CASTLIGHT HEALTH, INC., 10-Q filed on 5/12/2015
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2015
May 8, 2015
Class A [Member]
May 8, 2015
Class B [Member]
Class of Stock [Line Items]
 
 
 
Document Type
10-Q 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Mar. 31, 2015 
 
 
Document Fiscal Year Focus
2015 
 
 
Document Fiscal Period Focus
Q1 
 
 
Trading Symbol
CSLT 
 
 
Entity Registrant Name
CASTLIGHT HEALTH, INC. 
 
 
Entity Central Index Key
0001433714 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Non-accelerated Filer 
 
 
Entity Common Stock, Shares Outstanding
 
58,411,009 
35,362,942 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Current assets:
 
 
Cash and cash equivalents
$ 27,041 
$ 17,425 
Marketable securities
158,730 
175,057 
Accounts receivable, net
10,488 
11,097 
Deferred commissions
3,642 
3,675 
Prepaid expenses and other current assets
3,499 
3,476 
Total current assets
203,400 
210,730 
Property and equipment, net
3,497 
3,630 
Marketable securities, noncurrent
6,220 
Deferred commissions, noncurrent
2,377 
2,563 
Other assets
78 
131 
Total assets
209,352 
223,274 
Current liabilities:
 
 
Accounts payable
4,169 
3,217 
Accrued expenses and other current liabilities
4,365 
5,791 
Accrued compensation
7,378 
10,455 
Deferred revenue
24,002 
20,708 
Total current liabilities
39,914 
40,171 
Deferred revenue, noncurrent
7,079 
6,652 
Other liabilities, noncurrent
226 
261 
Total liabilities
47,219 
47,084 
Commitments and contingencies
   
   
Stockholders’ equity (deficit):
 
 
Additional paid-in capital
398,941 
393,397 
Accumulated other comprehensive income
(40)
Accumulated deficit
(236,819)
(217,176)
Total stockholders’ equity (deficit)
162,133 
176,190 
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)
209,352 
223,274 
Class A [Member]
 
 
Stockholders’ equity (deficit):
 
 
Common stock value issued
Class B [Member]
 
 
Stockholders’ equity (deficit):
 
 
Common stock value issued
$ 3 
$ 3 
Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Revenue:
 
 
Subscription
$ 14,906 
$ 7,463 
Professional services
1,045 
913 
Total revenue
15,951 
8,376 
Cost of revenue:
 
 
Cost of subscription
2,519 1
2,712 1
Cost of professional services
4,653 1
3,871 1
Total cost of revenue
7,172 
6,583 
Gross profit
8,779 
1,793 
Operating expenses:
 
 
Sales and marketing
16,463 1
16,560 1
Research and development
6,594 1
5,527 1
General and administrative
5,463 1
4,010 1
Total operating expenses
28,520 
26,097 
Operating loss
(19,741)
(24,304)
Other income, net
98 
23 
Net loss
$ (19,643)
$ (24,281)
Net loss per Class A and B share, basic and diluted
$ (0.21)
$ (0.90)
Weighted-average shares used to compute basic and diluted net loss per Class A and B share
91,786 
26,970 
Consolidated Statements of Operations Parenthetical (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Cost of subscription [Member]
 
 
Allocated Share-based Compensation Expense
$ 33 
$ 4 
Cost of professional services [Member]
 
 
Allocated Share-based Compensation Expense
425 
140 
Sales and marketing [Member]
 
 
Allocated Share-based Compensation Expense
1,751 
1,174 
Research and development [Member]
 
 
Allocated Share-based Compensation Expense
633 
421 
General and administrative [Member]
 
 
Allocated Share-based Compensation Expense
$ 1,027 
$ 814 
Consolidated Statements of Comprehensive Loss (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Consolidated Statement of Comprehensive Loss:
 
 
Net loss
$ (19,643)
$ (24,281)
Other comprehensive income:
 
 
Net change in unrealized gain on available-for-sale marketable securities
42 
Reclassification adjustments for net realized gains on available-for-sale marketable securities
Other comprehensive income
42 
Comprehensive loss
$ (19,601)
$ (24,280)
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Operating activities:
 
