Q2 HOLDINGS, INC., S-1 filed on 2/13/2015
Securities Registration Statement
Document and Entity Information
12 Months Ended
Dec. 31, 2014
Entity [Abstract]
 
Entity Registrant Name
Q2 HOLDINGS, INC. 
Entity Central Index Key
0001410384 
Entity Filer Category
Non-accelerated Filer 
Document Type
S-1 
Document Period End Date
Dec. 31, 2014 
Amendment Flag
false 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Current assets:
 
 
Cash and cash equivalents
$ 67,979 
$ 18,675 
Restricted cash
829 
116 
Investments
20,956 
Accounts receivable, net
5,007 
9,063 
Prepaid expenses and other current assets
2,695 
1,079 
Deferred solution and other costs, current portion
5,060 
3,124 
Deferred implementation costs, current portion
1,996 
1,814 
Total current assets
104,522 
33,871 
Property and equipment, net
18,521 
14,831 
Deferred solution and other costs, net of current portion
7,159 
5,358 
Deferred implementation costs, net of current portion
5,378 
4,560 
Other long-term assets
1,226 
2,488 
Total assets
136,806 
61,108 
Current liabilities:
 
 
Accounts payable
1,986 
4,085 
Accrued liabilities
9,268 
7,288 
Accrued compensation
3,936 
4,376 
Deferred revenues, current portion
17,289 
12,728 
Capital lease obligations, current portion
408 
714 
Total current liabilities
32,887 
29,191 
Deferred revenues, net of current portion
19,436 
14,773 
Capital lease obligations, net of current portion
167 
575 
Long-term debt, net of current portion
6,288 
Deferred rent, net of current portion
4,694 
4,444 
Other long-term liabilities
682 
101 
Total liabilities
57,866 
55,372 
Commitments and contingencies (Note 9)
   
   
Stockholders' equity (deficit):
 
 
Preferred stock
Common stock: $0.0001 par value; 150,000 shares authorized, 34,697 shares issued, and 34,696 shares outstanding as of December 31, 2014, and 35,000 shares authorized, 8,288 shares issued and outstanding as of December 31, 2013
Treasury stock at cost; 1 and zero shares at December 31, 2014 and 2013, respectively
(20)
Additional paid-in capital
143,337 
6,675 
Accumulated other comprehensive loss
(14)
Accumulated deficit
(64,366)
(44,732)
Total stockholders' equity (deficit)
78,940 
(36,316)
Total liabilities, redeemable convertible preferred stock, redeemable common stock and stockholders' equity (deficit)
136,806 
61,108 
Series A Preferred Stock [Member]
 
 
Redeemable convertible preferred stock and redeemable common stock:
 
 
Redeemable convertible preferred stock and redeemable common stock
10,815 
Series B Preferred Stock [Member]
 
 
Redeemable convertible preferred stock and redeemable common stock:
 
 
Redeemable convertible preferred stock and redeemable common stock
10,915 
Series C Preferred Stock [Member]
 
 
Redeemable convertible preferred stock and redeemable common stock:
 
 
Redeemable convertible preferred stock and redeemable common stock
18,995 
Common Stock [Member]
 
 
Redeemable convertible preferred stock and redeemable common stock:
 
 
Redeemable convertible preferred stock and redeemable common stock
1,327 
Junior Convertible Preferred Stock [Member]
 
 
Stockholders' equity (deficit):
 
 
Preferred stock
$ 0 
$ 1,740 
Consolidated Balance Sheets (Parenthetical) (USD $)
Dec. 31, 2014
Dec. 31, 2013
Preferred Stock, Par or Stated Value Per Share (in dollars per share)
$ 0.0001 
$ 0.0001 
Preferred Stock, Shares Authorized
5,000,000 
5,000,000 
Preferred Stock, Shares Issued
Preferred Stock, Shares Outstanding
Common Stock, Par or Stated Value Per Share (in dollars per share)
$ 0.0001 
$ 0.0001 
Common Stock, Shares Authorized
150,000,000 
35,000,000 
Common Stock, Shares, Issued
34,696,581 
8,287,995 
Common Stock, Shares Outstanding
34,695,544 
8,287,995 
Treasury Stock, Shares
Series A Preferred Stock [Member]
 
 
Redeemable Convertible Preferred Stock and Redeemable Common Stock, Par or Stated Value Per Share (in dollars per share)
$ 0.0001 
$ 0.0001 
Redeemable Convertible Preferred Stock and Redeemable Common Stock, Shares Authorized
7,908,442 
Redeemable Convertible Preferred Stock and Redeemable Common Stock, Shares Issued
7,908,442 
Redeemable Convertible Preferred Stock and Redeemable Common Stock, Shares Outstanding
7,908,442 
Series B Preferred Stock [Member]
 
 
Redeemable Convertible Preferred Stock and Redeemable Common Stock, Par or Stated Value Per Share (in dollars per share)
$ 0.0001 
$ 0.0001 
Redeemable Convertible Preferred Stock and Redeemable Common Stock, Shares Authorized
1,818,182 
Redeemable Convertible Preferred Stock and Redeemable Common Stock, Shares Issued
1,818,182 
Redeemable Convertible Preferred Stock and Redeemable Common Stock, Shares Outstanding
1,818,182 
Series C Preferred Stock [Member]
 
 
Redeemable Convertible Preferred Stock and Redeemable Common Stock, Par or Stated Value Per Share (in dollars per share)
$ 0.0001 
$ 0.0001 
Redeemable Convertible Preferred Stock and Redeemable Common Stock, Shares Authorized
2,605,094 
Redeemable Convertible Preferred Stock and Redeemable Common Stock, Shares Issued
2,605,094 
Redeemable Convertible Preferred Stock and Redeemable Common Stock, Shares Outstanding
2,605,094 
Common Stock [Member]
 
 
Redeemable Convertible Preferred Stock and Redeemable Common Stock, Shares Outstanding
3,829,221 
Junior Convertible Preferred Stock [Member]
 
 
Preferred Stock, Par or Stated Value Per Share (in dollars per share)
$ 0.0001 
$ 0.0001 
Preferred Stock, Shares Authorized
1,250,967 
Preferred Stock, Shares Issued
1,250,967 
Preferred Stock, Shares Outstanding
1,250,967 
Consolidated Statements of Comprehensive Loss (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Income Statement [Abstract]
 
 
 
Revenues
$ 79,129 
$ 56,872 
$ 41,101 
Cost of revenues
46,054 1
36,261 1
25,170 
Gross profit
33,075 
20,611 
15,931 
Operating expenses:
 
 
 
Sales and marketing
23,069 1
16,726 1
8,962 
Research and development
12,086 1
9,029 1
5,317 
General and administrative
16,991 1
11,742 1
8,780 
Unoccupied lease charges
236 
Total operating expenses
52,146 
37,733 
23,059 
Loss from operations
(19,071)
(17,122)
(7,128)
Other income (expense):
 
 
 
Interest and other income
65 
Interest and other expense
(557)
(505)
(232)
Total other expense, net
(492)
(499)
(228)
Loss before income taxes
(19,563)
(17,621)
(7,356)
Provision for income taxes
(71)
(55)
(164)
Loss from continuing operations
(19,634)
(17,676)
(7,520)
Loss from discontinued operations, net of tax
(199)
(1,259)
Net loss
(19,634)
(17,875)
(8,779)
Other comprehensive loss:
 
 
 
Unrealized loss on available-for-sale investments
(14)
Comprehensive loss
$ (19,648)
$ (17,875)
$ (8,779)
Net loss per common share:
 
 
 
Loss from continuing operations per common share, basic and diluted (dollars per share)
$ (0.67)
$ (1.49)
$ (0.66)
Loss from discontinued operations per common share, basic and diluted (dollars per share)
$ 0.00 
$ (0.02)
$ (0.11)
Net loss per common share, basic and diluted (dollars per share)
$ (0.67)
$ (1.51)
$ (0.77)
Weighted average common shares outstanding:
 
 
 
Basic and diluted (shares)
29,257 
11,866 
11,345 
Consolidated Statements of Operations (Parenthetical) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Stock-based compensation expenses
 
 
 
 
 
 
 
 
$ 4,570 
$ 1,605 
$ 1,031 
Cost of revenues [Member]
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expenses
191 
159 
147 
126 
72 
70 
61 
61 
623 
264 
187 
Sales and marketing [Member]
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expenses
231 
189 
187 
167 
94 
81 
60 
39 
774 
274 
123 
Research and development [Member]
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expenses
167 
131 
122 
107 
68 
64 
66 
59 
527 
257 
195 
General and administrative [Member]
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expenses
$ 894 
$ 622 
$ 612 
$ 518 
$ 249 
$ 197 
$ 189 
$ 175 
$ 2,646 
$ 810 
$ 526 
Consolidated Statements of Shareholders' Equity (USD $)
In Thousands, except Share data, unless otherwise specified
Total
Junior Convertible Preferred Stock [Member]
Common Stock [Member]
Treasury Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Other Comprehensive Loss [Member]
Accumulated Deficit [Member]
Common Stock, Shares, Outstanding, beginning at Dec. 31, 2011
 
 
11,337,000 
 
 
 
 
Junior Convertible Preferred Stock, Shares Outstanding, beginning at Dec. 31, 2011
 
1,251,000 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
Stockholders' Equity, beginning
$ (18,981)
$ 1,740 
$ 1 
$ 0 
$ 6,135 
$ 0 
$ (26,857)
Stock-based compensation
1,031 
 
 
 
1,031 
 
 
Exercise of stock options (shares)
 
 
42,000 
 
 
 
 
Exercise of stock options
17 
 
 
 
17 
 
 
Other comprehensive loss
 
 
 
 
 
 
Net loss
(8,779)
 
 
 
 
 
(8,779)
Stockholders' Equity, ending at Dec. 31, 2012
18,981 
(1,740)
(1)
(6,135)
26,857 
Junior Convertible Preferred Stock, Shares Outstanding, ending at Dec. 31, 2012
 
1,251,000 
 
 
 
 
 
Common Stock, Shares, Outstanding, ending at Dec. 31, 2012
 
 
11,379,000 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
Stockholders' Equity, beginning
(36,316)
1,740 
6,675 
(44,732)
Stock-based compensation
1,605 
 
 
 
1,605 
 
 
Reclass to redeemable common stock (shares)
 
 
(3,829,000)
 
 
 
 
Reclass to redeemable common stock
(1,327)
 
 
 
(1,327)
 
 
Exercise of stock options (shares)
 
 
738,000 
 
 
 
 
Exercise of stock options
435 
 
 
 
435 
 
 
Distribution associated with spin-off
(173)
 
 
 
(173)
 
 
Other comprehensive loss
 
 
 
 
 
 
Net loss
(17,875)
 
 
 
 
 
(17,875)
Stockholders' Equity, ending at Dec. 31, 2013
36,316 
(1,740)
(1)
(6,675)
44,732 
Junior Convertible Preferred Stock, Shares Outstanding, ending at Dec. 31, 2013
 
 
 
 
 
 
Common Stock, Shares, Outstanding, ending at Dec. 31, 2013
8,287,995 
 
8,288,000 
 
 
 
 
Common Stock, Shares, Outstanding, beginning at Sep. 30, 2013
 
 
 
 
 
 
 
Junior Convertible Preferred Stock, Shares Outstanding, beginning at Sep. 30, 2013
 
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
Stockholders' Equity, beginning
(36,316)
1,740 
 
 
 
Net loss
(6,499)
 
 
 
 
 
 
Stockholders' Equity, ending at Dec. 31, 2013
36,316 
(1,740)
 
 
 
Junior Convertible Preferred Stock, Shares Outstanding, ending at Dec. 31, 2013
1,251,000 
 
 
 
 
 
Common Stock, Shares, Outstanding, ending at Dec. 31, 2013
8,287,995 
 
8,288,000 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
Stockholders' Equity, beginning
78,940 
20 
143,337 
(14)
(64,366)
Stock-based compensation
4,570 
 
 
 
4,570 
 
 
Conversion of Series A, B, C, Common Preferred Stock and Junior Preferred Stock into Common Stock on initial public offering (shares converted)
 
(1,251,000)
 
 
 
 
 
Conversion of Series A, B, C, Common Preferred Stock and Junior Preferred Stock into Common Stock on initial public offering, amount converted
 
(1,740)
 
 
 
 
 
Conversion of Series A, B, C, Common Preferred Stock and Junior Preferred Stock into Common Stock on initial public offering (shares issued)
 
 
17,412,000 
 
 
 
 
Conversion of Series A, B, C, Common Preferred Stock and Junior Preferred Stock into Common Stock on initial public offering, amount issued
42,051 
 
 
43,790 
 
 
Initial public offering, net of issuance costs (shares)
 
 
7,414,000 
 
 
 
 
Initial public offering, net of issuance costs
86,286 
 
 
86,285 
 
 
Exercise of stock options (shares)
 
 
1,583,000 
 
 
 
 
Exercise of stock options
2,017 
 
 
 
2,017 
 
 
Shares acquired to settle the exercise of stock options (shares)
 
 
(1,000)
 
 
 
 
Shares acquired to settle the exercise of stock options
(20)
 
 
(20)
 
 
 
Other comprehensive loss
(14)
 
 
 
 
(14)
 
Net loss
(19,634)
 
 
 
 
 
(19,634)
Stockholders' Equity, ending at Dec. 31, 2014
$ (78,940)
$ 0 
$ (3)
$ (20)
$ (143,337)
$ 14 
$ 64,366 
Junior Convertible Preferred Stock, Shares Outstanding, ending at Dec. 31, 2014
 
 
 
 
 
Common Stock, Shares, Outstanding, ending at Dec. 31, 2014
34,695,544 
 
34,696,000 
 
 
 
 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Cash flows from operating activities:
 
 
 
Net loss
$ (19,634)
$ (17,875)
$ (8,779)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Amortization of deferred implementation, solution and other costs
4,435 
2,837 
1,869 
Depreciation and amortization
4,083 
2,971 
1,697 
Amortization of debt issuance costs
96 
68 
Amortization of premiums on investments
17 
Stock-based compensation expenses
4,570 
1,605 
1,031 
Loss from discontinued operations
199 
1,259 
Allowance for sales credits
65 
57 
51 
Loss on disposal of long-lived assets
18 
24 
Unoccupied lease charges
236 
Changes in operating assets and liabilities:
 
 
 
Accounts receivable, net
3,991 
(3,267)
(2,013)
Prepaid expenses and other current assets
(628)
(414)
124 
Deferred solution and other costs
(5,329)
(4,011)
(1,728)
Deferred implementation costs
(3,842)
(3,155)
(2,625)
Other long-term assets
(244)
(1,539)
(182)
Accounts payable
(842)
1,326 
1,949 
Accrued liabilities
(1,398)
5,523 
1,094 
Deferred revenue
9,224 
9,706 
4,299 
Deferred rent and other long-term liabilities
150 
4,444 
41 
Net cash used in continuing operations
(5,286)
(1,271)
(1,889)
Net cash used in discontinued operating activities
(236)
(1,120)
Net cash used in operating activities
(5,286)
(1,507)
(3,009)
Cash flows from investing activities:
 
 
 
Purchases of investments
(23,216)
Redemption of investments
2,230 
Purchases of property and equipment
(5,036)
(11,138)
(1,804)
Acquisitions and purchase of intangible assets
(125)
(425)
Increase in restricted cash
(713)
(116)
Cash included in distribution of spin-off
(46)
Net cash used in continuing investing activities
(26,735)
(11,309)
(2,345)
Net cash used in discontinued investing activities
(261)
Net cash used in investing activities
(26,735)
(11,309)
(2,606)
Cash flows from financing activities:
 
 
 
Proceeds from issuance of preferred stock, net of issuance costs
18,995 
Proceeds from borrowings on line of credit
12,500 
6,350 
Payments on line of credit
(18,710)
(2,682)
Payments on capital lease obligations
(748)
(718)
(654)
Proceeds from the issuance of common stock, net of issuance costs
86,286 
Proceeds from exercise of stock options to purchase common stock
2,017 
435 
17 
Shares acquired to settle the exercise of stock options
(20)
Net cash provided by (used in) financing activities
81,325 
22,380 
(637)
Net increase (decrease) in cash and cash equivalents
49,304 
9,564 
(6,252)
Cash and cash equivalents, beginning of period
18,675 
9,111 
15,363 
Cash and cash equivalents, end of period
67,979 
18,675 
9,111 
Supplemental disclosures of cash flow information:
 
 
 
Cash paid for taxes
55 
164 
199 
Cash paid for interest
419 
377 
184 
Supplemental disclosure of non-cash investing activities:
 
 
 
Equipment acquired under capital lease
975 
1,185 
Data center assets acquired under financing arrangements
$ 5,209 
$ 0 
$ 0 
Organization and Description of Business
Organization and Description of Business
Organization and Description of Business

Q2 Holdings, Inc., or the Company, is a leading provider of secure, cloud-based virtual banking solutions. The Company enables regional and community financial institutions, or RCFIs, to deliver a robust suite of integrated virtual banking services and more effectively engage with their retail and commercial account holders who expect to bank anytime, anywhere and on any device. The Company delivers its solutions to the substantial majority of its customers using a software-as-a-service, or SaaS, model under which its RCFI customers pay subscription fees for the use of the Company's solutions.

