ZENDESK, INC., 10-Q filed on 11/6/2015
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2015
Oct. 31, 2015
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Sep. 30, 2015 
 
Document Fiscal Year Focus
2015 
 
Document Fiscal Period Focus
Q3 
 
Trading Symbol
ZEN 
 
Entity Registrant Name
Zendesk, Inc. 
 
Entity Central Index Key
0001463172 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Non-accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
88,697,514 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Current Assets:
 
 
Cash and cash equivalents
$ 255,386 
$ 80,265 
Marketable securities
25,247 
42,204 
Accounts receivable, net of allowance for doubtful accounts of $1,070 and $264 as of September 30, 2015 and December 31, 2014, respectively
24,121 
11,523 
Prepaid expenses and other current assets
9,904 
5,013 
Total current assets
314,658 
139,005 
Marketable securities, noncurrent
22,513 
9,205 
Property and equipment, net
52,747 
41,895 
Goodwill and intangible assets, net
11,888 
14,152 
Other assets
2,450 
1,531 
Total assets
404,256 
205,788 
Current liabilities:
 
 
Accounts payable
4,390 
4,763 
Accrued liabilities
10,445 
7,841 
Accrued compensation and related benefits
11,872 
11,738 
Deferred revenue
74,295 
50,756 
Current portion of credit facility
 
3,041 
Current portion of capital leases
 
10 
Total current liabilities
101,002 
78,149 
Deferred revenue, noncurrent
1,657 
823 
Credit facility, noncurrent
 
3,911 
Other liabilities
8,966 
9,199 
Total liabilities
111,625 
92,082 
Commitments and contingencies (Note 7)
   
   
Stockholders’ equity:
 
 
Preferred stock
   
   
Common stock
887 
755 
Additional paid-in capital
485,417 
246,000 
Accumulated other comprehensive loss
(1,578)
(528)
Accumulated deficit
(191,443)
(131,869)
Treasury stock at cost (0.5 million shares as of September 30, 2015 and December 31, 2014)
(652)
(652)
Total stockholders’ equity
292,631 
113,706 
Total liabilities and stockholders’ equity
$ 404,256 
$ 205,788 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Share data in Millions, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Statement Of Financial Position [Abstract]
 
 
Allowance for doubtful accounts
$ 1,070 
$ 264 
Treasury stock, shares
0.5 
0.5 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Income Statement [Abstract]
 
 
 
 
Revenue
$ 55,661 
$ 33,910 
$ 146,122 
$ 88,508 
Cost of revenue
17,039 1
11,684 1
47,491 1
32,410 1
Gross profit
38,622 
22,226 
98,631 
56,098 
Operating expenses:
 
 
 
 
Research and development
16,031 1
9,550 1
43,517 1
25,227 1
Sales and marketing
29,079 1
21,548 1
79,725 1
56,174 1
General and administrative
12,319 1
8,940 1
33,982 1
23,639 1
Total operating expenses
57,429 1
40,038 1
157,224 1
105,040 1
Operating loss
(18,807)
(17,812)
(58,593)
(48,942)
Other income (expense), net
145 
(343)
(428)
(1,252)
Loss before provision for (benefit from) income taxes
(18,662)
(18,155)
(59,021)
(50,194)
Provision for (benefit from) income taxes
262 
(236)
554 
(272)
Net loss
(18,924)
(17,919)
(59,575)
(49,922)
Accretion of redeemable convertible preferred stock
 
 
 
(18)
Net loss attributable to common stockholders
$ (18,924)
$ (17,919)
$ (59,575)
$ (49,940)
Net loss per share attributable to common stockholders, basic and diluted
$ (0.22)
$ (0.25)
$ (0.71)
$ (1.07)
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted
87,777 
71,732 
83,536 
46,751 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Share-based compensation expense
 
 
$ 37,057 
$ 23,625 
Cost of Revenue
 
 
 
 
Share-based compensation expense
1,131 
591 
3,136 
1,691 
Research and Development
 
 
 
 
Share-based compensation expense
4,974 
3,052 
13,484 
7,530 
Sales and Marketing
 
 
 
 
Share-based compensation expense
3,786 
4,877 
10,154 
8,635 
General and Administrative
 
 
 
 
Share-based compensation expense
$ 3,551 
$ 2,298 
$ 10,283 
$ 5,769 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Statement Of Income And Comprehensive Income [Abstract]
 
 
 
 
Net loss
$ (18,924)
$ (17,919)
$ (59,575)
$ (49,922)
Other comprehensive loss, net of tax:
 
 
 
 
Net change in unrealized gain (loss) on available-for-sale investments
39 
(58)
70 
(66)
Foreign currency translation gain (loss)
(781)
(303)
(1,019)
17 
Net change in unrealized loss on derivative instruments
(101)
 
(101)
 
Comprehensive loss
$ (19,767)
$ (18,280)
$ (60,625)
$ (49,971)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Cash flows from operating activities
 
 
Net loss
$ (59,575)
$ (49,922)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
Depreciation and amortization
13,672 
7,673 
Share-based compensation
37,057 
23,625 
Other
525 
331 
Excess tax benefit from share-based award activity
(124)
 
Changes in operating assets and liabilities:
 
 
Accounts receivable
(13,082)
(5,104)
Prepaid expenses and other current assets
(4,161)
(1,960)
Other assets and liabilities
(1,622)
1,321 
Accounts payable
(1,919)
591 
Accrued liabilities
2,261 
922 
Accrued compensation and related benefits
(2,355)
5,215 
Deferred revenue
24,372 
17,290 
Net cash used in operating activities
(4,951)
(18)
Cash flows from investing activities
 
 
Purchases of property and equipment
(14,231)
(19,121)
Internal-use software development costs
(3,548)
(6,268)
Purchases of marketable securities
(56,991)
(43,006)
Proceeds from maturities of marketable securities
30,425 
6,950 
Proceeds from sale of marketable securities
29,650 
 
Cash paid for the acquisition of Zopim, net of cash acquired
(1,099)
(1,896)
Net cash used in investing activities
(15,794)
(63,341)
Cash flows from financing activities
 
 
Proceeds from initial public offering, net of issuance costs
 
103,110 
Proceeds from follow-on public offering, net of issuance costs
190,110 
 
Proceeds from exercise of employee stock options
5,773 
2,745 
Taxes paid related to net share settlement of equity awards
(481)
(1,750)
Proceeds from issuance of common stock from employee stock purchase plan
7,243 
2,346 
Proceeds from issuance of debt
 
3,940 
Excess tax benefit from share-based award activity
124 
 
Principal payments on debt
(6,952)
(20,000)
Principal payments on capital lease obligations
(10)
(271)
Net cash provided by financing activities
195,807 
90,120 
Effect of exchange rate changes on cash and cash equivalents
59 
(50)
Net increase in cash and cash equivalents
175,121 
26,711 
Cash and cash equivalents at the beginning of period
80,265 
53,725 
Cash and cash equivalents at the end of period
255,386 
80,436 
Supplemental cash flow data:
 
 
Cash paid for interest and income taxes
710 
930 
Non-cash investing and financing activities:
 
 
Purchases of property and equipment in accounts payable and accrued expenses
3,766 
998 
Share-based compensation capitalized in internal-use software development costs
1,674 
1,856 
Vesting of early exercised stock options
815 
1,196 
Property and equipment acquired through tenant improvement allowances
174 
3,932 
Issuance of common stock for the acquisition of Zopim
 
$ 10,893 
Overview and Basis of Presentation
Overview and Basis of Presentation

Note 1. Overview and Basis of Presentation

Company and Background

Zendesk was founded in Denmark in 2007 and reincorporated in Delaware in April 2009.

Our mission is to help organizations and their customers build better relationships. We are a software development company that provides a software-as-a-service, or SaaS, customer service platform. Our platform helps organizations engage with people in new ways that foster long-term customer loyalty and satisfaction. We empower organizations to better answer customers’ questions, and to solve their problems through the channels that people use every day when seeking help, such as email, chat, voice, social media and websites. Our customer service platform also helps people find answers on their own through knowledge bases and communities, capitalizing on the increasing customer preference for self-service. Our customer engagement capabilities allow organizations to proactively serve their customers, reaching out to those who may need help and soliciting feedback about their experience. The openness of our customer service platform makes it easy for organizations to integrate with their other applications. Our customer service platform consolidates the data from customer interactions and provides organizations with powerful analytics and performance benchmarking.

References to Zendesk, the “Company”, “our”, or “we” in these notes refer to Zendesk, Inc. and its subsidiaries on a consolidated basis.

Basis of Presentation

These unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2014, filed on February 17, 2015. There have been no changes to our significant accounting policies described in the Annual Report on Form 10-K that have had a material impact on our condensed consolidated financial statements and related notes.

The consolidated balance sheet as of December 31, 2014 included herein was derived from the audited financial statements as of that date. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, our comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2015.

Follow-On Public Offering

 

In March 2015, we completed a follow-on public offering, in which we issued 8.8 million shares of our common stock at a public offering price of $22.75 per share. We received net proceeds of $190.1 million after deducting underwriting discounts and commissions of $8.7 million and other offering expenses of $0.9 million.