 
Net loss
$ (19,643)
$ (24,281)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
Depreciation and amortization
454 
282 
Stock-based compensation
3,869 
2,553 
Amortization of deferred commissions
857 
1,376 
Accretion and amortization of marketable securities
443 
124 
Expense related to warrant
2,429 
Changes in operating assets and liabilities:
 
 
Accounts receivable
609 
(1,250)
Deferred commissions
(638)
(282)
Prepaid expenses and other assets
30 
(1,081)
Accounts payable
1,512 
759 
Accrued expenses and other liabilities
(4,403)
(3,376)
Deferred revenue
3,721 
6,686 
Net cash used in operating activities
(13,189)
(16,061)
Investing activities:
 
 
Purchase of property and equipment
(887)
(656)
Purchase of marketable securities
(13,034)
(35,733)
Sale of marketable securities
5,000 
13,000 
Maturities of marketable securities
30,180 
5,000 
Net cash provided by (used in) investing activities
21,259 
(18,389)
Financing activities:
 
 
Proceeds from the exercise of stock options
1,640 
1,522 
Net proceeds from initial public offering
189,943 
Payments of deferred offering costs
(94)
(2,102)
Net cash provided by financing activities
1,546 
189,363 
Net increase in cash and cash equivalents
9,616 
154,913 
Cash and cash equivalents at beginning of period
17,425 
25,154 
Cash and cash equivalents at end of period
$ 27,041 
$ 180,067 
Organization and Description of Business
Organization and Description of Business
Organization and Description of Business
Description of Business
Castlight Health, Inc. (Castlight) is a pioneer in a new category of cloud-based software that enables enterprises to understand and manage health care spending as a strategic business investment, and help employees and their families make more informed medical decisions based on factors such as cost, quality and patient experience. Our Enterprise Healthcare Cloud allows our customers to conquer the complexity of the existing health care system by providing personalized, actionable information to their employees, implementing technology-enabled benefit designs and integrating disparate systems and applications. Our comprehensive technology offering aggregates complex, large-scale data and applies sophisticated analytics to make health care data transparent and useful. We were incorporated in the State of Delaware in January 2008. Our principal executive offices are located in San Francisco, California.
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP), for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission (SEC), Regulation S-X. In the opinion of management, the information herein reflects all adjustments, consisting only of normal recurring adjustments except as otherwise noted, considered necessary for a fair statement of results of operations, financial position and cash flows. The condensed consolidated financial statements include the results of Castlight and its wholly owned U.S. subsidiary. The results for the interim periods presented are not necessarily indicative of the results expected for any future period.
The condensed consolidated balance sheet as of December 31, 2014 included herein was derived from the audited financial statements as of that date. The following information should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014. There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K that have had a material impact on our condensed consolidated financial statements and related notes.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. These estimates include, but are not limited to, the determination of the relative selling prices for our services and certain assumptions used in the valuation of our equity awards. Actual results could differ from those estimates, and such differences could be material to our consolidated financial position and results of operations.
Recently Issued and Adopted Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09 regarding ASC Topic 606, Revenue from Contracts with Customers. The standard provides principles for recognizing revenue for the transfer of promised goods or services to customers with the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance will be effective for us beginning January 1, 2017. Early adoption is not permitted. We are evaluating the accounting, transition and disclosure requirements of the standard and cannot currently estimate the financial statement impact of adoption.
Marketable Securities
Marketable Securities
Marketable Securities
At March 31, 2015 and December 31, 2014, respectively, marketable securities consisted of the following (in thousands):
 
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
March 31, 2015
 
 
 
 
 
 
 
U.S. agency obligations
$
153,201

 
$
12

 
$
(10
)
 
$
153,203

U.S. treasury securities
5,526

 
1

 

 
5,527

Money market mutual funds
13,199

 

 

 
13,199

 
171,926

 
13

 
(10
)
 
171,929

Included in cash and cash equivalents
13,199

 

 

 
13,199

Included in marketable securities
$
158,727

 
$
13

 
$
(10
)
 
$
158,730


 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
December 31, 2014
 
 
 
 
 
 
 
U.S. agency obligations
$
177,297

 
$
4

 
$
(44
)
 
$
177,257

U.S. treasury securities
5,580

 
1

 

 
5,581

Money market mutual funds
1,919

 

 

 
1,919

 
184,796

 
5

 
(44
)
 