The Company, formerly known as CBG Holdings, Inc., was incorporated in Delaware in March 2005 and is a holding company that owns 100% of the outstanding capital stock of Q2 Software, Inc. On March 1, 2013, the Company reorganized its business operations in conjunction with the private placement of its Series C redeemable convertible preferred stock. Prior to the reorganization, the Company owned 100% of the outstanding capital stock of cbanc Network Inc., or cbanc. Pursuant to the reorganization, the Company distributed all shares of cbanc to its stockholders in a spin-off, and the Company was renamed Q2 Holdings, Inc.

The Company's headquarters are located in Austin, Texas.
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

As used in this report, the terms "the Company," "we," "us," or "our" refer to Q2 Holdings, Inc. and its wholly-owned subsidiary. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, and Securities and Exchange Commission, or SEC, requirements. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses. Significant items subject to such estimates include stock-based compensation, the useful lives of property and equipment and income taxes. In accordance with GAAP, management bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Management regularly evaluates its estimates and assumptions using historical experience and other factors; however, actual results could differ significantly from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments acquired with an original maturity of ninety days or less at the date of purchase to be cash equivalents. Cash equivalents are stated at cost or fair value based on the underlying security.

Restricted Cash

Restricted cash consists of deposits held in checking and money market accounts for leased office space.

Investments

Investments consist primarily of U.S. government agency bonds, corporate bonds, commercial paper, certificates of deposits and money market funds. All investments are considered available for sale and are carried at fair value.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, restricted cash, investments and accounts receivable. The Company's cash and cash equivalents and restricted cash are placed with high credit quality financial institutions and issuers, and at times may exceed federally-insured limits. The Company has not experienced any loss relating to cash and cash equivalents or restricted cash in these accounts. The Company provides credit, in the normal course of business, to a number of its customers. The Company performs periodic credit evaluations of its customers' financial condition and generally does not require collateral. No individual customer accounted for 10% or more of revenues for each of the years ended December 31, 2014, 2013 and 2012. No individual customer accounted for 10% or more of accounts receivable, net, as of December 31, 2014 or 2013.

Accounts Receivable

Accounts receivable are stated at net realizable value, including both billed and unbilled receivables to customers. Unbilled receivable balances arise primarily when the Company provides services in advance of billing for these services and also when the Company earns revenues based on the number of registered users and the number of bill-pay and certain other transactions that registered users perform on the Company's virtual banking solutions in excess of the levels included in the Company's minimum subscription fee. Generally, billing for such revenues related to the number of registered users and the number of transactions processed by our registered users occurs one month in arrears. Included in the accounts receivable balances as of December 31, 2014 and 2013 were unbilled receivables of $2.3 million and $1.8 million, respectively.

The Company assesses the collectability of outstanding accounts receivable on an ongoing basis and maintains an allowance for doubtful accounts for accounts receivable deemed uncollectable. This allowance is recorded as a reduction against accounts receivable. As of December 31, 2014 and 2013, the Company did not provide for an allowance for doubtful accounts, as all amounts outstanding were deemed collectable. Historically, the Company's collection experience has not varied significantly, and bad debt expenses have been insignificant.

The Company maintains a reserve for estimated sales credits issued to customers for billing disputes or other service-related reasons. This allowance is recorded as a reduction against current period revenues and accounts receivable. In estimating this allowance, the Company analyzes prior periods to determine the amounts of sales credits issued to customers compared to the revenues in the period that related to the original customer invoice. This estimate is analyzed quarterly and adjusted as necessary.

The following table shows the Company's allowance for sales credits as follows:
 
 
Beginning Balance
 
Additions
 
Deductions
 
Ending Balance
Year Ended December 31, 2012
 
$

 
$
51

 
$

 
$
51

Year Ended December 31, 2013
 
51

 
290

 
(233
)
 
108

Year Ended December 31, 2014
 
$
108

 
$
399

 
$
(334
)
 
$
173



Deferred Implementation Costs

The Company capitalizes certain personnel and other costs, such as employee salaries, benefits and the associated payroll taxes that are direct and incremental to the implementation of its solutions. The Company analyzes implementation costs that may be capitalized to assess their recoverability, and only capitalizes costs that it anticipates to be recoverable. The Company assesses the recoverability of its deferred implementation costs by comparing the greater of the amount of the non-cancellable portion of a customer's contract and the non-refundable customer prepayments received as it relates to the specific implementation costs incurred. The Company begins amortizing the deferred implementation costs for an implementation once the revenue recognition criteria have been met and the Company amortizes those deferred implementation costs ratably over the remaining term of the customer agreement. The portion of deferred implementation costs expected to be amortized during the succeeding twelve-month period is recorded in current assets as deferred implementation costs, current portion, and the remainder is recorded in long-term assets as deferred implementation costs, net of current portion.

Deferred Solution and Other Costs

The Company capitalizes sales commissions and other third-party costs, such as third party licenses and maintenance related to its customer agreements. The Company capitalizes sales commissions because the commission charges are so closely related to the revenues from the non-cancellable customer agreements that they should be recorded as an asset and charged to expense over the same period that the related revenue is recognized. The Company begins amortizing deferred solution and other costs for a particular customer agreement once the revenue recognition criteria are met and amortizes those deferred costs over the remaining term of the customer agreement. The Company analyzes solution and other costs that may be capitalized to assess their recoverability and only capitalizes costs that it anticipates to be recoverable. The portion of capitalized costs expected to be amortized during the succeeding twelve-month period is recorded in current assets as deferred solution and other costs, current portion, and the remainder is recorded in long-term assets as deferred solution and other costs, net of current portion. Deferred commissions were $7.0 million and $4.6 million as of December 31, 2014 and 2013, respectively.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is calculated on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the related assets. Maintenance and repairs that do not extend the life of or improve an asset are expensed in the period incurred.

The estimated useful lives of property and equipment are as follows:
Computer hardware and equipment
 
3 - 5 years
Purchased software and licenses
 
3 - 5 years
Furniture and fixtures
 
7 years
Leasehold improvements
 
Lesser of estimated useful life or lease term


Deferred Revenues

Deferred revenues primarily consist of amounts that have been billed to or received from customers in advance of revenue recognition and prepayments received from customers in advance for implementation, maintenance and other services, as well as initial subscription fees. The Company recognizes deferred revenues as revenues when the services are performed and the corresponding revenue recognition criteria are met. Customer prepayments are generally applied against invoices issued to customers when services are performed and billed. Deferred revenues that are expected to be recognized as revenues during the succeeding twelve month period are recorded in current liabilities as deferred revenues, current portion and the remaining portion is recorded in long-term liabilities as deferred revenues, net of current portion.

Revenues

All revenue-generating activities are directly related to the sale, implementation and support of the Company's solutions within a single operating segment. The Company derives the substantial majority of its revenues from subscription fees for the use of its solutions hosted in the Company's data centers as well as revenues for implementation and customer support services related to the Company's solutions. A small portion of the Company's customers host the Company's solutions in their own data centers under term license and maintenance agreements, and the Company recognizes the corresponding revenues ratably over the term of those customer agreements.

Revenues are recognized net of sales credits and allowances. The Company begins to recognize revenues for a customer when all of the following criteria are satisfied:

there is persuasive evidence of an arrangement;

the service has been or is being provided to the customer;

the collection of the fees is reasonably assured; and

the amount of fees to be paid by the customer is fixed or determinable.

Determining whether and when these criteria have been met can require significant judgment and estimates. In general, revenue recognition commences when the Company's solutions are implemented and made available to the customers.

The Company's software solutions are available for use in hosted application arrangements under subscription fee agreements. Subscription fees from these applications, including related customer support, are recognized ratably over the customer agreement term beginning on the date the solution is made available to the customer. Amounts that have been invoiced are recorded in accounts receivable and deferred revenues or revenues, depending on whether the Company's revenue recognition criteria have been met.

The Company considers subscription fees to be fixed or determinable unless the fees are subject to refund or adjustment or are not payable within the Company's standard payment terms. In determining whether collection of subscription fees is reasonably assured, the Company considers financial and other information about customers, such as a customer's current credit-worthiness and payment history over time. Historically bad debt expenses have not been significant.

The Company enters into arrangements with multiple-deliverables that generally include multiple subscriptions and implementation services. Additional agreements with existing customers that are not in close proximity to the original arrangements are treated as separate contracts for accounting purposes.

For multiple-deliverable arrangements, arrangement consideration is allocated to deliverables based on their relative selling price. In order to treat deliverables in a multiple-deliverable arrangement as separate units of accounting, the deliverables must have standalone value upon delivery. If the deliverables have standalone value upon delivery, each deliverable must be accounted for separately. The Company's subscription services have standalone value as such services are often sold separately. In determining whether implementation services have standalone value apart from the subscription services, the Company considers various factors including the availability of the services from other vendors. To date, the Company has concluded that the implementation services included in multiple-deliverable arrangements do not have standalone value. As a result, when implementation services are sold in a multiple-deliverable arrangement, the Company defers any arrangement fees for implementation services and recognizes such amounts ratably over the period of performance for the initial agreement term.

When multiple-deliverables included in an arrangement are separated into different units of accounting, the arrangement consideration is allocated to the identified separate units based on a relative selling price hierarchy. The selling price for a deliverable is based on its vendor-specific objective evidence of selling price, or VSOE, if available, third-party evidence of selling price, or TPE, if VSOE is not available or best estimate of selling price, or BESP, if neither VSOE nor TPE is available. The Company has not established VSOE for its subscription services due to lack of pricing consistency, the introduction of new services and other factors. The Company has determined that TPE is not a practical alternative due to differences in its service offerings compared to other parties and the availability of relevant third-party pricing information. Accordingly, the Company uses BESP to determine the relative selling price. The amount of revenue allocated to delivered items is limited by contingent revenues.

The Company determined BESP by considering its overall pricing objectives and market conditions. Significant pricing practices taken into consideration include the Company's discounting practices, the size and volume of its transactions, customer characteristics, price lists, go-to-market strategy, historical standalone sales and agreement prices. As the Company's go-to-market strategies evolve, it may modify its pricing practices in the future, which could result in changes in relative selling prices, and include both VSOE and BESP.

Subscription Fee Revenues

The Company's solutions are available as hosted solutions under subscription fee agreements without licensing perpetual rights to the software. Subscription fees from a hosted solution are recognized monthly over the customer agreement term beginning on the date the Company's solution is made available to the customer. Additional fees for monthly usage above the levels included in the standard subscription fee, which include fees for transactions processed during the period, are recognized as revenue in the month when the usage amounts are determined and reported. Any revenues related to upfront implementation services are recognized ratably over the same customer agreement term. Amounts that have been invoiced are recorded in accounts receivable and deferred revenues or revenues, depending on whether the revenue recognition criteria have been met.

Professional Services Revenues

When professional services are not combined with subscription services or term licenses as a single unit of accounting, these professional services revenues are recognized as the services are performed.

Certain out-of-pocket expenses billed to customers are recorded as revenues rather than an offset to the related expense. Revenues recorded from out-of-pocket expense reimbursements totaled approximately $0.8 million, $0.5 million and $0.4 million during the years ended December 31, 2014, 2013 and 2012, respectively. The out-of-pocket expenses are reported in cost of revenues.

Term Licenses and Maintenance Revenues

A small portion of the Company's customers host and manage the Company's solutions on-premises or in third-party data centers under term license and maintenance agreements. Term licenses sold with maintenance, which entitles the customer to technical support and upgrades and updates to the software made available on a when-and-if-available basis, are accounted for under Accounting Standards Codification 985-605, "Software Revenue Recognition." The Company does not have VSOE of fair value for the maintenance and professional services so the entire arrangement consideration is recognized monthly over the term of the software license when all of the other revenue recognition criteria have been met. Revenues from term licenses and maintenance agreements were not significant in the periods presented.

Cost of Revenues

Cost of revenues is comprised primarily of salaries and other personnel-related costs, including employee benefits, bonuses and stock-based compensation, for employees providing services to the Company's customers. Costs associated with these services include the costs of the Company's implementation, customer support, data center and customer training personnel as well as reclassification of certain research and development expenses related to research and development personnel who perform services related to implementation and customer support. Cost of revenues also includes the direct costs of bill-pay and other third-party intellectual property included in the Company's solutions, the amortization of deferred solution and services costs, co-location facility costs and depreciation of the Company's data center assets, an allocation of general overhead costs and referral fees. Direct costs of third-party intellectual property include amounts paid for third-party licenses and related maintenance that are incorporated into the Company's software, with the costs amortized to cost of revenues over the useful lives of the purchased assets.

The amount of research and development expenses allocated to cost of revenues was $1.4 million, $1.6 million and $1.4 million for the years ended December 31, 2014, 2013 and 2012, respectively.

The Company capitalizes certain personnel costs directly related to the implementation of its solutions to the extent those costs are considered to be recoverable from future revenues. The Company amortizes the costs for a particular implementation once revenue recognition commences, and the Company amortizes those implementation costs over the remaining term of the customer agreement. Other costs not directly recoverable from future revenues are expensed in the period incurred. The Company capitalized implementation costs in the amount of $3.8 million, $3.2 million, and $2.6 million during the years ended December 31, 2014, 2013 and 2012, respectively.

Software Development Costs

Software development costs include salaries and other personnel-related costs, including employee benefits, bonuses and stock-based compensation, attributed to programmers, software engineers and quality control teams working on the Company's solutions. Costs related to software development incurred between reaching technological feasibility and the point at which the software solution is ready for general release have been insignificant through December 31, 2014, and accordingly all of the Company's software development costs have been expensed as incurred as research and development.

Research and Development Costs

Research and development costs include salaries and other personnel-related costs, including employee benefits, bonuses and stock-based compensation, third-party contractor expenses, software development tools, an allocation of facilities and depreciation expenses and other related expenses incurred in developing new solutions and upgrading and enhancing existing solutions. Research and development costs are expensed as incurred.

Advertising

All advertising costs of the Company are expensed the first time the advertising takes place. Advertising costs were $0.5 million, and $0.3 million for the years ended December 31, 2014 and 2013, respectively, and advertising costs were insignificant for the year ended December 31, 2012.

Sales Tax

The Company presents sales taxes and other taxes collected from customers and remitted to governmental authorities on a net basis and, as such, excludes them from revenues.

Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in stockholders' equity that result from transactions and economic events other than those with stockholders. Other comprehensive loss consists of net loss and unrealized gains and losses on investments.

Stock-Based Compensation

Stock options and restricted stock units awarded to employees, directors and consultants are measured at fair value at each grant date. The Company recognizes compensation expense ratably over the requisite service period of the option or restricted stock unit award. Generally, options vest 25% on the one-year anniversary of the grant date with the balance vesting monthly over the following 36 months, and restricted stock unit awards vest in four annual installments of 25% beginning on the one-year anniversary of the grant date.

The Company values stock options using the Black-Scholes option-pricing model, which requires the input of subjective assumptions, including the risk-free interest rate, expected life, expected stock price volatility and dividend yield. The risk-free interest rate assumption is based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the expected term of the Company's employee stock options. The expected life represents the period of time the stock options are expected to be outstanding and is based on the simplified method. Under the simplified method, the expected life of an option is presumed to be the mid-point between the vesting date and end of the contractual term. The Company used the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. Expected volatility is based on historical volatilities for publicly traded stock of comparable companies over the estimated expected life of the stock options. The Company assumed no dividend yield because it does not expect to pay dividends in the near future, which is consistent with the Company's history of not paying dividends.
Income Taxes

Deferred income taxes are provided for the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and operating loss carryforwards and credits using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. The Company assesses the likelihood that deferred tax assets will be realized and recognizes a valuation allowance if it is more likely than not that some portion of the deferred tax assets will not be realized. This assessment requires judgment as to the likelihood and amounts of future taxable income by tax jurisdiction. To date, the Company has provided a full valuation allowance against its deferred tax assets as it believes the objective and verifiable evidence of its historical pretax net losses outweighs any positive evidence of its forecasted future results. Although the Company believes that its tax estimates are reasonable, the ultimate tax determination involves significant judgment that is subject to audit by tax authorities in the ordinary course of business. The Company will continue to monitor the positive and negative evidence, and it will adjust the valuation allowance as sufficient objective positive evidence becomes available.

The Company evaluates its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized. Potential interest and penalties associated with any uncertain tax positions are recorded as a component of income tax expense. Through December 31, 2014, the Company has not identified any material uncertain tax positions for which liabilities would be required to be recorded.

Basic and Diluted Net Loss per Common Share

The Company uses the two-class method to compute net loss per common share because the Company has issued securities, other than common stock, that contractually entitle the holders to participate in dividends and earnings of the Company. The two-class method requires earnings for the period to be allocated between common stock and participating securities based upon their respective rights to receive distributed and undistributed earnings. Holders of the Company's Series A, B and C preferred stock are entitled, on a pari passu basis, to receive dividends when, as and if declared by the board of directors, prior and in preference to any declaration or payment of any dividend on the common stock or junior convertible preferred stock until such time as the total dividends paid on each share of Series A, B and C preferred stock is equal to the original issue price of the shares. Holders of junior convertible preferred stock are entitled to receive a pro rata share of any dividend declared, based on the number of shares of common and preferred stock outstanding. As a result, all series of the Company's preferred stock are considered participating securities.