Initial Public Offering

In May 2014, we completed our initial public offering, or IPO, in which we issued and sold 12.8 million shares of common stock at a public offering price of $9.00 per share. We received net proceeds of $103.1 million after deducting underwriting discounts and commissions of $8.1 million and other offering expenses of $3.8 million. Upon the closing of the IPO, all shares of our then-outstanding redeemable convertible preferred stock automatically converted into an aggregate of 34.3 million shares of common stock.

Immaterial Error Correction

We corrected an immaterial prior period error on the statement of operations for the nine months ended September 30, 2014 related to the calculation of weighted average shares used to compute net loss per share attributable to common stockholders.  As a result of this error, basic and diluted net loss per share attributable to common stockholders decreased by $0.01 for the nine months ended September 30, 2014.  The adjustment did not affect any other financial statements presented.

 

Reclassification

Certain prior year amounts have been reclassified for consistency with the current year presentation.  These reclassifications had no effect on the reported results of operations.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods.

Significant items subject to such estimates and assumptions include the fair value of our common stock (through the date of our IPO) and share-based awards, fair value of acquired intangible assets, goodwill, unrecognized tax benefits, useful lives of intangible assets and property and equipment, and the capitalization and estimated useful life of our capitalized internal-use software.

These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ from those estimates.

Concentrations of Risk

As of September 30, 2015, one customer represented 10% of our total accounts receivable balance. As of December 31, 2014, no customers represented more than 10% of our accounts receivable balance.  There were no customers that individually exceeded 10% of our revenue during the three and nine months ended September 30, 2015 or 2014.

Recently Issued and Adopted Accounting Pronouncements

In September 2015, the FASB issued ASU 2015-16 “Simplifying the Accounting for Measurement-Period Adjustments”, which requires that an acquirer in a business combination recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The new standard is required to be applied prospectively.  We plan to adopt this guidance in the first quarter of 2016. The adoption of this new standard is not expected to have a material impact on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09 regarding ASC Topic 606 “Revenue from Contracts with Customers.” This standard provides principles for recognizing revenue to which an entity expects to be entitled for the transfer of promised goods or services to customers.  In August 2015, the FASB issued ASU 2015-14, which deferred the effective date of ASU 2014-09 by one year.  Early adoption is permitted.  The amendment may be applied retrospectively to each prior period presented, or with the cumulative effect recognized as of the date of initial adoption.  We are currently evaluating the accounting, transition and disclosure requirements of the standard and cannot currently estimate the financial statement impact of adoption.

 

Acquisition
Acquisition

Note 2. Acquisition

On March 21, 2014, we completed the acquisition of Zopim Technologies Pte Ltd., or Zopim, a software development company that provides a SaaS live chat service. As of December 31, 2014, we finalized our purchase accounting after adjustments were made to the preliminary purchase price allocation. The total adjusted acquisition date fair value of consideration transferred was $15.8 million ($4.9 million of cash and $10.9 million of our common stock), which included $1.1 million of cash and $2.4 million of common stock consideration that was held back between 12 and 18 months as partial security for standard indemnification obligations.  These hold back amounts were released in equal installments in March and September 2015.  The total adjusted purchase price was allocated to assets acquired and liabilities assumed as set forth below (in thousands). The excess of the purchase price over the net assets acquired was recorded as goodwill. Goodwill generated from the acquisition is attributable to expected synergies from future growth and potential future monetization opportunities, and is not deductible for income tax purposes.

 

Net tangible liabilities assumed

 

$

(385

)

Intangible assets

 

 

6,560

 

Goodwill

 

 

9,594

 

Total purchase price

 

$

15,769

 

 

In connection with the acquisition, we also established a retention plan pursuant to which we issued RSUs for 0.9 million shares of our common stock, which vest in three annual installments from the date of acquisition. In addition, we agreed to pay cash in an aggregate amount of $3.0 million in two annual installments from the date of acquisition to Zopim employees in connection with their continued employment, which is recorded as compensation expense over the associated service periods of such employees.  In the three months ended March 31, 2015, RSUs for 0.3 million shares of our common stock became vested pursuant to the terms of the retention plan, and we paid the first installment of the cash retention bonus in the amount of $1.5 million.

 

Pro forma revenue and results of operations have not been presented because the historical results of Zopim were not material to our consolidated financial statements in any period presented.

 

Financial Instruments
Financial Instruments

 

Note 3. Financial Instruments

Investments

The following tables present information about our financial assets measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014 based on the three-tier fair value hierarchy (in thousands):

 

 

 

Fair Value Measurement at

 

 

 

September 30, 2015

 

 

 

Level 1

 

 

Level 2

 

 

Total

 

Description

 

 

 

 

 

 

 

 

 

 

 

 

Corporate securities

 

$

 

 

$

35,736

 

 

$

35,736

 

Money market funds

 

 

25,368

 

 

 

 

 

 

25,368

 

Asset-backed securities

 

 

 

 

 

6,030

 

 

 

6,030

 

Commercial paper

 

 

 

 

 

3,991

 

 

 

3,991

 

Agency securities

 

 

 

 

 

2,003

 

 

 

2,003

 

Total

 

$

25,368

 

 

$

47,760

 

 

$

73,128

 

Included in cash and cash equivalents

 

 

 

 

 

 

 

 

 

$

25,368

 

Included in marketable securities

 

 

 

 

 

 

 

 

 

$

47,760

 

 

 

 

 

Fair Value Measurement at

 

 

 

December 31, 2014

 

 

 

Level 1

 

 

Level 2

 

 

Total

 

Description

 

 

 

 

 

 

 

 

 

 

 

 

Corporate securities

 

$

 

 

$

40,345

 

 

$

40,345

 

Money market funds

 

 

21,382

 

 

 

 

 

 

21,382

 

Asset-backed securities

 

 

 

 

 

5,080

 

 

 

5,080

 

U.S. treasury securities

 

 

 

 

 

1,991

 

 

 

1,991

 

Commercial paper

 

 

 

 

 

3,993

 

 

 

3,993

 

Total

 

$

21,382

 

 

$

51,409

 

 

$

72,791

 

Included in cash and cash equivalents

 

 

 

 

 

 

 

 

 

$

21,382

 

Included in marketable securities

 

 

 

 

 

 

 

 

 

$

51,409

 

 

As of September 30, 2015 and December 31, 2014, there were no securities within Level 3 of the fair value hierarchy.  Gross unrealized gains or losses for cash equivalents and available-for-sale marketable securities as of September 30, 2015 and December 31, 2014 were not material. As of September 30, 2015 and December 31, 2014, there were no securities that were in an unrealized loss position for more than 12 months.

The following table classifies our available-for-sale marketable securities by contractual maturities as of September 30, 2015 and December 31, 2014 (in thousands):

 

 

 

September 30,

2015

 

 

December 31,

2014

 

Due in one year or less

 

$

25,247

 

 

$

42,204

 

Due after one year

 

 

22,513

 

 

 

9,205

 

Total

 

$

47,760

 

 

$

51,409

 

 

For certain other financial instruments, including accounts receivable, accounts payable and other current liabilities, the carrying amounts approximate their fair value due to the relatively short maturity of these balances. Based on borrowing rates available to us for loans with similar terms and maturities, the carrying value of borrowings approximates fair value within Level 2 of the fair value hierarchy.

There were no transfers between fair value measurement levels during the three and nine months ended September 30, 2015.

Derivative Instruments and Hedging

Our foreign currency exposures typically arise from foreign operations and, to a lesser extent, sales in foreign currencies for subscriptions to our customer service platform.  In September 2015, we implemented a hedging program to mitigate the impact of foreign currency fluctuations on our future cash flows and earnings.  We entered into foreign currency forward contracts with certain financial institutions and designated those hedges as cash flow hedges.  Our foreign currency forward contracts generally have maturities of fifteen months or less.

These derivative instruments expose us to credit risk to the extent that our counterparties are unable to meet the terms of the arrangement. We seek to mitigate this risk by transacting with major financial institutions with high credit ratings. In addition, we have a master netting agreement with each of our counterparties, which permits net settlement of multiple, separate derivative contracts with a single payment.  We may also be required to exchange cash collateral with certain of our counterparties on a regular basis. ASC 815 permits companies to present the fair value of derivative instruments on a net basis according to master netting arrangements.  We have elected to present our derivative instruments on a gross basis in our consolidated financial statements.

Cash Flow Hedges

Our foreign currency forward contracts are designated as cash flow hedges of foreign currency forecasted revenues and expenses.  We recognize all derivative instruments on our balance sheet at fair value as either assets or liabilities.  The effective portion of the gain or loss on each forward contract is reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings to either revenue or operating expense in the same period, or periods, during which the hedged transaction affects earnings. The ineffective portion of the gains or losses, if any, is recorded immediately in other income (expense), net. The change in time value related to our cash flow hedges is excluded from the assessment of hedge effectiveness and is recorded immediately in other income (expense), net. We evaluate the effectiveness of our cash flow hedges on a quarterly basis.

As of September 30, 2015, $0.1 million of unrealized losses related to the effective portion of changes in the fair value of foreign currency forward contracts designated as cash flow hedges were included in the balance of other accumulated comprehensive loss. We expect to reclassify $0.1 million from accumulated other comprehensive loss into earnings over the next twelve months associated with our cash flow hedges.

