (as amended) due Feb 2024 1,965,125 5.25 % 1,970,100 5.27 % Total principal amount 1,965,125 1,970,100 Unamortized discount and debt issuance costs (43,842 ) (46,128 ) Total debt 1,921,283 1,923,972 Less: Current portion of long-term debt (19,900 ) (19,900 ) Total long-term debt $ 1,901,383 $ 1,904,072 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 earnings (loss) per share follows: Three Months Ended March 31, 2019 2018 (in thousands) Basic earnings (loss) per share Numerator: Net income (loss) $ 3,145 $ (59,910 ) Accretion of dividends on Class A common stock — (69,835 ) Earnings allocated to unvested restricted stock (42 ) — Net income (loss) available to common stockholders $ 3,103 $ (129,745 ) Denominator: Weighted-average common shares outstanding used in computing basic earnings (loss) per share 305,653 101,644 Diluted earnings (loss) per share Numerator: Net income (loss) available to common stockholders $ 3,103 $ (129,745 ) Denominator: Weighted-average shares used in computing basic earnings (loss) per share 305,653 101,644 Add stock-based incentive stock awards 4,130 — Weighted-average shares used in computing diluted earnings (loss) per share 309,783 101,644 |
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 earnings (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 March 31, 2019 2018 (in thousands) Stock options to purchase common stock 369 2,035 Performance-based stock options to purchase common stock 130 165 Non-vested restricted stock incentive awards 2,908 2,990 Performance-based non-vested restricted stock incentive awards 1,282 1,812 Restricted stock units 4,675 — Performance stock units 957 — Total anti-dilutive shares 10,321 7,002 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) | Mar. 31, 2019 |
Accounting Policies [Abstract] | |
Expected benefit period | 6 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Cumulative adjustment for ASC 606 (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Prepaid and other current assets | $ 20,811 | $ 17,567 | $ 16,267 |
Other assets, net | 16,669 | 15,239 | 11,382 |
Total assets | 5,180,472 | 5,199,806 | 5,194,649 |
Current portion of deferred revenue | 285,212 | 268,095 | 270,433 |
Deferred revenue, net of current portion | 26,578 | 25,265 | 25,699 |
Non-current deferred taxes | 137,454 | 148,806 | 147,144 |
Total liabilities | 2,574,095 | 2,577,439 | 2,578,549 |
Accumulated deficit | (402,916) | (406,061) | (412,328) |
Without adoption of ASC 606 (ASC 605) | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Prepaid and other current assets | 19,198 | 16,267 | |
Other assets, net | 11,753 | 11,382 | |
Total assets | 5,173,943 | ||
Current portion of deferred revenue | 287,433 | 270,433 | |
Deferred revenue, net of current portion | 26,988 | 25,699 | |
Non-current deferred taxes | 135,792 | 147,144 | |
Total liabilities | 2,575,064 | ||
Accumulated deficit | (410,414) | $ (412,328) | |
ASC 606 impact | Accounting Standards Update 2014-09 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Prepaid and other current assets | (1,613) | 1,300 | |
Other assets, net | (4,916) | 3,857 | |
Total assets | (6,529) | 5,157 | |
Current portion of deferred revenue | 2,221 | (2,338) | |
Deferred revenue, net of current portion | 410 | (434) | |
Non-current deferred taxes | (1,662) | 1,662 | |
Total liabilities | 969 | (1,110) | |
Accumulated deficit | $ (7,498) | $ 6,267 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Impact of ASC 606 on Statements of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | $ 215,792 | $ 196,913 |
Gross Profit | 153,816 | 135,707 |
Total operating expenses | 124,021 | 113,749 |
Operating income (loss) | 29,795 | 21,958 |
Net income (loss) | 3,145 | (59,910) |
Subscription | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | 71,565 | 63,053 |
Maintenance | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | 106,292 | 97,000 |
Recurring Revenue | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | 177,857 | 160,053 |
License | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | 37,935 | $ 36,860 |
ASC 606 impact | Accounting Standards Update 2014-09 | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | 167 | |
Gross Profit | 167 | |
Total operating expenses | 1,400 | |
Operating income (loss) | (1,233) | |
Net income (loss) | (1,233) | |
ASC 606 impact | Accounting Standards Update 2014-09 | Subscription | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | 124 | |
ASC 606 impact | Accounting Standards Update 2014-09 | Maintenance | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | 235 | |
ASC 606 impact | Accounting Standards Update 2014-09 | Recurring Revenue | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | 359 | |
ASC 606 impact | Accounting Standards Update 2014-09 | License | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | (192) | |
Without adoption of ASC 606 (ASC 605) | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | 215,959 | |