184,757

Included in cash and cash equivalents
3,480

 

 

 
3,480

Included in marketable securities
$
175,093

 
$
5

 
$
(41
)
 
$
175,057

Included in marketable securities, noncurrent
$
6,223

 
$

 
$
(3
)
 
$
6,220

Fair Value Measurements
Fair Value Measurements
Fair Value Measurements
We measure our financial assets and liabilities at fair value at each reporting period using a fair value hierarchy that requires that we maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:
Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2—Include other inputs that are directly or indirectly observable in the marketplace.
Level 3—Unobservable inputs that are supported by little or no market activity.
The fair value of marketable securities included in the Level 2 category is based on observable inputs, such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly. These values were obtained from a third-party pricing service and were evaluated using pricing models that vary by asset class and may incorporate available trade, bid and other market information and price quotes from well-established third party pricing vendors and broker-dealers. There have been no changes in valuation techniques in the periods presented. We have no financial assets or liabilities measured using Level 3 inputs. There were no significant transfers between Levels 1 and 2 assets as of March 31, 2015 and December 31, 2014. The following tables present information about our assets that are measured at fair value on a recurring basis using the above input categories (in thousands):
 
 
Level 1
 
Level 2
 
Total
March 31, 2015
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
Money market mutual funds
$
13,199

 
$

 
$
13,199

Marketable securities:
 
 
 
 
 
U.S. agency obligations

 
153,203

 
153,203

U.S. treasury securities

 
5,527

 
5,527

 
$
13,199

 
$
158,730

 
$
171,929

 
 
Level 1
 
Level 2
 
Total
December 31, 2014
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
Money market mutual funds
$
1,919

 
$

 
$
1,919

U.S. agency obligations

 
1,561

 
1,561

Marketable securities:
 
 
 
 
 
U.S. agency obligations

 
175,696

 
175,696

U.S. treasury securities

 
5,581

 
5,581

 
$
1,919


$
182,838


$
184,757


Gross unrealized gains and losses for cash equivalents and marketable securities as of March 31, 2015 and December 31, 2014 were not material. We do not believe the unrealized losses represent other-than-temporary impairments based on our evaluation of available evidence as of March 31, 2015.
There were no realized gains or losses during the three months ended March 31, 2015. All of our marketable securities at March 31, 2015 mature within one year. As of December 31, 2014 those securities with maturities at the time of purchase of greater than one year are reflected in the noncurrent portion of our condensed consolidated balance sheets. Marketable securities on the balance sheets consist of securities with original or remaining maturities at the time of purchase of greater than three months, and the remainder of the securities is reflected in cash and cash equivalents.
Property and equipment, net
Property and equipment
Property and Equipment
Property and equipment consisted of the following (in thousands):
 
As of
 
March 31, 2015
 
December 31, 2014
Leasehold improvements
$
1,065

 
$
1,058

Computer equipment
3,279

 
3,247

Software
874

 
874

Capitalization of internal-use software
572

 
291

Furniture and equipment
302

 
301

Total
6,092

 
5,771

Accumulated depreciation
(2,595
)
 
(2,141
)
Property and equipment, net
$
3,497

 
$
3,630


Depreciation and amortization expense for the three months ended March 31, 2015 and 2014, was $0.5 million and $0.3 million, respectively. Depreciation is recorded on a straight-line basis.
Deferred Revenue
Deferred Revenue
Deferred Revenue
Deferred revenue consisted of the following (in thousands):
 