The following table presents information about our derivative instruments on the consolidated balance sheet as of September 30, 2015 (in thousands):

 

 

September 30, 2015

 

 

Asset Derivatives

 

 

Liability Derivatives

 

Derivative Instrument

Balance Sheet Location

 

Fair Value

(Level 2)

 

 

Balance Sheet Location

 

Fair Value

(Level 2)

 

Foreign currency forward contracts

Other current assets

 

 

69

 

 

Accrued liabilities

 

 

163

 

Foreign currency forward contracts

Other assets

 

 

10

 

 

Other

liabilities

 

 

25

 

Total

 

 

$

79

 

 

 

 

$

188

 

Our foreign currency contracts are classified within Level 2 because the valuation inputs are based on quoted prices and market observable data of similar instruments in active markets, such as currency spot and forward rates.  Our foreign currency forward contracts had a total notional value of $47.6 million as of September 30, 2015. There were no derivative assets or liabilities on our consolidated balance sheet as of December 31, 2014.

The following table presents information about our derivative instruments on the statement of operations for the three and nine months ended September 30, 2015 (in thousands):

 

 

 

 

Three Months Ended September 30, 2015

 

 

Nine Months Ended September 30, 2015

 

Hedging Instrument

Location of Gain (Loss) Reclassified into Earnings

 

Gain (Loss) Recognized in AOCI

 

 

Gain (Loss) Reclassified from AOCI into Earnings

 

 

Gain (Loss) Recognized in AOCI

 

 

Gain (Loss) Reclassified from AOCI into Earnings

 

Foreign currency forward contracts

Revenue, cost of revenue, operating expenses

 

 

(101

)

 

 

 

 

 

(101

)

 

 

 

Total

 

 

$

(101

)

 

$

 

 

$

(101

)

 

$

 

There were no gains or losses on derivative instruments for the three and nine months ended September 30, 2014.

All derivatives have been designated as hedging instruments.  Amounts recognized in earnings related to excluded time value and hedge ineffectiveness were not material for the three and nine months ended September 30, 2015.

Property and Equipment
Property and Equipment

Note 4. Property and Equipment

Property and equipment, net consists of the following (in thousands):  

 

 

 

September 30,

2015

 

 

December 31,

2014

 

Capitalized internal-use software

 

$

25,613

 

 

$

18,541

 

Hosting equipment

 

 

24,740

 

 

 

14,085

 

Leasehold improvements

 

 

16,651

 

 

 

15,144

 

Computer equipment and software

 

 

5,949

 

 

 

4,310

 

Furniture and fixtures

 

 

5,092

 

 

 

4,524

 

Construction in progress

 

 

4,575

 

 

 

3,546

 

Total

 

 

82,620

 

 

 

60,150

 

Less: accumulated depreciation and amortization

 

 

(29,873

)

 

 

(18,255

)

Property and equipment, net

 

$

52,747

 

 

$

41,895

 

 

Depreciation expense was $2.8 million and $1.7 million for the three months ended September 30, 2015 and 2014, respectively, and $7.7 million and $4.0 million for the nine months ended September 30, 2015 and 2014, respectively.

 

Amortization expense of capitalized internal-use software totaled $1.6 million and $0.9 million for the three months ended September 30, 2015 and 2014, respectively, and $4.6 million and $2.6 million for the nine months ended September 30, 2015 and 2014, respectively. The carrying value of capitalized internal-use software at September 30, 2015 and December 31, 2014 was $14.2 million and $13.6 million, respectively, including $1.7 million and $3.5 million in construction in progress, respectively.

Goodwill and Purchased Intangible Assets
Goodwill and Purchased Intangible Assets

Note 5. Goodwill and Purchased Intangible Assets

The changes in the carrying amount of goodwill for the nine months ended September 30, 2015 are as follows (in thousands):

 

Balance as of December 31, 2014

 

$

9,240

 

Foreign currency translation adjustments

 

 

(670

)

Balance as of September 30, 2015

 

$

8,570

 

 

Purchased intangible assets subject to amortization as of September 30, 2015 and December 31, 2014 consist of the following (in thousands).

 

 

 

September 30, 2015

 

 

 

Cost

 

 

Accumulated

Amortization

 

 

Foreign Currency Translation Adjustment

 

 

Net

 

 

Remaining Useful Life

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In years)

 

Developed technology

 

$

5,200

 

 

$

(2,271

)

 

$

(326

)

 

$

2,603

 

 

 

2.0

 

Customer relationships

 

 

1,300

 

 

 

(497

)

 

 

(88

)

 

 

715

 

 

 

2.5

 

Trade name

 

 

60

 

 

 

(60

)

 

 

 

 

 

 

 

 

 

 

 

$

6,560

 

 

$

(2,828

)

 

$

(414

)

 

$

3,318

 

 

 

 

 

 

 

 

December 31, 2014

 

 

 

Cost

 

 

Accumulated

Amortization

 

 

Foreign Currency Translation Adjustment

 

 

Net

 

 

Remaining Useful Life

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In years)

 

Developed technology

 

$

5,200

 

 

$

(1,118

)

 

$

(191

)

 

$

3,891

 

 

 

2.7

 

Customer relationships

 

 

1,300

 

 

 

(244

)

 

 

(48

)

 

 

1,008

 

 

 

3.2

 

Trade name

 

 

60

 

 

 

(45

)

 

 

(2

)

 

 

13

 

 

 

0.2

 

 

 

$

6,560

 

 

$

(1,407

)

 

$

(241

)

 

$

4,912

 

 

 

 

 

 

Amortization expense of purchased intangible assets for the three months ended September 30, 2015 and 2014 was $0.4 million and $0.5 million, respectively, and $1.4 million and $1.0 million for the nine months ended September 30, 2015 and 2014, respectively.

Estimated future amortization expense as of September 30, 2015 is as follows (in thousands):

 

Remainder of 2015

 

$

406

 

2016

 

 

1,610

 

2017

 

 

1,239

 

2018

 

 

63

 

 

 

$

3,318

 

 

Credit Facility
Credit Facility

Note 6. Credit Facility

Until its termination in June 2015, we had a credit facility with Silicon Valley Bank consisting of a $20.0 million revolving line of credit and a $10.0 million equipment line of credit. The revolving line of credit bore interest at the prime rate plus 2.0% per annum prior to our IPO and was reduced to the prime rate upon the consummation of our IPO.  Borrowings on the equipment line of credit bore interest of 2.5% per annum.  In June 2014, we repaid all outstanding principal and accrued interest under the revolving line of credit. In June 2015, we repaid all outstanding principal and interest under the equipment line of credit and terminated the Silicon Valley Bank credit facility.

Commitments and Contingencies
Commitments and Contingencies

Note 7. Commitments and Contingencies

Leases

We lease office space under noncancelable operating leases with various expiration dates. Certain of the office space lease agreements contain rent holidays or rent escalation provisions. Rent holiday and rent escalation provisions are considered in determining the straight-line expense to be recorded over the lease term. The lease term begins on the date of initial possession of the leased property for purposes of recognizing lease expense on a straight-line basis over the term of the lease. Rent expense was $2.0 million and $1.7 million for the three months ended September 30, 2015 and 2014, respectively, and $5.4 million and $5.2 million for the nine months ended September 30, 2015 and 2014, respectively.  

We leased computer equipment from various parties under capital lease agreements that expired in March 2015.  

Litigation and Loss Contingencies

We accrue estimates for resolution of legal and other contingencies when losses are probable and estimable. From time to time, we may become a party to litigation and subject to claims incident to the ordinary course of business, including intellectual property claims, labor and employment claims, and threatened claims, breach of contract claims, tax, and other matters. We currently have no material pending litigation.

We are not currently aware of any litigation matters or loss contingencies that would be expected to have a material adverse effect on our business, consolidated financial position, results of operations, comprehensive loss, or cash flows.

Indemnifications

In the ordinary course of business, we enter into contractual arrangements under which we agree to provide indemnification of varying scope and terms to customers, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties, and other liabilities relating to or arising from our customer service platform, live chat software, analytics software, or our acts or omissions. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. Further, our obligations under these agreements may be limited in terms of time and/or amount, and in some instances, we may have recourse against third parties for certain payments. In addition, we have indemnification agreements with our directors and executive officers that require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations may vary. To date, we have not incurred any material costs, and we have not accrued any liabilities in the accompanying condensed consolidated financial statements, as a result of these obligations.

Certain of our product offerings contain service-level agreements warranting defined levels of uptime reliability and performance and permitting those customers to receive credits for future services in the event that we fail to meet those levels. To date, we have not accrued for any significant liabilities in the accompanying consolidated financial statements as a result of these service-level agreements.  

Common Stock and Stockholders' Equity (Deficit)
Common Stock and Stockholders' Equity (Deficit)

Note 8. Common Stock and Stockholders’ Equity

 

Common Stock

Upon the completion of our IPO, we increased the number of shares authorized for issuance from 125 million to 400 million with a par value of $0.01 per share.  As of September 30, 2015 and December 31, 2014, there were 89.1 million and 76.1 million shares of common stock issued and 88.5 million and 75.5 million shares outstanding, respectively.  Included within the number of shares issued and outstanding were 0.3 million and 0.6 million shares of common stock subject to repurchase, as of September 30, 2015 and December 31, 2014, respectively.