Under the two-class method, for periods with net income, basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Net income attributable to common stockholders is computed by subtracting from net income the portion of current year earnings that the participating securities would have been entitled to receive pursuant to their dividend rights had all of the year's earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the participating securities have no obligation to fund losses. Diluted net income per common share is computed under the two-class method by using the weighted-average number of shares of common stock outstanding plus, for periods with net income attributable to common stockholders, the potential dilutive effects of stock options and warrants. In addition, the Company analyzes the potential dilutive effect of the outstanding participating securities under the if-converted method when calculating diluted earnings per share, in which it is assumed that the outstanding participating securities convert into common stock at the beginning of the period. The Company reports the more dilutive of the approaches as its diluted net income per share during the period. Due to net losses for each of the years ended December 31, 2014, 2013 and 2012, basic and diluted net loss per share were the same, as the effect of all potentially dilutive securities would have been anti-dilutive.
The following table sets forth the computations of net loss per share for the periods listed:
 
 
Year ended December 31,
 
 
2014

2013

2012
Numerators:
 
 
 
 
 
 
Loss from continuing operations attributable to common stockholders
 
$
(19,634
)
 
$
(17,676
)
 
$
(7,520
)
Loss from discontinued operations attributable to common stockholders
 

 
(199
)
 
(1,259
)
Net loss attributable to common stockholders
 
$
(19,634
)
 
$
(17,875
)
 
$
(8,779
)
Denominator:
 
 
 
 
 
 
Weighted-average common shares outstanding, basic and diluted
 
29,257

 
11,866

 
11,345

 
 
 
 
 
 
 
Loss from continuing operations per share, basic and diluted
 
$
(0.67
)
 
$
(1.49
)
 
$
(0.66
)
Loss from discontinued operations per share, basic and diluted
 
$

 
$
(0.02
)
 
$
(0.11
)
Net loss per common share, basic and diluted
 
$
(0.67
)
 
$
(1.51
)
 
$
(0.77
)

Due to net losses for each of the years ended December 31, 2014, 2013 and 2012, basic and diluted loss per share were the same, as the effect of all potentially dilutive securities would have been anti-dilutive. The following table sets forth the anti-dilutive common share equivalents for the periods listed:
 
 
Year ended December 31,
 
 
2014
 
2013
 
2012
Redeemable convertible preferred stock:
 
 
 
 
 
 
Series A preferred stock
 

 
7,908

 
7,908

Series B preferred stock
 

 
1,818

 
1,818

Series C preferred stock
 

 
2,184

 

Junior preferred stock
 

 
1,251

 
1,251

Stock options and restricted stock units
 
6,139

 
5,422

 
4,765

Total anti-dilutive common share equivalents
 
6,139

 
18,583

 
15,742


Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), or ASU 2014-09, which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled to when products are transferred to customers. ASU 2014-09 will be effective for the Company beginning in its first quarter of 2017. Early adoption is not permitted. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the impact of adopting the new revenue standard on its consolidated financial statements.

Subsequent Events

The Company has evaluated subsequent events through February 12, 2015, the date the financial statements were issued.
Fair Value Measurements
Fair Value Measurements
Fair Value Measurements

The carrying values of the Company's financial instruments, principally cash equivalents, investments, accounts receivable, restricted cash and accounts payable, approximated their fair values due to the short period of time to maturity or repayment. The carrying values of the Company's debt instruments approximated their fair value based on rates currently available to the Company.

Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The current accounting guidance for fair value measurements defines a three-level valuation hierarchy for disclosures as follows:

Level I—Unadjusted quoted prices in active markets for identical assets or liabilities;

Level II—Inputs other than quoted prices included within Level I that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data; and

Level III—Unobservable inputs that are supported by little or no market activity, which requires the Company to develop its own assumptions.

The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following table details the fair value hierarchy of the Company's financial assets measured at fair value on a recurring basis as of December 31, 2014:
 
 
 
 
Fair Value Measurements Using:
Cash Equivalents:
 
Fair Value
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Money market funds
 
$
17,865

 
$
17,865

 
$

 
$

Certificates of deposit
 
1,456

 

 
1,456

 

 
 
$
19,321

 
$
17,865

 
$
1,456

 
$

 
 
 
 
 
 
 
 
 
Investments:
 
Fair Value
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
U.S. government agency bonds
 
$
7,502

 
$

 
$
7,502

 
$

Corporate bonds and commercial paper
 
6,192

 

 
6,192

 

Certificates of deposit
 
7,262

 

 
7,262

 

 
 
$
20,956

 
$

 
$
20,956

 
$



All Company assets with fair values measured on a recurring basis, which consists only of cash and cash equivalents, as of December 31, 2013 were classified as Level 1 assets.

The Company determines the fair value of its investment holdings based on pricing from our pricing vendors. The valuation techniques used to measure the fair value of financial instruments having Level 2 inputs were derived from non-binding consensus prices that are corroborated by observable market data or quoted market prices for similar instruments. Such market prices may be quoted prices in active markets for identical assets (Level 1 inputs) or pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs).
Cash, Cash Equivalents and Investments
Cash, Cash Equivalents and Investments
Cash, Cash Equivalents and Investments

The Company's cash, cash equivalents and investments as of December 31, 2014 and 2013 consisted primarily of cash, U.S. government agency bonds, corporate bonds, commercial paper, certificates of deposits and money market funds.

The Company classifies investments as available-for-sale at the time of purchase and reevaluates such classification as of each balance sheet date. All investments are recorded at estimated fair value. Unrealized gains and losses on available-for-sale investments are included in accumulated other comprehensive loss, a component of stockholders' equity. The Company evaluates its investments to assess whether those with unrealized loss positions are other than temporarily impaired. The Company considers impairments to be other than temporary if they are related to deterioration in credit risk or if it is likely the Company will sell the investments before the recovery of their cost basis. Realized gains and losses and declines in value judged to be other than temporary are determined based on the specific identification method and are reported in other income (expense), net, in the consolidated statements of comprehensive loss. Interest, amortization of premiums, and accretion of discount on all investments classified as available-for-sale are also included as a component of other income (expense), net, in the consolidated statements of comprehensive loss.

As of December 31, 2014 and 2013, the Company's cash was $48.7 million and $18.7 million, respectively.

A summary of the cash equivalents and investments as of December 31, 2014 is as follows:
Cash Equivalents:
 
Amortized Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
Money market funds
 
$
17,865

 
$

 
$

 
$
17,865

Certificates of deposit
 
1,456

 

 

 
1,456

 
 
$
19,321

 
$

 
$

 
$
19,321

 
 
 
 
 
 
 
 
 
Investments:
 
Amortized Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
U.S. government agency bonds
 
$
7,508

 
$

 
$
(6
)
 
$
7,502

Corporate bonds and commercial paper
 
6,200

 

 
(8
)
 
6,192

Certificates of deposit
 
7,262

 

 

 
7,262

 
 
$
20,970

 
$

 
$
(14
)
 
$
20,956


The Company may sell its investments at any time, without significant penalty, for use in current operations or for other purposes, even if they have not yet reached maturity. As a result, the Company classifies its investments, including investments with maturities beyond twelve months as current assets in the accompanying consolidated balance sheets.

The following table summarizes the estimated fair value of the Company's investments, designated as available-for-sale and classified by the contractual maturity date of the investments as of the dates shown:
 
 
December 31,
 
 
2014
 
2013
Due within one year or less
 
$
9,095

 
$

Due after one year through five years
 
11,861

 

Total
 
$
20,956

 
$



The Company has certain available-for-sale investments in a gross unrealized loss position, all of which have been in such position for less than twelve months. The Company reviews its debt securities classified as short-term investments on a regular basis to evaluate whether or not any security has experienced an other than temporary decline in fair value. The Company considers factors such as the length of time and extent to which the market value has been less than the cost, the financial position and near-term prospects of the issuer and its intent to sell, or whether it is more likely than not the Company will be required to sell the investment before recovery of the investment's amortized-cost basis. If the Company determines that an other than temporary decline exists in one of these investments, the respective investment would be written down to fair value. For debt securities, the portion of the write-down related to credit loss would be recognized to other income, net in the consolidated statements of comprehensive loss. Any portion not related to credit loss would be included in accumulated other comprehensive loss. Because the Company does not intend to sell any investments which have an unrealized loss position at this time, and it is not more likely than not that the Company will be required to sell the investment before recovery of its amortized cost basis, which may be maturity, the Company does not consider the investments with unrealized loss positions to be other than temporarily impaired as of December 31, 2014.

The following table shows the fair values and the gross unrealized losses of these available-for-sale investments aggregated by investment category as of as of December 31, 2014:
 
 
 
Fair Value
 
Gross Unrealized Loss
U.S. government agency bonds
 
$
7,508

 
$
(6
)
Corporate bonds and commercial paper
 
6,200

 
(8
)
Total
 
$
13,708

 
$
(14
)


The Company did not have any available-for-sale investments as of December 31, 2013.
Deferred Solution and Other Costs
Deferred Solution and Other Costs
Deferred Solution and Other Costs
Deferred solution and other costs, current portion and net of current portion, consisted of the following:
 
 
December 31,
 
 
2014
 
2013
Deferred solution costs
 
$
3,585

 
$
2,174

Deferred commissions
 
1,475

 
950

Deferred solution and other costs, current portion
 
$
5,060

 
$
3,124

Deferred solution costs
 
$
1,684

 
$
1,721

Deferred commissions
 
5,475

 
3,637

Deferred solution and other costs, net of current portion
 
$
7,159

 
$
5,358

Property and Equipment
Property and Equipment
Property and Equipment
Property and equipment consisted of the following:
 
 
December 31,
 
 
2014
 
2013
Computer hardware and equipment
 
$
13,370

 
$
8,917

Purchased software and licenses
 
5,759

 
3,501

Furniture and fixtures
 
3,116

 
3,014

Leasehold improvements
 
4,064

 
4,020

 
 
26,309

 
19,452

Accumulated depreciation
 
(7,788
)
 
(4,621
)
Property and equipment
 
$
18,521

 
$
14,831


Depreciation expense, including amortization of assets held under capital leases, was $4.0 million, $2.9 million and $1.5 million for the years ended December 31, 2014, 2013 and 2012, respectively. Property and equipment included $3.2 million for assets acquired under capital leases at each of December 31, 2014 and 2013.
Accrued Liabilities
Accrued Liabilities
Accrued Liabilities
Accrued liabilities consisted of the following:
 
 
December 31,
 
 
2014
 
2013
Accrued data center equipment purchases
 
$
3,228

 
$
512

Accrued data center software purchases
 
1,483

 
467

Accrued transaction processing fees
 
1,537

 
3,761

Accrued professional services
 
730

 
721

Other
 
2,290

 
1,827

Total accrued liabilities
 
$
9,268

 
$
7,288

Debt
Debt
Debt

In April 2013 the Company entered into a secured credit facility agreement, or Credit Facility, with Wells Fargo Bank, National Association, or Wells Fargo, which the Company and Wells Fargo subsequently amended on March 24, 2014 and again on August 11, 2014. The Credit Facility, as amended, provides for a line of credit of up to $25.0 million, with an accordion feature, or Accordion Feature, allowing the Company to increase its maximum borrowings by up to an additional $25.0 million, subject to certain conditions and limitations, including that borrowings at any time shall be limited to 75% of the Company's trailing twelve-month recurring revenues. Access to the total borrowings available under the Credit Facility is restricted based on covenants related to the Company's minimum liquidity and adjusted EBITDA. Amounts borrowed under the Credit Facility accrue interest, at the Company's election at either: (i) the per annum rate equal to the LIBOR rate plus an applicable margin; or (ii) the current base rate plus the greater of the U.S. Federal Funds rate plus one percentage point, the one-month LIBOR plus one percentage point, or the lending financial institution's prime rate. The Company pays a monthly fee based on the total unused borrowings balance, an annual administrative fee and the initial closing fee, which is paid in three equal annual installments over the first three years of the Credit Facility. The Accordion Feature expires in October 2016, at which time maximum borrowings under the Facility are reduced to $25.0 million, and the Credit Facility matures in April 2017, at which time any outstanding borrowings and accrued interest become payable. In April 2013, the Company drew an advance on the Credit Facility of $2.5 million to pay off its existing loan and security agreement with another institution. In June 2013, the Company drew an advance on the Credit Facility of $3.9 million to fund capital expenditures and secured a letter of credit for the benefit of the landlord of its new corporate headquarters in the amount of $3.0 million. On February 26, 2014, the Company drew an advance of $12.5 million on the Credit Facility, which was subsequently repaid in full on March 17, 2014.

On March 24, 2014, the Company entered into Amendment Number One to the Credit Facility in connection with, and effective upon, the closing of the Company's initial public offering of shares of its common stock, or IPO, which occurred on March 25, 2014. The amendment primarily modified the definition of "Change of Control" in the Credit Facility. On April 22, 2014, the Company paid $4.2 million on the Credit Facility.
On August 11, 2014, the Company entered into Amendment Number Two to the Credit Facility, which modified the Credit Facility to add the Accordion Feature and modified or eliminated certain of the Company's financial covenants and fees it owes under the Credit Facility. On September 5, 2014, the Company paid $2.0 million on the Credit Facility.
As of December 31, 2014, the Company had no borrowings and only a secured letter of credit of $3.0 million against the Credit Facility, leaving an available balance of approximately $22.0 million, and the interest rate applicable to the Credit Facility was 4.7%. The Credit Facility is collateralized by substantially all of the Company's assets and requires that the Company maintain certain financial covenants as provided in the Credit Facility. The Company was in compliance with all financial covenants as of December 31, 2014.
Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies
Operating and Capital Lease Commitments
The Company leases office space for its corporate headquarters in Austin, Texas under a non-cancelable operating lease that expires in April 2021 and a regional sales office in Atlanta, Georgia under a non-cancelable operating lease that expires in January 2016. In addition, the Company leases office space for its previous corporate headquarters in Austin, Texas under a non-cancelable operating lease that expires in March 2015. All of the rentable space covered by this lease has been sublet to a tenant for substantially all of the remainder of the lease. Rent expense under operating leases was $1.0 million, $1.4 million, and $0.9 million for the years ended December 31, 2014, 2013 and 2012, respectively. In 2013, the Company moved to its current headquarters. As a result, the Company vacated its former leased headquarters and recorded an estimated unoccupied lease charge of $0.2 million for the remaining contractual lease payments less estimated sublease income.
New Facilities Lease
On July 18, 2014, the Company entered into an office lease agreement, or the Lease, with CREF Aspen Lake Building II, LLC to lease approximately 70,000 rentable square feet, or the Premises, of an office building to be located immediately adjacent to the Company's current headquarters in order to expand the Company's headquarters. The Lease provides for phased commencement dates, with commencement of the first phase covering approximately 55,000 rentable square feet anticipated to occur on November 1, 2015, or the Initial Commencement Date, with the remaining space becoming available nine months thereafter. The actual commencement dates are subject to timely completion of the construction of the Premises. The term of the Lease commences on the Initial Commencement Date and runs 124 months, with a five year renewal option, and the rent obligations under the Lease begin with rents of $98 per month, which escalate over the course of the Lease to $160 per month in the final four months of the Lease's term.
The Company has entered into various capital lease arrangements to obtain property and equipment for its data center and corporate operations. These agreements expire over various terms from March 2015 through May 2025 and the leases are secured by the underlying leased property and equipment.

Future minimum payments required under capital and operating leases that have initial or remaining non-cancelable lease terms in excess of one year at December 31, 2014 were as follows:
 
 
Capital Leases
 
Operating Leases
Year Ended December 31,
 
 
 
 
2015
 
$
418

 
$
2,054

2016
 
164

 
3,023

2017
 
4

 
3,289

2018
 

 
3,371

2019
 

 
3,453

Thereafter
 

 
13,446

Total minimum lease payments
 
586

 
$
28,636

Less: imputed interest
 
(11
)
 
 
Less: current portion
 
(408
)
 
 
Capital lease obligations, net of current portion
 
$
167

 
 

Contractual Commitments
The Company has non-cancelable contractual commitments related to third-party products, co-location fees, other product costs and data center hardware and software purchases. The Company is party to several purchase commitments for third-party products that contain both a contractual minimum obligation and a variable obligation based upon usage or other factors which can change on a monthly basis. The estimated amounts for usage and other factors are not included within the table below.
Future minimum contractual commitments that have initial or remaining non-cancelable terms in excess of one year were as follows:
 
 
Contractual Commitments
Year Ended December 31,
 
 
2015
 
$
10,465

2016
 
6,382

2017
 
4,464

2018
 
4,232

2019
 
4,092

Thereafter
 
4,092

Total commitments
 
$
33,727


Legal Proceedings
From time to time, the Company may become involved in legal proceedings arising in the ordinary course of its business. The Company is not presently a party to any legal proceedings that, if determined adversely to the Company, would have a material adverse effect on the Company.
Stockholders' Equity
Stockholders' Equity
Stockholder's Equity
Initial Public Offering

On March 25, 2014, the Company completed its IPO of 7,761 shares of common stock at $13.00 per share. The total shares sold in the IPO included 1,511 shares sold by selling stockholders. After deducting the payment of underwriters' discounts and commissions and offering costs, the net proceeds to the Company from the sale of shares in the offering were approximately $72.6 million.