Gross Profit | 153,983 | |
Total operating expenses | 125,421 | |
Operating income (loss) | 28,562 | |
Net income (loss) | 1,912 | |
Without adoption of ASC 606 (ASC 605) | Subscription | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | 71,689 | |
Without adoption of ASC 606 (ASC 605) | Maintenance | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | 106,527 | |
Without adoption of ASC 606 (ASC 605) | Recurring Revenue | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | 178,216 | |
Without adoption of ASC 606 (ASC 605) | License | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Total revenue | $ 37,743 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Impact of ASC 606 on Balance Sheets (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Prepaid and other current assets | $ 20,811 | $ 17,567 | $ 16,267 |
Other assets, net | 16,669 | 15,239 | 11,382 |
Total assets | 5,180,472 | 5,199,806 | 5,194,649 |
Current portion of deferred revenue | 285,212 | 268,095 | 270,433 |
Deferred revenue, net of current portion | 26,578 | 25,265 | 25,699 |
Non-current deferred taxes | 137,454 | 148,806 | 147,144 |
Total liabilities | 2,574,095 | 2,577,439 | 2,578,549 |
Accumulated deficit | (402,916) | (406,061) | (412,328) |
ASC 606 impact | Accounting Standards Update 2014-09 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Prepaid and other current assets | (1,613) | 1,300 | |
Other assets, net | (4,916) | 3,857 | |
Total assets | (6,529) | 5,157 | |
Current portion of deferred revenue | 2,221 | (2,338) | |
Deferred revenue, net of current portion | 410 | (434) | |
Non-current deferred taxes | (1,662) | 1,662 | |
Total liabilities | 969 | (1,110) | |
Accumulated deficit | (7,498) | $ 6,267 | |
Without adoption of ASC 606 (ASC 605) | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Prepaid and other current assets | 19,198 | 16,267 | |
Other assets, net | 11,753 | 11,382 | |
Total assets | 5,173,943 | ||
Current portion of deferred revenue | 287,433 | 270,433 | |
Deferred revenue, net of current portion | 26,988 | 25,699 | |
Non-current deferred taxes | 135,792 | 147,144 | |
Total liabilities | 2,575,064 | ||
Accumulated deficit | $ (410,414) | $ (412,328) |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Changes in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | $ 2,616,100 | $ (729,761) |
Other comprehensive gain (loss) before reclassification | (27,708) | |
Amount reclassified from accumulated other comprehensive income (loss) | 0 | |
Other comprehensive income (loss) | (27,708) | 33,353 |
Balance at end of period | 2,606,377 | (825,784) |
Foreign Currency Translation Adjustments | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | 17,043 | |
Other comprehensive gain (loss) before reclassification | (27,708) | |
Amount reclassified from accumulated other comprehensive income (loss) | 0 | |
Other comprehensive income (loss) | (27,708) | |
Balance at end of period | (10,665) | |
Accumulated Other Comprehensive Income (Loss) | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | 17,043 | 75,294 |
Balance at end of period | $ (10,665) | $ 108,647 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Changes in Deferred Revenue (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Movement in Deferred Revenue [Roll Forward] | |
Balance at December 31, 2018 | $ 296,132 |
Adoption of ASC 606 | (2,772) |
Deferred revenue recognized | (103,469) |
Additional amounts deferred | 121,899 |
Balance at March 31, 2019 | $ 311,790 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Expected Recognition of Deferred Revenue (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Accounting Policies [Abstract] | |
Expected recognition of deferred revenue | $ 311,790 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | |
Accounting Policies [Abstract] | |
Expected recognition of deferred revenue | $ 285,212 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations, expected timing | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Accounting Policies [Abstract] | |
Expected recognition of deferred revenue | $ 26,007 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations, expected timing | 2 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Accounting Policies [Abstract] | |
Expected recognition of deferred revenue | $ 571 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations, expected timing |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Change in Contract Acquisition Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2019 | |
Capitalized Contract Cost, Roll Forward [Roll Forward] | ||
Balance at December 31, 2018 | $ 0 | |
Adoption of ASC 606 | 5,157 | |
Commissions capitalized | 1,854 | |
Amortization recognized | (482) | |
Balance at March 31, 2019 | 6,529 | |
Current | $ 1,613 | |
Non-current | 4,916 | |
Total contract acquisitions costs | $ 0 | $ 6,529 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Cost of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Product Information [Line Items] | ||