 

Preferred Stock

As of September 30, 2015 and December 31, 2014, 10 million shares of preferred stock were authorized for issuance with a par value of $0.01 per share and no shares of preferred stock were issued or outstanding.

Employee Equity Plans

Employee Stock Purchase Plan

Our board of directors adopted the Employee Stock Purchase Plan, or ESPP, in February 2014, which became effective in May 2014 upon the effectiveness of the registration statement related to our IPO. Under the ESPP, eligible employees are granted options to purchase shares of our common stock through payroll deductions. The ESPP provides for eighteen-month offering periods, which include three six-month purchase periods. At the end of each purchase period, employees are able to purchase shares at 85% of the lower of the fair market value of our common stock at the beginning of an offering period or the fair market value of our common stock at the end of the purchase period. No shares of common stock were purchased under the ESPP during the three months ended September 30, 2015.  For the nine months ended September 30, 2015, 0.6 million shares of common stock were purchased under the ESPP. Pursuant to the terms of the ESPP, the number of shares reserved under the ESPP increased by 0.8 million shares on January 1, 2015.  As of September 30, 2015, 3.4 million shares of common stock were available for issuance under the ESPP.

Stock Option and Grant Plans

Our board of directors adopted the 2009 Stock Option and Grant Plan, or the 2009 Plan, in July 2009. The 2009 Plan was terminated in connection with our IPO, and accordingly, no shares are available for issuance under this plan. The 2009 Plan continues to govern outstanding awards granted thereunder.

Our 2014 Stock Option and Incentive Plan, or the 2014 Plan, serves as the successor to our 2009 Plan.  Pursuant to the terms of the 2014 Plan, the number of shares reserved for issuance under the 2014 Plan increased by 3.8 million shares on January 1, 2015.  As of September 30, 2015, we had 6.0 million shares of common stock available for future grants under the 2014 Plan.

The following table summarizes our stock option and RSU award activities for the nine months ended September 30, 2015 (in thousands, except per share information):

 

 

 

 

 

 

 

Options Outstanding

 

 

RSUs Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

Shares

 

 

 

 

 

 

Weighted

 

 

Remaining

 

 

Aggregate

 

 

 

 

 

 

Average

 

 

 

Available

 

 

Number of

 

 

Average

 

 

Contractual

 

 

Intrinsic

 

 

Outstanding

 

 

Grant Date

 

 

 

for Grant

 

 

Shares

 

 

Exercise Price

 

 

Term

 

 

Value

 

 

RSUs

 

 

Fair Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In years)

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding — January 1, 2015

 

 

7,560

 

 

 

12,043

 

 

$

7.39

 

 

 

8.29

 

 

$

204,467

 

 

 

3,064

 

 

$

13.69

 

Increase in authorized shares

 

 

3,779

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options granted

 

 

(2,009

)

 

 

2,009

 

 

 

24.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RSUs granted

 

 

(3,775

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,775

 

 

 

22.83

 

Stock options exercised

 

 

 

 

 

 

(2,308

)

 

 

2.50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RSUs vested

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,290

)

 

 

16.20

 

Unvested shares repurchased

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options forfeited or canceled

 

 

67

 

 

 

(67

)

 

 

4.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RSUs forfeited or cancelled

 

 

332

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(332

)

 

 

18.75

 

Outstanding — September 30, 2015

 

 

5,956

 

 

 

11,677

 

 

$

11.28

 

 

$

8.12

 

 

$

98,481

 

 

 

5,217

 

 

$

19.36

 

 

Aggregate intrinsic value represents the difference between our closing stock price of its common stock and the exercise price of outstanding, in-the-money options. Our closing stock price as reported on the New York Stock Exchange as of September 30, 2015 was $19.71.

 

As of September 30, 2015, we had a total of $145.8 million in future share-based compensation expense related to all equity awards, net of estimated forfeitures, to be recognized over a weighted average period of 3.1 years.

Early Exercise of Stock Options and Purchase of Unvested Stock Awards

Certain of our stock options permit early exercise. Common stock purchased pursuant to an early exercise of stock options or unvested stock awards is not deemed to be outstanding for financial reporting purposes until those shares vest. Therefore, cash received in exchange for unvested shares is recorded as a liability and is transferred into common stock and additional paid-in capital as the shares vest. Upon termination of service, we may, at our discretion, repurchase unvested shares acquired through early exercise of stock options or purchase of unvested stock awards at a price equal to the price per share paid upon the exercise of such options or the purchase of such unvested stock awards. As of September 30, 2015 and December 31, 2014, there were 0.3 million and 0.6 million shares, respectively, outstanding as a result of the early exercise of stock options and purchase of unvested stock awards by our employees and directors that were classified as accrued liabilities for an aggregated amount of $1.3 million and $2.1 million, respectively.

 

Net Loss Per Share
Net Loss Per Share

Note 9. Net Loss Per Share

We compute net loss per share of common stock in conformity with the two-class method required for participating securities. We considered all series of the redeemable convertible preferred stock to be participating securities as the holders of the preferred stock were entitled to receive a non-cumulative dividend on a pari passu basis in the event that a dividend is paid on common stock. We also consider shares of common stock issued upon the early exercise of stock options subject to repurchase to be participating securities, because holders of such shares have non-forfeitable dividend rights in the event a dividend is paid on common stock. The holders of all series of the redeemable convertible preferred stock and the holders of shares of common stock acquired upon early exercise of stock options do not have a contractual obligation to share in our losses. As such, our net losses for the three and nine months ended September 30, 2015 and 2014 were not allocated to these participating securities. Upon the closing of the IPO in May 2014, all shares of our then-outstanding redeemable convertible preferred stock automatically converted into our common stock.  

Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, less the weighted-average unvested common stock subject to repurchase. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including common stock issuable upon conversion of the redeemable convertible preferred stock, outstanding share-based awards, and outstanding 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 common stock outstanding would have been anti-dilutive.

The following table presents the calculation of basic and diluted net loss per share for the periods presented (in thousands, except per share data):

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Net loss

 

$

(18,924

)

 

$

(17,919

)

 

$

(59,575

)

 

$

(49,922

)

Less: Accretion of redeemable convertible preferred stock

 

 

 

 

 

 

 

 

 

 

 

(18

)

Net loss attributable to common stockholders

 

$

(18,924

)

 

$

(17,919

)

 

$

(59,575

)

 

$

(49,940

)

Basic shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares used to compute basic net

   loss per share

 

 

87,777

 

 

 

71,732

 

 

 

83,536

 

 

 

46,751

 

Diluted shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares used to compute diluted net

   loss per share

 

 

87,777

 

 

 

71,732

 

 

 

83,536

 

 

 

46,751

 

Net loss per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.22

)

 

$

(0.25

)

 

$

(0.71

)

 

$

(1.07

)

 

The anti-dilutive securities excluded from the shares used to calculate the diluted net loss per share are as follows (in thousands):

 

 

 

As of September 30,

 

 

 

2015

 

 

2014

 

Shares subject to outstanding common stock options and employee stock

   purchase plan

 

 

12,067

 

 

 

14,521

 

Restricted stock units

 

 

5,217

 

 

 

2,944

 

 

 

 

17,284

 

 

 

17,465

 

 

Income Taxes
Income Taxes

Note 10. Income Taxes

The effective tax rates for the three and nine months ended September 30, 2015 and 2014 were less than 2%.  The effective tax rate differs from the statutory rate primarily as a result of not recognizing a deferred tax asset for U.S. losses due to having a full valuation allowance against U.S. deferred tax assets.  There were no material changes to the unrecognized tax benefits during the three and nine months ended September 30, 2015 and 2014.

Geographic Information
Geographic Information

Note 11. Geographic Information

Our chief operating decision maker reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating our financial performance. Accordingly, we have determined that we operate in a single reporting segment.

Revenue

The following table presents our revenue by geographic areas, as determined based on the billing address of our customers (in thousands):

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

United States

 

$

31,388

 

 

$

19,031

 

 

$

81,094

 

 

$

50,774

 

EMEA

 

 

15,397

 

 

 

9,704

 

 

 

41,434

 

 

 

24,565

 

Other

 

 

8,876

 

 

 

5,175

 

 

 

23,594

 

 

 

13,169

 

Total

 

$

55,661

 

 

$

33,910

 

 

$

146,122

 

 

$

88,508

 

 

Long-Lived Assets

The following table presents our long-lived assets by geographic areas (in thousands):

 

 

 

As of

 

 

As of

 

 

 

September 30, 2015

 

 

December 31, 2014

 

United States

 

$

25,223

 

 

$

22,817

 

EMEA

 

 

10,304

 

 

 

4,373

 

Other

 

 

3,031

 

 

 

1,095

 

Total

 

$

38,558

 

 

$

28,286

 

 

The carrying value of capitalized internal-use software and intangible assets is excluded from the balance of long-lived assets presented in the table above.