Underwriter's Exercise Of Option to Purchase Additional Shares

On April 2, 2014, pursuant to the terms of the Company's IPO, which occurred on March 25, 2014, the underwriters exercised their option to purchase an additional 1,164 shares to cover over-allotments. After deducting the payment of underwriters' discounts and commissions and offering costs, the Company received net proceeds from the sale of shares totaling approximately $13.7 million.

Conversion of Redeemable Common and Preferred Stock

Immediately prior to the closing of the IPO, which occurred on March 25, 2014, each share of the Company's outstanding preferred, junior preferred and redeemable common stock was converted into one share of undesignated common stock. The following table presents the conversion of all classes of stock on March 25, 2014:
 
 
Prior to Conversion
 
Subsequent to Conversion
Convertible preferred stock
 
 
 
 
       Series A
 
7,908

 

       Series B
 
1,818

 

       Series C
 
2,605

 

Redeemable common stock
 
3,829

 

Junior preferred stock
 
1,251

 

Undesignated common stock
 

 
17,412

Stock-Based Compensation
Stock-Based Compensation
Stock-Based Compensation
In March 2014, the Company's board of directors approved the 2014 Equity Incentive Plan, or 2014 Plan, under which stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units and other cash-based or stock-based awards may be granted to employees, consultants and directors. Shares of common stock that are issued and available for issuance under the 2014 Plan consist of authorized, but unissued or reacquired shares of common stock or any combination thereof.
A total of 1,850 shares of the Company's common stock was initially authorized and reserved for issuance under the 2014 Plan. This reserve will automatically increase on January 1, 2015 and each subsequent anniversary through 2024, by an amount equal to the smaller of (a) 4.5% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or (b) an amount determined by the Company's board of directors. This reserve is automatically increased to include any outstanding shares under the Company's 2007 Stock Plan, or 2007 Plan, at the time of its termination or issuable upon expiration or termination of options granted under the Company's 2007 Plan that expire or terminate without having been exercised in full. Pursuant to the terms of the 2014 Plan, 107 shares available for future issuance under the 2007 Plan were transferred to the 2014 Plan, providing a total of 1,957 shares of common stock allocated for issuance under the 2014 Plan. In addition, 49 shares have been returned to the 2014 Plan as a result of termination of options that expired or terminated without having been exercised under the previously terminated 2007 Plan, resulting in a total of 2,006 shares available for issuance under the 2014 Plan. As of December 31, 2014, options to purchase a total of 606 shares of common stock have been granted under the 2014 Plan, 7 shares have been returned to the 2014 Plan as a result of termination of options that expired or terminated without having been exercised, and 1,407 shares of common stock remain available for future issuance under the 2014 Plan.
In July 2007, the Company adopted the 2007 Plan under which options or stock purchase rights may be granted to employees, consultants and directors. In February 2014, the board of directors, under the authority granted to it by the 2007 Plan, increased the number of shares available to be granted under the plan by 1,400 shares, and as of December 31, 2014, a total of 9,172 shares of common stock were allocated for issuance under the plan. Upon the completion of the Company's IPO in March 2014, the board of directors terminated the 2007 Plan in connection with the IPO and pursuant to the terms of the 2014 Plan, 107 shares that were available for future issuance under the 2007 Plan at such time were transferred to the 2014 Plan. No shares remain available for future issuance of awards under the 2007 Plan. The 2007 Plan will continue to govern the terms and conditions of all outstanding equity awards granted under the 2007 Plan. Shares of common stock that are issued and were available for issuance under the 2007 Plan consist of authorized, but unissued or reacquired shares of common stock or any combination thereof.
Stock Options

The following summarizes the assumptions used for estimating the fair value of stock options granted during the periods indicated:
 
 
Year Ended December 31,
 
 
2014
 
2013
 
2012
Risk-free interest rate
 
1.2 - 1.8%
 
0.7 - 2.2%
 
0.7 - 1.1%
Expected life (in years)
 
3.8 - 6.1
 
4.8 - 6.9
 
4.8 - 6.3
Expected volatility
 
45.1 - 46.8%
 
46.4 - 49.4%
 
52.0 - 52.5%
Dividend yield
 
 
 
Weighted-average grant date fair value per share          
 
$5.63
 
$3.15
 
$2.65


Stock option activity was as follows:
 
 
Number of
Options
 
Weighted
Average
Exercise Price
Balance as of January 1, 2012
 
5,022

 
$
1.12

Granted
 
1,064

 
5.73

Exercised
 
(42
)
 
0.41

Forfeited
 
(312
)
 
1.84

Balance as of December 31, 2012
 
5,732

 
1.94

Granted
 
834

 
7.69

Exercised
 
(738
)
 
0.59

Forfeited
 
(406
)
 
5.31

Balance as of December 31, 2013
 
5,422

 
2.76

Granted
 
2,331

 
10.10

Exercised
 
(1,583
)
 
1.27

Forfeited
 
(59
)
 
7.56

Balance as of December 31, 2014
 
6,111

 
$
5.90



The summary of stock options outstanding as of December 31, 2014 is as follows:
 
 
Options Outstanding
 
Options Exercisable
Range of Exercise Prices
 
Number of
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual Life
(in years)
 
Number of
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual Life
(in years)
$0.29 - $0.35
 
919

 
$
0.33

 
3.2
 
919

 
$
0.33

 
3.2

$0.54 - $0.84
 
477

 
0.72

 
4.8
 
477

 
0.72

 
4.8

$1.74 - $3.10
 
1,094

 
2.80

 
6.3
 
866

 
2.73

 
6.2

$4.00 - $7.82
 
1,312

 
6.89

 
5.6
 
572

 
6.48

 
5.7

$8.35
 
1,737

 
8.35

 
6.1
 

 

 

$13.00 - $19.44
 
572

 
15.41

 
6.7
 
21

 
13.00

 
6.2

 
 
6,111

 
$
5.90

 
5.5
 
2,855

 
$
2.44

 
4.9



Restricted Stock Units
The Company’s restricted stock units vest over a four-year period and upon vesting, the vested shares are issued to the recipient of the restricted stock units.
The summary of restricted stock unit activity is as follows:
 
 
Number of
Shares
 
Weighted
Average
Grant Date Fair Value
Nonvested as of January 1, 2014
 

 
$

Granted
 
28

 
19.44

Vested
 

 

Forfeited
 

 

Nonvested as of December 31, 2014
 
28

 
$
19.44


The aggregate intrinsic value of stock options exercised during each of the years ended December 31, 2014, 2013 and 2012 was $17.3 million, $4.8 million and $0.2 million, respectively. The total fair value of stock options vested during each of the years ended December 31, 2014, 2013 and 2012 was $2.2 million, $1.2 million, and $0.8 million, respectively.
As of December 31, 2014, total unrecognized stock-based compensation expense, adjusted for estimated forfeitures, related to stock options was $14.0 million, which the Company expects to recognize over the next 3 years, and total unrecognized stock-based compensation expense, adjusted for estimated forfeitures, related to restricted stock units was $0.5 million, which the Company expects to recognize over the next 3.9 years.
Provision for Income Taxes
Income Taxes
Provision for Income Taxes
The components of the Company's provision for income taxes from continuing operations were as follows:
 
 
Year Ended December 31,
 
 
2014
 
2013
 
2012
Current taxes:
 
 
 
 
 
 
Federal
 
$

 
$

 
$

State
 
67

 
52

 
162

Total current taxes
 
$
67

 
$
52

 
$
162

Deferred taxes:
 
 
 
 
 
 
Federal
 
$

 
$

 
$

State
 
4

 
3

 
2

Total deferred taxes
 
4

 
3

 
2

Provision for income taxes
 
$
71

 
$
55

 
$
164


As of December 31, 2014, the Company had federal net operating loss carryforwards of approximately $69.9 million, state tax credits of approximately $0.2 million and federal alternative minimum tax credits of $0.1 million. The net operating loss carryforwards will expire at various dates beginning in 2026 if not utilized. The state tax credits expire in 2027 if not utilized. The alternative minimum tax credits have an indefinite carryforward period.
Federal and state laws impose restrictions on the utilization of net operating loss carryforwards and research and development credit carryforwards in the event of a change in ownership of the Company, which constitutes an "ownership change" as defined by Internal Revenue Code Sections 382 and 383. Should there be an ownership change in the future, the Company's ability to utilize existing carryforwards could be substantially restricted.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company has established a valuation allowance due to uncertainties regarding the realization of deferred tax assets based on the Company's lack of earnings history. During the year ended December 31, 2014, the valuation allowance increased by $6.4 million.
The Company's deferred tax assets and deferred tax liabilities were as follows:
 
 
December 31,
 
 
2014
 
2013
Deferred tax assets:
 
 
 
 
NOL and credit carryforwards
 
$
21,328

 
$
16,340

Deferred revenue
 
2,657

 
1,596

Accrued expenses and other
 
3,386

 
3,295

Stock-based compensation
 
1,107

 
209

Total deferred tax assets
 
28,478

 
21,440

Deferred tax liabilities:
 
 
 
 
Deferred expenses
 
(5,128
)
 
(3,924
)
Depreciation and amortization
 
(2,972
)
 
(3,573
)
Total deferred tax liabilities
 
(8,100
)
 
(7,497
)
Deferred tax assets less tax liabilities
 
20,378

 
13,943

Less: valuation allowance
 
(20,266
)
 
(13,828
)
Net deferred tax asset
 
$
112

 
$
115


The Company had $9.9 million of excess stock deductions which are not included in deferred tax assets. The tax benefit from these deductions will increase additional paid-in capital when they are deemed realized under the "with and without" method.
The Company's provision for income taxes from continuing operations differs from the amount computed by applying the statutory federal income tax rate of 34% primarily as a result of the following:

 
 
Year Ended December 31,
 
 
2014
 
2013
 
2012
Income tax at U.S. statutory rate
 
34.0
 %
 
34.0
 %
 
34.0
 %
Effect of:
 
 
 
 
 
 
Increase in deferred tax valuation allowance
 
(32.9
)
 
(32.7
)
 
(31.5
)
State taxes, net of federal benefit
 
1.5

 
1.4

 
(0.7
)
Other permanent items
 
(3.0
)
 
(3.0
)
 
(4.0
)
Income tax provision effective rate
 
(0.4
)%
 
(0.3
)%
 
(2.2
)%

The Company files income tax returns in the U.S. federal jurisdiction and several state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for years before 2011. Operating losses generated in years prior to 2011 remain open to adjustment until the statute of limitations closes for the tax year in which the net operating losses are utilized. The tax years 2011 through 2014 remain open to examination by all major taxing jurisdictions to which the Company is subject, though the Company is not currently under examination by any major taxing jurisdiction.
The Company had not recorded any tax reserves related to uncertain tax positions as of December 31, 2014, 2013 and 2012. The Company's policy is to accrue interest and penalties related to uncertain tax positions as a component of income tax expense. For the years ended December 31, 2014, 2013 and 2012, the Company did not incur any interest or penalties.
Employee Benefit Plan
Employee Benefit Plan
Employee Benefit Plan
In January 2009, the Company adopted a 401(k) profit-sharing plan, or 401(k) Plan, covering substantially all employees. Employees can contribute between 1% and 90% of their total earnings. The 401(k) Plan also provides for employer contributions to be made at the Company's discretion. As of December 31, 2014, the Company had not made any discretionary contributions.
Discontinued Operations
Discontinued Operations
Discontinued Operations
On March 1, 2013, the Company distributed all of the shares of a subsidiary to the Company's stockholders in a spin-off. However, since all shares of the subsidiary were distributed in 2013, the Company's consolidated statements of comprehensive loss and statements of cash flows have been presented to show the discontinued operations of the subsidiary separately from continuing operations for all periods presented. Since the transaction was between entities under common control, the distribution of the shares of the subsidiary did not result in a gain or loss on distribution as it was recorded at historical carrying values.
Segments and Geographic Information Segments and Geographic Information
Segments and Geographic Information
Segments and Geographic Information
All revenue-generating activities are directly related to the sale, implementation and support of the Company's solutions in a single operating segment. The Company's chief operating decision maker, the Chief Executive Officer, reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. All of the Company's principal operations, assets and decision-making functions are located in the United States.
Related Parties
Related Parties
Related Parties
For the years ended December 31, 2014, 2013 and 2012, the Company recorded revenues from a related-party customer of $0.4 million, $0.3 million and $0.3 million, respectively.
For the year ended December 31, 2012, the Company paid $0.1 million to related parties for professional services.
Selected Quarterly Financial Data
Selected Quarterly Financial Data
Selected Quarterly Financial Data (unaudited)
Selected summarized quarterly financial information for the years ended 2014 and 2013 is as follows:
 
 
Three Months Ended
 
 
March 31, 2013
 
June 30, 2013
 
September 30, 2013
 
December 31, 2013
 
March 31, 2014
 
June 30, 2014
 
September 30, 2014
 
December 31, 2014
Revenues
 
$
12,834

 
$
14,044

 
$
14,325

 
$
15,669

 
$
16,834

 
$
19,158

 
$
20,989

 
$
22,148

Cost of revenues
 
7,807

 
8,408

 
9,167

 
10,879

 
10,212

 
10,830

 
12,143

 
12,869

Gross profit
 
5,027

 
5,636

 
5,158

 
4,790

 
6,622

 
8,328

 
8,846

 
9,279

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales and marketing
 
3,060

 
4,138

 
4,599

 
4,929

 
5,509

 
6,032

 
5,642

 
5,886

Research and development
 
1,866

 
2,152

 
2,259

 
2,752

 
2,736

 
2,787

 
3,155

 
3,408

General and administrative
 
2,335

 
2,776

 
3,207

 
3,424

 
3,718

 
4,058

 
4,574

 
4,641

Unoccupied lease charges
 

 
148

 
88

 

 

 

 

 

Total operating expenses
 
7,261

 
9,214

 
10,153

 
11,105

 
11,963

 
12,877

 
13,371

 
13,935

Loss from operations
 
(2,234
)
 
(3,578
)
 
(4,995
)
 
(6,315
)
 
(5,341
)
 
(4,549
)
 
(4,525
)
 
(4,656
)
Total other expense, net
 
(51
)
 
(116
)
 
(170
)
 
(162
)
 
(207
)
 
(119
)
 
(82
)
 
(84
)
Loss before income taxes
 
(2,285
)
 
(3,694
)
 
(5,165
)
 
(6,477
)
 
(5,548
)
 
(4,668
)
 
(4,607
)
 
(4,740
)
Provision for income taxes
 
(5
)
 
(14
)
 
(14
)
 
(22
)
 
(18
)
 
(15
)
 
(18
)
 
(20
)
Loss from continuing operations
 
(2,290
)
 
(3,708
)
 
(5,179
)
 
(6,499
)
 
(5,566
)
 
(4,683
)
 
(4,625
)
 
(4,760
)
Loss from discontinued operations, net of tax
 
(199
)
 

 

 

 

 

 

 

Net loss
 
$
(2,489
)
 
$
(3,708
)
 
$
(5,179
)
 
$
(6,499
)
 
$
(5,566
)
 
$
(4,683
)
 
$
(4,625
)
 
$
(4,760
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of net loss to adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Loss
 
$
(2,489
)
 
$
(3,708
)
 
$
(5,179
)
 
$
(6,499
)
 
$
(5,566
)
 
$
(4,683
)
 
$
(4,625
)
 
$
(4,760
)
       Depreciation and amortization
 
638

 
624

 
809

 
900

 
999

 
1,031

 
1,092

 
961

       Stock-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Cost of revenues
 
61

 
61

 
70

 
72

 
126

 
147

 
159

 
191

            Sales and marketing
 
39

 
60

 
81

 
94

 
167

 
187

 
189

 
231

            Research and development
 
59

 
66

 
64

 
68

 
107

 
122

 
131

 
167

            General and administrative
 
175

 
189

 
197

 
249

 
518

 
612

 
622

 
894

Provision for income taxes
 
5

 
14

 
14

 
22

 
18

 
15

 
18

 
20

Other expense, net
 
51

 
116

 
170

 
162

 
207

 
119

 
82

 
84

Unoccupied lease charge
 

 
148

 
88

 

 

 

 

 

Loss from discontinued operations, net of tax
 
199

 

 

 

 

 

 

 

Adjusted EBITDA
 
$
(1,262
)
 
$
(2,430
)
 
$
(3,686
)
 
$
(4,932
)
 
$
(3,424
)
 
$
(2,450
)
 
$
(2,332
)
 
$
(2,212
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Registered users (1)
 
2,609

 
2,900

 
2,956

 
3,124

 
3,447

 
3,941

 
4,123

 
4,340


(1)Represents registered users at the end of the period.
Summary of Significant Accounting Policies (Policies)
Basis of Presentation and Principles of Consolidation

As used in this report, the terms "the Company," "we," "us," or "our" refer to Q2 Holdings, Inc. and its wholly-owned subsidiary. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, and Securities and Exchange Commission, or SEC, requirements. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Basis of Presentation and Principles of Consolidation

As used in this report, the terms "the Company," "we," "us," or "our" refer to Q2 Holdings, Inc. and its wholly-owned subsidiary. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, and Securities and Exchange Commission, or SEC, requirements. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses. Significant items subject to such estimates include stock-based compensation, the useful lives of property and equipment and income taxes. In accordance with GAAP, management bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Management regularly evaluates its estimates and assumptions using historical experience and other factors; however, actual results could differ significantly from those estimates.
Cash and Cash Equivalents

The Company considers all highly liquid investments acquired with an original maturity of ninety days or less at the date of purchase to be cash equivalents. Cash equivalents are stated at cost or fair value based on the underlying security.
Restricted Cash

Restricted cash consists of deposits held in checking and money market accounts for leased office space.
Investments

Investments consist primarily of U.S. government agency bonds, corporate bonds, commercial paper, certificates of deposits and money market funds. All investments are considered available for sale and are carried at fair value.
Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, restricted cash, investments and accounts receivable. The Company's cash and cash equivalents and restricted cash are placed with high credit quality financial institutions and issuers, and at times may exceed federally-insured limits. The Company has not experienced any loss relating to cash and cash equivalents or restricted cash in these accounts. The Company provides credit, in the normal course of business, to a number of its customers. The Company performs periodic credit evaluations of its customers' financial condition and generally does not require collateral.
Accounts Receivable

Accounts receivable are stated at net realizable value, including both billed and unbilled receivables to customers. Unbilled receivable balances arise primarily when the Company provides services in advance of billing for these services and also when the Company earns revenues based on the number of registered users and the number of bill-pay and certain other transactions that registered users perform on the Company's virtual banking solutions in excess of the levels included in the Company's minimum subscription fee. Generally, billing for such revenues related to the number of registered users and the number of transactions processed by our registered users occurs one month in arrears. Included in the accounts receivable balances as of December 31, 2014 and 2013 were unbilled receivables of $2.3 million and $1.8 million, respectively.