As of
 
March 31, 2015
 
December 31, 2014
Subscription
$
17,342

 
$
14,826

Professional services—implementation
3,457

 
2,974

Professional services—communications
3,203

 
2,908

Total current
24,002

 
20,708

Subscription
1,960

 
1,950

Professional services—implementation
4,612

 
4,327

Professional services—communications
507

 
375

Total noncurrent
7,079

 
6,652

Total
$
31,081

 
$
27,360

Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies
Legal Matters
On April 2, April 16, April 29, and May 4, 2015, purported securities class action lawsuits were filed in the Superior Court of the State of California, County of San Mateo, against us, certain of our current and former directors, executive officers, significant stockholders and underwriters associated with our IPO. The lawsuits were brought by purported stockholders of our company seeking to represent a class consisting of all those who purchased our stock pursuant and/or traceable to the Registration Statement and Prospectus issued in connection with our IPO. The lawsuits assert claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and seek unspecified damages and other relief. We believe that the claims are without merit and intend to defend the lawsuits vigorously.
From time to time, we may become subject to other legal proceedings, claims or litigation arising in the ordinary course of business. In addition, we may receive letters alleging infringement of patents or other intellectual property rights. We do not believe that any liability from any reasonably foreseeable disposition of these legal actions and claims, individually or in the aggregate, would have a material effect on our business, operating results, cash flows or financial condition. The lawsuits described above are still in their early stages and the final outcome, including our liability, if any, with respect to the claims in the lawsuits, are uncertain. If an unfavorable outcome were to occur in the litigation, the impact could be material to our business, financial condition, cash flow or results of operations, depending on the specific circumstances of the outcome. We cannot make a reasonable estimate of the potential loss or range of loss, if any, arising from these matters. We accrue for loss contingencies when it is both probable that we will incur the loss and when we can reasonably estimate the amount of the loss or range of loss. If we determine that a loss is reasonably possible and can reasonably estimate the range of the loss, then we disclose the range of the loss.
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit)
Stockholders’ Equity
Common Stock
As of March 31, 2015, we had 58,442,009 shares of Class A common stock and 34,628,791 shares of Class B common stock outstanding.
Stock Options Activity
A summary of stock option activity for the three months ended March 31, 2015 is as follows (in thousands, except share and per share amounts): 
 
Options
Outstanding
 
Weighted-
Average
Exercise
Price
 
Aggregate
Intrinsic
Value
Balance at December 31, 2014
16,392,539

 
$
4.40

 
$
128,541

Stock option grants
466,900

 
$
8.88

 
 
Stock options exercised
(1,925,731
)
 
$
1.02

 
 
Stock options canceled
(1,016,745
)
 
$
7.12

 
 
Balance at March 31, 2015
13,916,963

 
$
4.82

 
$
61,110


The total grant-date fair value of stock options granted during the three months ended March 31, 2015 and 2014 was $2.1 million and $25.9 million, respectively.
The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-valuation model with the following assumptions and fair value per share:
 
Three Months Ended March 31,
 
2015
 
2014
Volatility
53%
 
60%
Expected life (in years)
6.2
 
5.0-6.2
Risk-free interest rate
1.38%-1.79%
 
1.53%-1.95%
Dividend yield
—%
 
—%

As of March 31, 2015, we had $32.6 million in unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted-average period of approximately 3.0 years.
Restricted Stock Units

A summary of restricted stock unit activity for the three months ended March 31, 2015 is as follows (in thousands, except share and per share amounts): 
 
Number of
Shares
Outstanding
 
Weighted-
Average
Grant Date Fair Value
Balance at December 31, 2014
1,398,893

 
$
11.06

Restricted Stock Units granted
666,300

 
$
9.13

Restricted Stock Units vested

 
$

Restricted Stock Units forfeited
(131,600
)
 
$
10.40

Balance at March 31, 2015
1,933,593

 
$
10.44

As of March 31, 2015, there was a total of $20.2 million in unrecognized compensation cost related to restricted stock units, which is expected to be recognized over a weighted-average period of approximately 3.9 years.
Income Taxes
Income Taxes
Income Taxes
The effective tax rate for the three months ended March 31, 2015 and 2014 was zero percent, primarily as a result of the estimated tax loss for the year and the change in valuation allowance.
There were no material changes to the unrecognized tax benefits in the three months ended March 31, 2015, and we do not anticipate that the unrecognized tax benefits will significantly increase or decrease in the next 12 months. At March 31, 2015, all unrecognized tax benefits are subject to a full valuation allowance and, if recognized, will not affect the effective tax rate.
Net Loss per Share
Net Loss per Share
Net Loss per Share
Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including Preferred Stock and outstanding stock options and warrants, to the extent dilutive. Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive.
Net loss is allocated based on the contractual participation rights of the Class A and Class B common stock as if the earnings for the year have been distributed. As the liquidation and dividend rights are identical, the net loss is allocated on a proportionate basis.
The following table presents the calculation of basic and diluted net loss per share for our common stock (in thousands, except per share data):
 