Subsequent Event
Subsequent Event

Note 12. Subsequent Event

On October 13, 2015, we completed the acquisition of We Are Cloud SAS, or WAC, the maker of BIME Analytics software. We acquired 100 percent of the outstanding shares of WAC in exchange for purchase consideration of $45.0 million in cash, subject to working capital adjustments.  As partial security for standard indemnification obligations, $7.0 million of the consideration will be held in escrow for a period of up to 18 months, with a portion to be released 12 months following the closing of the acquisition.  We have also entered into retention arrangements pursuant to which we have issued restricted stock unit awards for an aggregate of approximately 0.5 million shares of our common stock, subject to vesting based on continued employment.  The acquisition will be accounted for as a business combination.  We are in the process of evaluating the impact of the business combination on our consolidated financial statements.

 

Overview and Basis of Presentation (Policies)

Basis of Presentation

These unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2014, filed on February 17, 2015. There have been no changes to our significant accounting policies described in the Annual Report on Form 10-K that have had a material impact on our condensed consolidated financial statements and related notes.

The consolidated balance sheet as of December 31, 2014 included herein was derived from the audited financial statements as of that date. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, our comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2015.

Follow-On Public Offering

 

In March 2015, we completed a follow-on public offering, in which we issued 8.8 million shares of our common stock at a public offering price of $22.75 per share. We received net proceeds of $190.1 million after deducting underwriting discounts and commissions of $8.7 million and other offering expenses of $0.9 million.

Initial Public Offering

In May 2014, we completed our initial public offering, or IPO, in which we issued and sold 12.8 million shares of common stock at a public offering price of $9.00 per share. We received net proceeds of $103.1 million after deducting underwriting discounts and commissions of $8.1 million and other offering expenses of $3.8 million. Upon the closing of the IPO, all shares of our then-outstanding redeemable convertible preferred stock automatically converted into an aggregate of 34.3 million shares of common stock.

Immaterial Error Correction

We corrected an immaterial prior period error on the statement of operations for the nine months ended September 30, 2014 related to the calculation of weighted average shares used to compute net loss per share attributable to common stockholders.  As a result of this error, basic and diluted net loss per share attributable to common stockholders decreased by $0.01 for the nine months ended September 30, 2014.  The adjustment did not affect any other financial statements presented.

Reclassification

Certain prior year amounts have been reclassified for consistency with the current year presentation.  These reclassifications had no effect on the reported results of operations.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reported periods.

Significant items subject to such estimates and assumptions include the fair value of our common stock (through the date of our IPO) and share-based awards, fair value of acquired intangible assets, goodwill, unrecognized tax benefits, useful lives of intangible assets and property and equipment, and the capitalization and estimated useful life of our capitalized internal-use software.

These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ from those estimates.

Concentrations of Risk

As of September 30, 2015, one customer represented 10% of our total accounts receivable balance. As of December 31, 2014, no customers represented more than 10% of our accounts receivable balance.  There were no customers that individually exceeded 10% of our revenue during the three and nine months ended September 30, 2015 or 2014.

Recently Issued and Adopted Accounting Pronouncements

In September 2015, the FASB issued ASU 2015-16 “Simplifying the Accounting for Measurement-Period Adjustments”, which requires that an acquirer in a business combination recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The new standard is required to be applied prospectively.  We plan to adopt this guidance in the first quarter of 2016. The adoption of this new standard is not expected to have a material impact on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09 regarding ASC Topic 606 “Revenue from Contracts with Customers.” This standard provides principles for recognizing revenue to which an entity expects to be entitled for the transfer of promised goods or services to customers.  In August 2015, the FASB issued ASU 2015-14, which deferred the effective date of ASU 2014-09 by one year.  Early adoption is permitted.  The amendment may be applied retrospectively to each prior period presented, or with the cumulative effect recognized as of the date of initial adoption.  We are currently evaluating the accounting, transition and disclosure requirements of the standard and cannot currently estimate the financial statement impact of adoption.

 

Acquisition (Tables)
Schedule of Purchase Price Allocation for Acquisitions

  The total adjusted purchase price was allocated to assets acquired and liabilities assumed as set forth below (in thousands).

 

Net tangible liabilities assumed

 

$

(385

)

Intangible assets

 

 

6,560

 

Goodwill

 

 

9,594

 

Total purchase price

 

$

15,769

 

 

Financial Instruments (Tables)

The following tables present information about our financial assets measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014 based on the three-tier fair value hierarchy (in thousands):

 

 

 

Fair Value Measurement at

 

 

 

September 30, 2015

 

 

 

Level 1

 

 

Level 2

 

 

Total

 

Description

 

 

 

 

 

 

 

 

 

 

 

 

Corporate securities

 

$

 

 

$

35,736

 

 

$

35,736

 

Money market funds

 

 

25,368

 

 

 

 

 

 

25,368

 

Asset-backed securities

 

 

 

 

 

6,030

 

 

 

6,030

 

Commercial paper

 

 

 

 

 

3,991

 

 

 

3,991

 

Agency securities

 

 

 

 

 

2,003

 

 

 

2,003

 

Total

 

$

25,368

 

 

$

47,760

 

 

$

73,128

 

Included in cash and cash equivalents

 

 

 

 

 

 

 

 

 

$

25,368

 

Included in marketable securities

 

 

 

 

 

 

 

 

 

$

47,760

 

 

 

 

 

Fair Value Measurement at

 

 

 

December 31, 2014

 

 

 

Level 1

 

 

Level 2

 

 

Total

 

Description

 

 

 

 

 

 

 

 

 

 

 

 

Corporate securities

 

$

 

 

$

40,345

 

 

$

40,345

 

Money market funds

 

 

21,382

 

 

 

 

 

 

21,382

 

Asset-backed securities

 

 

 

 

 

5,080

 

 

 

5,080

 

U.S. treasury securities

 

 

 

 

 

1,991

 

 

 

1,991

 

Commercial paper

 

 

 

 

 

3,993

 

 

 

3,993

 

Total

 

$

21,382

 

 

$

51,409

 

 

$

72,791

 

Included in cash and cash equivalents

 

 

 

 

 

 

 

 

 

$

21,382

 

Included in marketable securities

 

 

 

 

 

 

 

 

 

$

51,409

 

 

The following table classifies our available-for-sale marketable securities by contractual maturities as of September 30, 2015 and December 31, 2014 (in thousands):

 

 

 

September 30,

2015

 

 

December 31,

2014

 

Due in one year or less

 

$

25,247

 

 

$

42,204

 

Due after one year

 

 

22,513

 

 

 

9,205

 

Total

 

$

47,760

 

 

$

51,409

 

 

The following table presents information about our derivative instruments on the consolidated balance sheet as of September 30, 2015 (in thousands):

 

 

September 30, 2015

 

 

Asset Derivatives

 

 

Liability Derivatives

 

Derivative Instrument

Balance Sheet Location

 

Fair Value

(Level 2)

 

 

Balance Sheet Location

 

Fair Value

(Level 2)

 

Foreign currency forward contracts

Other current assets

 

 

69

 

 

Accrued liabilities

 

 

163

 

Foreign currency forward contracts

Other assets

 

 

10

 

 

Other

liabilities

 

 

25

 

Total

 

 

$

79

 

 

 

 

$

188

 

 

The following table presents information about our derivative instruments on the statement of operations for the three and nine months ended September 30, 2015 (in thousands):

 

 

 

 

Three Months Ended September 30, 2015

 

 

Nine Months Ended September 30, 2015

 

Hedging Instrument

Location of Gain (Loss) Reclassified into Earnings

 

Gain (Loss) Recognized in AOCI

 

 

Gain (Loss) Reclassified from AOCI into Earnings

 

 

Gain (Loss) Recognized in AOCI

 

 

Gain (Loss) Reclassified from AOCI into Earnings

 

Foreign currency forward contracts

Revenue, cost of revenue, operating expenses

 

 

(101

)

 

 

 

 

 

(101

)

 

 

 

Total

 

 

$

(101

)

 

$

 

 

$

(101

)

 

$

 

 

Property and Equipment (Tables)
Components of Property and Equipment

Property and equipment, net consists of the following (in thousands):  

 

 

 

September 30,

2015

 

 

December 31,

2014

 

Capitalized internal-use software

 

$

25,613

 

 

$

18,541

 

Hosting equipment

 

 

24,740

 

 

 

14,085

 

Leasehold improvements

 

 

16,651

 

 

 

15,144

 

Computer equipment and software

 

 

5,949

 

 

 

4,310

 

Furniture and fixtures

 

 

5,092

 

 

 

4,524

 

Construction in progress

 

 

4,575

 

 

 

3,546

 

Total

 

 

82,620

 

 

 

60,150

 

Less: accumulated depreciation and amortization

 

 

(29,873

)

 

 

(18,255

)

Property and equipment, net

 

$

52,747

 

 

$

41,895

 

 

Goodwill and Purchased Intangibles Assets (Tables)

The changes in the carrying amount of goodwill for the nine months ended September 30, 2015 are as follows (in thousands):

 

Balance as of December 31, 2014

 

$

9,240

 

Foreign currency translation adjustments

 

 

(670

)

Balance as of September 30, 2015

 

$

8,570

 

 

 

Purchased intangible assets subject to amortization as of September 30, 2015 and December 31, 2014 consist of the following (in thousands).