The Company assesses the collectability of outstanding accounts receivable on an ongoing basis and maintains an allowance for doubtful accounts for accounts receivable deemed uncollectable. This allowance is recorded as a reduction against accounts receivable. As of December 31, 2014 and 2013, the Company did not provide for an allowance for doubtful accounts, as all amounts outstanding were deemed collectable. Historically, the Company's collection experience has not varied significantly, and bad debt expenses have been insignificant.

The Company maintains a reserve for estimated sales credits issued to customers for billing disputes or other service-related reasons. This allowance is recorded as a reduction against current period revenues and accounts receivable. In estimating this allowance, the Company analyzes prior periods to determine the amounts of sales credits issued to customers compared to the revenues in the period that related to the original customer invoice. This estimate is analyzed quarterly and adjusted as necessary.
Deferred Implementation Costs

The Company capitalizes certain personnel and other costs, such as employee salaries, benefits and the associated payroll taxes that are direct and incremental to the implementation of its solutions. The Company analyzes implementation costs that may be capitalized to assess their recoverability, and only capitalizes costs that it anticipates to be recoverable. The Company assesses the recoverability of its deferred implementation costs by comparing the greater of the amount of the non-cancellable portion of a customer's contract and the non-refundable customer prepayments received as it relates to the specific implementation costs incurred. The Company begins amortizing the deferred implementation costs for an implementation once the revenue recognition criteria have been met and the Company amortizes those deferred implementation costs ratably over the remaining term of the customer agreement. The portion of deferred implementation costs expected to be amortized during the succeeding twelve-month period is recorded in current assets as deferred implementation costs, current portion, and the remainder is recorded in long-term assets as deferred implementation costs, net of current portion.

Deferred Solution and Other Costs

The Company capitalizes sales commissions and other third-party costs, such as third party licenses and maintenance related to its customer agreements. The Company capitalizes sales commissions because the commission charges are so closely related to the revenues from the non-cancellable customer agreements that they should be recorded as an asset and charged to expense over the same period that the related revenue is recognized. The Company begins amortizing deferred solution and other costs for a particular customer agreement once the revenue recognition criteria are met and amortizes those deferred costs over the remaining term of the customer agreement. The Company analyzes solution and other costs that may be capitalized to assess their recoverability and only capitalizes costs that it anticipates to be recoverable. The portion of capitalized costs expected to be amortized during the succeeding twelve-month period is recorded in current assets as deferred solution and other costs, current portion, and the remainder is recorded in long-term assets as deferred solution and other costs, net of current portion.
Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is calculated on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the related assets. Maintenance and repairs that do not extend the life of or improve an asset are expensed in the period incurred.

The estimated useful lives of property and equipment are as follows:
Computer hardware and equipment
 
3 - 5 years
Purchased software and licenses
 
3 - 5 years
Furniture and fixtures
 
7 years
Leasehold improvements
 
Lesser of estimated useful life or lease term
Deferred Revenues

Deferred revenues primarily consist of amounts that have been billed to or received from customers in advance of revenue recognition and prepayments received from customers in advance for implementation, maintenance and other services, as well as initial subscription fees. The Company recognizes deferred revenues as revenues when the services are performed and the corresponding revenue recognition criteria are met. Customer prepayments are generally applied against invoices issued to customers when services are performed and billed. Deferred revenues that are expected to be recognized as revenues during the succeeding twelve month period are recorded in current liabilities as deferred revenues, current portion and the remaining portion is recorded in long-term liabilities as deferred revenues, net of current portion.
Revenues

All revenue-generating activities are directly related to the sale, implementation and support of the Company's solutions within a single operating segment. The Company derives the substantial majority of its revenues from subscription fees for the use of its solutions hosted in the Company's data centers as well as revenues for implementation and customer support services related to the Company's solutions. A small portion of the Company's customers host the Company's solutions in their own data centers under term license and maintenance agreements, and the Company recognizes the corresponding revenues ratably over the term of those customer agreements.

Revenues are recognized net of sales credits and allowances. The Company begins to recognize revenues for a customer when all of the following criteria are satisfied:

there is persuasive evidence of an arrangement;

the service has been or is being provided to the customer;

the collection of the fees is reasonably assured; and

the amount of fees to be paid by the customer is fixed or determinable.

Determining whether and when these criteria have been met can require significant judgment and estimates. In general, revenue recognition commences when the Company's solutions are implemented and made available to the customers.

The Company's software solutions are available for use in hosted application arrangements under subscription fee agreements. Subscription fees from these applications, including related customer support, are recognized ratably over the customer agreement term beginning on the date the solution is made available to the customer. Amounts that have been invoiced are recorded in accounts receivable and deferred revenues or revenues, depending on whether the Company's revenue recognition criteria have been met.

The Company considers subscription fees to be fixed or determinable unless the fees are subject to refund or adjustment or are not payable within the Company's standard payment terms. In determining whether collection of subscription fees is reasonably assured, the Company considers financial and other information about customers, such as a customer's current credit-worthiness and payment history over time. Historically bad debt expenses have not been significant.

The Company enters into arrangements with multiple-deliverables that generally include multiple subscriptions and implementation services. Additional agreements with existing customers that are not in close proximity to the original arrangements are treated as separate contracts for accounting purposes.

For multiple-deliverable arrangements, arrangement consideration is allocated to deliverables based on their relative selling price. In order to treat deliverables in a multiple-deliverable arrangement as separate units of accounting, the deliverables must have standalone value upon delivery. If the deliverables have standalone value upon delivery, each deliverable must be accounted for separately. The Company's subscription services have standalone value as such services are often sold separately. In determining whether implementation services have standalone value apart from the subscription services, the Company considers various factors including the availability of the services from other vendors. To date, the Company has concluded that the implementation services included in multiple-deliverable arrangements do not have standalone value. As a result, when implementation services are sold in a multiple-deliverable arrangement, the Company defers any arrangement fees for implementation services and recognizes such amounts ratably over the period of performance for the initial agreement term.

When multiple-deliverables included in an arrangement are separated into different units of accounting, the arrangement consideration is allocated to the identified separate units based on a relative selling price hierarchy. The selling price for a deliverable is based on its vendor-specific objective evidence of selling price, or VSOE, if available, third-party evidence of selling price, or TPE, if VSOE is not available or best estimate of selling price, or BESP, if neither VSOE nor TPE is available. The Company has not established VSOE for its subscription services due to lack of pricing consistency, the introduction of new services and other factors. The Company has determined that TPE is not a practical alternative due to differences in its service offerings compared to other parties and the availability of relevant third-party pricing information. Accordingly, the Company uses BESP to determine the relative selling price. The amount of revenue allocated to delivered items is limited by contingent revenues.

The Company determined BESP by considering its overall pricing objectives and market conditions. Significant pricing practices taken into consideration include the Company's discounting practices, the size and volume of its transactions, customer characteristics, price lists, go-to-market strategy, historical standalone sales and agreement prices. As the Company's go-to-market strategies evolve, it may modify its pricing practices in the future, which could result in changes in relative selling prices, and include both VSOE and BESP.

Subscription Fee Revenues

The Company's solutions are available as hosted solutions under subscription fee agreements without licensing perpetual rights to the software. Subscription fees from a hosted solution are recognized monthly over the customer agreement term beginning on the date the Company's solution is made available to the customer. Additional fees for monthly usage above the levels included in the standard subscription fee, which include fees for transactions processed during the period, are recognized as revenue in the month when the usage amounts are determined and reported. Any revenues related to upfront implementation services are recognized ratably over the same customer agreement term. Amounts that have been invoiced are recorded in accounts receivable and deferred revenues or revenues, depending on whether the revenue recognition criteria have been met.

Professional Services Revenues

When professional services are not combined with subscription services or term licenses as a single unit of accounting, these professional services revenues are recognized as the services are performed.

Certain out-of-pocket expenses billed to customers are recorded as revenues rather than an offset to the related expense. Revenues recorded from out-of-pocket expense reimbursements totaled approximately $0.8 million, $0.5 million and $0.4 million during the years ended December 31, 2014, 2013 and 2012, respectively. The out-of-pocket expenses are reported in cost of revenues.

Term Licenses and Maintenance Revenues

A small portion of the Company's customers host and manage the Company's solutions on-premises or in third-party data centers under term license and maintenance agreements. Term licenses sold with maintenance, which entitles the customer to technical support and upgrades and updates to the software made available on a when-and-if-available basis, are accounted for under Accounting Standards Codification 985-605, "Software Revenue Recognition." The Company does not have VSOE of fair value for the maintenance and professional services so the entire arrangement consideration is recognized monthly over the term of the software license when all of the other revenue recognition criteria have been met.
Cost of Revenues

Cost of revenues is comprised primarily of salaries and other personnel-related costs, including employee benefits, bonuses and stock-based compensation, for employees providing services to the Company's customers. Costs associated with these services include the costs of the Company's implementation, customer support, data center and customer training personnel as well as reclassification of certain research and development expenses related to research and development personnel who perform services related to implementation and customer support. Cost of revenues also includes the direct costs of bill-pay and other third-party intellectual property included in the Company's solutions, the amortization of deferred solution and services costs, co-location facility costs and depreciation of the Company's data center assets, an allocation of general overhead costs and referral fees. Direct costs of third-party intellectual property include amounts paid for third-party licenses and related maintenance that are incorporated into the Company's software, with the costs amortized to cost of revenues over the useful lives of the purchased assets.

The amount of research and development expenses allocated to cost of revenues was $1.4 million, $1.6 million and $1.4 million for the years ended December 31, 2014, 2013 and 2012, respectively.

The Company capitalizes certain personnel costs directly related to the implementation of its solutions to the extent those costs are considered to be recoverable from future revenues. The Company amortizes the costs for a particular implementation once revenue recognition commences, and the Company amortizes those implementation costs over the remaining term of the customer agreement. Other costs not directly recoverable from future revenues are expensed in the period incurred.
Software Development Costs

Software development costs include salaries and other personnel-related costs, including employee benefits, bonuses and stock-based compensation, attributed to programmers, software engineers and quality control teams working on the Company's solutions. Costs related to software development incurred between reaching technological feasibility and the point at which the software solution is ready for general release have been insignificant through December 31, 2014, and accordingly all of the Company's software development costs have been expensed as incurred as research and development.
Research and Development Costs

Research and development costs include salaries and other personnel-related costs, including employee benefits, bonuses and stock-based compensation, third-party contractor expenses, software development tools, an allocation of facilities and depreciation expenses and other related expenses incurred in developing new solutions and upgrading and enhancing existing solutions. Research and development costs are expensed as incurred.

Advertising

All advertising costs of the Company are expensed the first time the advertising takes place.
Sales Tax

The Company presents sales taxes and other taxes collected from customers and remitted to governmental authorities on a net basis and, as such, excludes them from revenues.
Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in stockholders' equity that result from transactions and economic events other than those with stockholders. Other comprehensive loss consists of net loss and unrealized gains and losses on investments.
Stock-Based Compensation

Stock options and restricted stock units awarded to employees, directors and consultants are measured at fair value at each grant date. The Company recognizes compensation expense ratably over the requisite service period of the option or restricted stock unit award. Generally, options vest 25% on the one-year anniversary of the grant date with the balance vesting monthly over the following 36 months, and restricted stock unit awards vest in four annual installments of 25% beginning on the one-year anniversary of the grant date.

The Company values stock options using the Black-Scholes option-pricing model, which requires the input of subjective assumptions, including the risk-free interest rate, expected life, expected stock price volatility and dividend yield. The risk-free interest rate assumption is based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the expected term of the Company's employee stock options. The expected life represents the period of time the stock options are expected to be outstanding and is based on the simplified method. Under the simplified method, the expected life of an option is presumed to be the mid-point between the vesting date and end of the contractual term. The Company used the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. Expected volatility is based on historical volatilities for publicly traded stock of comparable companies over the estimated expected life of the stock options. The Company assumed no dividend yield because it does not expect to pay dividends in the near future, which is consistent with the Company's history of not paying dividends.
Income Taxes

Deferred income taxes are provided for the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and operating loss carryforwards and credits using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. The Company assesses the likelihood that deferred tax assets will be realized and recognizes a valuation allowance if it is more likely than not that some portion of the deferred tax assets will not be realized. This assessment requires judgment as to the likelihood and amounts of future taxable income by tax jurisdiction. To date, the Company has provided a full valuation allowance against its deferred tax assets as it believes the objective and verifiable evidence of its historical pretax net losses outweighs any positive evidence of its forecasted future results. Although the Company believes that its tax estimates are reasonable, the ultimate tax determination involves significant judgment that is subject to audit by tax authorities in the ordinary course of business. The Company will continue to monitor the positive and negative evidence, and it will adjust the valuation allowance as sufficient objective positive evidence becomes available.

The Company evaluates its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized. Potential interest and penalties associated with any uncertain tax positions are recorded as a component of income tax expense. Through December 31, 2014, the Company has not identified any material uncertain tax positions for which liabilities would be required to be recorded.

Basic and Diluted Net Loss per Common Share

The Company uses the two-class method to compute net loss per common share because the Company has issued securities, other than common stock, that contractually entitle the holders to participate in dividends and earnings of the Company. The two-class method requires earnings for the period to be allocated between common stock and participating securities based upon their respective rights to receive distributed and undistributed earnings. Holders of the Company's Series A, B and C preferred stock are entitled, on a pari passu basis, to receive dividends when, as and if declared by the board of directors, prior and in preference to any declaration or payment of any dividend on the common stock or junior convertible preferred stock until such time as the total dividends paid on each share of Series A, B and C preferred stock is equal to the original issue price of the shares. Holders of junior convertible preferred stock are entitled to receive a pro rata share of any dividend declared, based on the number of shares of common and preferred stock outstanding. As a result, all series of the Company's preferred stock are considered participating securities.