Three Months Ended March 31,
 
 
2015
 
2014
 
 
Class A
 
Class B
 
Class A
 
Class B
 
Net loss
$
(12,562
)
 
$
(7,081
)
 
$
(21,983
)
 
$
(2,298
)
 
Weighted-average shares used to compute basic and diluted net loss per share
58,698

 
33,088

 
24,417

 
2,553

 
Basic and diluted net loss per share
$
(0.21
)
 
$
(0.21
)
 
$
(0.90
)
 
$
(0.90
)
 

The following securities were excluded from the calculation of diluted net loss per share for common stock because their effect would have been anti-dilutive for the periods presented (in thousands):
 
Three Months Ended March 31,
 
2015
 
2014
Stock options and restricted common stock
15,898

 
17,931

Warrants
115

 
115

Total
16,013

 
18,046

Summary of Significant Accounting Policies (Policies)
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP), for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission (SEC), Regulation S-X. In the opinion of management, the information herein reflects all adjustments, consisting only of normal recurring adjustments except as otherwise noted, considered necessary for a fair statement of results of operations, financial position and cash flows. The condensed consolidated financial statements include the results of Castlight and its wholly owned U.S. subsidiary. The results for the interim periods presented are not necessarily indicative of the results expected for any future period.
The condensed consolidated balance sheet as of December 31, 2014 included herein was derived from the audited financial statements as of that date. The following information should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014. There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K that have had a material impact on our condensed consolidated financial statements and related notes.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. These estimates include, but are not limited to, the determination of the relative selling prices for our services and certain assumptions used in the valuation of our equity awards. Actual results could differ from those estimates, and such differences could be material to our consolidated financial position and results of operations.
Recently Issued and Adopted Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09 regarding ASC Topic 606, Revenue from Contracts with Customers. The standard provides principles for recognizing revenue for the transfer of promised goods or services to customers with the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance will be effective for us beginning January 1, 2017. Early adoption is not permitted. We are evaluating the accounting, transition and disclosure requirements of the standard and cannot currently estimate the financial statement impact of adoption.
Marketable Securities (Tables)
Available-for-sale Securities
At March 31, 2015 and December 31, 2014, respectively, marketable securities consisted of the following (in thousands):
 
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
March 31, 2015
 
 
 
 
 
 
 
U.S. agency obligations
$
153,201

 
$
12

 
$
(10
)
 
$
153,203

U.S. treasury securities
5,526

 
1

 

 
5,527

Money market mutual funds
13,199

 

 

 
13,199

 
171,926

 
13

 
(10
)
 
171,929

Included in cash and cash equivalents
13,199

 

 

 
13,199

Included in marketable securities
$
158,727

 
$
13

 
$
(10
)
 
$
158,730


 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
December 31, 2014
 
 
 
 
 
 
 
U.S. agency obligations
$
177,297

 
$
4

 
$
(44
)
 
$
177,257

U.S. treasury securities
5,580

 
1

 

 
5,581

Money market mutual funds
1,919

 

 

 
1,919

 
184,796

 
5

 
(44
)
 
184,757

Included in cash and cash equivalents
3,480

 

 

 
3,480

Included in marketable securities
$
175,093

 
$
5

 
$
(41
)
 
$
175,057

Included in marketable securities, noncurrent
$
6,223

 
$

 
$
(3
)
 
$
6,220

Fair Value Measurements (Tables)
Fair Value, Assets Measured on Recurring Basis
The following tables present information about our assets that are measured at fair value on a recurring basis using the above input categories (in thousands):
 
 
Level 1
 
Level 2
 
Total
March 31, 2015
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
Money market mutual funds
$
13,199

 
$

 
$
13,199

Marketable securities:
 
 
 
 
 
U.S. agency obligations

 
153,203

 
153,203

U.S. treasury securities

 
5,527

 
5,527

 
$
13,199

 
$
158,730

 
$
171,929

 
 
Level 1
 
Level 2
 
Total
December 31, 2014
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
Money market mutual funds
$
1,919

 
$

 
$
1,919

U.S. agency obligations

 
1,561

 
1,561

Marketable securities:
 
 
 
 
 