 

 

 

September 30, 2015

 

 

 

Cost

 

 

Accumulated

Amortization

 

 

Foreign Currency Translation Adjustment

 

 

Net

 

 

Remaining Useful Life

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In years)

 

Developed technology

 

$

5,200

 

 

$

(2,271

)

 

$

(326

)

 

$

2,603

 

 

 

2.0

 

Customer relationships

 

 

1,300

 

 

 

(497

)

 

 

(88

)

 

 

715

 

 

 

2.5

 

Trade name

 

 

60

 

 

 

(60

)

 

 

 

 

 

 

 

 

 

 

 

$

6,560

 

 

$

(2,828

)

 

$

(414

)

 

$

3,318

 

 

 

 

 

 

 

 

December 31, 2014

 

 

 

Cost

 

 

Accumulated

Amortization

 

 

Foreign Currency Translation Adjustment

 

 

Net

 

 

Remaining Useful Life

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In years)

 

Developed technology

 

$

5,200

 

 

$

(1,118

)

 

$

(191

)

 

$

3,891

 

 

 

2.7

 

Customer relationships

 

 

1,300

 

 

 

(244

)

 

 

(48

)

 

 

1,008

 

 

 

3.2

 

Trade name

 

 

60

 

 

 

(45

)

 

 

(2

)

 

 

13

 

 

 

0.2

 

 

 

$

6,560

 

 

$

(1,407

)

 

$

(241

)

 

$

4,912

 

 

 

 

 

 

Estimated future amortization expense as of September 30, 2015 is as follows (in thousands):

 

Remainder of 2015

 

$

406

 

2016

 

 

1,610

 

2017

 

 

1,239

 

2018

 

 

63

 

 

 

$

3,318

 

 

Common Stock and Stockholders' Equity (Deficit) (Tables)
Summary of Stock Option and RSU Award Activity

The following table summarizes our stock option and RSU award activities for the nine months ended September 30, 2015 (in thousands, except per share information):

 

 

 

 

 

 

 

Options Outstanding

 

 

RSUs Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

Shares

 

 

 

 

 

 

Weighted

 

 

Remaining

 

 

Aggregate

 

 

 

 

 

 

Average

 

 

 

Available

 

 

Number of

 

 

Average

 

 

Contractual

 

 

Intrinsic

 

 

Outstanding

 

 

Grant Date

 

 

 

for Grant

 

 

Shares

 

 

Exercise Price

 

 

Term

 

 

Value

 

 

RSUs

 

 

Fair Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In years)

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding — January 1, 2015

 

 

7,560

 

 

 

12,043

 

 

$

7.39

 

 

 

8.29

 

 

$

204,467

 

 

 

3,064

 

 

$

13.69

 

Increase in authorized shares

 

 

3,779

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options granted

 

 

(2,009

)

 

 

2,009

 

 

 

24.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RSUs granted

 

 

(3,775

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,775

 

 

 

22.83

 

Stock options exercised

 

 

 

 

 

 

(2,308

)

 

 

2.50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RSUs vested

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,290

)

 

 

16.20

 

Unvested shares repurchased

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options forfeited or canceled

 

 

67

 

 

 

(67

)

 

 

4.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RSUs forfeited or cancelled

 

 

332

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(332

)

 

 

18.75

 

Outstanding — September 30, 2015

 

 

5,956

 

 

 

11,677

 

 

$

11.28

 

 

$

8.12

 

 

$

98,481

 

 

 

5,217

 

 

$

19.36

 

 

Net Loss Per Share (Tables)

The following table presents the calculation of basic and diluted net loss per share for the periods presented (in thousands, except per share data):

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Net loss

 

$

(18,924

)

 

$

(17,919

)

 

$

(59,575

)

 

$

(49,922

)

Less: Accretion of redeemable convertible preferred stock

 

 

 

 

 

 

 

 

 

 

 

(18

)

Net loss attributable to common stockholders

 

$

(18,924

)

 

$

(17,919

)

 

$

(59,575

)

 

$

(49,940

)

Basic shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares used to compute basic net

   loss per share

 

 

87,777

 

 

 

71,732

 

 

 

83,536

 

 

 

46,751

 

Diluted shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares used to compute diluted net

   loss per share

 

 

87,777

 

 

 

71,732

 

 

 

83,536

 

 

 

46,751

 

Net loss per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.22

)

 

$

(0.25

)

 

$

(0.71

)

 

$

(1.07

)

 

The anti-dilutive securities excluded from the shares used to calculate the diluted net loss per share are as follows (in thousands):

 

 

 

As of September 30,

 

 

 

2015

 

 

2014

 

Shares subject to outstanding common stock options and employee stock

   purchase plan

 

 

12,067

 

 

 

14,521

 

Restricted stock units

 

 

5,217

 

 

 

2,944

 

 

 

 

17,284

 

 

 

17,465

 

 

Geographic Information (Tables)

The following table presents our revenue by geographic areas, as determined based on the billing address of our customers (in thousands):

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

United States

 

$

31,388

 

 

$

19,031

 

 

$

81,094

 

 

$

50,774

 

EMEA

 

 

15,397

 

 

 

9,704

 

 

 

41,434

 

 

 

24,565

 

Other

 

 

8,876

 

 

 

5,175

 

 

 

23,594

 

 

 

13,169

 

Total

 

$

55,661

 

 

$

33,910

 

 

$

146,122

 

 

$

88,508

 

 

The following table presents our long-lived assets by geographic areas (in thousands):

 

 

 

As of

 

 

As of

 

 

 

September 30, 2015

 

 

December 31, 2014

 

United States

 

$

25,223

 

 

$

22,817

 

EMEA

 

 

10,304

 

 

 

4,373

 

Other

 

 

3,031

 

 

 

1,095

 

Total

 

$

38,558

 

 

$

28,286

 

 

Overview and Basis of Presentation - Additional Information (Details) (USD $)
Share data in Millions, except Per Share data, unless otherwise specified
9 Months Ended 12 Months Ended 9 Months Ended 12 Months Ended 3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 1 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Customer Concentration Risk
Accounts Receivable
Customer
Dec. 31, 2014
Customer Concentration Risk
Accounts Receivable
Customer
Sep. 30, 2015
Customer Concentration Risk
Accounts Receivable
Maximum
Dec. 31, 2014
Customer Concentration Risk
Accounts Receivable
Maximum
Sep. 30, 2015
Customer Concentration Risk
Sales Revenue, Net
Customer
Sep. 30, 2014
Customer Concentration Risk
Sales Revenue, Net
Customer
Sep. 30, 2015
Customer Concentration Risk
Sales Revenue, Net
Customer
Sep. 30, 2014
Customer Concentration Risk
Sales Revenue, Net
Customer
Sep. 30, 2015
Customer Concentration Risk
Sales Revenue, Net
Maximum
Sep. 30, 2014
Customer Concentration Risk
Sales Revenue, Net
Maximum
Sep. 30, 2015
Customer Concentration Risk
Sales Revenue, Net
Maximum
Sep. 30, 2014
Customer Concentration Risk
Sales Revenue, Net
Maximum
Mar. 31, 2015
Follow On Public Offering
May 31, 2014
IPO
Overview And Basis Of Presentation [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year founded
2007 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reincorporated date
Apr. 30, 2009 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of common stock sold in initial public offering
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8.8 
12.8 
Share price
$ 19.71 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 22.75 
$ 9.00 
Proceeds from follow-on public offering, net of issuance costs
$ 190,110,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 190,100,000 
 
Underwriting discounts and commission on IPO
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8,700,000 
8,100,000 
Offering expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
900,000 
3,800,000 
Proceeds from initial public offering, net of underwriting discounts and commissions and other offering expenses
 
$ 103,110,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 103,100,000 
Number of shares of common stock issued upon automatic conversion of convertible preferred stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
34.3 
Immaterial error correction
We corrected an immaterial prior period error on the statement of operations for the nine months ended September 30, 2014 related to the calculation of weighted average shares used to compute net loss per share attributable to common stockholders. As a result of this error, basic and diluted net loss per share attributable to common stockholders decreased by $0.01 for the nine months ended September 30, 2014. The adjustment did not affect any other financial statements presented. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Decrease in earnings per share due to immaterial error correction
$ 0.01 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of customers
 
 
 
 
 
 
 
 
 
 
Percentage of total revenue or receivables
 
 
 
 
10.00% 
10.00% 
 
 
 
 
10.00% 
10.00% 
10.00% 
10.00% 
 
 
Acquisition - Additional Information (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
9 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended
Sep. 30, 2015
Mar. 21, 2014
Zopim
Mar. 31, 2015
Zopim
Mar. 21, 2014
Zopim
Restricted Stock Units
Mar. 31, 2015
Zopim
Restricted Stock Units
Mar. 21, 2014
Zopim
Minimum
Mar. 21, 2014
Zopim
Maximum
Mar. 21, 2014
Zopim
Common Stock Consideration
Mar. 21, 2014
Zopim
Cash
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
Business acquisition, fair value of consideration transferred
 