Under the two-class method, for periods with net income, basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Net income attributable to common stockholders is computed by subtracting from net income the portion of current year earnings that the participating securities would have been entitled to receive pursuant to their dividend rights had all of the year's earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the participating securities have no obligation to fund losses. Diluted net income per common share is computed under the two-class method by using the weighted-average number of shares of common stock outstanding plus, for periods with net income attributable to common stockholders, the potential dilutive effects of stock options and warrants. In addition, the Company analyzes the potential dilutive effect of the outstanding participating securities under the if-converted method when calculating diluted earnings per share, in which it is assumed that the outstanding participating securities convert into common stock at the beginning of the period. The Company reports the more dilutive of the approaches as its diluted net income per share during the period.
Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), or ASU 2014-09, which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled to when products are transferred to customers. ASU 2014-09 will be effective for the Company beginning in its first quarter of 2017. Early adoption is not permitted. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the impact of adopting the new revenue standard on its consolidated financial statements.
Summary of Significant Accounting Policies (Tables)
The estimated useful lives of property and equipment are as follows:
Computer hardware and equipment
 
3 - 5 years
Purchased software and licenses
 
3 - 5 years
Furniture and fixtures
 
7 years
Leasehold improvements
 
Lesser of estimated useful life or lease term
The following table sets forth the computations of net loss per share for the periods listed:
 
 
Year ended December 31,
 
 
2014

2013

2012
Numerators:
 
 
 
 
 
 
Loss from continuing operations attributable to common stockholders
 
$
(19,634
)
 
$
(17,676
)
 
$
(7,520
)
Loss from discontinued operations attributable to common stockholders
 

 
(199
)
 
(1,259
)
Net loss attributable to common stockholders
 
$
(19,634
)
 
$
(17,875
)
 
$
(8,779
)
Denominator:
 
 
 
 
 
 
Weighted-average common shares outstanding, basic and diluted
 
29,257

 
11,866

 
11,345

 
 
 
 
 
 
 
Loss from continuing operations per share, basic and diluted
 
$
(0.67
)
 
$
(1.49
)
 
$
(0.66
)
Loss from discontinued operations per share, basic and diluted
 
$

 
$
(0.02
)
 
$
(0.11
)
Net loss per common share, basic and diluted
 
$
(0.67
)
 
$
(1.51
)
 
$
(0.77
)
The following table sets forth the anti-dilutive common share equivalents for the periods listed:
 
 
Year ended December 31,
 
 
2014
 
2013
 
2012
Redeemable convertible preferred stock:
 
 
 
 
 
 
Series A preferred stock
 

 
7,908

 
7,908

Series B preferred stock
 

 
1,818

 
1,818

Series C preferred stock
 

 
2,184

 

Junior preferred stock
 

 
1,251

 
1,251

Stock options and restricted stock units
 
6,139

 
5,422

 
4,765

Total anti-dilutive common share equivalents
 
6,139

 
18,583

 
15,742

Fair Value Measurements (Tables)
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
The following table details the fair value hierarchy of the Company's financial assets measured at fair value on a recurring basis as of December 31, 2014:
 
 
 
 
Fair Value Measurements Using:
Cash Equivalents:
 
Fair Value
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Money market funds
 
$
17,865

 
$
17,865

 
$

 
$

Certificates of deposit
 
1,456

 

 
1,456

 

 
 
$
19,321

 
$
17,865

 
$
1,456

 
$

 
 
 
 
 
 
 
 
 
Investments:
 
Fair Value
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
U.S. government agency bonds
 
$
7,502

 
$

 
$
7,502

 
$

Corporate bonds and commercial paper
 
6,192

 

 
6,192

 

Certificates of deposit
 
7,262

 

 
7,262

 

 
 
$
20,956

 
$

 
$
20,956

 
$

Cash, Cash Equivalents and Investments (Tables)
A summary of the cash equivalents and investments as of December 31, 2014 is as follows:
Cash Equivalents:
 
Amortized Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
Money market funds
 
$
17,865

 
$

 
$

 
$
17,865

Certificates of deposit
 
1,456

 

 

 
1,456

 
 
$
19,321

 
$

 
$

 
$
19,321

 
 
 
 
 
 
 
 
 
Investments:
 
Amortized Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
U.S. government agency bonds
 
$
7,508

 
$

 
$
(6
)
 
$
7,502

Corporate bonds and commercial paper
 
6,200

 

 
(8
)
 
6,192

Certificates of deposit
 
7,262

 

 

 
7,262

 
 
$
20,970

 
$

 
$
(14
)
 
$
20,956


The following table summarizes the estimated fair value of the Company's investments, designated as available-for-sale and classified by the contractual maturity date of the investments as of the dates shown:
 
 
December 31,
 
 
2014
 
2013
Due within one year or less
 
$
9,095

 
$

Due after one year through five years
 
11,861

 

Total
 
$
20,956

 
$

The following table shows the fair values and the gross unrealized losses of these available-for-sale investments aggregated by investment category as of as of December 31, 2014:
 
 
 
Fair Value
 
Gross Unrealized Loss
U.S. government agency bonds
 
$
7,508

 
$
(6
)
Corporate bonds and commercial paper
 
6,200

 
(8
)
Total
 
$
13,708

 
$
(14
)
Deferred Solution and Other Costs (Tables)
Schedule of Deferred Solution and Other Costs
Deferred solution and other costs, current portion and net of current portion, consisted of the following:
 
 
December 31,
 
 
2014
 
2013
Deferred solution costs
 
$
3,585

 
$
2,174

Deferred commissions
 
1,475

 
950

Deferred solution and other costs, current portion
 
$
5,060

 
$
3,124

Deferred solution costs
 
$
1,684

 
$
1,721

Deferred commissions
 
5,475

 
3,637

Deferred solution and other costs, net of current portion
 
$
7,159

 
$
5,358

Property and Equipment (Tables)
Schedule of Property and Equipment
Property and equipment consisted of the following:
 
 
December 31,
 
 
2014
 
2013
Computer hardware and equipment
 
$
13,370

 
$
8,917

Purchased software and licenses
 
5,759

 
3,501

Furniture and fixtures
 
3,116

 
3,014

Leasehold improvements
 
4,064

 
4,020

 
 
26,309

 
19,452

Accumulated depreciation
 
(7,788
)
 
(4,621
)
Property and equipment
 
$
18,521

 
$
14,831

Accrued Liabilities (Tables)
Schedule of Accrued Liabilities
Accrued liabilities consisted of the following:
 
 
December 31,
 
 
2014
 
2013
Accrued data center equipment purchases
 
$
3,228

 
$
512

Accrued data center software purchases
 
1,483

 
467

Accrued transaction processing fees
 
1,537

 
3,761

Accrued professional services
 
730

 
721

Other
 
2,290

 
1,827

Total accrued liabilities
 
$
9,268

 
$
7,288

Commitments and Contingencies (Tables)
Future minimum payments required under capital and operating leases that have initial or remaining non-cancelable lease terms in excess of one year at December 31, 2014 were as follows:
 
 
Capital Leases
 
Operating Leases
Year Ended December 31,
 
 
 
 
2015
 
$
418

 
$
2,054

2016
 
164

 
3,023

2017
 
4

 
3,289

2018
 

 
3,371

2019
 

 
3,453

Thereafter
 

 
13,446

Total minimum lease payments
 
586

 
$
28,636

Less: imputed interest
 
(11
)
 
 
Less: current portion
 
(408
)
 
 
Capital lease obligations, net of current portion
 
$
167

 
 
Future minimum payments required under capital and operating leases that have initial or remaining non-cancelable lease terms in excess of one year at December 31, 2014 were as follows:
 
 
Capital Leases
 
Operating Leases
Year Ended December 31,
 
 
 
 
2015
 
$
418

 
$
2,054

2016
 
164

 
3,023

2017
 
4

 
3,289

2018
 

 
3,371

2019
 

 
3,453

Thereafter
 

 
13,446

Total minimum lease payments
 
586

 
$
28,636

Less: imputed interest
 
(11
)
 
 
Less: current portion
 
(408
)
 
 
Capital lease obligations, net of current portion
 
$
167

 
 
Future minimum contractual commitments that have initial or remaining non-cancelable terms in excess of one year were as follows:
 
 
Contractual Commitments
Year Ended December 31,
 
 
2015
 
$
10,465

2016
 
6,382

2017
 
4,464

2018
 
4,232

2019
 
4,092

Thereafter
 
4,092

Total commitments
 
$
33,727

Stockholders' Equity (Tables)
Schedule of Conversions of Stock
The following table presents the conversion of all classes of stock on March 25, 2014:
 
 
Prior to Conversion
 
Subsequent to Conversion
Convertible preferred stock
 
 
 
 
       Series A
 
7,908

 

       Series B
 
1,818

 

       Series C
 
2,605

 

Redeemable common stock
 
3,829

 

Junior preferred stock
 
1,251

 

Undesignated common stock
 

 
17,412

Stock-Based Compensation (Tables)
The following summarizes the assumptions used for estimating the fair value of stock options granted during the periods indicated:
 
 
Year Ended December 31,
 
 
2014
 
2013
 
2012
Risk-free interest rate
 
1.2 - 1.8%
 
0.7 - 2.2%
 
0.7 - 1.1%
Expected life (in years)
 
3.8 - 6.1
 
4.8 - 6.9
 
4.8 - 6.3
Expected volatility
 
45.1 - 46.8%
 
46.4 - 49.4%
 
52.0 - 52.5%
Dividend yield
 
 
 
Weighted-average grant date fair value per share          
 
$5.63
 
$3.15
 
$2.65
Stock option activity was as follows:
 
 
Number of
Options
 
Weighted
Average
Exercise Price
Balance as of January 1, 2012
 
5,022

 
$
1.12

Granted
 
1,064

 
5.73

Exercised
 
(42
)
 
0.41

Forfeited
 
(312
)
 
1.84

Balance as of December 31, 2012
 
5,732

 
1.94

Granted
 
834

 
7.69

Exercised
 
(738
)
 
0.59

Forfeited
 
(406
)
 
5.31

Balance as of December 31, 2013
 
5,422

 
2.76

Granted
 
2,331

 
10.10

Exercised
 
(1,583
)
 
1.27

Forfeited
 
(59
)
 
7.56

Balance as of December 31, 2014
 
6,111

 
$
5.90

The summary of stock options outstanding as of December 31, 2014 is as follows:
 
 
Options Outstanding
 
Options Exercisable
Range of Exercise Prices
 
Number of
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual Life
(in years)
 
Number of
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual Life
(in years)
$0.29 - $0.35
 
919

 
$
0.33

 
3.2
 
919

 
$
0.33

 
3.2

$0.54 - $0.84
 
477

 
0.72

 
4.8
 
477

 
0.72

 
4.8

$1.74 - $3.10
 
1,094

 
2.80

 
6.3
 
866

 
2.73

 
6.2

$4.00 - $7.82
 
1,312

 
6.89

 
5.6
 
572

 
6.48

 
5.7

$8.35
 
1,737

 
8.35

 
6.1
 

 

 

$13.00 - $19.44
 
572

 
15.41

 
6.7
 
21

 
13.00

 
6.2

 
 
6,111

 
$
5.90

 
5.5
 
2,855

 
$
2.44

 
4.9

The summary of restricted stock unit activity is as follows:
 
 
Number of
Shares
 
Weighted
Average
Grant Date Fair Value
Nonvested as of January 1, 2014
 

 
$

Granted
 
28

 
19.44

Vested
 

 

Forfeited
 

 

Nonvested as of December 31, 2014
 
28

 
$
19.44

Provision for Income Taxes (Tables)
The components of the Company's provision for income taxes from continuing operations were as follows:
 
 
Year Ended December 31,
 
 
2014
 
2013
 
2012
Current taxes:
 
 
 
 
 
 
Federal
 
$

 
$

 
$

State
 
67

 
52

 
162

Total current taxes
 
$
67

 
$
52

 
$
162

Deferred taxes:
 
 
 
 
 
 
Federal
 
$

 
$

 
$

State
 
4

 
3

 
2

Total deferred taxes
 
4

 
3

 
2

Provision for income taxes
 
$
71

 
$
55

 
$
164

The Company's deferred tax assets and deferred tax liabilities were as follows:
 
 
December 31,
 
 
2014
 
2013
Deferred tax assets:
 
 
 
 
NOL and credit carryforwards
 
$
21,328

 
$
16,340

Deferred revenue
 
2,657

 
1,596

Accrued expenses and other
 
3,386

 
3,295

Stock-based compensation
 
1,107

 
209

Total deferred tax assets
 
28,478

 
21,440

Deferred tax liabilities:
 
 
 
 
Deferred expenses
 
(5,128
)
 
(3,924
)
Depreciation and amortization
 
(2,972
)
 
(3,573
)
Total deferred tax liabilities
 
(8,100
)
 
(7,497
)
Deferred tax assets less tax liabilities
 
20,378

 
13,943

Less: valuation allowance
 
(20,266
)
 
(13,828
)
Net deferred tax asset
 
$
112

 
$
115

The Company's provision for income taxes from continuing operations differs from the amount computed by applying the statutory federal income tax rate of 34% primarily as a result of the following:

 
 
Year Ended December 31,
 
 
2014
 
2013
 
2012
Income tax at U.S. statutory rate
 
34.0
 %
 
34.0
 %
 
34.0
 %
Effect of:
 
 
 
 
 
 
Increase in deferred tax valuation allowance
 
(32.9
)
 
(32.7
)
 
(31.5
)
State taxes, net of federal benefit
 
1.5

 
1.4

 
(0.7
)
Other permanent items
 
(3.0
)
 
(3.0
)
 
(4.0
)
Income tax provision effective rate
 
(0.4
)%
 
(0.3
)%
 
(2.2
)%
Selected Quarterly Financial Data (Tables)
Schedule of Quarterly Financial Data
Selected summarized quarterly financial information for the years ended 2014 and 2013 is as follows:
 
 
Three Months Ended
 
 
March 31, 2013
 
June 30, 2013
 
September 30, 2013
 
December 31, 2013
 
March 31, 2014
 
June 30, 2014
 
September 30, 2014
 
December 31, 2014
Revenues
 
$
12,834

 
$
14,044

 
$
14,325

 
$
15,669

 
$
16,834

 
$
19,158

 
$
20,989

 
$
22,148

Cost of revenues
 
7,807

 
8,408

 
9,167

 
10,879

 
10,212

 
10,830

 
12,143

 
12,869

Gross profit
 
5,027

 
5,636

 
5,158

 
4,790

 
6,622

 
8,328

 
8,846

 
9,279

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales and marketing
 
3,060

 
4,138

 
4,599

 
4,929

 
5,509

 
6,032

 
5,642

 
5,886

Research and development
 
1,866

 
2,152

 
2,259

 
2,752

 
2,736

 
2,787

 
3,155

 
3,408

General and administrative
 
2,335

 
2,776

 
3,207

 
3,424

 
3,718

 
4,058

 
4,574

 
4,641

Unoccupied lease charges
 

 
148

 
88

 

 

 

 

 

Total operating expenses
 
7,261

 
9,214

 
10,153

 
11,105

 
11,963

 
12,877

 
13,371

 
13,935

Loss from operations
 
(2,234
)
 
(3,578
)
 
(4,995
)
 
(6,315
)
 
(5,341
)
 
(4,549
)
 
(4,525
)
 
(4,656
)
Total other expense, net
 
(51
)
 
(116
)
 
(170
)
 
(162
)
 
(207
)
 
(119
)
 
(82
)
 
(84
)
Loss before income taxes
 
(2,285
)
 
(3,694
)
 
(5,165
)
 
(6,477
)
 
(5,548
)
 
(4,668
)
 
(4,607
)
 
(4,740
)
Provision for income taxes
 
(5
)
 
(14
)
 
(14
)
 
(22
)
 
(18
)
 
(15
)
 
(18
)
 
(20
)
Loss from continuing operations
 
(2,290
)
 
(3,708
)
 
(5,179
)
 
(6,499
)
 
(5,566
)
 
(4,683
)
 
(4,625
)
 
(4,760
)
Loss from discontinued operations, net of tax
 
(199
)
 

 

 

 

 

 

 

Net loss
 
$
(2,489
)
 
$
(3,708
)
 
$
(5,179
)
 
$
(6,499
)
 
$
(5,566
)
 
$
(4,683
)
 
$
(4,625
)
 
$
(4,760
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of net loss to adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Loss
 
$
(2,489
)
 
$
(3,708
)
 
$
(5,179
)
 
$
(6,499
)
 
$
(5,566
)
 
$
(4,683
)
 
$
(4,625
)
 
$
(4,760
)
       Depreciation and amortization
 
638

 
624

 
809

 
900

 
999

 
1,031

 
1,092

 
961

       Stock-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Cost of revenues
 
61

 
61

 
70

 
72

 
126

 
147

 
159

 
191

            Sales and marketing
 
39

 
60

 
81

 
94

 
167

 
187

 
189

 
231

            Research and development
 
59

 
66

 
64

 
68

 
107

 
122

 
131

 
167

            General and administrative
 
175

 
189

 
197

 
249

 
518

 
612

 
622

 
894

Provision for income taxes
 
5

 
14

 
14

 
22

 
18

 
15

 
18

 
20

Other expense, net
 
51

 
116

 
170

 
162

 
207

 
119

 
82

 
84

Unoccupied lease charge
 

 
148

 
88

 

 

 

 

 

Loss from discontinued operations, net of tax
 
199

 

 

 

 

 

 

 

Adjusted EBITDA
 
$
(1,262
)
 
$
(2,430
)
 
$
(3,686
)
 
$
(4,932
)
 
$
(3,424
)
 
$
(2,450
)
 
$
(2,332
)
 
$
(2,212
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Registered users (1)
 
2,609

 
2,900

 
2,956

 
3,124

 
3,447

 
3,941

 
4,123

 
4,340


(1)Represents registered users at the end of the period.
Organization and Description of Business (Details)
Dec. 31, 2014
Q2 Software, Inc. [Member]
Feb. 28, 2013
cbanc Network, Inc. [Member]
Organization [Line Items]
 
 
Wholly owned subsidiary, ownership percentage
100.00% 
 
Wholly owned subsidiary, ownership percentage, prior to reorganization
 
100.00% 
Summary of Significant Accounting Policies (Details) (USD $)
Share data in Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Property, Plant and Equipment [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Unbilled receivables
$ 2,300,000 
 
 
 
$ 1,800,000 
 
 
 
$ 2,300,000 
$ 1,800,000 
 
Allowance for sales credits
200,000 
 
 
 
100,000 
 
 
 
200,000 
100,000 
 
Deferred commissions
7,000,000 
 
 
 
4,600,000 
 
 
 
7,000,000 
4,600,000 
 
Property and Equipment [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Revenues recorded from out-of-pocket expense reimbursements
 
 
 
 
 
 
 
 
800,000 
500,000 
400,000 
Research and development
3,408,000 
3,155,000 
2,787,000 
2,736,000 
2,752,000 
2,259,000 
2,152,000 
1,866,000 
12,086,000 1
9,029,000 1
5,317,000 
Capitalized implementation costs
 
 
 
 
 
 
 
 
3,800,000 
3,200,000 
2,600,000 
Advertising costs
 
 
 
 
 
 
 