U.S. agency obligations

 
175,696

 
175,696

U.S. treasury securities

 
5,581

 
5,581

 
$
1,919


$
182,838


$
184,757

Property and equipment, net (Tables)
Property, Plant and Equipment
Property and equipment consisted of the following (in thousands):
 
As of
 
March 31, 2015
 
December 31, 2014
Leasehold improvements
$
1,065

 
$
1,058

Computer equipment
3,279

 
3,247

Software
874

 
874

Capitalization of internal-use software
572

 
291

Furniture and equipment
302

 
301

Total
6,092

 
5,771

Accumulated depreciation
(2,595
)
 
(2,141
)
Property and equipment, net
$
3,497

 
$
3,630

Deferred Revenue (Tables)
Deferred Revenue, by Arrangement, Disclosure
Deferred revenue consisted of the following (in thousands):
 
As of
 
March 31, 2015
 
December 31, 2014
Subscription
$
17,342

 
$
14,826

Professional services—implementation
3,457

 
2,974

Professional services—communications
3,203

 
2,908

Total current
24,002

 
20,708

Subscription
1,960

 
1,950

Professional services—implementation
4,612

 
4,327

Professional services—communications
507

 
375

Total noncurrent
7,079

 
6,652

Total
$
31,081

 
$
27,360

Stockholders' Equity (Deficit) (Tables)
A summary of stock option activity for the three months ended March 31, 2015 is as follows (in thousands, except share and per share amounts): 
 
Options
Outstanding
 
Weighted-
Average
Exercise
Price
 
Aggregate
Intrinsic
Value
Balance at December 31, 2014
16,392,539

 
$
4.40

 
$
128,541

Stock option grants
466,900

 
$
8.88

 
 
Stock options exercised
(1,925,731
)
 
$
1.02

 
 
Stock options canceled
(1,016,745
)
 
$
7.12

 
 
Balance at March 31, 2015
13,916,963

 
$
4.82

 
$
61,110

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-valuation model with the following assumptions and fair value per share:
 
Three Months Ended March 31,
 
2015
 
2014
Volatility
53%
 
60%
Expected life (in years)
6.2
 
5.0-6.2
Risk-free interest rate
1.38%-1.79%
 
1.53%-1.95%
Dividend yield
—%
 
—%
Net Loss per Share (Tables)
The following table presents the calculation of basic and diluted net loss per share for our common stock (in thousands, except per share data):
 
Three Months Ended March 31,
 
 
2015
 
2014
 
 
Class A
 
Class B
 
Class A
 
Class B
 
Net loss
$
(12,562
)
 
$
(7,081
)
 
$
(21,983
)
 
$
(2,298
)
 
Weighted-average shares used to compute basic and diluted net loss per share
58,698

 
33,088

 
24,417

 
2,553

 
Basic and diluted net loss per share
$
(0.21
)
 
$
(0.21
)
 
$
(0.90
)
 
$
(0.90
)
 
The following securities were excluded from the calculation of diluted net loss per share for common stock because their effect would have been anti-dilutive for the periods presented (in thousands):
 
Three Months Ended March 31,
 
2015
 
2014
Stock options and restricted common stock
15,898

 
17,931

Warrants
115

 
115

Total
16,013

 
18,046

Marketable Securities (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
 
 
Document Period End Date
Mar. 31, 2015 
 
Amortized Cost
$ 171,926 
$ 184,796 
Unrealized Gains
13 
Unrealized Losses
(10)
(44)
Fair Value
171,929 
184,757 
Included in cash and cash equivalents [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
13,199 
3,480 
Unrealized Gains
Unrealized Losses
Fair Value
13,199 
3,480 
Included in marketable securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
158,727 
175,093 
Unrealized Gains
13 
Unrealized Losses
(10)
(41)
Fair Value
158,730 
175,057 
Included in marketable securities, noncurrent [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
 
6,223 
Unrealized Gains
 
Unrealized Losses
 
(3)
Fair Value
 
6,220 
U.S. agency obligations [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
153,201 
177,297 
Unrealized Gains
12 
Unrealized Losses
(10)
(44)
Fair Value
153,203 
177,257 
U.S. treasury securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
5,526 
5,580 
Unrealized Gains
Unrealized Losses
Fair Value
5,527 
5,581 
Money market mutual funds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
13,199 
1,919 
Unrealized Gains
Unrealized Losses
Fair Value
$ 13,199 
$ 1,919 
Fair Value Measurements (Details) (USD $)
3 Months Ended
Mar. 31, 2015
Fair Value Disclosures [Abstract]
 