$ 15.8 
 
 
 
 
 
 
 
Business acquisition, fair value of consideration transferred, cash
 
4.9 
 
 
 
 
 
 
 
Business acquisition, fair value of consideration transferred, common stock
 
10.9 
 
 
 
 
 
 
 
Cash portion of fair value consideration transferred
 
 
 
 
 
 
 
2.4 
1.1 
Number of months that cash and shares were held back
 
 
 
 
 
12 months 
18 months 
 
 
RSUs issued pursuant to retention plan, in connection with the acquisition
3,775 
 
 
900 
 
 
 
 
 
Cash to be paid pursuant to retention plan, in connection with the acquisition
 
3.0 
 
 
 
 
 
 
 
Vesting period
 
 
 
3 years 
 
 
 
 
 
RSUs vested pursuant to retention plan, in connection with the acquisition
1,290 
 
 
 
300 
 
 
 
 
Cash retention bonus paid pursuant to retention plan, in connection with the acquisition
 
 
$ 1.5 
 
 
 
 
 
 
Acquisition - Schedule of Purchase Price Allocation for Acquisitions (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Business Acquisition [Line Items]
 
 
Goodwill
$ 8,570 
$ 9,240 
Zopim
 
 
Business Acquisition [Line Items]
 
 
Net tangible liabilities assumed
 
(385)
Intangible assets
 
6,560 
Goodwill
 
9,594 
Total purchase price
 
$ 15,769 
Financial Instruments - Financial Assets Measured at Fair Value on Recurring Basis (Details) (USD $)
Sep. 30, 2015
Dec. 31, 2014
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
$ 73,128,000 
$ 72,791,000 
Included in marketable securities
47,760,000 
51,409,000 
Level 1
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
25,368,000 
21,382,000 
Level 2
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
47,760,000 
51,409,000 
Corporate securities
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
35,736,000 
40,345,000 
Corporate securities |
Level 2
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
35,736,000 
40,345,000 
Money market funds
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
25,368,000 
21,382,000 
Money market funds |
Level 1
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
25,368,000 
21,382,000 
Asset-backed Securities
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
6,030,000 
5,080,000 
Asset-backed Securities |
Level 2
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
6,030,000 
5,080,000 
Commercial paper
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
3,991,000 
3,993,000 
Commercial paper |
Level 2
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
3,991,000 
3,993,000 
Agency securities
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
2,003,000 
 
Agency securities |
Level 2
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
2,003,000 
 
U.S. treasury securities
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
 
1,991,000 
U.S. treasury securities |
Level 2
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fair value of financial assets
 
1,991,000 
Fair Value Measurements, Recurring
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Included in cash and cash equivalents
25,368,000 
21,382,000 
Included in marketable securities
$ 47,760,000 
$ 51,409,000 
Financial Instruments - Additional Information (Details) (USD $)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Dec. 31, 2014
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
 
 
Securities within Level 3 of the fair value hierarchy
 
$ 47,760,000 
 
$ 51,409,000 
Gross unrealized gains or losses for available-for-sale marketable securities
 
 
Securities that were in an unrealized loss position for more than 12 months.
 
 
Transfer from fair value measurement level 1 to level 2
 
 
 
Transfer from fair value measurement level 2 to level 1
 
 
 
Derivative assets / liabilities
 
 
 
Gains / losses on derivative instruments
 
 
Foreign currency forward contracts
 
 
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
 
 
Unrealized losses related to effective portion of changes in fair value of foreign currency forward contracts
 
100,000 
 
 
Reclassification from accumulated other comprehensive loss into earnings over next 12 month
 
100,000 
 
 
Notional value
 
47,600,000 
 
 
Maximum
 
 
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
 
 
Foreign currency forward contracts maturity period
 
15 months 
 
 
Level 3
 
 
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
 
 
Securities within Level 3 of the fair value hierarchy
 
$ 0 
 
$ 0 
Financial Instruments - Available for Sale Marketable Securities by Contractual Maturities (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Fair Value Disclosures [Abstract]
 
 
Due in one year or less
$ 25,247 
$ 42,204 
Due after one year
22,513 
9,205 
Total
$ 47,760 
$ 51,409 
Financial Instruments - Schedule of Derivative Instruments on Consolidated Balance Sheet (Details) (Level 2, USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Derivatives Fair Value [Line Items]
 
Asset Derivatives, Fair Value
$ 79 
Liability Derivatives, Fair Value
188 
Foreign currency forward contracts |
Other current assets
 
Derivatives Fair Value [Line Items]
 
Asset Derivatives, Fair Value
69 
Foreign currency forward contracts |
Other assets
 
Derivatives Fair Value [Line Items]
 
Asset Derivatives, Fair Value
10 
Foreign currency forward contracts |
Accrued liabilities
 
Derivatives Fair Value [Line Items]
 
Liability Derivatives, Fair Value
163 
Foreign currency forward contracts |
Other liabilities
 
Derivatives Fair Value [Line Items]
 
Liability Derivatives, Fair Value
$ 25 
Financial Instruments - Schedule of Derivative Instruments on Statement of Operations (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2015
Derivative Instruments Gain Loss [Line Items]
 
 
Gain (Loss) Recognized in AOCI
$ (101)
$ (101)
Revenue, cost of revenue, operating expenses |
Foreign currency forward contracts
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
Gain (Loss) Recognized in AOCI
$ (101)
$ (101)
Property and Equipment - Components of Property and Equipment (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Property Plant And Equipment [Line Items]
 
 
Property and equipment, gross
$ 82,620 
$ 60,150 
Less: accumulated depreciation and amortization
(29,873)
(18,255)
Property and equipment, net
52,747 
41,895 
Capitalized Internal-Use Software
 
 
Property Plant And Equipment [Line Items]
 
 
Property and equipment, gross
25,613 
18,541 
Hosting Equipment
 
 
Property Plant And Equipment [Line Items]
 
 
Property and equipment, gross
24,740 
14,085 
Leasehold Improvements
 
 
Property Plant And Equipment [Line Items]
 
 
Property and equipment, gross
16,651 
15,144 
Computer Equipment and Software
 
 
Property Plant And Equipment [Line Items]
 
 
Property and equipment, gross
5,949 
4,310 
Furniture and Fixtures
 
 
Property Plant And Equipment [Line Items]
 
 
Property and equipment, gross
5,092 
4,524 
Construction in Progress
 
 
Property Plant And Equipment [Line Items]
 
 
Property and equipment, gross
$ 4,575 
$ 3,546 
Property and Equipment - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Dec. 31, 2014
Property Plant And Equipment [Abstract]
 
 
 
 
 
Depreciation expense
$ 2.8 
$ 1.7 
$ 7.7 
$ 4.0 
 
Amortization expense of capitalized internal-use software
1.6 
0.9 
4.6 
2.6 
 
Carrying value of capitalized internal-use software
14.2 
 
14.2 
 
13.6 
Capitalized internal-use software included in construction in progress
$ 1.7 
 
$ 1.7 
 
$ 3.5 
Goodwill and Purchased Intangible Assets - Changes in Carrying Amount of Goodwill (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2015
Goodwill And Intangible Assets Disclosure [Abstract]
 
Beginning balance
$ 9,240 
Foreign currency translation adjustments
(670)
Ending balance
$ 8,570 
Goodwill and Purchased Intangible Assets - Purchased Intangible Assets Subject to Amortization (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended 12 Months Ended
Sep. 30, 2015
Dec. 31, 2014
Finite Lived Intangible Assets [Line Items]
 
 
Cost
$ 6,560 
$ 6,560 
Accumulated Amortization
(2,828)
(1,407)
Foreign Currency Translation Adjustment
(414)
(241)
Net
3,318 
4,912 
Developed Technology
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Cost
5,200 
5,200 
Accumulated Amortization
(2,271)
(1,118)
Foreign Currency Translation Adjustment
(326)
(191)
Net
2,603 
3,891 
Remaining Useful Life
2 years 
2 years 8 months 12 days 
Customer Relationships
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Cost
1,300 
1,300 
Accumulated Amortization
(497)
(244)
Foreign Currency Translation Adjustment
(88)
(48)
Net
715 
1,008 
Remaining Useful Life
2 years 6 months 
3 years 2 months 12 days 
Trade Name
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Cost
60 
60 
Accumulated Amortization
(60)
(45)
Foreign Currency Translation Adjustment
 
(2)
Net
 
$ 13 
Remaining Useful Life
 
2 months 12 days 
Goodwill and Purchased Intangible Assets - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Goodwill And Intangible Assets Disclosure [Abstract]
 
 
 
 
Amortization expense
$ 0.4 
$ 0.5 
$ 1.4 
$ 1.0 
Goodwill and Purchased Intangible Assets - Estimated Future Amortization Expense (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Goodwill And Intangible Assets Disclosure [Abstract]
 
 
Remainder of 2015
$ 406 
 
2016
1,610 
 
2017
1,239 
 
2018
63 
 
Net
$ 3,318 
$ 4,912 
Credit Facility - Additional Information (Details) (Silicon Valley Bank, USD $)
1 Months Ended
Jun. 30, 2015
Revolving Line of Credit
 
Line Of Credit Facility [Line Items]
 