Total amortization of acquired technologies | $ 43,817 | $ 44,319 |
License | ||
Product Information [Line Items] | ||
Total amortization of acquired technologies | 35,837 | 36,608 |
Subscription | ||
Product Information [Line Items] | ||
Total amortization of acquired technologies | $ 7,980 | $ 7,711 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - Money market funds - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value | $ 277,100 | $ 117,100 |
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 | 277,100 | 117,100 |
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 | Mar. 31, 2019 | Dec. 31, 2018 |
Amount | ||
Total principal amount | $ 1,965,125 | $ 1,970,100 |
Unamortized discount and debt issuance costs | (43,842) | (46,128) |
Total debt | 1,921,283 | 1,923,972 |
Less: Current portion of long-term debt | (19,900) | (19,900) |
Total long-term debt | 1,901,383 | 1,904,072 |
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 | $ 1,965,125 | $ 1,970,100 |
Effective Rate | 5.25% | 5.27% |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | Sep. 30, 2018 | Oct. 31, 2018 | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||||
Long-term debt | $ 1,921,283,000 | $ 1,923,972,000 | ||
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 | |||
Quarterly periodic payment, as a percentage of original principal | 0.25% | |||
Covenant, leverage ratio, maximum | 7.40 | |||
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 | 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 | 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 |
Redeemable Convertible Class _2
Redeemable Convertible Class A Common Stock (Details) - USD ($) $ / shares in Units, $ in Millions | Sep. 30, 2018 | Oct. 31, 2018 |
Temporary Equity Disclosure [Abstract] | ||
Dividend rate | 9.00% | |
Liquidation preference (in dollars per share) | $ 1,000 | |
Conversion price (in dollars per share) | $ 19 | $ 19 |
Cumulative undeclared and unpaid dividends | $ 717.4 | |
Common Stock | ||
Subsidiary, Sale of Stock [Line Items] | ||
Conversion of stock (in shares) | 140,053,370 | |
Conversion of accrued and unpaid dividends (in shares) | 37,758,109 |
Earnings (Loss) Per Share - Rec
Earnings (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 | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Numerator: | ||
Net income (loss) | $ 3,145 | $ (59,910) |
Accretion of dividends on Class A common stock | 0 | (69,835) |
Earnings allocated to unvested restricted stock | (42) | 0 |
Net income (loss) available to common stockholders | $ 3,103 | $ (129,745) |
Weighted-average common shares outstanding used in computing basic earnings (loss) per share (in shares) | 305,653 | 101,644 |
Net income (loss) available to common stockholders | $ 3,103 | $ (129,745) |
Denominator: | ||
Weighted-average shares used in computing basic earnings (loss) per share (in shares) | 305,653 | 101,644 |
Add stock-based incentive stock awards (in shares) | 4,130 | 0 |
Weighted-average shares used in computing diluted earnings (loss) per share (in shares) | 309,783 | 101,644 |
Earnings (Loss) Per Share - Wei
Earnings (Loss) Per Share - Weighted Average Outstanding Shares of Common Stock Equivalents Excluded (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total anti-dilutive shares (in shares) | 10,321 | 7,002 |
Stock options to purchase common stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total anti-dilutive shares (in shares) | 369 | 2,035 |
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) | 130 | 165 |
Non-vested restricted stock incentive awards | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total anti-dilutive shares (in shares) | 2,908 | 2,990 |
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) | 1,282 | 1,812 |
Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total anti-dilutive shares (in shares) | 4,675 | 0 |
Performance stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total anti-dilutive shares (in shares) | 957 | 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense (benefit) | $ 565 | $ (8,357) |
Effective income tax rate | 15.20% | 12.20% |
Unrecognized tax benefits, income tax penalties and interest accrued | $ 4,300 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | Apr. 30, 2019 | Mar. 31, 2019 | Mar. 31, 2018 |
Subsequent Event [Line Items] | |||
Acquisitions payments net of cash acquired | $ 0 | $ 12,990 | |
SAManage Ltd. | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Consideration transferred for acquisition | $ 350,000 | ||
Acquisitions payments net of cash acquired | 329,000 | ||
Line of Credit | Revolving Credit Facility | SAManage Ltd. | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Proceeds from Lines of Credit | $ 35,000 |
Uncategorized Items - swi-20190
Label | Element | Value |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 6,267,000 |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 6,267,000 |