Available-for-sale Securities, Gross Realized Gain (Loss)
$ 0 
Available-for-sale Securities, Maturity Period
1 year 
Fair Value Measurements - Summary of Assets Measured at Fair Value on a Recurring Basis (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Document Period End Date
Mar. 31, 2015 
 
Marketable securities:
 
 
Marketable securities
$ 171,929 
$ 184,757 
Money market mutual funds [Member]
 
 
Marketable securities:
 
 
Marketable securities
13,199 
1,919 
U.S. agency obligations [Member]
 
 
Marketable securities:
 
 
Marketable securities
153,203 
177,257 
U.S. treasury securities [Member]
 
 
Marketable securities:
 
 
Marketable securities
5,527 
5,581 
Fair Value, Measurements, Recurring
 
 
Marketable securities:
 
 
Assets, Fair Value Disclosure
171,929 
184,757 
Fair Value, Measurements, Recurring |
Money market mutual funds [Member]
 
 
Cash equivalents:
 
 
Cash equivalents
13,199 
1,919 
Fair Value, Measurements, Recurring |
U.S. agency obligations [Member]
 
 
Cash equivalents:
 
 
Cash equivalents
 
1,561 
Marketable securities:
 
 
Marketable securities
153,203 
175,696 
Fair Value, Measurements, Recurring |
U.S. treasury securities [Member]
 
 
Marketable securities:
 
 
Marketable securities
5,527 
5,581 
Fair Value, Measurements, Recurring |
Level 1 [Member]
 
 
Marketable securities:
 
 
Assets, Fair Value Disclosure
13,199 
1,919 
Fair Value, Measurements, Recurring |
Level 1 [Member] |
Money market mutual funds [Member]
 
 
Cash equivalents:
 
 
Cash equivalents
 
1,919 
Fair Value, Measurements, Recurring |
Level 1 [Member] |
U.S. agency obligations [Member]
 
 
Cash equivalents:
 
 
Cash equivalents
 
Marketable securities:
 
 
Marketable securities
Fair Value, Measurements, Recurring |
Level 1 [Member] |
U.S. treasury securities [Member]
 
 
Marketable securities:
 
 
Marketable securities
Fair Value, Measurements, Recurring |
Level 2 [Member]
 
 
Marketable securities:
 
 
Assets, Fair Value Disclosure
158,730 
182,838 
Fair Value, Measurements, Recurring |
Level 2 [Member] |
Money market mutual funds [Member]
 
 
Cash equivalents:
 
 
Cash equivalents
Fair Value, Measurements, Recurring |
Level 2 [Member] |
U.S. agency obligations [Member]
 
 
Cash equivalents:
 
 
Cash equivalents
 
1,561 
Marketable securities:
 
 
Marketable securities
 
175,696 
Fair Value, Measurements, Recurring |
Level 2 [Member] |
U.S. treasury securities [Member]
 
 
Marketable securities:
 
 
Marketable securities
 
$ 5,581 
Property and equipment, net (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Property, Plant and Equipment [Abstract]
 
 
Depreciation Expense
$ 0.5 
$ 0.3 
Property and equipment, net - Schedule of Property, Plant and Equipment (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Property, Plant and Equipment [Line Items]
 
 
Property and Equipment
$ 6,092 
$ 5,771 
Capitalization of internal-use software
572 
291 
Accumulated depreciation
(2,595)
(2,141)
Property and equipment, net
3,497 
3,630 
Leasehold Improvements [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and Equipment
1,065 
1,058 
Computer Equipment [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and Equipment
3,279 
3,247 
Software [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and Equipment
874 
874 
Furniture and Equipment [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and Equipment
$ 302 
$ 301 
Deferred Revenue - Components of Deferred Revenue (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Deferred Revenue Arrangement [Line Items]
 
 
Total current
$ 24,002 
$ 20,708 
Total noncurrent
7,079 
6,652 
Total
31,081 
27,360 
Subscription [Member]
 
 
Deferred Revenue Arrangement [Line Items]
 