Credit facility
$ 20,000,000 
Percentage of interest rate above the prime rate
2.00% 
Equipment Line of Credit
 
Line Of Credit Facility [Line Items]
 
Credit facility
$ 10,000,000 
Credit facility interest rate
2.50% 
Commitments and Contingencies - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Other Commitments [Line Items]
 
 
 
 
Rent expense
$ 2.0 
$ 1.7 
$ 5.4 
$ 5.2 
Capital Lease Agreements
 
 
 
 
Other Commitments [Line Items]
 
 
 
 
Lease expiration date
 
 
Mar. 31, 2015 
 
Common Stock and Stockholders' Equity (Deficit) - Additional Information (Details) (USD $)
In Millions, except Share data, unless otherwise specified
9 Months Ended 0 Months Ended 0 Months Ended 3 Months Ended 9 Months Ended
Sep. 30, 2015
Dec. 31, 2014
May 31, 2014
Sep. 30, 2015
2009 Stock Option and Grant Plan
Jan. 2, 2015
2014 Plan
Employee Stock Option
Sep. 30, 2015
2014 Plan
Employee Stock Option
Jan. 2, 2015
Employee Stock Purchase Plan
Sep. 30, 2015
Employee Stock Purchase Plan
Sep. 30, 2015
Employee Stock Purchase Plan
Class Of Stock [Line Items]
 
 
 
 
 
 
 
 
 
Common stock, shares authorized
 
400,000,000 
125,000,000 
 
 
 
 
 
 
Common stock, par value
 
$ 0.01 
$ 0.01 
 
 
 
 
 
 
Common stock, shares issued
89,100,000 
76,100,000 
 
 
 
 
 
 
 
Common stock, shares outstanding
88,500,000 
75,500,000 
 
 
 
 
 
 
 
Common stock shares outstanding, subject to repurchase
300,000 
600,000 
 
 
 
 
 
 
 
Preferred stock, shares authorized
10,000,000 
10,000,000 
 
 
 
 
 
 
 
Preferred stock, par value
$ 0.01 
$ 0.01 
 
 
 
 
 
 
 
Preferred stock, shares issued
 
 
 
 
 
 
 
Preferred stock, shares outstanding
 
 
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award Increase in Number of Shares Reserved and Available for Issuance
3,779,000 
 
 
 
3,800,000 
 
800,000 
 
 
Percentage of purchase price of shares lower of the fair market value of common stock employees are able to purchase shares
 
 
 
 
 
 
 
 
85.00% 
Common shares purchased
 
 
 
 
 
 
 
600,000 
Shares of common stock available for issuance
5,956,000 
7,560,000 
 
 
6,000,000 
 
3,400,000 
3,400,000 
Share price
$ 19.71 
 
 
 
 
 
 
 
 
Future period share-based compensation expense
$ 145.8 
 
 
 
 
 
 
 
 
Future period share-based compensation expense, period to recognized
3 years 1 month 6 days 
 
 
 
 
 
 
 
 
Shares outstanding as a result of early exercise of stock options and purchase of unvested stock awards
300,000 
600,000 
 
 
 
 
 
 
 
Accrued liability for shares outstanding as a result of early exercise of stock options and purchase of unvested stock awards
$ 1.3 
$ 2.1 
 
 
 
 
 
 
 
Common Stock and Stockholders' Equity (Deficit) - Summary of Stock Option and RSU Award Activity (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
9 Months Ended 12 Months Ended
Sep. 30, 2015
Dec. 31, 2014
Shares Available for Grant
 
 
Balance at the beginning of the period
7,560,000 
 
Increase in authorized shares
3,779,000 
 
Stock options granted
(2,009,000)
 
RSUs granted
(3,775,000)
 
Unvested shares repurchased
2,000 
 
Stock options forfeited or canceled
67,000 
 
RSUs forfeited or cancelled
332,000 
 
Balance at the end of the period
5,956,000 
7,560,000 
Number of Shares
 
 
Balance at the beginning of the period
12,043,000 
 
Stock options granted
2,009,000 
 
Stock options exercised
(2,308,000)
 
Stock options forfeited or canceled
(67,000)
 
Balance at the end of the period
11,677,000 
12,043,000 
Weighted-Average Exercise Price
 
 
Balance at the beginning of the period
$ 7.39 
 
Stock options granted
$ 24.25 
 
Stock options exercised
$ 2.50 
 
Stock options forfeited or canceled
$ 4.36 
 
Balance at the end of the period
$ 11.28 
$ 7.39 
Weighted Average Remaining Contractual Term
 
 
Options Outstanding, Weighted-average remaining contractual term
8 years 1 month 13 days 
8 years 3 months 15 days 
Aggregate Intrinsic Value
 
 
Options Outstanding, Aggregate Intrinsic Value, Balance at beginning of period
$ 98,481 
$ 204,467 
Outstanding RSUs
 
 
Balance at the beginning of the period
3,064,000 
 
RSUs issued pursuant to retention plan, in connection with the acquisition
3,775,000 
 
RSUs vested
(1,290,000)
 
Unvested shares repurchased
2,000 
 
RSUs forfeited or cancelled
(332,000)
 
Balance at the end of the period
5,217,000 
3,064,000 
Weighted-Average Grant Date Fair Value
 
 
Balance at the beginning of the period
$ 13.69 
 
RSUs granted
$ 22.83 
 
RSUs vested
$ 16.20 
 
Unvested shares repurchased
2,000 
 
RSUs forfeited or cancelled
$ 18.75 
 
Balance at the end of the period
$ 19.36 
$ 13.69 
Net Loss per Share - Computation of Basic and Diluted Net Loss per Share of Common Stock (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Earnings Per Share [Abstract]
 
 
 
 
Net loss
$ (18,924)
$ (17,919)
$ (59,575)
$ (49,922)
Accretion of redeemable convertible preferred stock
 
 
 
(18)
Net loss attributable to common stockholders
$ (18,924)
$ (17,919)
$ (59,575)
$ (49,940)
Basic shares:
 
 
 
 
Weighted-average shares used to compute basic net loss per share
87,777 
71,732 
83,536 
46,751 
Diluted shares:
 
 
 
 
Weighted-average shares used to compute diluted net loss per share
87,777 
71,732 
83,536 
46,751 
Net loss per share attributable to common stockholders:
 
 
 
 
Net loss per share attributable to common stockholders, basic and diluted
$ (0.22)
$ (0.25)
$ (0.71)
$ (1.07)
Net Loss per Share - Schedule of Anti-Dilutive Securities Excluded from the Diluted per Share Calculation (Details)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Antidilutive securities excluded from computation of earnings per share amount
17,284 
17,465 
Shares subject to outstanding common stock options and employee stock purchase plan
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Antidilutive securities excluded from computation of earnings per share amount
12,067 
14,521 
Restricted Stock Units
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Antidilutive securities excluded from computation of earnings per share amount
5,217 
2,944 
Income Taxes - Additional Information (Details) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Schedule Of Effective Tax Rates [Line Items]
 
 
 
 
Changes in unrecognized tax benefits
$ 0 
$ 0 
$ 0 
$ 0 
Maximum
 
 
 
 
Schedule Of Effective Tax Rates [Line Items]
 
 
 
 
Effective income tax rate, percent
2.00% 
2.00% 
2.00% 
2.00% 
Geographic Information - Additional Information (Details)
9 Months Ended
Sep. 30, 2015
segment
Segment Reporting [Abstract]
 
Number of reportable segment
Geographic Information - Schedule of Revenue by Geographic Areas (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
 
 
Revenue
$ 55,661 
$ 33,910 
$ 146,122 
$ 88,508 
United States
 
 
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
 
 
Revenue
31,388 
19,031 
81,094 
50,774 
EMEA
 
 
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
 
 
Revenue
15,397 
9,704 
41,434 
24,565 
Other
 
 
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
 
 
Revenue
$ 8,876 
$ 5,175 
$ 23,594 
$ 13,169 
Geographic Information - Schedule of Long-Lived Assets by Geographic Areas (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Long-lived assets
$ 38,558 
$ 28,286 
United States
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Long-lived assets
25,223 
22,817 
EMEA
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Long-lived assets
10,304 
4,373 
Other
 
 
Revenues From External Customers And Long Lived Assets [Line Items]
 
 
Long-lived assets
$ 3,031 
$ 1,095 
Subsequent Event - Additional Information (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
9 Months Ended 0 Months Ended
Sep. 30, 2015
Oct. 13, 2015
We Are Cloud, Inc
Subsequent Event
Oct. 13, 2015
Maximum
We Are Cloud, Inc
Subsequent Event
Oct. 13, 2015
Restricted Stock Units
We Are Cloud, Inc
Subsequent Event
Subsequent Event [Line Items]
 
 
 
 
Percent of outstanding shares acquired
 
100.00% 
 
 
Purchase consideration in cash
 
$ 45.0 
 
 
Consideration held in escrow
 
$ 7.0 
 
 
Number of months consideration were held in escrow
 
 
18 months 
 
Number of months consideration held in escrow, to be released
 
12 months 
 
 
RSUs issued pursuant to retention plan, in connection with the acquisition
3,775 
 
 
500