 
500,000 
300,000 
 
Numerator: [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Loss from continuing operations attributable to common stockholders
(4,760,000)
(4,625,000)
(4,683,000)
(5,566,000)
(6,499,000)
(5,179,000)
(3,708,000)
(2,290,000)
(19,634,000)
(17,676,000)
(7,520,000)
Loss from discontinued operations attributable to common stockholders
(199,000)
(199,000)
(1,259,000)
Net loss
(4,760,000)
(4,625,000)
(4,683,000)
(5,566,000)
(6,499,000)
(5,179,000)
(3,708,000)
(2,489,000)
(19,634,000)
(17,875,000)
(8,779,000)
Denominator: [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding, basic and diluted (shares)
 
 
 
 
 
 
 
 
29,257 
11,866 
11,345 
Loss from continuing operations per share, basic and diluted (dollars per share)
 
 
 
 
 
 
 
 
$ (0.67)
$ (1.49)
$ (0.66)
Loss from discontinued operations per share, basic and diluted (dollars per share)
 
 
 
 
 
 
 
 
$ 0.00 
$ (0.02)
$ (0.11)
Net loss per common share, basic and diluted (dollars per share)
 
 
 
 
 
 
 
 
$ (0.67)
$ (1.51)
$ (0.77)
Antidilutive securities excluded from computation of loss per share (shares)
 
 
 
 
 
 
 
 
6,139 
18,583 
15,742 
Computer hardware and equipment [Member] |
Minimum [Member]
 
 
 
 
 
 
 
 
 
 
 
Property and Equipment [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Estimated useful life
 
 
 
 
 
 
 
 
3 years 
 
 
Computer hardware and equipment [Member] |
Maximum [Member]
 
 
 
 
 
 
 
 
 
 
 
Property and Equipment [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Estimated useful life
 
 
 
 
 
 
 
 
5 years 
 
 
Purchased software and licenses [Member] |
Minimum [Member]
 
 
 
 
 
 
 
 
 
 
 
Property and Equipment [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Estimated useful life
 
 
 
 
 
 
 
 
3 years 
 
 
Purchased software and licenses [Member] |
Maximum [Member]
 
 
 
 
 
 
 
 
 
 
 
Property and Equipment [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Estimated useful life
 
 
 
 
 
 
 
 
5 years 
 
 
Furniture and fixtures [Member]
 
 
 
 
 
 
 
 
 
 
 
Property and Equipment [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Estimated useful life
 
 
 
 
 
 
 
 
7 years 
 
 
Cost of revenues [Member]
 
 
 
 
 
 
 
 
 
 
 
Property and Equipment [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Research and development
 
 
 
 
 
 
 
 
$ 1,400,000 
$ 1,600,000 
$ 1,400,000 
Series A Preferred Stock [Member]
 
 
 
 
 
 
 
 
 
 
 
Denominator: [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Antidilutive securities excluded from computation of loss per share (shares)
 
 
 
 
 
 
 
 
7,908 
7,908 
Series B Preferred Stock [Member]
 
 
 
 
 
 
 
 
 
 
 
Denominator: [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Antidilutive securities excluded from computation of loss per share (shares)
 
 
 
 
 
 
 
 
1,818 
1,818 
Series C Preferred Stock [Member]
 
 
 
 
 
 
 
 
 
 
 
Denominator: [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Antidilutive securities excluded from computation of loss per share (shares)
 
 
 
 
 
 
 
 
2,184 
Junior Preferred Stock [Member]
 
 
 
 
 
 
 
 
 
 
 
Denominator: [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Antidilutive securities excluded from computation of loss per share (shares)
 
 
 
 
 
 
 
 
1,251 
1,251 
Stock options [Member]
 
 
 
 
 
 
 
 
 
 
 
Denominator: [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Antidilutive securities excluded from computation of loss per share (shares)
 
 
 
 
 
 
 
 
6,139 
5,422 
4,765 
Stock options [Member]
 
 
 
 
 
 
 
 
 
 
 
Stock-Based Compensation [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Option vesting percentage on first anniversary of grant date
 
 
 
 
 
 
 
 
25.00% 
 
 
Period of monthly vesting of options after first anniversary of grant date
 
 
 
 
 
 
 
 
36 months 
 
 
Fair Value Measurements (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2014
Fair Value, Measurements, Recurring [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Cash and Cash Equivalents, Fair Value
$ 19,321 
Investments, Fair Value
20,956 
Fair Value, Measurements, Recurring [Member] |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Cash and Cash Equivalents, Fair Value
17,865 
Investments, Fair Value
Fair Value, Measurements, Recurring [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Cash and Cash Equivalents, Fair Value
1,456 
Investments, Fair Value
20,956 
Fair Value, Measurements, Recurring [Member] |
Significant Unobservable Inputs (Level 3) [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Cash and Cash Equivalents, Fair Value
Investments, Fair Value
US government agency bonds [Member] |
Fair Value, Measurements, Recurring [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Investments, Fair Value
7,502 
US government agency bonds [Member] |
Fair Value, Measurements, Recurring [Member] |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Investments, Fair Value
US government agency bonds [Member] |
Fair Value, Measurements, Recurring [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Investments, Fair Value
7,502 
US government agency bonds [Member] |
Fair Value, Measurements, Recurring [Member] |
Significant Unobservable Inputs (Level 3) [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Investments, Fair Value
Corporate bonds and commercial paper [Member] |
Fair Value, Measurements, Recurring [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Investments, Fair Value
6,192 
Corporate bonds and commercial paper [Member] |
Fair Value, Measurements, Recurring [Member] |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Investments, Fair Value
Corporate bonds and commercial paper [Member] |
Fair Value, Measurements, Recurring [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Investments, Fair Value
6,192 
Corporate bonds and commercial paper [Member] |
Fair Value, Measurements, Recurring [Member] |
Significant Unobservable Inputs (Level 3) [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Investments, Fair Value
Certificates of deposits [Member] |
Fair Value, Measurements, Recurring [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Investments, Fair Value
7,262 
Certificates of deposits [Member] |
Fair Value, Measurements, Recurring [Member] |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Investments, Fair Value
Certificates of deposits [Member] |
Fair Value, Measurements, Recurring [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Investments, Fair Value
7,262 
Certificates of deposits [Member] |
Fair Value, Measurements, Recurring [Member] |
Significant Unobservable Inputs (Level 3) [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Investments, Fair Value
Money market funds [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Cash and Cash Equivalents, Fair Value
17,865 
Money market funds [Member] |
Fair Value, Measurements, Recurring [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Cash and Cash Equivalents, Fair Value
17,865 
Money market funds [Member] |
Fair Value, Measurements, Recurring [Member] |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Cash and Cash Equivalents, Fair Value
17,865 
Money market funds [Member] |
Fair Value, Measurements, Recurring [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Cash and Cash Equivalents, Fair Value
Money market funds [Member] |
Fair Value, Measurements, Recurring [Member] |
Significant Unobservable Inputs (Level 3) [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Cash and Cash Equivalents, Fair Value
Certificates of deposits [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Cash and Cash Equivalents, Fair Value
1,456 
Certificates of deposits [Member] |
Fair Value, Measurements, Recurring [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Cash and Cash Equivalents, Fair Value
1,456 
Certificates of deposits [Member] |
Fair Value, Measurements, Recurring [Member] |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Cash and Cash Equivalents, Fair Value
Certificates of deposits [Member] |
Fair Value, Measurements, Recurring [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Cash and Cash Equivalents, Fair Value
1,456 
Certificates of deposits [Member] |
Fair Value, Measurements, Recurring [Member] |
Significant Unobservable Inputs (Level 3) [Member]
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
Cash and Cash Equivalents, Fair Value
$ 0 
Cash, Cash Equivalents and Investments (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Cash and Cash Equivalents, Amortized Cost
$ 67,979 
$ 18,675 
$ 9,111 
$ 15,363 
Investments, Amortized Cost
20,970 
 
 
 
Investments, Unrealized Gains
 
 
 
Investments, Unrealized Losses
(14)
 
 
 
Investments, Fair Value
20,956 
 
 
 
Cash [Member]
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Cash and Cash Equivalents, Amortized Cost
48,700 
18,700 
 
 
Cash Equivalents [Member]
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Cash and Cash Equivalents, Amortized Cost
19,321 
 
 
 
Cash and Cash Equivalents, Fair Value
19,321 
 
 
 
Money market funds [Member]
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Cash and Cash Equivalents, Amortized Cost
17,865 
 
 
 
Cash and Cash Equivalents, Fair Value
17,865 
 
 
 
Certificates of Deposit [Member]
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Cash and Cash Equivalents, Amortized Cost
1,456 
 
 
 
Cash and Cash Equivalents, Fair Value
1,456 
 
 
 
US government agency bonds [Member]
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Investments, Amortized Cost
7,508 
 
 
 
Investments, Unrealized Gains
 
 
 
Investments, Unrealized Losses
(6)
 
 
 
Investments, Fair Value
7,502 
 
 
 
Corporate bonds and commercial paper [Member]
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Investments, Amortized Cost
6,200 
 
 
 
Investments, Unrealized Gains
 
 
 
Investments, Unrealized Losses
(8)
 
 
 
Investments, Fair Value
6,192 
 
 
 
Certificates of Deposit [Member]
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Investments, Amortized Cost
7,262 
 
 
 
Investments, Unrealized Gains
 
 
 
Investments, Unrealized Losses
 
 
 
Investments, Fair Value
$ 7,262 
 
 
 
Cash, Cash Equivalents and Investments - Contractual Maturities (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Cash and Cash Equivalents [Abstract]
 
 
Due within one year or less
$ 9,095 
$ 0 
Due after one year through five years
11,861 
Total
$ 20,956 
$ 0 
Cash, Cash Equivalents and Investments - Securities in Continuous Loss Position (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
 
Fair Value
$ 13,708 
Gross Unrealized Loss
(14)
US government agency bonds [Member]
 
Schedule of Available-for-sale Securities [Line Items]
 
Fair Value
7,508 
Gross Unrealized Loss
(6)
Corporate bonds and commercial paper [Member]
 
Schedule of Available-for-sale Securities [Line Items]
 
Fair Value
6,200 
Gross Unrealized Loss
$ (8)
Deferred Solution and Other Costs (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
 
 
Deferred solution costs
$ 3,585 
$ 2,174 
Deferred commissions
1,475 
950 
Deferred solution and other costs, current portion
5,060 
3,124 
Deferred solution costs
1,684 
1,721 
Deferred commissions
5,475 
3,637 
Deferred solution and other costs, net of current portion
$ 7,159 
$ 5,358 
Property and Equipment (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Property, Plant and Equipment [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Property and equipment, gross
$ 26,309 
 
 
 
$ 19,452 
 
 
 
$ 26,309 
$ 19,452 
 
Accumulated depreciation
(7,788)
 
 
 
(4,621)
 
 
 
(7,788)
(4,621)
 
Property and equipment
18,521 
 
 
 
14,831 
 
 
 
18,521 
14,831 
 
Depreciation and amortization
961 
1,092 
1,031 
999 
900 
809 
624 
638 
4,083 
2,971 
1,697 
Fixed Assets [Member]
 
 
 
 
 
 
 
 
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
 
 
 
 
 
 
 
4,000 
2,900 
1,500 
Computer hardware and equipment [Member]
 
 
 
 
 
 
 
 
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Property and equipment, gross
13,370 
 
 
 
8,917 
 
 
 
13,370 
8,917 
 
Purchased software and licenses [Member]
 
 
 
 
 
 
 
 
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Property and equipment, gross
5,759 
 
 
 
3,501 
 
 
 
5,759 
3,501 
 
Furniture and fixtures [Member]
 
 
 
 
 
 
 
 
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Property and equipment, gross
3,116 
 
 
 
3,014 
 
 
 
3,116 
3,014 
 
Leasehold improvements [Member]
 
 
 
 
 
 
 
 
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Property and equipment, gross
4,064 
 
 
 
4,020 
 
 
 
4,064 
4,020 
 
Assets acquired under capital leases [Member]
 
 
 
 
 
 
 
 
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Property and equipment, gross
 
 
 
 
$ 3,200 
 
 
 
 
$ 3,200 
 
Accrued Liabilities (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Payables and Accruals [Abstract]
 
 
Accrued data center equipment purchases
$ 3,228 
$ 512 
Accrued data center software purchases
1,483 
467 
Accrued transaction processing fees
1,537 
3,761 
Accrued professional services
730 
721 
Other
2,290 
1,827 
Total accrued liabilities
$ 9,268 
$ 7,288 
Debt (Details) (USD $)
12 Months Ended 0 Months Ended 1 Months Ended 12 Months Ended 0 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Sep. 5, 2014
Line of Credit [Member]
2013 Secured Credit Facility [Member]
Wells Fargo [Member]
Apr. 22, 2014
Line of Credit [Member]
2013 Secured Credit Facility [Member]
Wells Fargo [Member]
Mar. 17, 2014
Line of Credit [Member]
2013 Secured Credit Facility [Member]
Wells Fargo [Member]
Feb. 26, 2014
Line of Credit [Member]
2013 Secured Credit Facility [Member]
Wells Fargo [Member]
Jun. 30, 2013
Line of Credit [Member]
2013 Secured Credit Facility [Member]
Wells Fargo [Member]
Apr. 30, 2013
Line of Credit [Member]
2013 Secured Credit Facility [Member]
Wells Fargo [Member]
annual_installment
Dec. 31, 2014
Line of Credit [Member]
2013 Secured Credit Facility [Member]
Wells Fargo [Member]
Aug. 11, 2014
Line of Credit [Member]
2013 Secured Credit Facility [Member]
Wells Fargo [Member]
Aug. 11, 2014
Line of Credit [Member]
2013 Secured Credit Facility [Member]
U.S. Federal Funds Rate [Member]
Wells Fargo [Member]
Aug. 11, 2014
Line of Credit [Member]
2013 Secured Credit Facility [Member]
One Month LIBOR [Member]
Wells Fargo [Member]
Dec. 31, 2014
Letter of Credit [Member]
2013 Secured Credit Facility [Member]
Wells Fargo [Member]
Jun. 30, 2013
Letter of Credit [Member]
2013 Secured Credit Facility [Member]
Wells Fargo [Member]
Oct. 31, 2016
Scenario, Forecast [Member]
Line of Credit [Member]
2013 Secured Credit Facility [Member]
Wells Fargo [Member]
Line of Credit Facility [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repayments of Lines of Credit
$ 18,710,000 
$ 2,682,000 
$ 0 
$ 2,000,000 
$ 4,200,000 
$ 12,500,000 
 
 
 
 
 
 
 
 
 
 
Line of credit facility, increase to borrowing capacity
 
 
 
 
 
 
 
 
 
 
25,000,000.0 
 
 
 
 
 
Line of credit facility, maximum borrowing capacity
 
 
 
 
 
 
 
 
25,000,000.0 
 
 
 
 
 
 
25,000,000.0 
Basis spread on variable interest rate
 
 
 
 
 
 
 
 
 
 
 
1.00% 
1.00% 
 
 
 
Fixed interest rate
 
 
 
 
 
 
 
 
 
4.70% 
 
 
 
 
 
 
Line of credit facility, maximum borrowing capacity as a percentage of the Company's trailing twelve-month recurring revenues
 
 
 
 
 
 
 
 
 
 
75.00% 
 
 
 
 
 
Line of credit facility, initial closing fee, number of annual installments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Period of repayment for initial closing fee on line of credit facility
 
 
 
 
 
 
 
 
 
3 years 
 
 
 
 
 
 
Advances on line of credit
12,500,000 
6,350,000 
 
 
 
12,500,000 
3,900,000 
2,500,000 
 
 
 
 
 
 
 
Secured letters of credit amount
 
 
 
 
 
 
 
 
 
 
 
 
 
3,000,000 
3,000,000 
 
Available balance on line of credit facility
 
 
 
 
 
 
 
 
 
$ 22,000,000 
 
 
 
 
 
 
Commitments and Contingencies (Details) (USD $)
3 Months Ended 12 Months Ended 0 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Jul. 18, 2014
CREF Aspen Lake Building II, LLC [Member]
Lease Agreements [Member]
Jul. 18, 2014
CREF Aspen Lake Building II, LLC [Member]
Lease Agreements [Member]
sqft
Jul. 18, 2014
CREF Aspen Lake Building II, LLC [Member]
Lease Agreement, First Phase [Member]
sqft
Long-term Purchase Commitment [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rent expense under operating leases
 
 
 
 
 
 
 
 
$ 1,000,000 
$ 1,400,000 
$ 900,000 
 
 
 
Unoccupied lease charges
88,000 
148,000 
236,000 
 
 
 
Rentable square feet
 
 
 
 
 
 
 
 
 
 
 
 
70,000 
55,000 
Initial term of lease contract
 
 
 
 
 
 
 
 
 
 
 
124 months 
 
 
Renewal term of lease contract
 
 
 
 
 
 
 
 
 
 
 
5 years 
 
 
Initial monthly rent
 
 
 
 
 
 
 
 
 
 
 
98,000 
 
 
Final monthly rent
 
 
 
 
 
 
 
 
 
 
 
$ 160,000 
 
 
Period over which final monthly rent applies
 
 
 
 
 
 
 
 
 
 
 
4 months 
 
 
Commitments and Contingencies - Future Minimum Payments for Capital and Operating Leases (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Capital Leases
 
 
2015
$ 418 
 
2016
164 
 
2017
 
2018
 
2019
 
Thereafter
 
Total minimum lease payments
586 
 
Less: imputed interest
(11)
 