 
Total current
17,342 
14,826 
Total noncurrent
1,960 
1,950 
Professional Services - Implementation [Member]
 
 
Deferred Revenue Arrangement [Line Items]
 
 
Total current
3,457 
2,974 
Total noncurrent
4,612 
4,327 
Professional Services - Communications [Member]
 
 
Deferred Revenue Arrangement [Line Items]
 
 
Total current
3,203 
2,908 
Total noncurrent
$ 507 
$ 375 
Stockholders' Equity (Deficit) - Summary of Stock by Class (Details)
3 Months Ended
Mar. 31, 2015
Class of Stock [Line Items]
 
Document Period End Date
Mar. 31, 2015 
Class A [Member]
 
Class of Stock [Line Items]
 
Common Stock, Shares, Issued
58,442,009 
Class B [Member]
 
Class of Stock [Line Items]
 
Common Stock, Shares, Issued
34,628,791 
Stockholders' Equity (Deficit) - Summary of Stock Option Activity (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Options Outstanding
 
Beginning Balance
16,392,539,000 
Stock option grants
466,900,000 
Stock options exercised
(1,925,731,000)
Stock options canceled
(1,016,745,000)
Ending Balance
13,916,963,000 
Weighted- Average Exercise Price
 
Beginning Balance
$ 4.82 
Stock option grants
$ 8.88 
Stock options exercised
$ 1.02 
Stock options canceled
$ 7.12 
Ending Balance
$ 4.40 
Aggregate Intrinsic Value
 
Beginning Balance
$ 128,541 
Ending Balance
$ 61,110 
Stockholders' Equity (Deficit) - Stock Options Activity and Stock-based Compensation (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Equity and Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
 
Stock Granted, Value, Share-based Compensation, Gross
$ 2.1 
$ 25.9 
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options
$ 32.6 
 
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition
2 years 11 months 23 days 
 
Stockholders' Equity (Deficit) - Summary of Restricted Stock Unit Activity (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
 
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition
2 years 11 months 23 days 
Restricted Stock Units (RSUs) [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
 
Balance at December 31, 2014
1,398,893 
Restricted Stock Units granted
666,300 
Restricted Stock Units vested
Restricted Stock Units forfeited
(131,600)
Balance at March 31, 2015
1,933,593 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
 
Balance at December 31, 2014
$ 11.06 
Restricted Stock Units granted
$ 9.13 
Restricted Stock Units vested
$ 0.00 
Restricted Stock Units forfeited
$ 10.40 
Balance at March 31, 2015
$ 10.44 
Unrecognized compensation cost
$ 20.2 
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition
3 years 11 months 1 day 
Income Taxes (Details)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Income Tax Disclosure [Abstract]
 
 
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent
0.00% 
0.00% 
Net Loss per Share - Calculation of Basic and Diluted EPS for Common Stock (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Schedule of Earnings Per Share, Basic and Diluted, by Common Class, Including Two Class Method [Table] [Line Items]
 
 
Net loss
$ (19,643)
$ (24,281)
Weighted-average shares used to compute basic and diluted net loss per Class A and B share
91,786 
26,970 
Basic and diluted net loss per share (in usd per share)
$ (0.21)
$ (0.90)
Class A [Member]
 
 
Schedule of Earnings Per Share, Basic and Diluted, by Common Class, Including Two Class Method [Table] [Line Items]
 
 
Net loss
(12,562)
(21,983)
Weighted-average shares used to compute basic and diluted net loss per Class A and B share
58,698 
24,417 
Basic and diluted net loss per share (in usd per share)
$ (0.21)
$ (0.90)
Class B [Member]
 
 
Schedule of Earnings Per Share, Basic and Diluted, by Common Class, Including Two Class Method [Table] [Line Items]
 
 
Net loss
$ (7,081)
$ (2,298)
Weighted-average shares used to compute basic and diluted net loss per Class A and B share
33,088 
2,553 
Basic and diluted net loss per share (in usd per share)
$ (0.21)
$ (0.90)
Net Loss per Share - Summary of Antidilutive Securities (Details) (Class A [Member])
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount
16,013 
18,046 
Stock Options and Restricted Common Stock [Member]
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount
15,898 
17,931 
Warrants [Member]
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount
115 
115