Less: current portion
(408)
(714)
Capital lease obligations, net of current portion
167 
575 
Operating Leases
 
 
2015
2,054 
 
2016
3,023 
 
2017
3,289 
 
2018
3,371 
 
2019
3,453 
 
Thereafter
13,446 
 
Total minimum lease payments
$ 28,636 
 
Commitments and Contingencies - Future Minimum Payments for Contractual Commitments (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2014
Contractual Commitments
 
2015
$ 10,465 
2016
6,382 
2017
4,464 
2018
4,232 
2019
4,092 
Thereafter
4,092 
Total commitments
$ 33,727 
Stockholders' Equity (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
0 Months Ended 12 Months Ended 0 Months Ended 0 Months Ended
Mar. 25, 2014
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Mar. 25, 2014
Mar. 25, 2014
Series A Preferred Stock [Member]
Mar. 25, 2014
Series B Preferred Stock [Member]
Mar. 25, 2014
Series C Preferred Stock [Member]
Apr. 2, 2014
Common Stock [Member]
Mar. 25, 2014
Common Stock [Member]
Mar. 25, 2014
Common Stock [Member]
Mar. 25, 2014
Junior Convertible Preferred Stock [Member]
Class of Stock [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Share issued in initial public offering (shares)
 
 
 
 
 
 
 
 
1,164,000 
7,761,000 
 
 
Share price (dollars per share)
 
 
 
 
 
 
 
 
 
 
$ 13.00 
 
Shares sold by selling shareholders (shares)
 
 
 
 
 
 
 
 
 
1,511,000 
 
 
Proceeds from the issuance of common stock, net of issuance costs
$ 72,600 
$ 86,286 
$ 0 
$ 0 
 
 
 
 
$ 13,700 
 
 
 
Convertible stock, shares issued upon conversion
 
 
 
 
 
 
 
 
 
 
 
Conversion of Common and Preferred Stock [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Conversion of stock, shares converted
 
 
 
 
 
7,908,000 
1,818,000 
2,605,000 
 
3,829,000 
 
1,251,000 
Undesignated common stock, subsequent to conversion
 
 
 
 
 
 
 
 
 
17,412,000 
 
 
Stock-Based Compensation (Details) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended 1 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Mar. 31, 2014
2014 Stock Plan [Member]
Dec. 31, 2014
2014 Stock Plan [Member]
Mar. 31, 2014
2007 Stock Plan [Member]
Feb. 28, 2014
2007 Stock Plan [Member]
Dec. 31, 2014
2007 Stock Plan [Member]
Dec. 31, 2014
Stock options [Member]
Dec. 31, 2014
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
Initial reserve of shares under the plan
 
 
 
1,850,000 
 
 
 
 
 
 
Additional shares authorized under the plan, percentage increase
 
 
 
4.50% 
 
 
 
 
 
 
Shares reserved for future issuance
 
 
 
1,957,000 
 
 
 
9,172,000 
 
 
Granted (shares)
2,331,000 
834,000 
1,064,000 
 
606,000 
 
 
 
 
 
Shares available for future issuance under the plan
 
 
 
2,006,000 
1,407,000 
 
 
 
 
 
Additional shares authorized under the plan
 
 
 
 
 
 
1,400,000 
 
 
 
Shares transferred to new plan
 
 
 
 
 
107,000 
 
 
 
 
Shares transferred from the previous plan that expired or terminated
 
 
 
49,000 
7,000 
 
 
 
 
 
Aggregate intrinsic value of options exercised in period
$ 17.3 
$ 4.8 
$ 0.2 
 
 
 
 
 
 
 
Total fair market value of stock options vested during the period
2.2 
1.2 
0.8 
 
 
 
 
 
 
 
Unrecognized stock-based compensation expense, related to stock options
14.0 
 
 
 
 
 
 
 
 
 
Unrecognized stock-based compensation, related to stock options, period for recognition
 
 
 
 
 
 
 
 
3 years 
3 years 10 months 24 days 
Unrecognized stock-based compensation expense, related to restricted stock
 
 
 
 
 
 
 
 
 
$ 0.5 
Stock-Based Compensation - Assumptions Used in Estimating Fair Value of Options Granted (Details)
3 Months Ended 12 Months Ended
Sep. 30, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Risk-free interest rate, minimum
 
1.20% 
0.70% 
0.70% 
Risk-free interest rate, maximum
 
1.80% 
2.20% 
1.10% 
Expected volatility, minimum
 
45.10% 
46.40% 
52.00% 
Expected volatility, maximum
 
46.80% 
49.40% 
52.50% 
Dividend yield
0.00% 
0.00% 
0.00% 
 
Weighted-average grant date fair value per share (dollars per share)
$ 5.63 
$ 3.15 
$ 2.65 
 
Minimum [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Expected life (years)
 
3 years 9 months 18 days 
4 years 9 months 18 days 
4 years 9 months 18 days 
Maximum [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Expected life (years)
 
6 years 1 month 6 days 
6 years 10 months 24 days 
6 years 3 months 18 days 
Stock-Based Compensation - Stock Option Activity (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Number of Options (in shares)
 
 
 
Beginning balance
5,422 
5,732 
5,022 
Granted
2,331 
834 
1,064 
Exercised
(1,583)
(738)
(42)
Forfeited
(59)
(406)
(312)
Ending balance
6,111 
5,422 
5,732 
Weighted Average Exercise Price (dollars per share)
 
 
 
Options outstanding, beginning
$ 2.76 
$ 1.94 
$ 1.12 
Granted
$ 10.10 
$ 7.69 
$ 5.73 
Exercised
$ 1.27 
$ 0.59 
$ 0.41 
Forfeited
$ 7.56 
$ 5.31 
$ 1.84 
Options outstanding, ending
$ 5.90 
$ 2.76 
$ 1.94 
Stock-Based Compensation Stock Options by Range of Exercise Prices (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Options outstanding (shares)
6,111 
Options outstanding (weighted average exercise price per share)
$ 5.90 
Options outstanding (weighted average remaining contractual life in years)
5 years 6 months 
Options exercisable (shares)
2,855 
Options exercisable (weighted average exercise price per share)
$ 2.44 
Options exercisable (weighted average remaining contractual life in years)
4 years 10 months 24 days 
$0.29 - $0.35 [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Exercise price range, lower range limit
$ 0.29 
Exercise price range, upper range limit
$ 0.35 
Options outstanding (shares)
919 
Options outstanding (weighted average exercise price per share)
$ 0.33 
Options outstanding (weighted average remaining contractual life in years)
3 years 2 months 12 days 
Options exercisable (shares)
919 
Options exercisable (weighted average exercise price per share)
$ 0.33 
Options exercisable (weighted average remaining contractual life in years)
3 years 2 months 12 days 
$0.54 - $0.84 [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Exercise price range, lower range limit
$ 0.54 
Exercise price range, upper range limit
$ 0.84 
Options outstanding (shares)
477 
Options outstanding (weighted average exercise price per share)
$ 0.72 
Options outstanding (weighted average remaining contractual life in years)
4 years 9 months 18 days 
Options exercisable (shares)
477 
Options exercisable (weighted average exercise price per share)
$ 0.72 
Options exercisable (weighted average remaining contractual life in years)
4 years 9 months 18 days 
$1.74 - $3.10 [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Exercise price range, lower range limit
$ 1.74 
Exercise price range, upper range limit
$ 3.10 
Options outstanding (shares)
1,094 
Options outstanding (weighted average exercise price per share)
$ 2.80 
Options outstanding (weighted average remaining contractual life in years)
6 years 3 months 18 days 
Options exercisable (shares)
866 
Options exercisable (weighted average exercise price per share)
$ 2.73 
Options exercisable (weighted average remaining contractual life in years)
6 years 2 months 12 days 
$4.00 - $7.82 [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Exercise price range, lower range limit
$ 4.00 
Exercise price range, upper range limit
$ 7.82 
Options outstanding (shares)
1,312 
Options outstanding (weighted average exercise price per share)
$ 6.89 
Options outstanding (weighted average remaining contractual life in years)
5 years 7 months 6 days 
Options exercisable (shares)
572 
Options exercisable (weighted average exercise price per share)
$ 6.48 
Options exercisable (weighted average remaining contractual life in years)
5 years 8 months 12 days 
$8.35 [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Exercise price range, lower range limit
$ 8.35 
Exercise price range, upper range limit
$ 8.35 
Options outstanding (shares)
1,737 
Options outstanding (weighted average exercise price per share)
$ 8.35 
Options outstanding (weighted average remaining contractual life in years)
6 years 1 month 6 days 
Options exercisable (shares)
Options exercisable (weighted average exercise price per share)
$ 0.00 
Options exercisable (weighted average remaining contractual life in years)
0 years 
$13.00 - $19.44 [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Exercise price range, lower range limit
$ 13.00 
Exercise price range, upper range limit
$ 19.44 
Options outstanding (shares)
572 
Options outstanding (weighted average exercise price per share)
$ 15.41 
Options outstanding (weighted average remaining contractual life in years)
6 years 8 months 12 days 
Options exercisable (shares)
21 
Options exercisable (weighted average exercise price per share)
$ 13.00 
Options exercisable (weighted average remaining contractual life in years)
6 years 2 months 12 days 
Stock-Based Compensation - Restricted Stock Activity (Details) (Restricted Stock [Member], USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Restricted Stock [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Vesting period
4 years 
 
Number of Nonvested Shares (shares)
 
 
Nonvested, beginning
 
Granted
28 
 
Nonvested, ending
28 
 
Nonvested Shares, Weighted Average Grant Date Fair Value (dollars per share)
 
 
Nonvested, beginning
$ 19.44 
$ 0.00 
Granted
$ 19.44 
 
Nonvested, ending
$ 19.44 
$ 0.00 
Provision for Income Taxes - Components of Income Tax Provision (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Current taxes: [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Federal
 
 
 
 
 
 
 
 
$ 0 
$ 0 
$ 0 
State
 
 
 
 
 
 
 
 
67 
52 
162 
Total current taxes
 
 
 
 
 
 
 
 
67 
52 
162 
Deferred taxes:
 
 
 
 
 
 
 
 
 
 
 
Federal
 
 
 
 
 
 
 
 
State
 
 
 
 
 
 
 
 
Total deferred taxes
 
 
 
 
 
 
 
 
Provision for income taxes
$ 20 
$ 18 
$ 15 
$ 18 
$ 22 
$ 14 
$ 14 
$ 5 
$ 71 
$ 55 
$ 164 
Provision for Income Taxes - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Federal [Member]
 
Operating Loss Carryforwards [Line Items]
 
Net operating loss carryforwards
$ 69.9 
State [Member]
 
Operating Loss Carryforwards [Line Items]
 
Tax credits
0.2 
Alternative Minimum Tax Credit Carryforward [Member] |
Federal [Member]
 
Operating Loss Carryforwards [Line Items]
 
Tax credits
$ 0.1 
Provision for Income Taxes - Deferred Tax Assets and Liabilities (Details) (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2014
Income Tax Disclosure [Abstract]
 
 
Increase in valuation allowance
$ 6,400,000 
 
Deferred tax assets:
 
 
NOL and credit carryforwards
16,340,000 
21,328,000 
Deferred revenue
1,596,000 
2,657,000 
Accrued expenses and other
3,295,000 
3,386,000 
Stock-based compensation
209,000 
1,107,000 
Total deferred tax assets
21,440,000 
28,478,000 
Deferred tax liabilities:
 
 
Deferred expenses
(3,924,000)
(5,128,000)
Depreciation and amortization
(3,573,000)
(2,972,000)
Total deferred tax liabilities
(7,497,000)
(8,100,000)
Deferred tax assets less tax liabilities
13,943,000 
20,378,000 
Less: valuation allowance
(13,828,000)
(20,266,000)
Net deferred tax asset
115,000 
112,000 
Excess stock deductions excluded from deferred tax assets
$ 9,900,000 
 
Provision for Income Taxes - Income Tax Rate Reconciliation (Details)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Income Tax Disclosure [Abstract]
 
 
 
Statutory Federal income tax rate, percent
34.00% 
34.00% 
34.00% 
Increase in deferred tax valuation allowance, percent
(32.90%)
(32.70%)
(31.50%)
State taxes, net of federal benefit, percent
1.50% 
1.40% 
(0.70%)
Other permanent items, percent
(3.00%)
(3.00%)
(4.00%)
Income tax provision effective rate, percent
(0.40%)
(0.30%)
(2.20%)
Employee Benefit Plan (Details)
12 Months Ended
Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract]
 
401(K) Plan, minimum annual contributions per employee, percent of total earnings
1.00% 
401 (K) Plan, maximum annual contributions per employee, percent of total earnings
90.00% 
Related Parties (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Related Party Transactions [Abstract]
 
 
 
Revenue from a related-party customer
$ 0.4 
$ 0.3 
$ 0.3 
Related party expenses, professional services
 
 
$ 0.1 
Selected Quarterly Financial Data (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Quarterly Financial Information Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Revenues
$ 22,148 
$ 20,989 
$ 19,158 
$ 16,834 
$ 15,669 
$ 14,325 
$ 14,044 
$ 12,834 
$ 79,129 
$ 56,872 
$ 41,101 
Cost of revenues
12,869 
12,143 
10,830 
10,212 
10,879 
9,167 
8,408 
7,807 
46,054 1
36,261 1
25,170 
Gross profit
9,279 
8,846 
8,328 
6,622 
4,790 
5,158 
5,636 
5,027 
33,075 
20,611 
15,931 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Sales and marketing
5,886 
5,642 
6,032 
5,509 
4,929 
4,599 
4,138 
3,060 
23,069 1
16,726 1
8,962 
Research and development
3,408 
3,155 
2,787 
2,736 
2,752 
2,259 
2,152 
1,866 
12,086 1
9,029 1
5,317 
General and administrative
4,641 
4,574 
4,058 
3,718 
3,424 
3,207 
2,776 
2,335 
16,991 1
11,742 1
8,780 
Unoccupied lease charges
88 
148 
236 
Total operating expenses
13,935 
13,371 
12,877 
11,963 
11,105 
10,153 
9,214 
7,261 
52,146 
37,733 
23,059 
Loss from operations
(4,656)
(4,525)
(4,549)
(5,341)
(6,315)
(4,995)
(3,578)
(2,234)
(19,071)
(17,122)
(7,128)
Other income (expense):
 
 
 
 
 
 
 
 
 
 
 
Total other expense, net
(84)
(82)
(119)
(207)
(162)
(170)
(116)
(51)
(492)
(499)
(228)
Loss before income taxes
(4,740)
(4,607)
(4,668)
(5,548)
(6,477)
(5,165)
(3,694)
(2,285)
(19,563)
(17,621)
(7,356)
Provision for income taxes
(20)
(18)
(15)
(18)
(22)
(14)
(14)
(5)
(71)
(55)
(164)
Loss from continuing operations attributable to common stockholders
(4,760)
(4,625)
(4,683)
(5,566)
(6,499)
(5,179)
(3,708)
(2,290)
(19,634)
(17,676)
(7,520)
Loss from discontinued operations, net of tax
(199)
(199)
(1,259)
Net loss
$ (4,760)
$ (4,625)
$ (4,683)
$ (5,566)
$ (6,499)
$ (5,179)
$ (3,708)
$ (2,489)
$ (19,634)
$ (17,875)
$ (8,779)
Selected Quarterly Financial Data - Reconciliation of EBITDA (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
registered_user
Sep. 30, 2014
registered_user
Jun. 30, 2014
registered_user
Mar. 31, 2014
registered_user
Dec. 31, 2013
registered_user
Sep. 30, 2013
registered_user
Jun. 30, 2013
registered_user
Mar. 31, 2013
registered_user
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Net loss
$ (4,760)
$ (4,625)
$ (4,683)
$ (5,566)
$ (6,499)
$ (5,179)
$ (3,708)
$ (2,489)
$ (19,634)
$ (17,875)
$ (8,779)
Depreciation and amortization
961 
1,092 
1,031 
999 
900 
809 
624 
638 
4,083 
2,971 
1,697 
Stock-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expenses
 
 
 
 
 
 
 
 
4,570 
1,605 
1,031 
Provision for income taxes
20 
18 
15 
18 
22 
14 
14 
71 
55 
164 
Other expense, net
84 
82 
119 
207 
162 
170 
116 
51 
492 
499 
228 
Unoccupied lease charges
88 
148 
236 
Loss from discontinued operations
199 
199 
1,259 
Adjusted EBITDA
(2,212)
(2,332)
(2,450)
(3,424)
(4,932)
(3,686)
(2,430)
(1,262)
 
 
 
Registered users
4,340,000 
4,123,000 
3,941,000 
3,447,000 
3,124,000 
2,956,000 
2,900,000 
2,609,000 
 
 
 
Cost of revenues [Member]
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expenses
191 
159 
147 
126 
72 
70 
61 
61 
623 
264 
187 
Sales and marketing [Member]
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expenses
231 
189 
187 
167 
94 
81 
60 
39 
774 
274 
123 
Research and development [Member]
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expenses
167 
131 
122 
107 
68 
64 
66 
59 
527 
257 
195 
General and administrative [Member]
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expenses
$ 894 
$ 622 
$ 612 
$ 518 
$ 249 
$ 197 
$ 189 
$ 175 
$ 2,646 
$ 810 
$ 526